INCREASING THE RETURN:

Investing in Mississippis Working Families

Mississippi Economic Policy Center

About the Mississippi Economic Policy Center

The Mississippi Economic Policy Center (MEPC) engages in rigorous, accessible and timely analysis to inform the policy debate on issues that affect the economic and social well being of working families and low-wealth Mississippians. An independent, nonpartisan initiative, MEPC is managed by the Enterprise Corporation of the Delta (ECD), a regional financial institution and community development intermediary dedicated to strengthening communities, building assets and improving lives in economically distressed areas in the Mid South. Key MEPC partners include the Mississippi Center for Justice and other organizations that contribute expertise and otherwise provide important guidance and support. MEPC and this project receive crucial support from the following foundations: Annie E. Casey Foundation, Charles Stewart Mott Foundation, Ford Foundation, Joyce Foundation, Open Society Institute and the W.K. Kellogg Foundation.

2007. All rights reserved. Any portion of this report may be reproduced without prior permission, provided the source is cited as: Edward Sivak and Vincent E. Mangum, Increasing the Return: Investing in Mississippis Working Families. Jackson, MS: Enterprise Corporation of the Delta, 2006. To download a copy of Increasing the Return go to www.mepconline.org. To acquire a hard copy of the report or for other information contact: Mississippi Economic Policy Center 4 Old River Place, Suite A Jackson, MS 39202 (601) 944-1100

Mississippi Economic Policy Center

Table of Contents

Acknowledgements ........................................................................................................................................ 2 Executive Summary ...................................................................................................................................... 3 Chapter 1 Mississippis Working Families ................................................................................................................. 6 Chapter 2 Investing in Growth: Honing the Competitive Edge ............................................................................. 11 Chapter 3 Tools for Success: Mississippis Economic Development Incentives ................................................... 17 Chapter 4 Decreasing Volatility: Stabilizing Employment through Workforce Supports ..................................... 23 Chapter 5 Increasing the Return: A Summary of Strategies and Recommendations ........................................... 28

Mississippi Economic Policy Center

Acknowlegements

The Mississippi Working Poor Families Project received funding from a consortium of foundations including the Annie E. Casey Foundation, the Charles Stewart Mott Foundation, the Ford Foundation and the Joyce Foundation. The National Working Poor Families Project, in association with Brandon Roberts and Deborah Povich, provided much-needed and appreciated technical assistance throughout the analysis and drafting stages of the report. Kerri Rivers with the Population Reference Bureau rounded out the national project team with credible and accessible analysis of the American Community and Current Population Survey. We are also especially grateful to the members of our advisory board who provided valuable feedback during the drafting process. The Mississippi Working Poor Families Advisory Board included individuals from the following organizations: Catholic Charities of Jackson, Childrens Defense Fund, Foundation for the Mid South, Mississippi Center for Justice, Mississippi NAACP, Public Policy Center of Mississippi, Rand Gulf States Policy Institute, Mississippi State Board for Community and Junior Colleges and Systems Consultants Associates. In addition to the advisory board, Rebecca Tyndall, formerly with ECD/HOPE, also provided assistance in procuring documents for Chapter 3.

Finally, the project could not have been completed without the help of the following people who work hard every day in their various capacities in state and local government: City Clerks Office City of Jackson, Mississippi Secretary of State, Mississippi Department of Employment Security, Mississippi Department of Human Services Division of Economic Assistance, the Mississippi Development Authority Financial Resources Division and the Mississippi State Board of Junior and Community Colleges.

Mississippi Economic Policy Center

Executive Summary

Residents of Mississippi will be the first to describe Mississippi as one big small town. Family ties run deep, and friendships span generations. As such, no one would argue with the notion that the states strongest asset is its people. Mississippians are resilient and work hard for their communities and neighbors. While working hard, many are falling short of economic security in their families. Nearly 130,000 (or 39%) of Mississippis working families are low-income.1 Many remain low-income despite working more than one job. Low-income working families that include a married couple, for example, work, on average, 1.4 jobs to try and make ends meet from month to month. Educational attainment in working families helps to explain the high rate of low-income working families. Mississippians who did not finish high school earn, on average, half as much as college graduates. One-fifth of the working adults in the state do not have a high school diploma or have not passed the General Educational Development (GED) Test. Mississippi also has a prevalence of low-wage work. Approximately 383,020 (or 35.2%) of Mississippis jobs are in low-wage occupations.2 Over the next five years, job growth projections by the Mississippi Department of Employment Security show that the occupations with the largest numbers of openings will primarily offer lowskilled, low-wage jobs without benefits. In the midst of low-wage work and low levels of educational attainment, the global economy is rapidly expanding. While Mississippi businesses and industry used to be able to leverage competitive advantages for regional and national success, advances in technology and transportation coupled with free trade now require companies to compete with entities from all over the

world. Many of the losses in the once strong manufacturing sector of Mississippis economy are attributable to globalization. Even with knowledge of the global trends, Mississippi lags the region in its participation in the global economy. Compared to 11 other southern states, the state ranks second to last for exports as a percentage of gross state product (GSP) and last in foreign direct investment as a share of GSP.3 To compete in the global economy, a strong workforce with the capacity to research and develop new ideas is a necessity. As local economies shift from agriculture, mining and manufacturing to technology and services, the presence or absence of systems to develop residents with the skills to participate in the global environment will determine the presence or absence of good jobs. The title of this report, Increasing the Return: Investing in Mississippis Working Families, directs the reader towards a return on investment theme and suggests that the return on the public investment could be higher. By strengthening existing training systems, targeting resources towards innovative and permissible training activities and enhancing workforce supports, Mississippi could improve the economic stability of thousands of working families. Simultaneously, a coordinated training strategy focused on the jobs of today and tomorrow could build a workforce that actively competes and succeeds in the global economy. Increased economic stability and greater global participation could ultimately lead to higher incomes, higher educational attainment rates, higher levels of private investment and associated increases in economic development. Simply put, a high rate of return on the investment of public dollars and the individual investment of hard work will be realized.

Mississippi Economic Policy Center

Working Poor Families Project, generated with data from the U.S. Census Bureau 2004 American Community Survey. Working Poor Families Project, generated with data from the Bureau of Labor Statistics Occupational Employment Statistics program, November 2004. http://www.bls.gov/oes/home.htm. Data do not include self employment. 3 Blueprint Mississippi: a Business Approach to Mississippis Future, Executive Summary. August 2004, http://www.msmec.com/mec/documents//BlueprintMississippi/BP3173ExecSumFinal2.pdf.
1 2

Finally, the theme of return on investment also calls for systems of measurement and monitoring. All investors with strong track records have tools for measuring the performance of their investments. Given the hundreds of millions of taxpayer dollars invested in training the workforce, developing jobs and supporting working families, recommendations to enhance systems that measure success, focus on outcomes and enhance accountability appear frequently.

Findings and Recommendations

Chapter 1: Mississippis Working Families The reports first chapter provides a demographic overview of the states working families. Some highlights from the first chapter include: 129,457 working families in Mississippi are low-income; 256,177 children live in these low-income families; 56.8% of all working families with a minority parent 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 Edge The reports second chapter examines the states workforce training systems including the community colleges, the Workforce Investment Network, Adult Education and Temporary Assistance for Needy Families (TANF). Among working-age adults, 347,343 have not finished high school; Approximately 33.2% of prime working-age adults that are white have an associates degree or higher, while only 19% of prime working-age adults that are African-American have attained similar levels of education; If all of Mississippis people of color attained equal education and earnings as whites, the state would experience a $1.1 billion increase in annual tax revenues; On average, Mississippi annually spends $6.52 per adult without a high school diploma or that has not successfully passed the GED test on adult basic education; The number of people who exit the Workforce Investment Act (WIA) program is very high; however, only a small percentage (11.7%) of the people who exit receive training; and Only a small percentage (2.5%) of people enrolled in the TANF program were enrolled in job training.

Moving forward, the following list represents policy opportunities for state policy makers to enhance current systems. Pilot the use of two pools of state funds directed at increasing affordability within the postsecondary system for traditional and nontraditional students. For traditional students, the pool of funds would be used to provide grants for academically qualified students without the resources to pay for college. For nontraditional students, the pool would target workers at least 24 or older who are not qualified for Pell Grants. Funds could be used for associates degree, credit certificate and non-credit vocational programs. Double the available resources for Adult Education from $6.52 to $13.00 per adult without a high school education or equivalency. Increased resources could be targeted towards programs with high levels of work and education goal attainment and serve as the first step on a path to additional education and ultimately higher wages. Strengthen training options available to Mississippis unemployed workers by targeting more WIA resources towards education and training. Increase training options available to TANF participants with the goal of doubling the rate of participants in training activities annually for the next three years. Training programs could be focused on those activities that allow the state to meet its federal work participation requirements. Enhance data collection and reporting systems to assess the effectiveness of training systems in their ability to move low-wage Mississippians up the economic ladder.

