Barriers that impede residents from fully participating in the regional economy undercut metropolitan Chicago’s primary source of growth -- its human capital. Numerous measures of economic well-being by race and ethnicity show how the region falls short of ensuring equitable opportunity for all residents, and thus falls short of performing to its full potential. Black and Hispanic residents in particular experience persistent disparities in educational attainment, employment, household income, and other indicators. Over time, these challenges limit the pace and durability of the region’s economic growth, while also impeding efforts to reduce poverty or create opportunity.
[GRAPHIC TO COME: A series of data charts will provide information on persistent disparities in economic outcomes among metropolitan Chicago’s residents by race/ethnicity.]
Racial and economic inclusion is integral to our continued growth and development. Research increasingly demonstrates the connection between reducing racial inequality and achieving stronger and more sustained economic growth. The International Monetary Fund has found that lowering income inequality in a region by 10 percent lengthens periods of growth by 50 percent. Apart from the need for a skilled workforce, the Federal Reserve Bank of Cleveland has found that growth in regional productivity depends most on ethnic diversity, racial inclusion, minority-owned businesses, and low levels of income inequality. In contrast, persistent inequality undermines a community’s resilience in the face of uncertain future economic shifts. During 2006-10, income inequality was one of the most effective ways of predicting a county’s risk of entering into recession, and recent research shows that higher levels of wealth inequality can increase the severity of a recession.
Rates of labor force participation among the region’s black residents during 2005-16 were at least five percentage points below any other group. Metropolitan Chicago had nearly 150,000 young adults ages 16-24 years (12.1 percent) disconnected from both work and school in 2015, including 22.9 percent of young black residents. Many of these young adults have a high school diploma but require substantial remedial education, as well as options to intersperse learning and income. As skills demand evolves, low graduation rates among low-income and entry-level workers undermine training programs that could help them to enter and remain in the workforce. At the same time, average real U.S. annual wages for those with a high school diploma have not increased since 1970, even as costs to participate in the economy like childcare and post-secondary education have risen.
As both inequality and global economic shifts play out, how individuals relate to the labor market has become more complicated. Entry-level requirements have increased, and workers must increasingly seek out and pay for more post-secondary training before entering the workforce, in addition to continual training throughout their career to remain competitive. In 2016, for the first time, workers with a Bachelor’s degree or higher made up a larger proportion of the workforce (36 percent) than workers with a high school diploma or less (34 percent). Yet the qualifications listed in a job posting do not necessarily reflect the actual skills and education needed to perform the related tasks. Inflated job requirements can contribute to large pools of overlooked talent. These hurdles can be particularly challenging for people tenuously connected to the workforce like returning citizens and opportunity youth -- or young adults 16-24 years old who are not in school and not working. As the workforce and education systems adapt, a career pathway approach can provide essential resources to mitigate challenges that some individuals face to entering and thriving in the economy.
Put simply, the game is changing. Many employers seek to hire new workers who already have the required skills, rather than to invest in extensive education and training of staff. Some research has found an ongoing decline in the share of workers receiving employer-sponsored or on-the-job training, and the U.S. has been slow to implement a system of apprenticeship programs on a national scale. Some sectors like manufacturing and health care have standardized the skills requirements or have gained new efficiencies through technology. Others have seen a rise in typical education requirements for entry-level positions. For many low-income and entry-level workers, these trends can result in a cycle of temporary or contract work without the job security, benefits, or training to pursue better opportunities. In short, workers with tenuous connections to the economy make increasingly complex decisions about their own workforce readiness -- that is, how they plan to pursue, pay for, progress through, and complete the education and training required to attain relevant skills. Without action, evidence of increasing training requirements and decreasing employer investments in training raises concerns about compounding inequality.
[GRAPHIC TO COME: A graphic will provide information on career pathway programs and coordination in the region’s education and workforce systems.]
The decision to invest in post-secondary education and training can have lifelong economic consequences for individuals and households. Even for workers in high-growth sectors or with industry-recognized credentials, some jobs provide better opportunities for career advancement and upward mobility. Yet many students make costly, self-directed decisions with limited information. In particular, the range of education and credentialing programs has continued to diversify, but sub-baccalaureate credentials are not uniformly valuable for workers and employers. Looking beyond immediate employment needs, the workforce and education systems have increasingly emphasized strategies for connecting individuals to jobs that have the potential to grow in skills and compensation. Achieving these goals requires regional coordination to target educational supports and training in skill areas and occupations that likewise offer pathways to upward mobility.
A career pathway approach offers one model for coordinating public and private resources around programs that connect target populations with supportive, progressive opportunities in growing occupations. These programs offer a series of manageable steps leading to attainment of industry-recognized credentials and career advancement by balancing classroom and work-based learning. Well-articulated guidance on pursuing opportunities is then communicated to individuals and households through multiple workforce channels. In doing so, career pathways synchronize regional workforce needs with individual training needs and help both employers and workers assess the value of credentials in the regional job market. Programs have the flexibility and stakeholder input to structure learning and earning opportunities as appropriate for many different occupations and sectors. Examples may include pathways in business information technology, insurance, advanced manufacturing, transportation and logistics, and health care.
Close cooperation with employers ensures that programs provide in-demand skills, a broad set of necessary supports, and connections to specific work-based learning opportunities. For example, regional collaboration in Long Beach, California, has contributed to substantial increases in the share of local students meeting entrance requirements to that state's university systems, as well as graduation rates among students of color that surpass those statewide. This model can help students balance improved flexibility with assurances of the training’s ongoing value. Likewise, by aligning educational systems with the needs of employers, it can help workforce partners enhance the delivery of career counseling, job-placement assistance, and other support services.
The following describes strategies and associated actions to implement this recommendation.