Progress and challenges for workforce development efforts in Milwaukee

In a new report examining Milwaukee’s workforce development system, the Public Policy Forum cites a higher level of coordination and cohesion among key workforce development players since the establishment of the Milwaukee Area Workforce Investment Board (MAWIB) in 2007, but suggests a need for better coordination between the city’s economic development priorities and the needs of its unemployed.

The report – "Pathways to Employment" – analyzes the resources, programming, and priorities of MAWIB and the Milwaukee Area Technical College (MATC), widely considered the two most prominent workforce development entities in Milwaukee, and also summarizes the activities and spending of other key workforce agencies. In addition, the report explores promising efforts to coordinate workforce development activities in Milwaukee’s health care, manufacturing, and food and beverage sectors. 

On the whole, we find that sector-specific workforce strategies show considerable promise for the economy at large, but that many of the individuals being served by MAWIB may not have the education or skill levels to meet the requirements of area employers in sectors being targeted by economic development leaders – like advanced manufacturing, financial services, and water – or to benefit from related technical diploma programs at MATC or WCTC. As Milwaukee identifies economic development goals, therefore, it is important to determine the extent to which those goals should influence workforce development policies and programs. 

That is not to suggest the individuals MAWIB serves cannot advance beyond low-skill, entry-level positions through additional work experience and/or education, nor that the sectors targeted by regional economic development efforts should change. It does suggest, however, that MAWIB‘s role as the entity serving those with the greatest barriers to employment demands a commitment to a broad array of services and strategies that respond both to the needs of key industry sectors and the needs of its clientele.
Other key findings from the report include the following:

• MAWIB has made substantial progress in addressing several longstanding concerns that had surrounded its predecessor (the Private Industry Council), including improved coordination of local workforce development services and greater involvement of major area employers. Interviews with key stakeholders, however, indicate there is more progress to be made. 
• MATC’s technical diploma program offerings seem generally attuned to the demands of the Milwaukee area job market, as estimated by the Wisconsin Department of Workforce Development. In tandem with those offered at Waukesha County Technical College (WCTC), most MATC technical diploma programs seem to be appropriately scaled in relation to job projection numbers, though in many cases retention appears to be a problem. 
• The Milwaukee W-2 agencies’ designation as the one-stop job centers for Milwaukee County, and the sheer size of their funding base, make those organizations major players in Milwaukee’s workforce development system. Consequently, the education and skills levels of W-2 participants logically should play a prominent role in determining the city’s workforce development priorities and strategies. 
• Employment and training services in Milwaukee are largely supported by federal funding sources, which have been declining for many years. Consequently, local workforce development organizations must continue to pursue new revenue sources and improve efficiency in order to maintain existing service levels. The recent creation of the Milwaukee Area Workforce Funding Alliance to better leverage the funding contributions of local philanthropists and to pursue additional funding from national foundations has represented a positive start toward that effort. 

The report concludes by asking whether the region’s economic development vision – and the demands of specific area employers – should drive MAWIB funding priorities, MATC program offerings and Milwaukee’s overall workforce development strategies, or whether the education and skill levels of the local workforce should be the major factor in the development of both regional economic development planning and workforce development priorities.

The goal, it suggests, should be to strike a proper balance between the two.

Meeting the workforce development needs of healthcare employers in southeast Wisconsin

A Public Policy Forum survey of healthcare employers finds that despite near-record unemployment rates in the region, southeast Wisconsin’s healthcare sector faces a distinctive challenge: finding sufficient numbers of qualified and trained workers to fill current and future job openings. Survey respondents said applicant quality (60.7%) and retaining qualified workers (30.2%) are the biggest challenges they face in meeting their organizations’ workforce needs. Gaps in applicants’ basic skills, especially soft skills such as professionalism, team skills and verbal communication, also make it harder for healthcare employers to recruit and hire competent job candidates.

The recent survey of 28 healthcare facilities included the four largest hospital systems in Southeast Wisconsin, as well as nursing and residential care facilities such as medical offices and diagnostics labs.

Respondents said current job openings are greatest for registered nurses and nursing aides and attendants. However, a significant number of respondents were unwilling or unable to provide data on current job openings or predict how demand for healthcare professionals will change in the next one to three years.

This is important because lack of job growth data limits the ability of workforce development officials to adjust regional workforce development training resources to address healthcare employers’ short-term needs. Nevertheless, the challenges indentified in the survey point to areas for regional workforce development organizations and area healthcare employers to work together to increase the supply of healthcare workers.

