Good jobs without a degree? Boston's $3 million test.
Paths to Progress
Facing problems of income inequality, US cities looking at new ways to create well-paying jobs for workers.
Hari Maharjan steps out of a service elevator onto the thickly carpeted second floor in a downtown hotel. Pulling on his rubber gloves, he pushes a groaning laundry cart along the hushed corridor.
Mr. Maharjan, a housekeeping trainee, is shadowing a room attendant with nine years on the job. Maharjan is assigned a marble-floored bathroom to clean – fresh towels, mopped floor, as-new fittings. “If the guest sees a hair, there will be trouble,” the attendant says, bending to excavate the soiled bed linen.
While the training may look typical for a low-wage job, Maharjan isn’t your ordinary trainee. The 40-something father of two used to own his own store and before moving to the United States had worked as a cook in a Hilton hotel in Dubai. He sees cleaning rooms as a foothold into the American hospitality industry that he can parlay into other hotel jobs that demand more skills – and pay higher wages. Maharjan eventually wants his workdays to be measured out in more than towels and linens. “I love meeting the customers. It makes me feel happy,” he says.
This also isn’t a story about another person losing their footing in America’s middle class. Instead, Maharjan and his 16 classmates are the first to take part in a pilot project designed to help workers without college degrees land increasingly elusive well-paying jobs with benefits and a career path.
“We need to change the narrative. It’s about quality jobs, great jobs. A living wage with benefits, and a career ladder,” says Trinh Nguyen, director of the city’s Office of Workforce Development.
Using federal grants, Boston is doubling its enrollment of low-income workers in apprenticeships for construction and hospitality to 100 a year. Maharjan’s class of 17 graduated this month from a US Department of Labor-recognized “pre-apprenticeship” program for housekeeping – a national first. After they start working, trainees will continue to receive career coaching and grants for part-time college tuition.
This focus on apprenticeships and associate degrees makes sense for Boston, says Alicia Modestino, a labor economist at Northeastern University. “We don’t do a very good job of producing individuals at a middle-skill level of education,” she says.
These are the workers that employers increasingly covet, particularly when it comes to supporting the highly educated professionals of which Boston has a surfeit. While hospitals have no problem recruiting doctors, “we can’t find enough surgical technicians,” says Ms. Modestino.
By most measures, Boston is a success story, a city of knowledge and innovation anchored by deep pockets and good schools. Biotech research is booming. General Electric is moving its headquarters here. The statewide unemployment rate recently hit a 15-year low.
But the spoils of the growth aren’t equally divided. In fact, Boston led a recent Brookings survey of cities by income inequality: The top 5 percent of households took home nearly 18 times as much as those in the lowest 20 percent. While that bottom quintile is swelled by a large student body that is unlikely to remain in that income bracket, the city has pockets of poverty that sit uncomfortably with the idea that innovation hubs like Boston and San Francisco are charting a post-industrial future for all.
34,000 workers in five years
Across the country, the bulk of job growth since the 2007-09 recession has been in lower-paid service jobs such as retail and restaurant work that don’t require a college degree, fueling criticism of a two-track economy that has become a brake on social mobility.
Boston isn’t the only city that is pushing innovative apprenticeships in high-growth industries as a way to tackle inequality in its labor force. It received $3 million for these pre-apprenticeships from the Department of Labor last October, part of a $175 million program designed to train 34,000 workers over five years.
Other recipients include:
• Mission College in Santa Clara, Calif., which is training data technicians and support specialists to work in high-tech companies in Silicon Valley.
• A manufacturing consortium in Springfield, Ill., which is developing new apprenticeships that connect the workplace to community colleges.
• Houston Community College is rolling out health-care and IT apprenticeships for hundreds of workers in the Gulf Coast and Greater Dallas region.
Still, Boston already has job openings that offer a path to the middle class. The question is whether residents who only have a high school degree or less – 36 percent of those aged 25 and up – can apply. They also face the “up-skilling” of jobs by employers who became more picky about qualifications when the labor market was slack, demanding a bachelor’s degree for positions that previously went to high school graduates.
To bridge this gap, city and state officials are investing more in vocational schools, trade apprenticeships, and other training programs that give recipients a shot at landing a better job.
In the case of housekeeping, it is exacting work. Large hotels now require all employees to speak serviceable English and complete safety courses to comply with public-health regulations. The upside is a job that pays well above minimum wage – and the possibility of future promotions for self-starters, even without a college degree.
“Hospitality is a profession where you can move into almost any position in a hotel without a high school diploma. You can work your way into the position,” says Marie Downey, the executive director of the nonprofit that runs the Hospitality Training Center (HTC) that graduated Maharjan’s class.
