lifting arizona's workforce: a homegrown ingredient for economic success · lifting...

LIFTING ARIZONA’S WORKFORCE:

A HOMEGROWN INGREDIENTFOR ECONOMIC SUCCESS

January 2007

LIFTING ARIZONA’S WORKFORCE:

A HOMEGROWN INGREDIENTFOR ECONOMIC SUCCESS

“Arizona must approach itsfuture in the biosciences bybuilding “trees of talent” byencouraging scientific andtechnical talent to be developedand retained in the state.”Arizona’s Bioscience Roadmap, prepared

for the Flinn Foundation by the

Technology Partnership Practice, Battelle

Memorial Institute 2002.

“The only way to address thenational challenge of globalcompetition is by buildingstrong regional economies.” Elaine L. Chao, Secretary of Labor,

February 2006.

“While Arizona is expected to experience robust employment growth in bioscienceemployment across key technical occupations spanning research, laboratory sciences,and production and management support, there is a clear mismatch in the specificareas of demand and key trends in supply.”Arizona Bioscience Workforce Strategy – Preparing for the Future, October 2003. Prepared for the

Maricopa Community Colleges by the Technology Partnership Practice, Battelle Memorial Institute.

“As the well-educated baby boomergeneration begins to retire, the diverseyoung population that will replace itdoes not appear prepared educationallyto maintain or enhance the state’sposition in a global economy.”Measuring Up 2006 – Arizona, The National

Center for Public Policy and Higher Education

“USING CONSERVATIVE ESTIMATES, Arizona willrequire more than 25,000 new carpenters,construction laborers, frontline supervisors,painters and electricians in the next decade. Atthe current rate of apprenticeship completions,the state will train slightly more than one thirdthat number.”A Workforce Needs Assessment of the Arizona Construction

Trade Industry, Arizona Department of Commerce,

February 2005.

ACKNOWLEDGMENTS

Children’s Action AllianceBoard of Directors

David J. Bodney

Chairman

Dana Wolfe Naimark

President and CEO

www.azchildren.org

Children’s Action Alliance (CAA) is a non-profit, non-partisan organization dedicated to promoting the well-being

of all of Arizona’s children and their families through research, policy development, media campaigns, and advocacy.

The Working Poor Families Project (WPFP) is a national initiative that partners with existing state nonprofit

organizations to identify and strengthen state policies that assist working families achieve success in the labor

market. WPFP was developed and is managed on behalf of the foundations by the consulting firm of Brandon

Roberts + Associates.

This project was generously supportedby grants from these foundations:

The Annie E. Casey Foundation

Ford Foundation

Joyce Foundation

Mott Foundation

Laura Almquist

David Barlett

Charles Blanchard

Fred DuVal

Kay Ekstrom

Armando Flores

Sybil Francis

Jack Gibson

MaryAnn Guerra

Jaime Gutierrez

Nora Hannah

David Howell

Martin Latz

Mark Lodato

John Loredo

Steve Mittenthal

Susan Navran

Christine Nowaczyk

Brenda Sperduti

Ricardo Lopez Valencia

Carolyn Warner

4001 N. 3rd Street, Suite 160

Phoenix, AZ 85012

(602) 266-0707

2850 N. Swan Road, Suite 160

Tucson, AZ 85712

(520) 795-4199

Children’s Action Alliance would like to give special

thanks to the following people who provided invaluable

feedback and advice: Tom Rex, Arizona State University,

Center for Business Research; Rob Melnick and Nancy

Welch, Morrison Institute for Public Policy; Kathy Boyle,

Arizona Community College Association; Mark Barnes,

Barnes & Associates; Pat Harrington and Keely Hartsell,

Arizona Department of Economic Security; and Karen

Lirsch, Arizona Department of Education.

Arizona is on the move toward the knowledgeeconomy that will define this century. To nurturethis transformation, Arizona is making investmentsin research, biosciences, and technology. We aresucceeding in attracting new businesses andsignificant research grants to supplement thetourism, construction, real estate, and smallbusiness components of our economic mix.

Of course, there are many factors outside of ourcontrol that could weaken or damage our economicengine: terrorist attacks, growing federal budgetdeficits, soaring gas prices. But there is also a vitaleconomic component that we can shape right hereat home that can either undermine our economicsuccess or fuel our prosperity. That component isthe Arizona workforce. And the outcome dependson our state policies and leadership.

As the baby boomers age and the skillrequirements of jobs evolve, Arizona competeswith other states for a quality workforce to fuelour economy. For decades, we have beenfortunate to have a steady flow of workers fromother states and other countries. But we also havea home-grown workforce that we can eithernurture as a stimulant to our economy or neglectand leave it to be a drain on our prosperity.

In 2000 when the last general census wastaken, Arizona ranked as the 20th mostpopulous state with 5.1 million people.1 By2036, Arizona will have doubled in population.2

Over one-third of our workforce is ill-equippedto contribute to the modern economy we arebuilding. These are Arizona’s low-income

working adults who have little education ortraining and earn wages so low they cannotsupport themselves and their families. Morethan 550,000 children are growing up in thesestruggling, working families. Without betterconnections to education and training, thesechildren will likely be tomorrow’s low-wageworkforce lacking skills and earning potential.

Educational deficiencies and a lack of crucialskills prevent many low-income adults fromthriving in a world where education andknowledge are prerequisites for economicsuccess. Two out of five Arizona adults of workingage possess only a high school education or less.Such low levels of educational attainment limitthe opportunities of individual families and dimthe economic prospects of the entire state.

Helping working adults succeed in themodern economy is essential to the futureprosperity of Arizona. With our pioneer spiritand our ethic of hard work, this is a challengewe can meet. Arizona is a state of possibilities;we have transformed this land into a dynamicplace to live, work, and create. We can continuethis proud history by building moreopportunities for Arizonans who work hard toget ahead and achieve their goals. This reportexplores strategies to energize the state’seconomy through a trained workforce thatfulfills the demands of the state’s employers ofboth today and tomorrow. Included are somedirections to explore together to strengthen ourworkforce and our future economic prospects.

LIFTING ARIZONA’S WORKFORCE: A HOMEGROWN INGREDIENT FOR ECONOMIC SUCCESS

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KEY FINDINGS:• 1 in 3 Arizona’s working families earn low

incomes. This ranks Arizona 43rd out of 50 states.(These families earn less than twice the federalpoverty level, equal to $38,614 annual incomefor a family of four in 2004.)

• 1 in 5 Arizona jobs are in occupations that paybelow $9.29 per hour ($19,307 annually), theamount required in 2004 to keep a family of fourout of poverty.

• 2 out of 5 Arizona adults have a high schooleducation or less.

• Arizona invests very little in basic adult education.Arizona ranks in the bottom ten states in the nation,investing only $8 per adult without a high schooldiploma compared to the national average of morethan $46. New Mexico spends more than twice asmuch as Arizona at $20 per adult. Utah ranks in thetop third in the nation at nearly $54 per adult, whileFlorida spends nearly $200 per adult.

• Many working adults are shut off from need-based financial aid for postsecondary education.Arizona’s investment in need-based financial aidfor community college and university students isextremely low: Arizona spends an estimated$9.68 per undergraduate student, compared tothe national average of $410.41.

• High rates of Arizona adults and children gowithout health coverage. More than 2 out of 5 ofArizona’s low-income working families have atleast one parent without health insurance.

