Human Truth Podcast | Ep. 07 The Metric That Could Predict Your Lifetime Earnings
On the Human Truth Podcast, we discuss the American Opportunity Index, that ranks companies on worker advancement opportunities. Listen here.
Welcome to The Human Truth Podcast where, each episode, we take a closer look at a popular workforce statistic ripped from the headlines and ask: Where’d it come from? Is it true? And why should we care?
In this episode, we examine this stat from the American Opportunity Index:
Workers at firms that rank higher on the American Opportunity Index earn almost 2.5x more than those in similar roles at low-ranking firms, which can lead to a difference of $1.5 million or more over the course of their career.
Host Ian Cook is joined by Matt Sigelman, author of the index and president of The Burning Glass Institute, to discuss what makes certain companies rank higher in terms of worker advancement, and what those consequences mean for employees over the course of their careers.
On the podcast this episode:
Host, Ian Cook is Visier’s VP of People Analytics
Guest, Matt Sigelman, president of The Burning Glass Institute
Further reading from the episode:
Want to get in touch? Email us at firstname.lastname@example.org
Producer: It’s the Human Truth Podcast, where each episode we examine workforce statistic ripped from the headlines and ask where did it come from? Is it accurate and should we care? This week we’re looking into a stat from the American Opportunity Index that found that workers at firms that rank higher on the American Opportunity Index earn almost 2.5 times more than those in similar roles at low ranking firms. Which can lead to a difference of $1.5 million or more over the course of their career. For that, let’s get into it with host Ian Cook and special guest, Matt Sigelman, President of the Burning Glass Institute.
Ian Cook: Hi, I am Ian Cook and I’m the host of the Human Truth Podcast. And today, we are talking about why the company you can work for can have such a significant impact on your career growth and your overall net earnings over the span of your career. And to discuss this topic, I’m really pleased to be joined by Matt Sigelman. He is the president of the Burning Glass Institute, one of the brains and authors behind the study we’re talking about. So, thank you for joining us today and before we dive into the content, we’d love to get a little bit of a introduction to you and tell us a bit more about the Burning Glass Institute and the work it focuses on.
Matt Sigelman: So the Burning Glass Institute was launched at the start of this year to advance data driven research and practice at the intersection of the future of work, the future of workers and the future of learning. And here’s why we’ve come together to do that work because we see this is a time on the one hand, really awakening of awareness about questions of economic mobility of workers, awakening of awareness as companies struggle to find talent of the role that they play. And an awakening awareness among communities of the need to be able to pull people up as opposed to just pull people in.
Ian Cook: Fantastic. I love the way you described that, Matt. I think you could put it better like it is. We’re at the dawning of a different age of work and the dynamics that go on within a community, within a firm for people themselves are fundamentally different and understanding that is huge. And what leads you to this work? You clearly have a passion for it by the way you articulated it, but what led you to this area of study?
Matt Sigelman: So I’m an accidental economist. I spent the last 20 years of my career building a company that’s now called Lightcast. I’m extremely proud of what like Lightcast does today. We had the breakthrough innovation that if you wanted to be able to understand the world of work that you could get to a more timely and I think more importantly, more granular view of the labor market through a big data approach than through traditional national surveys. And that’s changed the field in a lot of ways. I’m proud of that work and proud to be continuing it in a fully independent non-profit context.
Ian Cook: Yeah, fantastic. So let’s get into this American Opportunity Index. Can you describe what we’re tracking, what you’re actually describing when you talk about opportunity and measuring it in the way that you are?
Matt Sigelman: So in a lot of ways we think about this as a yard stick for the American Dream, a yardstick for the progress that workers are making. It’s a great question when you ask, what is the opportunity? It sounds a kind of deep philosophy and at some levels it is. But of course, as economists, we try to figure out how to measure something which is deeply philosophical. We break opportunity down into three core dimensions. The access that people have to opportunity, so can you get on the ladder? Mobility, can you move up the ladder? And pay, can you afford to stay on the ladder? And then, we dimensionalize each of those categories further.