What is a Low-Income Working 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 parent with at least one child under the age of 18. Working Family: A family where all family members ages 15 and over have a combined work effort of 26 or more weeks in the last 12 months, or all family members ages 15 and over have a combined work effort of 26 or more weeks in the last 12 months and one currently unemployed parent looked for work in the previous four weeks. Low-Income Working Family: A family with an income below 200% of the threshold for poverty as defined by the U.S. Census Bureau. Twice the federal poverty level is used as a proxy for self sufficiency, i.e., an income that allows a family to pay for basic needs like food, housing, clothing and health care without any public or private assistance.

Chapter 3: Tools for Success: Mississippis Economic Development Incentives Chapter 3 provides an overview of the states employment profile and a summary of some of its key economic development programs. Some of the findings include: In 2004, Mississippi employed more than one million 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 supported 11,234 jobs; and Beyond the dollars invested and number of jobs assisted, there are reporting mechanisms to understand the level of the economic development investment and to determine who actually benefits. The following recommendations represent opportunities for state policy makers to enhance the current set of economic development programs. Include a provision to require employers who receive public subsidies through incentive programs to fill a portion of the newly created jobs with workers coming from a low-wage environment. Employers that employ a high number of low-wage workers could receive a more generous subsidy. Track the percentage of low-wage workers that moved into jobs assisted through state incentive payments. Track the earnings of workers assisted through incentive programs one year after the assistance was received. Measures could include the percentage of workers earning above poverty-level wages and the percentage of workers earning more than 200% of poverty-level wages. Increase the transparency of the Jobs Tax Credit. While employers claim an estimated $4 million dollars in credits annually, there is currently no way to answer questions about the number of jobs assisted and the quality of the jobs. Efforts could

be made to annually report the number and quality of jobs assisted in the Tax Expenditure Report. Annually, a report on the use of public incentives to generate jobs by employers could be publicly released in aggregate form on the Mississippi Development Authority website to encourage legislative and programmatic accountability.

The following recommendations represent opportunities for state policy makers to enhance the current set of workforce support programs. Increase the minimum wage to levels equal to Arkansas rate of $6.25 per hour. Groceries could be exempted from the sales tax, while certain services could be added to the list of taxable items to account for the revenue that would no longer be generated by grocery sales; Within the income tax system, deduction and exemption amounts could be updated to account for inflation, thus preventing people in poverty from spending limited incomes on a tax; Increase the child care reimbursement level to meet the federal recommendation of 75% of the market rate; Double the eligibility threshold for Medicaid participation for working families; Create incentives for small employers to provide health care benefits to their employees and families; and Increase the maximum weekly unemployment insurance benefit from $210 per week to $250 per week.

Chapter 4: Decreasing Volatility: Stabilizing Employment through Workforce Supports The fourth chapter highlights Mississippis policies for supporting low-wage working families. Some findings from the chapter include: 282,751 working Mississippians were employed in occupations that typically pay below poverty-level wages; A raise in the minimum wage would have a positive effect on the wages of at least 17,000 of the states lowest-paid workers; In 2006, families with incomes below the federal poverty level will pay state income taxes; In 2005, the market rate survey showed that the state was only reimbursing child care providers at 52% of the market rate for providers around the state. 288,197 working Mississippians do not receive health benefits through their employers; Adults in working families lose eligibility for state-sponsored insurance when earnings exceed 34% of the federal poverty level (approximately $5,496 for a family of three); and For workers that received unemployment insurance payments, the maximum benefit was the smallest in the nation at $210 per week.

This report provides a road map for residents and policy makers to assess the current environment for working families in Mississippi and offers opportunities for the state to target investments in its people. As we progress towards the next decade, investments in the people of Mississippi will provide strong returns by allowing working families to build the states economy and increase its position in the global marketplace.

CHAPTER 1:

Mississippis Working Families

An overwhelming number of families in Mississippi have members that go to work everyday. However, a job in Mississippi does not guarantee economic security. In 2004, nearly four out of 10 families with children engaged in work and remained low-income. Families like these work hard and contribute to their local economies. While playing by the rules, they find their finances squeezed at the end of the month. As the prices of gas, groceries, electricity and health care rise, many working families simply do not earn enough to cover basic living expenses.4 Several factors contribute to the high rate of low-income working families. First, there is a growing prevalence of low-wage work. As the economy continues to transition to service sector employment, low-wage, service sector employment increases. Seven of the ten occupations projected to generate the most job openings over the next five years will most likely be in low-wage job sectors. Anecdotally, one can see the rise in service sector employment around the gaming hubs of Tunica and the Mississippi Gulf Coast. Another factor affecting the high rate of low-income working families is the lack of coordinated systems designed to help low-wage workers to increase their skills and move up the economic ladder. Regardless of the factors, Mississippians many of whom affect our everyday lives are working hard and falling short. We depend on the entry-level bank teller earning $14,980 annually to assist us with our banking needs.5 In the morning, we drop our

children off at day care with a teacher who earns approximately $22,000 per year. Finally, we rely on nursing aides and attendants to care for our aging parents and grand-parents on an annual salary of $16,860.

Mississippis Low-Income Working Families a Snapshot

This report defines a low-income working family as a family with an income below 200%, or double, the federal poverty threshold as defined by the U.S. Census Bureau. In 2004, twice the federal poverty level for a family of four amounted to $38,614. Twice the federal poverty level for a family of four is used as a proxy for self-sufficiency, which is earning enough income to cover all of a familys expenses without government assistance. Map 1 illustrates the concentrations of individuals living below 200% of the federal poverty line by county.6

Map 1 Concentration of Individuals Earning Below 200% of the Federal Poverty Line by County (2000)

Fast Facts Working Families

129,457 working families in Mississippi are low-income 256,177 children live in a working family that is low-income 56.8% of all working families with a minority parent are low-income Mississippi ranks 47th in the country for its rate of low-income working families (39.1%) Most of the counties in the state have concentrations higher than 40% of individuals living below 200% of the federal poverty line. With 69 of the states 82 counties having such large percentages of their residents living below 200% of the federal poverty line, clearly issues relating to self sufficiency affect all parts of the state.
4 5

Legend

Less than 30% 31 to 40% 41 to 50%

Greater than 50%

Mississippi Economic Policy Center

Working Poor Families Project, generated with data from the U.S. Census Bureau 2004 American Community Survey. Mississippi Department of Employment Security, http://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.

Approximately four out of 10 working families with children (39.1%) in Mississippi are low-income. While the percentage is slightly below Arkansas, Mississippi still has one of the three highest rates in the country of working families that do not earn enough income to be economically self-sufficient (Chart 1).
Chart 1 Percentage 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%
41.5% 33.4% 38.6% 39.1% 30.6% U.S. 28.3%

Children also play an important part in a familys ability to attain economic stability. Children require food, child care and health insurance all of which cost money. In 2004, there were 256,177 children who lived in low-income working families. While 39.1% of the working families in the state were lowincome, 44% of the children in working families were in working families that were low-income. Children who grow up in low-income families are also more likely to have lower educational attainment and associated economic success upon completing their terminal degree than children who do not grow up in low-income families. While Mississippi has made gains over the last five years in the percentage of adults aged 25 and older with a high school degree or equivalency, many parents in low-income working families have not completed the 12th grade. Among low-income working families, 31.4% have a parent that has not finished high school or passed the General Educational Development (GED) Test. Additionally, 57.1% of low-income working families in Mississippi have no parent with some postsecondary education.8 Among Mid-South states, only LA has a higher rate at 61.9%. Given the well-documented relationship between increased educational attainment and higher earnings, the low-income working family educational attainment statistics are noteworthy.

Income Inequality in Mississippi

Mississippis income inequality ratio is one of the highest in the country. Over the past couple of decades, income inequality has increased in the state as average earnings have risen much more rapidly in the top income quintile than in the bottom income quintile (Table 1).
Table 1 Income Inequality in Mississippi Early 1980s to Early 2000s
Early '80s Lowest Quintile Middle Quintile Highest Quintile $11,029 $28,983 $64,342 Early '00s $13,456 $37,162 $95,406 Percent Change 22.0% 28.2% 48.3% Dollar increase per Year $115 $390 $1,490

AL (39)

AR (49)

LA (47)

MS (48)

TN (31)

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

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

The majority of working families that are low-income are comprised of parents that were born in the United States. Of the 129,000 low-income working families in Mississippi, only 1,628 (1.3%) of the families had a parent that was an immigrant. Within working families there are differences by race. Among families with a minority parent, the rate of working families that are low-income is 56.8%. An estimated 71,297 of Mississippis working families with a minority parent are low-income. In contrast, the rate of working families without a minority parent that are low-income is about half the rate for families with a minority parent at 28.2%. Nevertheless, while the rate of low-income working families without a minority parent is low compared to the rate for families with a minority parent, there are still 58,160 white families that are working and low-income.7

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

7 8

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

Low-income workers will also most likely not move up the economic ladder by working harder. The average low-income family in Mississippi already works 2,467 hours a year the equivalent of 1.2 full-time jobs. The level of effort expended by working families remains high regardless of family type. Married lowincome working families work, on average, enough hours to equal approximately 1.4 full-time jobs. Lowincome working families with a single father work, on average, 2,289 hours per year, and single mother lowincome working families work about one full-time job.9 Even though low-income working families are often engaging in work more than 40 hours a week, they are still not earning enough to make ends meet.

