We need new ways to get workers to jobs. MPC has partnered with Boston Consulting Group to develop a tool that can help employers quantify the cost of transportation-related employee turnover.
Calls to create US manufacturing jobs are frequent and urgent. But what’s not so frequent, not so urgent? Means of accessing those jobs.
That’s a problem we’ve uncovered in looking at manufacturing jobs in the Chicago area. Most of these jobs are located in suburbs, where public transportation is insufficient. The consequence is employee turnover, and that’s a negative for both employers and employees. Understanding and quantifying the problem is a useful first step. It shows that the transportation challenge is a costly one. And not just for Chicago, site of our quantification pilot. This is relevant for cities and metropolitan areas worldwide, and we have some ideas and an easy new tool to help employers analyze their situation.
Spotlight on Chicago manufacturing jobs
The City of Chicago offers a dense transit network capable of supporting many worker commutes. But only a sixth of the existing manufacturing jobs in Chicago’s six-county area are located in the City of Chicago; most of these jobs are located in the Chicago suburbs, which are not very accessible by transit. Often, manufacturing workers simply cannot get to the job.
Car ownership is low and transit options may be limited or slow, or they may not serve relevant employment destinations at all. To compound the issue, four of the five largest employment centers in the region are poorly served by rapid transit, and major employment centers rarely overlap with economically disconnected populations.
To better understand the relationship between transportation and employment, several groups partnered: the Metropolitan Planning Council (MPC), the University of Illinois Chicago, and Equiticity, funded by the Chicago Community Trust. Over the past three months, MPC and its partners have conducted focus groups with job seekers working with American Job Centers in Chicago, and with coaches who provide support and job placement, to explore the relationship between transportation and employment. When we asked the 79 focus group participants if transportation challenges made them miss out on job opportunities, three-quarters said yes. The same proportion said that transportation was a barrier to keeping a job. Half of respondents said they didn’t own a car.
We asked focus group participants if transportation challenges made them miss out on job opportunities. Three-quarters said yes.
This is not a new problem. The Chicago Metropolitan Agency for Planning documented in its regional plan ON TO 2050 that transportation infrastructure, access to employment, and socioeconomic factors all affect residents’ daily commuting patterns. Recommendations from the ON TO 2050 plan include improving options for employment, education and training, and services opportunities, especially in disinvested areas
MPC’s Our Equitable Future report identifies a key solution for barriers to employment access: make jobs accessible to low-income residents, many of whom struggle to get to and from their jobs.
To support economic mobility in the Chicago region, we need new, flexible transportation services that connect underserved populations with hubs, especially in suburban areas. The idea proposed in Our Equitable Future is to pilot new transit services in the Chicago region to improve connectivity between job hubs and low-income communities with low employment. Now that technology has evolved substantially, how can we create new, customized options for people who don’t own a car?
MPC has been collaborating with Boston Consulting Group’s (BCG) Chicago team, which has provided substantial pro bono services this year to dissect the problem and configure potential solutions. One component is helping employers understand how big the transportation problem really is. It used to be that employers offered the job and expected workers to figure out the transportation—in fact, most employers still do. But when transportation is a key contributor to an unreliable workforce and high levels of turnover, employers may want to think more about how they can be part of the solution. They should be contemplating key questions: What is the business cost of employee turnover? Why do people leave good jobs? What can be done to stabilize employment to the benefit of workers and employers?
BCG's new tool quantifies the cost of employee turnover
A tool for quantifying the cost of turnover
BCG has developed a helpful tool for employers in all industries to quantify the cost of employee turnover due to transportation problems. The simple spreadsheet tool asks employers to fill in a few inputs—like industry, average employee salaries, cost of turnover per employee, and annual turnover rate—to generate an annual cost to the employer based on transportation challenges. The tool also includes national averages and can be used even if employers don’t have all these statistics.
For instance, a typical distribution center like the ones that dot our region can employee as many as 400 people. The average annual turnover rate in that industry is 41%, and studies have found that 17% of attrition is due to transportation issues. That’s about 28 people leaving per year due to a lack of reliable transportation. Using industry averages, the cost to fill that mobility gap for those 28 people could actually be $97,000 less than the cost of hiring and training 28 new employees.
Why don’t we prioritize transportation solutions?
Employees value transportation benefits, and they help retain workers. The next question: If investments in new forms of transportation solutions could have a meaningful impact on employee retention, reduce turnover costs, and improve the lives of workers, why don’t we prioritize these measures?
Employers are understandably wary of taking on any additional costs. But if they could ultimately save money and resources, and make meaningful improvements to the lives of our most vulnerable residents who just want a steady job, it’s worth it.
Employers are encouraged to take a look at the tool and plug in their own numbers to see how they can improve job retention rates. Employers that are interested in joining this conversation and potentially participating in a pilot transportation project should contact Audrey Wennink, MPC Director of Transportation, at email@example.com.