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Conversation with Keith Wardrip | Federal Reserve Bank of Philadelphia

I recently got the opportunity to sit down with Keith Wardrip of the Federal Reserve Bank of Philadelphia and discuss the latest release of his co-authored paper, Opportunity Occupations Revisited,” which was highlighted by the New York Times in May (https://www.nytimes.com/2019/05/02/business/economy/good-jobs-no-college-degrees.html). Keith will be at CLOSE IT 2019 presenting on the report and new research. So, join us!



Hi Keith, I am so glad we got the opportunity to catch up with you and your work at the Federal Reserve Bank of Philadelphia. You’ve been working with the Federal Reserve Bank since 2011. In 2015, we featured you and the initial “Opportunity Occupations” report at Close It in DC. What was the reason that you and your colleagues – I see they’re from two other Federal Reserve Bank locations – decided to take on the topic of where people can find high paying, sub-baccalaureate degreed jobs?

Keith: I think that’s an important question, because having an understanding for the motivations for the research helps with the interpretation of the findings. So one of the Federal Reserve’s functions is to promote maximum sustainable economic growth, and we know that economic growth is stronger when all residents have an opportunity to participate. We know that workers without a college degree are sometimes at a disadvantage in the labor market when it comes to wages and employment rates. And we also know that where you live directly affects your economic opportunities. It affects the types of jobs available, it affects how much those jobs pay, and it affects the level of education that you’ll need to be considered for those jobs. So our “Opportunity Occupations” research is really an effort to learn more about the nature of employment opportunities for the two thirds of American adults without a four year college degree.

Jamai: What made you want to do this, and why now?

Keith: We wanted to know how economic opportunities vary across regional economies. We wanted to give both workers and local workforce development systems an idea for some potential career paths that can offer a decent wage for workers without a four year degree. Since every regional economy is different, we thought it was important to conduct the study at the local level and tease out the variations from one regional economy to another.

Jamai:  The first study focused on specific positions and looked at the differences in those positions depending on metropolitan area, correct?

Keith: Yes, that is correct. The first study was really an exploratory analysis, so we used a couple of different assessments for the education that a person would need to be hired for a particular occupation. In this update, we decided to focus exclusively on Burning Glass data because it was the only data source that let us understand how educational requirements varied from place to place. And in this updated study, we also tried to answer the question that a lot of people asked after the first study which was “Why is there so much variation across regional economies in the first place?”   So in the new study we run what we call a national counterfactual scenario which allows us to calculate a place’s hypothetical level of opportunity if we assume conditions reflected national levels. That allowed us to tease out the main drivers of actual, local opportunity employment. Is opportunity employment higher or lower because of the types of jobs that are available, because of the level of education employers are looking for, or because of the cost of living?

Jamai: So what do you think? What were your ah-has in this new report “Opportunity Occupations Revisited?” Were there some diamonds in the data, or anything of surprise?

Keith: Absolutely. One finding that was consistent with the first report is that the level of opportunity employment, which we define as a job that typically pays above the national median wage and that does not require a four-year college degree, varies substantially across metro areas. We studied one hundred and twenty-one of the largest metros in the country, and we saw that the opportunity employment share ranged from a high of 34% in Toledo, Ohio to a low of just under 15% in Washington, DC.

Jamai: Meaning 34% of job opportunities in that region pay above median wage and don’t require a 4-year degree?

Keith: Right, so in Toledo 34% of the jobs were in an occupation that paid above the wage threshold that we set and also did not require a four-year degree.

Jamai: And do you think that is because of heavy manufacturing or do you think it was because of the service industry?

Keith: So the counterfactual scenario that we ran allowed us to tease out those numbers, and in Toledo, I can tell you that it was primarily driven by the cost of living. The cost of living in Toledo is substantially lower than in the U.S. overall.

Jamai: Wow. So it wasn’t that Toledo employers were requiring fewer degrees for the same jobs.  It’s more that the cost of living in Toledo is lower, so jobs that don’t require degrees end up paying enough for people to live decently.

Keith: Right, so there were a large number of occupations that may not have paid as much as the national wage, but after we adjusted for the cost of living in Toledo, their pay did exceed the local wage threshold. Now the mix of occupations also has a positive impact on employment opportunity there, and as you suggested, manufacturing is one of the drivers.

Jamai: So if we look at these opportunities, say in Toledo, how do we start taking advantage of this? The average person that grew up somewhere else, is not going to move because they saw your report. We now know which cities have more and better sub-baccalaureate degree job openings.  But it is doubtful that somebody is going to read your report and think “Golly, the Federal Reserve has convinced me to move!”

