Building an Economy that Works for All

Highlights from the “Building an Economy that Works for All” Forum
Poverty Reduction as a Workforce Development Strategy
October 26, 2004 – Sawmill Inn, Grand Rapids, MN
10:00 a.m. – 1:00 p.m.

Keynote Speaker:  Todd Perkins, owner of Pier Pleasure, a regional boating equipment company based in Mankato, Minnesota. 

Panelists: Jim Woehrle, Associate Director of KOOTASCA Community Action; Marian Barcus, Family Services Division Manager for Itasca County Health and Human Services; and Kristine Jacobs, Executive Director of JOBS NOW Coalition.

The fifteenth in a series of Itasca Development Corporation/Jobs 2020 forums was held Tuesday, October 26, 2004 at the Sawmill Inn.  The forum addressed poverty reduction as a workforce development strategy and was titled “Building an Economy that Works for All”. 

Jim Woehrle,  KOOTASCA Community Action

Jim’s primary responsibility is to engage the community in strategies to end poverty in Itasca County by 2024.  KOOTASCA was established in 1964 along with 1000 other community action agencies across the nation as part of President Lyndon Johnson’s War on Poverty.  KOOTASCA operates the Head Start Program, Energy Assistance, Housing Rehabilitation and Weatherization programs and other family stabilization programs like Circles of Support, Crisis Nursery and Transitional Housing.

KOOTASCA staff developed their definition of what it means to be out of poverty:  To be out of poverty means that people have enough money to meet their basic needs.  The poverty formula used by the federal government has not been revamped since the 1960’s and does not allow for costs such as housing to rise faster than food or allow for added costs like child care and transportation.  A figure much closer to what is needed to support a family is 185% of the federal poverty threshold.  The local Food Shelf and Free and Reduced School Lunch Programs base eligibility at 185% of the federal poverty figure. 

• Census 2000 shows 23% of the population under age 65 in Itasca County has an income below 185% of poverty.  That is 10,021 people.
• Itasca County has 4,075 children that live in families below 185% of poverty.  This is 39% of all the children under age 18.
• 2,623 children in Itasca County receive free and reduced lunch in our schools.
• Food shelf use in Itasca County has risen by 39% between 2000 and 2003. (19,000 people)
• 8th graders qualifying for free and reduced lunches taking the Basic Skills Tests consistently show much lower passing test scores that students from higher income families.  A quote from District 318 Superintendent Lloyd Styrwoll:  “The single most consistent factor affecting students’ performance is poverty.”
• Findings from the Grand Rapids Chamber of Commerce Job Skills Survey 2004 show that more than 70% of survey respondents said they have moderate or extreme difficulty finding well prepared candidates for entry-level employment positions.  This is the likely result of the low achieving students.
• Over 33% of the households in Itasca County pay more than 1/3 of their income for rent.  (State and federal guidelines say that paying over 1/3 of income for rent is considered unaffordable)
• The rental vacancy rate in the Grand Rapids prime market area is 1%. (A healthy rental vacancy rate is 5%)
  • This forces workers to move further away from their jobs
  • Increases transportation costs
  • Increases time needed to get to work
  • Limits ability of children to participate in after school activities

Jim told the audience that reducing, and ultimately ending, poverty is economic development.  IDC/Jobs 2020’s mission of helping create quality jobs is a mission that low-income people say is the most important thing they need – a job that will support their family.

With shrinking program funding at all levels, KOOTASCA Community Action staff understands the need to engage the community in order to end poverty.  Four community engagement strategies adopted by KOOTASCA Community Action are:

1. Build community to ensure all low income children receive a high quality education, including early childhood programming, to meet their future needs.
2. Build community and agency capacity to ensure all low income people have safe, decent, affordable housing.
3. Build relationships across class and race lines.
4. Develop a skilled, committed group of community leaders to end poverty. 

KOOTASCA is developing activities to work on these strategies and invites community involvement.  In order to be successful, it must be a community wide vision and meet the goal stated in the vision for a healthy community adopted by IDC/Jobs 2020 stating “All people have access to quality employment and no one lives in poverty.”

Marian Barcus, Itasca County Health and Human Services

Marian talked about the limits of the safety net programs available through Itasca County Health and Human Services and the gray zones in those programs.  Gray zones are where people make too much money for county assistance but not enough to meet their basic needs.  She outlined the “safety net” programs available and the limits of those programs.

• Minnesota Family Investment Program (MFIP):  Provides cash grant, including food portion, to families with children or to individual children
• From 2000-2004, MFIP emergency cash assistance increased by 14%
• Minnesota expenditures for MFIP decreased while Itasca County expenditures for MFIP increased 12%
• Diversionary Work Program (DWP) is an intensive job finding program required pre-MFIP for many applicants
• Child Care Program: Provides funding to assist working parents and student parents with child care costs
• General Assistance: Provides cash grant to individuals/couples without children and exempt from work, e.g., disabled, caregiver of disabled, or attending school.
• Food Support: Food purchase benefit
• Retired, Survivors, Disabled Insurance (RSDI): Cash benefit based on prior earnings record or on parent or spouse earnings record
• Supplemental Security Income (SSI):  Cash grant to adults and children with permanent disabilities, blindness or age 65+
• Medical Assistance: Non-cash health care coverage for adult individuals
• Minnesota Care: Premium-based health care coverage for adults and children meeting the criteria for eligibility
• Medical Assistance – Employed Persons with Disabilities: Non-cash health care coverage for persons certified as disabled by the Social Security Administration or State Medical Review Team

Not including Medicare, approximately ¼ of Itasca County’s population is on subsidized health care programs.

While these safety nets make life a little easier for eligible parties, there are many holes (or gray zones) in the safety nets.  The gray zones include categories of individuals who have no eligibility for health care or assistance.  They have marginal employment or are in poor health. 

