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How to Make the New Economy Work for Everyone

Last week, the Aspen Institute released a comprehensive, bipartisan set of reforms to help the working and middle class. Here’s what it has to say.
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In 2015, the Aspen Institute, joined by Mark Warner, the Democratic senator from Virginia, and Mitch Daniels, the former Republican governor of Indiana, launched an ambitious project called the Future of Work. The purpose of the initiative, which was initially prompted by Warner’s interest in the policy issues posed by the growing gig economy, is, according to its website, “to propose a new course — a way to upgrade America’s economic reward structure to keep pace with the shifting realities of the 21st century.”

Last week, the Future of Work released the fruits of their labor: a report titled “Toward a New Capitalism.” Part one of the report highlights some of the challenges facing the American economy, with a particular focus on two trends: technology and trade-driven segmentation and short-termism.

“The way that businesses accomplish work and the way that they relate to workers has changed over the last couple decades. There has been a trend on the part of businesses toward more disintegration, toward businesses relying more on outsourcing or contracting out to get work done versus hiring employees to do that work in-house,” says Ethan Pollack, the research manager of the initiative. “Another trend has been the short-termism. Within the governance of a firm/corporation, there has been a shift in power away from workers, toward shareholders. Some of these shareholders have been pressuring for more short-term profits, as opposed to value creation. One of the impacts of that trend has been that businesses are not investing in their workers and not treating their workers as full partners in the way they have in the past.”

The consequences of these trends will be familiar to anyone who follows the economy (or politics): stagnating wages, a decline in the bargaining power of workers, and a lack of investment in workers (for example, on-the-job training).

The second part of the report tackles those consequences in the form of an exhaustive set of policy proposals. Some are new, some have been around for awhile, but the overall blueprint is particularly noteworthy for its lack of highly partisan or controversial proposals. There are no calls for a trade war, or a higher minimum wage, or the elimination of existing labor force regulations (though the report does point out that regulations such as these might have the unintended effect of encouraging employers to rely more heavily on contracting or outsourcing work).

“The policies represent, we think, kind of a unique approach to solving problems and one that is not too ideological and so is more sustainable,” Pollack says.

The report’s proposals focus broadly on two broad goals: changing the relationship between workers and businesses to make work a mutual enterprise, and empowering workers to be less reliant on businesses for various benefits and perks. The proposals under the first umbrella all seek to, in Pollack’s words, “give businesses a stake in their workers and give workers a stake in their businesses.” They include the following:

  • Tax incentives to encourage businesses to provide both tuition assistance and job training to all workers (not just executives).
  • The development of a new type of corporate form called an R Corp, which would make businesses eligible for tax and regulatory relief in exchange for engaging in worker-friendly practice.
  • New systems for providing consumers with detailed, reliable information about the labor force practices of companies.
  • Incentives to encourage profit-sharing and employee ownership.
  • Incentives to encourage a more long-term perspective on the part of shareholders.

The report also calls for a number of reforms designed to help independent workers: a portable benefits model, reforms to the Pell grant to make it easier for workers to get continuing education, and the formation of a transparent skills-based credential system to make both job searching and hiring easier.

“We have a social contract where workers are very dependent on businesses for a lot of benefits—retirement, health care, disability. A lot of these are wrapped up in employment, and training is as well,” Pollack says. “We want to try to figure out how to, not necessarily decouple those benefits from employment, but make it so they are also available outside the employment relationship.”

Yesterday, at his final White House press conference, a reporter asked President Barack Obama about the “gaps” in his legacy. This was the president’s response:

I worry about inequality because I think that if we are not investing in making sure everybody plays a role in this economy, the economy will not grow as fast and I think it will also lead to further and further separation between us as Americans — not just along racial lines. I mean, there are a whole bunch of folks who voted for the president-elect because they feel forgotten and disenfranchised. They feel as if they’re being looked down on. They feel as if their kids aren’t going to have the same opportunities as they did.

And you don’t want to — you don’t want to have an America in which a very small sliver of people are doing really well, and everybody else is fighting for scraps, as I said last week. Because that’s oftentimes when racial divisions get magnified, because people think, well, the only way I’m going to get ahead is if I make sure somebody else gets less; somebody who doesn’t look like me or doesn’t worship the same place I do.

Donald Trump was elected, to at least some degree, because of his economic message. To date, however, many of his solutions to the profound challenges facing the American economy seem to be rooted in nostalgia and hinge on promises to “bring back” American jobs (most of which have been lost to automation and are simply not coming back). An effective agenda to help working- and middle-class Americans must consist of more than just one-off deals to save a few factories here and there.

Pollack says that the Future of Work initiative is designed to look forward, not back. “The future is not always better,” Pollack says, “but let’s try and make sure that, when we look at where we’re going, the type of work we have in the future is providing workers with increasing wages, opportunities for training, and general upward mobility as a career path.”