Stuart Andreason, Federal Reserve Bank of Atlanta: Bridging Research and Reality in the Job Market

Van Ton-Quinlivan: Welcome to WorkforceRx with Futuro Health, where future-focused leaders in education, health care and workforce development explore new innovations and approaches. I’m your host Van Ton-Quinlivan, CEO of Futuro Health. There is wide agreement among economists that a recovery is underway in the U.S., but there are many questions about what kind of recovery it will be, particularly as it relates to jobs. Some experts are predicting a jobless recovery, while others are more optimistic about job growth. Will hard hit sectors bounce back? Will we seize the opportunity to create a more equitable economy with livable wages? What changes do we need in job training and education to spur a post-pandemic economy? Today’s guest, Stuart Andreason, is very well positioned to answer these and other questions. As director of the Center for Workforce and Economic Opportunity at the Federal Reserve Bank of Atlanta, he tracks changes in the economy to determine what skills workers and businesses need to be successful. This research also informs policies and programs to help people succeed in the labor market, especially low- and moderate-income workers. Stuart, thanks so much for joining us today.

Stuart Andreason: Thanks for having me. I’m thrilled to be here.

Van Ton-Quinlivan: Delighted. I think many people think of the Federal Reserve as being a big bank somewhere in New York or D.C. that’s involved in setting economic policy at the national level. Can you help us understand why the Federal Reserve cares about workforce development? And does this interest differ between different regional offices of the Federal Reserve?

Stuart Andreason: Well, I’m slowly becoming a veteran of the Federal Reserve. I’ve been there almost seven years now and seven years ago I was asking the same question. I was a researcher interested in how we help connect people to economic opportunity and I’d seen a job posting and was really just kind of interested in figuring out what was happening with it. It seemed really intriguing. I always answer this question by saying the Federal Reserve does do the things that you think it does. It helps set the nation’s monetary policy and we help facilitate the payment system for the country. So, when you get a direct deposit, it’s likely run through the Federal Reserve in some way.

But our charge from Congress is actually that we do two things: we promote full employment and we promote stable prices. Now, stable prices is well defined for us. It’s helping keep inflation right at about two percent, so we’re able to kind of really know what that means. But full employment is a little bit harder. We do that through our monetary policy tools. We want to make sure that we’re helping kind of set the environment where lots of different things can flourish. But promoting full employment isn’t just setting the broad environment and making sure that everything’s OK and maybe things will shake out well. It may not be in the tools that we have, but we also think of ourselves as a research institution and convener. And we said to ourselves, “You know, we need to start really being serious about how we use our analytics, how we use power to pull together different players, to speak to the business community, to speak to nonprofits and the entire world to talk about if we’re connecting people to work.” We think of it as part of our strategy to full employment and a healthy economy. We need to make sure that everyone that is seeking a new skill to get a better job, to find different things to do…we want them to be able to do that because that’s what helps make the economy grow.

Van Ton-Quinlivan: Maybe you can give us some specifics. What are some examples of impact you think the center has had in shaping effective policies or helping businesses and workers succeed?

Stuart Andreason: So, our center is relatively young. Last fall we went through our third anniversary of having launched. What we’ve been doing since I’ve been around is figuring out how we do this in our district. Let’s think about our system and what we’re doing in the south. We worked across the country and we have great colleagues in all of the twelve Reserve Banks. We ended up launching the center because there’s been so much focus on these issues, on workforce development issues in the Fed. Each flavor is a little bit different because the country is so different. So, you know, people in Kansas City and Boston have been thinking about job quality and how to build better connections across the country to that effort working with employers. But it’s really exciting because the Board in DC and all of the Reserve Banks are working on workforce development in some way. So, we created the center three years ago to hopefully be a little bit of a hub. I always like to say that what we strive to be, if we’re not, is a bridge between the research and the real world. And it’s a two-way bridge.

We want to learn from the field and hear about what people are doing in workforce development, think about promising practices, bring that back to the research that we’re doing, hopefully learn from and maybe find ways to commit some support to that. Now, we’ve learned there’s lots of different ways that we can use those analytics to be helpful. We launched a few years ago, with colleagues at the Cleveland and Philadelphia Feds, work on opportunity occupations. We wanted to highlight high quality jobs that didn’t require a bachelor’s degree and paid well. We were lucky to be able to partner and get some data from Burning Glass to look at job ads and actually see how employers were requesting different education, depending on where you lived. We learned that it mattered where you lived in terms of what employers wanted. That’s led to some really interesting things.