Moving Forward in Todays Economy

As the global economy continues to mature, Mississippi needs to make strategic investments to equip all of its workers with the skills to compete for and generate high-quality jobs. Concurrently, the state must also target investments toward supports that allow low-income workers to remain consistently employed while upgrading their skills. These types of investments are essential to meet the projected demand for jobs that require a skill set beyond a high school education. The next three chapters will provide a road map to increase Mississippis return on its investment in working families. Chapter 2 focuses on the states system of workforce training for adults. Specifically, the chapter examines opportunities to enhance access to training through the channels of the community college system, the workforce investment network and the Temporary Assistance for Needy Families program. Chapter 3 examines the states system of economic development incentives to create jobs. Finally, Chapter 4 looks at the states system of workforce supports for people who are on the job.

Each of the chapters concludes with a series of recommendations for decision makers to consider. The recommendations focus large public investments on Mississippis working families. By focusing investments on working families one of the states strongest assets Mississippi stands to improve its overall ability to address the challenges of low-wage working families such as poverty, educational attainment and economic mobility. As working families embrace opportunities to move up the self-sufficiency ladder, local communities will reap the benefits of high-quality jobs, a strong business climate and increased tax revenues.

Ibid.

CHAPTER 2:

Investing in Growth: Honing the Competitive Edge

Success in the global economy depends largely on the development and retention of a skilled workforce. Throughout the South, technology- and knowledgebased jobs are growing at a much more rapid pace than jobs in the manufacturing and natural resource sectors.10 In fact, through 2011, employment in the sectors of manufacturing and mining is projected to experience a negative annual growth rate.11 Investments in the upgrade of education and skills will pay long-term dividends by contributing to the generation of high-quality jobs and helping people achieve economic success.12 For families, economic stability also hinges on the acquisition of skills relevant to high-quality jobs. To acquire the necessary skills to compete for high-wage employment, working families must have access to training systems that equip students with the tools to pursue job opportunities that offer economic advancement. Targeted investments in a coordinated and comprehensive workforce training strategy that simultaneously enhances the states competitive advantage in the global marketplace and improves working families opportunities to achieve selfsufficiency will ultimately contribute to the states overall ability to improve the social and economic outcomes of the state.

This chapter will begin with an overview of Mississippis educational and skill attainment. It will then move into an assessment of state policies and outcomes related to the acquisition of skills needed to move into high-quality jobs. The chapter will conclude with a series of policy recommendations to further educational outcomes for the adult workforce throughout the state.

Educational Attainment the Key to Higher Wages and a Strong Economy

Opportunities for gains in the educational attainment of Mississippis workforce are numerous. Beginning with basic literacy, approximately 64% of the states residents ages 16 and over have very low levels of literacy.13 Literacy challenges contribute to low rates of attainment at the high school level. Among working-age adults, 347,343 workers do not have a high school degree or a GED.14 At the next level, only 29% of Mississippis young adults enroll in post-secondary education. While the level of enrollment is tied with Louisianas and slightly higher than Tennessees, the rate trails Alabamas and Arkansas. Given the low enrollment rates, it is not surprising that only 27.8% of prime working-age adults (25-54) have an associates degree or higher.15

Fast Facts Worker Training and Skill Development

Among working-age adults, 347,343 workers do not have a high school degree or GED In Mississippi, college graduates earn, on average, $41,026 twice the rate of high school drop outs Approximately 33.2% of prime working-age adults that are white have an associates degree or higher, while only 19% of prime working-age adults that are AfricanAmerican have attained similar levels of education If all of Mississippis people of color attained equal education and earnings as whites, the state would experience a $1.1 billion increase in annual tax revenues

Mississippi Economic Policy Center

Blueprint Mississippi: A Business Approach to Mississippis Future, Executive Summary. August 2004. Mississippi Economic Council, 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 Estimates calculated by the National Institute for Literacy, 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 Ibid.
10

Additionally, great disparities exist across race. While only 12.5% of prime working-age whites have not finished high school or passed the GED test, the rate for prime working-age African Americans is 25%. The gap is even wider between the two sets of prime working-age adults that have attained at least an associates degree. Approximately 33.2% of prime working-age adults that are white have an associates degree or higher, while only 19% of prime working-age adults that are African-American have attained a similar level of education.16 It should be noted that the educational attainment rates for whites and African Americans at the associates degree level are lower than the national averages. The national rate of prime working-age adults that have attained an associates degree or higher is 37.3%.17 Educational attainment and skills acquisition are critical for the attainment of jobs that pay self-sufficiency wages. While a worker without a high school degree earns, on average, $22,695 annually, a worker with an associates degree earns $31,232. The attainment of the associates degree represents an increase of nearly 40% in average annual earnings (Chart 2). Over the next 25 years, the growth rate for the states African-American population will approach 15%,
Chart 2 Average Wages Earned by Educational Attainment for Mississippi Adults aged 25-64 Working 35+ Hours (2000)
$50,000
$41,026

compared to a growth rate of 8.5% for the states white population. Mississippis economic future is linked to reducing the educational disparities between the states African-American and white populations.18 If disparities were reduced, and all of Mississippis people of color attained equal education and earnings as whites, the state would experience a $1.1 billion increase in annual tax revenues.19 In 2005, Mississippis per capita annual income of $25,318 was one of the lowest in the country.20 Given the relationship between earnings and educational attainment highlighted in Chart 2, efforts to strengthen the educational attainment of Mississippis workers through training system enhancements from high school and adult basic education through college will positively affect economic competitiveness and growth statewide.

The Workforce Investment Network administered by the Mississippi Department of Employment Security; and Temporary Assistance for Needy Families administered by the Mississippi Department of Human Services. Each of the systems faces unique challenges and opportunities in moving working adults toward meaningful employment. Community and Junior College System During the 2004-2005 academic year, the 15 colleges within the SBCJC system enrolled 92,097 students in for-credit programs. Additionally, the SBCJC system connected 209,795 students to non-credit training programs that focused on Adult Basic Education, GED preparation, Literacy, Workforce Development and Continuing Education.21 Table 2 illustrates the demographics of the students enrolled in for-credit programs.
Table 2 Public Community and Junior College Demographics Academic Year 2004-2005 Non-Duplicated Credit Enrollment
Percent of Students over age 24 Percent Women Percent Minority 38.4% 64.2% 39.6%

A Competitive Workforce Open to All

Mississippi uses four primary vehicles to connect low-income adults to training and educational opportunities. The four vehicles are: The Community and Junior College System coordinated by the Mississippi State Board for Community and Junior Colleges (MS SBCJC); Adult Basic Education and General Educational Development testing also coordinated by the MS SBCJC;

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

$40,000
$31,232

$30,000 $20,000 $10,000 $0

$22,695

$26,131

Less than a High School Diploma

High School Diploma

Associates Degree

Bachelors Degree

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

Working Poor Families Project, generated with data from the U.S. Census Bureau 2004 American Community Survey. Ibid. 18 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.xls. 21 Mississippi Public Community and Junior Colleges. Statistical Data 2004-2005. State Board for Community and Junior Colleges Division of Accountability and Technology.
16 17

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Among first-time, first-year students, 76.1% returned for the spring semester during the 2004-2005 academic year.22 In 2004, retention rates for students transitioning from the first year to the second year declined to 58%. Mississippi does well in its retention statistics compared to other states (ranked 4th in the nation) from year one to year two. Even so, a rate of 40% of those that enter the college system leaving after one year represents a loss of potentially educated students and ultimately workers.23 Approximately 51% of all first-time, first-year students completed a bachelors degree within six years of entering the college.24 For middle-income residents of Mississippi, the community college system offers a reasonably affordable education. Middle-income families earning, on average, $37,200 pay about 16% of their income to cover tuition, room and board after financial aid has been received. Mississippi ranks 8th in the nation and 2nd in the Mid South in this measure of affordability. For the lowest-income families in the state, families spend, on average, approximately 17% of their income on community college costs.25 Affordability is an important component of making training systems accessible and available to Mississippi residents. For very low-income students and working family members seeking a post-secondary education, scholarships and grants-in-aid are essential for bridging the affordability gap. One way to measure a states investment in need-based aid is to compare a states level of need-based aid funded through state resources with the states level of need-based aid funded through federal Pell Grant resources. While a number of states invest amounts equal to 25% or more of the federal Pell Grant contribution, Mississippi invests approximately one percent of the amount. An increase in state-funded aid for training through the community college system could be an important tool for increasing enrollment and retention at post-secondary institutions especially among the states low-income families.

