The economic decline of older, northeast and Midwest U.S. central cities that occurred in the 1970’s and 1980’s can be attributed to two principal causes.
- First, many manufacturing jobs were lost to international locations, in part, because labor in foreign locations was cheaper.
- Second, massive developments in production technology, telecommunications, and the ascendance of information industries encouraged large-scale population, office and factory relocations to less congested and lower cost, suburban and exurban areas (Sassen 1994; Downs 1994; Kirlin 1993; Rusk 1993; Miewskowski and Mills 1993; Harrison and Bluestone 1988).
As a result of these factors, many central cities have declining human capital and physical infrastructures, and tax bases. Wilson (1987) suggests that the difficulty central cities encountered in coping with the growth of their suburbs and the emerging global economy is a major cause of concentrated inner-city unemployment and poverty. Additionally, these factors have severely and disproportionately impacted minority residents of the central city who depended on the urban manufacturing job base for survival. Many of these residents have been prevented from leaving the central city because of various “institutional” barriers (i.e. housing and labor market discrimination) (Turner, Fix and Struyk, 1991; Kirschenman and Neckerman, 1991; Hill, Rittenhouse, and Allison, 1994; Massey and Denton, 1993).
As the socioeconomic status of central city residents has worsened, the direct financial requirements from local economies in the form of public assistance, subsidized housing, and other public expenses have increased (Bluestone and Harrison, 1988). In an attempt to cut costs by reducing the number of public assistance recipients (AFDC recipients), current welfare reform proposals require that the recipient either find work or work in exchange for assistance. However, the work available to, or that can be found by, these individuals provides little relief from poverty: increasing costs of living (i.e. increasing housing costs and gasoline and transportation costs) are not matched by increasing wages. In fact, wages in jobs for the lowest skilled individuals have not increased at the same rate as wages in jobs for higher skilled individuals (Juhn, Murphy, and Pierce, 1993).
Further exacerbating the problems of the public assistance recipient are:
- the fact that the typical recipient is poorly educated and has low skills (Bane and Ellwood, 1994; and Burtless, 1995 for a national perspective; and Leete and Bania, 1995a for a local labor market perspective), or has outdated skills that are no longer needed in today’s increasingly technical and information-based workplace; and
- the response of the private sector to the new global economy in modifying some of the types of jobs that are available (Capelli, 1993); thus requiring a more skill-diversified employee.
In the public sector, addressing these problems through governmental action is problematic because public administrators face the difficult task of balancing social and economic growth and stability with the uncertainty and reality of shrinking public, private, and nonprofit fiscal budgets, increasing economic division, and deeply entrenched and opposing political ideologies. Private sector concern for economic and social decline centers around lost labor force productivity, smaller markets for goods and services, increased private sector expenses in workforce training, security, and insurance, increased reluctance to invest in central cities, and increased social instability (Stilman, 1994).
In requiring the public assistance recipient to work in lieu of benefits, several policy questions arise. These questions include:
- Are there sufficient jobs paying “liveable” wages to employ every public assistance recipient?
- Do public assistance recipients possess sufficient skills to take the newer service and information based jobs of the global economy?
- Are the jobs of today and in the future realistic (i.e. skillswise and void of discriminatory hiring practices) and physically accessible (i.e. does the public recipient have adequate and reasonable means of transportation to employment locations) to the public assistance recipient?
Answers to these questions are necessary from both the public and private sectors in order to assure that the worker will be sufficiently and gainfully employed.
While the answers to these questions might be intuitively obvious, the basis for this tuition has not been well shown in research. For instance, while it is well documented that welfare recipients have low skills nationally (Bane and Ellwood, 1994; and Burtless, 1995), little conclusive evidence has been brought forth which compares the skills of a specific population group to its local labor market demand. Furthermore, few studies portray the geographical relationship between where jobs are located in the metropolitan area and where public assistance recipients reside.
Another limitation to answering these critical policy questions is the fact that labor market experts cannot conclusively determine what effect technological change has had on the education and skills content of occupations in the labor market (Spenner, 1983; and Capelli, 1993). So far, three theories dominate this field of research: technology has caused either an “upgrade” of skills (Packer and Wirt, 1992), a “downgrade” of skills (See Spenner’s discussion (1983) of Braverman for a richer discussion of this theory), or has not appreciably affected the education and skills content of occupations (Keefe, 1991; Mishel, 1992).
The uncertainty of labor market research raises questions about available data for studying the labor market. For example, the U.S. Department of Labor (DOL) issued occupational characteristics to describe over 12,000 occupations in the U.S. labor market, but this data is over twenty years old as most of it was developed prior to 1975. Are these data still representative of the education and skills needed in today’s technologically based workplace?
Two recent studies by Leete and Bania (1995a; 1995b) appear to provide a way to bridge the gap between these DOL occupational characteristics and the education and skills presently required in the labor market. Furthermore, Leete and Bania show the coexistence of the skills and spatial mismatches for public assistance recipients in the Cleveland-Akron Metropolitan Statistical Area (MSA). These studies conclude similar things:
- Education, skill levels, and job experience among welfare recipients are low;
- Most occupations which would be accessible to welfare recipients are entry level, low-skill occupations which pay relatively low wages and benefits;
- Long-term economic security will require a major training and skill upgrade for most welfare recipients; and
- There exists a significant spatial mismatch between where most welfare recipients reside (public housing neighborhoods in the central city) and the location of new job openings.