Andrew Sum Center for Labor Market Studies Northeastern University Boston, Massachusetts

1. An Assessment of Conditions in Massachusetts Labor Markets in Recent Years New Challenges Facing the State’s Workforce Development System Andrew Sum Center for Labor Market Studies Northeastern University Boston, Massachusetts June 2010

2. Rethinking Workforce Development’s Role in Massachusetts at the End of the Decade (2000 – 2010) • The original economic case for WIA at the end of the decade of the 1990s – a radically different labor market era • National labor markets were moving close to full employment; state was at full employment, no need for any job creation. The jobs are there • Congress eliminated the state alone summer jobs program for youth • No emphasis on work experience or tryout employment as a strategy to prepare youth or adults for jobs • Public service employment does not get a thought in the legislation • Unemployment spells in the U.S. were typically quite short in duration; no need for payments of stipends to allow individuals to participate in training or education programs; anyone can get a job • “Work first” was viewed as a desirable alternative strategy to training or education especially for low income adults and welfare recipients; work experience would boost future employability and wage

3. OJT was allowed as a training activity but not emphasized or heavily encouraged; worries over potential abuse by employers despite past evidence of strong effectiveness In today’s labor market environment and for more than half of the past decade, a much different reality prevailed, especially here in our state. • Nationally, jobs did not grow very much; Here in Massachusetts we never came close to recovering our peak 2001 I job level – we are still nearly 230,000 jobs behind through April of this year • Job gains and losses were not uniformly shared across gender, age, educational or occupational groups. Here in Massachusetts, men, the young (under 25), those without college degrees, and blue collar workers/clerical/administrative support have borne the brunt of job losses • Length of unemployment spells have increased to historical highs in both the U.S. and Massachusetts; long-term unemployment has increased massively in our state as well as permanent job losers; why we need to care about these new unemployment problems – they have been strong predictors of severe long-term earnings losses for dislocated workers

4. One of the WIA legislation’s missions of integrating training with adult basic education and other social service programs has met with very little success; performance measures for different programs discourage such integration and lead to mis-reporting of our actual inputs and outcomes Let’s review the key findings for our own state and that of other states in key economic and labor market areas and pose some potential new solutions for our labor market woes • Job losses in the recession; absence of any net job growth in our state over the decade • The deep slide in male employment in our state; absence of male job growth for two decades • The steep rise in both long-term and very long-term unemployment in our state and the nation during the Great Recession; a new priority group that should be tackled immediately • The deep deterioration in youth labor markets in the nation and state, especially among teens and young adults without bachelor degrees and men; U.S. Senate is behaving like Nero and fiddling with legislation • The substantial imbalances between the numbers of job seekers in our state and available job vacancies

5. Trends in Payroll Employment in Massachusetts, 4th Quarter 2007 to 1st Quarter 2010 Source: Massachusetts Executive Office of Labor and Workforce Development, Current Employment Statistics (CES-790), tabulations by authors.

6. Trends in Payroll Wage and Salary Employment in the State of Massachusetts and the Other Six Bottom Performing States, 2001 I to 2010 I (Seasonally Adjusted)

7. States with the Highest Percentage of Job GrowthBetween 1st Quarter 2001 and 1st Quarter 2010 (in %)

8. States with the Highest Percentage of Job Loss Between 1st Quarter 2001 and 1st Quarter 2010 (in %)

9. Trends in Total Resident Employment (16+) by Gender in Each New England State from 2007 Second Half to 2009 Second Half (in 1000s)

10. Six States Experiencing a Decrease in Male Employment Between 1988 – 2009

11. Five States with Negative Growth Rates of Male Employment from 1988 to 2009 (in %)

12. Fourteen States Generating a Male Employment Increase of 18% of More Between 1988 – 2009 (in Thousands)

13. The New Unemployed at the End of the Great Recession of 2009-2010 • The Great Recession’s toll on unemployment was far greater and more unprecedented in its characteristics than projected by any labor market analyst • A very substantial majority of unemployed adults, especially blue collar men and women, are permanently displaced (record high numbers of dislocated workers) in the nation and state) • The mean lengths of unemployment in the late winter and spring of 2010 have risen to 35, the highest ever in our history; previous high was 22 weeks in the recession of 1981-82 • We have record high numbers in the U.S. and our state who report being continuously jobless for 52 or more weeks; the OECD definition of long-term unemployment • Look at the trend in the number of long-term and very long-term unemployed in Massachusetts from 2000 when the state’s unemployment rate was 2.6% (all time low) through first 4 months of this year – u.rate averaging 9.4% (not seasonally adjusted) • Long-term unemployed up from 7,900 to nearly 156,000 (up 20*) • Very long-term unemployed up from 3,200 to nearly 104,000, up 32*