Keith: (laughs). Right, there is not going to be mass migration to Toledo, Ohio.

Jamai: But how can we use the awesome findings of this report to really start pushing for change that creates economic opportunity?

Keith: That’s my favorite part of this research project. It’s such a multifaceted issue that I think there are any number of ways that communities can expand opportunity employment for their residents. But I think it depends on the reason for a low level of opportunity in the first place. So there are some places where there are very few decent paying jobs for workers without a college degree, and in those situations, economic development efforts can target industries that are characterized by high levels of opportunity employment. Communities can think about growing industries that pay decent wages for workers without a college degree. In places like Washington, DC or Boston with knowledge-based economies offering high-paying jobs that often require a bachelor’s degree, I think employers can do a couple of things. They can reconsider the qualifications they include in their job advertisements, and they might be able to find better ways to assess the skills of applicants. So maybe they can lower their education requirements and start hiring based on skills and not degrees. Lastly, there are some jobs that always have and always will require a college degree, and I think communities can look for ways to make college more accessible and affordable for lower-income residents.

Jamai:  So, there are obviously different factors that impact each region. We have learned over and over again that this is not a one-size-fits all approach, it’s community by community, which makes it even more difficult.

Keith: Yes, and you know there are certain lower-wage economies where a modest wage increase can go a long way. We also mentioned in the report that housing is usually the largest line item in a household’s budget, so affordable housing policies could help bring wages into better alignment with the local cost of living. I hope our research puts information in the hands of communities to help them better understand employment opportunities for less-educated workers and then with that information they can come up with better ways to address the issue.

Jamai: So are you guys doing anything with these 121 cities to try to do anything to move towards action? I can envision so many ways regions could use these reports.

Keith: I think research is interesting in its own right, but it certainly is more compelling when you can see it implemented and actually drive change somewhere.

You were asking about “Ah-ha” moments, and I think another theme that emerged from the research is that when you look at the larger opportunity occupations across the country, they really run the gamut and represent a real cross section of the United States economy, from healthcare to the skilled trades to supervisory positions. By and large, though, they require some level of training beyond high school, some level of postsecondary education or on-the-job experience. There are only a handful of opportunity occupations that one could expect to work in without some level of postsecondary education or training.

Jamai: This is beyond the paper, but do you feel like consumer knows where to go and what to do to get an opportunity job?  How do they think about the problem, or navigate to a solution?  How do they answer the questions, “Okay, where are the jobs that will get me out of poverty? What skills do I need? Where do I get the training? Where do I get the certificate?” Or do they even know to ask these questions?

Keith: I think that awareness is critical. But you made the point earlier that no one is going to read the report and move to Toledo. I don’t know how many workers without a four year degree might read this paper directly, but they may see an article in the paper about the research and ask those questions. But there may be an information gap there, and I hope that communities themselves – the community colleges, the employers, the workforce training providers – could use our findings for their locality to identify opportunities for workers and help employers access the talent they need.

Jamai: That’s what I see as well. This paper is primarily for thought leaders, economic developers, community colleges, community organizations, workforce providers, etcetera. They’ll be able to say “Okay, here’s our city. If we know where those jobs are, and what those jobs are, how do we make them more obvious to the consumer as early as high school?” Everybody in high school thinks that in healthcare, there are only two jobs, doctor and nurse. There are actually dozens, if not hundreds, of different healthcare occupations, even within the same healthcare organization. But I think it’s great research. Really what I appreciate about both your papers is that you look at a slice across cities, and you really show there’s a big difference community to community when it comes down to making a living wage without a 4-year degree.

Keith: I don’t know if you’ve seen them, but we did produce a one-page fact sheet for every one of the metro areas that we studied. Each sheet lists the ten largest opportunity occupations, along with their employment, their annual median wage, and how the metro ranks among the 121 areas we studied.

Jamai: These are great. I want to help disseminate them!  So, what’s next? Are you about to start your next paper?

Keith: We absolutely are. We are already hard at work on it.

Jamai: What are you thinking? Can you tell us?

Keith: The data set we acquired from Burning Glass also includes the skills that employers are asking for in each job posting. What we hope to do is look at the skills that employers are seeking in a regional economy and identify some less obvious career pathways between lower wage and higher wage occupations.

Jamai: That’s incredible. I look forward to seeing that next!