Ian Cook: That’s again, a nice succinct description. As somebody with a philosophy background, I love the crisp way to conceptualize opportunity is about and a person’s how much they can access work, move up through work, be rewarded for the work they’ve done. So growing your career and I think many people wouldn’t recognize how much chance plays a part in how somebody’s career progresses. Again, personal stories aside, but it sounds like you’re trying to take that past chance and actually understand the mechanics.
Matt Sigelman: And I would say by the way, it’s chances because one of the things that we’ve learned both from some prior research but certainly came through loud and clear in this work is that there are steps that we all make all along the arc of our careers that have significant bearing in terms of whether and how we move up. We’re kind of used to thinking about where you go to university as the crucible of your career. And the reality is that every time you pick a job, there is a significant, it’s an inflection point. It’s a point that will reshape the arc of your career in significant ways. And unfortunately, most of us don’t have a lot of visibility into exactly how that’s going to play out.
Ian Cook: No, I can almost hear all of the Gen Ys and Gen Zs reaching for their computers to download the research. Now, they’re like, “What do I need to do next?” So I mean, first of all, what were you expecting to find when you ventured into this data? Because you come with a huge background in the whole labor market space like 20 years as you say, studying, understanding, cataloging, using the data. So what was your starting assumptions around opportunity and how it shapes people’s lives?
Matt Sigelman: So, we had done some prior research looking at first youth who are often called opportunity youth. So these are youth who are not in a job, not in school, often considered some of the people who are at the highest risk parts of the job market. And we track them over the course of five years, found that actually about half of them over five years had moved up. So the glass was half full, like to see that be more. Similarly, we’d done some work together with our co-author in this project Joe Fuller, at the Harvard Business School. Where we found that of people who are in so-called poverty trap jobs that are in fact actually about 4 and 10 of them had progressed over the course of five years and out of poverty. So on the one hand, those are hopeful statistics and I think they bear testament to the fact that people do rise.
At the same time, one of the things that we also could see from some of that past research is that when you look at who rises, we could see a range of factors that where you start matters, what kind of sector you work in matters. But it turned out that where you work, what company you work for matters at least as much. You could have two workers who are in the exact same role at directly competing companies who have very different probabilities of moving up. And so, what we really want to understand is that and to be able to put a number to it.
Ian Cook: Interesting. So that of leads me very nicely elegantly to the next question is, so what makes the characteristics of a company because you rank the index is like these are companies who rank high on the index because they support opportunity mobility. These are companies that rank low on the index because of the opposite. As you said, sort two people starting in those companies end up somewhere completely different. So what are the characteristics of a high mobility or a high opportunity company?
Matt Sigelman: So we’re still learning that. So one of the things I want to emphasize here is the Opportunity Index itself is simply a yard stick. One of the things that’s different about this lens that we’ve held up to worker mobility from a bunch of other company rankings that we’ve all seen is that this is based on actual worker experience. So as we were first designing this, we spoke to a lot of people and said, “Hey, why don’t you measure whether employers have in place various kinds of policies and practices?” And we very steadfastly decided, we pushed back on that and said we’re not going to, not because we don’t think policies and practices are important, actually we think they’re deeply important. But because we want to understand which ones, and the only way you can do that is if you can just say simply what actually bears out where? What are the outcomes? So we studied, we followed the careers of 3 million workers at the Fortune 250, America’s 250 largest companies and looked at what happened to them over the course of five years from 2017 to 2021.
But to your question, here’s what we’ve been learning since we’ve pulled it all together and come up with these sets of lists and we can talk more about that. But one of the things that we’ve been doing since is we’ve been profiling the companies that have come out at the top of the various rankings that we compiled on this basis. And I think there’s a couple of things that stand out for me at this point, notwithstanding that further study is certainly needed. One of the things that’s really very clear is that these are companies who are all investing significantly in training and skills development for their workers. That sounds like an obvious practice but you’ve got an equally long and a gus career in this space.
