The State of Working Louisiana

I know the price of success: dedication, hard work, and an unremitting devotion to the things you want to see happen. Frank Llyod Wright Louisiana Budget Project An initiative of the Louisiana Association of Nonprofit Organizations 2008 The State of Working Louisiana

Table of Contents Introduction... 4 Employment Participation... 5 Industry Sectors... 6 Working Populations... 7 Age... 7 Race/Ethnicity... 8 Educational Attainment... 10 Gender... 10 Unemployment... 11 Wages... 14 Poverty... 15 Louisiana Governmental Action... 18 Findings... 19 Recommendations... 19 Areas for Further Research... 20 About the Louisiana Budget Project... 21 Endnotes... 22 page 2

List of Tables 1. Change in Employment by Industry in Louisiana, 1998-2007...6 2. Labor Force Share by Age Group, 2007...7 3. Labor Force Share by Race/Ethnicity, 2007...9 4. Racial and Ethnic Workforce for Louisiana and U.S. Comparison, 1998 and 2007...9 5. Labor Force Share by Education, 2007...10 6. Labor Force Share by Gender, 2007...10 7. Unemployment Rates by Groups, 2007...13 8. Variance in Wages by Percentile, 1998 and 2007...14 9. Louisiana Poverty Data, 2006 vs. 2007...15 10. Louisiana Income Disparities...15 11. Poverty Rates: Louisiana vs. Top States...16 List of Figures 1. Job Growth in Louisiana...5 2. Unemployed Teens (ages 16-19), 2007...8 3. United States-Louisiana Unemployment Rates...11 4. Louisiana Unemployment Rates by Parish, November 2008...12 5. Children Living in Families Where No Parent Has FT, Year-Round Employment... 18 page 3

Introduction The State of Working Louisiana for 2008 documents the status of Louisiana s economy and the issues facing its workforce. Unless otherwise noted, the primary source for the data presented in this report is the Current Population Survey (CPS), conducted jointly by the U. S. Bureau of Labor Statistics (BLS) and the U. S. Bureau of the Census as compiled by the Economic Policy Institute (EPI), a nonprofit economic research organization based in Washington, D. C. In addition to the data through 2007 compiled by EPI, the report includes some employment information released by the Louisiana Workforce Commission and work related data from The Annie E. Casey Foundation, 2008 Kids Count Data Book. This period marked a dynamic era of change for Louisiana in terms of state government leadership and economic rebounding from the storms of 2005, hurricanes Katrina and Rita. The southern part of the state witnessed the return of businesses and employment as housing was restored and transportation improved. Louisiana s unemployment rate at 4.3% for 2007 was lower than the national average of 4.6%. This figure represented a state average that includes demographic differences when disaggregated for age, ethnicity, education attainment, gender, and geography. However, long-term unemployment hovers at 22.6%. Louisiana s 2007 labor force participation rate was 61.5% which was lower than the nation s labor force participation rate of 66.0%. However, there were a significant number of unfilled jobs because of the gap between job skill levels and educational attainment. Louisiana Governor Bobby Jindal established workforce development as a priority for his administration with a plan to enhance job training in the state in order to reduce the long-term unemployment rate and the high rate of job vacancies. Louisiana experienced a small job increase of 33,000 jobs in the 10 year period from 1998 to 2007. Aggressive efforts by the Louisiana Department of Economic Development in 2008 targeted industries with positive growth potential and the location of these jobs in regions most in need of development. Louisiana s 2007 wages are considerably lower than the national average with the median hourly Louisiana wage at $13.59 and the nation s median wage at $15.10. The state s poverty ranking continues to be 49th in the nation with 18.6% of its population living below the poverty threshold, as compared with the national average of 13.0%. The recommendations in this report converge with the solutions to poverty advocated through the joint efforts of LANO s Community Solutions Institute and The Louisiana Association of United Ways. They also complement the state s efforts in educational improvements and industry diversification. page 4

