What Ails the U.S. Labor Market: Too Many Bad Jobs
Margy Waller, Executive DirectorWriting in the New York Times Week in Review, Louis Uchitelle reviews the recent decline in the floor for wages in the U.S. labor market.
The $20 hourly wage, introduced on a huge scale in the middle of the last century, allowed masses of Americans with no more than a high school education to rise to the middle class. It was a marker, of sorts. And it is on its way to extinction.
Americans greeted the loss with anger and protest when it first began to happen in big numbers in the late 1970s, particularly in the steel industry in Western Pennsylvania. But as layoffs persisted, in Pennsylvania and across the country, through the ’80s and ’90s and right up to today, the protests subsided and acquiescence set in.
Hourly workers had come a long way from the days when employers and unions negotiated a way for them to earn the prizes of the middle class — houses, cars, college educations for their children, comfortable retirements. Even now a residual of that golden age remains, notably in the auto industry. But here, too, wages are falling below the $20-an-hour threshold — $41,600 annually — that many experts consider the minimum income necessary to put a family of four into the middle class.
The nation’s political leaders — Democrats and Republicans alike — have argued that education and training are a route back to middle-class wages for those who have fallen out. But the demand isn’t sufficient to absorb all the workers that the leaders would educate.
…. The trend in the hourly work force is striking. Take only the peak years in each business cycle, starting in 1979. The proportion earning at least $20 an hour declined from 23 percent that year, to 20 percent in 1980, to 18 percent in 1989, and to 16 percent in 2000. Manufacturing was hit the hardest.
Uchitelle doesn’t take the data to the next point, which is a focus of our research at The Mobility Agenda: the high proportion of the U.S. labor market made up of low-wage jobs. Our policy leaders haven’t focused nearly enough on the fact that the U.S. isn't just losing better jobs, growth in low-wage jobs is changing our economy in ways that affect all of us. Our economy is heavily dependent on individual spending. When workers don’t earn enough to take care of daily expenses like housing, transportation, and food – spending and consumption decline. And that hurts the economy for all of us. As is apparent today.
Unfortunately, over 40 million jobs in the United States—about one in three—pay low wages of $11.11 or less, often providing no employment benefits and little flexibility. Even though the United States is among the wealthiest nations in the world, employers pay these workers less than workers who hold similar jobs elsewhere.
The last decade has seen some progress on advancing a number of well-known policies to improve job quality by boosting the minimum wage and expanding publicly subsidized employment benefits, like child care and wage subsidies such as the Earned Income Tax Credit. Likewise, we support efforts to address education and advancement strategies that prepare workers for skilled jobs.
Still, when one worker advances out of a low-wage job and another worker takes it, the job does not change.
In contrast to the manufacturing jobs, many of these jobs are in growth sectors like retail and hospitality, jobs that will not be off-shored because they are geographically specific.
At The Mobility Agenda, we’ve surveyed key contacts across the nation for new ideas and strategies to strengthen the labor market by improving these jobs. State and local stakeholders are experimenting with a host of new initiatives to improve low-wage jobs. These innovative ideas are less well known and are not commonly incorporated into the agenda of advocates and academics. For much more information about these new strategies, see our web based resources on this research, starting here.
Here's an update from The Mobility Agenda's Senior Research Associate Sarah Sattelmeyer and Executive Director Margy Waller, coauthors of a forthcoming report on work-life policies for the United States.
Is Representative Issa overlooking some important changes in our economy and labor market:
The American workplace, she said, has not kept pace with the changing needs of families, especially those that "no longer have a stay-at-home parent to provide care for a new child."
Outdated family-leave policies, she said, "are a talent drain on the government -- they're an incentive for skilled people to look elsewhere for work at the very time when our government needs them most."
The Mobility Agenda’s forthcoming report on work-life policy proposals to strengthen the economy and our labor market addresses these issues. Watch for it soon!
Here's an update from The Mobility Agenda's Research Assistant, Jonny Finity.
The California legislature appears poised to create a new Universal Voluntary Account initiative. If approved, employees and employers alike in the nation’s most populous state will definitely have something to cheer about. The proposed bill would allow thousands of workers without employer-sponsored retirement investment plans or options to invest for retirement using the state-run California Public Employees’ Retirement System (CalPERS).
When it comes to retirement benefits, employees of small businesses have traditionally been left out; small business owners are often unable to meet the high costs of managing a company pension system. According to director Dean Baker of the Center for Economic and Policy Research (CEPR), a state-sponsored universal retirement account initiative would virtually eliminate small-holder risk and administrative costs associated with employer-sponsored plans, allowing small businesses to compete in the global marketplace. The increase in operational fees incurred by the investing agency (such as CalPERS) would be covered by new users through account holder fees or investment interest and would not have to be paid for by the state.
Employees without access to employer-sponsored retirement plans, forced to act independently on financial investment matters, often act too late; that affects all of us. In a 2006 paper Baker points out that in 2004 “53 percent of near retirement age workers (ages 45-54) had accumulated less than $48,000 in financial assets.” That is a dismal number at a time when the New York Post warns that soon-to-be New York retirees will require about $548,000 in order to retire. Social Security will likely be going strong for another 40 years or so, according to Baker, but additional sources of retirement income are still necessary.