The state also does not provide FTE resources to support non-credit career classes; therefore, the cost of these classes is typically covered through higher student tuition. A number of other states do provide support for non-credit career classes. In North Carolina, for example, the state will provide funding for non-credit career classes that upgrade job-related skills. Non-credit career classes are important training tools for low-income working adults because they allow workers to retain their jobs while enhancing their skill sets to compete for higher wages. Non-credit career classes are also usually shorter in duration than a degree course, which increases the likelihood of completion. Adult Education The Adult Basic Education (ABE) program and GED testing is coordinated by the State Board for Junior and Community Colleges. Adult Basic Education potentially serves as the gateway for low-wage and low-skill workers to obtain training and ultimately higher-wage jobs. Given the large percentage of families with a parent without a high school diploma and the high rate of workers with similar levels of educational attainment, a well-functioning ABE program is critical to any efforts to start the progression of hard-to-serve populations up the career ladder. Analysis of the number of adults without a high school diploma relative to the number of adults enrolled in adult education reveals that the potential opportunity for adult education statewide drastically dwarfs the number of students that take adult educa22 23

tion classes. Only 7.6% of all adults in Mississippi without a high school diploma are involved in an adult education class.26 The ABE program serves over 25,000 people annually, with 60% of the participants being residents of color and 40% white.27 For students entering the adult education system at the most basic levels, 29% show improvement. The rate of improvement is similar (31-33%) in each of the three beginning and intermediate Adult Basic Education levels. The program completion rate is 51% and 55% for Adult Secondary Education Low and High Levels respectively.28 Goal setting is an important tool for moving students and workers beyond the entry-level training offered by adult education. Adult education students who set goals experience high levels of success. Eighty-three percent (83%) of all unemployed students who entered the program with a goal of attaining employment met their goal. Eighty-seven percent (87%) of the students who entered the program with a stated goal of beginning post-secondary education or training attained their goal of further education. While the success rates of students that set goals of employment and training is high, an emphasis on targeting the adult education system towards the acquisition of skills to move into additional training for higherpaying jobs does not appear to be a priority. Only one out of five students (20.1%) enrolled in adult education set a primary or secondary goal of entering/ retaining employment or entering post-secondary training. 29

Ibid. National Center for Public Policy and Higher Education, 2006. 24 Measuring Up 2006: The State-by-State Report Card for Higher Education, 2006, http://measuringup.highereducation.org/compare/state_comparison.cfm. 25 Ibid; National Center for Public Policy and Higher Education 2006. 26 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.xls. 27 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.

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In addition to program emphasis, another factor contributing to low completion rates in the Adult Basic Education System could be a low rate of investment in the program. Mississippi annually spends $6.52 per working-age adult without a high school diploma on adult education. Mississippi trails all Mid South States in this area (Chart 3). 30
Chart 3 State Resources Allocated for Adult Education per Adult without a High School Degree or GED (2003)
$80.00 $60.00 $40.00 $20.00 $0.00 AL AR LA MS TN
$11.68 $17.94 $6.52 $7.25 $68.24 U.S. $46.65

Programs to Watch: Coahoma Community College GED Scholarship Program

Coahoma Community College (CCC) offers a full first-semester scholarship to all of its students that complete GED training and receive a GED diploma through CCC. At the end of the 2005 academic year, 11.2% of CCCs full-time students had completed their entrance requirements through GED training nearly two percentage points above the state average. The program is a good example of the state Adult Education / GED Testing system establishing a pathway towards gainful employment beginning with basic education and continuing with post-secondary classes. As mentioned earlier, ABE and GED testing, programs that are well-integrated into the community college system, offer opportunities for students to build career pathways to achieve economic success. With each additional level of educational attainment, students gain more options to earn higher wages. A number of community colleges within the state have taken the first step towards linking their ABE and GED testing programs to post-secondary studies. Coahoma Community College, for example, makes a scholarship available to students completing the GED testing program.

Workforce Investment Network In 2004, the state legislature consolidated most of the states workforce training programs outside of the community college system into the Mississippi Department of Employment Security. Additionally, the legislation created four Workforce Areas each governed by a workforce investment board (WIB). The system was adjusted to allow each WIB to have the latitude to create a workforce investment network that most readily met the needs of the people living in the WIBs respective communities. Each workforce area relies on a one-stop system to connect participants to programs to advance employment outcomes. Much of the system is designed to tailor the structure of the workforce programs to the local economy. The local WIBs establish training priorities and determine levels of workforce supports and training partners to meet the needs primarily of unemployed and dislocated workers. Any efforts to target special populations (for example, adults in poverty) are localized with no state mandates beyond federal WIA requirements. During the 2004 program year for the state Workforce Investment Act Program, nearly 41,000 participants including adults, youths and dislocated workers exited the program. Over 22,000 of the people who exited the program were adults. Most of the 22,986 adults who exited the program received core services (80.5%). Core services included outreach, intake and eligibility determination, as well as job search and placement assistance.

Source: Working Poor Families Project, generated with data from the 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).

30

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).

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Mississippi Basic Skills Training Tax Credit

The Mississippi Basic Skills Training Tax Credit provides an income tax credit to businesses that sponsor trainings through the community and junior college system. The credit specifically targets the costs that employers incur while providing training for an employee: To enhance skills needed to perform an existing job; To improve job performance; and/or To prepare an employee for a designated career path. During the 2006 Fiscal Year, the credit received little use as only an estimated $120,000 in tax credits were claimed on business tax returns (Mississippi Tax Expenditure Report 2005). In 2006, the Legislature voted to extend the credit for two more years until 2008. For adults that require additional assistance to become job ready, the state makes intensive services available for workers to develop individual employment plans, to receive specialized assessments and case management. Only 7.8% of those exiting the program received core and intensive services.

In Mississippi, training services are available for adults that are determined to need additional training to attain employment after the completion of core and intensive services. With a strong emphasis on the provision of core services, WIA training was provided to only a small percentage of Mississippi program participants. Of the adults who exited the program, only 11.7%, or approximately 2,689 exiters, received training.31 This rate lagged the rates for all of the bordering states, where training rates exceeded 55% (Table 3).
Table 3 Rate of Training Services Received by Adult WIA Exiters from April 2004 March 2005 Mississippi and its Border States
Number of Exiters Alabama Arkansas Louisiana Mississippi Tennessee 9,341 1,052 5,796 22,986 6,187 Percent of Exiters that Received Training 89.9% 74.5% 73.1% 11.7% 56.1% Calculated Number of Exiters that Received Training 8,397 784 4,237 2,689 3,471

Temporary Assistance for Needy Families The states Temporary Assistance for Needy Families (TANF) program also has some flexibility to dedicate resources towards education and training. Even with recent changes to federal regulations requiring increased work participation rates among TANF caseloads, education and training opportunities still exist and can contribute to the overall goal of increased work participation rates. For example, non-credit, vocational education and associates degree-level courses that are related to an occupation qualify as core activities under the current regulations.32 Many of the people who receive TANF assistance experience many barriers to employment. As such, people leaving TANF for work may enter jobs with low wages. One strategy to increase opportunities for people leaving TANF could be to increase training opportunities available to TANF participants. In 2004, 2.5% of all Mississippi TANF recipients were enrolled in education and training activities.33 If Mississippi doubled those efforts annually over the next three years, Mississippi would lead the nation in the percentage of TANF recipients enrolled in training. By acting strategically, the state could simultaneously grow the employability of its TANF participants while using the education and training activities to meet federal work participation requirements.

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

It should be noted that only California and New York exit more people from WIA programs than Mississippi. With a very large WIA program, Mississippi has the potential to expand the training component of its WIA services with great effect. By doubling WIA training rates and targeting training towards job preparation for employment that offers upward mobility, the WIA program could contribute to the longterm economic stability of the state. Ultimately, those that would receive training targeted towards economic advancement would earn more money, generate more tax revenue and use fewer state employment services once employed.

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 Final TANF 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 Work Activity for Families Counted as Meeting the All-Families Work Requirements, FY2004.
31

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From the late 1990s to 2006, the TANF caseload in Mississippi decreased from more than 60,000 people to approximately 13,354.34 Some participants exited the program for work opportunities, others dropped out of the program and still others were no longer able to participate in the program once they reached the 60 month lifetime program time limit. Limited performance data show that Mississippi ranks 37th nationally and 3rd in the Mid South in its Adult Employment Retention Rate at 56.8%.35 The retention rate measures the extent to which TANF recipients who have entered work remain employed for three consecutive quarters following their initial placement.36 While some data on the level of TANF leavers and work participation rates are available, there is no source of information about TANF exiters ability to achieve economic self-sufficiency. Some states, like Arkansas for example, measure the percentage of TANF exiters that earn above poverty level wages. The data allow the state to measure the TANF programs success in moving its participants towards self-sufficiency, which reduces the likelihood that exiters will return to the program in the future.

Measuring the Return

All efficiently run companies invest in systems to provide timely, accurate and comprehensive data on company performance to maximize shareholder return. These systems include a process for setting outcome-based goals and provide for the ongoing and regular measurement of companies attainment of their goals. Systems and programs that achieve or surpass goals are then enhanced, while systems and programs that do not achieve the goals are improved to facilitate goal attainment.