Employment Participation Louisiana has experienced inconsistent job growth over the last 10 years. During this time, the economic setbacks mirrored national trends while the effects of the hurricanes of 2005 reflect devastating effects to economic vitality of such disasters. In addition to affecting all areas of the state economy, the deliterious effects of the hurricanes served to remind leaders and citizens alike of the problems of the relatively undiversified service economy of the Greater New Orleans area, the high degree of poverty and the overall low educational rates in the state as a whole. The long term job growth, from 1998 to 2007, increased only 1.8% while the nation grew by 9.3%. However, the short term job growth, from 2006 to 2007, in Louisiana was higher than the nation at 3.6% and 1.1%, respectively. Figure 1: Job Growth in Louisiana Job Growth in Louisiana 1,940.0 1,920.0 1,900.0 1,880.0 1,860.0 1,840.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: LBP Analysis of Economic Policy Institute (EPI) Analysis of Current Employment Survey page 5

Industry Sectors In the last 10 years, Louisiana created approximately 33,600 new jobs. The industries that experienced the most growth and their percentage growth included: Professional and Business Services (15.8%) Education and Health Services (11.9%) Leisure and Hospitality (7.7%). A percentage of that growth was offset by job losses in other industries: Natural Resources and Mining (11.5%) Manufacturing (14.5%). Table 1: Change in Employment by Industry in Louisiana, 1998-2007 page 6

Working Populations The tables below detail working populations by age, race/ethnicity, educational level, and gender in Louisiana and the United States. Age The individuals between the ages of 25 and 54 comprise the majority (68.1%) of the Louisiana workforce. This percentage share of the labor force mirrors that of the United States. In this decade the 55 and older age group has increased in Louisiana from 11% in 1998 to 17.6% in 2007. The national trend for this age group has gone in the same direction with the over 55 age group reporting 12.4% in 1998 and increasing to 17.3% in 2007. This increase in the workers over 55 years of age reflects the continuing national trend of longer life expectancy. The youth group in Louisiana (ages 16-24) has decreased, as has this same age group for the United States. In Louisiana, the youth group percentages went from 18.1% in 1998 to 14.2% in 2007. The age trends for Louisiana have been following the direction of the national trends. In fact, the United States percentage in 2007 for each of the three age groups is very close in number to that of Louisiana. The reductions in birthrates and the continued out migration of young people from the state pose both current and future problems for the state. Recently the Baton Rouge Area Chamber responded to this challenge with a campaign to lure young, former Louisiana residents, and others in this age group, back to the state. Table 2: Labor Force Share by Age Group, 2007 Transition from adolescence to adulthood generally involves employment. Figure 2 illustrates that Louisiana continues to show a high percentage of teens ages 16-19 not attending school and not working. 1 page 7

Figure 2: Unemployed Teens ages 16-19: 2007 Source: KIDS COUNT Data Center. www.kidscount.org/datacenter. A project of the Annie E. Casey Foundation. Race/Ethnicity The changes in the racial and ethnic composition of the Louisiana workforce have not been dramatic over the last decade. However, as far as comparison of the Louisiana data against the United States data, a different trend has emerged. The share of whites in the United States workforce has declined steadily over time; the African-Americans and Asians in the workforce have remained constant and the number of Hispanics in the workforce has increased. As noted in Table 3, in Louisiana the white and Hispanic populations show growth while the African-Americans and Asians declined slightly. Louisiana and the United States had similar shares of white workers in the labor force in 2007. However, Louisiana s share of African-Americans in the workforce in 2007 was nearly two-and-a-half times that of the United States as a percentage of total employment. In addition, the percentage of Hispanic workers is much smaller than the national share. page 8

Table 3: Labor Force Share by Race/ethnicity, 2007 Table 4 illustrates the historical changes from 1998 to 2007 in race/ethnicity for Louisiana compared with the United States. The comparatively significant Hispanic growth still represents a lower total percentage of the population when compared to the United States and to neighboring southern states. Table 4: Racial and Ethnic Workforce Louisiana and United States Comparison, 1998-2007 page 9