The Public Policy Forum conducted the survey on behalf of the Milwaukee Area Healthcare Alliance (MAHA), a new workforce development partnership between the YWCA of Greater Milwaukee and the Milwaukee Area Health Education. The Research Brief titled Assessing Healthcare Employers Workforce Development Needs in Southeastern Wisconsin, which can be accessed here, details the survey’s results and highlights challenges healthcare employers face in hiring and retaining a qualified workforce.

Some call for investment in people, not bricks and bridges

A recent Milwaukee Talkie blog post asked, “Can’t we all get along when it comes to spending stimulus funds?” That post tackled state-vs.-local issues with regard to infrastructure spending, but not everyone is even at the point of agreeing that President-Elect Obama’s forthcoming New Deal-like plan to stimulate the economy by funding infrastructure has the right target.

In articles like “First, Repair the Human Infrastructure,” the head of a community health initiative claims that stimulus funding used to prevent chronic illness would save billions down the line in medical care and disability costs. Similarly, another blog makes a bid for human capital: “Lots of infrastructure is decaying in this country, and that includes the people and systems that comprise our social, educational, health and other kinds of human infrastructure. It isn’t just a matter of bricks and bridges.”

In the article “Don’t Forget the Human Infrastructure,” the Brookings Institute’s Isabel Sawhill presents some pragmatic arguments for making strategic investments in the nonprofit sector, which employs 10 percent of the workforce while providing a safety net for many, but is suffering in the bad economy. She notes that if such "human infrastructure" investments were made, the nonprofit sector would:

· Spend the money quickly and fully
· Employ people with a broad range of skills
· Be able to rely on a network of preexisting institutions
· Have the capacity to spread the dollars widely
· Avoid shrinkage, thus not adding to the ranks of the unemployed.

In Milwaukee, nonprofits are feeling the crunch. A Journal Sentinel article advised the sector: "Now is a time to be wary." The Nonprofit Portal of Milwaukee's most recent online newsletter links to five articles on weathering the economic crisis.

A commenter on a Seattle blog disagrees with Sawhill and others' human infrastructure arguments, cautioning against investing too heavily in recurring costs, “When you finance a building [or a road, bridge or rail line], you’re expecting to be able to use that building for maybe 50 years. You don’t need to build it again next year. . . . When we hire a teacher, however, the cost of their salary will recur each year.”

Others agree that we should be building things, but stress that short-term projects should be emphasized to stimulate the economy more quickly. An L.A. Times article describes how complex infrastructure projects like subways have a long lead time devoted to preparing engineering studies and environmental surveys, which can delay their stimulative effect. Lawrence E. Harris, a USC professor of finance counters, “But lots of tradesmen who know how to build houses can build community buildings, senior citizen centers and early childhood centers, which don’t take a long time.” Despite its emphasis on large infrastructure projects, Obama’s stimulus package is likely to highlight modernizing schools.

At least one women’s group is also concerned about Obama’s plan. Feminist Majority Foundation President Eleanor Smeal expressed alarm that the recovery package will emphasize construction jobs “which notoriously under-represent women workers.” She cautioned, “Although we support a physical infrastructure stimulus package, we believe it must be accompanied with a human infrastructure component that will employ a majority of women workers.”

Evidence abounds that many aspects of physical infrastructure have been neglected for too long in this country, as well as locally in Milwaukee. The number of voices pointing out that other aspects of the country’s “infrastructure” – from education to the nonprofit sector to hurricane protection – also are in disrepair speaks to the myriad challenges facing the new Obama administration. But perhaps no challenge is greater than this: while consensus seems to have emerged that we must stimulate the economy somehow, and while the battle therefore will continue over what sector or project gets the money, in the end we are still spending money we don't really have.

No Worker Left Behind: Testing job applicants not shown to harm equity

UWM economist Marc Levine’s most recent figures (2006 data) on what he has termed “the crisis of black male joblessness in Milwaukee,” identifying that 46.8 percent of working-age black males in the city are out of work, suggest that Milwaukeeans should take notice of studies about minorities and employment. A new study in the Quarterly Journal of Economics by David Autor and David Scarborough makes a connection between equitable hiring and worker productivity.

With employers increasingly using company-designed standardized tests to measure applicants’ potential job skills, Autor and Scarborough wanted to find out what effect this testing had on rates of minority hires. Perhaps testing would reduce racial discrimination (and increase minority employment) by introducing objective data to rely on in hiring. Due to multiple societal and demographic factors, overall, minorities as a group tend to score lower on standardized tests than non-minorities. So, would the testing lead employers to hire fewer minorities based on differential scores? Additionally, would the employees hired based on test scores perform better than those hired before the firms introduced testing?

