Six years after the end of the Great Recession neither the United States nor the global economy has created enough jobs to make up for those lost and to account for growth of the labor force, and wage stagnation remains in its 30-year doldrums. Something needs to change. What follows is as much a call to action as a prediction.
Thomas A. Kochan is a professor of work and employment research at the MIT Sloan School of Management and co-director of the Institute for Work and Employment Research. His forthcoming book is Shaping the Future of Work.
Globalization of markets and economic activity increases competition among workers that will, if left unfettered, lead to a race to the bottom for many and increased returns to the minority with skills in short supply. To upgrade work in a global world will require continuous investments in lifelong education and skills to remain marketable and productive in a world with widely varying wages and labor costs, and expanded efforts by NGOs, labor unions, transnational firms, national governments and international agencies in monitoring and enforcing labor standards throughout global supply chains, and by consumers to pay attention to the conditions under which the products they buy are produced.
Advances in information technology and machine intelligence, along with advances in the life sciences, will change the demand for labor and eliminate some existing jobs. Past technological inventions have created entirely new occupations (think computer programmers and associated technicians) and will do so again. But good jobs don’t emerge automatically from technological changes. The design and quality of new jobs can be influenced if we explicitly challenge inventors and designers to develop technologies that complement workers’ skills and capabilities. Complementary technologies, skills, and empowered workers are essential to driving productivity, improving job quality, and fostering the organizational changes needed to spread the benefits and absorb the costs of technical advance.
WORK AND EMPLOYMENT RELATIONSHIPS
Industrialization moved work from independent, itinerant, or informal community activities into formal employment relationships with an identifiable employer responsible for paying competitive wages and benefits and meeting worker rights and employment standards. Today we see a reverse trend, as work again is getting separated from employment relationships. Those working for organizations as diverse as Federal Express and Uber are embroiled in legal disputes over whether they are employees or independent contractors who lie outside the protections and benefits of formal employment relationships. And in many developing countries the majority still survives on informal work unprotected by employment standards. Two alternatives present themselves for dealing with the decline or absence of formal employment relationships: re-define the rules to more clearly specify the organization responsible for enforcing standards and providing benefits, or eliminate the need for this distinction by expanding coverage of standards to all who work and de-couple the financing and delivery of essential benefits (health, retirement, disability, etc.) from individual employers.
The labor movement is dead. Long live the labor movement. This seems to capture the schizophrenic mood of many people in the U.S., and indeed around the world. While traditional unions continue their long decline, today we see an enormous range of experimentation with new forms of worker voice and advocacy and we have learned about how to “transform” outmoded arms-length and overly rigid 20th-century union-management relationships into partnerships that support great companies and great jobs. These developments suggest that new forms of worker voice, power, and advocacy can be invented.
If politics in Washington or other national capitals remain as polarized as they are now, there is little hope for solutions at those levels. Instead, consistent with history, innovation in state and local governments (minimum wage, sick leave, community benefit agreements, living wage ordinances, social impact investing, etc.) is flourishing. The same is true in the private sector where every industry can find a subset of firms using “high road” employment practices to achieve strong economic performance and good jobs and wages. Fostering and learning from these local innovations and leading firms may again lay the foundation for broader national and international policies that support good companies and good jobs.
MARKET AND INSTITUTIONAL FAILURES
Both a market and an institutional failure will need to be addressed to gain control over the future of work. It is not in the interest of any individual business leader or firm to take responsibility for creating more good jobs, but is in the interest of the overall business community to do so if we are to have a robust economy and a strong middle class with the purchasing power for businesses to thrive. Nor can business do this successfully on its own any more than can government, labor, or education. But market failures can be addressed through collective, coordinated actions and these are the key institutions that collectively could make progress if they tore down the walls built up between them in recent years and started working together.
I believe we can shape the future of work if we bring the multiple interested parties together to negotiate ways forward informed by the economic, technological, and institutional realities of the day.
So let’s get on with this task and take control over the future of work.
For the Future of Work, a special project from the Center for Advanced Study in the Behavioral Sciences at Stanford University, business and labor leaders, social scientists, technology visionaries, activists, and journalists weigh in on the most consequential changes in the workplace, and what anxieties and possibilities they might produce.