14. This group will face extremely difficult problems obtaining re-employment and matching their previous earnings. Past research in Connecticut and Pennsylvania has revealed the existence of very large long-term earnings losses (5-6 years after dislocation) – losses of 25-35% when the following traits hold true • Had 5 or more years of seniority before dislocation • Went on UI after dislocation • Spent at least 6 months being unemployed Worst off • Also had to change sectors of employment

15. Trends in Unemployment Rates in Massachusetts, Selected Years 1988-2010 (Annual Averages, Except 2010, in %)

16. Long-Term and Very Long-Term Unemployment Rates in Massachusetts, January – April 2010 Source: January – April 2010 CPS surveys, public use files, tabulations by authors.

17. Comparisons of the Number of Unemployed Persons in Massachusetts and Their Distribution by the Length of their Ongoing Unemployment Spells, 2000 and 2010 (January – April) Sources: Monthly CPS household surveys, 2000 and January – April 2010, public use files, tabulations by authors.

18. Comparisons of the Number of Unemployed Persons in Massachusetts and Their Distribution by the Length of their Ongoing Unemployment Spells, 2000 and 2010 (January – April)

19. National Wave II Interviews Reporting Various Mental or Physical Problems from Their Spell of Joblessness (Fall 2009, Rutgers University Study) (a) Check off the boxes that describe how you now feel Has your employment situation cause stress in your relationships with family or friends?

20. Forms of stress experienced (if yes to question on previous page) Rating of health as only fair or poor

21. Changes in Employment Rates of Teens (16-19) in Massachusetts, the U.S., and Other States, 1999 to 2010 (in %) Sources: (i) U.S. Bureau of Labor Statistics, Geographic Profiles of Employment and Unemployment, 1999 and 2007; (ii) Monthly CPS surveys, public use files, 1999, 2000, 2009, 2010.

22. Trends in the E/P Ratios of Massachusetts Teens (16-19 Year Olds), Selected Years, 1999 to 2010 (in %)

23. E/P Ratios of Massachusetts Teens During the September 2009 to April 2010 Period By Gender and Selected Household Income Group (in %, Not Seasonally Adjusted)

24. Estimating the Additional Number of Employed Teens in Massachusetts in the January-April Period of 2010, Under Two Alternative Scenarios

25. Trends in Job Vacancies in the U.S. Selected Time Periods fromDecember 2000 – January 2001 to October – December 2009(in 1000s, Seasonally Adjusted)

26. Time Trends in the Annual Average Number of Job Vacancies in Massachusetts, 2006 – 2009 (in 1000s)

27. Percent Share of All Job Vacancies in Massachusetts that Were Part-Time From 2005-2009

28. Estimated Number of Full-Time and Part-Time Job Vacancies in Massachusetts, 2007 II to 2009 IV

29. Part-Time Vacancies as Percent of All Job Vacancies in Major Occupations with the Highest Ratios of Part-Time Vacancies, 2009 IV

30. Trends in the Annual Average Number of Unemployed Persons (16+) and the Unemployment Rate in Massachusetts, 2007-2009

31. Trends in the Ratios of Unemployed Persons Per Job Vacancy in Massachusetts, 2007-2009

32. Trends in the Ratio of the Number of Unemployed Persons (16+) in the United States Per 100 Job Vacancies, Selected Time Periods, November – December 2007 to December 2009 (Not Seasonally Adjusted)

33. Trends in the Ratios of Full-Time Unemployed to Full-Time Job Vacancies in Massachusetts, 2007-2009

34. Trends in the Number of Underutilized Workers (16+) in Massachusetts, 2007 to 2009 (Annual Averages)

35. Average Number of Job Vacancies in Massachusetts in 2009 Versus Unemployed, Underemployed, and Hidden Unemployed Persons in the State in 2007, 2008, and 2009

