INCREASINGTHERETURN: InvestinginMississippi’s WorkingFamilies · 2012-04-14 · Executive Summary...

INCREASINGTHERETURN:

Investing inMississippi’sWorking Families

MississippiEconomic PolicyCenter

About the Mississippi EconomicPolicy Center

The Mississippi Economic Policy Center (MEPC)engages in rigorous, accessible and timely analysisto inform the policy debate on issues that affectthe economic and social well being of workingfamilies and low-wealth Mississippians. Anindependent, nonpartisan initiative, MEPC ismanaged by the Enterprise Corporation of theDelta (ECD), a regional financial institution andcommunity development intermediary dedicatedto strengthening communities, building assets andimproving lives in economically distressed areas inthe Mid South. Key MEPC partners include theMississippi Center for Justice and other organiza-tions that contribute expertise and otherwise pro-vide important guidance and support.

MEPC and this project receive crucial supportfrom the following foundations: Annie E. CaseyFoundation, Charles Stewart Mott Foundation,Ford Foundation, Joyce Foundation, Open SocietyInstitute and theW.K. Kellogg Foundation.

© 2006. All rights reserved. Any portion of thisreport may be reproduced without priorpermission, provided the source is cited as:

Edward Sivak and Vincent E. Mangum,Increasing the Return: Investing in Mississippi’sWorking Families. Jackson, MS:Enterprise Corporation of the Delta, 2006.

To download a copy of Increasing the Returngo to www.mepconline.org. To acquire a hardcopy of the report or for other information contact:

Mississippi Economic Policy Center4 Old River Place, Suite AJackson, MS 39202(601) 944-1100

Table ofContents

Acknowledgements ........................................................................................................................................ 2

Executive Summary ...................................................................................................................................... 3

Chapter 1 –Mississippi’s Working Families ................................................................................................................. 6

Chapter 2 –Investing in Growth: Honing the Competitive Edge ............................................................................. 11

Chapter 3 –Tools for Success: Mississippi’s Economic Development Incentives ................................................... 17

Chapter 4 –Decreasing Volatility: Stabilizing Employment throughWorkforce Supports ..................................... 23

Chapter 5 –Increasing the Return: A Summary of Strategies and Recommendations ........................................... 28

1

Acknowlegements TheMississippi Working Poor Families Project re-ceived funding from a consortium of foundationsincluding the Annie E. Casey Foundation, the CharlesStewart Mott Foundation, the Ford Foundation andthe Joyce Foundation. The National Working PoorFamilies Project, in association with Brandon Robertsand Deborah Povich, provided much-needed andappreciated technical assistance throughout the analy-sis and drafting stages of the report. Kerri Rivers withthe Population Reference Bureau rounded out thenational project team with credible and accessibleanalysis of the American Community and CurrentPopulation Survey.

We are also especially grateful to the members of ouradvisory board who provided valuable feedbackduring the drafting process. The Mississippi WorkingPoor Families Advisory Board included individualsfrom the following organizations: Catholic Charities ofJackson, Children’s Defense Fund, Foundation for theMid South, MS Center for Justice, MS NAACP, PublicPolicy Center of Mississippi, Rand Gulf States PolicyInstitute, Mississippi State Board for Community andJunior Colleges and Systems Consultants Associates.In addition to the advisory board, Rebecca Tyndall,formerly with ECD/HOPE, also provided assistancein procuring documents for Chapter 3.

Finally, the project could not have been completedwithout the help of the following people who workhard every day in their various capacities in state andlocal government: City Clerk’s Office – City of Jackson,Mississippi Secretary of State, Mississippi Departmentof Employment Security, Mississippi Department ofHuman Services Division of Economic Assistance,the Mississippi Development Authority FinancialResources Division and the Mississippi State Boardof Junior and Community Colleges.

2

ExecutiveSummary

Residents of Mississippi will be the first to describe Mis-sissippi as one big small town. Family ties run deep,and friendships span generations. As such, no onewould argue with the notion that the state’s strongestasset is its people. Mississippians are resilient andwork hard for their communities and neighbors.

While working hard, many are falling short of economicsecurity in their families. Nearly 130,000 (or 42%) ofMississippi’s working families are low-income. 1 Manyremain low-income despite working more than onejob. Low-income working families that include a mar-ried couple, for example, work, on average, 1.4 jobs totry and make ends meet from month to month. Edu-cational attainment in working families helps to ex-plain the high rate of low-income working families.Mississippians who did not finish high school earn, onaverage, half as much as college graduates. One-fifthof the working adults in the state do not have a highschool diploma or have not passed the General Educa-tional Development (GED) Test.

Mississippi also has a prevalence of low-wage work.Approximately 383,020 (or 35.2%) of Mississippi’s jobsare in low-wage occupations.2 Over the next five years,job growth projections by theMississippiDepartment of Employment Security show that theoccupations with the largest numbers of openings willprimarily offer low-skilled, low-wage jobs withoutbenefits.

In the midst of low-wage work and low levels of educa-tional attainment, the global economy is rapidly ex-panding. While Mississippi businesses and industryused to be able to leverage competitive advantages forregional and national success, advances in technologyand transportation coupled with free trade now requirecompanies to compete with entities from all over the

world. Many of the losses in the once strong manufac-turing sector of Mississippi’s economy are attributableto globalization. Even with knowledge of the globaltrends, Mississippi lags the region in its participation inthe global economy. Compared to 11 other southernstates, the state ranks second to last for exports as apercentage of gross state product (GSP) and last in for-eign direct investment as a share of GSP. 3

To compete in the global economy, a strong workforcewith the capacity to research and develop new ideas isa necessity. As local economies shift from agriculture,mining and manufacturing to technology and services,the presence or absence of systems to develop resi-dents with the skills to participate in the global envi-ronment will determine the presence or absence ofgood jobs.

The title of this report, “Increasing the Return: Invest-ing in Mississippi’s Working Families,” directs thereader towards a return on investment theme and sug-gests that the return on the public investment could behigher. By strengthening existing training systems, tar-geting resources towards innovative and permissibletraining activities and enhancing workforce supports,Mississippi could improve the economic stability ofthousands of working families. Simultaneously, a coor-dinated training strategy focused on the jobs of todayand tomorrow could build a workforce that activelycompetes and succeeds in the global economy. In-creased economic stability and greater global participa-tion could ultimately lead to higher incomes, highereducational attainment rates, higher levels of privateinvestment and associated increases in economicdevelopment. Simply put, a high rate of return onthe investment of public dollars and the individualinvestment of hard work will be realized.

1 Working Poor Families Project, generated with data from the U.S. Census Bureau 2004 American Community Survey.2 Working Poor Families Project, generated with data from the Bureau of Labor Statistics Occupational Employment Statisticsprogram, November 2004. http://www.bls.gov/oes/home.htm. Data do not include self employment.

3 Blueprint Mississippi: a Business Approach to Mississippiʼs Future, Executive Summary. August 2004.http://www.msmec.com/mec/documents//BlueprintMississippi/BP3173ExecSumFinal2.pdf

3

Finally, the theme of “return on investment” alsocalls for systems of measurement and monitoring.All investors with strong track records have tools formeasuring the performance of their investments.Given the hundreds of millions of taxpayer dollarsinvested in training the workforce, developing jobsand supporting working families, recommendationsto enhance systems that measure success, focus onoutcomes and enhance accountability appearfrequently.

Findings and Recommendations

Chapter 1:Mississippi’s Working FamiliesThe report’s first chapter provides a demographicoverview of the state’s working families. Some high-lights from the first chapter include:• 129,457 working families in Mississippi are low-in-

come;• 256,177 children live in these low-income families;• 56.8% of all working families with a minority par-

ent are low-income; and• 56.1% of all working families in Mississippi have a

parent with no post-secondary education.

Chapter 2:Investing in Growth: Honing the Competitive EdgeThe report’s second chapter examines the state’sworkforce training systems including the communitycolleges, theWorkforce Investment Network, AdultEducation and Temporary Assistance for NeedyFamilies (TANF).• Among working-age adults, 347,343 have not fin-

ished high school;• Approximately 33.2% of prime working-age adults

that are white have an associate’s degree or higher,while only 19% of prime working-age adults thatare African-American have attained similar levelsof education;

• If all of Mississippi’s people of color attained equaleducation and earnings as whites, the state wouldexperience a $1.1 billion increase in annual taxrevenues;

• On average, Mississippi annually spends $6.52per adult without a high school diploma or thathas not successfully passed the GED test on adultbasic education;

• The number of people who exit theWorkforce In-vestment Act (WIA) program is very high; how-ever, only a small percentage (11.7%) of thepeople who exit receive training; and

• Only a small percentage (2.5%) of people enrolledin the TANF program were enrolled in training.

Moving forward, the following list represents policyopportunities for state policy makers to enhance cur-rent systems.

• Pilot the use of two pools of state funds directed atincreasing affordability within the postsecondarysystem for traditional and nontraditional students.For traditional students, the pool of funds wouldbe used to provide grants for academically quali-fied students without the resources to pay for col-lege. For nontraditional students, the pool wouldtarget workers at least 24 or older who are notqualified for Pell Grants. Funds could be used forassociate’s degree, credit certificate and non-creditvocational programs.

• Double the available resources for Adult Educa-tion from $6.52 to $13.00 per adult without a highschool education or equivalency. Increased re-sources could be targeted towards programs withhigh levels of work and education goal attainmentand serve as the first step on a path to additionaleducation and ultimately higher wages.

• Strengthen training options available to Missis-sippi’s unemployed workers by targeting moreWIA resources towards education and training.

• Increase training options available to TANF partic-ipants with the goal of doubling the rate of partici-pants in training activities annually for the nextthree years. Training programs could be focusedon those activities that allow the state to meet itsfederal work participation requirements.

• Enhance data collection and reporting systems toassess the effectiveness of training systems in theirability to move low-wage Mississippians up theeconomic ladder.

4

What is a Low-IncomeWorking Family?

Before moving into the body of the report,some definitions will assist the reader to put

the report in context.

Family: Primary married couple or single par-ent with at least one child under the age of 18.

Working Family: A family where all familymembers ages 15 and over have a combinedwork effort of 26 or more weeks in the last 12months, or all family members ages 15 andover have a combined work effort of 26 ormore weeks in the last 12 months and one

currently unemployed parent looked for workin the previous four weeks.

Low-Income Working Family: A family withan income below 200% of the threshold forpoverty as defined by the U.S. Census Bu-reau. Twice the federal poverty level is usedas a proxy for “self sufficiency,” i.e., an in-come that allows a family to pay for basic

needs like food, housing, clothing and healthcare without any public or private assistance.