Educational Attainment Table 5 below shows that in 2007 individuals in Louisiana with some college, a bachelor s degree or higher participated in the workforce at a higher rate than individuals without lower educational attainment. Those with high school degrees and those who did not graduate from high school made up smaller shares of the labor force. The trend in education attainment in 2007 shows some improvement since 1998 and reflects the national trends. However, Louisiana still lags the United States in post-secondary educational attainment. College graduates made up a much larger share in the United States workforce at 30.3% compared to Louisiana at 25.9%. The state faces a daunting challenge and opportunity with 63.3% of residents with less than a high school education not participating in the workforce. Table 5: Labor Force Share by Education, 2007 Gender Compared with the United States, women in Louisiana made up a slightly larger percentage of the population (51.4% to 50.7%) and the workforce (47.9% to 46.4%) in 2007. Table 6: Labor Force Share by Gender, 2007 page 10

Unemployment Louisiana reported a lower total unemployment for 2007 at 4.3% than that of the national average of 4.6%. The number of jobs related to energy production and from hurricane recovery efforts of the last few years benefited Louisiana. That variance with the national rate continued through 2008 according to the Louisiana Workforce Commission as shown in Figure 3. Figure 3: United States-Louisiana Unemployment Rates Source: LMI Bulletin--Workforce at a Glance, Louisiana Workforce Commission, December 23, 2008 Unemployment rates across the 64 parishes of Louisiana varied considerably from over 11% in the rural northeast delta to below 4% in southern parishes with large numbers of energy production and construction workers. In many cases the high unemployment rates correlate with both high poverty rates and lower educational attainment. page 11

Figure 4 : Louisiana Unemployment Rates Source: LMI Bulletin--Workforce at a Glance, Louisiana Workforce Commission, December 23, 2008 Though the unemployment rate for the state as a whole was low when compared to the United States, certain demographic subgroups across regions exhibited higher levels. Table 7 indicates that the rate was more than three times higher for African-Americans than whites within the state. Compared with the United States, however, African-Americans in Louisiana had only a.6% higher rate. In Louisiana and the country as a whole, individuals with less than a high school education are more likely to be unemployment than groups with higher degrees of educational attainment. page 12

Table 7: Unemployment by Groups, 2007 Although Louisiana s annual unemployment rate fell slightly in 2007, the state s long term unemployment rate (the percentage of workers who have been unemployed for more than 26 weeks) increased significantly and was at its highest in 10 years. According to EPI data, Louisiana s long term unemployment rate increased from 16.3% in 2006 to 22.6% in 2007, while the long term unemployment for the United States remained unchanged at 17.6% for 2006 and 2007. A long-term unemployment rate of 22.6% means that more than one in five Louisiana citizens looking for work have been unemployed for longer than 26 weeks. This represents a group of people who have exceeded unemployment insurance benefits and are likely to be depleting their savings in order to survive. The increased time that workers are unemployed may indicate that the jobs available in the state do not match the job skills of the individuals available for work. This gap may require that the state find the means to educate and train the Louisiana individuals seeking employment to match the needed job skills. page 13

Wages Louisiana reported the median hourly wage for in 2007 at $13.59. This remains below the nation s median wage of $15.10. However, in the last 10 years (1998 to 2007), Louisiana wages increased at a rate greater than the United States. During this time period, the median wage (50th percentile) in Louisiana grew by 7.0%. This exceeds the nation s median wage growth of only 5.4%. The growth in Louisiana wages also exceeds the nation for both the high and low wage levels. The 20th and 80th percentiles grew in Louisiana by 8.7% and 11% respectively. However, in the United States, the 20th and 80th percentiles grew by only 5.4% and 8.5% respectively. This is evidence that in both the state and the country, the highest wages are growing the fastest. However, in Louisiana the lowest wages are catching up to the median. Table 8: Variance in Wages by Percentiles, 1998 to 2007 Although Louisiana has experienced real wage growth across all levels, there are demographic differences between the high and low wage earners. Educational achievement produces the largest disparity in Louisiana. Individuals with some college make only a slightly greater wage than those with a high school diploma, $12.56 and $12.24 respectively. However, those with at least a bachelor s degree make $20.74 per hour, a 60% improvement. Race and gender also show wage disparity in Louisiana. In 2007, African American workers earned an average wage of $10.82, while white workers earned $15.34. Historically, white workers not only made a higher wage, but also experienced greater long term wage growth. In the ten years from 1998 to 2007, the median wage for a white workers grew by 7.9% while the median African American wage grew by 6.3%. In 2007 a male worker earned an average wage of $15.72, while a female earned $12.08. Although women in the state earn less on average than men do, their short-term and long term wage growth greatly exceed that of men. From 2006 to 2007, the median wage for a woman grew by more than 5% while the median wage for a man decreased by almost 2%. In the long term (from 1998 to 2007), women s median wages grew by 15.4% while men s grew by only 3.2%. page 14