• The cost of child care is out of reach for manyworking parents. This leaves children indetrimental situations and reduces theproductivity of parents at their jobs. Arizona’s childcare subsidy rates are six years out of date.

POLICY STEPS TO LIFT WORKFORCESKILLS AND EDUCATION:• Increase the state investment in basic adult

education and literacy.

• Increase funding for need-based financial aidfor community college and university students.

• Update the rules for need-based financial aidto allow more low-income working adults withfamilies to qualify.

• Strengthen vocational training and education forwelfare recipients after they find employment inlow-income jobs.

• Provide educational mentoring to communitycollege students who withdraw before earninga career certificate or associate degree.

• Restore the $17.5 million for job training thatwas transferred from the Arizona Job TrainingFund to the state’s General Fund to balancethe budget during the state’s fiscal crisis.

• Improve access to quality, affordable child careby expanding eligibility for child care subsidiesto 200% of the federal poverty level.

• Appropriate sufficient funding for the childcare subsidy program to serve all qualifiedparents and to update the subsidy levels tocurrent rates.

• Strengthen existing health care programs forlow-income families and small businesses.

• Conduct outreach to employers and low-income workers to link working adults witheducational and career opportunities andemployment supports.

• Adopt a state refundable Earned Income Tax Credit.

TABLE OF CONTENTSEXECUTIVE SUMMARY

CHAPTER ONEArizona’s Workforce: Hardworking Yet Largely Undeveloped 1

CHAPTER TWOThe Gap Between Employer Demands and Workforce Skills 5

CHAPTER THREEExpanding High-Paying Jobs 13

CHAPTER FOURBeyond Wages – Incentives, Benefits And Supports 16

CONCLUSION 20

APPENDICES

Appendix 1Income Thresholds for Low Income Families 21

Appendix 2Examples of Arizona Occupations Paying Less than $9.28 per Hour 22

Appendix 3What a State Earned Income Tax Credit for Arizona Might Look Like 23

Endnotes 24


ARIZONA’S WORKFORCE: HARDWORKING YET LARGELY UNDEVELOPED

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Arizona is on the move toward theknowledge economy that will define thiscentury. To nurture this transformation, Arizonais making investments in research, biosciences,and technology. We are succeeding in attractingnew businesses and significant research grantsto supplement the tourism, construction, realestate, and small business components of oureconomic mix.

Over the last six years, hundreds of millions intax dollars, along with millions in private funds,have been invested to attract the “knowledgeindustry” to Arizona. New partnerships havebeen forged between the public and privatesectors. For example, the state universities havea collaboration with the Translational GenomicsResearch Institute (T-Gen) and theInternational Genomics Consortium (IGC).These investments and collaborations havereshaped downtown Phoenix, with the openingof a Phoenix campus of the University ofArizona medical school being the most recentaddition. In Tucson, the Critical Path Institute, acollaboration between the U.S. Food and DrugAdministration, the University of Arizona, andSRI International, is working to enable thepharmaceutical industry to safely accelerate thedevelopment of new medications.

Job creation is projected to reach 3.7 million by2036 with the largest growth occurring in theprofessional, business, healthcare and socialassistance sectors.3 Over one-third of our workforceis ill-equipped to contribute to the moderneconomy we are building. These are the 232,300low-income working families whose parents havelittle education or training and earn wages so low

they cannot support themselves and their families.More than 550,000 children are growing up inthese struggling, working families. (See Appendix 1for income thresholds of low-income families.)Without better connections to education andtraining, these children will likely be tomorrow’s low-wage workforce lacking skills and earning potential.

Shortage ofSkilled Workforce

The possibilities for the 21st century Arizonaeconomy are exciting. The bioscience sector is fastgrowing and offers opportunities for newbusinesses and high wage jobs. Yet, amid theexcitement surrounding these new developments,a quiet but persistent question continues to beraised: Does Arizona have the skilled workforce thatthis new industry demands?

2006 2036

Arizona’s Job Creation Will Increase by 1.1 Million

0

1,000,000

2,000,000

3,000,000

4,000,000


2

In 2002, Arizona’s Flinn Foundationcommissioned the Battelle Memorial Institute toidentify the strategies needed to position Arizona asa major southwest bioscience center over thecoming decades. Arizona’s Bioscience Roadmaphighlights several weaknesses that may hinderArizona from building the “trees of talent” neededfor a thriving bioscience sector. These includebudget constraints, a lack of public support forhigher education, and a lack of skilled bioscienceand other workers.4

Arizona’s workforce needs are not limited tothis new knowledge-based technology.Workforce shortages either already exist or arebeing projected in many occupations. The

nursing shortage has received much attention inrecent years and resources have been dedicatedto address the problem. Arizona hospitals sufferfrom shortages in other positions as well. Arecent survey revealed an 11 percent vacancyrate in radiology technologists, 10 percent inbilling/coders, and 9 percent in pharmacists.5

There is also a serious shortage of workers inthe construction trades. Arizona cannotcontinue to grow without workers to buildhomes, commercial buildings, roads, schools,and the other facilities that the nation’s second-fastest growing state needs. The state isexperiencing a shortage of workers in “core”skilled trade occupations such as carpenters,

What is a Working Family?Terms like “working family,” “low-income” and “poor” are concepts that people intuitively grasp yetstruggle to define precisely. In this report, the following definitions are used:

Family: A family is a married-couple or single-parent, primary family with at least one child under age 18.

Working Family: A family in which all related members age 15 and over have either a combinedwork effort of 39 or more weeks in the last 12 months or a combined work effort of at least 26 weeksand one unemployed parent actively looking for work within the past four weeks.

Poor Working Family: A working family with an annual income below the threshold for povertydefined by the U.S. Census Bureau. In 2004, the threshold for a four-person family equaled $19,307.

Low-Income Working Family: A family with an annual income less than 200 percent (or double)of the poverty threshold. For a family of four in 2004, the low-income threshold was $38,614

This report focuses on working families with incomes at or below 200 percent of poverty rather thanjust those officially defined as poor by the federal government. This is because the official definition nolonger reflects the financial reality of what it takes for a family to make ends meet. To spotlight familiesthat earn too much to be technically poor but too little to be truly self-sufficient, this report considersall working families earning less than 200 percent of poverty.


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front-line supervisors, and electricians.6 Industryconcern is so great that the Arizona Chapter ofthe Association of General Contractors startedits own charter school in Ft. Mohave in order to“grow” the next generation of workers.7

Despite an increasing population and economicgrowth, Arizona’s ability to provide an abundant,trained workforce is uncertain. Baby boomers arereaching retirement age and the pools of trainedworkers available for hire are diminishing. WillArizona’s evolving new 21st century economy stallbecause employers find it impossible to fill theirpositions? Where will Arizona find the workforcenecessary to meet the increased demands?

A Plentiful Resource: Arizona’s Low-Income Workers

Fortunately, we already have an abundantresource: Arizona’s low-skilled, low-incomeworkers. These are hard-working Arizonans weencounter every day – office workers, child carecenter teachers, and retail salespersons. (SeeAppendix 2 for examples of low wage jobs.) Atthe same time that many Arizona employers arestruggling to fill jobs, many Arizona families arestruggling to make ends meet. Deliberate,targeted action must be taken to better align thetwo. As Arizona invests in attracting newemployers and industries, it is also time to investin the human resource side of the equation. Thesuccess of Arizona businesses – and the healthof Arizona’s economy — requires well-educated,skilled workers who continue to grow andevolve as the demands of their jobs change.