Chapter 3:Tools for Success: Mississippi’s EconomicDevelopment IncentivesChapter 3 provides an overview of the state’s employ-ment profile and a summary of some of its key eco-nomic development programs. Some of the findingsinclude:• In 2004, Mississippi employed more than one mil-

lion workers that earned over $30 billion in wages;• One out of three Mississippi jobs (35.2%) are in

low-wage occupations;• 54,515 Mississippians hold more than one job;• In FY 2006, Mississippi invested over $67 million

in economic development incentives that sup-ported 11,234 jobs; and

• Beyond the dollars invested and number of jobsassisted, there are reporting mechanisms to under-stand the level of the economic development in-vestment and to determine who actually benefits.

The following recommendations represent opportuni-ties for state policy makers to enhance the current setof economic development programs.• Include a provision to require employers who re-

ceive public subsidies through incentive programsto fill a portion of the newly created jobs withworkers coming from a low-wage environment.Employers that employ a high number of low-wage workers could receive a more generous sub-sidy.

• Track the percentage of low-wage workers thatmoved into jobs assisted through state incentivepayments.

• Track the earnings of workers assisted through in-centive programs one year after the assistance wasreceived. Measures could include the percentageof workers earning above poverty-level wages andthe percentage of workers earning more than200% of poverty-level wages.

• Increase the transparency of the Jobs Tax Credit.While employers claim an estimated $4 milliondollars in credits annually, there is currently noway to answer questions about the number of jobs

assisted and the quality of the jobs. Efforts couldbe made to annually report the number and qual-ity of jobs assisted in the Tax Expenditure Report.

• Annually, a report on the use of public incentivesto generate jobs by employers could be publiclyreleased in aggregate form on the Mississippi De-velopment Authority website to encourage legisla-tive and programmatic accountability.

Chapter 4:Decreasing Volatility: Stabilizing Employmentthrough Workforce SupportsThe fourth chapter highlights Mississippi’s policies forsupporting low-wage working families. Some findingsfrom the chapter include:• 282,751 working Mississippians were employed in

occupations that typically pay below poverty-levelwages;

• A raise in the minimum wage would have a posi-tive effect on the wages of at least 17,000 of thestate’s lowest-paid workers;

• In 2006, families with incomes below the federalpoverty level will pay state income taxes;

• In 2005, the market rate survey showed that thestate was only reimbursing child care providers at52% of the market rate for providers around thestate.

• 288,197 working Mississippians do not receivehealth benefits through their employers;

• Adults in working families lose eligibility for state-sponsored insurance when earnings exceed 34%of the federal poverty level (approximately $5,496for a family of three); and

• For workers that received unemployment insur-ance payments, the maximum benefit was thesmallest in the nation at $210 per week.

The following recommendations represent opportuni-ties for state policy makers to enhance the current setof workforce support programs.

• Increase the minimum wage to levels equal toArkansas’ rate of $6.25 per hour.

• Groceries could be exempted from the sales tax,while certain services could be added to the list oftaxable items to account for the revenue thatwould no longer be generated by grocery sales;

• Within the income tax system, deduction and ex-emption amounts could be updated to account forinflation, thus preventing people in poverty fromspending limited incomes on a tax;

• Increase the child care reimbursement level tomeet the federal recommendation of 75% of themarket rate;

• Double the eligibility threshold for Medicaid par-ticipation for working families;

• Create incentives for small employers to providehealth care benefits to their employees and fami-lies; and

• Increase the maximum weekly unemployment in-surance benefit from $210 per week to $250 perweek.

This report provides a road map for residents and pol-icy makers to assess the current environment forworking families in Mississippi and offers opportuni-ties for the state to target investments in its people.As we progress towards the next decade, investmentsin the people of Mississippi will provide strong returnsby allowing working families to build the state’s econ-omy and increase its position in the global market-place.

5

CHAPTER1:

Mississippi’sWorking FamiliesAn overwhelming number of families in Mississippihave members that go to work everyday. However, ajob in Mississippi does not guarantee economic secu-rity. In 2004, nearly four out of 10 families with chil-dren engaged in work and remained low-income.Families like these work hard and contribute to theirlocal economies. While playing by the rules, theyfind their finances squeezed at the end of the month.As the prices of gas, groceries, electricity and healthcare rise, many working families simply do not earnenough to cover basic living expenses.4

Several factors contribute to the high rate of low-in-come working families. First, there is a growing preva-lence of low-wage work. As the economy continues totransition to service sector employment, low-wage,service sector employment increases. Seven of the tenoccupations projected to generate the most job open-ings over the next five years will most likely be in low-wage job sectors. Anecdotally, one can see the rise inservice sector employment around the gaming hubs ofTunica and theMississippi Gulf Coast.

Another factor affecting the high rate of low-incomeworking families is the lack of coordinated systemsdesigned to help low-wage workers to increase theirskills and move up the economic ladder. Regardlessof the factors, Mississippians – many of whom affectour everyday lives – are working hard and fallingshort. We depend on the entry-level bank teller earn-ing $14,980 annually to assist us with our bankingneeds.5 In the morning, we drop our children off atday care with a teacher who earns approximately$22,000 per year. Finally, we rely on nursing aidesand attendants to care for our aging parents andgrand-parents – on an annual salary of $16,860.

Mississippi’s Low-IncomeWorking Families – a Snapshot

This report defines a low-income working family as afamily with an income below 200%, or double, thefederal poverty threshold as defined by the U.S. Cen-sus Bureau. In 2004, twice the federal poverty levelfor a family of four amounted to $38,614. Twice thefederal poverty level for a family of four is used as aproxy for self-sufficiency, which is earning enough in-come to cover all of a family’s expenses without gov-ernment assistance. Map 1 illustrates theconcentrations of individuals living below 200% ofthe federal poverty line by county.6

Most of the counties in the state have concentrationshigher than 40% of individuals living below 200% ofthe federal poverty line. With 69 of the state’s 82counties having such large percentages of their resi-dents living below 200% of the federal poverty line,clearly issues relating to self sufficiency affect all partsof the state.

4 Working Poor Families Project, generated with data from the U.S. Census Bureau 2004 American Community Survey.5 Mississippi Department of Employment Securityhttp://www.mdes.ms.gov/wps/PA_1_0_6A/docs/LMI/Publications/OES/OES%20by%20Group/MISSISSIPPI/43ms.pdf

6 Note: the Census 2000 data are the most recent data available for county by county analysis of poverty statistics

Fast Facts – Working Families

• 129,457 working families in MS are low-in-come

• 256,177 children live in a working familythat is low-income

• 56.8% of all working families with a minor-ity parent are low-income

• Mississippi ranks 47th in the country for itsrate of low-income working families (39.1%)

Concentration of IndividualsEarning Below 200% of the

Federal Poverty Lineby County 2000

LegendLess than 30%

31 to 40%

41 to 50%Greater than 50%

6

Approximately four out of 10 working families withchildren (39.1%) in Mississippi are low-income.While the percentage is slightly below Arkansas’, MSstill has one of the three highest rates in the countryof working families that do not earn enough incometo be economically self-sufficient (Chart 1).

The majority of working families that are low-incomeare comprised of parents that were born in the UnitedStates. Of the 129,000 low-income working familiesin Mississippi, only 1,628 (1.3%) of the families had aparent that was an immigrant.

Within working families there are differences by race.Among families with a minority parent, the rate ofworking families that are low-income is 56.8%. Ap-proximately 71,297 of the Mississippi working fami-lies with a minority parent are low-income. Incontrast, the rate of working families without a minor-ity parent that are low-income is about half the ratefor families with a minority parent at 28.2%. Never-theless, while the rate of low-income working familieswithout a minority parent is low compared to the ratefor families with a minority parent, there are still58,160 white families that are working and low-in-come.7

Children also play an important part in a family’s abil-ity to attain economic stability. Children require food,child care and health insurance – all of which costmoney. In 2004, there were 256,177 children wholived in low-income working families. While 39.1% ofthe working families in the state were low-income,44% of the children in working families were in work-ing families that were low-income. Children whogrow up in low-income families are also more likely tohave lower educational attainment and associatedeconomic success upon completing their terminal de-gree than children who do not grow up in low-incomefamilies.

While Mississippi has made gains over the last fiveyears in the percentage of adults aged 25 and olderwith a high school degree or equivalency, many par-ents in low-income working families have not com-pleted the 12th grade. Among low-income workingfamilies, 31.4% have a parent that has not finishedhigh school or passed the General Educational Devel-opment (GED) Test.

Additionally, 57.1% of low-income working families inMississippi have no parent with some postsecondaryeducation.8 Among Mid-South states, only LA has ahigher rate at 61.9%. Given the well-documented re-lationship between increased educational attainmentand higher earnings, the low-income working familyeducational attainment statistics are noteworthy.

Income Inequality in Mississippi

Mississippi’s income inequality ratio is one of thehighest in the country. Over the past couple ofdecades, income inequality has increased in the stateas average earnings have risen much more rapidly inthe top income quintile than in the bottom incomequintile (Table 1).

If a worker remains in the lowest quintile over time,the worker will most likely not achieve self-sufficiencythrough raises or cost of living adjustments.

7 Working Poor Families Project, generated with data from the U.S. Census Bureau 2004 American Community Survey.7 Ibid

Chart 1Percentage of Working Families that are Low Income

45.0%40.0%35.0%30.0%25.0%20.0%15.0%10.0%5.0%0.0%

AL (39) AR (49) LA (47) MS (48) TN (31)

U.S. 28.3%

Source: Working Poor Families Project, generated with data from theU.S. Census Bureau 2004 American Community Survey.

33.4%

41.5%38.6% 39.1%

30.6% Table 1Income Inequality in MississippiEarly 1980s to Early 2000s

Dollar increaseEarly '80s Early '00s Percent Change per Year

Lowest Quintile $11,029 $13,456 22.0% $115

Middle Quintile $28,983 $37,162 28.2% $390

Highest Quintile $64,342 $95,406 48.3% $1,490

Source: Economic Policy Institute / Center on Budget and Policies Priorities, Pulling Apart:A State-by-State Analysis of Income Trends, January 2006

7

Low-income workers will also most likely not moveup the economic ladder by working harder. The aver-age low-income family in Mississippi already works2,467 hours a year – the equivalent of 1.2 full-timejobs. The level of effort expended by working familiesremains high regardless of family type. Married low-income working families work, on average, enoughhours to equal approximately 1.4 full-time jobs. Low-income working families with a single father work, onaverage, 2,289 hours per year, and single mother low-income working families work about one full-timejob.9 Even though low-income working families areoften engaging in work more than 40 hours a week,they are still not earning enough to make ends meet.

