A young man about to start his career once opined to me that perhaps the strong and broad middle class that grew post-World War II was a historical accident, a mere blip never to be repeated. He argued that when one examined the long arc of history, the most common form of societal structure was a pyramid with the top 10 percent controlling more of the society’s wealth and power than the remaining 90 percent. Like so many of his generation, he believes in a type of libertarianism espousing that no institution, governmental or otherwise, can be relied upon; individual interests are more important than community or societal interests.
Maria Echaveste served as administrator of the Wage and Hour Division of the U.S. Department of Labor and as White House deputy chief of staff in the Clinton Administration, and is a senior fellow at the Warren Institute on Law and Social Policy at University of California–Berkeley’s School of Law.
I was tempted to dismiss his opinion as a product of his upbringing (his father was a Republican conservative rarely found in that liberal bastion of New York’s Upper West Side). But as we look at our current economy and the ever-vanishing American Dream, it is hard to disagree with that young man—the American middle class appears to be disappearing.
What to do? There are at least three areas where new strategies need to be developed if we are to reverse the trends of low-wage jobs and a shrinking middle class. First, we must reverse the unfair coupling of increased American productivity with wage stagnation. When American workers contribute to overall productivity and therefore, profits of corporations, there must be some mechanisms for ensuring that those profits are shared more equally. Second, with the rapid decline of unionization in the private sector (less than eight percent) and increased attacks on public sector unions, workers need new forms of organizing to even the playing field in negotiating with employers and corporate interests. Third, more importantly and more difficult to do, we have to re-invigorate the concept of the common good and community. The pendulum’s swing so far toward the individual has permitted the concentration of wealth and inequality, lessening the bonds among us such that we are increasingly unwilling to invest in all of our human capital and our common infrastructure.
Turning to wage stagnation, several ideas are emerging to counter this devastating trend. One is the emergence of livable wage campaigns and increasing the minimum wage to $15 an hour—allowing a working adult with two children an annual income above the poverty line. Not quite the middle class, but coupled with affordable housing, a family could begin to have the economic stability so important for the well-being of families and children. Another idea has been to tax CEO pay in a couple of different ways. One would be to set corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation, as has been proposed in California. Another would be to eliminate the deductibility of performance pay that was adopted in the '90s and helped fuel the growth of stock options and other performance pay. It should be noted that the focus on performance pay has also led to short-term corporate strategies in which CEOs are more concerned about demonstrating short-term growth than long-term strategies.
Second, with respect to collective bargaining and worker organizations, it is essential for labor to develop new ways of organizing. The focus on individuals and the entrepreneurial spirit has deceived many a worker into thinking he or she is in charge, when in fact workers are not seeing the benefits of entrepreneurship. The Uber effort to categorize itself simply as a platform to connect drivers with customers and not as a traditional employer is an absolutely valid and creative idea. Had Uber stayed within that model, there would have been no lawsuit. This concept of creating independent contractors to avoid employer liabilities is not new. It has been used in agriculture with farmworkers, and also tried in the janitorial industry.
We need to understand that some people do want freedom and flexibility; we should try to ensure that such individuals do not fall prey to efforts that impinge on that flexibility. More importantly, we need to be mindful that some corporations would rather cut costs than truly allow individuals to be independent and flexible. So the growth of concepts such as the Freelancers Union, to provide combined purchasing power for health care and other benefits, is one creative idea. Another would be to create worker organizations that are not tied to a particular employer or worksite, but rather focus on the common interests that workers have. For example, in the restaurant industry, having a predictable work schedule is essential if you have children. How can a group of waitresses across a city negotiate with their employers in ways to achieve that predictability? How do workers achieve paid sick leave? In the absence of unions, workers do not have the bargaining power; something has to change that equation. Recent efforts like Restaurant Opportunities Centers United and Silicon Valley Rising are examples of the new organizing. Workers’ organizations like these focus on more than one employer and use more than collective bargaining, including tapping the consumer’s interest in fairness and justice.
Lastly, we need to strengthen the importance and relevance of the common good; that communities are strong when individuals see and act on their common interests. The trend of disinvestment in public education, of weak physical infrastructure, because people are unwilling to tax themselves for the future must be reversed. I say this is perhaps the hardest to do because we are an increasingly diverse society. That diversity makes it very easy for other forces to weaken and divide us. In this area, I would submit that the most dramatic and effective way of ensuring that we see each other as fellow human beings would be a program of compulsory national service. Many who served in our armed services have returned with a deeper appreciation of the differences but ultimately the commonalities among their fellow soldiers. If we could institute a program where, regardless of wealth, background, race, or religion, our young people would work together to improve our society, we would go a very long way to developing that common ground and see that acting on behalf of the common good ultimately benefits us all.
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.