Staircases or Treadmills?: Labor Market Intermediaries and Economic Opportunity in a Changing Economy

Chapter One

Chapter One Mobility and Economic Opportunity: The Role of Intermediaries Many Americans work in low-wage jobs at some point in their lives. For many of them, low-paid work is only a temporary situation and they are able to move over time to higher-paid positions with better career opportunities. A substantial number of people, however, remain in low-paid jobs for long periods of time. Indeed, some seem to be caught in an endless cycle of moving from one low-paid job to another, all with poor working conditions, few benefits, and limited opportunities for advancement. Why do some people seem to be stuck in low-wage work while others eventually are able to take advantage of better economic opportunities? In trying to answer this question, most researchers focus on two things: who you are and where you work. An individual’s educational and personal background, skills and work experience, motivation and personality, race, gender, and age, all clearly shape the kinds of work that person can do, his or her value to employers, ties to certain kinds of work opportunities, and opportunities for advancement. Similarly, characteristics of where individuals work—the size, competitiveness, organizational structure, and human resource practices of their employer, the industry they are in, their location— clearly shape wage levels, career advancement opportunities, and vulnerability to layoffs. Together, people’s personal characteristics and the nature of their workplaces go a long way toward explaining their economic success or failure in the labor market. In recent years, however, many researchers and policymakers concerned with career advancement have been paying increasing attention not just to the characteristics of workers and employers but also to the third-party organizations that help match people looking for work with employers looking for employees. The impact of some of these third-party organizations on advancement opportunities may be increased by the additional assistance they provide, including training, management assistance, technical support, and career services. Such organizations are not a new phenomenon: public-sector employment services for unemployed workers, union hiring halls in the building trades, and for-profit temporary placement agencies have existed for a long time. The number and variety of organizations involved in job-matching activities, however, seem to have increased significantly since the 1980s. Moreover, at least some of these organizations seem to be playing more important roles in shaping labor flows and even in restructuring the quality and quantity of jobs in U.S. labor markets. Researchers have responded by trying to understand what makes these job-matching services effective or not, while more and more policymakers have been promoting better “workforce intermediaries” as a strategy for improving job advancement opportunities for disadvantaged workers. How do these third-party labor market intermediaries (LMIs) affect labor market outcomes? In particular, to what extent do LMIs affect opportunities for disadvantaged workers, and to what extent can a focus on improving LMIs themselves help disadvantaged workers find better jobs and build better careers? These are the questions that motivated this study. In this book, we address these questions by combining qualitative and quantitative research to study the overall impact of a comprehensive set of intermediaries in two regional labor markets: Milwaukee, Wisconsin, and California’s Silicon Valley. These regions were selected initially because we suspected that they would provide a significant opportunity to contrast the organization of work and labor markets in the so-called old and new economies. Yet, as we will see, there were as many commonalities as differences between the two regions. Furthermore, our research period, ranging from the mid-1990s to 2002, spanned both a period of very tight labor markets and the first year of an economic downturn, allowing us to investigate some aspects of the effects of absolute unemployment levels on LMI activities . Because of these cross-regional and temporal elements, we thus believe 2 STAIRCASES OR TREADMILLS? that our findings may be applicable in many different regional labor markets and conditions. Our research found that LMIs are widespread in these two regional labor markets: more than one-quarter of all workers in both regions have held a job in the previous three years that they got through an LMI. Furthermore, while unemployed and disadvantaged workers are somewhat more likely to use intermediaries , we found evidence of intermediary use across the labor market, and among both the unemployed and employed. We found little evidence, however , that most of...