Moving Forward in Today’s Economy

As the global economy continues to mature, Missis-sippi needs to make strategic investments to equip allof its workers with the skills to compete for and gener-ate high-quality jobs. Concurrently, the state mustalso target investments toward supports that allowlow-income workers to remain consistently employedwhile upgrading their skills. These types of invest-ments are essential to meet the projected demand forjobs that require a skill set beyond a high school edu-cation.

The next three chapters will provide a road map to in-crease Mississippi’s return on its investment in work-ing families. Chapter 2 focuses on the state’s systemof workforce training for adults. Specifically, thechapter examines opportunities to enhance access totraining through the channels of the community col-lege system, the workforce investment network andthe Temporary Assistance for Needy Families pro-gram. Chapter 3 examines the state’s system of eco-nomic development incentives to create jobs. Finally,Chapter 4 looks at the state’s system of workforcesupports for people who are on the job.

Each of the chapters concludes with a series of rec-ommendations for decision makers to consider. Therecommendations focus large public investments onMississippi’s working families. By focusing invest-ments on working families – one of the state’sstrongest assets – Mississippi stands to improve itsoverall ability to address the challenges of low-wageworking families such as poverty, educational attain-ment and economic mobility. As working familiesembrace opportunities to move up the self-sufficiencyladder, local communities will reap the benefits ofhigh-quality jobs, a strong business climate and in-creased tax revenues.

9 Ibid

8

CHAPTER2:

Investing inGrowth:Honing theCompetitive Edge

Success in the global economy depends largely on thedevelopment and retention of a skilled workforce.Throughout the South, technology- and knowledge-based jobs are growing at a much more rapid pacethan jobs in the manufacturing and natural resourcesectors.10 In fact, through 2011, employment in thesectors of manufacturing and mining is projected toexperience a negative annual growth rate.11 Invest-ments in the upgrade of education and skills will paylong-term dividends by contributing to the generationof high-quality jobs and helping people achieve eco-nomic success.12

For families, economic stability also hinges on the ac-quisition of skills relevant to high-quality jobs. To ac-quire the necessary skills to compete for high-wageemployment, working families must have access totraining systems that equip students with the tools topursue job opportunities that offer economic ad-vancement.

Targeted investments in a coordinated and compre-hensive workforce training strategy that simultane-ously enhances the state’s competitive advantage inthe global marketplace and improves working fami-lies’ opportunities to achieve self-sufficiency will ulti-mately contribute to the state’s overall ability to

improve the social and economic outcomesof the state.

This chapter will begin with an overview of Missis-sippi’s educational and skill attainment. It will thenmove into an assessment of state policies and out-comes related to the acquisition of skills needed tomove into high-quality jobs. The chapter will con-clude with a series of policy recommendations to fur-ther educational outcomes for the adult workforcethroughout the state.

Educational Attainment – the Key toHigher Wages and a Strong Economy

Opportunities for gains in the educational attainmentof Mississippi’s workforce are numerous. Beginningwith basic literacy, approximately 64% of the state’sresidents ages 16 and over have very low levels of lit-eracy.13 Literacy challenges contribute to low rates ofattainment at the high school level. Among working-age adults, 347,343 workers do not have a highschool degree or a GED.14

At the next level, only 29% of Mississippi’s youngadults enroll in post-secondary education. While thelevel of enrollment is tied with Louisiana’s and slightlyhigher than Tennessee’s, the rate trails Alabama’s andArkansas’. Given the low enrollment rates, it is notsurprising that only 27.8% of prime working-ageadults (25-54) have an associate’s degree or higher.15

10 Blueprint Mississippi: A Business Approach to Mississippiʼs Future, Executive Summary. August 2004. Mississippi EconomicCouncil www.msmec.com

11 Mississippi Economic Review and Outlook. “Mississippi Economic Outlook: Coast Reconstruction Fueling Economy,”Marianne Hill; Mississippi Institutions for Higher Learning, June 2006.

12 Wheeler, Christopher H. “Employment growth in America. What determines where good jobs are created?” Bridges,Federal Reserve Bank of St. Louis, Winter 2004-2005.

13 http://www.casas.org/lit/litcode/Detail.CFM?census__AREAID=25. Portland State University 1996.14 Working Poor Families Project, generated with data from the U.S. Census Bureau American Community Survey 2004.15 National Center for Public Policy and Higher Education 2006.

Fast Facts – Worker Training andSkill Development

• Among working-age adults, 347,343workers do not have a high school degreeor GED

• In Mississippi, college graduates earn, onaverage, $41,026 – twice the rate of highschool drop outs

• Approximately 33.2% of prime working-ageadults that are white have an associate’sdegree or higher, while only 19% of primeworking-age adults that are African-American have attained similar levels ofeducation

• If all of Mississippi’s people of color attainedequal education and earnings as whites, thestate would experience a $1.1 billionincrease in annual tax revenues

9

Additionally, great disparities exist across race. Whileonly 12.5% of prime working-age whites have not fin-ished high school or passed the GED test, the rate forprime working-age African Americans is 25%. Thegap is even wider between the two sets of prime work-ing-age adults that have attained at least an associ-ate’s degree. Approximately 33.2% of primeworking-age adults that are white have an associate’sdegree or higher, while only 19% of prime working-ageadults that are African-American have attained a sim-ilar level of education.16 It should be noted that theeducational attainment rates for whites and AfricanAmericans at both the high school and associate’s de-gree level are lower than the national averages. Na-tionally, 12.8% of prime working age-adults do nothave a high school diploma or equivalent. Likewise,the rate of prime working-age adults that have at-tained an associate’s degree or higher is 37.3%.17

Educational attainment and skills acquisition are crit-ical for the attainment of jobs that pay self-sufficiencywages. While a worker without a high school degreeearns, on average, $22,695 annually, a worker withan associate’s degree earns $31,232. The attainmentof the associate’s degree represents an increase ofnearly 40% in average annual earnings (Chart 2).

Over the next 25 years, the growth rate for the state’sAfrican-American population will approach 15%,compared to a growth rate of 8.5% for the state’swhite population. Mississippi’s economic future islinked to reducing the educational disparities betweenthe state’s African-American and white populations.18

If disparities were reduced, and all of Mississippi’speople of color attained equal education and earningsas whites, the state would experience a $1.1 billionincrease in annual tax revenues.19

In 2005, Mississippi’s per capita annual income of$25,318 was one of the lowest in the country.20

Given the relationship between earnings and educa-tional attainment highlighted in Chart 2, efforts tostrengthen the educational attainment of Mississippi’sworkers through training system enhancements fromhigh school and adult basic education through collegewill positively affect economic competitiveness andgrowth statewide.

A Competitive Workforce Open to All

Mississippi uses four primary vehicles to connect low-income adults to training and educational opportuni-ties. The four vehicles are:• The Community and Junior College System coor-

dinated by the Mississippi State Board for Com-munity and Junior Colleges (MS SBCJC);

• Adult Basic Education and General EducationalDevelopment testing – also coordinated by the MSSBCJC;

• TheWorkforce Investment Network administeredby the Mississippi Department of Employment Se-curity; and

• Temporary Assistance for Needy Families admin-istered by the Mississippi Department of HumanServices.

Each of the systems faces unique challenges and op-portunities in moving working adults toward mean-ingful employment.

Community and Junior College SystemDuring the 2004-2005 academic year, the 15 collegeswithin the SBCJC system enrolled 92,097 students infor-credit programs. Additionally, the SBCJC systemconnected 209,795 students to non-credit training pro-grams that focused on Adult Basic Education, GEDpreparation, Literacy,Workforce Development andContinuing Education.21 Table 2 illustrates the demo-graphics of the students enrolled in for-credit programs.

16 Working Poor Families Project, generated with data from the U.S. Census Bureau American Community Survey 2004.17 Ibid18 Mississippi: A Sense of Urgency. Rural Responses to the New Economy. Southern Rural Development Center and MDC.

April 2002.19 Ibid.20 Bureau of Economic Analysis. http://www.bea.gov/bea/newsrelarchive/2006/spi0306.xls21 Mississippi Public Community and Junior Colleges. Statistical Data 2004-2005. State Board for Community and

Junior Colleges Division of Accountability and Technology

Chart 2Average Wages Earned by Educational Attainment forMississippi Adults aged 25-64 Working 35+ Hours 2000

$50,000

$40,000

$30,000

$20,000

$10,000

$0Less than aHigh School

Diploma

High SchoolDiploma

Associate’sDegree

Bachelor’sDegree

Source: National Center for Higher Education Management Systems. www.higheredinfo.orgSteven Ruggles, Matthew Sobek, Trent Alexander, Catherine Fitch, Roland Goeken,Patricia Kelly Hall, Miriam King, Chad Ronnade.

$22,695$26,131

$31,2321

$41,026

Table 2Public Community and Junior College DemorgraphicsAcademic Year 2004-2005 Non-Duplicated Credit Enrollment

Percent of Students over age 24 38.4%Percent Women 64.2%Percent Minority 39.6%

Source: Mississippi Public Community and Junior Colleges, Statistical Data 2004-2005

10

Among first-time, first-year students, 76.1% returnedfor the spring semester during the 2004-2005 aca-demic year.22 In 2004, retention rates for studentstransitioning from the first year to the second year, de-clined to 58%. Mississippi does well in its retentionstatistics compared to other states (ranked 4th in thenation) from year one to year two. Even so, a rate of40% of those that enter the college system leavingafter one year represents a loss of potentially edu-cated students and ultimately workers.23 Approxi-mately 51% of all first-time, first-year studentscompleted a bachelor’s degree within six years of en-tering the college.24

For middle-income residents of Mississippi, the com-munity college system offers a reasonably affordableeducation. Middle-income families earning, on aver-age, $37,200 pay about 16% of their income to covertuition, room and board after financial aid has beenreceived. Mississippi ranks 8th in the nation and 2ndin the Mid South in this measure of affordability. Forthe lowest-income families in the state, familiesspend, on average, approximately 17% of their in-come on community college costs.25

Affordability is an important component of makingtraining systems accessible and available to Missis-sippi residents. For very low-income students andworking family members seeking a post-secondaryeducation, scholarships and grants-in-aid are essen-tial for bridging the affordability gap. One way tomeasure a state’s investment in need-based aid is tocompare a state’s level of need-based aid fundedthrough state resources with the state’s level of need-based aid funded through federal Pell Grant re-sources. While a number of states invest amountsequal to 25% or more of the federal Pell Grant contri-bution, Mississippi invests approximately one percentof the amount. An increase in state-funded aid fortraining through the community college system couldbe an important tool for increasing enrollment and re-tention at post-secondary institutions – especiallyamong the state’s low-income families.