Matt Sigelman: And so, I know I don’t need to tell you, but actually for a lot of companies, skill training is really about… Or training rather and a lot of companies spend a lot of money on training, but a lot of it is compliance training or it’s systems training. Hey, we’re an airline and we’re rolling out a new reservation system and everyone has to learn it. But the notion, or maybe more recently, there’s a vogue around making sure that workers of access to learning resources and that’s certainly important, but it’s mostly engineered around engagement and retention. We want our employer employees to be engaged, we want them to stay. If they’re learning things, they may stay longer. But that notion that you actually believe that your employees can become more productive, you believe your employees can step into other jobs, is a very different mindset.
Ian Cook: It is. I mean, you raise lots of wonderful questions Matt. And it has always surprised me from where I sit looking at again, organizations that if you look at the entities that contribute to an organization, people are actually the only one that often increases in value. We learn, we grow, we build experience, we build network, we build relationship. Who I was as the 18 year old stepping into work compared to who I am now is light years of difference. And yet, organizations often treat people as a box to be shuffled and fixed and monitored. And again, that mindset shift is something the Human Truth podcast is all about shifting. So appreciate what you’re sharing.
Let’s go to highlight a stat from the report. And again, maybe we can use that as a way to dig in, but we raised it at the top of the show that workers who go to or start in the same job with a high ranking company, they’ll earn two and a half times more. So after the five years, they’re earning two and a half times more, which over their career can be $1.5 million in earnings more than somebody who joins a low ranking company. I mean, this is a pretty significant difference in terms of those companies that you say put money, time, energy, intent behind growing people versus those that leave it to chance. Was the size of that gap surprising? What did you take from that?
Matt Sigelman: I mean, I have to say we were fairly gobsmacked by the breadth of that gap. And I want to point out, there’s things that we were not able to control for here. For example, geography obviously plays a role in how much people earn, but not two and a half times. And just to put a real live example on this, if you looked at administrative assistance in companies that were in the top quintile of wage, those admins were making I think about 83 or $84,000 a year. Admins at bottom quintile companies were making $38,000 a year. So these are real roles and I want to use that example because I actually think that we probably can all relate to it too. I think we’ve all been at places where the admins probably are making in the ’80s and we’ve probably all been at places where admins are making in the ’30s.
And there are a couple of things at play here. Some I think relate to company culture and to how companies both assess talent and onboard talent and progress talent within roles. Some of it has to do as well with the kinds of overall pay culture that companies have. One of the things that we saw that was very interesting in the data as we dug in on this question. Because again, when you see a spread that big, I’m the guy who’s asking, “Hey, guys, is this actually right?” And one of the things that we found in the data here is that companies tend to be either high wage cultures or low wage cultures. And if you’re a booming tech company and everyone’s making $150,000 a year, $200,000 a year, it’s hard to say, “Hey, we’re going to pay our admin $38,000.” And similarly, the kinds of companies that have developed a rigorous cost culture and they’re paying everybody poorly.
Ian Cook: Yes, I know. Again, I think there’s probably lots more we could unpack in terms of how those things work out. One of the things I just wanted to revisit, because I think it’s super insightful for the audience. I mean, you are deriving these outcomes from the data and you talked about following the careers of 3 million people associated with the 250 top companies. How is it that you’re doing that? Because again, you talked about big data at the top of the show. I think you and I understand that, but if you wouldn’t mind just unpacking how are you sourcing that data? How are you following people through in those past to really show the strength of the findings?
Matt Sigelman: So the data comes from Lightcast, in terms of looking at people’s career histories and Glassdoor, in terms of looking at people’s compensation histories. I think both of these, so the Lightcast data is based upon things like resumes, people’s online career histories, career profiles, some sites like LinkedIn and so forth, which give us a record of how real people are progressing. Now, I want to emphasize to your question, this is something which wasn’t possible until the past 5, 10 years. You didn’t have these kinds of data sources with the kind of robustness that they have today. And so, that’s why in the past, if you wanted to understand a question like this, at best you would have to do a survey. And surveys as you know, are very narrow. If you do a 500 worker survey, that’s a lot. And think about looking at 250 companies based on 500 workers, it’s not going to tell you very much.