Improving the skills of low-income workerswill pay off in several ways. First, employers willreap the benefits of an expanded pool of localtalent available to hire and a diminished need– and expense – for recruiting workers fromother states or other countries. Second,

moving Arizona’s low-income workers intohigher paid jobs means more Arizona familieswill have increased income which, in turn,results in better housing, better access toeducation, and improved health care. Finally,with higher job earnings per capita, the state’seconomy will be stimulated which, in turn, willcreate additional good paying jobsdownstream. Arizona’s economic future willcontinue to build.

Being a low-income worker not only meansless take-home pay, it also means doingwithout the assets that come with higher payingjobs: no health insurance for the parents – andoften the children as well; no paid time off forvacations, emergencies and illness, so that alltime away from work means a lower paycheck;no retirement benefits so future financialsecurity is at risk. The irony is that the lack ofthese benefits falls to the workers who least canafford to go without them.

Although this report focuses on the educationand training of adults, it is important toremember the impact on children. Childrenwho live in low-income families are more likely

Did you know…• More than half of Arizona’s low-income working

families (58%) spend more than one-third oftheir income on housing.

• More than 2 out of 5 of Arizona’s low-incomeworking families have at least one parent withouthealth insurance.

Sources: Working Poor Families Project, Population Reference Bureau,analysis of 2004 Current Population Survey; Working Poor FamiliesProject, Population Reference Bureau, analysis of Current PopulationSurvey, Annual Social and Economic Supplement (three-year average,2003-2005)


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to have poor health, have developmentaldelays or learning disabilities, and to be keptback in school. Medical care is often foregoneuntil the need becomes critical, which meansincreased expenses, school absences for thechildren, unpaid time off for parents and, in toomany cases, unpaid medical bills for hospitalsand physicians. Home life is often unstable asparents juggle multiple jobs and spend manyhours away from home. Children experienceinconsistent and low quality child care. Manyparents have to alternate paying bills, riskingutility cutoffs or eviction. Many families live insubstandard housing, or skip meals. Thoseparents with low literacy skills are unable toassist their children with school work. Theresult is that many of these children fall behindin school. Helping these families move up theeconomic ladder is important for tomorrow’s

generation of Arizonans. If not, the cyclecontinues, with children growing up without thenecessary skills for the employers of tomorrow.

Building the Workforce forTomorrow’s Economy

Arizona has taken important steps indeveloping our 21st century economy. Thisgoal, however, cannot be fulfilled solely byattracting new employers and new technologyto the state. Arizona must also invest indeveloping a workforce to equal the need forskilled, trained employees. Arizona’s low-income working adults provide an abundant,available resource that can not only fill thisdemand but, at the same time, can liftArizona’s economy.


THE GAP BETWEEN EMPLOYER DEMANDS AND WORKFORCE SKILLS

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A significant misalignment exists between thedemands of Arizona’s employers and theeducational level of Arizona’s workforce. TheEducational Testing Service reports that 70percent of new jobs created nationally between1998 and 2008 will require at least somepostsecondary education. Yet only 33 percent ofArizona’s population possesses an associate’sdegree or higher and 25 percent have somepostsecondary education short of a degree.8

Transforming today’s low-income, low-educated workers into a 21st century workforcerequires a multi-level approach. At one end ofthe spectrum are workers who need basiceducation, such as literacy and GED classes. Atthe other end are those who have somepostsecondary coursework but lack thecredentials and specific training employersrequire. Arizona needs to improve itsinvestments at all levels.

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2

The Demand For Educated Workers

Exceeds Availability

0

20%

40%

60%

80%

Adults with AAand higher

(AZ)

Adults with somepostsecondary

education(AZ)

Jobs requiringpostsecondary

education(U.S.)

Sources: Educational Testing Service; American Community Survey,Educational Attainment for Arizona Adults 25 years old and older.


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Getting Back to Basics – Literacy Skills and Adult Basic Education

Literacy is a mix of skills that allow a personto perform a wide variety of tasks using writtenmaterials.9 The Arizona Department ofEducation defines it as “an individual’s ability toread, write and speak in English, compute andsolve problems at levels of proficiencynecessary to function on the job, in the familyand in society.”10 Examples are balancing acheckbook, reading and following directions fora prescription, and filling out a job application.Underlying skills include the ability to read andunderstand common words and perform basicmath. Many of us take these skills for grantedand assume people around us possess them.Yet, 43 to 55 percent of the U.S. populationpossesses only basic literacy skills, meaningthat they are unable to perform moderatelychallenging literacy activities.11

The Arizona Department of Education isresponsible for overseeing Arizona’s adult literacyprograms, which include adult basic education,adult secondary education, English languageacquisition for adults, and family literacy.

Adult Basic Education. Instruction inreading,writing and math for adults whose skillsare below the 9th grade level.

Adult Secondary Education andPreparation for the General EquivalencyDevelopment (GED) Exam. Sixteen percentof Arizona adults age 25 and over lack a highschool diploma or GED.12,13 The Adult SecondaryEducation Program assesses which skills arelacking and provides instruction in preparation forthe GED test. The seven-hour GED exam testscompetencies in writing, reading, social studies,

Arizona Adults Have Low Educational Attainment

Bachelor +25%

Some College25%

No High School Diploma

16%High School Only

26%Associates Degree

8%

Low Literacy Levelsof U.S. Adults

Proficient13%

Basic28%

Below Basic16%

Intermediate43%

Source: American Community Survey, 2004, EducationalAttainment for Arizonans ages 25 and older

Source: A First Look at the Literacy of America’s Adults inthe 21st Century, National Center for Educational Studies.

Examples of Basic Skills:• Finding in a pamphlet for prospective jurors

an explanation of how people were selectedfor the jury pool.

• Using a television guide to find out whatprograms are on at a specific time.

• Comparing the ticket prices for two events.

Examples of Intermediate Skills:• Consulting reference materials to determine

which foods contain a particular vitamin.• Identifying a specific location on a map.• Calculating the total cost of ordering specific

office supplies from a catalog.


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science, and math. GED preparation classes areavailable in a variety of settings: one-to-oneinstruction, traditional classroom and publictelevision broadcasts. This form of adult educationis vital, as one out of four high school diplomasissued in Arizona are earned through GED testing.

English Language Acquisition for Adults.The Arizona Department of Education has setstandards for six levels of English LanguageAcquisition for Adults, from beginning literacywhich allows the student to provide personalinformation, provide basic directions, and usenumbers for routine tasks, through level fivewhich includes the ability to state a point of viewand give or follow technical instructions.Coursework includes listening/speaking, reading,writing, functions (such as providing personalinformation or describing an event), grammarand mechanics of the English language. Classesare offered through 28 entities, most of whichare school districts, community colleges, andcareer-training organizations.

Family Literacy Programs. Family Literacyis a successful private-public partnership thatbrings together parents and their preschool-agedchildren to improve reading and Englishlanguage skills, strengthen parenting, andimprove economic opportunities. With acombination of $1 million in state funds and a

variety of federal funds, Family Literacy programsoperate in 15 sites throughout the state,sponsored by community colleges, literacyvolunteers, community organizations, and schooldistricts. Last fiscal year, 1,173 adults and 1,200children were involved in project activities.

