scorecardresearch Skip to main content
Perspective | Magazine

An MIT economist on how to turn bad jobs into good ones

Research shows the benefits of retraining and raising wages outweigh the costs.


This column is from the 2019 Top Places to Work issue. Visit on Thursday evening when we’ll reveal the 125 companies with the happiest employees.

Despite the historically strong job market in our state and nationally, almost a quarter of Massachusetts residents are stuck in low-wage jobs. None of us should find it acceptable that 23 percent of the state’s working adults (who were not self-employed) earned $15 an hour or less in 2018 — an amount well below the wage needed to support an adult with one child in many parts of Massachusetts. People who hold low-wage jobs suffer worse health than the rest of us — as do their children. What’s more, many low-wage jobs, especially in retail and food service, are characterized by unpredictable schedules that make it difficult for employees to manage their lives and fulfill their family responsibilities. The political anger that we read about every day in our nation is in part because too many people cannot earn enough to support their families.

Although it may seem like blaming the victim, part of the problem lies in low skill levels. In Massachusetts, 53 percent of workers who earn $15 an hour or less have no more than a high school degree. But we also know that most people can improve their skills. Effective job training programs, such as those offered by the workforce development organization JVS Boston, can make a real difference. As an example, in the past year, its 12-week pharmacy technician training program placed 45 people in better-paying jobs; graduates went from earning an average of $13 an hour before gaining new skills to $17 an hour after.


We have good evidence that well-run job training programs, ones that include significant investments in training, support services (for example, help with small unexpected expenses), and coaching for participants, are effective in moving people into better jobs and raising their earnings. High-performing programs are also characterized by strong relationships with employers.


We know how to make these work, but we face two big challenges: spreading the model to reach more workers, and providing the resources needed to pay for it. Federal funding for training has been in decline for several decades, and even in our current strong economy, states, cities, and philanthropies have to fill in the gap. Some employers, too, can take actions that help them and their workforce. Hierarchical organizations like hospitals can use training programs to create job ladders, where low-wage workers can ascend to better jobs without changing employers.

Job ladders do not work as well in less-hierarchical low-wage industries such as restaurants and retail. And many jobs that pay low wages — such as cleaning, food and beverage service, and residential construction — are not going away. We also need to think about how to make these jobs better.

Traditionally, unionization has been the most effective strategy to improve job quality — wages, benefits, and workplace fairness — at scale. Consider the family-supporting wage and strong benefits package that Unite Here Local 26 in Boston last year achieved for Marriott hotel workers. But unions have limited scope and face significant employer resistance. It is also a challenge to organize many low-wage industries, which often have workforces that are vulnerable and difficult to reach.

An important part of the answer lies in establishing and enforcing good labor market standards. A strong body of economic research shows that raising minimum wages to a reasonable range creates societal benefits that far exceed any costs of related job losses. This means Governor Charlie Baker and the Massachusetts Legislature made a good choice in 2018 when they enacted a law that will gradually raise the state’s minimum wage to $15 an hour by 2023.


However, employers in low-wage sectors will sometimes ignore minimum wages. Others misclassify employees as independent contractors, denying them a range of labor protections and benefits. A 2015 study organized by the UMass Amherst Labor Center found widespread wage theft in residential construction in Massachusetts. It is the job of the state to stop such law breaking.

Making bad jobs into good ones that pay family-supporting wages does not have to put labor and employers at odds. In some settings both the employer and its workers may become better off. One example could be the long-term care industry. In Massachusetts, tens of thousands of home health aides and certified nursing assistants work for low wages. But their employers face major labor shortages and suffer from high turnover. If these frontline workers were trained to do more and have a broader scope of practice, the health care system would save money because better-trained and empowered home health aides and nursing assistants can reduce the costs of chronic diseases and keep people out of the emergency room. The savings could then be shared with this more skilled workforce. This approach could benefit employers, employees, and patients. Such win-win-win solutions may also be possible in other industries in which high turnover hurts employers by reducing the quality of their relationships with customers.


There is no single solution to the challenge of low wages and job quality. We need a tool kit and a desire to invest in people, to set and enforce standards, and to work constructively with employers. The good news is, we know each of these tools can be effective. But do we have the social commitment and political will to deploy them?

Paul Osterman is a professor of human resources and management at the MIT Sloan School of Management and editor of the forthcoming book “Creating Good Jobs: An Industry-Based Strategy.” Send comments to