Number one, it’s helped us to inform training organizations about what’s happening in the local labor market that they might not have had the same view into as they always wanted. But it’s also helped us to support and think about some of the efforts that are happening on skills-based hiring, where coalitions of firms across the country are starting to think about the way that they advertise and think about jobs and what they expect in that hire. You know, when you require a bachelor’s degree, you’re screening out a certain number of workers, particularly a lot of diverse workers, workers of color that may not have those degrees and it may not be the actual linchpin in doing the job. In some cases it will be, but we actually have been really hopeful with that.

So, we’ve got a number of tools that help follow that. Our colleagues at the Cleveland and Philadelphia Feds just released a couple of months ago a really cool tool called the Occupational Mobility Explorer, which is great. So, you can go into that tool — and I encourage people to look at it — click on it and say, “I’m currently a cashier.” And you can see, based on the skills that you have, a career pathway that may not look the same as you might think. You know, you might think, “Well, I’m a cashier and so eventually I could become a department manager or store manager.” But you actually can start to see that there’s pathways that leads you both within, say, the retail industry, but beyond. You might find new ways that you connect into the financial services world. There’s a lot of crossover skills. It’s a wonderful tool and we hope that it can help people kind of think about the next steps that they take when they are potentially dealing with some challenge related to COVID or a job loss or just kind of thinking about the future.

We also just wanted communities to be able to know what was happening in their local labor markets and so we created a tool called the Opportunity Occupations Monitor. You can go in for any metro area and kind of zoom in on your local labor market and see what the jobs are. See how many of the job ads are requiring a bachelor’s degree or not, what the average wage is and not only what the average wage is, but how it matches up to your local cost of living and kind of what the whole range of wages are. So, we’ve been trying to do things like that. But we also want to heighten a lot of the great ideas that are coming out — whether that’s through research that’s not done by the Fed or through kind of best practices — wonderful kind of promising policies.

We launched a series called Ask Us Anything where we’re pulling in people like you, honestly, to talk about what can be done to recover from the current crisis that we’re in? What are long term ways to make someone future proof and ready for the future of work? One of the really exciting things that we’re getting into now, which we’re excited to work with Futuro on quite a bit, is the Rework America Alliance which was actually born out of the crisis. We’re really trying to take all of these pieces — we’ve kind of always had a lot of these kinds of pieces going — and really turn them into a solutions lab. We’re excited to work with employers, with non-profits and organizations like Futuro to think about how we get people connected to long-term good opportunities, make them more resilient, and increase their economic mobility.

Van Ton-Quinlivan: I did not realize, even personally, what a candy store was under your roof. Thank you for sharing with us all those tools. If my audience were to ask you, Stuart, examples of opportunity occupations, would you mind sharing what some examples would be?

Stuart Andreason: Sure. Other people might call them good middle-skill jobs. Some of the ones that we found were ones that you’d expect to see. In the health care space — and honestly, one of the most prevalent across the entire country — was registered nurse, which is a good example of what we mean by a job that doesn’t require a bachelor’s degree. I think you probably know better than anyone that depending on your employer, they may actually require a bachelor’s degree, but there’s very, very few places that by law it’s a part of licensure and must be included. So that’s one. But it actually really matters where you live.

If you’re in a place that has a lot of bachelor’s degrees, that registered nurse job is almost certain to require a bachelor’s degree. So, if you look at the San Franciscos and the San Joses of the world, the vast majority of job ads expect a bachelor’s degree. But if you get to some other markets, where there’s lower levels of bachelor’s degree holders, you’ll see less of that. We actually saw that. And also, some places that are a little bit lower cost of living have some lower degree expectations. We saw a lot of places like Birmingham, Kansas City, that just had lower levels of bachelor degree requirements in jobs.

But opportunity occupations are not just in the health care sector. It’s things like computer support specialists, network managers, but also some traditional jobs, things that you don’t always hear about. These are not the “new collar” health care jobs, but things like office managers, executive support staff. Those are jobs that are often available. They’re going to be pretty high-skilled and they’re going to expect a certain level of competency — cultural competency, understanding a culture of an organization — but don’t necessarily require a degree. So those are a few that are pretty prevalent. Trucking, commercial driving are big in many, many places and those are some of the ones that you can get into a little bit faster.

Van Ton-Quinlivan: Thanks for making it real for us. Stuart, what is your take on this question of whether or not this will be a jobless recovery and what does that mean, particularly for low- and moderate-income workers?