To increase the return on Mississippis investment in workforce training, the state must develop systems that collect data on the attainment of training program outcomes. For example, how many WIA and TANF exiters earn above 100 or 200 percent of poverty-level wages? Additionally, efforts to make the data publicly available will also contribute to program accountability. In Arkansas, the collection and reporting of such data led to the creation of a career pathways program that serves thousands of TANF participants annually through basic education, bridge programs and the community college system. The program was launched when the data showed that fewer than 10% of all TANF exiters were earning above poverty-level wages. The SBCJC does have a system in place to set goals and measure its performance against those goals. Two goals relevant to the discussion on workforce training include 1) the cumulative grade point average (GPA) for community college students that transfer to state four-year colleges being equal to or greater than the GPA for native students, and 2) 90% of students who complete a Vocational Technical Training program being positively placed. As of 2005, the GPA of community college transfer students (2.78) was almost equal to the GPA of native students (2.79). Additionally, 88.9% of all Vo-Tech students were positively placed.37

34 35

36 37

Phone and e-mail correspondence interview with Cheryl Sparkman, Director Division of Economic Assistance, Mississippi Department of Human Services, 1/31/2007 2/1/2007. Working Poor Families Project generated with data from U.S. Department of Human Services TANF High Performance Bonus Rates, Office of Family Assistance, High Performance Bonus Awards, Performance Year 2004. www.acf.hhs.gov//programs/ofa/HPB/2004/table03a.htm#fn3, Table 3(A). Phone interview with Cheryl Sparkman, Director Division of Economic Assistance, Mississippi Department of Human Services. Mississippi State Board for Junior and Community Colleges Program Performance Indicators and Measures FY 2005, http://www.sbcjc.cc.ms.us/pdfs/nonfinperfindfy2005.pdf.

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Building on the foundation of the SBCJCs tracking systems, the SBCJC could look at adding measurements that track placement of low-income students and the progress of students that receive remediation. Another important measure to track could include the percentage of ABE students that transition into postsecondary studies and obtain a certificate or degree. This measurement would yield valuable information about the development of a career path leading to higher-wage opportunities. Additionally, within the Adult Education program, measurements could be created to track the percentage of Adult Education students that earn above poverty-level wages one year after placement. Within the Workforce Investment Network and the Temporary Assistance for Needy Families programs, state measurement activities could be enhanced by developing self-sufficiency goals and tracking progress towards those goals annually. Specifically, the state could set goals around moving a certain percentage of exiters into jobs that pay above poverty-level wages. Annually, the state could track the progress of the program exiters and report the percentage of exiters that meet or exceed the wage target. Earnings data following the exit of the two programs would provide the state with good information about the programs capacity to move participants towards self-sufficiency. Data could be used to make program enhancements over time.

Increasing the Return by Honing the Competitive Edge

Adult educational attainment and enrollment in post-secondary classes in Mississippi is low compared to Mississippis border states and the rest of the nation. Additionally, significant disparities exist across race. In the midst of low levels of attainment, the community and junior college system provides one of the most affordable post-secondary options in the country. However, for those who still cannot afford college, very few resources exist to bridge the affordability gap. Other programs with the flexibility to provide training are currently targeted towards other areas.

Investments in the states workforce education and training systems will yield long-term benefits for working Mississippians, businesses and the overall economies of local communities. By increasing access to training for working families, people around the state will have additional opportunities to upgrade their skill sets and move into higher-wage work. As people move into higher-wage work, communities will benefit through increased local savings and economic activity. The following page summarizes Mississippis investment opportunities to increase the return on workforce training systems and programs.

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Investment Opportunities Honing the Competitive Edge

STRENGTHENING POLICIES Post-secondary Training For students from low-income working families, very few need-based resources exist at the state level. While a number of states invest in need-based aid in amounts equal to or exceeding 25% of the federal Pell Grant contribution, Mississippi invests state resources amounting to about one percent of its annual Pell Grant allocation. Likewise, the state does not provide resources for non-credit career training courses a valuable tool for people who are already working and are looking to rapidly upgrade their marketable skills. To address affordability challenges for the states lowest-income working families, the state could: Pilot the use of two pools of state funds directed at increasing affordability for traditional and nontraditional students. For traditional students, the pool of funds would be used to provide grants for academically qualified students without the resources to pay for college. For nontraditional students, the pool would target workers at least 24 or older who are not qualified for Pell Grants. Funds could be used for associates degree, credit certificate and non-credit vocational programs. Adult Education About eight percent of all the adults in the state of Mississippi who have not obtained a high school diploma or passed the GED test are involved in adult education. One possible reason for the low levels of involvement could be the lack of a recognizable career path from Adult Education to post-secondary training. Only 20% of the adults that enroll in Adult Education set a primary or secondary goal of entering employment or post-secondary education. Another reason could be very low levels of investment

by the state in the Adult Education program. On average, Mississippi spends $6.52 per adult who has neither received a high school diploma nor passed the GED test. Mississippi could: Double the available resources per adult without a high school education or equivalency from $6.50 to $13.00 for Adult Education. Increased resources could be targeted towards programs with high levels of work and educational goal attainment and serve as the first step on a path for additional education and ultimately higher wages. Workforce Investment Act and Temporary Assistance for Needy Families Mississippi exits one of the largest groups of people in the country from its WIA program. While the number 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 people enrolled in the TANF program were enrolled in training (2.5%). Mississippi could strengthen training options available to its unemployed and very low-skilled workers by: Targeting more WIA resources towards education and training; and Increasing training options available to TANF participants with the goal of doubling the rate of participants in training activities annually for the next three years. Training programs could be focused on those activities that allow the state to meet its federal work participation requirements.

PROGRAM MEASUREMENT AND ACCOUNTABILITY To increase the return on Mississippis investment in workforce training, the state must employ systems that set goals, collect data on the attainment of training program outcomes and make the data publicly available. The State Board for Community and Junior Colleges does have a system to set goals and measure their attainment. The SBCJC even makes information about their progress available to the public on its website. Other programs, like WIA and TANF, set goals and track federally mandated indicators; however, only a small number of indicators provide information on program outcomes. Mississippi could improve its measurement and accountability systems within its training and employment assistance programs by: Tracking the percentage of low-income students positively placed after completing studies within the community and junior college system; Tracking the earnings of Adult Education graduates benchmarked to 100% and 200% of povertylevel wages; Tracking the percentage of Adult Education graduates that transition into post-secondary education and obtain a certificate or degree; Tracking the earnings of TANF exiters benchmarked to 100% and 200% of poverty-level wages one year after leaving the program; Tracking the earnings of WIA exiters benchmarked to 100% and 200% of poverty-level wages; and Ultimately using the data to establish goals, track progress and make information publicly available (similar to the SBCJC Program Performance Report) and to make program enhancements over time.

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CHAPTER 3:

Mississippis Economy
Mississippi businesses are the lifeblood of our states economy. In 2004, Mississippi businesses employed 1,080,524 workers and paid annual wages totaling $30.3 billion.38 While annual aggregate wage numbers have risen over the past couple of years, enthusiasm for the rise is tempered by an abundance of low-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 of low-wage work will continue. With the exception of nurses, operations managers and truck drivers, most job growth will occur in low-wage service sector employment requiring little skill preparation (Table 4).40 The dominance of the service sector as a source of employment in Mississippi is noteworthy given that many service sector jobs require no more than a high

Fast Facts Economic Development

In 2004, Mississippi employed more than one million workers who 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 supported 11,234 jobs school diploma and pay low wages while offering few benefits. As these jobs grow in number, working families that fill the jobs will meet challenges achieving self-sufficiency no matter how hard they work given the low wages and lack of benefits associated with many of the high-growth occupations.

Tools for Success: Mississippis Economic Development Programs

While enhancements to Mississippis education and training efforts are critically important for the state to increase the return on its investment in working families, they are only part of a comprehensive strategy to move Mississippis working families towards self-sufficiency. Education and training efforts may prepare the workforce for high-wage jobs; however, in isolation, they do not create the type of jobs that provide financial security for working families. The other component of a comprehensive strategy to increase the return on Mississippis investment in working families includes efforts to generate high-quality jobs. Mississippis economic development policies provide an opportunity for the state to assist businesses and ultimately to generate jobs that contribute to economic advancement.

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

Average Annual Wage Cashier Retail Salesperson Registered Nurse Waiter and Waitress Laborer and Freight, Stock, and Material Mover Combined Food Preparation, Serving Worker and Fast Food Worker Truck Driver, Heavy and Tractor Trailer General Operations Manager Food Preparation Worker Nursing Aide, Orderly and Attendant $14,640 $19,860 $45,590 $13,290 $19,340 $13,860 $30,900 $66,310 $13,700 $16,060 Projected Annual Openings 2565 2210 1360 1005 905 820 770 765 720 685 Education Required High School Diploma High School and some onthe-job Training Bachelors Degree High School Diploma High School Diploma High School Diploma High School and some on-the-job Training Bachelors Degree High School Diploma High School and some on-the-job Training

Source: Mississippi State WIA and Wagner-Peyser Plan. Updated May 2006.
Mississippi Department of Employment Security. Working Poor Families Project, generated with data from the Bureau of Labor Statistics Occupational Employment Statistics Program, November 2004. Occupational Employment Projections. Year 2002 to Year 2012 State of Mississippi. Mississippi Department of Employment Security.

38

Mississippi Economic Policy Center

39 40

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At the same time, the service sector also contains most of the states fastest growing occupations most of which pay self-sufficiency wages. Participation in the fastest growing occupations, however, will require higher levels of education (Table 5).

