The link between poverty and the economy is often ignored.  The poor are often categorized as the “other” and blamed for their financial condition. 

Poverty, however, is a deficiency that makes our economy incomplete, as spelled out in the new report Ties that Bind: Poverty and Michigan’s Economic Recovery.  Without addressing the condition of poverty and understanding the effect it has on the state economy, it will be difficult for Michigan to recover from the recession.

Poverty means there is less disposable income so consumer spending is reduced and businesses are forced to lay off workers or shut down entirely. This means less revenue for the state as incomes decrease and the tax base shrinks.

Public structures that help children and families also work to stabilize incomes and consumer spending and speed up economic recovery. With 16.8 percent of Michiganians living in poverty, programs such as cash assistance, food assistance, unemployment insurance and homelessness prevention can help provide the temporary relief needed by so many families in Michigan as well as bolster the economy so that it can grow and thrive.

While it is easy to look at those living in poverty as the “other”, 58 percent of Americans between ages 20 and 75 will experience at least one year of poverty during their life and few have been immune to the economic downturn. The number of Michigan households making less than $25,000 a year has grown by 17.5 percent while those making over $100,000 or more a year have declined by 16.1 percent.

Children have been especially harmed. In 2010, 23.5 percent of the children in Michigan lived in poverty. One of the most alarming statistics is the increase in child homelessness, which grew by 40 percent between the 2009–2010 school year and the current school year. 

It is unfathomable, but more than 31,000 children in Michigan are homeless and more than 700,000 are on food assistance. 

Though quality education is the No. 1 predictor of future success for kids, deep cuts are being made to education and assistance programs that will only further hurt Michigan’s children. Investing in Michigan’s children is investing in Michigan’s future workforce and helps build a citizenry and state that is economically secure.

Policies that seek to undermine programs that keep families stable and people spending money into the economy will only slow the state’s recovery.

 Recent policy decisions reducing access to cash assistance and food assistance should be reviewed. The state Earned Income Tax Credit should be returned to 20 percent of the federal EITC. The Legislature should reverse its decision to reduce unemployment benefits from 26 weeks to 20 weeks. Investments in skilled job training and financial supports while workers become ready for employment should be a priority for the state.

In order for Michigan’s economy to recover, investments must be made in the people of the state. An economy that works for everyone will help build a competitive and productive workforce, increase consumer spending and support local businesses. For Michigan to be truly competitive in the future, it must have the people and infrastructure that will attract investment in the state.

Michigan’s financial future will be greater if we build an economy designed to make sure all people in the state are able to maintain stability and economic balance.  Michigan’s economy must work for everyone, and not just those at the top of the income scale.

– Melissa K. Smith

One would think a blogger who writes about adult learning and Unemployment Insurance would be enthusiastic about a federal proposal that addresses both. However, what the U.S. House passed Tuesday night was less than thrilling.

It would be nice to report that Michigan’s own Congressman Dave Camp sponsored a bill that makes it easier for unemployed workers without a high school diploma to acquire that credential along with postsecondary training in order to reduce their chances of becoming unemployed in the future.  Nope. Congressional Republicans decided that the best way to help unemployed workers who never finished high school is (drum roll here)…bar them from receiving any unemployment benefits.

Take a deep breath and let’s count the ways that this policy proposal is misguided.

• It punishes people who never finished high school or got a GED, regardless of the reason or their circumstances. Individuals who made that decision years ago, worked hard at a job (or started a business), earned enough to qualify for unemployment benefits and then find themselves unemployed would not be able to access this safety net to provide for their families or prevent foreclosures on their homes.

• It operates on the assumption that skills deficits and other characteristics of workers are driving the unemployment problem, when in fact unemployment is caused by a lack of available jobs.

• It makes assumptions about who is likely to be unemployed and for how long. In fact, as we reported in our Labor Day Report this year, while workers without a high school diploma were more likely to be unemployed than those who completed high school, such unemployed were less likely than those at any other educational level to remain unemployed for more than half a year.

• It doesn’t have a clear purpose. Is barring workers without a high school diploma or GED intended to encourage them to go back to school and acquire one? If so, there are no provisions in the bill to help with that. Is the goal to reduce the cost of Unemployment Insurance by attacking those most likely to need it? If so, it will not make a big difference, since workers without a diploma who earn low wages usually cannot qualify for benefits anyway.

• Finally, it creates a terrible precedent by introducing eligibility standards on the federal level that have nothing to do with the hours or weeks of employment or wages earned prior to losing one’s job. No other federal eligibility requirement is based on personal characteristics of a worker that have nothing to do with the worker’s employment.

In a worst-case scenario, such a policy could encourage employers to favor applicants without a high school diploma over those that possess one, and could even create a perverse incentive for employers to encourage high school dropout. Along with stigmatizing a population that many states are trying to help, this policy could work directly against workforce development efforts.

