TOWARD A NEW CAPITALISM
THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 1 is a nonpartisan effortidentify to concrete ways
Copyright © 2016 by the Aspen Institute the © 2016 by Copyright Apple, BlackRock, and others. All statements and views expressed in Future of Work publications the solely are responsibility of the authors. Foundation,Foundation, TheMarkle Peter The Foundation,Peterson G. ThePew Charitable Trusts, The PrudentialFoundation, The Rockefeller Foundation, Brian Sheth, Parker, Sean of a broad range of foundations, individuals, and corporate partners, including: Emanuel FriedmanJ. Philanthropies,Foundation, TheHitachi Foundation, Ford The The Kresge Research more information Manager, respectively. For visit as.pn/futureofwork. InitiativeThe Work Future of is made possiblethethrough generousphilanthropic support and Purdue University President Mitch Daniels. John Bridgeland and Bruce Reed serve as the Initiative’s Co-Chairs; McKay Conor and Ethan Pollack serve as the Initiative’s Director and rewards fuels work, innovation, and promises a brighter future businesses for and workers alike. The Initiative is drivenby leadership the Honoraryof Co-Chairs Senator WarnerMark workforce. The workforce. Initiative focusedis on objectives:key two first,advance to and protectthe economic interests Americans of in the independent including workforce, those in the rapidly growing on-demand and economy; second, to inspire a 21st-century capitalism which THE FUTURE OF WORK INITIATIVE to strengthen the social contract in the midst sweeping of changes in the and workplace THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 2 - - President, Purdue University the promise of – the held our country has together work United States Senator
We hope you will join us in rising to this challenge. hope you We The future of ofwork is too uncertain and the pressures and competition innovation This agenda provides an alternate approach, one that restores the promise of provides work with This agenda The associated policy agenda, “A Policy Agenda to Restore the Promise of Work,” offers a offers Work,” of Promise the Restore to Agenda Policy “A agenda, policy associated The These two documents are the culmination of documents are the These two “The Promise work. This document, that Over the past year, we have crisscrossed the country with the Aspen Future of Work team of crisscrossed the countryAspen Future the with Work have we past year, the Over THROUGHOUT OUR HISTORY, OUR HISTORY, THROUGHOUT Mitch Daniels Mitch Warner R. Mark it all, either. The same entrepreneurial spirit of invention that made American capitalism spirit of The same entrepreneurial that made it all, either. invention the engine of of stage the next and social mobility must be brought to envisioning economic ahead again. American has the chance to get every capitalism to ensure too fierce to expect companies to solve all these problems on their own. Likewise, the 21st own. Likewise, all these problems on their companies to solve expect too fierce to to solve ofcentury and the gears is too complex government to expect slow bureaucracy too how we can come together to address these common challenges. can come together we how out stifling innovation. It is a work in progress, and neither one of single work in progress, every It is a us endorses out stifling innovation. sectors and parties about across these ideas in order to start a conversation offer idea. We can drive up costs and encourage businesses to rely more heavily on contract and contin and contract on heavily more rely to businesses encourage and costs up drive can to workers. less security even provides in turn which work, gent set of ideas to meet the challenge. It recognizes that policymakers have often responded to set of have It recognizes that policymakers meet the challenge. ideas to but this approach trends with regulations meant to protect employees, the aforementioned to get ahead. to get of Opportunity and the Future of Work,” describes how technology and global competition describes how of of and the Future Opportunity Work,” have some changes but that ways, positive in many American economy modernized the have and skills training benefits, wages, with the Americans to find jobs also made it harder for the American worker and ensure everyone has a stake in America’s success. America’s in has a stake everyone and ensure American worker the to ask entrepreneurs, workers, thinkers, and civic leaders how to make capitalism work for for capitalism work to make how leaders and civic thinkers, workers, to ask entrepreneurs, as far as their ability and drive will take them. But for millions of hard-working Americans, millions of them. But for Americans, will take hard-working and drive as far as their ability often too political system up to that promise – and our to live seems no longer our economy seems to let them down. promise that anyone willing to work hard and play by the rules should have the chance to go chance to go the have the rules should by play hard and willing to work anyone promise that FOREWORD THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 3 - - - - - century, that engine of win two opportunity helped century, th on the promise of boundless opportunity in reward for hard work. We We on the promise of hard work. for in reward boundless opportunity