The researchers used data from over 1,300 retail stores of a national chain, and determined the test in use to be non-racially-biased. After examining hiring and job tenure both before and after testing was instituted, the study found that employees hired using testing had higher job tenures by 10%. Though minorities did score lower than others on the standardized test, minority hiring was unaffected by the introduction of testing to the application process. Furthermore, the aspects of testing that enhanced employee productivity accrued to both minority and non-minority job applicants.

The testing not affecting minority employment is good news, but the increase in job tenure accruing to both minorities and non-minorities is even more encouraging. It implies that the job testing allowed employers to make more informed decisions of whom to hire in both the minority and non-minority pools of applicants.

The study’s findings, as some have noted -- especially the fact that minority hiring was stable despite lower test scores – suggest that testing applicants is not incompatible with affirmative action goals.

Worth the risk for some female small business owners

The Women’s Initiative for Self-Employment, a nonprofit program in California that helps low-income women start their own businesses, presented findings at this month's Summit on Economic Justice for Women in Atlanta showing microenterprise to be a successful strategy for increasing household income and wealth.

It seems that starting a small business would be even riskier for low-income women with no prior business experience, but some evidence shows the growth in business equity could be a worthwhile strategy to break the cycle of intergenerational poverty.

While many anti-poverty efforts focus on increasing income, emphasis on building asset ownership and wealth could prevent "asset poverty" and provide a safety net for long-term self-sufficiency. Business ownerhip is an important route to increasing assets: as a share of overall household wealth, business equity ranks second to homeownership.

Research cited by the Small Business Association is grim, showing that over half of new small businesses do not survive four years. Despite the risky environment, Women’s Initiative clients, all of whom are low-income at program entry and 78% of whom are women of color, are doing well. Seventy percent of program graduates are in business within a year of training, and 133 graduates report businesses grossing a combined $2.9 million, with net profits of $1.3 million. Annual household income for participants entering the business training program is just $14,000, but two years after training, average income is $37,000.

One key to the Women’s Initiative’s success may be cultural competency. Training is available in Spanish, and with microenterprise, it may be easier than in a traditional corporation to maximize cultural ties as an asset rather than a barrier. For instance, women of color may choose to start businesses that relate to their cultural backgrounds or feature their non-English language skills (46 percent of Women's Initiative clients are Spanish-speaking).

Minority groups in the U.S. have larger shares of women business owners, including 31 percent of Asian American and 46 percent of African American business owners. The Women’s Initiative organization found the greatest gains from their intervention for women of color, especially from Latina clients whom, as a group, tended to begin the program in debt with an average net worth of -$5,684. African American clients reported the greatest average absolute growth in business equity, while Latinas saw the largest relative gains in business equity, growing over 300%, and the largest gains in average overall household wealth. Rates of home ownership (a key marker of asset wealth) increased most rapidly for Latina clients as well, growing from 11 percent before training to 32 percent after participation.

Nationally, women own 28 percent of non-farm U.S. firms. Only 14 percent of these firms employ workers, and almost 80 percent had receipts totaling less than $50,000 in 2002. While those dollar figures are small, Wisconsin's 104,200 women-owned small businesses generated a substantial $17.6 billion in revenue in 2002, the latest year available. A 2004 study showed that Wisconsin is a good place for African American women entrepreneurs. Wisconsin ranked among the top states in survival and employment of businesses owned by African American women. Female business owners in Wisconsin receive support from the Wisconsin Women's Business Initiative Corporation.

Some skepticism about microenterprise as a route to wealth may still be warranted, given that many Women’s Initiative clients created their ventures in fields with traditionally low profits, such as child care, housekeeping, and food service. The fact remains that female-dominated professions like child care and housekeeping tend to be less lucrative than, say, defense contracting, or financial trading. Following Women’s Initiative training, nearly 17 percent of clients still lacked health insurance, though that share is fairly low for a recently-low-income group.

While microenterprise efforts might not lead women to head firms in traditionally male-dominated, highest-net-worth arenas, low-income women can make impressive leaps in assets in the risky small business ownership environment.

Milwaukee gains and Wisconsin slows

I've only lived in the city of Milwaukee for six years. But ever since I landed here, the city has bled jobs. In fact, Milwaukee lost over 11,000 jobs since my first day of graduate school at UWM in 2001. Maybe this is why I've been particularly struck with recent employment data which shows the creation of 2,191 net new jobs in the city since July of last year (see table below).

What's more, Milwaukee is outperforming the rest of the region and rest of the state in employment gains. In a previous post I detailed this historical trend which now continues in July and even shows signs of strengthening. Indeed, the city now posts a half-percentage point advantage over the statewide employment growth rate, .9% for Milwaukee versus .4% for Wisconsin.

