If Companies Want a Diverse Workforce, They Need to Pay Attention to Transportation
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Now that COVID-19 vaccines are being administered, and we can see a hopeful end to the pandemic, it’s time to begin planning for a return to the office. In parallel, 2020 highlighted the urgent need to renew our commitment to increase racial diversity in the workforce. These two topics intersect in very important ways.
Especially for low- to moderate-wage employees, companies’ enhanced support for transportation could make a major difference in attracting and retaining a diverse workforce. The Metropolitan Planning Council (MPC) recently partnered with Equiticity and the University of Illinois at Chicago College of Urban Planning and Public Affairs to conduct focus group research with job seekers on the South and West sides of Chicago, and found that transportation is a major barrier to getting and keeping a job.
The focus group participants, who receive career support services at Chicago’s network of American Job Centers, repeatedly identified transportation costs, both monetary and time, as barriers that disincentivized taking jobs in much of the region. Asked if transportation challenges made them miss out on job opportunities, 73.4 percent of focus group respondents (N=82) answered yes. Asked if transportation is a barrier to keeping a job, 73.8 percent of respondents answered yes.
Employers need to be thinking more about their role in helping employees get to work. The most basic consideration is where their offices are located: are they transit-accessible, or in a walkable or bikeable area? Or must every employee own a car as the price of entry? If it’s the latter, employers are missing out on a large segment of talented employees. More than a quarter (26.9%) of Chicago households do not have a vehicle, and households headed by a person of color have slightly higher rates of not owning a vehicle (29.6%). A majority of Chicago households below the poverty line do not have a vehicle (51.7%). That’s no surprise because having a car is a major household cost, estimated by AAA at $9,282 per year, which many lower-income households cannot afford.
For decades, Black and Brown communities have been marginalized and experienced disinvestment in their neighborhoods. As a result, they’re often located in places with few job opportunities, so residents need to travel farther to get to work, which costs more. For lower-income households, the cost of transportation is a significant burden and barrier to employment. The report notes:
Clients spend a large portion of their wages on transportation costs, especially considering other essential expenses like housing, food, childcare, and health care. Respondents estimated that clients making minimum wage spend at least half a week’s pay on monthly transportation costs, whether they take public transportation or drive. Reflecting on the difficulty of covering essential expenses on a minimum wage, a respondent stated: “It doesn’t add up.”
The bottom line is that it’s no longer good enough for employers to simply provide the job and expect employees to absorb all the costs of getting there. Many jobs are inaccessible by transit, so how can we make these jobs viable options for people without cars? How can we add support to the transportation systems so that employees have reasonable back-up options for getting to work reliably when something unexpected happens?
To access a diverse workforce, companies should first be thinking hard about locating in an area with multimodal access, especially when they are employing low- to moderate-wage workers. More companies are starting to think about transportation as part of the complete picture, as evidenced in MPC’s Transit Means Business report. However, it’s mostly corporations employing higher-wage workers that have gotten into the transportation game, treating it as an amenity to attract talent. Think: Google bus. For lower-wage workers, making transportation easier and more affordable could make a major difference.
So how do we address this? For companies, offering a mobility solution can be less expensive than the cost of employee turnover, and the associated costs of constant rehiring and training. Being proactive about mobility options can help increase stability for employers and employees.
A new toolkit has been developed to help businesses think through strategies to decrease mobility barriers to the workplace, which reduces turnover. When workers can reliably get to work regardless of their personal circumstances, it provides employment stability and the opportunity to build wealth. It’s a win-win. Developed through a partnership between MPC and a pro bono Boston Consulting Group team, the toolkit includes slide decks, an overview report, customizable templates, a cost calculator, and instructional videos walking a company through the thought process of:
- Establishing a baseline situation. Assessing employer and employee needs to design the most effective solution.
- Evaluating and selecting a solution. Evaluating tradeoffs between solutions to prioritize and select the best solution and provider.
- Standing up a program. Once a provider is selected, implementing the transportation program and tracking its impact.
Depending on the employer’s location and employees’ needs, solutions may range from helping with last-mile transportation to the transit system, to developing on-demand vanpools, to establishing in-house carpool matching systems. The ROI calculator gives employers the ability to determine the break-even cost—the subsidy amount a company can manage without hurting the bottom line. All toolkit elements are available for any company to customize and use:
- Give Workers a Ride, Give Employment a Boost – overview report
- Employer-sponsored transportation toolkit
- Customizable templates from toolkit
- ROI Cost calculator spreadsheet tool
We’ve identified five compelling reasons that companies ought to consider sponsoring a transportation program.
- Employer-sponsored transportation programs help companies find and retain qualified workers. Many companies, particularly startups and small to medium-sized businesses on the low-to-middle range of the pay scale have a tough enough time finding and keeping workers. By sponsoring transportation solutions, they can expand the pool of eligible workers, raising their chances of securing a quality workforce and maintaining productivity. Employee retention is financially crucial: less turnover means fewer resources spent on searching, hiring, and training. In short, it is good for the bottom line.
- It helps employees stay employed. Many workers face difficult commutes, a situation that can affect their performance in many ways, including the ability to arrive on time, number of absences, morale, and productivity. Transportation programs help workers get to work and hold down a job, and job stability helps people build wealth.
- It benefits the company’s brand. Sponsorship gets recognized by employees, government, the press, social media, and the public in general. A transportation program is a sign of a company’s good citizenship; proof that it abides by the principle of doing well by doing good. And as numerous studies have shown, customers’ and consumers’ purchasing decisions are increasingly influenced by the social consciousness and sense of responsibility that businesses demonstrate.
- It contributes to the region’s economic vitality. Apart from the microeconomic benefits of transportation programs, companies that undertake them are building stronger communities and stronger regions. When individual businesses succeed with their sponsored programs, their example encourages others to take up the practice. Neighboring companies team up, and transportation vendors are inspired to develop more, and more cost-effective, solutions. Successful solutions can encourage entrepreneurs and smaller businesses or companies offering low- to mid-wage jobs to envision a vibrant future.
- It works. Numerous companies, big and small, regional and global, spanning a broad range of industries, have already instituted programs to ease their workers’ transportation difficulties and broaden their appeal to potential employees. Among those with positive results : Bosch, McDonald’s, Method, and CA Ventures.
Respondents described how they calculate the amount of money and time it would take to commute to a new job before even applying: “Well, I noticed if it’s somewhere far, I won’t even apply to the job” (105). This was frustrating because, in the suburbs, jobs were both more available and paid higher wages: “It might be a good job, but the commute might make you not want to take the job, honestly.”
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Employers often seek to locate business where land is cheap. Cheap sites are often cheap because they are not well served by transportation or other infrastructure. Employers will then complain that their employees have difficulty getting to work, and demand better transportation facilities and services from the surrounding jurisdiction.
We can talk about the wisdom of employers adopting better (or any) TDM strategies when the real solution is that they should locate their businesses where transportation facilities and services are more robust.
Unfortunately, our tax system encourages land speculation that inflates the price of prime sites (sites near infrastructure amenities). TDM is fine. But it won’t make much of a dent in the situation until we create economic incentives for reducing sprawl and promoting development where necessary infrastructure already exists.
If this approach makes sense to you, see “Financing Infrastructure with Value Capture: The Good, The Bad & The Ugly” at https://www.strongtowns.org/journal/2018/2/20/financing-infrastructure-with-value-capture-the-good-the-bad-the-ugly/