Overview
The American Opportunity Index measures how well major employers are fostering workers’ economic mobility and how they could do better. It ranks 250 large companies by how well they create economic mobility for their workers. The index uses big-data analysis of career histories, job postings, and salaries of more than 3 million workers at those firms, to study the progress of workers in jobs that are open to those without college degrees. The Index is produced by a partnership of the Burning Glass Institute, Harvard Business School’s Managing the Future of Work Project, and the Schultz Family Foundation.
The Index differs from other corporate rankings in three key ways:
- It focuses on assessing worker outcomes, not company policies and practice.
- It focuses on workers in roles open to those without college degrees.
- It allows comparison of opportunity creation across companies in different industries and with different business models (comparing outcomes for workers in similar jobs across different firms).
Three dimensions are key to opportunity creation: access, wage, and mobility. In concrete terms, workers must be able to: get on the ladder, earn enough to stay on the ladder, and move up the ladder.
The initiative ranked the top 50 companies overall. It also identified the 50 best firms across five different models of opportunity creation: the best workplaces to advance within, the best workplaces to start from, the best workplaces to stay and thrive at one company, the best workplaces to advance without a college degree, and the best workplaces at growing their own talent.
Key Conclusions
- Corporate practice has a profound impact on the careers of workers. A key finding extends beyond the ranking of top performers and points to the many significant practical benefits of taking a job at one firm versus another:
- A worker at a firm that lags in how fast it advances its employees would need to work a full year longer than a worker at a top-quintile firm before being promoted.
- After five years, workers at firms with effective practices at promoting their employees will advance almost three times further than workers at bottom-quintile companies.
- Workers in top-quintile firms in terms of wages earn almost 2.5 times more than their peers in the same roles at bottom-quintile firms. Across a range of roles, this can translate to a difference of $1.5 million or more over the course of a career.
- Employees at companies that are good at launching careers are over 60 percent more likely to land a better job when they leave for another employer than those employed at firms whose record for promoting out puts them in the bottom quintile.
- Companies that prioritize access are more likely to give opportunity to workers who need it most: Firms in the top quintile for entry-level hires are four times more likely to hire people without significant experience than companies in the bottom quintile; firms in the top quintile for removing barriers are 26 percent more likely to hire someone without a college degree.
- There is no single model of opportunity. The drivers of mobility and opportunity are uneven and depend on the structure, culture, and business model of a company. Directly competitive firms can perform very differently on the various measures created for the Index, even when their overall scores are similar. A firm’s sector influences outcomes, but it doesn’t preordain them. In the insurance industry, for example, four firms are in the top 50 overall, but six firms scored in the bottom quintile.
- The Index’s data on performance offer a set of concrete goals to which companies can aspire. While outperformance on each metric may not fit a given company’s business model, the performance of top firms on each metric provides a set of actionable benchmarks. Among them: an average time to promotion of no more than five years; five-year retention rate of at least 70 percent of a starting cohort; and wages that are at least 40 percent above the median for a given occupation.
- To generate opportunity, firms must embrace at least two of the three core dimensions of opportunity. In order to generate opportunity for its workers, a firm has to excel in at least two of the three core dimensions—access, wage, and mobility.
- Most companies are delivering well for workers in at least one way, but all have work to do. Elements of good practice are widespread, with two-thirds of companies ranking among the top 50 on at least one model. The top firms in the overall ranking—AT&T, American Express, Cisco, PG&E, and Microsoft—exhibited strengths in several of the areas mentioned. Good practice is not the exclusive provenance of a few industries: The top 50 list includes companies from 21 out of 27 sectors. Firms that lead the rankings don’t consistently appear in the top quintile of each subcategory.
This work provides a framework for measuring opportunity creation and for tracking worker mobility over time, even for companies that are not yet included in the Index. It also provides a structure for data sharing and benchmarking across peers for a wider circle of firms.
The Index reinforces that employers matter in the push to improve opportunity. Good corporate practice is key in attracting and retaining strong employees and in producing strong business results.
Partners
Burning Glass Institute, Harvard University Project on Workforce, Harvard Business School Managing the Future of Work Project, the Schultz Family Foundation
Resources
https://americanopportunityindex.com/newsroom/0