Ian Cook: Oh, totally.
Matt Sigelman: Now, it’s relevant, it’s worth pointing out that these kinds of data sets continue to evolve. They continue to gain robustness over time. So there are parts of the employment spectrum that tend to be underrepresented. As you can imagine, people working in a warehouse are less likely to have an online career. But that was the interesting thing that surprised us. Actually, when we looked at it, there were a lot more people across the spectrum who were online today than even maybe a year or two ago. So the warehouse example is a good one. We found career histories from I think something like 75,000 people working in Amazon warehouses. Now, there’s a million of them, I think 1.2 million, but 75,000…
Ian Cook: 75,000 is a decent sample.
Matt Sigelman: Exactly.
Ian Cook: But we’ll go to break in a second, Matt, but I mean, we’re just going to double down on that question just to give people that understanding. We can now sense, interpret, use what we know about the labor market in ways that, as you say, weren’t possible 2, 3, 5 years ago. And I think that’s super exciting. We’re going to go to break now, but when we come back, we’ll dig into what does some of this mean for individual choices? What does some of this mean if you’re running a company and by the choices you can make, so hang with us folks, we’ll be back.
Producer: Successful companies measure what matters. Employees thrive when they feel valued and business benefit as a result. Get the insights you need to succeed with the Getting Started with People Analytics Guide to learn to basics. Visit visier.com to download today.
Ian Cook: And so, we’re back folks. And this is Ian Cook and a host of the Human True Podcast with Visier. And I’ve been chatted with Matt Sigelman and just getting blown away by the insight we’ve got. Matt’s the president of the Burning Glass Institute and the Burning Glass Institute has launched the American Opportunity Index, a set of data looking at which firms help people grow their careers, help move themselves forward. Lots of useful insight, really nice. I love the way you structured the website, Matt, just turning it into somewhat of an infographic. So the exploration of all that massive amount of data is kind of communicated really clearly. I’m going to start, if you’re a company and you’re interested by this thought of helping my people grow as a part of what I want to do, how would you recommend a company look at the Opportunity Index, use your findings to think about applying to their own business?
Matt Sigelman: So first of all, Ian, I think there’s the old adage that ‘what gets measured gets managed,’ And it’s as true as ever.
Ian Cook: It’s so true.
Matt Sigelman: One of the things that really struck us as we were started out on this project, we spoke to a number of companies, CHROs, in some cases, people who are driving the people analytics functions. And one of the things that we heard repeatedly was that as much as companies, I think most companies are very committed to the wellbeing of their workers. They recognize that employees are a critical stakeholder in the success of their businesses. But their long term mobility is not something that companies really had on the map. And of the relatively few who were thinking about it, they were struggling to measure it. So I think the first thing I would say and answer your question is this is something you need to measure. And I think part of what we’ve tried to do as our contribution here is to make the methodology transparent. There’s nine sub models and a bunch of metrics, which I won’t geek out on unless you want me to.
Ian Cook: Well, that could be part two.
Matt Sigelman: But I think part of the first thing I would say to companies is you’ve got to start to measure this. That means establishing a set of metrics. But also, and I know this is something I’m sure we see eye to eye on, I think it’s also about making sure that those metrics become routinized. Just having a one time report that somebody produces for you is good at opening people’s eyes, but nothing changes unless there’s a workflow built around it.
Ian Cook: Absolutely.
Matt Sigelman: And I think that’s one of the places where I think there’s a real opportunity to take metrics like this and a whole host of others. I know Visier’s been leading in this for sure.
Ian Cook: I mean, you’ll appreciate how our chief people officer Paul Rubenstein talks about this. He has four Cs, so you need context, curation, cadence and conversation so that he brings that monthly look. And again, internal trajectory is something that’s… we’re not in the Fortune 250 yet. We’re on our way there, but we’re not there yet. But it’s something that’s an ongoing conversation inside Visier, where a lot of people will join us as interns, we’re their first coding job. We look to bring them back, we look to help grow their careers, often align to the kinds of findings here. So as a company, it’s a structure measurement. As a company, it’s a way to understand where you are, what you might do to move forward. So what if you’re an employee, how would you recommend, again, those individuals looking to navigate their career, what’s in the index that’s helpful for them?