Employment trends indicate that the service sector will continue to be a job driver in the future. Participation and ultimately movement towards self-sufficiency will depend on the access to and attainment of skills and education. As of the first quarter of 2006, 79% of Mississippis jobs were in service producing industries.41 The employment projections illustrate the evolution of Mississippis economic landscape. While the manufacturing sector was once one of the most robust employment generators in the Mississippi economy, many manufacturing jobs have moved with the companies to developing nations. Over the last decade, the sector has consistently lost jobs. From 1995 to 2005, the sector experienced declines in total aggregate wages in eight out of 10 years for an overall in-

crease of 25% over the course of a decade. At the same time, the health care and social assistance, business services, and leisure and hospitality sectors have all experienced double digit growth rates.42 Throughout the last ten years, this evolution has affected various parts of the state in different ways. For example, the states greater metropolitan areas all exhibit unemployment rates that are near or lower than the national average. As of October 2006, DeSoto County (south of Memphis), the Jackson suburbs and Hattiesburg have unemployment rates of 4.4% or lower.43 The low rates are likely tied to higher concentrations of an educated workforce and the presence of job opportunities that match the skill sets of the workforce. In rural areas, however, the evolution has had a negative effect on working families. All six of the states counties with double digit unemployment are rural. Due to lower levels of population and educational attainment, rural areas are less able than a large city to absorb the loss of a large employer and are likely to generate the lowwage service sector jobs listed in Table 4 over time.

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

Average Annual Wage Physical Therapy Assistant Medical Assistant Respiratory Assistant Cardiovascular Technologist and Technician Self Enrichment Education Teacher Art, Drama and Music Teacher (Post Secondary) Occupational Therapist Computer Software Engineer Medical Records and Health Information Technician Surgical Technologist $34,640 $21,570 $38,680 $38,220 $31,480 $46,680 $61,330 $57,370 $24,720 $27,810 Projected Annual Openings 51.1% 50.8% 50.5% 50.0% 47.3% 44.8% 42.4% 41.7% 41.6% 41.2% Education Required Vocational Education or Associates Degree Vocational Education or Associates Degree Vocational Education or Associates Degree Vocational Education or Associates Degree Vocational Education or Associates Degree Bachelors Degree Bachelors Degree Bachelors Degree Vocational Education or Associates Degree Vocational Education or Associates 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.

Hill, Marianne. Mississippi Economic Review and Outlook. June 2006. Page 13. 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 relative to the rest of the state prior to Hurricane Katrina consistent with other urban areas. Since the storm, rates have risen.
41 42

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Mississippis Workforce
More than 1.3 million people over the age of 16 were engaged in Mississippis workforce in 2004. The labor force participation rate for the state was 61.6% slightly below the national participation rate of 66% but within 1.8 percentage points of Mississippis neighboring states. Of the 1.3 million people in the labor force, 47.7% were women, and over a third were minorities.44 For those in the labor force, identifying stable jobs that pay self-sufficiency wages can be challenging. Nearly 11 percent (10.8%) of all Mississippians who were 18-64 years of age were not fully employed. Additionally, 54,515 Mississippians held more than one job in 200545 The data on under-employment and second jobs are not surprising. From 1979 to 1999, average earnings per job in Mississippi decreased from 79% of the national average to 74%.46 Likewise, in 2005, over 27% of all wage and salary workers were employed in low-wage jobs.47 Growth in good-paying jobs coincident with properly trained workers filling them is important for the economic advancement of Mississippis residents and communities. Without changes occurring in the overall employment mix, working families will have few chances to grow their incomes for the foreseeable future.

Generating Jobs Incentives for Increasing Mississippi Employment

Mississippi has a mixed track record in the use of economic development subsidies to generate largescale employment opportunities. Two notable companies that have received several hundred million dollars in subsidies from the state of Mississippi are Nissan North America and the Northrop Grumman Corporation. Today, the two companies employ more than 17,000 people and are the two largest manufacturing employers in the state.48 In addition to being strong, financially viable companies with longevity, they both offer their employees self-sufficiency wages. At the other end of the spectrum, the state provided a loan guaranty for the construction and start-up of a beef processing plant in Oakland. The project was unable to get off the ground and closed down after three months of operations, costing the state $40 million dollars.49

Mississippis bundle of incentives for economic development includes a number of loan and grant programs. Most of the programs are targeted towards infrastructure development or capital projects and do not have job creation or associated wage and benefit requirements. Several of the program outputs are tracked in an annual report titled the Mississippi Development Authority Program Overview. For FY 2006 MDA reports that $67,727,469 was approved or awarded to 458 projects that supported 11,234 jobs. The report does not include funds spent on MDA projects through tax expenditures (revenue that is foregone through the administration of credits and rebates) through the awarding of credits and rebates to companies.

Working Poor Families Project, generated with data from the Current Population Survey 2004. www.bls.gov/lau/table14full04.pdf. 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 Analysis. 48 Mississippi Development Authority Top 100 Mississippi Manufacturers Based on Employment. 49 State Pays off Beef Plant Debt, John Faquay. Clarion Ledger, June 3, 2005.
44 45

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Advantage Jobs The states primary business assistance program, Advantage Jobs, does require full-time job creation goals with wage standards and health coverage. Companies that meet the eligibility requirements for the incentive receive cash rebates of Mississippi withholding taxes for up to 10 years. There are currently no requirements to target a portion of the jobs assisted towards low-income workers. Table 6 illustrates the minimum job creation and wage targets.

The final benefit received by a company is tied to the net economic benefit received by the state. Hence, companies that support jobs with higher wages receive proportionally larger incentive payments. The range of average annual salaries for the counties runs from $20,281 to $44,168; the average annual state salary is listed at $29,190. It should be noted that while the Advantage Jobs program targets distressed communities, it does not contain provisions to target low-wage workers. The Mississippi Development Authority does track the performance of Advantage Jobs quarterly in its Program Overview. Through FY 2006, the Advantage Jobs program assisted 12 projects that supported 1,743 jobs. Of the 12 projects assisted, five were located in developed counties, five were located in moderately developed counties and two were located in the least developed counties. Projects assisted included 10 manufacturers and two technology intensive enterprises.50 While the report represents a strong foundation for monitoring its program outputs,

enhancements could be made to bring more clarity to the level of investment, to identify who actually benefits. Momentum Mississippi In 2005, the state legislature passed the Momentum Mississippi legislation to target high-growth industries in the manufacturing and service sectors. Some of the goals of the legislation included: 1) the alignment of incentives and resources towards the development of the high-growth industries; 2) an increase in public and private research and development funding to aid with technology transfer and to commercialize innovation; 3) improvement of the profitability and productivity of existing businesses. Momentum Mississippi represents an effort to expand Mississippis current incentive programs to include a focus on more high-growth industries. Momentum looks to achieve its goals through a number of new loan and grant programs. It also broadens existing programs to focus on technology and investments that increase global competitiveness. Through FY 2006, few of the new Momentum programs had been tapped; however, two technology intensive enterprises that received support through an expanded Advantage Jobs did occur.51

Table 6 Advantage Jobs Job Creation and Wage Requirements

Industry Any Business except retail and gaming Job Creation Requirement 10 full-time jobs in the least developed counties 25 full-time jobs in the moderately developed and developed counties 100 full-time jobs in the least developed counties 200 full-time jobs in the moderately developed and developed counties 20 full-time jobs in the least developed counties 50 full-time jobs in the moderately developed and developed counties 10 full-time jobs 10 full-time jobs Wage Requirement

125% of the lesser of the average annual wage of the state or county

Data / Information Processing

100% of the lesser of the average annual wage for the state or county

Manufacturing

110% of the lesser of the average annual wage for the state or county 150% of the lesser of the average annual wage for the state or county 150% of the state wage

Research and Development Technology Intensive

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

Mississippi Development Authority Financial Resources Division. MDA Program Overview FY 2006 Summary for Periods 7/1/2005-6/30/2006. 51 Ibid.
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Jobs Tax Credit The jobs tax credit provides a credit of up to 10% of a companys payroll against corporate income taxes. As with the Mississippi Advantage Jobs program, counties with higher levels of distress have lower job creation targets. While the credit is useful for generating employment, it does not target improved employment outcomes for low-income workers. The Annual Tax Expenditure Report estimates that employers claim credits of about $4,000,000 per year against their corporate income tax. However, there is no way to answer questions about the number of jobs that are assisted through the credit due to the way it is reported through the tax filing system.

Mississippis Small Businesses

Approximately 9.4% of Mississippis low-income families have members who are self-employed. With nearly one out of ten low-income working families having at least one parent who is self-employed, small businesses play an important role in moving families towards self-sufficiency. Mississippis small business outcomes are comparable to those of surrounding states (Table 7). Small businesses are growing statewide and represent a significant employment generator. Given the employment opportunities available to working families through the small business sector, access to capital from public and private sources for the start-up and expansion of small businesses is important. In FY 2006, the state provided $1.75 million in loans to 29 projects through the Minority Business Enterprise Loan Program. The investment assisted 115 jobs. Efforts to increase access to capital to generate

quality jobs are an important component of moving families towards self sufficiency. Additionally, activities that stimulate entrepreneurship and grow strong businesses that pay good wages from within the state could also have a positive effect on the economies of local communities.

