Expanding Opportunity for Low-Wage Workers through Systems Alignment

Low wage workers are core to the U.S. economy and often serve in vital front-line occupations related to childcare, food service, retail, personal services, transportation, and agriculture. Women and people of color, especially Black and Hispanic residents, comprise a large portion of the low-wage workforce and often face numerous barriers that hinder their ability to move up to better jobs. Low-wage work does not typically provide the financial stability many people ultimately seek from employment, nor does it enable career pathways that lead to greater economic mobility in most instances.

In a recently released report, my co-authors and I examine what we know about how the fields of economic development and workforce development have affected outcomes for low-wage workers. The full research report and shorter summary brief were published in May 2024 by WorkRise, which is a research-to-action network on jobs, workers, and mobility hosted by the Urban Institute. Our research was informed by practical insights gained through convenings of more than 20 economic development and workforce development professionals from nine communities across the U.S during the second half of 2023. The practitioner convenings were a part of the Advancing Worker Equity (AWE) initiative facilitated by New Growth Innovation Network (NGIN)—a knowledge hub for inclusive growth strategies. Analysts from the Federal Reserve Bank of Atlanta presented findings from the Worker Voices Project during the AWE convenings that also shaped our research and understanding of the issues.

Despite having some overlapping and complementary goals, economic development and workforce development tend to operate in their respective silos. This functional disconnect makes both fields less effective than they might otherwise be especially for improving outcomes among low-wage workers. The WorkRise report reviews the literature and examines: (1) traditional levers, which broadly reflect the status quo of the two fields, and show mixed results for effectiveness with only a minimal focus on equity; and (2) innovations or newer approaches that, while more likely to explicitly emphasize equity, have a more limited evidence base about their effectiveness in expanding economic opportunity for historically marginalized groups.

Traditional levers. These are widely used and standard practice, despite mixed research evidence about their effectiveness. Some of the traditional policy tools have been structured in ways that exacerbate inequities. Teasing out program and policy effects from contextual factors, and understanding who benefits, is difficult. Efforts to better incorporate equity into traditional programs are relatively new and, to date, there is limited evidence as to their effectiveness in that regard. The traditional levers we examined in the report include:

• State and local business incentives
• Federal place-based programs
• Small business development and entrepreneurship supports

Innovations. These initiatives reflect a combination of both older and more novel approaches that aim to integrate economic and workforce development activities and calibrate them to local conditions. Equity concerns tend to feature explicitly in the theories of change underpinning these efforts. Still, there is limited research available about the impacts of such efforts on people and places. The innovations we examined in the report include:

• Good jobs, worker voice, and community benefits
• Apprenticeship, mentorship, and small business support models
• Decoupling workforce innovations from employers
• Sectoral strategies

In the report, we make recommendations about how to better align and integrate economic and workforce development systems in ways that improve outcomes for low-wage workers in terms of enhanced access, opportunity, inclusion, and mobility. The themes underlying our recommendations are as follows:

• Implementation and policy/program diffusion – Understanding how the particularities of place affect program success, with special attention to the role of local economic and workforce development ecosystems.
• Worker voice and empowerment – Engaging workers in program design and implementation can identify challenges and resources that can be targeted to create more equitable systems.
• Targeting support – Using ongoing program monitoring and tracking to ensure resources are targeted to workers and communities that need them and remaining nimble enough to course correct when needed.
• Identifying who benefits – Tracking whether existing residents or new workers are benefiting from policies and programs and building programs that ensure existing workers and communities are not excluded or harmed.
• Workforce and economic engagement – Cultivating closer ties between the economic development and workforce development fields to identify target areas for alignment.
• Career pathways – Looking beyond short-term entry-level job opportunities to identify longer-term career progression for low-wage workers that boosts their economic mobility.

Translating this research into practice to better align the fields of economic development and workforce development for the benefit of low-wage workers will require clarifying roles and building the scaffolding needed to promote collaborative local systems. It also means encouraging more communication and deeper ties between the two practices to identify opportunities and challenges. Promising examples of this sort of engagement and collaboration between the two ecosystems are emerging in communities and regions across the U.S. that will require connective organizational infrastructures and robust social capital to be sustained.