The Missing Piece in Workforce Development Efforts: Study Examines Telework and Its Impact on Local Income
Jen Sherwood, of Newaygo, MI now has more flexibility to spend time with her children
Newaygo, MI. (March 12, 2018) - Jen Sherwood had a dilemma. As a single mother with two school-age children—one of whom has severe health issues—she needed a job with flexibility. A traditional 9-to-5 job in an office just wouldn’t cut it.
Her father heard about Digital Works in Newaygo, Michigan and told her she could train to work at home. A few months later, she was hired by Amazon.com, giving Sherwood an opportunity “to be a full-time mom and earn a full-time paycheck.”
Will Yarborough also needed a job with flexibility but for a different reason—he is serving his country in the Texas Army National Guard. He trained at the Grants, New Mexico, SoloWorks facility, learning key customer service and computer skills and soon landed a job at ViaSource Solutions.
“A veteran or someone in the active military is a perfect match for online jobs,” Yarborough said. “It takes a certain kind of person to go through services. They learn certain soft skills and life skills that make them dependable. They’re very punctual and understand how to deal with problems as they arise using the chain-of-command.”
Sherwood and Yarborough are not alone. Many people—from senior citizens to millennials—are looking for a new way to work.
The New Job Market
The workforce itself and the needs of employers have changed, but many communities are still operating on the old formula. Traditionally, workforce development focused on bringing companies to an area through tax breaks and other incentives.
But a recent study conducted by researchers from Purdue University and Oklahoma State University shows that to focus solely on that approach means missing a big economic opportunity through teleworking and telecommuting.
“Many, if not all, states have a well-oiled manufacturing incentive system,” said Dr. Roberto Gallardo, Assistant Director of the Purdue Center for Regional Development (PCRD) and a Purdue Extension Community & Regional Economics Specialist. “They have an approach they’ve developed over time to give incentives to these brick-and-mortar companies that will build in their area and employ people in their area. Why not leverage that same, effective system in a new way and use it for teleworkers?”
Dr. Roberto Gallardo
Gallardo and Dr. Brian Whitacre from Oklahoma State University recently completed a study titled, “21st Century Economic Development: Telework and Its Impact on Local Income.” During their research, the two found that teleworking and telecommuting positively impact median household income at the neighborhood level (census tracts) and potentially spur economic growth in surrounding areas.
“It’s basically a spillover effect,” Gallardo said. “As teleworkers move forward in their career and increase their wages, you begin to see a positive spillover to neighboring tracts. You begin to see the spending increase beyond just the place where these people live and work.
“We found that both salaried and self-employed teleworkers are seeing a positive impact on their median household income. What communities and states need to do now is modify their economic and workforce development policies—to nurture, attract and retain teleworkers.”
Telework: Income on the Rise
Gallardo’s interest in telework and telecommuting was piqued years ago when he was working as a community economic development specialist in rural Mississippi communities. While there, he began to notice a disturbing trend.
“The story was the same for every rural community I worked with,” he said. “Their industrial parks were vacant, their economic base was drying up, and if a community didn’t have the density of workers and skills an employer needed, then that area was going to get overlooked. What many people don’t realize is that companies use high-tech algorithms that focus on the top 300-plus metro areas. That’s how they determine where it makes sense to expand.”
That left much of rural America without a shot. Gallardo said it became clear that a new, more feasible economic strategy was needed for all areas, but especially rural communities—one focused on what small towns or rural areas could offer its residents, outside employers and local businesses.
“I realized we’ve got to get rural community to think about telecommuting as a feasible economic strategy. We needed to train residents in digital skills, not just coding, but for those needs companies have for outsourcing to teleworkers such as customer service, time management, computer literacy, and more,” he said.
This is what Connected Nation (CN) specializes in doing in urban and rural communities across the country.