Stuart Andreason: So, it’s a little hard for me to guess if it’ll be jobless or not. But I will say one of the things that we’ve been tracking — and I don’t want to hit everyone with too many tools — but one of the things that we’ve been tracking is just the number of people that are actually working compared to right before the pandemic. Now in February, because that’s the data that we have through, there are still about eight and a half million people less employed. That’s just the total number of people that are employed, not looking at the unemployment rate, not looking at labor force participation rate. But eight and a half million people less are working today than were in February of 2020. That’s still a really big number.

I think that we’re all getting hopeful — as vaccines roll out, as there’s some lights at the end of the tunnel, we’re seeing increasing activity — that people are going to get re engaged in work. But we’ve been living this way for so long. We know that going through the experience of the pandemic, women, lower wage workers, people on the front lines in positions that just intrinsically could not be done remotely, have experienced greater disruption. Through the Rework America Alliance, our colleagues at McKinsey said there’s about thirty-five occupations — and they’re the things that you’d expect…manufacturing, hospitality and food service jobs — that represented about 70 percent of the layoffs. I’m worried about what’s going to happen in those fields as we’ve learned to shop differently, as we’ve learned to congregate differently. We need to find strategies to get those people back to work and we also just need to get the total number of people working up, too.

Van Ton-Quinlivan: So, in the past recession, you saw a high adoption of technology and companies were able to maintain or grow their productivity without volume and workers. I would imagine similar things are getting more exaggerated in this recession and I wonder which jobs are likely to come back in different forms, and which jobs are likely to never come back? What do you think about this observation?

Stuart Andreason: Well, I think that it’s been a forcing mechanism for more of that. This is more just from personal perspective than anything, but if you’ve been in a grocery store in some time — and that’s an if, which is part of this point — the experience is quite different. You might be pushing a cart that feels really normal, but you’re likely to be running into a professional picker in the aisle, someone that’s been getting groceries ready for a delivery or getting ready for a curbside pickup. One of the things that we’ve seen is that the industries that have been hit are often the ones that we think of as really labor- intensive. It’s difficult to deliver, say, hospitality virtually. You know, in the previous recession, we really saw the investments in things, and we’ll just take an example of a tech firm. They might have quite high sales just from really low marginal costs. But we’ve seen some really labor-intensive industries get hit and have to find ways to survive, and so we’ve seen more and more of that.

Van Ton-Quinlivan: That leads to questions about how to upskill and reskill people to get the jobs that do exist or will exist. Do you think that the job training efforts that we have now can meet the challenge? And if not, what needs to change?

Stuart Andreason: Well, yeah, I think that you’re exactly right. We can do a lot to ensure that we have people that are ready for the future, but we have to make sure that the system works for that. We need to make sure that there’s lifelong learning. We need to make sure that we’re thinking about what employers can contribute, how they can help direct what happens with training and really help us train for the jobs that are on the on the horizon rather than for today. Now, I think that the system that we have can do it, but there’s opportunities for greater collaboration.

We need to find ways that make it easier for a public workforce board to work with a community college, to work with a nonprofit. Some of that’s going to be aligning incentives. Some of it’s going to be aligning funding streams and that might require some new tools. I think that we have some moments that are critical opportunities for our system. So, we have pretty strong investment from employers. We have pretty strong investment in the higher ed system. But we think about some of the really high- quality programs that are happening in higher ed programs that don’t have accreditation — they are non-credit programs — those can be struggles for people to get through, but we know that they can work. And there’s been some really promising examples of ways to fund that such as partnerships with community credit unions that have helped cover the costs of logistics training program that didn’t have Pell eligible and student loan eligibility. So, we need to do more of that.

It’s finding ways to take the kind of sometimes fragmented system, pull it together and work together effectively. It’ll be new practice, new ways of operating, but also potentially some new policies. We’re hoping that as we test out some of these things, that we’ll be able to better inform where some of those choke points are, for lack of a better term, share those with policymakers and hopefully get to a more cohesive system.

Van Ton-Quinlivan: Certainly, one of the systems disrupted is the higher education system and when you talk about lifelong learning and continuous learning, higher education institutions will be challenged to reinvent themselves so that they’re appropriate for adults who can consume them at different points in life. In other words, get booster shots of skilling and upskilling throughout their lives. One of the conundrums will be who pays, right? Because a lot of our education infrastructure is set up so that financial aid, for example, is highly biased towards you getting your education up front rather than throughout your life. So hopefully, there can be some reconsideration of how do people finance their education, how can employers contribute to continuous education and learning, even if they only stay with you for a few years. Just like a 401k is portable — an employer can contribute to your retirement even if you don’t stay with them for the entirety of a career. Would you have one wish for the higher education system in terms of their roles in this new economy?