Some say we must restrict innovation and trade – and that we must use the coercive pow must use the coercive and trade – and that we must restrict innovation we say Some Together we must summon American ingenuity and common purpose to restore the American ingenuity must summon we Together Millions of Americans are fed up with an economy and a political system that too often too that ofMillions system political a and economy an with up fed are Americans Now, however, the great American bargain is at risk, and so is the middle class it built. American bargain is at risk, and so is the the great however, Now, Most important, this bargain helped create a dynamic, healthy economic climate within healthy bargain helped create a dynamic, important, this Most We built that prosperity with a uniquely American bargain that anyone willing to work willing to work American bargain that anyone with a uniquely built that prosperity We
er ofmodels ofthe economic to to revert businesses to force regulation order to – in the past mobility of and upward generations. previous security, recapture the economic prosperity, courage to shape it. courage promise of America for a new century. Once more, we find ourselves at the crossroads that find ourselves we Once more, promise of century. a new for America or muster the fear the future, whether to defined our character as a nation – has always and the strength of our economy. A new bargain is required to ensure the success of the success bargain is required to ensure new A Amer and the strength of our economy. health. and civic system free enterprise ica’s lets them down. Americans long for a new vision ofvision new a for long Americans its keep can that bargain American down. the them lets goods, cheaper consumer levels, than just employment is at stake promise once again. More in turn provide even less security to workers. less even in turn provide trends by using regulations to protect employees, but this approach can have the adverse ef the adverse have but this approach can using regulations to protect employees, trends by which work, offect on contract and contingent more heavily encouraging businesses to rely cient, and competitive, it has raised complex questions about what the economic future may future may the economic questions about what it has raised complex cient, and competitive, but costs, business reduce can automation and outsourcing, Contracting, workers. for hold these to often responded have Policymakers workers. impacts on adverse also have can they While a surge ofWhile a surge effi more dynamic, has made our economy technology and globalization foundation for social prosperity, personal responsibility, civic service, and trust in institu in trust and service, civic responsibility, personal prosperity, social for foundation tions and one another. which both businesses and workers thrived, resulting in the strongest economy and the economy in the strongest resulting thrived, both businesses and workers which bargain also strengthened the a Such known. had ever middle class the world strongest the work are not a cost of doing business but the wellspring of productivity, creativity, and creativity, are not a cost ofthe work of wellspring doing business but the productivity, success. training, and economic security in return. This bargain recognized that work is not just a This bargain recognized that training, and economic security in return. do who those and that lives; our to purpose and dignity, structure, gives it that but living, hard and play by the rules should have a chance to go as far as their ability would take them. take as far as their ability would a chance to go the rules should have by hard and play skills wages, could count on rising and work and loyalty, Americans committed their hard enterprise, and democracy. In the 20 and democracy. enterprise, and community. prosperity, American invention, fuel moon, and put a man on the wars, world AMERICA WAS BUILT WAS AMERICA of the power combining initiative, nation by most optimistic strongest, became the richest, INTRODUCTION THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 4 The nature of workmay be changing,but the value ofwork has not. Thefuture of work relies on our abilityto design new arrangements to ensure that the promise of opportunity keepsup with the pacechange. of - - - Over the past several decades, while while decades, the past several Over century. As we did in the last century, we must come together to forge to forge must come together we the last century, did in we As century. st The message was clear: the challenges are great and the opportunities diverse, there is opportunities diverse, are great and the was clear: the challenges The message This project is a work in progress. We want to raise these challenging issues and foster and these challenging issues want to raise We work in progress. This project is a A New Capitalism can lead to a more productive economy, more successful businesses, businesses, more successful economy, lead to a more productive Capitalism can New A A great nation rewards those principles and practices that it values and creates the future those principles and practices that it values great nation rewards A The foundations of this new economic model lead us to some basic principles. We need foundations ofThe principles. model lead us to some basic economic this new The purpose of the Aspen Institute Initiative on the Future of Work is to propose a new a new Work is to propose ofFuture ofThe purpose on the Initiative Aspen Institute the therefore not taxed, the combination of