Located on the third floor of a brick building above a cream-bun bakery in Boston’s Chinatown district, HTC trains students in mock hotel rooms and chef’s kitchens. One floor up is UNITE Here Local 26, the union that helps fund the training. Graduates who are hired at unionized hotels – nearly 6 in 10 in the Boston area – typically start on $18 or more an hour, nearly double the state $10 minimum wage, plus union benefits that include family health plans and housing loans.
Brian Lang, president of Local 26, says apprenticeships offer a way for hotels to recruit workers who already know the ropes and are more likely to stay in their jobs once hired. Given the boom in hotel construction in Boston – several major operators are opening or expanding this year alone – the demand for staff is rising. For Mr. Lang, the question is whether these workers will be covered by union contracts that put a floor under wages.
“We’re talking about an industry that’s incredibly profitable. It’s expanding and investing here. Well, you’re coming to Boston. Let’s see you share the wealth,” he says.
Previous HTC graduates are already seeded among Boston’s hotels; some have a decade or more of experience. What’s different about the pre-apprenticeship program, says Ms. Downey, is that applicants were vetted in multiple interviews both for their aptitude and ambition. “They want to get their foot in. They want to succeed,” she says.
Nearly everyone in the first graduating class is an immigrant, like Maharjan. HTC runs other training programs targeting the city’s minorities; one is specifically geared to help African-Americans.
Born in Nepal, Maharjan moved to Boston in 2004 with his wife and twin sons. His first job was in an Indian restaurant kitchen. By 2011, he had saved enough to buy a convenience store in Somerville, a gentrifying city adjourning Boston. He opened seven days a week, 6 a.m. to 10:30 p.m., and staffed it with family and relatives. Then came two armed robberies within seven months that told him it was time for a change.
“Even with your own business you don’t save much money,” he says.
Four months ago, he sold the store and began looking for a new career.
A hotel job paying $18 an hour certainly sounds good to these trainees.
In 2014, nearly half of all Boston residents, including the unemployed and those in part-time work, earned less than that on annualized basis, according to a study commissioned by the mayor's Office for Workforce Development (OWD). And this in a city where the cost of housing and other essentials are among the nation’s highest.
The study calculated that in a two-parent, two-child household with one child in preschool, both parents would need to make $16.96 an hour, or $35,277 a year, to cover their costs – what it calls a “family-sustaining wage.” In 2014, more than a quarter of full-time workers earned below this.
For residents who don’t finish college, the odds are increasingly long. A six-year forecast of job openings in Boston for the OWD study found that four out of 10 required a bachelor’s degree or higher, compared with a national average of 26 percent. While many of these jobs had high salaries, most of the listings for entry-level service jobs – waiters, cashiers, cooks – were well below the “family-sustaining” wage.
The occupation with the largest forecast number of openings – 795 a year – is registered nurse, with an average income of $95,000. It requires an associate degree, though most nurses have at least a bachelor’s degree, underscoring the education gap for many Bostonians.
In a coauthored paper for the Federal Reserve Bank of Boston, Modestino found that some of this up-skilling in job listings was a function of the recession as employers sought out more skilled candidates from a larger pool of job seekers. Since 2012, she has noted a downward trend as labor markets tighten and recruiters lower the bar. But “some of this stuff sticks,” she says.
Take administrative assistants: 4 in 5 currently don’t have college degrees. But job openings, including one-for-one replacements, are the reverse: 4 in 5 require degrees. Employers argue that these jobs have become more skilled because of IT systems and digitization of data. “You’ve invested and put dollars into that system; you’re not going back” to high school graduates, says Modestino.
Why not move to a cheaper city?
Given these inequities, should workers in low-paid service jobs pack up and move to cheaper cities? Why stick in Boston when so many jobs are going to college graduates and bypassing the average worker?
Not so fast, says Enrico Moretti, an economics professor at the University of California, Berkeley. He argues that high school graduates living in innovation hubs like Boston have better prospects than their peers in more affordable rust-belt cities.
Every job created in highly skilled industries like biotech has a multiplier effect on the local service sector, from real estate to retail to health services, and that means steady jobs and competitive wages. By contrast, cities based around traditional manufacturing aren’t producing enough jobs for their own high school classes, says Professor Moretti, author of “The New Geography of Jobs.”
“Well-paying blue-collar positions are going away every year. Local service jobs are not. They’re very labor intensive and not outsourceable, by and large,” he says.
Back at the hotel, Maharjan has finished cleaning another bathroom. His forehead is slick with sweat. The room’s TV is switched to the hotel’s welcome message for the next guest; an instrumental guitar picks out “Hotel California.”
Maharjan doesn’t linger. Another room needs cleaning. “I love to work. But being a trainee is not easy,” he says.
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