Why The American Opportunity Index?

10/13/2022

Share on

Opportunity and upward mobility are fundamental to the American ethos. For workers in the United States, there is a broad consensus that hard work and experience should yield more responsibility and better pay. For American companies, enabling workers to climb the career ladder is vital to attracting and retaining talent that businesses need to grow and thrive. And for the U.S. economy, building better pathways of mobility is essential to competing within the global economy.

For years, however, our country has seen troubling indications that mobility is on the wane. Ninety percent of children born in 1940 would go on to earn more than their parents, while the same was true for just half of Americans born in the 1980s.

As economic inequality has risen and real wages for many Americans have fallen, the welcome return to robust employment after the shock of the COVID-19 pandemic has been overshadowed by widespread job dissatisfaction. Whether it’s called the Great Resignation, the Great Attrition, or the Great Renegotiation , there’s ample evidence that, for too many people, the basic human desire to advance is not being fulfilled. According to a recent McKinsey study, 41 percent of workers globally cited lack of opportunity for advancement as the main reason they left their jobs. It’s time for the opportunity to get ahead–and the tools needed to make that happen—to be restored for all Americans, not just a privileged few.

However, what’s often missing from our national conversation is the vital role major employers play in improving mobility. It has become increasingly clear that companies can’t succeed in either their own business goals or in fostering economic progress if they see themselves as passive recipients of whichever applicants happen to be on the job market at a particular time.

Indeed, in a study by Harvard Business School’s Project on Managing the Future of Work with Burning Glass, we found that individual companies, through their practices, play a significant role in determining whether lower-income workers are able to escape the poverty trap. Much analysis of economic advancement looks at workers’ mobility in isolation, focusing on their individual education, training, and experience, rather than within a larger context that includes the practices of the companies that employ them. That’s a significant oversight, because employers can be major enablers of opportunity and mobility.

What can major employers do to renew the promise of opportunity and upward mobility for more Americans? The American Opportunity Index: A Corporate Scorecard of Worker Advancement is a new effort to give companies and other stakeholders a set of robust tools that measure how well major employers are doing in fostering mobility and how they could do better. It is a joint project of the Burning Glass Institute, Harvard Business School’s Project on Managing the Future of Work, and the Schultz Family Foundation. The Index ranks America’s largest companies based on real-world outcomes tied to economic mobility, not inputs, using a new source of insight: big-data analysis of career histories, job postings, and salary sources to understand the opportunities major companies offer American workers.

Against a backdrop of growing concerns about inequality, our analysis is different from many others because we focus on the outcomes of workers who don’t necessarily hold college degrees. These individuals, some in low-skill occupations and some in “middle-skill” jobs that require more education and training than a high school diploma but less than a four-year college degree, are in many respects a bellwether for how likely the majority of Americans are to achieve upward mobility.

The imperative for change is strong. A survey of Fortune 500 workers conducted as part of this initiative found deep concerns about job mobility but also a willingness to stick with employers who can offer advancement. More than one-third of those surveyed agreed with the statement “I feel stuck in my job” (a percentage that jumps to more than 4 in 10 for those without a college degree), yet 84 percent agreed that they would be more likely to stay with their current company if they knew they could move up in the ranks.

Fostering talent as a means of opportunity is well-aligned with the influential 2019 Business Roundtable statement underscoring that companies have a responsibility not just to their shareholders but to stakeholders, including their employees. This report aims to provide practical guidance for companies not through lofty statements of principles, but through empirical data that offer real-world models of success and a yardstick by which to evaluate the practices that actually deliver for workers and for companies.

The inarguable conclusion is that everybody has work to do. While examples of best practice are widespread across firms and industries, nobody is earning top marks across the board. We hope that business leaders will use the Opportunity Index—including the case studies of high performers in this report—to align their practices with what drives upward mobility. Just as importantly, the Index provides companies with a framework for measuring the mobility of their workers as well as a data set for benchmarking their own performance and determining actionable goals. Focusing on the level of opportunity they create for their employees not only boosts workers, but also enables firms to optimize their business model and improve their performance. Helping companies understand how what they do matters is central to this undertaking, even more than who the winners are.