Stuart Andreason: You know, I think that you are hitting on something. I want to extend what you said.  We think about education as something that you do up front and it’s kind of set for your career. It’s going to be lifelong, but let’s not hold higher education institutions to the standard that they have to be seen as those institutions. So many of their outcomes metrics are based on the student that shows up, does some number of years of schooling — two years, four years — and they’re judged on how well they graduate people. So, someone who shows up for a course, takes a refresher course, gets that booster shot that you’re talking about, may not show up as a success for the college or university and that’s a problem. It should.

We need to understand why people are there, think about how we think about outcomes at higher institutions. I think that would be a big one, because if we can connect the right outcomes to what the future’s going to look like, that’s going to change behavior in higher ed. But I also hope that they can find new partners, find an employer, find a student that they wouldn’t have thought about before, find a new way of offering a student loan or a funding mechanism that might connect with someone differently. I would say, “Try one thing new.” The worst that can happen is that we learn from it and try something different next time.

Van Ton-Quinlivan: In terms of trying something new, I had first heard about the Atlanta Federal Reserve and its cliff tool. I would love for you to talk about the insights that led to the development of that tool, because it is trying something new based on learnings that were created along the way.

Stuart Andreason: Yeah, and that’s a good example of why we need to try something new. So let me just talk a little bit about what our cliff tool is. We know that as people move up the income ladder, they lose public assistance and public support. Those are things like child care supports that are federally funded, but managed through the states. It’s also things like someone’s earned income tax credit, it is SNAP assistance, it might be housing assistance. In some communities, there’s some real disincentives to moving up the income ladder. There are penalties when people find and connect to a new job. We started hearing about that through our business engagement group at the Atlanta Fed called the Regional Economic Information Network. We just kept hearing about people completing a workforce development program, but then not accepting the position that they’d trained for, and we started to say, “Why is that?”

We think that one of the reasons is that potentially people are making rational choices. We ended up connecting with a researcher in Florida, who’s now actually joined our team on this, and she talked about counseling that she did with workers who are making twelve dollars an hour and offered small raises and potentially lost their entire child care support grant from the state of Florida which was valued at over ten thousand dollars. So, small raises that were leading to big losses in income. Those are pretty extreme examples, but the headwinds for people moving up the economic ladder due to public support loss can be pretty significant, and it might be an entirely reasonable choice that people choose to stay where they are given their family circumstances. The move from a minimum wage job up to a $30,000 a year job may not actually pay out in material resources for that worker.

So, we started to build a tool and we actually employed some financial planning software that was typically targeted at helping high income earners optimize their tax situation. We took the back end of that and built it to start to understand how people move through the income ladder as we thought about all of these other kinds of true costs and true tax costs. When people lost an income support, that’s kind of like paying an additional tax and there were often situations where someone was facing a more than 100% marginal tax — so in earning a dollar they had to pay more than a dollar back through loss of supports or increases in taxes. On average, that marginal tax is highest on our lowest quintile of income earners, and that’s a challenge. So, we built this tool so that we can help inform people, kind of optimize their choices, as they think about careers. We hope that it helps inform policy. We’ve built customized versions of this for communities across the country. I encourage people that are interested to look at our Advancing Careers Initiative which is really helping to navigate these challenges, to think about local solutions, to think about how employers play a role in it. It’s really, really exciting work.

Van Ton-Quinlivan: Let’s close up today by really just having you tie together these tools to this issue of racial disparity and what more needs to be done?

Stuart Andreason: Thank you for that question. One of the things we have really been trying to do is think about who these statistics represent, and often it is workers of color. It’s people who have been disadvantaged for centuries, for generations, and we’re hoping to paint that picture better. We also want to try to take this into practice. We’re excited through some of the work in the Rework America Alliance to look specifically at the challenges that diverse workers face. I would suggest that we’re working on painting a full picture on this. So, we understand that there are challenges that affect low income and often workers of color, but we have a lot more to learn. We launched, our presidents actually launched, last summer a long series that’s going to be running through 2021 focused on racism and the economy — both the effects that racism has on the economy, but how it’s played out. We’ve heard about challenges on the employment front in terms of occupational segregation: health care is heavily women, especially in allied health fields; we know that home health workers are often women of color. So, it’s not only what happens today, but we hope that looking back at history helps us understand how we can use all of these to lead to a better and more equitable future.

Van Ton-Quinlivan: Thank you so much, Stuart, for being with us today and inspiring us to think deeply and broadly. We appreciate your leadership on this issue. I’m Van Ton-Quinlivan with Futuro Health. Thanks for checking out this episode of WorkforceRx. I hope you will join us again as we continue to explore how to create a future-focused workforce in America.