One reason for Milwaukee's "outperformance" is Wisconsin's underperformance. Some places in Wisconsin just aren't adding jobs like they used to. The city of Madison, surprisingly, is one of those places. In fact, while Milwaukee was the state's top net gainer of jobs, the city of Madison was the state's top loser. You don't have to look too far back in the data to find a time when just the opposite was true.

What follows is a rank of Wisconsin municipalities with a population larger then 25,000.

Change in Employment, July 2006 - July 2007

Milwaukee City	2,191
Kenosha City	442
Waukesha City	330
Appleton City	320
West Allis City	270
La Crosse City	255
Wauwatosa City	206
New Berlin City	187
Eau Claire City	172
Brookfield City	171
Greenfield City	169
Oak Creek City	164
Menomonee Falls Village	161
Franklin City	157
West Bend City	136
Manitowoc City	101
Green Bay City	70
Racine City	62
Superior City	30
Fond Du Lac City	-7
Wausau City	-41
Sun Prairie City	-53
Neenah City	-71
Stevens Point City	-76
Sheboygan City	-94
Oshkosh City	-111
Beloit City	-243
Janesville City	-489
Madison City	-493

Are there policy implications to Milwaukee's resurgence?

Sammis White of UW-Milwaukee's Workforce Development Center may have summed it up best in an article in today's Milwaukee Journal-Sentinel:

"You're seeing greater job growth here than elsewhere." Too often, White said, the Milwaukee area's contribution to the state's economy is overlooked.

Maybe a new recognition of Milwaukee's economic might will cause the rest of Wisconsin to see our city and region as an increasingly important weapon to use in our state's battle to gain traction in a new global economy. Arguably, this could change the nature of Milwaukee's relationship with the state - less "aid," more investment.

Wisconsin's new boomtown?

After years of employment losses, the city of Milwaukee is growing again. Milwaukee added 2,039 net new jobs in the last 12 months and 4,057 jobs since May 2005. While Milwaukee still has plenty of ground to make up, the city now shows signs of headed in the right direction in terms of employment gains.


In fact, for the most recent month of available data, Milwaukee's employment base expanded at a 0.83% growth rate (May 2006 to May 2007). During the same period, Wisconsin employment grew 0.81% and the M7 region grew at a pace of 0.72%. In other words, employment gains in Milwaukee are now out-pacing both the region and the state.

The following two charts show how Milwaukee has been gaining ground on the region and the state in employment growth. The first chart displays the percentage difference between the employment growth rates in Milwaukee and the state. In other words, if the chart shows a negative (red bar), then the city grew at a slower pace than the state. If the chart show a positive percentage figure (black bar) then the city grew a a faster clip than the state. With this understanding, the chart shows a recovery trend in city of Milwaukee employment growth as it relates to the state. The turnaround began somewhere around 2004 and has continued to this day where the city is now growing faster than the state.

The same trend can also be noted when comparing the city's growth rate to that of its 7-county southeastern Wisconsin region. In this case the trend is even more noticeable with Milwaukee job growth out-growing the region from 2005-2006 and 2006-2007, 0.04% and 0.11% respectively.

So much for Milwaukee being an employment drag on the rest of the region and the state. Then again, out-growing a slow-growth state and a slow-growth region is not much to brag about.

Big in Japan

According to a recent The Wall Street Journal (WSJ) article, there are 92 skyscrapers under construction in Tokyo, Japan. Even at this pace of construction, it is reported that the supply of office space in Tokyo will not keep up with demand due to years of robust expansion in Japan's service sector.

With Milwaukee's downtown office vacancy rate hovering around a dismal 15%, it might be time to look to Japan for a quick lesson in downtown development.

The catalyst in Tokyo's office building boom, according to the WSJ article, is Japan's shift from a manufacturing economy to a high-end service economy built on marketing and finance jobs.

Milwaukee is going through a similar economic restructuring. But a recent report by The Brookings Institution highlights Milwaukee's inability to adequately replace lost manufacturing jobs with high-value service sector jobs. In other words, don't get caught up in the hype that blames Milwaukee's economic woes on manufacturing job losses. Instead, blame our economic malaise on the region's sluggish employment growth in its service economy (see below chart by Brookings).

The story is simple: Everyone is losing manufacturing jobs (yes, even China). Some regions are transitioning. Some are not.

Sure, we could subsidize developers in hopes of spurring new downtown construction. But, if the Tokyo boom teaches us anything, finding ways to bolster a high-end services economy may be a more efficient strategy in building a postcard-worthy skyline for Milwaukee's downtown.