Increasing the Return Tools for Success

While training and education are important components of a comprehensive strategy to move working families towards self-sufficiency, good-paying jobs with benefits must be available to make the investment of working family resources worthwhile. Mississippis job projections suggest that much of the states growth over the next five to six years will primarily occur in low-wage occupations that require few skills. With the economy evolving from a strong manufacturing base of employment to a service-dominated environment, efforts are needed to generate high-quality jobs. Mississippi offers several incentives to stimulate growth and development. Of the incentives, some focus specifically on the support of high-wage jobs with benefits. At the same time, the bundle of incentives could be strengthened by targeting and including benchmarks for providing jobs for the states low-wage workers. Efforts to enhance the states monitoring systems could also provide good information on Mississippis return on its investment in economic development. Finally, small businesses and entrepreneurship development offer opportunities throughout the state for working families to gain economic stability. The following page provides an overview of Mississippis opportunities to increase the return on its economic development investments.

Table 7 State Small Business Profiles (2005)

U.S. Total Number of Firms Firms with Employees New Firms with Employees Small firm percent of nonfarm sector Percent of total Small firms Number Growth rate 23,974,500 23.7% 99.7% 580,900 4.9% 50.1% Mississippi 197,586 27.4% 96.8% 6,141 2.0% 50.0% Alabama 323,891 26.8% 97.3% 9,413 4.4% 49.7% Arkansas 222,542 27.8% 97.1% 7,852 8.3% 48.8% Louisiana 347,436 27.7% 97.6% 9,875 6.2% 53.9% Tennessee 471,316 23.3% 97.2% 17,415 1.6% 45.1%

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

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Investment Opportunities: Tools for Success

Strengthening Programs The states main business assistance program, Advantage Jobs, is structured to provide incentives for high-quality job growth. Companies are rewarded with higher incentives for investing in less developed counties and providing higher-quality jobs. The program, however, does not contain any provisions for targeting low-wage workers. Building on the strengths of a program that includes wage standards and health insurance requirements in exchange for state subsidies, the state could: Include a provision to require employers to fill a portion of the newly created jobs with low-wage workers. Companies that employ a high number of low-wage workers could receive a more generous subsidy. Program Measurement and Accountability The state does provide a quarterly report on several different incentive programs. The information listed includes the aggregate amount of projects funded through a certain program, the number of projects approved and the estimated number of jobs created. While the report provides a starting point for measuring the return on the states economic development investment, it provides limited information on who benefits from each program. To enhance the utility of the monitoring systems used to assess the states economic development programs, the state could: Track the percentage of low-wage workers that moved into jobs assisted through state incentive payments; Track the earnings of workers assisted through incentive programs one year after the assistance was received. Measures could include the percentage of workers earning above poverty-level wages and the percentage of workers earning above 200% of poverty-level wages; Increase the transparency of the Jobs Tax Credit. While employers claim an estimated $4 million dollars in credits annually, there is currently no way to answer questions about the number of jobs assisted and the quality of the jobs. Efforts could be made to annually report the number and quality of jobs assisted in the Tax Expenditure Report; and Annually, the incentive reports could be publicly released in aggregate form on agency websites to encourage legislative and programmatic accountability.

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CHAPTER 4:

could be the difference between retaining and losing a valuable employee and ultimately profit. Workforce supports, like health insurance and child care, can fill the gaps left by low-wage work and can play a crucial role in stabilizing the economics of working families. For example, it costs a single parent with two children in Coahoma County approximately $2,055 a month to cover housing, health care, child care, and food and transportation costs. Assuming the parent earns $8.00 per hour, the family will be approximately $650 dollars short each month without any type of assistance. However, with child care, childrens health insurance and food assistance, the shortfall drops to only $63 dollars a month (Table 8).

Fast Facts Workforce Supports

282,751 working Mississippians were employed in jobs with below poverty-level wages More than one out of five workers in Mississippi (21.6%) do not receive health benefits through their employers In 2006 families with incomes below the poverty level will pay income taxes

Decreasing Volatility: Stabilizing Employment through Workforce Supports

As seen in Chapter 3, low-wage employment is a characteristic of Mississippis economy. In 2005, 282,751 Mississippians, or 27.1% of the working population, were employed in low-wage jobs.52 The low-wage workers are incredibly important to the states economic and social well-being. Low-wage professions include nursing assistants that care for the elderly; child care workers that keep children safe while parents are working, and teaching assistants that enhance childrens education. While important, these jobs simply do not pay enough to move employees towards self-sufficiency. Typically low-wage jobs lack health insurance, workable vacation / sick time and resources for retirement. In the absence of these benefits, workers forego primary care and opportunities to build a safety net for retirement or an emergency. Low-wage work is also expensive to employers. Specifically, when employees leave a job, employers lose productivity and profit. On average, employer costs for replacing a supermarket cashier hover near $3,600. Since low-wage workers typically do not stay in jobs as long as high-wage workers do, workforce supports are critical to the bottom line of employers around the state.53 The absence of workforce supports like child care and health care

Table 8 Impact of Work Supports on Wage Adequacy

Single Parent with One Preschool and One School Age Child - Coahoma County, MS (2003)
WORK SUPPORTS No Work Supports Child Care Child Care and Food Stamps $1,408 $414 $73 $312 $244 $213 $173 $160 ** -6 $0 $1,583 -175 89% Child Care and Food Stamps and MS CHIP $1,408 $414 $73 $312 $244 $101 $173 $160 ** -6 $0 $1,471 -63 96%

TOTAL INCOME: Monthly Costs: Housing Child Care Food Transportation Health Care Miscellaneous Taxes Earned Income Tax Credit Child Care Tax Credit Child Tax Credit TOTAL LIVING EXPENSE SHORTFALL (-) OR SURPLUS WAGE ADEQUACY (Total Income / Total Expense)

$1,408 $414 $454 $403 $244 $213 $173 $160 ** -6 $0 $2,055 -647 69%

$1,408 $414 $73 $403 $244 $213 $173 $160 ** -6 $0 $1,674 -266 84%

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

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Mississippi Economic Policy Center

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Working Poor Families Project, generated with data from the Basic Monthly Current Population Survey. Note: Low-wage is defined as a wage below $9.59 per hour adjusted for the state cost of living index. Lane, Julia The Low-Wage Labor Market: Challenges and Opportunities for Economic Self Sufficiency. The Role of Job Turnover in the Low-Wage Labor Market, www.aspe.hhs.gov/hsp/lwlm99/lane.htm.

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As seen through out the report, state- and employersponsored training opportunities provide working families with the tools to move up the economic ladder. At the same time, the states investment in workforce supports is incredibly important to stabilize the jobs of working families seeking to upgrade their employment opportunities. For example, with a certain set of policies in place, a working parent may be able to upgrade his or her skills through a noncredit career course at a local community college. The skills upgrade could ultimately lead to higher wages and more economic participation in the local community. However, if the worker does not have access to health insurance and falls ill, then the bills associated with getting better may become a barrier to realizing the gains of the additional training. Likewise, a worker who loses his or her job due to an extended absence caused by limited child care resources could also undergo financial hardship and not reap the benefits of upgrading his or her skills. Workforce supports allow workers to remain gainfully employed when the expected or unexpected events of a working family transpire.

Stabilizing Employment
Wages The most important workforce support is ones income. A rise in income is the quickest way to economic self-sufficiency. For workers earning minimum wage, however, self-sufficiency is a distant goal. Mississippi follows the federal law for minimum wage which is currently $5.15 per hour. Analysis conducted by the Center for Policy Research and Planning at the Institutions of Higher Learning estimated that 17,000 workers in Mississippi earn wages at or below minimum wage. Increasing the minimum wage to $7.25 would affect about 223,000 workers assuming that all workers in the bottom quintile of Mississippi earners ($7.76 and below) would receive a raise.54 In October of 2006, the state of Arkansas raised the minimum wage from $5.15 to $6.25. Research conducted on the proposed increase showed that eight out of 10 people who were to benefit from a $1.10 increase in the minimum wage were 20 years of age or older. Additionally, 53% of the people who would benefit also worked full-time. Approximately 127,000 people were to benefit from the increase.55

Taxes Mississippis tax structure creates challenges for working families trying to achieve self-sufficiency. The states two major avenues for collecting revenue the sales tax and the income tax both have regressive features. The sales tax, which is a flat tax and includes a tax on groceries, takes a greater share of income from people with lower wages than from people with higher wages. On the income tax, the deductions and exemptions have not been adjusted for inflation for several years. As a result, Mississippians with wages below the poverty line will begin paying income taxes in 2006. Overall, the tax burden for working families in the lowest quintile is 10.0% whereas the wealthiest one percent of earners has a tax burden of 6.9%. After federal deductions are taken into account, the lowest 20% of working Mississippians are taxed at nearly twice the rate of the highest earners.56 At the federal level, the Earned Income Tax Credit (EITC) provides a boost to Mississippis low-income working families by refunding money to working families through the tax return process. A working family with two children earning $16,000 a year during 2005 could receive a credit of $4,400 as a tax refund.57 Reviews of tax returns in nine Mississippi counties showed that an estimated 8,289 eligible filers did not claim the Earned Income Tax Credit in 2002.58 In 2003, 366,476 tax filers in Mississippi claimed the EITC.59

