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ARTHUR FRAZIERMAXINE GOODMAN LEVIN COLLEGE OF

URBAN AFFAIRSCLEVELAND STATE UNIVERSITY

Increasing Marginal Revenue Product of Urban Black Men in

Public Housing

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Table of Contents

IntroductionPublic Housing and Urban Spatial TheoryThe Impact of GautreauxHuman CapitalSoft SkillsMethodDiscussionConclusion

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Introduction

From economic perspective many Black males living in public housing have low productivity and marginal revenue product (MRP)

MRP is defined as the amount of revenue a firm generates when it adds one additional unit of input

Input can be labor, capital or bothA worker is valuable to an employer if MRP

exceeds the wagePublic housing urban Black male MRP is not

very productive

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Historical Perspective

After World War I millions of Blacks came north to look for work

Many settled in industrial cities such as Chicago, Detroit, Pittsburgh and Cleveland

Several Blacks had difficulty finding suitable housing in northern cities and many were forced to live in urban ghettos

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During the Great Depression the unemployment rate for Blacks was 30 to 60 percent higher than Whites

Congress passed the Fair Labor Standards Act in 1938 establishing the minimum wage

However, White employers realized they had to pay Black workers the same wage as White workers for equal work and began firing Black workers

As a result, urban Blacks had to accept lower paying menial jobs and became isolated in ghettos

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Public Housing and Urban Spatial Theory

Urban spatial theory-Blacks living in urban areas are isolated from high wage suburban jobs

Large pool of workers relative to available jobs

The urban spatial mismatch theory assumes that residential location is exogenous. However, other factors i.e. school quality, transportation, safety may also influence location

Spatial mismatch alone is not reason for high Black urban male unemployment

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The Impact of Gautreaux

More than 60 percent of public housing is located in central metro areas where there is a large concentration of minorities

In suburban areas public housing is less than 20 percent of all units

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In Gautreaux v. Chicago Housing Authority a federal court ruled that the Chicago Housing Authority and Housing and Urban Development (HUD) discriminated against Black tenants by placing them in large public housing developments in poor neighborhoods

The case was settled when HUD agreed to give vouchers to Black tenants which allowed them to move to areas that were less than 30 percent Black

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After Gautreaux HUD began to offer more alternatives to Black tenants such as

1. Moving to Opportunity (MTO)2. Housing Opportunities for People

Everywhere (HOPE) IV However, despite more alternatives for

tenants and improvements in public housing, the underlying problem of urban Black male unemployment did not improve

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Human Capital

One reason for high urban Black male unemployment is lack of human capital

Human capital includes education, experience, and neighborhood quality

Classic economic models assume that all workers have the same productive human capital but in reality that is not the case

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Studies have found that a 25 percent gap in earnings and education of Black men can be accounted for in variation of neighborhood quality

Local productivity is a significant contributor to positive neighborhood growth

Public schools are very important to neighborhood growth and nurturing productivity at an early age

If these schools lack resources to effectively teach, children will not acquire the basic math and reading skills needed to compete in the job market

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Consequently urban Black males in public housing neighborhoods with underperforming public schools face severe obstacles when trying to acquire human capital needed to improve employment prospects

One obstacle is a perception that urban Black men lack soft skills

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Soft Skills

Definition of soft skills is difficult to quantify even though employer surveys indicate it is the most important hiring component for entry level jobs

Four workplace competencies have been identified as soft skills:

1. Cognitive skills2. Oral communications3. Personal qualities/work ethic4. Interpersonal/teamwork skills

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Cognitive skills-difficult to measure because they are often based on mathematical standardized tests such as the Armed Services Qualification Test (AFQT)

Include ability to identify problems, evaluate alternative solutions, reaching decisions in a logical manner, and adjusting to unanticipated situations by applying established rules

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Oral communications-ability to communicate messages appropriate to the audience

Also include being able to understand instruction, give direction and verify information

Personal qualities/work ethic are skills associated with self-esteem and willingness to work

There is debate as to whether this is soft skill per se or a product of soft skills

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Interpersonal skills include the ability to negotiate, being a team player, participate in group decisions, and be able to resolve conflict

When addressing soft skills in the context of employment three common elements emerge:

1. Soft skills relate to interaction between individuals

2. Soft skills are likely to be environmental specific

3. Soft skills are difficult to define

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Giloth (1990) identifies two paradigms that relate to soft skills, workforce strategies and job training

