Shaping the Future of Work

Thomas A. Kochan

• Publisher: Business Expert Press
• Year: 2015
• Print ISBN: 9781631574016
• eBook ISBN: 9781631574023
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

Shaping the Future of Work lays out a comprehensive strategy for changing the course the American economy and employment system have been on for the past 30 years. The goal is to create more productive businesses that also provide good jobs and careers and by doing so build a more inclusive economy and broadly shared prosperity. This will require workers to acquire new sources of bargaining power and for business, labor, government, and educators to work together to meet the challenges and opportunities facing the next generation workforce. The book reviews what worked well for average workers, families, and the economy during the era of the post-World War II Social Contract, why that contract broke down, and how, working together, we can build a new social contract suitable to today's economy and workforce. The ideas presented here come from direct engagement with next generation workers who participated in a MIT online course devoted to the future of work and from the author's 40 years of research and active involvement with business, government, and labor leaders over how to foster innovations in workplace practices and policies.

CHAPTER 1

The Next Generation’s American Dream: What Can Be Done to Achieve It?

Work hard in school, get as much education as you can, play by the rules, and you will do well in life. That was the advice I got from my parents, and it clearly served me, and the majority of my baby boomer cohort, quite well. We were fortunate to graduate from high school, vocational school programs, or college into an economy that was growing, pushing new technological frontiers, and providing ample opportunities to pursue our interests. We were able to live the American Dream.

I wish my generation could promise our children and grandchildren that they would have similar opportunities. But if we are honest, at this moment, we cannot. A majority of Americans now feel that the country has been going in the wrong direction for at least a decade and expect that members of the next generation will have a lower standard of living than ours. (When I use the term next generation, I’m referring roughly to people who are 18 to 33 years old today—the so-called millennials—because they have come of age after the turn of the century.)

Is this outcome inevitable—the result of a global economy, advancing technology, or some other forces outside our control? I don’t think so, unless, of course, we do nothing. But reversing course will take a cross-generational effort that involves baby boomers who want one more chance to leave a more positive legacy and next-generation workforce members and leaders who want to regain control of their destiny.

This book is designed to support this type of cross-generational effort, first by starting a conversation with next-generation workers about what they want from their jobs, careers, and family lives—their dreams and aspirations. Then comes the hard part: figuring out what they and leaders of the institutions that shape work and employment opportunities need to do to help the next generation realize its goals.

Is there anything to learn from what made it possible for baby boomers to live the American Dream? I believe so, not so we can try to simply replicate these conditions but so we can understand how to adapt and update them to fit with the needs and demands of today’s economy, workforce, and environment. In fact, the basic argument running through this book is this:

The key reason for the challenges the workforces of today and tomorrow face is that the rapid pace of change in globalization, technology, and demographics has outpaced many of the public policies, business strategies, and organizational practices that were designed in an earlier era to govern work, pay, and employment relations. Closing this gap by updating these policies, strategies, and practices is essential if the next generation is to regain control of its destiny.

Preview: Policies and Business Models to Support Great Companies and Great Jobs

To whet your appetite for this argument, let me illustrate two things: first, how outdated our employment policies are; and second, how the models guiding business strategies of corporations need to change.

Most of our labor and employment legislation dates back to the New Deal of the 1930s. That flurry of action was a direct response to the Great Depression and a belated response to the shift from farming to an industrial economy. Not surprisingly, given work and family patterns at that time, the framers of this legislation and the workplace practices that followed had a model of the typical worker in mind. That worker was as a male production employee who worked full time under close managerial supervision in a large domestic firm. Conveniently, he had a wife at home to attend to family and community responsibilities.

Today, in contrast, we have an economy that is knowledge driven and values innovation. The workforce is diverse. Nearly as many women as men are working. People can expect to move across employers multiple times in their careers and in and out of full-time and part-time work so they can attend school and/or take care of family responsibilities. It is not even always clear who the employer is, given the advent of franchise, contractor, and outsourcing arrangements. Yet most of our laws and the regulations and procedures used to enforce them still reflect the earlier era. The United States is the only large industrial economy that still lacks a national policy on paid family leave. The task of updating our policies, business strategies, and workplace practices to suit our knowledge-driven economy and diverse labor force is huge, essential, and long overdue.

