Three things that matter for upward mobility in the labor market

Over the past several years, social policy research and initiatives in the United States have been framed less around the need to alleviate poverty and disadvantage, and more around an imperative to promote upward mobility. This shift owes, among other factors, to the groundbreaking research of Raj Chetty and colleagues, which spotlights the relatively low levels of upward mobility experienced by many groups in America, especially African-Americans and those growing up in poor neighborhoods.

As with Chetty’s research, most of these efforts focus on how children who grow up in lower-income households can overcome the barriers that often stand in their way of accessing the middle class, such as lack of quality child care, housing instability, unsafe neighborhoods, low-performing schools, and difficulty affording and succeeding in higher education.

While such strategies are critical to ensuring better opportunities for the next generation, they have less to offer the tens of millions of struggling adults—many of them parents to these children—who are already in the labor market, or will be soon. As economist David Autor shows, decent-paying jobs for workers without college degrees have been disappearing for decades, and most of those workers end up in low-paid occupations. In this sense, we need to pair a burgeoning agenda to promote intergenerational economic mobility with one focused on improving intragenerational mobility.

On that count, Opportunity Industries, a recent report by my colleagues Chad Shearer and Isha Shah, provides valuable new insight. They examine more than 25 years of data to identify places in the labor market that provide non-college workers with a better shot at reaching the middle class. Their findings point to three things that influence upward mobility opportunities for these workers.

Your occupation matters

In America’s large metropolitan areas today, only 20 percent of workers without college degrees possess what Shearer and Shah label “good jobs”—those in which workers earn better-than-average wages for their local community, and have access to employer-sponsored health insurance. Another 13 percent work in what the authors call “promising jobs,” which do not provide good pay and benefits, but do have a track record of helping their occupants reach a good job within 10 years. That leaves roughly two in three non-college workers in what the authors call “other jobs,” but which one might less charitably call, “bad jobs.”

Not surprisingly, some fields provide greater access to good and promising jobs for non-college workers than others. Your odds of having a good job are better if you work in maintenance occupations (say, as an HVAC technician) than if you work in personal care occupations (say, as a ticket booth attendant at a movie theater).

What’s more revealing, though, is that pathways to middle-class jobs most often involve switching occupations. Roughly three-quarters of workers without college degrees predicted to get a good job in the next decade will make a major career switch along the way (Figure 1). Many of these people begin their working lives in fields like retail and food service, but use what they learn in these “starter fields” to move into better-paying careers. For instance, nearly four in ten non-college workers who switch out of lower-paying facilities occupations (e.g., janitors, groundskeepers) move into better-paying jobs in construction, maintenance, or production.

Your industry matters

What you do for a living, and the sector of the economy in which you do it, are often two different things. People working in office and administrative support jobs, for instance, are spread almost evenly across the financial services, government, and retail industries.

Some industries provide non-college workers with a better shot at landing good jobs. Many blue-collar industries like manufacturing, logistics, and wholesale trade are what economists call “tradable” industries, those that face stiffer competition because they sell most of their products and services to customers outside their local market (Figure 2). The same is true of several white-collar sectors like information and professional services, which still provide many jobs to workers without bachelor’s degrees.

Other industries that mostly serve customers in their local marketplace don’t offer as many good jobs for non-college workers, but do provide many promising jobs. In food service, retail, and administrative services, many people gain the skills that enable them to climb the ladder in those sectors, or more frequently, jump to another better-paying industry. Customer service representatives in the utilities sector, for instance, tend to receive much higher pay than their counterparts in the health care sector.

Your location matters 

Finally, Shearer and Shah note that these mobility dynamics vary greatly across local labor markets. Good and promising jobs held by non-college workers represent 31 percent of all jobs in the El Paso area, versus less than 18 percent in Houston, despite the fact these metro areas are both in Texas (Figure 3). Certainly, the education levels of local populations influence these dynamics; a higher share of El Pasoans than Houstonians lack a college degree.

But metropolitan areas’ specific occupational and industry structures also influence opportunity for these workers. For example, manufacturing is a significant part of the local economy in both Tucson, Ariz. and Stockton, Calif., but non-college manufacturing workers in Tucson (who tend to work in higher-skill aerospace jobs) are nearly twice as likely to have a good job as their counterparts in Stockton (who tend to work in lower-skill food and beverage production jobs).

What it means for improving workers’ mobility 

Unfortunately, no metro area has enough good and promising jobs for all its workers. But smarter public policies at the local and regional levels can help narrow the gap between demand and supply. A couple implications stand out.

First, workforce development activities should do more to support worker mobility. Leading approaches in recent years have focused on meeting employer needs and building career pathways within single sectors, such as health care, manufacturing, and retail. Routes to the middle class, however, more often traverse industries than operate within them. With data on these real-world pathways, and greater focus on providing people with the skills to learn continuously on the job, local agencies can better prepare workers to navigate an increasingly tumultuous labor market toward a good-job destination.

Second, economic development officials should focus their programs and services on good jobs for the workers who need them most, rather than cultivate only the highest-paying jobs or—even worse—throw public money at bad jobs. In providing business incentives and supports, economic developers should consider factors including skill requirements, wages and benefits, and physical accessibility to ensure that the jobs they attract and retain truly help build a stronger local middle class.

In the end, creating and connecting today’s workers to good middle-class jobs can help boost their kids’ long-term prospects, spurring greater intergenerational mobility in the American economy.