Marian stated that business can help win the war against poverty.  Marian challenged the audience with the following questions to help decrease the need for the safety nets:

• Can your business increase its pay to meet or exceed that required for self support?
• Could we create an economic region in which health care is universal and affordable to business, government and individuals?
• Can you become an ally for Circles of Support?
• Can you teach a classroom of high school students to have the right attitude and aptitude for work?
• Can you advise welfare-to-work programs about the best way to train successful employees?
• Can you mentor an MFIP parent at work?
• Can we support each other in business reforms that allow increased wages and can we support each other in meeting needs of the disabled?
• The public sector and the private sector should work together to help eliminate poverty.

Kristine Jacobs, JOBS NOW Coalition

JOBS NOW was founded in 1982 and advances economic opportunity through research, education and advocacy.  JOBS NOW is the oldest and largest employment policy coalition in the country.  The Coalition consists of more than 100 organizational members who believe all workers should have the opportunity to attain a decent standard of living. 

JOBS NOW found glaring inconsistencies in the traditional economic indicators such as the unemployment rate.  The unemployment rate was improving in the 1990s, yet more and more people needed help with basic necessities like food, housing and healthcare.  Many of these people worked full-time but still couldn’t make ends meet for their families.

To answer the question:  Does Minnesota’s economy create enough jobs that pay a family-supporting wage?, JOBS NOW members developed an alternative to the unemployment rate as an economic indicator.  They conducted a study that compared the total number of job seekers in the state with the total number of job openings that paid family-supporting wages.   The JOBS NOW Coalition publishes “The Cost of Living in Minnesota”  which includes a series of reports on the cost of basic needs for Minnesota families. (Information can also be accessed on the web at www.jobsnowcoalition.org/costofliving ).

Family budgets were constructed that measured the cost of meeting the basic needs of food, housing, health, childcare, clothing and transportation.  The cost of basic needs is refigured for different types of families and for every county in Minnesota.

The findings for Itasca County:

• Each worker in a family of four with both parents working would have to earn at least $10.63 per hour ($21.26 combined) to meet basic needs  (This is a “no frills” budget and falls short of what is usually called a middle-class standard of living.)
• 42% of all workers in Itasca County make less than $10 per hour
• Itasca County’s 25th percentile wage is the third lowest of any county in Minnesota
• One in every four workers in Itasca County earns no more than $7.43 per hour
• Living costs are 13% lower than in the Metro region
• Median wages are 44% lower than in the Metro region

The shortage of jobs that pay family-supporting wages is often attributed to a “skills-deficit” theory, which says that workers must become better skilled before wages can rise and that most new jobs will require advanced technological skills.

To test this theory, JOBS NOW looked at job growth projections from the U.S. Bureau of Labor Statistics.

• Of the nation’s 20 fastest growing occupations for this decade, only two will require a bachelor’s degree, and only three will require any education beyond high school
• According to the Economic Policy Institute, there will be virtually no change over the next decade in the percentage of jobs that require a four-year college degree; nor will there be a change in the percentage of jobs that require any education beyond high school.
• Job growth rates are often confused with the actual numbers of jobs being created. (To say that computer science is a field with a very high growth rate is not the same thing as saying it is the field where the largest number of jobs are created.)
  • Example:  We’ll need 60% more computer analysts by 2009 and only 14% more workers in food service.  However, the increases equate to about 250,000 new jobs for computer analysts and about 670,000 new jobs in food service.
• Another study from the Economic Policy Institute shows that long term unemployment among college educated workers increased by 300% between 2000 and 2003 – almost twice the rate of increase for workers with a high school degree or less.
• Minnesota’s Job Vacancy Survey provides no evidence of a shift to high skill operations.  Jobs with high skill requirements pay far more than jobs without them, but there is a shortage of jobs that demand those skills.  As long as this shortage persists, raising skills will do little to raise wages.

• JOBS NOW suggests the following solutions to improve workers’ living standards:
  • Instead of asking people to work harder or upgrade their skill levels, find ways to improve pay for the jobs people already have
  • We need to focus not on just the number of jobs created, but on the quality of those jobs
  • Focus on a vision that centers on the idea of an economy that works for all – the market can be shaped for the good of all communities

Conferences on jobs or economic development usually center on one question: What can be done to ensure that our region becomes a better place for business to do business?  The discussion should shift to a different question: What can we do to ensure that Itasca County becomes a better place to work?

Keynote speaker:  Todd Perkins, owner of Pier Pleasure in Mankato

The title of Todd’s presentation was “How improving my worker’s living standards benefited my business”.  Todd described some of the adjustments he made to his manufacturing and retail business which enabled him to absorb higher payroll costs.

Todd attended a JOBS NOW conference in 1999 which caused him to re-evaluate his ideas about the wages he paid his employees and determine if those wages were family-supporting wages.  Before the conference he felt he was paying a competitive wage dictated by what similar companies in the Mankato area were paying similar employees.   Understanding that any company’s goal should be to keep the people you have invested in, he decided to identify the job gap as identified by JOBS NOW and find a way to pay employees a better wage.  He looked at ways to boost morale as well as pay.   Todd met with employees and told them he was increasing wages and offering a percentage bonus or incentive plan.  Results in the five years since the changes were made include a 50% error reduction, higher productivity and improved work response.  Employees have been more willing to “raise the bar” by making changes and improvements. Employee turnover has significantly decreased, liability insurance costs have dropped and customer satisfaction is up. 

Todd told the audience that “any good company is made up of excellent people ….employees who are paid well and treated fairly will give their best to a company and ultimately save the company money.”  Todd said he “took a leap of faith” and the company has prospered.