Poverty The Louisiana Budget Project (LBP) and Community Solutions Institute (CSI) released Community Solutions 2008-2009, a comprehensive report that highlights data with recommendations to reduce the poverty levels in Louisiana. According to data, Louisiana s poverty rate has gone down slightly from 2006 but still remains high at 18.6%, ranking Louisiana 49th of 50 states in poverty. Table 9: Louisiana Poverty Data: 2006 vs. 2007 Other data reflect that a significant number of Louisiana households are below the Federal poverty level. Table 10 represents the number and percentage of households whose total income is below the federal poverty level. It shows that Louisiana has a higher percentage of households with incomes below the poverty level than the rest of the United States. This table also illustrates the number and percentage of households with incomes below the poverty level for four selected parishes in Louisiana. The differences reflect notable disparities in poverty among parishes in Louisiana. Table 10: Louisiana Income Disparities page 15

Table 11: Poverty Rates: Louisiana vs. Top States page 16

Table 11 compares the poverty rates of Louisiana to that of the United States and other individual states for 2006 and 2007. As the data reflects, Louisiana is ranked 50 th in Total Poverty Rate, State Child Poverty Rate and State Family Poverty Rate, as well as 46 th in State Median Income. It also shows that Louisiana has higher poverty rates than the country in the three aforementioned categories, while the median income for Louisiana is substantially less than the national median and the median of the other states cited. The inability of the state to reduce its poverty numbers in any significant way highlights mounting problems for impoverished Louisiana communities. One barrier to improvement is that Louisiana s low-wealth students lack equal educational opportunity. Louisiana governmental investments for education continued to rise to $9,125 2 per student without seeing substantial gains in educational advancement. Although Louisiana is very near the national average per-student expenditure rate of $9,295 3, it ranks only 46 th in academic achievement. 4 The most dismal statistic is that Louisiana ranks last nationally in Grade 4 Reading scores on the National Assessment of Educational Progress. 5 In 2007, 775,425 Louisianans lived in poverty (18.6% overall, 26.8% of children) many of them likely victims of Louisiana s eductional system, which sorely needs reform. These current data do not adequately describe the impact of poor education. Louisiana children and households face overwhelmingly negative odds most critically: Inadequate health care No health insurance Unemployment Lack of livable wages Homelessness Substandard housing Inadequate transportation Risk of arrests and incarceration Increase in foster care caseloads Lack of access to existing social services According to Douglas Nelson, President of the Annie E. Casey Foundation, Not only does poverty impose short-term hardships on millions of Americans, but it has long-term consequences for children overwhelming evidence shows that growing up in poverty especially deep and sustained poverty compromises children s health, dims their educational prospects, increases risk of future arrest and incarceration, and lowers their options for success. 6 Each year the Census Bureau uses a set of money income thresholds to determine the official poverty level. The official definition uses money before income taxes and does not include capital gains or non-cash benefits such as public housing, Medicaid or food stamps. If a family s total income is less than the family s threshold, then that family and every individual in it is considered to be in poverty. American Community Survey (ACS) data released by the U.S. Census Bureau showed that Louisiana s poverty rate decreased in 2007 by.4% from 2006. However in 2007, Louisiana still ranked 49th in the nation with 18.6% of the population living below the poverty threshold, a significantly higher rate than the national average of 13.0%. page 17

