News Column

In Texas, Working Poor Families Struggle To Get Ahead

June 18, 2012

Brenda Bell

texas

Back in 2005, a lifetime ago, Alona Smith was working random jobs as a security guard and taking classes at Austin Community College when she became pregnant. As the dutiful daughter of a single mom, a latchkey kid who had basically raised her own baby sister, she knew too well what lay ahead.

Her boyfriend was a college student in Houston. She had no health insurance, no safety net and, now, no chance of getting that nursing degree.

Too embarrassed to explain her situation to her counselor at Capital IDEA, the nonprofit program that was sponsoring her education, she quit school -- the offramp that many struggling students don't find their way back from. "I dropped off the radar," Smith said.

But eventually Capital IDEA picked her up again, paying her tuition, helping her juggle course work with a new baby and night jobs as a nurse's aide.

Now 27, Smith is a registered nurse in the intensive care unit at St. David's North Austin Medical Center -- the "best job I ever had." She and Marlon, now her husband, and their two children live in a new house they bought in Pflugerville. He works at Dell, and together they earn a six-figure income, placing their family comfortably in the middle class.

Smith's story of personal triumph also illustrates a daunting reality. Gov. Rick Perry and other politicians boast about the vigor of the "Texas jobs machine," but many of the jobs it has churned out are low-wage and dead-end. And while Texas typically enjoys an unemployment rate below the national average -- currently 6.9 percent, compared with the U.S. rate of 8.2 percent -- it has reduced its investment in efforts aimed at lifting poor, working adults into sustainable careers with living wages and benefits. The kind of program that gave Smith another chance.

"More employment opportunities don't mean a better shot at the middle class," said Don Baylor with the Center for Public Policy Priorities, a liberal-leaning Austin think tank that is an advocate for low- and moderate-income Texans. "It's not necessarily going to lead to upward mobility."

To the Texas Workforce Commission, work itself "is the way people can keep their skills fresh and improve their situation," said Lisa Givins, spokeswoman for the agency. "Not everybody needs to be trained."

Bob Duvic, distinguished lecturer in finance at the University of Texas McCombs School of Business, agrees that even a low-end job can lead to something better. But, he added, "We face a long-term problem that really has to do with education. You can train someone to drive a truck, but what if that truck goes away? Even my plumber has to know electronics now."

The state's record on education speaks for itself. Texas ranks 50th in the U.S. in the percentage of adults 25 or older who have a high school degree. For those 3 million Texans who don't, adult basic education -- general education degree (GED) studies, English as a second language and literacy classes are the first step up the ladder. Yet Texas is one of only two states that spend no money on adult education beyond the minimum required to get federal funding for those programs, according to U.S. Department of Education data.

For the working poor, community college remains the most accessible route to education that pays off: A two-year degree or certificate can equal a 30 percent increase in earning power. But developmental or remedial education -- required by almost half of incoming community college students and a major barrier to their success -- has proven "alarmingly ineffective" for years, according to the Texas Higher Education Coordinating Board. When the agency asked the Legislature for $30 million in incentives for schools that improve the academic performance of remedial students, it got $9 million. The innovation projects it paid for have yet to bear fruit.

Texas community colleges enroll 70 percent of all the state's freshmen, and a disproportionate share of minority, older, part-time and low-income students, compared with four-year universities. Despite the enormous growth in demand at those colleges -- 220,000 new students in just seven years, the equivalent of more than four UT-Austins -- the state's contribution to their operational revenue is half what it was in 1980, placing more financial burden on local taxing districts and students themselves.

"We've done what they have asked of us ... by increasing access and enrollments," said Steve Johnson with the Texas Association of Community Colleges. "The problem is, the state can't, or won't, pay for that growth."

Financial aid to low-income students is another cost Texas is passing on to Washington. Federal Pell grants are already the main source of aid for Texas community college students; as a percentage of that assistance, the state's own program -- which the Legislature cut last year -- pales beside those of California, New York and other large states.

"There's a distance between the rhetoric you hear and the spending," Baylor said. "We don't put our money where our mouth is."

Getting stuck

In the mid-1990s, Texas was so eager for welfare reform that it enacted its own version before the federal government did, imposing tougher work requirements and time limits for public assistance benefits than Washington. The state's "work first" approach has never wavered: Get the jobless off the unemployment rolls and families off welfare as quickly as possible. Personal responsibility, not upward mobility, is the watchword.

Federal dollars support 90 percent of the Texas Workforce Commission's $1.1 billion budget, and some low-income job seekers can get specialized skills training through the federal Workforce Investment Act. The state reports that the training boosts job retention and nearly doubles average annual earnings over those who receive more basic services, such as resume writing help.

But 95 percent of the 463,000 Texans counted as being served by the Workforce Investment Act in 2011 were "self-service" only, meaning they received no staff assistance. Of those who did, half qualified as low-income, and only half of those -- 5,305 -- received any training, according to the commission.

A 2011 report by the Legislative Budget Board shows that as federal funding for workforce development programs has dropped, Texas has done little to fill the gap for the working poor. A Workforce Investment Act program providing child care, transportation and other support for low-income adults seeking job training or education serves 25 percent fewer people than it did in 2006. And the Self-Sufficiency Fund, which uses federal money to customize career development programs for parents on public assistance, has dwindled from $12 million annually to $1.2 million since its inception.