Did you know…• One out of four high school diplomas issued

in Arizona each year are earned through GEDtesting.

Source: “The Value of Arizona GED Testing,” Arizona Department of

Education, www.ade.az.gov/adult-ed.

Arizona Meets Very Littleof The Need for

English Acquisition

Need for Adult Education Far Exceeds

Those Enrolled in Programs

Adults not English Proficient*221,707

Waiting List5,695

ELAA Students Enrolled14,041

Adults WithoutHigh School Diploma

653,176

Waiting List1,643

Students Enrolled10,267

Source: Arizona Department of Education Adult Literacy ServicesReport, 10/16/06

*Reported as speaking English “not well” or “not at all” for 2000 U.S. Census.”


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According to Arizona’s Auditor General, nearlythree out of four children who participated inFamily Literacy made significant improvementsin language and problem-solving skills. Parentparticipants made significant gains in reading,writing, and listening comprehension skills. Morethan three quarters of the parents advancedtheir skills by 2.3 grade levels or more.

Unfortunately, federal funding for the FamilyLiteracy program is decreasing and may becompletely eliminated by July 1, 200714 TheArizona Department of Education hasrequested an additional $2 million in statefunding to replace federal funds.

With current funding, the Arizona Departmentof Education is able to provide adult educationand English acquisition classes to only a smallfraction of those who could benefit from thistraining. According to an ADE official, waitinglists for these classes are as long as two yearsand understate the demand as individuals arediscouraged from signing up due to the delay ingetting enrolled in classes.

As of October 2006, 10,267 students wereenrolled in the basic and secondary adulteducation classes, with another 1,643 onwaiting lists. For every 10 adults enrolled inEnglish Language Acquisition classes, another4 were waiting for slots to open up.15

Combined, the adults enrolled and those onthe waiting list equal less than three percent ofthe population between 16 and 64 years ofage who lack a high school diploma or Englishproficiency skills.

Clearly, Arizona’s financial commitment for adulteducation has not kept pace with demand. TheGeneral Fund appropriation for adult education hasremained virtually static at $4.5 million since 1998.Arizona ranks in the bottom ten states in the nation,investing only $8 per adult without a high school

diploma compared to the national average of morethan $46. New Mexico spends more than twice asmuch at $20 per adult. Utah ranks in the top thirdat nearly $54 per adult, while Florida spends nearly$200 per adult.16 Increasing the availability of adulteducation would help directly elevate the skill levelof the Arizona workforce.

Postsecondary EducationPossessing a high school diploma or GED is

not sufficient in today’s economy, and it will beeven less adequate in the future. According tothe U.S. Census Bureau, adults with a bachelor’sdegree earned an average of $51,554 in 2004,while those with a high school diploma earned$28,645.17 Those lacking a high school diplomaearned only $19,169. Yet, 2 out of 5 Arizonaadults lack any postsecondary education, andonly a third of Arizona adults have earned anassociate degree or higher.

What an Education PaysAverage Annual Salary

No Diploma College Degree0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$19,169

$28,645

$51,554

High SchoolDiploma

Source: U.S. Census Bureau, 2004 data


9

While the financial rewards for postsecondaryeducation are great, the path to additionaleducation can be full of obstacles for workingparents. A variety of practical action steps canshrink these obstacles and open opportunitiesfor a more skilled workforce.

Learn Now/Learn LaterFor low-income adult students who often

are balancing school with jobs and family, thecommunity college system can be the idealplace to start or restart their postsecondaryeducation. No longer the “junior college” thatserved almost exclusively as a stepping stoneto a four-year college or university,community colleges now offer a vast array ofcoursework, from nearly one thousand careercertificates which can be obtained in lessthan a year to associate degrees that providethe basis for a bachelor’s or advanced degree.Career fields range from fire fighting to earlychildhood education.

For working adults, pursuing an educationfull-time with no breaks is seldom possible.Due to financial and family responsibilities,working parents are often unable to attendschool continuously. One solution is toapproach postsecondary education as a seriesof milestones that can be reached in steps: firstearning a career certificate, then an associate’sdegree, then a bachelor’s degree.

Career certificates require 30-40 credit hours ata community college. These certificates servedual purposes: they not only qualify the studentfor higher-paying jobs, the coursework also formsthe basis for an associate’s degree. Earning acareer certificate can provide a student with astrong career path to follow over time. Many adultstudents would benefit from career mentoring tohelp them identify a career path and thesequential steps they can take along that path.

The Arizona economy would benefit fromenhanced career mentoring, as well. Forexample, in a special report about theworkforce of high technology manufacturing inGreater Phoenix, the Batelle Memorial Instituteconcluded that finding and keeping workerswith the necessary talent and technical skills willcontinue to pose a challenge for these firms.The report recommends that the communitycolleges and employers work to increaseawareness of manufacturing technology careersand establish more targeted outreach andmentoring programs to work with diversestudent populations.18

Overcoming the Financial Barrier forPostsecondary Education

Although only a fraction of university costs,Arizona’s community college tuition is becomingless affordable for lower-income adults.According to Measuring Up 2006, a report cardfor higher education throughout the nation,“Since the early 1990s, colleges and universitiesin Arizona have become less affordable forstudents and their families. If Arizona’sdownward trends are not addressed, they couldundermine the state’s ability to develop aneducated workforce.” Even after financial aid,low-income families end up spending morethan one third of their income on education.19

Did you know…• Forty-five percent of first year community

college students do not return for theirsecond year.

Source: Measuring Up 2006 – Arizona, The National Center for Public

Policy and Higher Education.


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NOTE: Based on the lower-middle income families quintile(average family income of $26,912); community college costsinclude tuition, room and board less financial aid.20

Most low-income working families cannotafford money out of their monthly budgets fortuition and books, let alone associated costssuch as transportation and child care duringclass time. Yet many low-income families do notqualify for traditional financial aid which is basedon strict income standards that do not considerfamily responsibilities. Working parents earningeven very low incomes often do not qualify forfinancial aid. Arizona ranks 45th worst for need-based financial aid grants for community collegeand university students, with an estimated$9.68 per student. The national average is$410.41, with 37 states providing $100 or moreper full-time equivalent.21

The Arizona Legislature recently establishedthe Postsecondary Education Grant Fund forstudents graduating from Arizona high schoolsor obtaining the equivalent of a high schooldiploma while living in Arizona. The fund, whichreceived $5 million in state appropriations,provides a $2,000 grant annually for up to fouryears to be used for tuition, books, and fees.

This grant is limited to baccalaureatestudents and requires reimbursement of allgrant monies if a degree is not obtained withinfive years. Because working adults are unlikelyto be able to attend school full-time, theycannot benefit from this grant. A similar grantprogram, available to part-time studentsearning career certificates or associate’sdegrees, would reach more working adults toraise their level of education.

Building Bridges BetweenEducational Levels

A danger point for “dropping out” beforecompleting educational goals is when studentstransition from one level to the next. Whether itbe the adult who has just earned a GED or theindividual possessing a career certificate who isreturning to earn an associate’s degree,negotiating the path can be daunting.Encouraging and smoothing the transitionsfrom one level to the next promotes moreeducational success. This includes not onlyease in enrolling and transferring records, butalso in traversing a different campus, findingchild care that is available when classes areoffered, and obtaining books and supplies.