The state also does not provide FTE resources to sup-port non-credit career classes; therefore, the cost ofthese classes is typically covered through higher stu-dent tuition. A number of other states do providesupport for non-credit career classes. In North Car-olina, for example, the state will provide funding fornon-credit career classes that upgrade job-relatedskills. Non-credit career classes are important train-ing tools for low-income working adults because theyallow workers to retain their jobs while enhancingtheir skill sets to compete for higher wages. Non-credit career classes are also usually shorter in dura-tion than a degree course, which increases thelikelihood of completion.

Adult EducationThe Adult Basic Education (ABE) program and GEDtesting is coordinated by the State Board for Juniorand Community Colleges. Adult Basic Education po-tentially serves as the gateway for low-wage and low-skill workers to obtain training and ultimatelyhigher-wage jobs. Given the large percentage of fami-lies with a parent without a high school diploma andthe high rate of workers with similar levels of educa-tional attainment, a well-functioning ABE program iscritical to any efforts to start the progression of hard-to-serve populations up the career ladder.

Analysis of the number of adults without a highschool diploma relative to the number of adults en-rolled in adult education reveals that the potential op-portunity for adult education statewide drasticallydwarfs the number of students that take adult educa

tion classes. Only 7.6% of all adults in Mississippiwithout a high school diploma are involved in anadult education class.26

The ABE program serves over 25,000 people annu-ally, with 60% of the participants being residents ofcolor and 40% white.27 For students entering theadult education system at the most basic levels, 29%show improvement. The rate of improvement is simi-lar (31-33%) in each of the three beginning and inter-mediate Adult Basic Education levels. The programcompletion rate is 51% and 55% for Adult SecondaryEducation Low and High Levels respectively.28

Goal setting is an important tool for moving studentsand workers beyond the entry-level training offeredby adult education. Adult education students who setgoals experience high levels of success. Eighty-threepercent (83%) of all unemployed students who en-tered the program with a goal of attaining employ-ment met their goal. Eight-seven percent (87%) of thestudents who entered the program with a stated goalof beginning post-secondary education or training at-tained their goal of further education. While the suc-cess rates of students that set goals of employmentand training is high, an emphasis on targeting theadult education system towards the acquisition ofskills to move into additional training for higher-pay-ing jobs does not appear to be a priority. Only oneout of five students (20.1%) enrolled in adult educa-tion set a primary or secondary goal of entering /retaining employment or entering post-secondarytraining. 29

22 Ibid23 National Center for Public Policy and Higher Education 200624 Measuring Up 2006: The State-by-State Report Card for Higher Education,” 2006

(see: http://measuringup.highereducation.org/compare/state_comparison.cfm)25 Ibid; National Center for Public Policy and Higher Education 200626 Working Poor Families Project, generated with data from the U.S. Department of Education,

www.ed.gov/about/offices/list/ovae/pi/AdultEd/datatables/2003-2004enroll.xls27 Measure and Methods for the National Reporting System for Adult Education. State Board for Community and Junior Colleges.

11/21/2005.28 Measure and Methods for the National Reporting System for Adult Education. State Board for Community and Junior Colleges.

11/21/2005.29 Ibid

11

In addition to program emphasis, another factor con-tributing to low completion rates in the Adult BasicEducation System could be a low rate of investmentin the program. Mississippi annually spends $6.52per working-age adult without a high school diplomaon adult education. Mississippi trails all Mid SouthStates in this area (Chart 3).

As mentioned earlier, ABE and GED testing, programsthat are well-integrated into the community collegesystem, offer opportunities for students to build careerpathways to achieve economic success. With eachadditional level of educational attainment, studentsgain more options to earn higher wages. A number ofcommunity colleges within the state have taken thefirst step towards linking their ABE and GED testingprograms to post-secondary studies. Coahoma Com-munity College, for example, makes a scholarshipavailable to students completing the GED testing pro-gram.

Workforce Investment NetworkIn 2004, the state legislature consolidated most of thestate’s workforce training programs outside of thecommunity college system into the Mississippi De-partment of Employment Security. Additionally, thelegislation created four Workforce Areas – each gov-erned by a workforce investment board (WIB). Thesystem was adjusted to allow eachWIB to have thelatitude to create a workforce investment network thatmost readily met the needs of the people living in theWIBs’ respective communities. Each workforce arearelies on a one-stop system to connect participants toprograms to advance employment outcomes.

Much of the system is designed to tailor the structureof the workforce programs to the local economy. Thelocal WIBs establish training priorities and determinelevels of workforce supports and training partners tomeet the needs primarily of unemployed and dislo-cated workers. Any efforts to target special popula-tions (for example, adults in poverty) are localizedwith no state mandates beyond federal WIA require-ments.

During the 2004 program year for the state WorkforceInvestment Act Program, nearly 41,000 participantsincluding adults, youths and dislocated workers ex-ited the program. Over 22,000 of the people who ex-ited the program were adults. Most of the 22,986adults who exited the program received core services(80.5%). Core services included outreach, intake andeligibility determination, as well as job search andplacement assistance.

29 Ibid30 Working Poor Families Project generated with data from 2002-03 expenditure data submitted to the U.S.

Department of Education (numerator) and 2004 Census data on number of adults 18-64 without HS/GED (denominator)

Chart 3State Resources Allocated for Adult Educationper Adult without a High School Degree or GED 2003

$80.00

$60.00

$40.00

$20.00

$0.00AL AR LA MS TN

U.S. $46.65

Source: Working Poor Families Project, generated with data from the 2002-03expenditure data submitted to the U.S. Department of Education (numerator) and2004 Census data on number of adults 18-64 without HS/GED (denominator)

$11.68

$68.24

$17.94$6.52 $7.25

Programs to Watch: CoahomaCommunity College

GED Scholarship Program

Coahoma Community College (CCC) offers afull first-semester scholarship to all of its stu-dents that complete GED training and receive aGED diploma through CCC.

At the end of the 2005 academic year, 11.2% ofCCC’s full-time students had completed their en-trance requirements through GED training –nearly two percentage points above the state av-erage. The program is a good example of thestate Adult Education / GED Testing system es-tablishing a pathway towards gainful employ-ment beginning with basic education andcontinuing with post-secondary classes.

12

For adults that require additional assistance to be-come job ready, the state makes intensive servicesavailable for workers to develop individual employ-ment plans, to receive specialized assessments andcase management. Only 7.8% of those exiting theprogram received core and intensive services.

In Mississippi, training services are available foradults that are determined to need additional trainingto attain employment after the completion of core andintensive services. With a strong emphasis on theprovision of core services, WIA training was providedto only a small percentage of Mississippi program par-ticipants. Of the adults who exited the program, only11.7%, or approximately 2,689 exiters, received train-ing.31 This rate lagged the rates for all of the border-ing states, where training rates exceeded 55%(Table 3).

It should be noted that only California and New Yorkexit more people fromWIA programs than Missis-sippi. With a very largeWIA program, Mississippihas the potential to expand the training component ofits WIA services with great effect. By doublingWIAtraining rates and targeting training towards jobpreparation for employment that offers upward mobil-ity, theWIA program could contribute to the long-term economic stability of the state. Ultimately, thosethat would receive training targeted towards economicadvancement would earn more money, generate moretax revenue and use fewer state employment servicesonce employed.

Temporary Assistance for Needy FamiliesThe state’s Temporary Assistance for Needy Families(TANF) program also has some flexibility to dedicateresources towards education and training. Even withrecent changes to federal regulations requiring in-creased work participation rates among TANF case-loads, education and training opportunities still existand can contribute to the overall goal of increasedwork participation rates. For example, non-credit, vo-cational education and associate’s degree-levelcourses that are related to an occupation qualify ascore activities under the current regulations.32

Many of the people who receive TANF assistance ex-perience many barriers to employment. As such, peo-ple leaving TANF for work may enter jobs with lowwages. One strategy to increase opportunities forpeople leaving TANF could be to increase training op-portunities available to TANF participants. In 2004,2.5% of all Mississippi TANF recipients were enrolledin education and training activities.33 If Mississippidoubled those efforts annually over the next threeyears, Mississippi would lead the nation in the per-centage of TANF recipients enrolled in training. Byacting strategically, the state could simultaneouslygrow the employability of its TANF participants whileusing the education and training activities to meetfederal work participation requirements.

Table 3Rate of Training Services Received by Adult WIA Exitersfrom April 2004 – March 2005Mississippi and its Border States

Alabama 9,341 89.9% 8,397

Arkansas 1,052 74.5% 784

Louisiana 5,796 73.1% 4,237

Mississippi 22,986 11.7% 2,689

Tennessee 6,187 56.1% 3,471

Source: 2004 WIASRD Data Book. Social Policy Research Associates. February 2006.www.doleta.gov/performance/results/py_2004_WIASRD_databook.pdf

Calculated Numberof Exiters that

Received TrainingNumber of Exiters

Percent of Exitersthat Received

Training

31 2004 WIASRD Data Book. Social Policy Research Associates. February 2006.www.doleta.gov/performance/results/py_2004_WIASRD_databook.pdf

32 Elizabeth Lower-Basch, Evelyn Ganzglass, Elisa Minoff, Sharon Parrott and Liz Schott. “Analysis of New Interim FinalTANF Rules.” Center on Budget and Policy Priorites, Center for Law and Social Policy. http://www.cbpp.org/7-21-06tanf.pdf.

33 U.S. Department of Health and Human Services, Table 4A Average Monthly Number of Adults Engaged in Work by WorkActivity for Families Counted as Meeting the All-Families Work Requirements, FY2004.

Mississippi Basic Skills TrainingTax Credit

The Mississippi Basic Skills Training Tax Creditprovides an income tax credit to businesses thatsponsor trainings through the community andjunior college system.

The credit specifically targets the costs that em-ployers incur while providing training for an em-ployee:• To enhance skills needed to perform an ex-

isting job;• To improve job performance; and/or• To prepare an employee for a designated ca-

reer path.During the 2006 Fiscal Year, the credit receivedlittle use as only an estimated $120,000 in taxcredits were claimed on business tax returns(Mississippi Tax Expenditure Report 2005). In2006, the Legislature voted to extend the creditfor two more years until 2008.

13

From the late 1990s to 2006, the TANF caseload inMississippi decreased from more than 60,000 peopleto approximately 13,354.34 Some participants exitedthe program for work opportunities, others droppedout of the program and still others were no longer ableto participate in the program once they reached the60 month lifetime program time limit. Limited per-formance data show that Mississippi ranks 37th na-tionally and 3rd in the Mid South in its AdultEmployment Retention Rate at 56.8%.35 The reten-tion rate measures the extent to which TANF recipi-ents who have entered work remain employed forthree consecutive quarters following their initial place-ment.36

While some data on the level of TANF leavers andwork participation rates are available, there is nosource of information about TANF exiters’ ability toachieve economic self-sufficiency. Some states, likeArkansas for example, measure the percentage ofTANF exiters that earn above poverty level wages.The data allow the state to measure the TANF pro-gram’s success in moving its participants towards self-sufficiency, which reduces the likelihood that exiterswill return to the program in the future.