Last year the Legislature slashed funding for the state's flagship job training program, the Skills Development Fund, from $44 million to $22 million. Meanwhile, businesses everywhere are reducing their own training efforts, said UT's Duvic.

"Corporations complain they can't get qualified people, but they used to train them. Now they don't want to spend the money," he said. "It's shifting the burden of preparing people to the state."

In recent years, Texas has been the state with the largest share of its hourly workforce earning minimum wage or less. According to the Bureau of Labor Statistics, that share has now dropped to 8 percent, putting Texas behind Georgia and Mississippi. However, its vast pool of 473,000 minimum-wage jobs -- twice as many as Florida and New York combined and three times as many as California -- keeps growing.

The good jobs vs. bad jobs scenario is particularly striking in the Austin-San Marcos-Round Rock area, where education levels and average incomes are higher than the rest of the state. Managerial and tech sector jobs are relatively plentiful, and unemployment is only 5.8 percent. Forbes magazine recently named the Austin area the best in the country for jobs.

Yet the city's poverty rate -- 20.8 percent -- is also higher than the state's, and as much as 40 percent of the area's population is barely getting by, according to some measures. The percentage with no degree beyond high school -- 54 percent -- has barely budged since 2006. An American-Statesman analysis of the latest federal data found that 9 of the 10 most numerous local jobs were low-earning: sales and office clerks, fast food workers, waiters and cashiers.

"We've got two rapidly diverging communities on our hands," said city demographer Ryan Robinson. "One community where life is great, where really, really good jobs are being created. Others have an extremely different experience in Austin."

"The labor market is changing even as we speak," said labor economist Chris King, director of UT's Ray Marshall Center for human resources research. In the past, he said, people "could get a job, a toehold, work your way up the ladder to a pretty good wage job. Now we've got career lattices -- flat wages, declining wages, U.S.-wide. If they don't shed the bad job and get one with upward movement, they're going to get stuck."

A downside of that scenario is the burden it puts on other taxpayers, says Sylvia Acevedo, CEO of CommuniCard LLC and founder of a local education fair for Hispanic families. "If you have a permanent underclass, that puts a lot more pressure on the middle class. If you're in the low end -- no benefits, no insurance -- who (besides taxpayers) is going to provide those services?"

Lending a hand up

The only new state program intended to educate workers out of that rut was assailed by an unlikely critic: Texas Workforce Commissioner Tom Pauken, who led the agency until last month.

Called Jobs and Education for Texans, the $25 million program under Comptroller Susan Combs allocated money in 2009 for scholarships to individuals and grants to nonprofit organizations with a "proven track record" in graduating low-income students from two-year programs at community colleges and technical schools. Capital IDEA -- the nonprofit that sent Alona Smith through ACC -- received $724,000; similar groups in Houston and San Antonio also received grants.

"I just really question the dollar value of what's going on here," Pauken said, complaining that the groups are tied to a radical, "anti-free market" agenda. He called the $45 million Texas Back to Work program a "better bang for the buck" because of its lower cost -- $2,100 per worker, compared with about $3,800 per participant per year for Capital IDEA.

Almost all of the state's Back to Work cost was for incentives to employers who hired jobless people for at least 16 weeks in positions paying less than $15 an hour. Within a year after the incentive period ended, 70 percent of the nearly 27,000 workers were no longer in those jobs, though state statistics show they were still employed somewhere.

"It's a strong program that employers have benefited from," commission spokesman Lisa Givens said. "It's not a job creation program -- it targeted a group of individuals, to give them a hand."

Last year, the average starting salary for Capital IDEA graduates was $17.81 an hour. The program cost is split between tuition and books, and intensive case management that can make the difference between success and failure for its students, most of whom are the first in their families to go to college.

"If you're in a predicament like I was, they're God's blessing," said Eric Satterwhite, now in his second year in ACC's mechanical drafting program. "I wouldn't be in school if not for them. There would be no way I could do it."

UT's Ray Marshall Center has found the nonprofit program produces "large, statistically significant gains in quarterly employment" that persist over time. Average earnings increased by $75,000 over 10 years, and an anticipated $255,000 over 20 years. The average 10-year return on taxpayers' investment, based on costs versus projected savings in public assistance: $10,000 per participant.

After Pauken leveled his criticism, Combs last year redirected half of the money intended for direct assistance to students through the nonprofits and put it into technical training equipment for community college classes. "More students would get trained through equipment grants, and fewer resources are needed to administer those grants," said R.J. DeSilva, a spokesman for Combs.

Asked about the charge of leftist bias, incoming Capital IDEA board Vice Chairman and corporate attorney Paul Skeith said that lifting people out of poverty goes hand in hand with investment in economic development, and is hardly a radical notion. "Most of us would say it comes from the Sermon on the Mount," he said.

For Alona Smith, the hard times of her own investment are receding: the daily grind of classes, homework, the unpaid clinical hours for her nursing degree, dropping off her baby to work a 12-hour night shift and starting all over again the next day. "That was my life for two years," she said. "I don't know how I did it."

She's not finished yet -- she wants to be certified in urgent care, a step up in her career -- but she can breathe easier. "It feels better to not be living paycheck to paycheck."



Source: (c)2012 Austin American-Statesman, Texas