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Economic Opportunity in a Volatile Economy
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Major Findings
Role of intermediaries is widespread in both regions: More than a quarter
of all workers in each region had held a job in the last three years that
they got directly through an intermediary. LMI users are not just the unemployed: A greater portion of LMI users
were already employed and used an LMI in the hopes of getting a better
job or career. LMI use is not limited to disadvantaged workers: Workers at all income
levels and from a variety of ethnic groups use intermediaries. While overall intermediary incidence looks quite similar in Milwaukee
and the Silicon Valley, the intermediaries in the two regions appear to
function in very different ways. Milwaukee has slightly higher use of intermediaries: To the extent that
one believes LMIs to be a product of the "new economy," it may
surprise some that the use of intermediaries was slightly higher in Milwaukee
than in Silicon Valley (29.8 percent vs. 26.3 percent of workers had held
a job in the last three years that they got through an intermediary). Intermediaries in Milwaukee are much more focused on disadvantaged workers.
In Silicon Valley, intermediaries are more consistently pervasive across
labor market groups. Milwaukee's slightly higher overall LMI use was driven
by substantially higher LMI use among Milwaukee's disadvantaged workers
(whether "disadvantaged" is defined by income, education, or
race). Clearly in Milwaukee, LMIs and especially temporary help agencies
had found a niche in working with disadvantaged workers. Fewer relatively
advantaged workers in Milwaukee used LMIs. In Silicon Valley, LMI use
was more broadly and consistently spread across the population. There are related differences in industry and occupational characteristics
of intermediary users: Given that Milwaukee's intermediaries are more
focused on disadvantaged workers, it is not surprising that the occupations
appear substantially different in the two regions. In Silicon Valley,
LMI use was significantly higher among Professional/Specialty Occupations
(12.9 percent vs. 3.7 percent) and Technicians and Related Occupations
(6.7 percent vs. 2.7 percent). In Milwaukee, LMI use was significantly
higher among Machine Operators, Assemblers, and Inspectors (15.6 percent
vs. 2.8 percent) and those in Transportation and Material Moving Occupations
(17.5 percent vs. 7.8 percent). Differences exist among specific intermediaries and groups of workers:
Temporary agencies in each region seem to have significantly different
constituencies. In Silicon Valley, temporary agencies are surprisingly
missing from the Hispanic population - only 5.7 percent of Hispanics had
held a job in the last three years that they got through a temporary agency,
compared to 15.6 percent of whites and 19.9 percent of Asians (the black
population is very small in Silicon Valley). In Milwaukee, in contrast,
temporary agencies are connecting strongly to the black population: 31
percent of blacks held a job in the last three years that they got through
a temporary agency, compared to 11 percent of whites. Temporary agencies are the most widespread intermediary: In both Silicon
Valley and Milwaukee, temp agencies accounted for about half of all intermediary
use. Temporary agencies provide the least services: The service mix offered
by temporary agencies appears relatively weak. For instance, more than
60 percent of non-profit agency or other LMI users reported receiving
assistance in job-hunting skills, compared to approximately 30 percent
of temporary agency users. At an aggregate level, intermediaries seem to have slight impact on wages;
temporary agencies, however, appear to affect access to health insurance:
Even after controlling for workers' characteristics, those who use temporary
agencies are much less likely to find jobs that provide health insurance. Strong social networks lead to less LMI use: Using a measure of "social
connectedness," we found that those who are more socially connected
are less likely to use LMIs than those who are less socially connected,
and more likely to use friends to find jobs. Social network also lead to use of better LMIs: Of those people who do
use LMIs, those with strong social connections are more likely to use
"better" LMIs - unions, professional associations, and community
colleges - than temp agencies. Social networks are less effective in low-income areas: Within low- income
areas, social networks may be strong, but they appear to be limited in
their ability to lead to better employment outcomes. The most promising intermediary efforts involved community colleges linked
with networks of intermediaries, or membership-based associations: Unions
and networks that include community colleges provided the most promising
models of intermediary activity. Specific characteristics include:
Improved career outcomes are most likely in cases where LMIs can affect
the demand side of the labor market by bringing both incentives and pressures
to bear on employers: In a few cases, intermediaries we studied had the
ability to change the quality of available jobs, by working closely with
both workers and employers around training and productivity. Clearly this
can have a significant impact in improving outcomes for both workers and
employers, but intermediaries that try to have a positive impact on job
quality are facing an enormous challenge. |