not taxed, therefore of accelerated depreciation and the tax exemption makers have been focused on creating incentives for investments in physical capital, but in physical investments for on creating incentives focused been have makers and expenses not human capital. In fact, although labor and training costs are considered Rewarding Businesses for Rewarding Work: Work: Businesses for Rewarding Rewarding businesses to reduce the cost of pressured policy labor, have competition and innovation business incentives, strengthening public information, reforming corporate governance, governance, corporate reforming information, public strengthening incentives, business workers: and empowering no silver bullet, and the solutions must be as broad as they are bold. Our prospective policy prospective are bold. Our bullet, and the solutions must be as broad as they no silver four separate approaches: realigning relies on therefore this narrative, attached to agenda, labor leaders. remain at risk. In that spirit, we put forward the notion of New Capitalism in beta version. the notion of put forward beta version. Capitalism in we that spirit, risk. In remain at New crisscrossed the countryto talk with and collect ideas from have we the past year, Over and business, academic, as civic, as well and workers, managers, investors, entrepreneurs, ideas to deepen that debate and sharpen our analysis. We don’t have all of the answers, but all of have the answers, don’t We our analysis. ideas to deepen that debate and sharpen prosperity will strong belief a America’s have that without addressing these questions, we a debate across sectors and parties to work together to address them. We propose various propose various to address them. We together work a debate across sectors and parties to believe such a model is not only possible in today’s polarized political climate, but that it has polarized political climate, in today’s possible a model is not only such believe nation together. the potential to bring our divided of up with the pace of keeps opportunity change. We democratic institutions. ahead, and strengthen our Americans the chance to get all give that it wants to see. The nature of work may be changing, but the value of of The nature be changing, but the to see. that it wants work has not. The work may that the promise future of to ensure arrangements relies on our ability to design new work concentrated returns. Society deserves civic and business leaders who will seek to make innovation a force for for force a innovation make to seek will who leaders business and civic deserves Society overly and not and prosperity, widespread growth and steer the future ofgood toward work investors together. Workers deserve a say and a stake in the companies they help build, and in the companies they a stake and a say deserve Workers together. investors the to take the freedom Businesses deserve do. work they better at the hard a chance to get well, their enterprises will too. do workers when their and the confidence that long view new incentives and new ways of doing business that reward workers, entrepreneurs, and entrepreneurs, of workers, ways doing business that reward and new incentives new a new economic model that fuels innovation, rewards work, and promises a brighter future promises a brighter and work, rewards economic model that fuels innovation, a new of the sake for and democracy. alike, economy our businesses and workers for course – a way to upgrade America’s economic reward structure to keep pace with the shift pace to keep structure economic reward America’s to upgrade way course – a ofing realities the 21 We believe this is a false choice. America must embrace the realities ofrealities the embrace must America choice. is a false this econo modern the believe We them. to circumvent attempt or deny not my, THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 5 ------https:// April. https://thegiin.org/ Just as it is import is it as Just The Boston Consulting Group. Real, durable growth requires making de making requires growth durable Real, https://www.cbo.gov/sites/default/files/113th-congress-2013-2014/reports/49817-Taxing_Capital_In 4 As we seek comprehensive tax reform that broadens the base, lowers rates, and and rates, lowers the base, that broadens tax reform seek comprehensive we As 1 By providing consumers, workers, and investors with greater information about with greater information and investors workers, consumers, providing By 3
2 planning and investment. While outside the scope of this project, we recognize that uncertainty also inhibit such longer-term of government policies can Mudaliar, Schiff, and Bass, 2016. “Annual Impact Investor Survey:Mudaliar, Schiff, and Bass, 2016. “Annual Impact Investor Network, Impact Investing 2016.” Global assets/2016%20GIIN%20Annual%20Impact%20Investor%20Survey_Web.pdf www.bcg.com/documents/file103894.pdf Barton, Stereotypes” Millennial Customer: Debunking Fromm, and Egan, 2012. “The Congressional Budget Office, 2014. “Taxing Capital Income: Effective Marginal Tax Rates Under 2014 Law and Selected Policy Tax Rates Under 2014 Capital Income: Effective Marginal Congressional Budget Office, 2014. “Taxing come_0.pdf Options” December. 