The example that illustrates how U.S. business models need to change comes courtesy of a courageous group of employees at Market Basket, a New England grocery chain with 71 stores and 25,000 employees. Their actions highlighted a debate that needs to be raised all across America: namely, what is the purpose of a business—only to make money for shareholders or to make money and provide good jobs for employees and good service and fair prices for customers? For six weeks in the summer of 2014, executives, store managers, clerks, truck drivers, and warehouse workers of this family-owned business stood side by side outside their stores demanding that their CEO be reinstated and the business model that made the company thrive and supported good jobs, low prices, and great customer service be maintained. Their customer base cheered them while they had to shop elsewhere at considerable inconvenience and expense. Never before have we seen such a broad coalition of workers and customers unite to save a business from short-sighted shareowners hoping to extract more cash for their pockets. But they did so at considerable risk, because the managers and supervisors who protested had no legal protections under our outmoded labor law, the Wagner Act, which dates back to 1935.

Yet they persevered. Under the combined pressure of this coalition, along with a tremendous outpouring of community support and creative use of social media to maintain solidarity, the board of directors relented and sold the company to the beloved CEO who brought back the workforce, the store’s customers, and community goodwill.

I will build on this case at various points in this book because it illustrates both the frustrations many in society experience about what is wrong in American business and a positive way these frustrations can be turned into collaborative actions that create change. The reason the Market Basket employees gained such broad and deep public support is that they were seen as fighting to preserve what I illustrate in Figure 1.1, something I and others call a “high road” business strategy and set of workplace practices that can deliver good profits to shareholders, good jobs and careers to employees, and good prices and service to customers. This is what the American public wants to see in business and at work today and in the future. So the public, customers, and employees all rallied together to keep Market Basket from sliding from the high-road to the low-road strategy. Our challenge is to make the high-road model for business strategies and employment relations the norm, not the exception to the more dominant approach that treats employees as just another cost to be minimized, tightly controlled, and disposed of when not needed.

Figure 1.1 America: Which way to compete?

So let’s get started, first by painting a quick picture of the challenges and opportunities facing young people entering today’s labor force.

A Two-Dimensional Jobs Crisis

The first decade of the twenty-first century earned the sad title of the “lost decade.” Workers of almost all occupational and income levels were the losers in two dimensions: the quantity and quality of jobs. If the second decade aspires to be known as the recovering decade, we still have a long way to go. Despite encouraging gains in 2015, the economy still has not generated enough jobs to make up for those lost in the Great Recession of 2007 to 2009 and to absorb the number of young people who have entered the labor force since then. Even worse, the quality of jobs being created is, on average, lower than those lost in the recession.

Figures 1.2 and 1.3 tell these stories. Figure 1.2 tracks how many jobs were lost during the Great Recession and how many still need to be created to keep up with the growth in the labor force since the beginning of the recession. The line that dips deepest in the chart and drags on for years before returning to the level where it started represents today’s reality. The other lines provide a comparison with recessions of earlier years. It took a record six years from the start and nearly five years after the end of the Great Recession to recover the jobs that were lost. Every prior post-recession recovery did this at a faster pace, as the lines capturing their growth rates illustrate. The good news is that 2014 and 2015 have been banner years for job creation—finally! But this is still the worst job creation record of any recession since the Great Depression of the 1930s. Let’s hope 2014–2015 are the models for the future, not 2009–2013.

Figure 1.2 Job losses in past recessions compared to the Great Recession of 2007–2009

Source: Center on Budget and Policy Priorities, Chart Book: The Legacy of the Great Recession, updated November 10, 2010, http://www.cbpp.org/cms/index.cfm?fa=view&id=3252.