Matt Sigelman: I think for workers, this is really about being able to make better informed decisions. One of the reasons why we not only created an overall index, but we created five archetypes of mobility, which sort of reflect different ways that companies unlock opportunities for their workers is because it’s not one size fits all. Different people value different things. So let me give an example, one of the measures that we created was sort of best places for career stability. There’s a lot of people out there and we actually surveyed 500 workers to find out how we should weigh the various factors in the model and the like.
And one of the things we heard repeatedly was actually mobility’s. Not all that necessarily important to everyone. I want to be able to enjoy my work, enjoy the people I’m working with. I want to feel respected, I want to get well paid and I want to go home. And being able to have an indicator that helps those people figure out what other companies have, given that set of opportunities is important. There’s a whole set of other people who want to be able to rise and helping them see that is equally important.
Ian Cook: But I think this is a really important conversation, Matt, because so often, the focus is on just the move forward at all costs. And my perception is that that is a not significant but small portion of the overall working population that has that really flat out drive to make their career everything. Whereas, there’s larger populations who are skin substantial contributors to a business where it’s like, you know what? I want to do, what I’m good at. And I want to do it well and I want to do other things. So any sense of that bell curve from your studies in terms of who are the fast movers, who are the stable, middle, etc?
Matt Sigelman: I think it depends a lot by role and frankly by company. People do self-select toward places that have the kind of level of mobility that fits them. I think there’s a similar dynamic around pay, by the way. I think there’s a lot of assumption that a lot of companies have that all workers care about is how much they get paid and they’re so darn fickle and they’ll move for a penny an hour or whatever. And I think the reality we heard was that pay is important to workers for sure. But workers are smart, they’re not only managing how much I make today, but how much will I make in the future? And so, pay was really important to workers, but so was having a clear path to promotion, having the training available to help you get there.
Ian Cook: And given our current context of what’s happening in tech, I think stability may be one of those weighted factors that is increasing in people’s judgment about where they might move to. So I’ve seen those factors move around a lot through the ebbs and flows of our economic cycle. So I think that’s a great way to describe it. So again, how would an employee use the index to make certain choices for themselves?
Matt Sigelman: So I think this gives them a view, first of all, to how to align their own priorities with the kind of work environments that are going to fit them. It also helps them to figure out in general, how to prioritize some of the employment decisions they’re making. Again, one of the things I worry about so much is that lack of transparency today.
Ian Cook: Yeah. Because one of the things that struck me from looking at the index is like, “Oh, there’s a whole bunch of interview questions that as an employee I would start,” how would this play out? How would growth, can you give me examples of, there’s a whole bunch of very specific questions that come out from your structure that an employee could say, what kind of business are you in terms of opportunity for the people who work there?
Matt Sigelman: Well, one of the things, by the way, on that note, which is coming out of some further research that we’re in the midst of right now, is that, and why asking that? I love that idea of interviewing the employer, particularly right now when we’re in a seller’s market rather. But one of the reasons why that’s so important, and we’re finding that even within companies, there are often significant disparities. There are sort of talent pools where people have high mobility within a company in talent pools where people don’t. Sometimes that’s based on whether you’re a professional or whether you’re a nonprofessional. Sometimes, it seems almost kind of arbitrary whether logistics people move up, but the transportation people don’t. And for workers, unless you ask those questions, it’s not going to be obvious. And frankly, for employers who care about worker experience across the board, unless you’re digging in at a great enough level of granularity, you’re not going to see that those kinds of disparities exist and where they do.