4 2 3 1 have more control over their professional lives. These proposals seek to empower workers workers empower to seek proposals These lives. professional their over control more have to make the flexibility to persist, the security them with the tools to improve, providing by ahead. to get and the opportunity the most of their lives, Empowering Workers to Make the Most of Most the Make to Potential: Their Workers Empowering should also workers in their workforce, and invest to reward businesses ant to encourage the short-term. posals encourage worker ownership and involvement in governance, promote long-term in governance, and involvement ownership worker posals encourage on only to focus pressure to the from succumbing management shareholding, and dissuade cisions with a long-term perspective. Policies that give everyone – investors, managers, and and managers, – investors, everyone give that Policies cisions with a long-term perspective. the leaders to take for it easier future will make in a company’s – a greater stake workers of the performance These pro should be a mutual enterprise. what and improve long view Giving Everyone a Stake in Prosperity: a Stake Everyone Giving how well companies pay, train, and schedule their employees, we can empower the market the market can empower we train, and schedule their employees, companies pay, well how itself a better future of to promote work. tions; and investors are increasingly taking social impact into account as they seek financial seek impact into account as they taking social are increasingly tions; and investors returns. makes it easier for consumers and workers to make informed decisions; Millennials, who who decisions; Millennials, informed to make and workers consumers for it easier makes incorporate to likely more are ofshare growing a represent power, purchasing consumer genera than previous work they or where buy they decisions about what into their values to patronize; workers through the places they choose to work; and investors through the through investors and work; to choose they places the through workers patronize; to surging: technology is That power choose to purchase. they vehicles businesses or savings Arming Consumers, Workers, and Investors with the Power of Information: the Power with and Investors Workers, Arming Consumers, choose companies they the through their values to reinforce the power have Consumers simplifies the code, policymakers should also focus on creating a tax and regulatory on creating a focus should also struc policymakers the code, simplifies workforce. in the and invest businesses to reward encourages ture that debt financing has led to negative effective tax rates on physical capital investment for many many for investment capital physical rates on tax effective to negative has led financing debt industries. THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 6 Technology- andtrade-driven firmsegmentation onthe one hand, andshort-termism on the other, arecombining to undermine the social contract between workersand business. ------https://tcf.orgcon http://www.bls.gov/opub/ The strength ofwent our economy 5 Meanwhile, capital markets and ac capital markets Meanwhile, 6 http://www.nytimes.com/2006/10/29/books/re http://ilr.sagepub.com/content/69/2/405 While shareholders and management reap their rewards, workers are workers reap their rewards, While shareholders and management http://www.epi.org/publication/raising-americas-pay/ 9
when workers planned their future around a single company and line ofline and company single around a future their planned workers when 8
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These trends – technology- and trade-driven firm segmentation on the one hand, and and trade-driven These trends – technology- In recent decades, that bargain has begun to come apart for our economy and society our economy for that bargain has begun to come apart In recent decades,
view/Leonhardt.t.html?_r=0 2016 vol. 69 no. 2 405-434. no. 2016 vol. 69 Leonhardt 2006. “The Shrinking Safety Net.” The New York Times, Oct 29. York New Shrinking Safety Net.” The 2006. “The Leonhardt Waddoups 2016. “Did Employers in the United States Back Away from Skills Training during the Early 2000s?” ILR Review March Waddoups 2016. “Did Employers in the United States Back Away from Skills Training tent/report/protecting-workers-patchwork-economy/ Strom and Schmitt, 2016. “Protecting Workers in a Patchwork Economy.” The Century The Foundation. April 7. Strom and Schmitt, 2016. “Protecting Workers in a Patchwork Economy.” mlr/2012/12/art1full.pdf Wiatrowski 2012. “The last private industry pension plans: a visual essay.” Bureau of Labor Statistics Bureau of Labor last private industryWiatrowski 2012. “The a visual essay.” pension plans: Bivens, Gould, Mishel, and Shierholz 2014. “Raising America’s Pay: Why It’s Our Central Economic Policy Challenge.” Economic Challenge.” Our Central Economic Policy Pay: Why It’s 2014. “Raising America’s Bivens, Gould, Mishel, and Shierholz Policy Institute, June 4. 