Arizona has an effective program to help highschool students from economically disadvantagedgroups make successful transitions to communitycollege and university. This program, calledAchieving a College Education (ACE) Program,provides individual mentoring and counseling. Asimilar program for adult students could helpthem succeed in their entry or re-entry to post-secondary education and the achievement ofspecific educational goals. An adult ACE programcould identify adults enrolled in basic educationand provide mentoring and other supports toencourage their continuing education.

Community College Costs Devour More Than a Third of Low-Income

Family Budget

College Costs38%


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Education and career mentoring could alsobenefit adult students in a variety of situations. Forinstance, a student who has left due to financialdifficulties might become aware he is eligible forchild care subsidies. Coaching students on how tostay in school and achieve their educational goalsis as important for adults as it is for teenagers. Alittle less than half of first year community collegestudents in Arizona fail to return for a secondyear.22 Yet community colleges have few resourcesto follow up on students who fail to return withouthaving earned a certificate or degree.

Arizona will soon have a tool for trackingpostsecondary students who graduated fromArizona high schools. The ArizonaDepartment of Education’s StudentAccountability Information System (SAIS),used to track K-12 students across Arizonaschool districts, is being expanded topostsecondary students beginning July 1,2007. Data gathered will provide importantinformation about how Arizona studentsmove from one educational level to another,and from one educational institution toanother. Efforts should be made to use thissystem to identify and reach out to studentswho have dropped out of school withoutcompleting a certificate or degree.

State-Operated Job Training Programs

Arizona operates two major employmentprograms: The Jobs program for TemporaryAssistance for Needy Families (TANF) clientsand Workforce Connection for WIA clients.Although both have goals of helping people getjobs and become self-sufficient, theirapproaches and outcomes vary.

Jobs Program. The emphasis of Arizona’sJobs program is to move clients intoemployment as soon as possible to keep thewelfare rolls low. While some transitional servicesare available after the client’s cash assistance hasended, the program’s success has beenhampered by high worker-to-client ratios andmanagement transitions. Statistics show that fourin ten of the TANF clients who get a job are nolonger employed nine months later.23

Efforts to enhance job training are underway.First, the Arizona Department of EconomicSecurity, which operates the Jobs program, plansto contact clients six months after they get a joband leave cash assistance. Second, theDepartment expects to issue contracts which willprivatize the Jobs program throughout the state.Under the new contracts, vendors will be requiredto develop post-employment plans that focus onjob retention, self-sufficiency and continuedcareer advancement, including training. Thevendors must facilitate child care availability andtraining in addition to employment servicesduring the 24-month period after clients leaveTANF cash assistance. In addition, vendors will berequired to identify benchmarks that will be

Did you know…• Only 4% of Arizona TANF welfare

participants were enrolled in education andtraining activities in 2004.24

• The employment retention rate for formerTANF participants is 60% after three quarters.25

• The average hourly wage for people who leftTANF in State Fiscal Year 2006 was $8.19.


12

monitored regarding the percent of clients theyengage in post-employment training. Theexpectation is that the private vendors will reducethe rate of clients returning to cash assistance tobelow 25 percent.

Plans to improve post-employment jobtraining are hampered by lack of sufficientfunding. The federal Deficit Reduction Act (DRA)passed by Congress requires states to engagehigher percentages of TANF clients in work-related activities. Arizona’s new target will beclose to 50 percent participation — much higherthan the 19.6 percent required last federal fiscalyear. These more stringent requirements mustbe met with no additional federal or state fundsfor the Jobs program.

Arizona workers, taxpayers, and employerswould benefit from “work first plus careerdevelopment” policies that view successfulemployment of welfare clients as only an initialstep in raising their self-sufficiency.Employment should be followed by identifyingand addressing training needs for a career paththat raises skill levels and earning potential overtime. Under federal guidelines, TANF clientswho obtain employment but continue toreceive subsequent job training and educationcan count toward work participation rates up tothe maximum twelve months. Such a strategywould help lift the educational achievement oflow-income workers to better meet the needsof Arizona’s economy.

Arizona Workforce Connection. In 1998,Congress passed the Workforce Investment Actto consolidate federal workforce programs. Themain feature of Arizona’s Workforce Connectionis the creation of “one-stop” centers throughwhich teens and adults seeking employmentand employment-related training can get

assistance. Sixteen programs, ranging from JobCorps to Unemployment Insurance to SeniorCommunity Service Employment, deliver theirservices through these comprehensive one-stopcenters, affiliate sites, and self-service electronicaccess locations. In contrast to the Jobsprogram, one out of three of the unemployedWIA adults receives training services. Eighty-fivepercent of adults who obtained employmentafter participating in the program were stillemployed six months after placement.

While the Workforce Development program issuccessful for those who participate, less thanone percent of adults who would qualify for itstraining programs due to lack of a high schooldiploma or GED receive such training.

Did you know…• 34% of unemployed adult WIA participants

were enrolled in education and trainingactivities in 2004.

• The employment retention rate six monthsafter initial placement for former WIAparticipants is 85%.

Source: Arizona Workforce Investment Act Annual Performance Report,

Program Year 2004.


EXPANDING HIGH-PAYING JOBS

13

Arizona enjoys low unemployment. “NowHiring” signs can be found on many billboardsand in store windows. However, according tothe Bureau of Labor Statistics, one out of fiveArizona jobs are in occupations with a medianpay less than $19,307 annually, the federalpoverty level for a family of four in 2004.

One solution to this problem is topurposefully attract higher-paying industries tothe state so that, over time, the mix shiftstowards higher paying jobs. In 2002, theGreater Phoenix Economic Council issued aMandate for Action and Progress: A Prospectusand Map to the Future. This report presented afive-year plan designed to change the mix andquality of jobs by focusing economicdevelopment activities in five priority clusters:aerospace/aviation, high technology, bio-industry, software and advanced business andfinancial services.26 The plan calls for creation of18,800 net new jobs over a five-year period,with 60 percent higher wage jobs.

Greater Phoenix Economic CouncilFive-Year Plan

The report identified three “fundamentalactions” needed to improve Arizona’s economy:

1 Development must shift from quantity toquality.

2 A comprehensive economic plan must beorganized and executed.

3 Education, transportation, and fiscal policymust be aligned with the economicdevelopment strategy.

Commerce and EconomicDevelopment Commission

The purpose of the Commission is to manageand leverage financial resources that enhanceeconomic development within Arizona. TheCommission is responsible for developing the

CHA

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3

One-fifth of Arizona JobsAre in Occupations ThatPay Below Poverty Level

Below $19,307

SOURCE: Bureau of Labor Statistics, Geographic Profile ofEmployment & Unemployment based on current PopulationSurvey, 2004

High Pay Jobs As Percent of Total Job Creation

Year 1 Year 2 Year 3 Year 4 Year 50

20%

40%

60%

80%

$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $

$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $

$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $

$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $

$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $$ $ $ $ $ $ $


14

state’s 10 year economic strategy aimed atensuring high-quality, high-paying jobs in Arizona.In addition, the Commission administers theCEDS Fund, which provides financial assistanceto support the state’s economic developmentefforts. Finally, the Commission is also therecommending body for the Economic StrengthProjects program, a grant program providingassistance to local government entities for roadconstruction projects.

The CEDC helps develop and launch“economy defining” initiatives that impact thestate’s economy. Recent projects include fundingfor the feasibility and organization planning forthe Translational Genomics Research Institute(TGen), the Critical PATH Institute and the“Arizona Virtual Water University.”