Measuring the Return

All efficiently run companies invest in systems to pro-vide timely, accurate and comprehensive data oncompany performance to maximize shareholder re-turn. These systems include a process for setting out-come-based goals and provide for the ongoing andregular measurement of companies’ attainment oftheir goals. Systems and programs that achieve orsurpass goals are then enhanced, while systems andprograms that do not achieve the goals are improvedto facilitate goal attainment.

To increase the return on Mississippi’s investment inworkforce training, the state must develop systemsthat collect data on the attainment of training pro-gram outcomes. For example, how manyWIA andTANF exiters earn above 100 or 200 percent ofpoverty-level wages? Additionally, efforts to make thedata publicly available will also contribute to programaccountability. In Arkansas, the collection and re-porting of such data led to the creation of a careerpathways program that serves thousands of TANFparticipants annually through basic education, bridgeprograms and the community college system. Theprogram was launched when the data showed thatfewer than 10% of all TANF exiters were earningabove poverty-level wages.

The SBCJC does have a system in place to set goalsand measure its performance against those goals.Two goals relevant to the discussion on workforcetraining include 1) the cumulative grade point average(GPA) for community college students that transfer tostate four-year colleges being equal to or greater thanthe GPA for native students, and 2) 90% of studentswho complete a Vocational Technical Training pro-gram being positively placed. As of 2005, the GPA ofcommunity college transfer students (2.78) was al-most equal to the GPA of native students (2.79). Ad-ditionally, 88.9% of all Vo-Tech students werepositively placed.37

34 Phone and e-mail correspondence interview with Cheryl Sparkman, Director – Division of Economic Assistance,Mississippi Department of Human Services

35 Working Poor Families Project generated with data from U.S. Department of Human Services TANF High Performance BonusRates, Office of Family Assistance, High Performance Bonus Awards, Performance Year 2004.Table 3(A) www.acf.hhs.gov//programs/ofa/HPB/2004/table03a.htm#fn3

36 Phone interview with Cheryl Sparkman, Director – Division of Economic Assistance, Mississippi Department of Human Services37 Mississippi State Board for Junior and Community Colleges Program Performance Indicators and Measures FY 2005

http://www.sbcjc.cc.ms.us/pdfs/nonfinperfindfy2005.pdf14

Building on the foundation of the SBCJC’s trackingsystems, the SBCJC could look at adding measure-ments that track placement of low-income studentsand the progress of students that receive remediation.Another important measure to track could include thepercentage of ABE students that transition into post-secondary studies and obtain a certificate or degree.This measurement would yield valuable informationabout the development of a career path leading tohigher-wage opportunities. Additionally, within theAdult Education program, measurements could becreated to track the percentage of Adult Educationstudents that earn above poverty-level wages oneyear after placement.

Within theWorkforce Investment Network and theTemporary Assistance for Needy Families programs,state measurement activities could be enhanced bydeveloping self-sufficiency goals and tracking progresstowards those goals annually. Specifically, the statecould set goals around moving a certain percentage ofexiters into jobs that pay above poverty-level wages.Annually, the state could track the progress of the pro-gram exiters and report the percentage of exiters thatmeet or exceed the wage target. Earnings data follow-ing the exit of the two programs would provide thestate with good information about the programs’ ca-pacity to move participants towards self-sufficiency.Data could be used to make program enhancementsover time.

Increasing the Return by Honing theCompetitive Edge

Adult educational attainment and enrollment in post-secondary classes in Mississippi is low compared toMississippi’s border states and the rest of the nation.Additionally, significant disparities exist across race.In the midst of low levels of attainment, the commu-nity and junior college system provides one of themost affordable post-secondary options in the coun-try. However, for those who still cannot afford col-lege, very few resources exist to bridge theaffordability gap. Other programs with the flexibilityto provide training are currently targeted towardsother areas.

Investments in the state’s workforce education andtraining systems will yield long-term benefits for work-ing Mississippians, businesses and the overalleconomies of local communities. By increasing ac-cess to training for working families, people aroundthe state will have additional opportunities to upgradetheir skill sets and move into higher-wage work. Aspeople move into higher-wage work, communities willbenefit through increased local savings and economicactivity. The following page summarizes Mississippi’sinvestment opportunities to increase the return onworkforce training systems and programs.

15

Investment Opportunities –Honing the Competitive Edge

STRENGTHENING POLICIES

Post-secondary TrainingFor students from low-income working families, veryfew need-based resources exist at the state level.While a number of states invest in need-based aid inamounts equal to or exceeding 25% of the federalPell Grant contribution, Mississippi invests state re-sources amounting to about one percent of its an-nual Pell Grant allocation. Likewise, the state doesnot provide resources for non-credit career trainingcourses – a valuable tool for people who are alreadyworking and are looking to rapidly upgrade theirmarketable skills. To address affordability challengesfor the state’s lowest-income working families, thestate could:• Pilot the use of two pools of state funds directed atincreasing affordability for traditional and nontra-ditional students. For traditional students, thepool of funds would be used to provide grants foracademically qualified students without the re-sources to pay for college. For nontraditional stu-dents, the pool would target workers at least 24 orolder who are not qualified for Pell Grants. Fundscould be used for associate’s degree, credit certifi-cate and non-credit vocational programs.

Adult EducationAbout eight percent of all the adults in the state ofMississippi who have not obtained a high schooldiploma or passed the GED test are involved inadult education. One possible reason for the lowlevels of involvement could be the lack of a recogniz-able career path from Adult Education to post-sec-ondary training. Only 20% of the adults that enrollin Adult Education set a primary or secondary goalof entering employment or post-secondary educa-tion. Another reason could be very low levels of in-

vestment by the state in the Adult Education pro-gram. On average, Mississippi spends $6.52 peradult who has neither received a high schooldiploma nor passed the GED test. Mississippi could:• Double the available resources per adult without ahigh school education or equivalency from $6.50to $13.00 for Adult Education. Increased re-sources could be targeted towards programs withhigh levels of work and educational goal attain-ment and serve as the first step on a path for addi-tional education and ultimately higher wages.

Workforce Investment Act and Temporary Assis-tance for Needy FamiliesMississippi exits one of the largest groups of peoplein the country from its WIA program. While thenumber of people who exit the program is very high,only a small percentage of exiters receive training(11.7%). Likewise, only a small percentage of peopleenrolled in the TANF program were enrolled in train-ing (2.5%). Mississippi could strengthen training op-tions available to its unemployed and verylow-skilled workers by:• Targeting moreWIA resources towards educationand training; and

• Increasing training options available to TANF par-ticipants with the goal of doubling the rate of par-ticipants in training activities annually for the nextthree years. Training programs could be focusedon those activities that allow the state to meet itsfederal work participation requirements.

PROGRAM MEASUREMENT ANDACCOUNTABILITY

To increase the return on Mississippi’s investment inworkforce training, the state must employ systemsthat set goals, collect data on the attainment of train-ing program outcomes and make the data publiclyavailable. The State Board for Community and Jun-ior Colleges does have a system to set goals andmeasure their attainment. The SBCJC even makesinformation about their progress available to thepublic on its website. Other programs, likeWIA andTANF, set goals and track federally mandated indica-tors; however, only a small number of indicators pro-vide information on program outcomes. Mississippicould improve its measurement and accountabilitysystems within its training and employment assis-tance programs by:• Tracking the percentage of low-income studentspositively placed after completing studies withinthe community and junior college system;

• Tracking the earnings of Adult Education gradu-ates benchmarked to 100% and 200% of poverty-level wages;

• Tracking the percentage of Adult Education gradu-ates that transition into post-secondary educationand obtain a certificate or degree;

• Tracking the earnings of TANF exiters bench-marked to 100% and 200% of poverty-level wagesone year after leaving the program;

• Tracking the earnings of WIA exiters bench-marked to 100% and 200% of poverty-level wages;and

• Ultimately using the data to establish goals, trackprogress and make information publicly available(similar to the SBCJC Program Performance Re-port) and to make program enhancements overtime.

16

While enhancements to Mississippi’s education andtraining efforts are critically important for the state toincrease the return on its investment in working fami-lies, they are only part of a comprehensive strategy tomove Mississippi’s working families towards self-suffi-ciency. Education and training efforts may preparethe workforce for high-wage jobs; however, in isola-tion, they do not create the type of jobs that providefinancial security for working families. The othercomponent of a comprehensive strategy to increasethe return on Mississippi’s investment in working fam-ilies includes efforts to generate high-quality jobs.Mississippi’s economic development policies providean opportunity for the state to assist businesses andultimately to generate jobs that contribute to eco-nomic advancement.

Mississippi’s Economy

Mississippi businesses are the lifeblood of our state’seconomy. In 2004, MS businesses employed1,080,524 workers and paid annual wages totaling$30.3 billion.38 While annual aggregate wage num-bers have risen over the past couple of years, enthusi-asm for the rise is tempered by an abundance oflow-wage work. More than one out of three jobs(35.2%) in Mississippi are in low-wage occupations.39

Forecasts through 2012 suggest that the prevalence oflow-wage work will continue. With the exception ofnurses, operations managers and truck drivers, mostjob growth will occur in low-wage service sector em-ployment requiring little skill preparation (Table 4).40

The dominance of the service sector as a source ofemployment in Mississippi is noteworthy given thatmany service sector jobs require no more than a high

school diploma and pay low wages while offering fewbenefits. As these jobs grow in number, working fami-lies that fill the jobs will meet challenges achievingself-sufficiency – no matter how hard they work –given the low wages and lack of benefits associatedwith many of the high-growth occupations.

38 Mississippi Department of Employment Security.39 Working Poor Families Project, generated with data from the Bureau of Labor Statisticsʼ Occupational Employment Statistics

Program, November 2004.40 Occupational Employment Projections. Year 2002 to Year 2012 State of Mississippi. Mississippi Department of Employment

Security.