Hill, Marianne. Raise the Minimum Wage? Mississippi Economic Outlook and Review. June 2006. News from the National Council on Churches, http://www.ncccusa.org/news/060410huckabeeminwage.html. 56 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.pdf. 58 Internal Revenue Service Stakeholder Partnership Education and Communication Office, Jackson, MS. 59 Brookings Institution, http://www.brookings.edu/urban/eitc/.
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Health Care Health coverage is a critical workforce support for working families. An illness left untreated could easily become the cause of an extended work absence which could affect both wages and long-term employment prospects. Unfortunately, a significant number of working Mississippians do not have health insurance. Low-wage workers often have jobs that do not provide health insurance. One out of five workers (21.6%) between the ages of 18 and 64 (or 288,197 workers) do not have health insurance.60 Additionally, 38.6% of all low-income working families have at least one parent without health insurance.61 In the absence of employer-sponsored health coverage, the Medicaid program offers the only opportunity outside of uncompensated emergency room care for low-income working families to access health care. While children of working parents earning up to 200% of the Federal Poverty Line (FPL) can receive coverage through the Mississippi Childrens Health Insurance Program, Mississippi only covers working parents earning up to 34% of the federal poverty line among one of the eight lowest eligibility standards in the country.62

Child Care Mississippis child care assistance program is a tierstructured program with the highest priority given to working families enrolled in or transitioning from the Temporary Assistance for Needy Families (TANF) program followed by very low-income parents at risk of entering the TANF program. Depending on the availability of funds, parents earning up to 85% of the state median income or enrolled in an education or training program are also eligible for child care assistance. Parents who receive child care assistance through the TANF program do not have co-payments. Parents who are working and not enrolled in the TANF program have a tiered co-payment structure that is based on family size, income and the number of children for whom services are received.63 Child care assistance payments are made directly to child care providers through reimbursement for services. In January of 2005, the Office for Children and Youth with the Mississippi Department of Human Services conducted a market rate survey of all licensed child care centers and family care providers. The survey results showed that Mississippi Child Care Assistance payments are made to child care providers through reimbursement for services at 52% of the market rate for child care in the state.64 With a reimbursement rate of 52% of the market rate, families that rely on child care assistance to go to work have access to about half of the providers in their communities. Lower reimbursement rates limit the number of centers able to accept child care assistance certificates from working families.

Unemployment Insurance Low-wage workers are often susceptible to layoffs and restructuring activity due to low educational attainment and typically short tenures. Low-wage workers also often experience longer periods of time between jobs than other workers, which can disrupt efforts to move towards self-sufficiency.65 For workers who lose their jobs through no fault of their own, unemployment insurance (UI) is a critical support that allows working families to quickly move back into the workforce. The UI payments provide a small amount of cash assistance to help with basic living expenses while an individual seeks employment. Mississippis UI trust fund balance is one of the largest in the country. While solvent, the UI program does not provide benefits for part-time workers or temporary disability insurance. Additionally, in 2005, only 28% of the states jobless workers received unemployment insurance payments.66 For those who used the program, they could receive a maximum weekly benefit of $210.67 The maximum benefit paid through the UI program was roughly equal to the weekly wage of an employee working 40 hours per week at a minimum wage job ($206). The low benefit amount poses challenges for potential workers trying to cover basic living expenses while also covering expenses related to looking for employment. This obstacle is especially problematic for workers in rural areas where the highest rates of unemployment occur who require gas and an automobile for job search activities. Mississippi could enhance its supports for unemployed workers by connecting more workers to the UI program and increasing the weekly benefit to $250 a week.

Working Poor Families Project, generated with data from the 2005 Current Population Survey, Annual Social and Economic Supplement, March 2005. 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.org. 63 Mississippi Department of Human Services, http://www.mdhs.state.ms.us/ocy_apply.html. 64 E-mail correspondence dated 8/22/06 with Mississippi Department of Human Services. 65 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%2Epdf. 67 National Employment Law Project and the Mississippi Department of Employment Security.
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Increasing the Return Decreasing Volatility through Stable Employment

Many of Mississippis jobs simply do not pay enough for workers to achieve self-sufficiency. Additionally, the workforce supports available especially those that support health care and child care are limited in their reach. Furthermore, a low minimum wage and the regressive nature of the Mississippi tax system exacerbate the challenges of low-wage work. Workforce supports play a major role in stabilizing the employment and financial security of Mississippis working families. Workforce supports play the dual role of making existing wages go further and of providing a safety net for working families. As more working families are able to use workforce supports to stabilize their employment situations, local economies will benefit from having longer-tenured employees that invest in their communities.

Likewise, working families who benefit from strong workforce supports will be in a position to move up the economic ladder, as stable families will be more likely to participate in training opportunities than working families that are experiencing economic uncertainty. Ultimately, strong, supported working families will increase the return on investments made through the education, training and economic development systems by moving into high-wage work, remaining in jobs and stimulating the economy. The following page summarizes Mississippis investment opportunities targeted towards decreasing volatility through workforce supports.

Mississippi Economic Policy Center

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Investment Opportunities: Decreasing Volatility Strengthening Policies

Wages Currently, the state follows the federal minimum wage guidelines which require a minimum wage of $5.15 per hour. A raise in the minimum wage would have a positive effect on the wages of at least 17,000 of the states lowest-paid workers. To bring the states lowest-wage workers a step closer to self-sufficiency, the state could: Increase the minimum wage to levels equal to Arkansas at $6.25 an hour. Taxes Both the sales and income taxes have regressive features that require a greater share of income from lower-income families than from higher-income families. Groceries, a necessary expense regardless of income, are currently taxed at seven percent. Meanwhile, the income tax, having certain components that have not been adjusted for inflation, taxes people earning wages below the poverty level. The state could make the following adjustments to the tax code to make low-income working family wages go further: Groceries could be exempted from the sales tax while certain services could be added to the list of taxable items to account for the revenue that would no longer be generated by grocery sales; and Within the income tax system, deduction and exemption amounts could be updated to account for inflation, thus preventing people in poverty from spending limited incomes on a tax. Child Care In 2005, the market rate survey showed that the state was only reimbursing child care providers at 52% of the market rates for providers around the state. At that rate, families have limited access to providers that can provide care for their children while the parents work. To extend the level of centers available to provide care to low-income working families, the state could: Increase the reimbursement level to the federal recommendation of 75% of the market rate. Health Care Statewide, one out of five workers do not have access to health insurance. Additionally, the state only provides state-sponsored insurance for adults who earn up to 34% of the federal poverty line. To address the high levels of workers without insurance, the state could implement the following policies to stimulate coverage in the public and private sectors: Double the eligibility threshold for Medicaid participation for working families; and Create incentives for small employers to provide health care benefits to their employees and families. Unemployment Insurance Unemployment Insurance is a critical tool for working families to quickly get back on their feet after they lose a job through no fault of their own. In 2005, only 28% of Mississippis jobless received UI payments. For those that did receive payments, the maximum benefit was the smallest in the nation at $210 per week. Mississippi could assist workers who lose their jobs especially those in rural areas constrained by rising fuel costs by: Increasing weekly unemployment insurance benefits from $210 per week to $250 per week.

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CHAPTER 5:

Increasing the Return: A Summary of Strategies and Recommendations

As highlighted in the executive summary, Mississippis strongest asset is its people. Even in the face of adversity, Mississippians work with and help each other. Despite the strength of this asset, however, Mississippi and its people often find that investments of resources and hard work do not yield the most favorable returns. Increasing the Return: Investing in Mississippis Working Families underscores the challenges faced by working families every day. Nearly 130,000 of Mississippis working families are low-income. While working hard, Mississippis low-income working families face obstacles on the pathway to financial security and economic advancement.

Investing in Mississippis working families is a critical strategy for moving the state ahead in a rapidly changing global economy. As globalization increases its demand for a specialized workforce, efforts to connect the states people with the systems to compete in the new economy are essential to expanding the access to and the availability of good jobs. Fortunately, there are significant opportunities to enhance the states investment in working families. Expanded and coordinated investments in training and education present the opportunity to equip working families with the skills to move into good jobs. Enhanced systems to measure program effectiveness in serving working families offer the chance to inform

and update economic development policies aimed at supporting good jobs. Finally, a strong network of workforce supports ensures that hard work pays and that employers, employees and ultimately the states economy benefit. By targeting working families, both the state and its people will see an increase in the return on their investment of time and money as families move ahead and propel the state and its communities forward in the new economy.

Mississippi Economic Policy Center

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Mississippi Economic Policy Center

Mississippi Economic Policy Center 4 Old River Place, Suite A Jackson, MS 39202 (601) 944-1100 www.mepconline.org