In the regular session of 2007 Louisiana passed Act 278, a state refundable tax credit in for working people with low to moderate income that will assist in lifting families above the poverty threshold. Louisiana filers can claim this state Earned Income Tax Credit (EITC) for the first time when they file their 2008 state income tax returns. All filers eligible to claim the federal EITC will automatically be eligible for the state EITC credit amount of 3.5%. Data from the Annie E. Casey Foundation Kids Count Date illustrate the effects of unemployment and low wages on children 7. Data reveal that Louisiana ranks 50th among the states, showing the largest percentage of children living in families where no parent has full-time, year-round employment. Figure 5: Children living in families where no parent has full-time, year-round employment, 2006 Source: KIDS COUNT Data Center. www.kidscount.org/datacenter. A project of the Annie E. Casey Foundation. Louisiana Governmental Action Plan Governor Bobby Jindal took office in January 2007. The Governor acknowledged Louisiana s economic outlook and made workforce development a priority for his administration. Renaming the state Department of Labor, the Louisiana Workforce Commission reflected a major change regarding job training to reduce long-term unemployment in the state. The Governor pointed out that the state has approximately 100,000 open job opportunities statewide and thousands of its citizens were not working at that time. Governor Bobby Jindal summarized requirements for the vacant positions as follows: page 18

55% are jobs that require a high school degree or less 35% are jobs requiring advanced training or a 2-year certification and 10% require a 4-year degree Over half the jobs in Louisiana in 2014 will require more training than a high school diploma but less than a 4 year college degree. To meet future demands, the Governor outlined and the legislature approved a plan through Act 743 of the 2008 regular session that will coordinate the efforts of various departments and agencies involved in the preparation and training of potential workers. The state has also developed a new program called Day One Guarantee. In October, 2008 the Louisiana Community and Technical College System Board of Supervisors adopted the program for more than 100 workforce training programs in the state s two-year institutions. 8 Through this program, the state guarantees the employability to individuals trained and to businesses hiring these trained individuals. If a person Louisiana trains is not ready for work the first day of employment, the state will provide free retraining. In addition to increasing the number of jobs in Louisiana and encouraging more industries to come to Louisiana, the state plans that new endeavors will work to reduce the long term unemployment. This in turn should result in an improvement of other workforce indicators including the level of poverty in Louisiana. Findings Data regarding workforce participation, wages, unemployment, and industry sector changes included in this report provide the following key findings: Louisiana s unemployment rate (4.3%) trailed the national rate of (4.6%) for this period. Individual parish rates varied from below 4% to above 11%. Long-term unemployment hovers at 22.6% and the overall labor force participation rate is 4.5% points lower than the United State s of 66%. State job growth has lagged behind the United States for the past ten years except in sectors related to oil and gas production and construction services since the storms of 2005, hurricanes Katrina and Rita. Ranking 49th in earnings, Louisiana s poverty rate of 18.6% is higher than the ntional rate of 13%. Governor Bobby Jindal began his term in 2008 and has made workforce development issues a top concern. His focus includes both improved workforce preparation and targeted job development. Recommendations Poverty in Louisiana and labor force challenges share common roots of low educational attainment and job skills. Improve workforce impediments and inequities, and ultimately poverty and its effects decrease. The following recommendations can begin to achieve those results. Support the collaboration and coordination of workforce training as advocated by the Louisiana Workforce Commission and articulated through secondary education and post-secondary programs in both the Louisiana Community and Technical Col- page 19