36. The Ratio of the Number of Underutilized Workers in Massachusetts to the Total Number of Job Vacancies, 2007 to 2009

37. Industrial Sectors in Massachusetts With the Lowest and Highest Ratios of Unemployed and Underemployed Persons Per Job Opening in 2009 (Annual Averages)

38. Occupational Groups in Massachusetts With the Lowest and Highest Ratios of Unemployed and Underemployed Persons Per Job Opening in 2009 (Annual Averages)

39. Percent Distribution of Job Vacancies in Massachusetts by Their Educational Requirements From 2007 IV to 2009 IV

40. Occupations With Job Vacancy Rates Above 3.0% During the 4th Quarter of 2009 in Massachusetts

41. There are a variety of integrated economic development and workforce development strategies, including job creation, wage subsidies, training and retraining programs that can be pursued to help close the large gap between job availability and the underutilized labor force in our state. • First, remaining ARRA monies available in the state and other economic development/green technology investment monies from federal and state government, and private utilities, should be redirected at projects that would boost employment both directly and indirectly through the multiplier effect, especially in the state’s construction and manufacturing industries which are still characterized by huge labor surpluses. The state needs to undertake steps to enforce compliance with the Governor’s administrative rules on listing jobs. The information base should track the industries and occupations of all jobs created and the characteristics of the individuals receiving them.

42. Second, available federal monies for subsidized job creation should be more aggressively pursued and Congressional support for youth jobs programs should be sought. The state should seek funding for job creation activities under the TANF Emergency Grants provided to states by the U.S. Congress. States were allowed to use part of these monies for job creation for adults and youth who could meet specific income guidelines established by the state. Massachusetts did not apply for these monies last year, choosing other uses of the funds. The state should apply for such monies with available grants and possible forthcoming additions to the fund by the U.S. Congress. The state’s Congressional representatives, including Senator Brown, should provide active support for the funding of summer and year-round job creation programs for teens and young adults (20-24) under the Workforce Investment Act. In both our state and the nation, teen employment rates this year (2010) are at post World War II lows, and low income youth (family income under $20,000) in our state are characterized by the lowest employment rates.

43. Third, the state legislature should enact the proposed Youth Workforce Solutions Act that would expand funding to support youth jobs through such programs as Connecting Activities and Youth Works, especially year-round efforts, and educational services for out-of-school youth and high school students at-risk of dropping out. • Fourth, additional monies should be made available by the federal government to state and local WIA service delivery agencies to recruit and retrain displaced workers, especially blue collar workers, including on-the-job training subsidies to encourage firms to hire and train such displaced workers. We need to have our Congressional delegation support proposed legislation that would expand UI claimants and exhaustee eligibility for education and training currently provided under the Trade Adjustment Act. Massachusetts also should enact legislation similar to the Maine Competitive Skills Scholarship program that would help dislocated workers to become eligible for tuition, fees, and stipends to support their education and training for high growth occupations.

44. Fifth, the Workforce Training Fund (WTF) and the Workforce Competitiveness Training Programs should be more heavily targeted on both existing employed blue collar workers and on encouraging firms to hire additional workers (backfill slots) in response to the training monies they receive from the state. Training programs need to be redesigned to support employment expansion efforts. There is a clear, immediate need to improve the existing WTF database on who gets trained, including their demographic and occupational backgrounds, what services they receive, and what promotions/wage increases workers obtain after completing such training. Similar remarks apply to the Workforce Competitive Training programs.

45. Finally, the operations of the state’s job bank systems operated by (Job Quest) and the WIA One-Stop Career Centers need to be more carefully evaluated to improve their performance in capturing job vacancies for use in referring the unemployed. How successful is the job bank system in capturing available job vacancies around the state and local WIB areas? How can the staff of the One-Stop Centers, especially the Business Service Representatives, be used to improve the penetration rate of job bank orders? Which specific services provided by one-stop center (workshops, self-guided job search, job development, job referrals, marketing of new hire tax credits) are the most effective in improving re-employment rates and the earnings of jobseekers? There is a clear need for more careful experimentation in this area to test the effectiveness of alternative service strategies.