Incentives for Economic Development

Arizona offers a range of incentives forattracting new businesses and creating full-timejobs. These include:

Enterprise Zone Program. The goal of thisprogram is to improve the economies of areas inthe state with high poverty or unemploymentrates by enhancing opportunities for privateinvestment. Businesses are eligible for income orpremium tax credits and property tax reduction.

Military Reuse Zone. This program wasestablished to lessen the impact of militarybase closures. Currently there are two militaryReuse Zones in Arizona: Williams GatewayAirport and the Phoenix/Goodyear Airport.Among the tax credits offered to businesses isa credit for each new net job created, totalingup to $7,500 per non-dislocated employeeand up to $10,000 per dislocated employee.

Research & Development Income TaxCredit. This is a state income tax credit forbusinesses engaged in qualified research anddevelopment done in Arizona. This includesresearch conducted at a state university andfunded by a company.

Small Business Capital Investment TaxCredit Program (Angel InvestmentProgram). The objective of this program isto expand early stage investments in targetedArizona small businesses. This isaccomplished by providing tax credits toinvestors who make capital investment insmall businesses certified by the ArizonaDepartment of Commerce. An investorseeking an income tax credit must documentthat the investment was made in either aqualified rural or bioscience company or anyother qualified small business. Tax credits upto $20 million may be authorized to qualifiedinvestors beginning July 1, 2006 throughJune 30, 2011.

Tucson Empowerment Zone. The TucsonRegional Economic Opportunities (TREO)has initiated the development of anEconomic Blueprint, an economicdevelopment vision and strategy for thefuture. Targeted for completion in 2007, theBlueprint will provide a comprehensiveperformance-based strategy to effectivelyposition the Tucson region to capitalize on itsbest economic development opportunitiesover the coming decades.


15

Employer Sponsored Job TrainingSince 2001, Arizona employers have paid a

tax to support the Arizona Job Training Fund.Employers pay one-tenth of one percent on thefirst $7,000 of an employee’s wages or $7.00per year, whichever is lower.

These funds are used to train new andincumbent workers for specific jobs. Under theNet New Hire Program, businesses can applyfor grants that return up to 75 percent of thecosts of training added employees in jobs thatmeet wage criteria. The Incumbent WorkerProgram reimburses employers for up to half ofthe costs for training that upgrades the skills ofexisting employees.

The program’s intent is to meet specificneeds of employers, create new jobs, andincrease the skill and wage levels of Arizona

employees. Trainees’ wages must also equal orexceed a qualifying wage rate, which rangefrom $16,748 for rural counties to $36,079 forlarge businesses in Maricopa County.27 Duringstate fiscal year 2006, 136 applications wereapproved and training was provided for 11,678workers. The average salaries paid for workerstrained was $46,226.28

Unfortunately, during the budget crises thatoccurred between 2001 and 2005, thesetraining funds were used to help balance thestate’s General Fund. $17.5 million wastransferred over a three-year period and has notbeen replaced. These funds need to berestored over the next two to three years sothat funds are available as demand for trainingand retraining employees increases.


BEYOND WAGES – INCENTIVES, BENEFITS AND SUPPORTS

16

In addition to salaries, American middle classand upper middle class workers rely onemployer-provided training, benefits andincentives as well as a wide range of tax breaksand tax incentives to enhance their skill levelsand help their families thrive. Similarly, salariesalone are not enough to make ends meet forlow-income workers. Employees may needadditional, temporary resources to help themsustain and boost their work productivity and toseek additional education and training whileworking. The following chart shows thechallenges low-income families face in meetingtheir monthly household budgets. Withoutadditional tools, these families will not be ableto build financial security, cope with unplannedevents such as the breakdown of a car or afamily illness, or pay for additional educationand training to move up the economic ladder.

The family depicted in the pie chart consists oftwo parents with a three-year old child and aseven-year old child. The family’s income of$34,000 per year is at 170 percent of the FederalPoverty Level, making them ineligible for childcare subsidies and most other income supportprograms. The family is able to receive medicalinsurance coverage through KidsCare and thecompanion program HIFA parents, which allowsparents of KidsCare children to receive healthcare coverage. Full-time child care for the threeyear old and part-time care for the seven year oldconsumes one-third of the family’s income, morethan housing costs. The $34 remaining at the endof the month must cover costs such as clothing,personal items, school supplies, and haircuts.There is no allocation for savings, emergencies, orfamily activities.

Arizona has the infrastructure in place formany of the supplemental supports low-income workers need. However, many of thesesupports suffer from neglect or outdatedpolicies that weaken their capacity to supportthe workforce. These tools need publicattention and leadership to keep up withArizona’s evolving workplace economy andworkforce demographics.

Health CoverageHaving access to affordable health care is

important for employees, employers, andfamilies. People who have health insurance aremore likely to seek medical attention early, thusreducing both the length of an illness and thecost of treating it. Absenteeism is reducedwhen employees have health insurance forthemselves and for their children. Yet, 1.2million Arizonans, including 250,000 children,

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Monthly Expenditures forLow-Income FamilyTwo Parents, Two Children Household

Earning $34,000 Per Year

Only $34 of monthly earnings reamin to pay for clothing, personal items,school supplies, haircuts, etc.

Telephone$20

Health Premiums

$113Transportation

$297 Other$34

Taxes$29

Housing$782

Child Care$953

Food$605

Calculation by CAA staff based on 2006 tax and eligibility criteria.


17

do not have health insurance of any kind.29

Many of these are in low-income familieswhere the employers either do not providehealth insurance benefits or the cost of familycoverage is prohibitive.

With federal and state funding, Arizona offershealth coverage to qualified adults and childrenthrough programs called AHCCCS and KidsCare. This coverage has helped dramaticallyreduce Arizona’s rate of uninsured childrenfrom 25% in 1998 to 15% today. This successis even more impressive given that employer-based health coverage has continued todiminish during this time.

Children living in families with incomes up totwice the federal poverty level may be eligiblefor KidsCare coverage with a robust package ofhealth services geared for children. Adults andchildren with incomes below the federalpoverty level are eligible for AHCCCS coverageand a capped number of parents with incomesbetween 100% and 200% of the federalpoverty level qualify for KidsCare Parentscoverage. These policies provides a strongfoundation for extending health coverage.However, there are four major weaknesses inArizona’s health policies that hinder coveragefor low-income working families.

First, it is estimated that more than half ofArizona’s uninsured children are already eligiblefor AHCCCS or KidsCare but their parents don’tknow they qualify or don’t know how to applyand enroll. The experience in other statesshows that we can shrink this gap dramaticallythrough hands-on community-based outreachto families and ongoing advertising. Arizonashould target state dollars to leverage privateinvestment in this type of outreach.

Second, the KidsCare coverage for 14,000parents has been on the chopping block during

the state budget debates the past few years.Arizona should sustain its commitment to coverthese parents, strengthening the workforce andfamilies at the same time.

Third, the complexities of the application andenrollment policies and procedures keepqualified people out of coverage. Too many ofthe people who apply for KidsCare andAHCCCS are denied coverage due toprocedural reasons only. Between July 2003and June 2004, the Department of EconomicSecurity received over 2 million newapplications for AHCCCS (Medicaid) coverage.Of those applications, 800,000 were denied orclosed for procedural reasons, such as peoplenot turning in the correct paperwork or missingan interview.