CHAPTER3:

Tools for Success:Mississippi’s EconomicDevelopmentPrograms

Fast Facts – Economic Development

• In 2004, Mississippi employed more than onemillion workers who earned over $30 billionin wages

• One out of three Mississippi jobs (35.2%) arein low-wage occupations

• 54,515Mississippians hold more than one job• In FY 2006, Mississippi invested over $67million in economic development incentivesthat supported 11,234 jobs

Table 4Top 10 Occupations with Highest Projected Growth in Mississippi 2001-2012

Cashier $14,640 2565 High School DiplomaRetail Salesperson $19,860 2210 High School and some on–the-job TrainingRegistered Nurse $45,590 1360 Bachelor’s DegreeWaiter and Waitress $13,290 1005 High School DiplomaLaborer and Freight, Stock,

and Material Mover $19,340 905 High School DiplomaCombined Food Preparation, Serving

Worker and Fast Food Worker $13,860 820 High School DiplomaTruck Driver, Heavy and Tractor Trailer $30,900 770 High School and some on-the-job TrainingGeneral Operations Manager $66,310 765 Bachelor’s DegreeFood Preparation Worker $13,700 720 High School DiplomaNursing Aide, Orderly and Attendant $16,060 685 High School and some on-the-job Training

Source: Mississippi State WIA and Wagner-Peyser Plan. Updated May 2006.

AverageAnnual Wage

Projected AnnualOpenings

Education Required

17

At the same time, the service sector also containsmost of the state’s fastest growing occupations – mostof which pay self-sufficiency wages. Participation inthe fastest growing occupations, however, will requirehigher levels of education (Table 5).

Employment trends indicate that the service sectorwill continue to be a job driver in the future. Partici-pation and ultimately movement towards self-suffi-ciency will depend on the access to and attainment ofskills and education. As of the first quarter of 2006,79% of Mississippi’s jobs were in service producingindustries.41

The employment projections illustrate the evolution ofMississippi’s economic landscape. While the manu-facturing sector was once one of the most robust em-ployment generators in the Mississippi economy,many manufacturing jobs have moved with the com-panies to developing nations. Over the last decade,the sector has consistently lost jobs. From 1995 to2005, the sector experienced declines in total aggre-gate wages in eight out of 10 years for an overall in-

crease of 25% over the course of a decade. At thesame time, the health care and social assistance,business services, and leisure and hospitality sectorshave all experienced double digit growth rates.42

Throughout the last ten years, this evolution has af-fected various parts of the state in different ways. Forexample, the state’s greater metropolitan areas all ex-hibit unemployment rates that are near or lower thanthe national average. As of October 2006, DeSotoCounty (south of Memphis), the Jackson suburbs andHattiesburg have unemployment rates of 4.4% orlower.43 The low rates are likely tied to higher con-centrations of an educated workforce and the pres-ence of job opportunities that match the skill sets ofthe workforce. In rural areas, however, the evolutionhas had a negative effect on working families. All sixof the state’s counties with double digit unemploy-ment are rural. Due to lower levels of population andeducational attainment, rural areas are less able thana large city to absorb the loss of a large employer andare likely to generate the low-wage service sector jobslisted in Table 4 over time.

41 Hill, Marianne. Mississippi Economic Review and Outlook. June 2006. Page 13.42 Ibid, page 57.43 Labor Market Data Publication, August 2006. Mississippi Department of Employment Security.

Note: The Gulf Coast metro areas exhibited low unemployment rates prior to Hurricane Katrina consistent with other urban areas.Since the storm, rates have risen.

Table 5Top 10 Occupations with Fastest Projected Growth in Mississippi 2001-2012*

Physical Therapy Assistant $34,640 51.1% Vocational Education or Associate’s DegreeMedical Assistant $21,570 50.8% Vocational Education or Associate’s DegreeRespiratory Assistant $38,680 50.5% Vocational Education or Associate’s DegreeCardiovascular Technologist and Technician $38,220 50.0% Vocational Education or Associate’s DegreeSelf Enrichment Education Teacher $31,480 47.3% Vocational Education or Associate’s DegreeArt, Drama and Music Teacher

(Post Secondary) $46,680 44.8% Bachelor’s DegreeOccupational Therapist $61,330 42.4% Bachelor’s DegreeComputer Software Engineer $57,370 41.7% Bachelor’s DegreeMedical Records and

Health Information Technician $24,720 41.6% Vocational Education or Associate’s DegreeSurgical Technologist $27,810 41.2% Vocational Education or Associate’s Degree

Source: Mississippi Department of Employment Security; O*Net Online www.online.onecenter.org.*Note: Only the Fastest Growing Occupations with at least 30 annual openings were listed in this table.

AverageAnnual Wage

Projected AnnualOpenings

Education Required

18

Mississippi’s Workforce

More than 1.3 million people over the age of 16 wereengaged in Mississippi’s workforce in 2004. The laborforce participation rate for the state was 61.6% -slightly below the national participation rate of 66%but within 1.8 percentage points of Mississippi’sneighboring states. Of the 1.3 million people in thelabor force, 47.7% were women, and over a third wereminorities.44

For those in the labor force, identifying stable jobsthat pay self-sufficiency wages can be challenging.Nearly 11 percent (10.8%) of all Mississippians whowere 18-64 years of age were not fully employed. Ad-ditionally, 54,515 Mississippians held more than onejob in 200545 The data on under-employment andsecond jobs are not surprising. From 1979 to 1999,average earnings per job in Mississippi decreasedfrom 79% of the national average to 74%.46 Likewise,in 2005, over 27% of all wage and salary workerswere employed in low-wage jobs.47

Growth in good-paying jobs coincident with properlytrained workers filling them is important for the eco-nomic advancement of Mississippi’s residents andcommunities. Without changes occurring in the over-all employment mix, working families will have fewchances to grow their incomes for the foreseeable fu-ture.

Generating Jobs – Incentives forIncreasing Mississippi Employment

Mississippi has a mixed track record in the use of eco-nomic development subsidies to generate large-scaleemployment opportunities. Two notable companiesthat have received several hundred million dollars insubsidies from the state of Mississippi are NissanNorth America and the Northrop Grumman Corpora-tion. Today, the two companies employ more than17,000 people and are the two largest manufacturingemployers in the state.48 In addition to being strong,financially viable companies with longevity, they bothoffer their employees self-sufficiency wages. At theother end of the spectrum, the state provided a loanguaranty for the construction and start-up of a beefprocessing plant in Oakland. The project was unableto get off the ground and closed down after threemonths of operations, costing the state $40 milliondollars.49

Mississippi’s bundle of incentives for economic devel-opment includes a number of loan and grant pro-grams. Most of the programs are targeted towardsinfrastructure development or capital projects and donot have job creation or associated wage and benefitrequirements. Several of the program outputs aretracked in an annual report titled the Mississippi De-velopment Authority Program Overview. For FY 2006MDA reports that $67,727,469 was approved orawarded to 458 projects that supported 11,234 jobs.The report does not include funds spent on MDAprojects through tax expenditures (revenue that isforegone through the administration of credits and re-bates) through the awarding of credits and rebates tocompanies.

44 Working Poor Families Project, generated with data from the Current Population Survey 2004. www.bls.gov/lau/table14full04.pdf45 Working Poor Families Project, generated with data from the 2005 Basic Monthly Current Population Survey.46 Mississippi: A Sense of Urgency. Rural Responses to the New Economy. Southern Rural Development Center and MDC. April 2002.47 2005 Basic Monthly Current Population Survey. PRB Analysis48 Mississippi Development Authority Top 100 Mississippi Manufacturers Based on Employment49 “State Pays off Beef Plant Debt,” John Faquay. Clarion Ledger, June 3, 2005.

19

Advantage JobsThe state’s primary business assistance program, Ad-vantage Jobs, does require full-time job creation goalswith wage standards and health coverage. Compa-nies that meet the eligibility requirements for the in-centive receive cash rebates of Mississippiwithholding taxes for up to 10 years. There are cur-rently no requirements to target a portion of the jobsassisted towards low-income workers. Table 6 illus-trates the minimum job creation and wage targets.

The final benefit received by a company is tied to thenet economic benefit received by the state. Hence,companies that support jobs with higher wages re-ceive proportionally larger incentive payments. Therange of average annual salaries for the counties runsfrom $20,281 to $44,168; the average annual statesalary is listed at $29,190. It should be noted thatwhile the Advantage Jobs program targets distressedcommunities, it does not contain provisions to targetlow-wage workers.

The Mississippi Development Authority does trackthe performance of Advantage Jobs quarterly in itsProgram Overview. Through FY 2006, the AdvantageJobs program assisted 12 projects that supported1,743 jobs. Of the 12 projects assisted, five were lo-cated in developed counties, five were located inmoderately developed counties and two were locatedin the least developed counties. Projects assisted in-cluded 10 manufacturers and two technology inten-sive enterprises.50 While the report represents astrong foundation for monitoring its program outputs,

enhancements could be made to bring more clarityto the level of investment, to identify who actuallybenefits.

Momentum MississippiIn 2005, the state legislature passed the MomentumMississippi legislation to target high-growth industriesin the manufacturing and service sectors. Some ofthe goals of the legislation included: 1) the alignmentof incentives and resources towards the developmentof the high-growth industries; 2) an increase in publicand private research and development funding to aidwith technology transfer and to commercialize inno-vation; 3) improvement of the profitability and pro-ductivity of existing businesses.

MomentumMississippi represents an effort to expandMississippi’s current incentive programs to include afocus on more high-growth industries. Momentumlooks to achieve its goals through a number of newloan and grant programs. It also broadens existingprograms to focus on technology and investmentsthat increase global competitiveness. Through FY2006, few of the newMomentum programs had beentapped; however, two technology intensive enterprisesthat received support through an expanded Advan-tage Jobs did occur.51

50 Mississippi Development Authority Financial ResourcesDivision. MDA Program Overview FY 2006 Summary forPeriods 7/1/2005-6/30/2006.

51 Ibid.

20

Table 6Advantage Jobs Job Creation and Wage Requirements

Source: Mississippi Development Authority http://www.mississippi.org/content.aspx?url=/page/3138&

Industry Job Creation Requirement Wage Requirement

Any Business except retailand gaming

Data / Information Processing

Manufacturing

Research and Development

Technology Intensive

• 10 full-time jobs in the leastdeveloped counties• 25 full-time jobs in the moderately

developed and developed counties





• 10 full-time jobs

• 10 full-time jobs

125% of the lesser of the averageannual wage of the state or county

100% of the lesser of the averageannual wage for the state or county



150% of the state wage

Jobs Tax CreditThe jobs tax credit provides a credit of up to 10% of acompany’s payroll against corporate income taxes.As with the Mississippi Advantage Jobs program,counties with higher levels of distress have lower jobcreation targets. While the credit is useful for generat-ing employment, it does not target improved employ-ment outcomes for low-income workers. The AnnualTax Expenditure Report estimates that employersclaim credits of about $4,000,000 per year againsttheir corporate income tax. However, there is no wayto answer questions about the number of jobs thatare assisted through the credit due to the way it is re-ported through the tax filing system.

Mississippi’s Small Businesses

Approximately 9.4% of Mississippi’s low-income fami-lies have members who are self-employed. Withnearly one out of ten low-income working familieshaving at least one parent who is self-employed,small businesses play an important role in movingfamilies towards self-sufficiency. Mississippi’s smallbusiness outcomes are comparable to those of sur-rounding states (Table 7).