The proposal is, in a word, pointless.

– Peter Ruark

It has not been an easy year for workers in Michigan.

The unemployment rate remains among the highest in the country. At 10.9 percent in July, it is the third highest. We can take some consolation in the fact that the rate has improved from 13.1 percent a year ago, when it was second-highest, and from 14.2 percent two years ago, when it led the nation.

But before we uncork the champagne (or whatever people drink at Labor Day picnics), we should be aware that 50 percent of unemployed workers in Michigan in 2010 were unemployed long-term (meaning more than 26 consecutive weeks).  According to the League’s 2011 Labor Day Report (pdf), this share is higher than it was during any of the previous economic downturns—even the bad old days of 1982-1983, when the unemployment rate reached a jaw-dropping 15.5 percent.

There is also a disturbing racial disparity noted in the report: While the unemployment rate went down between 2009 to 2010 for white and Hispanic workers and for Michigan’s workforce as a whole, it rose sharply for African American workers. In 2010, 24 percent of African American workers—nearly one out of four—were unemployed, and the unemployed in four Detroit-area cities with African American majorities (Detroit, Highland Park, Pontiac and Inkster) accounted for 16 percent of all unemployed workers in Michigan. 

The higher African American unemployment rate, while cause for great concern, is not surprising. Many African Americans live in concentrated urban areas where job seekers far outnumber the available jobs. In the Detroit area, there is insufficient public transportation from high-unemployment areas to the communities in which jobs may be available.

Educational levels among this population are also often a barrier to employment. In both good times and bad, people with low levels of education (those without a high school diploma or who have only a diploma and nothing more) have a higher rate of unemployment than those with some level of postsecondary training. As can be expected, the higher the level of one’s education, the less likely to be unemployed.

It is also true that communities with low levels of education are not as attractive to employers. It turns into a vicious cycle in which communities that are already disadvantaged in the labor market become more disadvantaged when the economy is bad.

Building occupational skills among Michigan’s low-skilled workers will not make all the jobs come back. We know that. But it will provide them with increased clout in the labor market and increase their likelihood of obtaining secure employment with a livable wage.

Building the occupational skills of low-skilled adults, and providing adult education to those not yet ready to participate in occupational training, is one way to help soften the effects of economic downturns on workers and make low-skilled communities—both rural and urban—more attractive to employers. That’s something for Michigan’s leaders to consider as they strategize on ways to get Michigan working again.

– Peter Ruark

Information is power, and Michigan needs all the empowerment it can get in order to prepare our workforce for the 21st century economy.

Helping adult learners—low-skill individuals age 25 and older—acquire occupational skills is important to Michigan’s economic development as well as to the individuals themselves. However, our state has a lot of unanswered questions regarding the effectiveness of programs that bring their skills up to speed.

Community colleges, for example, have many adult students in developmental (remedial) education classes because they have not mastered one or more basic skill areas necessary for postsecondary work. Yet we do not have a statewide data system that tells us the success rate of such students in completing their studies and obtaining an occupational credential (i.e. an associate degree or vocational certificate).

We also don’t have a way to track the success rate of adults who go through the adult education system and then go on to postsecondary training. Nor can we track the wage levels of such students after they graduate and find jobs in the workforce. Knowing the answer to these and other questions would help state agencies know how to improve educational services for adult learners—a population the state cannot afford to ignore.

Michigan is able to track individual progress of students as they go through the K-12 system and as such is able to measure and improve the effectiveness of educational services for that population. The K-12 data collection system is not yet formally linked to postsecondary or workforce systems, however.

Having a longitudinal data system that follows each individual through K-12, adult education, postsecondary education, and the Michigan Works! Agencies, and matches this information with wage and employment information, can provide important information about state system effectiveness. Importantly, it can do this without jeopardizing individual privacy.

Gov. Rick Snyder is planning to give a speech this fall on his workforce development plan. It is hoped that his plan will address not only high-skill jobs and workers, but raising the skills of low-skill workers as well. It is also hoped that a comprehensive data collection system will be a key ingredient of this plan.

(More information on this topic can be found in a recent paper by the Michigan League for Human Services, The Key Ingredient: Better Data is Crucial to Building Michigan’s Workforce System.)

– Peter Ruark

There is a proposal in the Michigan Senate to eliminate all state funding for adult education. This is misguided. If Michigan wants to be economically competitive, it needs to build the skills of its workforce and adult education is an essential part of doing that.

The days when a person could get go directly from high school into a well-paying manufacturing job in the automobile industry with only a high school diploma are over. Some kind of postsecondary occupational credential is now needed to succeed in the job market. However, many workers lack certain basic skills (in reading, writing or mathematics) that are needed in order to participate in occupational training.