In addition, the number of families “churning”on and off coverage is significant. BetweenJanuary 2004 and September 2004, threequarters (76.6 percent) of the people enrolling inAHCCCS had previously been enrolled in thesystem within the past twelve months. Thischurning and inconsistent coverage not only putsfamilies at medical risk, but imposes large taxpayercosts on the state bureaucracy to disenroll people,process new applications, and re-enroll. Arizonacan simplify, streamline, and coordinateapplication procedures for AHCCCS and KidsCareto improve the continuity of coverage.

Fourth, the share of private-sector workersinsured by their employers is declining.Nationally, the percentage covered has droppedfrom 59% in 2000 to 55% in 2005. For smallemployers (less than 100 employees), thepercentages are smaller: In 2005, 40% ofworkers were covered. Employer-providedhealth insurance coverage for children is alsodropping, from 66% in 2000 to 61% in 2005.Arizona has developed several strategies to


18

confront this issue. Health Care Group providesa coverage plan to individuals or employers with50 or fewer employees. Approximately 8,300businesses currently participate, covering23,000 members.30

A health insurance premium tax credit is nowavailable to lower the cost of coverage forindividuals earning less than 250% of the federalpoverty level and small businesses of fewer thanthan 25 employees. The credit is available to thehealth care insurer based on the eligibility of theindividual or group being insured. Therequirements include a six month “bare” periodduring which the individual or business must nothave been covered by a health insurance policy.The credit is limited to three years and amaximum of $5 million in tax credits may beauthorized by the Arizona Department ofRevenue statewide for any one year. This newcredit provides another avenue for making healthinsurance coverage more affordable.

Arizona should continue to test thesestrategies to extend health coverage foremployees in small businesses.

Child CareChild care is a necessary expense for working

parents with young children. But the Arizonacost of $4,000 to $9,000 per year per childputs safe, reliable child care beyond the reachof many working families. For the past 40years, child care subsidies supported by stateand federal tax dollars have helped parents payfor child care and allowed them to beproductive and reliable members of theworkforce. Parents make co-payments for theirchild care, with the amount varying based ontheir income and the care that they choose.

Arizona’s child care policies have severalweaknesses that leave working parents behind.First, the subsidy amount is still based on whatchild care centers were charging back in 2000.But, based on the state’s own survey, mostchild care costs in Arizona have risen by 25%or more since then. Arizona is one of only 5states in the nation still paying child caresubsidy rates based on the costs of care in2000 or earlier.31 The national benchmark forchild care subsidies is to set a rate that allowsworking parents access to 75 percent of thecare in their own communities. Arizona’s ratesfall more than 20% below the benchmark --and more than $150 short per family permonth. This shortfall limits the child careoptions for working parents and hinders thestability and productivity of our workforce.

Second, Arizona’s eligibility rules leave outmany low income working families. Workingparents earning up to 165% of the federalpoverty level – in jobs such as office clerks,medical assistants, and hotel desk clerks – can


19

use the subsidy to choose the child care thatworks best for their families. But parents whoearn raises or promotions at work are oftenfinancially penalized, because they lose all childcare support at once. And many more low-income working families struggle to pay thehigh costs of child care. Thirty states haveeligibility levels higher than Arizona.32 RaisingArizona’s eligibility to 200% of the federalpoverty level would strengthen the low-incomeworkforce and give more working parents theopportunity to raise their own skill levels.

Third, state appropriations may not besufficient to reach all the qualified workingparents who apply. From 2003 to 2005,Arizona turned qualified families away due tofunding shortfalls. While new funding hasstopped this practice, growth in the number ofchildren and new federal requirements thatmore parents who receive welfare are alsoworking will raise the amount of funds neededto sustain this work support. There are manyqualified working parents who are notconnected to child care subsidies. Employers,parents, and children would all benefit fromoutreach and awareness efforts that linkfamilies to this benefit.

Earned Income Tax CreditThe Earned Income Tax Credit (EITC) is a

refundable federal income tax credit for familiesearning up to $36,348 with at least onequalifying child ($38,348 if married filingjointly). The EITC can put up to $4,536 in afamily’s pocket, depending on income level andthe number of children. Since the credit isrefundable, if the family’s federal income tax billis less than the amount of the tax credit, theremaining amount of the credit will berefunded directly to the family. The EITC is one

of the largest and most successful anti-povertytools in the United States.33

In Arizona, approximately 70 percent of the481,000 households who qualified last yearclaimed the credit - leaving 147,000 who did not.The federal EITC put $507 million back into theArizona economy with purchases of groceries,rent, school supplies, and other basic necessities.34

Twenty states have enacted their own EITC,providing families with a tax credit on their stateincome taxes in addition to the credit on thefederal taxes. These credits help to offset theregressivity of state tax systems – low-incomefamilies pay a higher share of their income instate and local taxes than higher incomefamilies, due to states’ reliance on sales taxes.Arizona should enact a refundable state earnedincome tax credit to improve the fairness of ouroverall tax system and to improve theeconomic vitality and opportunities for our low-income workforce. (See Appendix 3.)

Better Connections Needed toAvailable Support

Many low-income working families remaindisconnected from the available work supportsof health coverage, child care, and the earnedincome tax credit. And many employers do not

Did you know…• One out of 5 Arizona adult workers does not

have health insurance.

• Three out of 5 Arizona workers do not haveemployer-provided pensions.

Sources: Population Reference Bureau, analysis of 2005 Current

Population Survey, Annual Social and Economic Supplement;

Population Reference Bureau, analysis of 2003 - 2005 Current

Population Survey, Annual Social and Economic Supplement.


20

know what is available nor that they haveemployees who might meet the criteria forthese services. Direct outreach efforts to bothemployers and employees would raiseawareness about these supports and linkqualified families to the services.

When employees have access to low-costhealth insurance and can take advantage of work

support such as child care assistance, they havemore disposable family income. The benefitswould include greater stability and productivityfor the adult workers, greater consistency forchildren, and improved opportunities to lifteducation and training to meet the demands ofour 21st century economy.

CONCLUSIONRaising the level of education and training of Arizona’s low-income workers will fuel the state’s 21st

century economy. With practical action steps, we can make this transformation happen. Arizona already has a strong foundation and a workforce that possesses a strong work ethic.

Employers want to improve the skills of current and future employees. We have the both the tools andthe ability to make our economic dreams come true.