Small businesses are growing statewide and representa significant employment generator. Given the em-ployment opportunities available to working familiesthrough the small business sector, access to capitalfrom public and private sources for the start-up andexpansion of small businesses is important.

In FY 2006, the state provided $1.75 million in loansto 29 projects through the Minority Business Enter-prise Loan Program. The investment assisted 115jobs. Efforts to increase access to capital to generate

quality jobs are an important component of movingfamilies towards self sufficiency. Additionally, activi-ties that stimulate entrepreneurship and grow strongbusinesses that pay good wages from within the statecould also have a positive effect on the economies oflocal communities.

Increasing the Return – Tools for Success

While training and education are important compo-nents of a comprehensive strategy to move workingfamilies towards self-sufficiency, good-paying jobswith benefits must be available to make the invest-ment of working family resources worthwhile. Missis-sippi’s job projections suggest that much of the state’sgrowth over the next five to six years will primarilyoccur in low-wage occupations that require few skills.With the economy evolving from a strong manufac-turing base of employment to a service-dominated en-vironment, efforts are needed to generate high-qualityjobs. Mississippi offers several incentives to stimulategrowth and development. Of the incentives, somefocus specifically on the support of high-wage jobswith benefits. At the same time, the bundle of incen-tives could be strengthened by targeting and includingbenchmarks for providing jobs for the state’s low-wage workers. Efforts to enhance the state’s monitor-ing systems could also provide good information onMississippi’s return on its investment in economic de-velopment. Finally, small businesses and entrepre-neurship development offer opportunities throughoutthe state for working families to gain economic stabil-ity. The following page provides an overview of Mis-sissippi’s opportunities to increase the return on itseconomic development investments.

Table 7State Small Business Profiles 2005

U.S. Mississippi Alabama Arkansas Louisiana Tennessee

Total Numberof Firms

Firms withEmployees

New Firms withEmployees

Small firmpercent of non-farm sector

23,974,500 197,586 323,891 222,542 347,436 471,316

Percent of total 23.7% 27.4% 26.8% 27.8% 27.7% 23.3%

Small firms 99.7% 96.8% 97.3% 97.1% 97.6% 97.2%

Number 580,900 6,141 9,413 7,852 9,875 17,415

Growth rate 4.9% 2.0% 4.4% 8.3% 6.2% 1.6%

50.1% 50.0% 49.7% 48.8% 53.9% 45.1%

Source: U.S. Small Business Administration, Office of Advocacy

50 Mississippi Development Authority Financial Resources Division. MDA Program Overview FY 2006 Summary forPeriods 7/1/2005-6/30/2006.

51 Ibid.

21

Strengthening Programs

The state’s main business assistance program, Ad-vantage Jobs, is structured to provide incentives forhigh-quality job growth. Companies are rewardedwith higher incentives for investing in less devel-oped counties and providing higher-quality jobs.The program, however, does not contain any provi-sions for targeting low-wage workers. Building onthe strengths of a program that includes wage stan-dards and health insurance requirements in ex-change for state subsidies, the state could:• Include a provision to require employers to fill aportion of the newly created jobs with low-wageworkers. Companies that employ a high numberof low-wage workers could receive a more gener-ous subsidy.

Program Measurement and Accountability

The state does provide a quarterly report on severaldifferent incentive programs. The informationlisted includes the aggregate amount of projectsfunded through a certain program, the number ofprojects approved and the estimated number ofjobs created. While the report provides a startingpoint for measuring the return on the state’s eco

nomic development investment, it provides limitedinformation on who benefits from each program.To enhance the utility of the monitoring systemsused to assess the state’s economic developmentprograms, the state could:• Track the percentage of low-wage workers thatmoved into jobs assisted through state incentivepayments;

• Track the earnings of workers assisted throughincentive programs one year after the assistancewas received. Measures could include the per-centage of workers earning above poverty-levelwages and the percentage of workers earningabove 200% of poverty-level wages;

• Increase the transparency of the Jobs Tax Credit.While employers claim an estimated $4 milliondollars in credits annually, there is currently noway to answer questions about the number ofjobs assisted and the quality of the jobs. Effortscould be made to annually report the numberand quality of jobs assisted in the Tax Expendi-ture Report; and

• Annually, the incentive reports could be publiclyreleased in aggregate form on agency websites toencourage legislative and programmatic account-ability.

Investment Opportunities: Tools for Success

22

As seen in Chapter 3, low-wage employment is acharacteristic of Mississippi’s economy. In 2005,282,751 Mississippians, or 27.1% of the working pop-ulation, were employed in low-wage jobs.52 The low-wage workers are incredibly important to the state’seconomic and social well-being. Low-wage profes-sions include nursing assistants that care for the eld-erly; child care workers that keep children safe whileparents are working, and teaching assistants that en-hance children’s education.

While important, these jobs simply do not payenough to move employees towards self-sufficiency.Typically low-wage jobs lack health insurance, work-able vacation / sick time and resources for retirement.In the absence of these benefits, workers forego pri-mary care and opportunities to build a safety net forretirement or an emergency.

Low-wage work is also expensive to employers.Specifically, when employees leave a job, employerslose productivity and profit. On average, employercosts for replacing a supermarket cashier hover near$3,600. Since low-wage workers typically do not stayin jobs as long as high-wage workers do, workforcesupports are critical to the bottom line of employersaround the state.53 The absence of workforce

supports like child care and health care

could be the difference between retaining and losing avaluable employee and ultimately profit.

Workforce supports, like health insurance and childcare, can fill the gaps left by low-wage work and canplay a crucial role in stabilizing the economics ofworking families. For example, it costs a single parentwith two children in Coahoma County approximately$2,055 a month to cover housing, health care, childcare, and food and transportation costs. Assumingthe parent earns $8.00 per hour, the family will be ap-proximately $650 dollars short each month withoutany type of assistance. However, with child care, chil-dren’s health insurance and food assistance, theshortfall drops to only $63 dollars a month (Table 8).

52 Working Poor Families Project, generated with data from the Basic Monthly Current Population Survey. Note: Low-wage is definedas a wage below $9.59 per hour adjusted for the state cost of living index.

53 Lane, Julia “The Low-Wage Labor Market: Challenges and Opportunities for Economic Self Sufficiency. The Role of Job Turnoverin the Low-Wage Labor Market. www.aspe.hhs.gov/hsp/lwlm99/lane.htm

CHAPTER4:

DecreasingVolatility:StabilizingEmployment throughWorkforce Supports

Fast Facts – Workforce Supports

• 282,751 working Mississippians were em-ployed in jobs with below poverty-level wages

• More than one out of five workers in Missis-sippi (21.6%) do not receive health benefitsthrough their employers

• In 2006 families with incomes below thepoverty level will pay income taxes

Table 8Impact of Work Supports on Wage AdequacySingle Parent with One Preschool and One School Age Child - Coahoma County, MS 2003

No Work Supports Child Care

WORK SUPPORTS

Child Careand Food Stamps

Child Careand Food Stamps

and MS CHIP

Source: Mississippi Self Sufficiency Standard, Page 22. March 2003

TOTAL INCOME:Monthly Costs:

HousingChild CareFoodTransportationHealth CareMiscellaneousTaxesEarned Income Tax CreditChild Care Tax CreditChild Tax Credit

TOTAL LIVING EXPENSESHORTFALL (-) OR SURPLUS

WAGE ADEQUACY(Total Income / Total Expense)

$1,408 $1,408 $1,408 $1,408

$414 $414 $414 $414$454 $73 $73 $73$403 $403 $312 $312$244 $244 $244 $244$213 $213 $213 $101$173 $173 $173 $173$160 $160 $160 $160

** ** ** **-6 -6 -6 -6$0 $0 $0 $0

$2,055 $1,674 $1,583 $1,471

-647 -266 -175 -63

69% 84% 89% 96%

23

As seen through out the report, state- and employer-sponsored training opportunities provide workingfamilies with the tools to move up the economic lad-der. At the same time, the state’s investment in work-force supports is incredibly important to stabilize thejobs of working families seeking to upgrade their em-ployment opportunities. For example, with a certainset of policies in place, a working parent may be ableto upgrade his or her skills through a non-credit ca-reer course at a local community college. The skillsupgrade could ultimately lead to higher wages andmore economic participation in the local community.However, if the worker does not have access to healthinsurance and falls ill, then the bills associated withgetting better may become a barrier to realizing thegains of the additional training. Likewise, a workerwho loses his or her job due to an extended absencecaused by limited child care resources could also un-dergo financial hardship and not reap the benefits ofupgrading his or her skills. Workforce supports allowworkers to remain gainfully employed when the ex-pected or unexpected events of a working family tran-spire.

Stabilizing Employment

WagesThe most important workforce support is one’s in-come. A rise in income is the quickest way to eco-nomic self-sufficiency. For workers earning minimumwage, however, self-sufficiency is a distant goal. Mis-sissippi follows the federal law for minimum wagewhich is currently $5.15 per hour. Analysis con-ducted by the Center for Policy Research and Plan-ning at the Institutions of Higher Learning estimatedthat 17,000 workers in Mississippi earn wages at orbelow minimum wage. Increasing the minimumwage to $7.25 would affect about 223,000 workers as-suming that all workers in the bottom quintile of MSearners ($7.76 and below) would receive a raise.54

In October of 2006, the state of Arkansas raised theminimum wage from $5.15 to $6.25. Research con-ducted on the proposed increase showed that eightout of 10 people who were to benefit from a $1.10 in-crease in the minimum wage were 20 years of age orolder. Additionally, 53% of the people who wouldbenefit also worked full-time. Approximately 127,000people were to benefit from the increase.55

TaxesMississippi’s tax structure creates challenges for work-ing families trying to achieve self-sufficiency. Thestate’s two major avenues for collecting revenue – thesales tax and the income tax – both have regressivefeatures. The sales tax, which is a flat tax and in-cludes a tax on groceries, takes a greater share of in-come from people with lower wages than from peoplewith higher wages. On the income tax, the deduc-tions and exemptions have not been adjusted for in-flation for several years. As a result, Mississippianswith wages below the poverty line will begin payingincome taxes in 2006.