How does this affect young people entering the labor market? As late as 2014, nearly 40 percent of college graduates were not finding jobs that would allow them to put the knowledge and skills they learned in college to work. They are what we call “underemployed”—they are working in low-wage retail, restaurant, or other service jobs that don’t require a college degree, don’t put their skills to work or provide opportunities for further learning and development, and likely pay wages that are hardly sufficient to meet their college debt payments, much less start a career and/or a family. To make things worse, a significant body of research indicates that the imprint of starting a career in this type of depressed labor market lasts for a long time, in some cases one’s entire working career. Not finding a career position with a decent starting wage and opportunities for continued learning and advancement imposes significant and in some cases permanent damage.

Young students in the online course provided some first-hand experiences with this. One coined a name for it: “working nomads”:

I think the concept of working is dramatically changing in my generation ([born in the] 80s and younger), and the change couldn’t [be] understood by [an] older generation. We want to work at a stable organization, but [those] jobs are vanishing so have to work as an unpaid intern or part-time worker. . . . “Working nomads” are a growing tendency of today’s working trends, I think. . . . . So, does this trend entirely change our job structure or [is it] just a temporary trend? I’m not sure, but we should focus on this tendency to understand our generation and today’s world.

Figure 1.3 tells the story of the second dimension of the jobs crisis. Look at the 30 years since about 1980, during which earnings have essentially flat-lined. Over the course of those years, the productivity of American workers grew by a healthy 80 percent, but family income grew by about only 10 percent and average hourly wages inched up only about 6 percent. The data in Table 1.1 indicate why the first decade of this century earned its “lost decade” label. Real wages (wages adjusted for increases in the cost of living) either declined or did not increase for high school or college graduates. Only those at the top of the occupational ladder with advanced degrees experienced modest wage growth.

Figure 1.3 The social contract, 1947–2013

Source: Josh Bivens, Elise Gould, Lawrence Mishel, and Heidi Shierholz, “Raising America’s Pay: Why It’s Our Central Economic and Policy Challenge,” Economic Policy Institute, June 4, 2014, http://www.epi.org/publication/raising-americas-pay/.

Table 1.1 Total changes in real earnings, 2000–2011

Source: Jonathan Haskel, Robert Z. Lawrence, Edward E. Leamer, and Matthew J. Slaughter, “Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent Facts,” Journal of Economic Perspectives 26, no. 2 (2012): 119–140.

Where did all the fruits of increased productivity go in the last 30 years? Figure 1.4 tells this well-known story. Most of the income growth went to the top 1 percent or less of the population—the Occupy movement (young people who protested in 2012 that too much of the nation’s income was concentrated in the top 1 percent of the population) had its facts right (Figure 1.4). America is now suffering from the highest level of income inequality of any time since the 1920s. Little wonder that politicians from across the political spectrum, from President Obama to Republican Senator Marco Rubio, are talking about the need to address this problem. They and many others, including a significant number of leading economists, business leaders, and even Pope Francis, worry that persistence of this divide will do more than just limit economic growth: it could also threaten the future of our democracy, just as extreme inequality has done in other countries in years past. (See Figure 1.5 for a sample of voices on this issue).

Figure 1.4 Annual income share of the top 1 percent of the U.S. population

Source: Emmanuel Saez, “Striking It Richer: The Evolution of Top Incomes in the United States,” updated with 2009 and 2010 estimates, March 2, 2012, http://elsa.berkeley.edu/~saez/saez-UStopincomes-2010.pdf.

Figure 1.5 Comments on income ine...

Table of contents

• Cover
• Half Title Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Preface
• Acknowledgments
• Prologue
• Chapter 1 The Next Generation’s American Dream: What Can Be Done to Achieve It?
• Chapter 2 What Was the Postwar Social Contract, Where Did It Come From, and What Made It Work for Three Decades?
• Chapter 3 What Changed in the 1980s and After?
• Chapter 4 Out of Crisis, Innovation: Seedbeds for the Future of Work
• Chapter 5 A New Age of Innovation?
• Chapter 6 A Call to Action: Building the Next-Generation Social Contract
• Index