Fifty years ago, many retirees had a defined-benefit pension to rely on in addition to their Social Security income; today defined-benefit pensions have all but dried up (The “gold watch” pension is an example; a defined-benefit pension is any retirement package where the benefits are defined). Universal retirement accounts bridge this gap; they have become necessary to bring our jobs and our economy up to date and in line with contemporary needs like flexibility and increased mobility. Workers whose employers do not offer investment accounts will become retirees without savings, who can place a great strain on the economy. It is better for all of us that everyone has access to – and uses – investment opportunities available. And since the proposed California bill would also allow employers to match employee contributions, maximizing investment leverage, the likelihood of economic security in retirement will only increase under this initiative.
One of the major job market changes in the last several decades has been in workforce mobility. Older generations expected the job chosen in their 20’s to be a lifetime career – usually with the same company! Today’s jobs are less rigid, and workers change jobs much more frequently. As defined-benefit pensions go the way of lifetime employment, investment options need the same kind of mobility that today’s workers have. Universal retirement accounts can offer mobility the way defined-benefit pensions and the 401(k) never could – with the flexibility to take your retirement pension with you from job to job.
While several states have been tossing around the idea of offering state-sponsored universal retirement accounts, California would become the first to enact legislation to actually create one. For California this could mean a stronger, more competitive job market with better jobs to attract out-of-state workers – which could spell danger for job markets and employers in neighboring states that don’t offer the same opportunity.
Finally, universal retirement accounts are voluntary. Offering workers options such as universal retirement accounts does not automatically turn a bad job into a good one, but California’s legislation is a positive step towards better jobs. Better jobs mean healthier communities and a stronger economy. That is something we can all cheer about.
April 8, 2008
The 2008 New Jersey Paid Family Leave Bill: Bringing Employers and Employees...Together?
Here's an update from The Mobility Agenda's Senior Research Associate, Sarah Sattelmeyer.
Yesterday, the New Jersey Senate approved a (long time in the works!) paid family leave bill, which the Assembly passed in March. Governor Corzine has committed to signing this bill, which will make New Jersey the third state to adopt paid family leave.
For those of you who are not work-life policy junkies like myself, family and medical leave (which differs from paid sick days) can guarantee workers time away from work to recover from a personal health condition, for the birth or adoption of a child, to care for an elderly family member, and/or to incorporate additional longer-term family care needs.
The 1993 federal Family and Medical Leave Act, administered by the US Department of Labor, provides unpaid family and medical leave for some U.S. workers. On the other hand, State Temporary Disability Insurance programs are administered on a state level and offer paid family and medical leave for workers. Employer and employee generally jointly fund these programs.
Many states are working (California has been successful!) to extend their Temporary Disability Insurance programs or develop new programs to cover a wide array of family and medical needs, including adoption. According to the National Partnership for Women and Families, New Jersey's new law falls into this category in that it will expand the state's temporary disability insurance program to give workers up to six weeks of family leave benefits to care for a sick family member or a newborn or newly adopted child. It provides temporary disability insurance benefits at two-thirds of wage replacement up to a maximum of $524 per week in 2008, and is financed by a small employee payroll deduction.
It’s about time, right? But despite the passage of this bill through both houses of the New Jersey legislature, significant conflict about the idea of work-life policies still exists. According to an Associated Press reporter and Newsday.com, Sen. Jennifer Beck (R-Monmouth) and other opponents of the bill fear that "[t]his [bill will] impose a tax on every employer in our state and continue…to lay the groundwork for the exodus of citizens and employers."
This comment by Senator Beck should have provided the perfect opportunity for Senate Majority Leader Stephen Sweeney, a leading proponent of the bill, to use language that bridged the business-worker gap. But instead, he followed in the divisive footsteps of Senator Beck by commenting that "[t]his bill…signif[ies] a new day for the state's work force, in that, the needs of families will be put before the needs of business owners."
Senator Sweeney, while meaning well and clearly a strong champion of workers who is on the right side of this issue, lost his chance to promote the pro-business benefits of work-life policies when he verbally created a divide between “families” and “business owners”—between us and them.
In many situations, employers have used public and private policy to balance competing work-life priorities. In a recent study conducted by WFD Consulting and Corporate Voices for Working Families, offering work-life policies in the workplace improves employee retention, creates more positive human capital outcomes, and establishes a more productive workforce, all of which can lead to stronger financial performance, especially for retail companies whose employees often have a direct relationship with customers. In fact, researchers reporting on a 2002 Watson Wyatt study found that “companies that provide more flexible work arrangements” could see as much as a 3.5 percent rise in shareholder value.
Work-life policies also lead to better mental health and less stress, which contribute to a reduction in employee health care costs. According to the CDC, stress at work can increase employees’ unscheduled absences, and health care expenditures (something about which we are all concerned!) are nearly 50 percent greater for U.S. workers who report high levels of stress.