Overall, the tax burden for working families in thelowest quintile is 10.0% whereas the wealthiest onepercent of earners has a tax burden of 6.9%. Afterfederal deductions are taken into account, the lowest20% of working Mississippians are taxed at nearlytwice the rate of the highest earners.56

At the federal level, the Earned Income Tax Credit(EITC) provides a boost to Mississippi’s low-incomeworking families by refunding money to working fami-lies through the tax return process. A working familywith two children earning $16,000 a year during 2005could receive a credit of $4,400 as a tax refund.57 Re-views of tax returns in nine Mississippi countiesshowed that an estimated 8,289 eligible filers did notclaim the Earned Income Tax Credit in 2002.58 In2003, 366,476 tax filers in MS claimed the EITC.59

54 Hill, Marianne. “Raise the Minimum Wage?” Mississippi Economic Outlook and Review. June 2006.55 News from the National Council on Churches. http://www.ncccusa.org/news/060410huckabeeminwage.html56 Robert S. McIntyre, Robert Denk, Norton Francis, Matthew Gardener, Will Gomaa, Fiona Hsu, Richard Sims. “Who Pays?

A Distributional Analysis of the Tax Systems in all 50 States.” Institution for Taxation and Economic Policy. January 2003.57 Center on Budget and Policy Priorities. “Earned Income Benefits for Tax Year 2005 at Various Income Levels.”

http://www.cbpp.org/eic2006/08_Benefits.pdf58 Internal Revenue Service Stakeholder Partnership Education and Communication Office, Jackson, MS.59 http://www.brookings.edu/urban/eitc/

24

Health CareHealth coverage is a critical workforce support forworking families. An illness left untreated could eas-ily become the cause of an extended work absencewhich could affect both wages and long-term employ-ment prospects. Unfortunately, a significant numberof working Mississippians do not have health insur-ance. Low-wage workers often have jobs that do notprovide health insurance. One out of five workers(21.6%) between the ages of 18 and 64 (or 288,197workers) do not have health insurance.60 Addition-ally, 38.6% of all low-income working families have atleast one parent without health insurance.61 In theabsence of employer-sponsored health coverage, theMedicaid program offers the only opportunity outsideof uncompensated emergency room care for low-in-come working families to access health care. Whilechildren of working parents earning up to 200% of theFederal Poverty Line (FPL) can receive coveragethrough the MS Children’s Health Insurance Pro-gram, Mississippi only covers working parents earn-ing up to 34% of the federal poverty line – amongone of the eight lowest eligibility standards in thecountry.62

Child CareMississippi’s child care assistance program is a tier-structured program with the highest priority given toworking families enrolled in or transitioning from theTemporary Assistance for Needy Families (TANF)program followed by very low-income parents at riskof entering the TANF program. Depending on theavailability of funds, parents earning up to 85% of thestate median income or enrolled in an education ortraining program are also eligible for child care assis-tance. Parents who receive child care assistancethrough the TANF program do not have co-payments.Parents who are working and not enrolled in theTANF program have a tiered co-payment structurethat is based on family size, income and the numberof children for whom services are received.63

Child care assistance payments are made directly tochild care providers through reimbursement for serv-ices. In January of 2005, the Office for Children andYouth with the Mississippi Department of HumanServices conducted a market rate survey of all li-censed child care centers and family care providers.The survey results showed that MS Child Care Assis-tance payments are made to child care providersthrough reimbursement for services at 52% of themarket rate for child care in the state.64 With a reim-bursement rate of 52% of the market rate, familiesthat rely on child care assistance to go to work haveaccess to about half of the providers in their commu-nities. Lower reimbursement rates limit the numberof centers able to accept child care assistance certifi-cates from working families.

Unemployment InsuranceLow-wage workers are often susceptible to layoffs andrestructuring activity due to low educational attain-ment and typically short tenures. Low-wage workersalso often experience longer periods of time betweenjobs than other workers, which can disrupt efforts tomove towards self-sufficiency.65 For workers wholose their jobs through no fault of their own, unem-ployment insurance (UI) is a critical support that al-lows working families to quickly move back into theworkforce. The UI payments provide a small amountof cash assistance to help with basic living expenseswhile an individual seeks employment.

Mississippi’s UI trust fund balance is one of thelargest in the country. While solvent, the UI programdoes not provide benefits for part-time workers ortemporary disability insurance. Additionally, in 2005,only 28% of the state’s jobless workers received un-employment insurance payments.66 For those whoused the program, they could receive a maximumweekly benefit of $210.67 The maximum benefit paidthrough the UI program was roughly equal to theweekly wage of an employee working 40 hours perweek at a minimum wage job ($206). The low benefitamount poses challenges for potential workers tryingto cover basic living expenses while also covering ex-penses related to looking for employment. This ob-stacle is especially problematic for workers in ruralareas – where the highest rates of unemploymentoccur – who require gas and an automobile for jobsearch activities. Mississippi could enhance its sup-ports for unemployed workers by connecting moreworkers to the UI program and increasing the weeklybenefit to $250 a week.

60 Working Poor Families Project, generated with data from the 2005 Current Population Survey, Annual Social and Economic Supplement, March 2005.61 Working Poor Families Project, generated with data from the 2005 Current Population Survey, Annual Social and Economic Supplement, 2003-2005.62 Working Poor Families Project, generated with data from the Kaiser Family Foundation www.statehealthfacts.org63 http://www.mdhs.state.ms.us/ocy_apply.html64 E-mail correspondence dated 8/22/06 with MS Department of Human Services65 “Child Care Cuts will Give Businesses Plenty to Cry About” Theresa Feeley and Jim Wunderman. San Francisco Business Times. March 21, 2003.66 National Employment Law Project http://www.nelp.org/docUploads/SouthernStateUIStatistics2005%5F052406%5F131726%2Epdf67 National Employment Law Project and the Mississippi Department of Employment Security

25

Increasing the Return – DecreasingVolatility through Stable Employment

Many of Mississippi’s jobs simply do not pay enoughfor workers to achieve self-sufficiency. Additionally,the workforce supports available – especially thosethat support health care and child care – are limitedin their reach. Furthermore, a low minimum wageand the regressive nature of the Mississippi tax sys-tem exacerbate the challenges of low-wage work.Workforce supports play a major role in stabilizingthe employment and financial security of Mississippi’sworking families. Workforce supports play the dualrole of making existing wages go further and of pro-viding a safety net for working families. As moreworking families are able to use workforce supports tostabilize their employment situations, localeconomies will benefit from having longer-tenuredemployees that invest in their communities.

Likewise, working families who benefit from strongworkforce supports will be in a position to move upthe economic ladder, as stable families will be morelikely to participate in training opportunities thanworking families that are experiencing economic un-certainty. Ultimately, strong, supported working fami-lies will increase the return on investments madethrough the education, training and economic devel-opment systems by moving into high-wage work, re-maining in jobs and stimulating the economy. Thefollowing page summarizes Mississippi’s investmentopportunities targeted towards decreasing volatilitythrough workforce supports.

26

Strengthening Policies

WagesCurrently, the state follows the federal minimumwage guidelines which require a minimum wage of$5.15 per hour. A raise in the minimum wagewould have a positive effect on the wages of at least17,000 of the state’s lowest-paid workers. To bringthe state’s lowest-wage workers a step closer to self-sufficiency, the state could:• Increase the minimum wage to levels equal toArkansas’ at $6.25 an hour.

TaxesBoth the sales and income taxes have regressivefeatures that require a greater share of income fromlower-income families than from higher-incomefamilies. Groceries, a necessary expense regardlessof income, are currently taxed at seven percent.Meanwhile, the income tax, having certain compo-nents that have not been adjusted for inflation,taxes people earning wages below the poverty level.The state could make the following adjustments tothe tax code to make low-income working familywages go further:• Groceries could be exempted from the sales taxwhile certain services could be added to the listof taxable items to account for the revenue thatwould no longer be generated by grocery sales;and

• Within the income tax system, deduction andexemption amounts could be updated to ac-count for inflation, thus preventing people inpoverty from spending limited incomes on a tax.

Child CareIn 2005, the market rate survey showed that thestate was only reimbursing child care providers at52% of the market rates for providers around thestate. At that rate, families have limited access toproviders that can provide care for their childrenwhile the parents work. To extend the level of cen-ters available to provide care to low-income work-ing families, the state could:• Increase the reimbursement level to the federalrecommendation of 75% of the market rate.

Health CareStatewide, one out of five workers do not have ac-cess to health insurance. Additionally, the stateonly provides state-sponsored insurance for adultswho earn up to 34% of the federal poverty line. Toaddress the high levels of workers without insur-ance, the state could implement the following poli-cies to stimulate coverage in the public and privatesectors:• Double the eligibility threshold for Medicaid par-ticipation for working families; and

• Create incentives for small employers to providehealth care benefits to their employees and fami-lies.

Unemployment InsuranceUnemployment Insurance is a critical tool for work-ing families to quickly get back on their feet afterthey lose a job through no fault of their own. In2005, only 28% of Mississippi’s jobless received UIpayments. For those that did receive payments, themaximum benefit was the smallest in the nation at$210 per week. Mississippi could assist workerswho lose their jobs – especially those in rural areasconstrained by rising fuel costs – by:• Increasing weekly unemployment insurancebenefits from $210 per week to $250 per week.

Investment Opportunities: Decreasing Volatility

27

28

As highlighted in the executive summary, Missis-sippi’s strongest asset is its people. Even in the faceof adversity, Mississippians work with and help eachother. Despite the strength of this asset, however,Mississippi and its people often find that investmentsof resources and hard work do not yield the most fa-vorable returns.

Increasing the Return: Investing in Mississippi’sWorking Families underscores the challenges facedby working families every day. Nearly 130,000 ofMississippi’s working families are low-income. Whileworking hard, Mississippi’s low-income working fami-lies face obstacles on the pathway to financial secu-rity and economic advancement.

Investing in Mississippi’s working families is a criticalstrategy for moving the state ahead in a rapidlychanging global economy. As globalization increasesits demand for a specialized workforce, efforts to con-nect the state’s people with the systems to compete inthe new economy are essential to expanding the ac-cess to and the availability of good jobs.

Fortunately, there are significant opportunities to en-hance the state’s investment in working families. Ex-panded and coordinated investments in training andeducation present the opportunity to equip workingfamilies with the skills to move into good jobs. En-hanced systems to measure program effectiveness inserving working families offer the chance to inform

and update economic development policies aimed atsupporting good jobs. Finally, a strong network ofworkforce supports ensures that hard work pays andthat employers, employees and ultimately the state’seconomy benefit.

By targeting working families, both the state and itspeople will see an increase in the return on their in-vestment of time and money as families move aheadand propel the state and its communities forward inthe new economy.

CHAPTER5:

Increasing the Return:A Summary ofStrategies andRecommendations

29

Mississippi Economic Policy Center4 Old River Place, Suite A

Jackson, MS 39202(601) 944-1100

www.mepconline.org

MississippiEconomic PolicyCenter

Date post:	05-Aug-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

INCREASINGTHERETURN: InvestinginMississippi’s WorkingFamilies · 2012-04-14 · Executive Summary...

Documents