Ian Cook: Yes. I mean, you can raise two interesting points. One thing, again, I really appreciate about the research, the way it’s been done is it provides a template or a blueprint by which this conversation can be had. We can structure the components, we can understand the effects, we can communicate using common languages. It’s one of the things I appreciate about at measurement, it allows you to define and understand and then share and then act on a common basis. But also, we can apply that to the market as you have done from the Burning Glass Institute. But you could also apply that inside your own business and say, okay, if you want a fast career, jump into this population. If you want a stable career, again, I don’t know if it’s true, but my perception is accounting is often one of those very steady growth kind of places. High finance potentially not, but accounting is. Whereas, other groups like software development or sales or others, they can have a very different trajectory. So I don’t know if you got down to that granularly, but that sounds like there’s another layer of insight there.
Matt Sigelman: So the whole index is developed at an occupational level, which is to say, because otherwise there’s not going to be a lot of comparability between firms in different sectors. So in order to be able to compare a tech company with a transportation company, with a retailer, we look at the opportunity creation for each occupation and stack them up. So the data is right there and very much there. And I think there’s an opportunity as well to flip this around for leaders inside companies to not only sort of say, okay, how do we make sure the shoe fits different employee groups. But also to say, how would I create a mobility atlas of my company? Where are my workers moving up? Where are they getting stuck? That’s important. And you talked about this before, Ian, about this idea of increasing the value of my talent.
We use this term human capital all the time, and we don’t think about it very much. But behind the idea is the idea that the people who work for you are an asset every bit as valuable and probably more so than the technology and machines that you deploy in making it whatever it is that you do. And so, if that’s the case, just like with any other asset, you want that asset base to become more valuable. When people rise, they’re becoming more valuable, they’re being becoming more productive, they’re doing higher value work. That’s really critical for your company. So getting to a detailed awareness of that mobility landscape of your company is actually not just a good thing to do from a social good perspective, but it’s a good thing to do from a business perspective.
Ian Cook: It’s a win-win. We could keep riffing on this for over long time, Matt, but we’re going to lead us to a landing soon. Clearly, the team put a ton of effort into building the index. What are the plans going forward? We’ve talked a little about how it can be applied for employees and companies, but how do you see evolving the work of the opportunity index over time?
Matt Sigelman: So I think first of all, there’s a bunch of additional ways in which we look to continue to improve this. So for example, we’re working right now to add in data on disparities on the basis of race, ethnicity, and gender. We’re looking at pay progression metrics that we can build into this. But I think there’s as well, a set of broader questions that this becomes a tool for answering even outside of the scope of individual firms. So the methodology that we’re talking about here, the sets of metrics for how do you measure opportunity creation, how do you measure people’s mobility can be applied to communities. They can apply to understanding what are the jobs, the occupations that bend the arc for people? What are the skills in those jobs that give people a boost, range of questions like that, which we’re really keen to lean in on.
Ian Cook: Yeah, so it really sounds like you’ve laid a foundation, you’ve got some substantive, meaningful findings and it’s just going to get richer, deeper, and smarter from here.
Matt Sigelman: I hope so.
Ian Cook: I’m going to wrap it up there. Thank you, Matt. Thanks for the folks for listening to the Human Truth podcast. Today, we’re joined by Matt Sigelman, from the Burning Glass Institute. They have created a thing called the American Opportunity Index. You can search it using that language, it will come up in your search string. It is well worth exploring, whether you’re an employer looking to elevate the work experience of your people. Whether you’re an employee looking to understand how do I get on the conveyor belt that’s going to work best for me. This piece of research has insight for you. So thank you, Matt and team, A, for creating it in the first place, I think. And B, for coming in and sharing all your insights about how it works and why it’s important. I find it fascinating, I hope our audience has too. So I’m your host, I’m Ian Cook, and I’m going to be back next time discussing more workforce statistics. So thanks again, all the best.
Producer: Thanks for joining this episode on the Human Truth Podcast presented by Visier. More links and information presented on today’s show are at visier.com/podcast. Subscribe wherever you listen to podcast. The Human Truth Podcast is brought to you by Visier, the global leader and people analytics whose vision is to review the human truth that helps businesses and employees win together. Today’s episode was produced by Grace Sheppard, with technical production by Gabriel Kava. Sarah Gonzales is our head of content, and Ian Cook is our host. See you next time. And until then, visit us at visier.com/podcast.