“Connected Nation’s staff works to expand broadband access to all people, no matter where they live. Over the years, as we increased access, we began to notice that many people needed training in online skills. That’s how Digital Works was born,” said Stu Johnson, Executive Director of Digital Works, a division of CN. “Our students learn everything from how to apply for jobs online to customer-service skills that are tailored to what employers are looking for in a teleworker. We now work with more than 70 employers nationwide.”
Once hired, those employees bring tax dollars into their communities—even if they’re working for remote companies—and although they may start in customer service positions, they can work their way to higher-paying jobs that are not often available in smaller towns or rural areas.
“We have one employee who started out in customer service and after showing she could be dependable and learn new skills, she worked her way up the ladder and now works at a little place called Apple, making a very good salary,” Johnson said.
Gallardo said that kind of story makes sense. He said teleworking is a “knowledge society” or “knowledge economy”—meaning workers don’t necessarily need to be producing physical goods to create economic growth, but rather productivity is tied to aspects like more sales and better online and phone skills to retain customers or new niche markets.
“The training and jobs offered through Digital Works and similar programs are not for telemarketing positions,” Johnson adds. “These are decentralized call centers. They are your stepping stones to cultivating and developing the skills needed for those higher-paying jobs that require self-motivation and self-management.”
“Basically, through teleworking, a person can increase his or her income through their knowledge and skill,” Gallardo said. “If you want to be a high earner, you’ve got to start somewhere such as customer service. But ultimately, you can stay in your small town and work for places like Google and you may be making a six-figure salary.
It’s family-friendly, and both individuals and families are able to spend more time, and money, locally. Also, Gallardo pointed out it’s something the newest set of employees, millennials, say they want—flexibility over more pay.
The Four Steps to Growing Your Teleworkforce
So, what’s next for communities looking to tap into what Gallardo calls their “dormant workforce?” The study lays out four policy recommendations:
- States should offer incentives for existing businesses that are telework-friendly or that offer telework options. This should include identifying which businesses are having trouble finding local workers to meet a skillset they need and assist in finding a teleworker from a different region, keeping that business, and tax base, in the area.
- Use incentives in a new way. Approach companies with telework-related jobs and offer unique incentives. One example could be offering to cover 10 percent of the salary for any resident hired for 5 years. Those telecommuters are then keeping their tax dollars in your area.
- Modify existing workforce development programs. Communities must generate a telework-capable workforce. These people must have digital and soft skills needed to be telework friendly, such as the training provided by Digital Works. A Brookings Report, Digitalization and the American Workforce, showed that nearly 40 percent of jobs required at least medium digital skills.
- Offer broadband subscription tax credits for those who work at home. This encourages Internet Service Providers (ISPs) to expand into rural areas. If they see that a particular region has a lot of teleworkers who need adequate broadband and have assistance in paying for it, they’re more likely to think this is worth the investment of expanding the infrastructure.
“These are just a starting point; much more research needs to be done on teleworking,” Gallardo said. “But it’s clear that although a lot of states and communities have worked hard at attracting businesses to their areas, they have done little to nothing on tapping into this fast-growing telework and telecommuting resource.
Will Yarborough is serving in the Army National Guard
“They’re missing out on a growing workforce development opportunity that can tap into everyone from a traditional, full-time worker or military spouse who has to move every few years to that stay-at-home mom or dad or college student who just want to pick up a few hours here or there. It’s an economic opportunity that’s largely being ignored.”
For people like Sherwood and Yarborough, it’s a chance to live a better life.
“In the Reserve, you’re a part-time soldier, part-time civilian and you have to work for a company that makes that possible and understands this,” Yarborough said. “I was working at Pizza Hut, and it just wasn’t enough to make a living wage. Training with Digital Works helped me change that.”
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To read Dr. Gallardo’s and Dr. Whitacre’s findings and full study, click here. To learn more about Digital Works, head to digitalworksjobs.com where you can find details to apply for the program, to bring the program to your community or to become one of DW’s partner employers. SoloWorks is a program supported using the Digital Works model. For more on Connected Nation, head to connectednation.org.