That is where adult education fits in. It helps workers become marketable and it helps Michigan attract and keep employers. Businesses tend not to locate in places where large numbers of adults lack basic reading and mathematics skills.

Adult education funding needs to be increased to meet the need. The governor’s proposed budget, however, keeps funding at $22 million per year for the next two years—no increase.

Worse, Sen. Howard Walker, the chair of the Senate Appropriations Subcommittee on K-12, School Aid and Education, has proposed that Michigan eliminate state adult education funding entirely.

Eliminating this funding would gut the total amount of available adult education funds by approximately 60 percent, as Michigan received only $14.6 million in federal adult education funding last year. This would result in even fewer workers being able to enroll in and complete basic skills training. 

The Michigan League for Human Services published an analysis on the need for more state funding for adult education. (You may have read about it a previous blog post.) The paper showed a correlation between the decrease in funding over the past decade and the 63 percent decrease in enrollment during that time, as fewer individuals had access to adult education programs in their communities.

Fortunately, elimination of state investment in adult education is not a done deal. The subcommittee has not yet passed an appropriations bill. But at a time when it is crucial to build Michigan’s economy and workforce, the conversation on adult education funding is going in the wrong direction.

The League is testifying about these proposed cuts. Your Senator and the Senators on this subcommittee (Sens. Walker, Caswell, Pappageorge and Hopgood) need to hear from you that adult education funding needs to be preserved, and better yet, increased. Let’s hope the key players crafting the budget will recognize the importance of adult education, and refrain from making decisions that will render it inaccessible to large numbers of workers that need it.

– Peter Ruark

April 12th, 2011 Posted to Blog: Factually Speaking,State Budget,Workforce Development | Comments (1)

During Gov. Rick Snyder’s State of the State address in January, he emphasized the importance of taking a P-20 approach to improving Michigan’s education system. The P-20 concept is gaining popularity nationwide, and refers to educational improvement undertaken as a holistic endeavor, from early childhood up through K-12 into postsecondary and the workforce.

It is important, of course, to make sure that the “20” side of the equation gets as much attention as the “P” side. While interventions in early childhood have been shown to be very effective in promoting K-12 and postsecondary success, there are many adult workers who do not have the occupational skills in demand in today’s labor market.

Upskilling these workers is crucial to our state’s economic strength. The skill level of a state’s workforce is one factor that job providers take into consideration when deciding where to locate their businesses, and individuals with occupational skills are in a better position to start up and maintain their own businesses.

A solid P-20 approach to education will make it easier for those who need to improve their basic skills (reading, math, English as a second language) to do so while concurrently acquiring occupational skills in such sectors as construction, health care or computer programming. Some community colleges in Michigan are currently teaming up with businesses and adult education providers to enable adult learners to do this.

The governor’s budget proposal released Thursday contained good news and bad news for adult learners and workers. On the upside, funding for community colleges was held harmless as was funding for adult education in the School Aid Fund. On the downside, the budget includes a 15 percent reduction for four-year colleges and universities. While this does not necessarily signal a backing away from commitment to the P-20 approach, it is important for Michigan to make a financial investment to build up the skills of its workforce to help get our economy moving again. This ought to be something that most liberals and conservatives can agree on.

– Peter Ruark

Having vibrant major cities is central to a stable economy and retaining talent in Michigan.

Gov. Rick Snyder’s 10-point plan to ‘Reinvent Michigan’ includes improving the state’s city centers and establishing of a proper mass transit system.

Michigan Forward, in conjunction with Mothering Justice and Michigan Voice, recently held a forum about this called “Building the Urban Base.” The topics covered ranged from transit, to job creation to education reform. The main takeaway was that Detroit is the heart of Michigan, and education needs to be the foundation of Detroit’s success. Building an urban base, and creating an urban strategy are the keys to revitalizing Detroit, and thus Michigan.

Several expert speakers presented and many recommendations came out of the event. Among these recommendations are the need to create a mass transit system in Detroit, reform the Detroit Public School system, and establish innovative business models as seen around the country and abroad.

Detroit is the only major U.S. city lacking a mass transit system, a regional transit authority, and a dedicated transit source. Transportation Riders United, an organization working towards increased mobility and transit in Detroit, is at the head of all efforts to bring light rail to Michigan’s major city. They have reported that for every $1 invested in public transit returns on average $6 in local economic activity.

In other metro cities where there is a light rail, development booms along its corridors and young professionals invest their dollars in these new businesses. Michigan could see a 4 percent to 16 percent gain in revenues due to the increases in income and employment generated by investments in transit.

Michigan ranked in the top ten for highest projected non-graduates from high school for 2010, with more than a quarter of this population located in Detroit. Michigan also ranks 34th in the nation in four-year degree attainment. Michigan Future, Inc., an organization dedicated to the shift toward a knowledge-based economy, has focused its work on the area needing the most improvement—high school education in Detroit. The organization recently launched a plan to open 35 high-performing schools in Detroit by 2017. 