lege System and the state s four- year colleges and universities. Provide public support for quality early childhood and pre-school programs including transportation to such programs. Expand tuition support or forgiveness of education loans for post-secondary programs in order to stem the tide of youth out-migration from the state. Develop or expand the use of Individual Development Accounts (IDA) for education, home ownership, microenterprise development, and fuel efficient transportation. Areas for Further Research In Louisiana workforce issues reveal governmental funding priorities as well as historic labor force patterns connected to geographic differences, education inequities, and deep-rooted cycles of poverty. The solutions to poverty, offered by LANO s Community Solutions Institute provide a foundation for critical areas of continued and new research related to labor force issues. The Nurse-Family Partnership, School-Based Health Centers, and LaCHIP programs show promising results for health improvement and workforce participation. Therefore, track long-term indicators that result in lowering both work and school absentee rates and increase productivity. The hardest individuals to employ include people with mental or emotional disabilities, substance abuse problems, and those with criminal records. Identify and track alternative and assistive programs that successfully place these populations across the state, especially if these programs are directed by nonprofit organizations and can be replicated. Identify where charter schools have taken over low-performing public schools and successfully reduced dropout rates, increased education achievement, and increased employment for young workers. page 20

About the Louisiana Budget Project The Louisiana Budget Project (LBP) is part of a national network of 31 State Fiscal Analysis Initiatives (SFAI). SFAIs are independent, non-partisan nonprofit organziations committed to rigorous policy analysis, responsible budget and tax policies and a particular focus on the needs of low and moderate income families. The Center on Budget and Policy Priorities coordinates the State Fiscal Analysis Initiative. To learn more about the SFAI visit the website www.statefiscal.org/ The Louisiana Budget Project (LBP) is supported in part by the W.K. Kellogg Foundation, the Open Society Institute, the Annie E. Casey Foundation, and the Public Welfare Foundation. The comprehensive work of the LBP results in impacts for policymakers, communities and citizens across the state. Through its research and analysis, LBP produces timely reports and leads advocacy efforts to support tax and budget reform in the interest of low and moderate income citizens. The LBP is particularly responsive to the needs of Lousiana s most vulnerable citizens. As a dimension of service, LBP conducts citizen and community-based trainings on state and federal fiscal policies, builds coalitions and networks within the state to strengthen communities. An advisory committee of nonprofit, business, labor and community leaders guides the work of the LBP. For more information on the Louisiana Budget Project and to sign up for timely emails on crtical budget and policy issues, participate on the LBP blog, and to receive a free RSS subscription, visit www. labudget.org. In Louisiana, the Louisiana Budget Project is sponsored by the Louisiana Association of Nonprofit Organizations (LANO). LANO is a statewide network of nonprofits, foundations, corporations and individuals from every region of the state. With over 1,000 members, LANO s mission is to strengthen, promote and build the capacity of Louisiana s nonprofit sector through education, advocacy and member services. To receive public policy alerts on all of LANO s critical policy agenda and other advocacy issues that impact your work, sign up on at www.lano.org. About the Author: Jeanette Eckert, Senior Analyst (Focus: Workforce Development and The Economy) Jeanette Eckert has been working as a Senior Analyst with LBP since November 2007. Her work at LBP is focused on workforce development issues. Prior to coming to LBP, Ms. Eckert spent 30 years in state government, retiring from the Louisiana State Employees Retirement System, where she worked 12 years as the Audit Director. Ms. Eckert also taught computer science classes for six years as a part time adjunct professor at the Baton Rouge Community College. Ms. Eckert is a Certified Public Accountant, as well as a Certified Internal Auditor. She earned a bachelor s degree in Business Education from the University of Louisiana at Lafayette, a Masters of Business from Louisiana State university and a Masters in Information Systems Designs Services from Louisiana State University. Acknowledgement: Special thanks to Nooshin Mahalia from EPI for review of the data in this report. page 21

Endnotes 1 2008 Kids Count Data Book, The Annie E. Casey Foundation, p. 49. 2 2007 Report Card on American Education 3 Ibid 4 Ibid 5 Ibid 6 2007 Kids Count Data Book, The Annie E. Casey Foundation 7 2008 Kids Count Data Book, p. 53. 8 Louisiana Community and Technical College System, (May 14, 2008) Governor Bobby Jindal Announces Immediate Implementation of Day One Guarantee. Retrieved January 12, 2009 from http://www.lctcs.edu/news_pf.asp?articleid=350 page 22