There’s a major hurdle to employment that many Americans don’t even think about — and it’s holding the economy back

Daniel Lobo/Flickr

• Transportation presents a difficult and underreported challenge to low-income workers trying to find jobs and manage daily life in the US without a car.
• Regional Federal Reserve Banks such as the Philadelphia and Kansas City Feds are working to promote solutions for economic problems by bringing together the private sector, government, and community organizations.
• The struggles of Nichole Keyes, a 28-year-old single mother of three who works as a picker in a Pennsylvania warehouse, echo those of millions of Americans.

For Nichole Keyes, a 28-year-old single mother of three young children, landing a job as a warehouse picker in Scranton, Pennsylvania, proved difficult. But staying financially afloat and keeping food on the table was only half the battle. The other half was getting to work.

Keyes’ day has her waking up at 4 in the morning. At 5, she wakes her kids (ages 2, 4, and 6), and gets them ready for school. She then walks a half-hour to downtown Scranton with her three kids by her side — recently in freezing temperatures that make her littlest one shiver. That’s just to get to the first of two daycare centers. She takes a bus to get to the second one.

Keyes then rushes to her job as a warehouse picker for a supplier of horse-riding gear. Sometimes, if the bus is running late, she has to take a taxi, which sets her back financially.

“I’m a single mom of three kids recently separated from my husband,” Keyes told Business Insider. “It’s tough. I haven’t been working 40 hours. There’s not enough money to go around, so just getting transportation is a big deal.”

The challenge she faces represents a threat to viable employment that affects millions of Americans but is hardly on the radar screen of politicians or economic policymakers. A mix of urban-suburban sprawl and a well-documented lack of upkeep with US transportation infrastructure leaves many workers in precarious situations, despite a 17-year-low unemployment rate of 4.1%.

That’s now attracting increasing attention from officials at the Federal Reserve as the central bank becomes more involved in community development, one of its key but often overlooked functions.

When unemployment was peaking at 10%, massive fiscal and monetary stimuli were the obvious solutions to the problem, and they are widely credited with having prevented a second Great Depression. Now, the low official unemployment rate makes the Fed’s locally tailored interventions — which involve convening community groups, government actors, and the private sector — to find solutions to pressing social problems more important than ever.

“Patrick Harker.AP/Saquan Stimpson

The work we’re doing in Scranton is that there are all these warehouse-logistics jobs near the highway, but potential workers live in the city of Scranton, and there’s no way to get there,” Patrick Harker, president of the Philadelphia Fed, recently told Business Insider.

“We’re using that as an example we think is a generic problem among cities. Many individuals don’t have cars. Public-transport options are limited.

“We absolutely have to work hard to bring people from the sidelines into the workforce. Not only for those communities and individuals, but for the economy as a whole.”

The US economy expanded at a solid 2.6% rate in the fourth quarter of 2017. But the benefits of that growth have been highly uneven.

Back in Scranton, when Keyes’ shift ends, about 4:30, the rush begins all over again as Keyes rushes to get to the two locations where her three children are before they close at 6.

“Not to mention trying to get stuff you need for the house, and the kids are hungry, of course, so I have to cook them something to eat,” she said. “Then there are the baths and putting them to sleep. The next morning it starts all over.”

Some of the solutions available to workers like Keyes include shuttles provided by the employers, arrangements for more frequent bus traffic, and, of course, access to more affordable childcare that’s close to home. But these are to too piecemeal to make a dent in America’s poverty crisis.

Segregated, car-dependent cities

The problem of getting to work is prevalent in the lower rungs of America’s highly unequal income scale, according to Federal Reserve officials and community leaders from different parts of the country.

America’s highly segregated and car-dependent cities and counties make it difficult for many workers to reach the facilities where the jobs are. And the jobs are increasingly is the suburbs.

Research and survey from regional Fed banks found the problem to be pervasive around the US.

Sharp disparities in income and opportunity at different income levels mean vastly different job-market experiences and financial outlooks depending on where a household stands. Low workforce participation beyond what might be expected by simply demographic trends has also stained the economic recovery.

“A low unemployment rate masks marginal attachment to the labor force and the sizable part of the low- and moderate-income population that is not in the labor force,” Tammy Edwards, vice president of community development at the Federal Reserve Bank of Kansas City, told Business Insider.

“Low unemployment should induce wage growth, but it hasn’t. As the unemployment rate falls, there is greater need for low- and moderate-income individuals to be included. Addressing structural barriers that hinder their participation — things like job quality, reliable transportation, hiring practices — is critical.”

Cycle of poverty

The Fed’s community-development role is rooted in the enforcement of a 1977 statute known as the Community Reinvestment Act, which was intended to ensure banks did not exclude poorer communities from investment and credit opportunities.

But it has since evolved into broader research and outreach functions where Fed officials become the conveners of employers, community groups, and other relevant government bodies into a common discussion about specific local and regional problems.

For the Kansas City Fed, Edwards says, that means “promoting economic resiliency and mobility of low- and moderate-income individuals and underserved communities.”

According to one Philly Fed report:

“In nearly every discussion held … access to reliable transportation was discussed as a necessary component of economic mobility and quality of life. Many residents in northeastern Pennsylvania — especially lower-income or elderly residents — couldn’t access employment, were missing doctor’s appointments, couldn’t get their children to child care, and couldn’t participate in social, religious, and cultural events, all as a result of the lack of transportation. Residents from the region who did not own a car were stuck — literally and figuratively.”

Similarly, another just-released report from the Philly Fed also finds that “for residents without access to a car [in certain counties] transportation can be a formidable barrier to employment, hampering both an applicant’s ability to apply for a job and an employed resident’s ability to retain one.”