Lastly, Detroit has one of the highest unemployment rates of major cities across the country, at 20.5 percent as of November 2010. According to Enxit Group, LLC based in Southfield, Michigan, business leaders across the globe want to invest their capital in growth areas. In order for Detroit to become more attractive, we need to first work on our education and transit systems, thus providing an educated workforce and an accessible environment for investors.

As we look towards our future, which sometimes looks and feels bleak, it is good to know that improving Detroit, our state’s major city, is on the governor’s agenda.

 
– Anika Fassia

Going to college is expensive. It’s also one of the keys to getting out of or staying out of poverty, reducing your chances of unemployment, and attaining higher income.

Unfortunately, with tuition at both two-year and four-year institutions rising faster than the rate of inflation and median household income falling, many students are finding it harder and harder to go to college. (See our new report Pulling the Plug on Michigan’s Future: Why Draining Resources Hurts Tomorrow’s Workforce.)

What’s to blame for the increase in tuition? There are several factors, such as expenses relating to health care, fuel costs and some courses being more expensive to teach than others. However, a lot of it has to do with the state, over a period of years, cutting aid to higher ed.

Over the last eight years (2002-2010) the state’s general fund has shrunk by 12.6 percent, but state funding to community colleges, public-four year schools, and state-funded financial aid programs has dropped by 15 percent. This lack of state support, coupled with the factors listed above has caused tuition at Michigan’s four-year public institutions to skyrocket. Over the same eight-year period, tuition and fees increased 88 percent at Michigan’s four-year public colleges and 40 percent at two-year institutions.

Overall, Michigan’s investment in higher ed ranked fifth from the bottom in the nation between 2005 and 2009 and our tuition increases rank seventh-highest over the same time period.

Because of these cuts in state support, causing tuition to soar, tuition is representing an ever-increasing share of household income for families at all levels. This especially hurts families at or below the poverty level (which is $17,285 for a family of three) who have the most to gain by going to college.

However, even as tuition rises and aid programs (including many need-based aid programs offered by the state) have been cut or drastically reduced, enrollment has not dropped as more families and individuals understand the need for education beyond high school.

This is causing more students to finance their college education through student loans. In 2008, over half of all four-year graduates had student loan debt, which averaged just over $22,000, and half of all full-time freshmen took out student loans, up from just 40 percent in 2001.

Michigan cannot afford to have its young people graduating with tens of thousands of dollars in educational  debt due to our cutting aid to the institutions that will ensure Michigan stays competitive in a changing economy.  At a time where jobs are shifting from skills-based to knowledge-based, is it worth cutting off aid to the institutions that invest in our future?

– Jacqui Broughton

We at the Michigan League for Human Services have written extensively about the need for Michigan to invest in postsecondary education and training. A new report from Georgetown University called Help Wanted provides projections for future job demand that underscore this need.

According to the report, the number of Michigan jobs requiring postsecondary education will grow by 116,000 between 2008 and 2018, while jobs for workers with no education past high school (including dropouts) will grow by only 22,000.

In Michigan, 62 percent of jobs in 2018 will require some postsecondary education and 28 percent will require a bachelor’s or graduate degree. These figures are close to projections for the nation as a whole.

Jobs that require some level of postsecondary training (such as an associate’s degree or a recognized vocational credential) but not a bachelor’s degree are called “middle skill jobs.” This is where a large part of the job growth will be in the next several years.

What is driving the increasing need for postsecondary education? According to the report, it is technology. Throughout our country’s history, technological development has favored workers with more education, and in turn, demand for these workers grows as the technology spreads throughout the economy.

So what are Michigan and the United States doing in light of all this? The good news is that No Worker Left Behind has been very successful in its first three years. It has enrolled more than 131,000 workers, and 75 percent of the 58,000 program completers have found new employment or retained a job that had been at risk.

However, in contrast to the $40 million in state funds that Gov. Jennifer Granholm recommended for its first year, the state only invested $4.5 million in No Worker Left Behind this fiscal year, with the vast majority of funding coming from the federal government.

This may have worked fine when there was federal money to be had. But, according to the Lansing State Journal, federal funding will be cut by $92.4 million as the need in other states becomes greater and as stimulus funds begin to dry up. Because workers already in training programs will receive highest priority for the remaining funding, No Worker Left Behind will not be able to enroll many new trainees in the near future.

There has to be serious monetary investment in adult learning by both the state and the nation if we are going to have a workforce that can meet the job demands of the upcoming decade. If Michigan plans to be competitive, it must make sure it has the money to upskill its workforce when federal funds are scarce.

Right now our state doesn’t have the money. And though it sounds like a broken record to say so again, we won’t have the money until we devise a way to increase state revenues.

– Peter Ruark