21

APPENDIX 1

Income Thresholds for Low Income FamiliesU.S. Census Bureau

Two Person Family $12,714 $25,428

Three Person Family $15,066 $30,132

Four Person Family $19,307 $38,614

Two Person Family $13,145 $26,290

Three Person Family $15,577 $31,154

Four Person Family $19,971 $39,942

Upper Annual Income Limit ofFederal Poverty Level

2005

Upper Annual Income Limit Low Income Working Family

(200% of 2005 Federal Poverty Level)

Upper Annual Income Limit ofFederal Poverty Level

2004

Upper Annual Income Limit Low Income Working Family

(200% of 2004 Federal Poverty Level)


*A family of four where both adults worked full-time (2080 hours per year) at jobs paying $9.28 per hour or less had incomes below200% of the federal poverty level in 2004Source - Arizona Department of Economic Security, 2004 Occupational Wage and Employment Estimates

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APPENDIX 2

EXAMPLES OF ARIZONA OCCUPATIONS PAYING LESS THAN $9.28* PER HOUR (AVERAGE)

Occupational Title Mean Hourly Wage*

Agricultural Equipment Operators $8.68

Bartenders $8.02

Cashiers $9.17

Child Care Workers $7.89

Cooks, Fast Food $7.65

Counter Attendants, Cafeteria, Food Concession, & Coffee Shop $7.35

Crossing Guards $7.60

Dining Room & Cafeteria Attendants & Bartender Helpers $6.44

Dishwashers $6.75

Farmworkers & Laborers, Crop, Nursery, & Greenhouse $6.85

Food Preparation Workers $8.70

Food Servers, Nonrestaurant $7.86

Helpers—Carpenters $8.71

Helpers—Roofers $8.48

Home Health Aides $9.03

Hosts & Hostesses, Restaurant, Lounge, & Coffee Shop $7.46

Hotel, Motel, & Resort Desk Clerks $8.23

Janitors & Cleaners $8.92

Laundry & Dry-Cleaning Workers $7.72

Maids & Housekeeping Cleaners $7.55

Manicurists & Pedicurists $8.33

Packers & Packagers, Hand $7.48

Personal Care & Service Workers $8.81

Physical Therapist Aides $9.08

Proofreaders & Copy Markers $7.88

Religious Workers, $9.25

Sawing Machine Setters, Operators, & Tenders, Wood $9.22

Shoe & Leather Workers & Repairers $9.26

Waiters & Waitresses $7.07


23

APPENDIX 3

WHAT A STATE EARNED INCOME TAX CREDIT FOR ARIZONA MIGHT LOOK LIKE

Why Adopt a State EITC?A State EITC provides additional relief from child poverty. In Arizona, 23% of children livein poverty.35 A refundable state EITC can lower this percentage. Nationally, the federal EITC has liftedmore than 4 million people, half of them being children, out of poverty.36

Low wages and welfare reform. Welfare rolls have declined dramatically since welfare reformlaws were passed in 1996. Many former welfare recipients are now employed in low-wage jobs. AState EITC provides support to those families who enter and remain in the workforce.

State tax changes. Enacting a state EITC ensures that low- and moderate-income working familiesshare in the benefits of tax cuts. Arizona taxpayers will receive a five percent income tax reduction in2007 and again in 2008, for a total of ten percent. The average tax reduction for taxpayers earningless than $30,000 a year will be $14 over the two-year period, with those earning between $25,000and $30,000 a year receiving an average reduction of $56 over the two-year period.

Options for a State EITCPercent of Federal Credit – Other states allow a percentage ranging from 5% to 30%.

Refundable. The majority of states with their own EITC program provide for a refundable EITC.

Qualifying Child. Most states allow workers to qualify for EITC without having to have a qualifyingchild. Only three states require deny eligibility for those not having a qualifying child.

The Cost of a State EITCFor the states currently offering a state EITC, the cost is less than 1 percent of state tax revenues each

year. The cost depends on four factors: (1) The number of families claiming the federal credit; (2) thepercentage of federal credit at which the state credit is set; (3) whether the credit is refundable or not;and (4) how many residents who receive the federal credit become aware of and claim the state credit.

Source: Center on Budget and Policy Priorities.


24

ENDNOTES1 U.S. Census Projections, http://www.census.gov/population/projections/PressTab1.xls

2 Arizona Department of Economic Security, Arizona Population Projections 2006-2055.

3 Joint Legislative Budget Committee, Arizona Monthly Fiscal Highlights, - September 2006.

4 Platform for Progress: Arizona’s Bioscience Roadmap, Technology Partnership Practice, Battelle Memorial Institute,Cleveland, Ohio, December 2002.

5 Arizona’s Workforce Shortage, Arizona Hospital and Healthcare Association, Healthcare Institute, August 2001 presentation.

6 Arizona Department of Commerce, A Workforce Needs Assessment of Arizona Construction Trade Industry, February 2005.

7 Bill Coates, “Contractors group builds its own high school to train students, “Arizona Capitol Times, July 21, 2006.

8 Working Poor Families Project, Population Reference Bureau, analysis of 2004 Current Population Survey.

9 Sheida White and Sally Dillow, “Key Concepts and Features of the 2003 National Assessment of Adult Literacy,” U.S.Department of Education, Institute of Education Sciences, December 2005, p. 3.

10 Arizona Administrative Rules and Regulations, R7-2-308. Adult Education.

11 “A First Look at the Literacy of America’s Adults in the 21st Century,” U.S. Department of Education, National Center forEducational Statistics, 2005.

12 Population Reference Bureau, analysis of 2004 American Community Survey.

13 “The Value of Arizona GED Testing,” Arizona Department of Education, www.ade.az.gov/adult-ed.

14 Arizona Department of Education, State Fiscal Year Budget Request, 9/1/06.

15 “Adult Literacy Services Report,” Arizona Department of Education, October 16, 2006.

16 Computed by Working Poor Families Project staff based on 2002 American Community Survey data.

17 “Census Bureau Data Underscore Value of College Degree,” U.S. Census Bureau, October 26, 2006.

18 Competing With Talent: High Technology Manufacturing’s Future in Greater Phoenix, Highlights of a February 2005 studycommissioned by the Maricopa Community Colleges Center for Workforce Development and Salt River Project andconducted by Battelle Memorial Institute’s Technology Partnership Practice, www.maricopa.edu/workforce/hightech.php

19 Measuring Up 2006: The State Report Card on Higher Education – Arizona, The National Center for Public Policy andHigher Education.

20 Measuring Up 2006: The State Report Card on Higher Education – Arizona, The National Center for Public Policy andHigher Education, p. 9.

21 “36th Annual Survey Report on State-Sponsored Student Financial Aid, 2004-2005 Academic Year, National Associationof State Student Grant and Aid Programs,” Table 12. Estimated Undergraduate Grant Dollars per UndergraduateEnrollment, by State: 2004-2005. Ranking and averages include Puerto Rico and Washington, D.C.

22 National Center for Public Policy and Higher Education, 2006.

23 U.S. Department of Health and Human Services, Administration for Children and Families, High Performance BonusAwards for Performance Year 2004 Work-Related Measures.

24 U.S. Department of Health and Human Services, Program Year 2004 data.

25 Ibid.

26 Mandate for Action and Progress: A Prospectus and Map to the Future, Greater Phoenix Economic Council, July 2002.

27 Governor’s Council on Workforce Policy, Qualifying Wage Rates effective 1/1/04.

28 Governor’s Council on Workforce Policy, Annual Report, 2006.

29 US Census Bureau, CPS Annual Demographic Survey, 2005.

30 Arizona Health Care Cost Containment System, Healthcare Group, Enrollment and Demographic Data as of October 7, 2006.

31 Karen Schuman and Helen Blank, “State Child Care Assistance Policies 2006: Gaps Remain, with New ChallengesAhead,” National Women’s Law Center Issue Brief, September, 2006.

32 Ibid.

33 Center on Budget and Policy Priorities EITC Toolkit, available at www.cbpp.org.

34 Arizona Office for Children, Youth and Families website, http://www.governor.state.az.us/cyf/ppp/index.html.

35 Kids Count Data Book, 2005, The Annie E. Casey Foundation.

36 Ifie Okwuje and Nicholas Johnson, A Rising Number of State Earned Income Tax Credits are Helping Working FamiliesEscape Poverty, Center on Budget and Policy Priorities, October 20, 2006.

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