A sector-based paradigm is a belief that development begins where the jobs are and community connections to lower-income job seekers follow

This paradigm relies on clusters as a tool for job creation and economic development

However, a cluster based approach could be biased against Black males because of the perception that they lack the soft skills needed to attract firms

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A place-based paradigm focuses on the need of the individual job-seeker and seeks to improve job prospects through community development

In terms of raising Black male MRP, this would be the most desired approach because performance criteria common to a sector-based paradigm would not be considered a barrier to employment opportunities

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Method

Research Question: Whether programs addressing soft skills and job training increase employment opportunities

Table 1 displays definitions of variables used in factor analysis and logistic regression obtained from the data set Survey of Income Participation (SIPP) 2004 Panel

20Table 1

Employment Employment last month EPUBHSE Residence in public housing project ELKWRK Spent time looking for work

EWRKEXP3 Worked in a work experience program

EWELACT1 Attend classes to improve basic reading EWELAC21 Attend job readiness to learn EWELAC22 Attend job search program or job

club

EWELAC23 Attend training to learn a specific job skill EWELACT3 Did ... attend job training EWELACT4 Participate in a work experience Black Race ESEX Sex of this person THEARN Total household earned income

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Table 2 describes 13 employment measures that were submitted to an exploratory factor analysis

The analysis resulted in five factors with high loadings pertaining to job search and job club programs

In addition there were high loadings associated with attendance at a job readiness program and attending classes to improve reading

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Table 2

Factor Loadings 1 2 3 4 5 Communalities Participate in a work experience 0.820 -0.034 -0.019 0.037 0.23 0.728 Spent time looking for work 0.681 0.113 0.063 0.065 -0.002 0.485 Worked in a work experience program 0.558 -0.54 0.393 0.017 -0.052 0.760 Attend job search program or job club 0.102 0.872 0.098 0.142 0.016 0.801 Black 0.001 0.616 0.218 -0.021 -0.266 0.498 Did ... attend job training 0.131 0.159 0.800 -0.045 0.101 0.695 Attend classes to improve basic reading -0.159 -0.229 -0.617 0.328 0.154 0.590 Sex of this person 0.353 0.127 -0.566 -0.309 0.033 0.558 Attend training to learn a specific job skill

0.056 0.216 -0.203 0.693 -0.32 0.674

Residence in public housing project -0.225 -0.3 0.238 0.691 0.234 0.730 Attend job readiness to learn 0.265 0.162 -0.077 0.683 0.074 0.574 Total household earned income -0.043 -0.148 -0.018 0.868 0.784 Employment last month 0.341 -0.004 -0.12 0.044 0.754 0.701 Eigenvalue 2.210 1.953 1.725 1.542 1.149 Percent of Total Variance 17.003 15.022 13.266 11.859 8.840 65.989 Percent of Common Variance 26% 23% 20% 18% 13% 100%

KMO measure of sampling adequacy = 0.515 Bartlett's Test of Sphericity Approx. Chi-Square =333.389, df= 78, p<.001 n = 124

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Table 3 displays the results from logistic regression predicting the variable Employment which measures whether a participant held a job during a one month period

The final statistics revealed significant contributions of ELKWRK, spent time looking for work, EWELACT1, a measure of class attendance to improve reading and THEARN, a measure of household income

A one unit increase in these variables increased the odds of the occurrence of the variable Employment

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Discussion

Urban Black males living in public housing have low MRP

As shown in table 3, a one unit increase in public housing (EPUBHSE) reduces the odds of employment by 62 percent

One solution to this problem would involve increasing psychological capital

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Luthans (2012) identifies four components of psychological capital:

1. Self-efficacy –ability to handle unexpected problems

2. Hope-ability to adapt to changes in order to accomplish a goal

3. Optimism- positive mental attitude4. Resilience-successful response to adversity

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The findings of this study suggest that positive Black male psychological capital can be developed through job readiness training and other work related activities

However, Porter (1995) believes urban entrepreneurs have the capacity to increase Black male MRP by directing their talent from the social sector to the private sector.

As a result, inner cities can become export communities and become attractive to clusters

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Conclusion

Black men in public housing face several challenges

However, evidence indicates job training and other activities such as attending classes to improve reading and job readiness skills increase the odds of employment.

Soft skills, human capital and psychological capital are attributes that can be developed with training

Collaborative effort from public and private sectors are needed to improve the MRP of Black males living in public housing

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