Last week we blogged about the Fed’s series, Investing In America’s Workforce. The issue of income inequality has reached a point where something has to be done. The Federal Reserve has said if something isn’t done it will eventually hurt the overall economy. Each of the 12 regions has focused on this issue, particularly about workforce investment, as it pertains to each of their locations and needs. Some of them provide really good information such as the Boston and Kansas City regions that offer perspectives from the employer, employee, or both regarding the issue. All, if not some of the regions continue to speak out about workforce needs because it is a critical time. The Richmond Fed, for example, has an upcoming event, Renewing The Promise of the Middle Class, in May.
This week on the blog, we’re going to look at this issue from the employers who have made that investment but also address why some employers may not be able to do it and what needs to happen.
Before we learn about the employer’s viewpoint, it’s important to establish a quality job that demonstrates what it means to invest in the workforce. The Fed calls that quality job a good job and the Boston Fed does an excellent job of defining it. A policy analyst from the Boston Fed says their research about good jobs shows wage levels of an organization and the benefit structure that is available. A good job also includes the environment of the workplace. That includes scheduling which is something that affects a lot of low-wage workers so they know when they will work, or so they will have it ahead of time to make plans for financial and family needs. Other items that can also be included are safe working conditions, no discrimination, and the ability to have a voice about issues affecting them and the workplace. The analyst does say a good job can be different for different people but he focuses on the basics most people would say make a good job.
The Boston Fed policy analyst says he’s looked at research and it validates employers who invest in those types of good jobs receive a return on it, too, which is what we at CALMC have always said, everybody wins when there is a strong partnership between employers and employees. The policy analyst explains a little more how employers actually gain by investing in good jobs. Employers who provide better wages and benefits and create a great work environment will have increased sales and productivity plus lower turnover which only result in higher profits.
The Kansas City Fed highlighted two companies that actually did invest in those good jobs. One company said they first look at the character of a potential new hire before determining if they have the skills for the job. They are more concerned about a person being a good fit for their workplace and prefer to train people for the job instead of trying to find someone that already has the necessary skills. The company provides good wages, benefits, and profit sharing that has provided more than $30,000 annually for each individual hourly employee. They also provide educational assistance and assistance with financial planning because they understand the financial concerns employees can have both in the present and future. It’s important, the company rep said, people look at creating good jobs as an investment and not a cost. It’s a basic philosophy that people need to have and they have found it works!
The other company was very similar to the first company in regards to wages and benefit structure. This company makes use of apprenticeship programs and provides regular meetings for employees on the company’s financial status. The president of the company said teams are empowered to make daily decisions and he advocates it does take some patience because developing teams is not something that can be done in the short-term but over time there are substantial payoffs. He also says if an employer is interested in starting a worker voice or employee engagement environment it’s best to begin with an “open book” approach. It helps employees understand the business of the organization. They learn about profit, sales and quality as well as receiving the organization’s financial information. The president agreed with the person from the other company and said it is a process that works and his company is doing quite well from it.
Many of the employers we, too, have worked with also see positive success when they invest in their employees. There can be a wide range of differences that can determine that success and it depends on the existing relationship and the environment both inside and outside the workplace. Some have a first of just developing regular communication while others are ready to problem solve on issues impacting the organization. It’s important not to distinguish what may appear to be small success versus large success stories. Sometimes those that appear to be small, such as learning to communicate with each other, can be big wins for an organization. It can help lead to working together on problems and that verifies the statement from the president in the Kansas City example when he said it’s not an overnight process. It does take time and it has to be continuous. It’s not a fad, it’s not a stop and start process.
We’ve blogged before about diesel repair shop on the south side of Columbus. This is a non-union facility who had so many workplace accidents it was about to put them out of business. The owner had tried just about everything when we started with him to develop a safety committee. He decided it was time to make an investment like the examples from the Kansas City Fed and he is very happy he did. That process began over 10 years ago but in that time the only accidents they have had are one this year and one last year and both were related to other things. The business has expanded, profit sharing has been provided annually to employees and their benefit plan has also improved. The owner says the process works because it’s the employees creating a safer workplace.
In a unionized environment, the employer saw tremendous success when they worked on scheduling issues with employees. Customers were having difficulty getting their issues resolved because the workplace had a set schedule. Employees wanted a more flexible schedule to help with family issues. By working together they were able to extend customer service hours and resolve productivity problems as well as flex schedules so family issues could be resolved. In addition, the employer saw an upcoming skills gap as the needs of the workplace were changing. To help workers become more aware of the problem and to encourage them to update their skills, union leadership at the workplace organized an educational fair during work hours so employees could gather the information they would need on schools, financial assistance and other items that would help them develop their skills. The union was also able to provide tuition assistance which also encouraged employees to upgrade their skills. This helped the employer save on costs and maintain a consistent, knowledgeable workforce that would yield greater productivity, less turnover costs and be better able to service the needs of their customers in the present and the future.
But not all employers can invest in the workforce. While these examples are great and many employers would like to do some of the same things from the examples, some of them face stiff competition all the time and that competition is driving down wages. That immense pressure employers have from competition can determine their decision about workforce investment. They have to face a real dilemma especially if they’re interested in doing the right thing. Do they pay low-wages and no benefits or do they increase pay and benefits and risk shut down which could put people out of work altogether?
It also means we all have a decision to make. Do we continue doing the same thing we’ve always have done for the last 25 years or longer or do we start to make improvements? For things to improve we may need more policy and regulation to help raise wages. Are we willing for that to happen? Or do we want to continue to see people struggle and use safety net programs as their benefit plans which eventually will cause the programs to suffer because they’re not designed to be benefit programs? The choice is ours. We must make a decision because it’s not sooner or later it will affect ALL of us, it’s affecting us NOW.