We still need research to explore the narrative lens that works best when discussing work-life policy with a pro-business contingent. But even without the research, stakeholders should use common sense in their public remarks about work-life policy. New Jersey legislators just passed a bill that will help thousands of workers, but Senator Sweeney’s comments did not even open the door for a productive dialogue with the business community about legislation that affects all of us.
The facts are on his side. The battle is won, but not the war. The Senator Sweeneys of the world need to see their legislation through in a manner that will help other leaders win similar battles.
The Mobility Agenda will soon release Work-Life Policies for the Twenty-First-Century Economy, a report that explains the need for better work-life policy and provides recommendations for stakeholders.
April 8, 2008
E.J. Dionne Finds Inclusion on the Campaign Trail
In his column today, E.J. Dionne (a favorite of The Mobility Agenda) reports that the message of “inclusion” on the campaign trail has overcome old-style, slice-and-dice-progressive-constituencies “micropolitics”.
It’s great to have the press call attention to this concept. And no surprise that E.J. Dionne is one of the first to do so.
April 2, 2008
Talking about Economy, not Poverty
by Margy Waller
For much more about the evidence on changing narratives, see our website.
The Nation magazine recently praised efforts by the Congressional Progressive Caucus,
led by Congresswoman Barbara Lee (D- CA), to introduce a plan to cut
poverty. The detailed package of policy proposals, “The Anti-Poverty
and Opportunity Initiative,” calls for:
The
initiative incorporates many policy ideas community organizations and
other stakeholders have been wishing that Congress and the
administration would adopt – for many years now. Individual lists might
differ a bit from Congresswoman Lee’s, but any Congressional staffer
from a progressive office already has a list like this memorized.
So why aren’t these proposals the law of the land?
It's
probably because supporters have reached everyone persuadable by
talking about the proposals as “anti-poverty” initiatives for forty
years. And all that support still isn’t enough to overcome the
opponents of legislation like this. While many people want to do
something about poverty—it’s not a high priority for voters. In
February, the Gallup Poll asked voters about "the most important
problem facing the country" and just 2 percent named
poverty/hunger/homelessness.
That means friendly policymakers don’t have the political space they need to take on opponents.
And
continuing to use the poverty banner means it is unlikely that this
plan will generate adequate support in the future. There are a few
reasons for this:
* The U.S. definition of poverty is out of
date and flawed, allowing opponents to use it to limit policy solutions
to a narrow very low-income group.
* Public understanding of the
causes of (irresponsible and immoral behavior) and remedies
(responsible personal behavior) for poverty hinders adoption of the
policy solutions we seek to address it.
* Defining the problem as “poverty” opens the door to a losing scenario in the legislative debate.
In
fact, when Senator Clinton announced her support for a plan to adopt a
goal to cut child poverty in late February, the conservative think tank
Heritage Foundation took the opening to criticize and offer their
alternative:
See the problem?
The
poverty debate provides a classic example of the imperative not to
sacrifice our larger policy goals for the sake of an incremental or
different advance, particularly when that advance actually undermines
the shared agenda for the long term. By advancing a plan to set a
target for cutting poverty, elected officials and candidates set up a
problematic future, and one that threatens to undermine the policy
goals.
Let’s
imagine the likely scenario to come. Whether or not a candidate who has
promised to set a goal to cut poverty wins the White House, we can
expect continued efforts by some advocacy groups and members of
Congress to push for the goal and the policy to match.
The
mainstream media will portray the likely legislative options as two
competing proposals: one we like (a comprehensive approach to
addressing inequality and economic mobility) and one we don’t (solve
poverty with marriage and harder work).
Our
opponents are able to push these concepts with success because they are
consistent with a broad public understanding of the causes of poverty,
and a widely held belief that government programs cannot really address
the issue of poverty or inequality. We already lost this same fight in
battles over welfare. Why would we want to engage in it again?
We
don’t need to re-fight that battle. We know that some people (democrats
and low-income voters) are persuaded by a sympathy lens on the issue
(the one that the word “poverty” calls up for many people in this
country) to support a limited set of policies. Unfortunately, this
language actually decreases support for progressive policies like a
living wage.
Moreover,
we also know that using an economic narrative moves these same voters
and others (working-class, non college-educated men, older men,
Republican voters, union households, and older voters without a college
education) to support more of our policy goals.
So,
if there is no true demand for a goal to cut poverty and it won’t help
add new support, it would be much smarter strategically to use an
economic case to promote the same larger policy agenda without the
damaging poverty headline. (You’ll find much more information about the
evidence on the impact of using different narratives for policy results
on our website.
In
fact, the Progressive Caucus members have proposals that would address
poverty, social and economic mobility, and inequality that they’ve put
under an economy title, the “Rebuild and Reinvest in America
Initiative.” They should focus on this legislation and incorporate the
“anti-poverty” agenda into that legislation.
Anyone
who wants anti-poverty policy to be high on the agenda after the
upcoming election should stop talking about goals to cut poverty and
instead talk about an economy that will work for everyone. Changing the
way we start the conversation with others about this issue doesn’t mean
we don’t care about the poor anymore or that our policy goals have to
change at all. It’s just an acknowledgment that if we want to win, we
have to change the narrative to one that works for us, and for more of
the public too.