5 experiencing less wage growth, less security, and less upward mobility. and less upward less security, growth, wage less experiencing same robust portfolio of benefits and investment in training and skills development that ofsame robust portfolio training and skills development in benefits and investment once did. they short-termism on the other – are undermining the social contract between workers and workers the social contract between short-termism on the other – are undermining buy- stock and dividends higher with shareholders reward businesses When business. the providing businesses are no longer Many workers. to reward over less cash is left backs, tivity in their enterprises. in tivity tivist investors have intensified pressure on corporate leaders to deliver short-term profits, short-term profits, to deliver on corporate leaders intensified pressure have investors tivist produc and longer-term of can come at the expense in their workforce which investment in-house operations with contracting, outsourcing, franchises, and on-demand work, often work, on-demand and franchises, outsourcing, contracting, with operations in-house or both. wages, lower leading to less benefit coverage, the indicators of health from WWII until the 1960s. our civic replacing and global competition by responded to innovation businesses have Many alike. ination protections, and other protections and benefits. ination protections, in continued growth hand-in-hand with the strength of saw which institutions, our civic for other industries, and the economy as a whole: in return for their hard work and loyalty, and loyalty, hard work their in return for whole: as a and the economy other industries, for anti-discrim health and retirement plans, conditions, working could count on safe workers benefits around an individual’s employer. The Treaty Treaty The au protected example, for of Detroit, employer. individual’s benefits around an and vacation, unemployment, health, workers and provided annual strikes from tomakers would become a model companies and unions between This agreement pension benefits. IN THE 1950 net of built a safety health and retirement government and of leaders work, labor, business, THE SOCIAL CONTRACT SOCIAL THE 9 7 8 6 THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 7 - - - - - Harvard
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11 10 http://www.brookings.edu/research/pa Marriott, Hilton, and other hotels now offer their offer Marriott, Hilton, and other hotels now 13
Innovation in information and communications technology has not been the sole driver driver sole the been not has technology communications and information in Innovation A good example of this transformation is in the hospitality industry. A halfA of example century good ago, A industry. is in the hospitality this transformation This horizontal disintegration was soon coupled with vertical disintegration, as firms in vertical disintegration, as was soon coupled with This horizontal disintegration The American business landscape was relatively stable between the 1930s and 1970s, with the 1930s and 1970s, between stable was relatively American business landscape The
Davis 2015, “Capital Markets and Job Creation in the 21st Century” pers/2015/12/30-21st-century-job-creation-davis Weil 2014. pg. 146. University Press. pg. 122. Weil 2014. The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It. Weil 2014. The Bernhardt, Batt, Houseman, and Appelbaum 2015. “Domestic Outsourcing in the United States: A Research Agenda to Assess Bernhardt, Batt, Houseman, and Appelbaum 2015. “Domestic Outsourcing in the United States: A Research Trends and Effects on Job Quality.” Center for Economic Policy Research. December. Center for Economic and Effects on Job Quality.” Trends working-paper-domestic-outsourcing-2016-03.pdf 12 13 11 10 technology increasingly solve these problems as well, allowing firms to contract jobs out contract jobs to firms allowing well, as problems these solve increasingly technology instead of in-house. creating jobs firm as an organization is to solve problems like reducing transactions costs and managing problems like firm as an organization is to solve and communications information decades, the last few But over challenges. principal-agent “brand” to other companies with whom they contract the actual operations of they “brand” to other companies with whom the hotels. One of role. ofsignificant and growing a the core functions of this trend, but it has played a equipment. In 1962, only 2 percent of motels were franchised; by 1987, that figure rose to 64 rose that figure of2 percent 1987, only In 1962, equipment. by franchised; motels were 80 percent. it is over percent, and today last few decades, a new model has emerged, where the lead company contracts with different different with contracts company the lead where model has emerged, a new decades, few last and building, vehicles, their own location and own their own franchises that each manage the industry operated under a traditional model: the company with its name on the side ofthe industry operated under a traditional model: the company the in it. But over the people that worked the building and employed the building also owned costly. Firms retained the activities central to their competitive strategy but shed activities strategy but shed activities central to their competitive retained the activities Firms costly. and shift liabilities. flexibility, increase to reduce costs, creasingly found it economical to contract work out to other companies for non-core func out to other companies for to contract work it economical found creasingly can be which capacity internally, the productive tions rather than building and maintaining smaller firms more focused on specific industries. smaller firms more ing largely on growth rather than profitability, these companies grew into conglomerates into grew companies these profitability, than rather growth on largely ing ofcombination a 1980s, in the Beginning regulatory industries. multiple spanned that and corporations to break up into led large along with shareholder pressures, legal changes, many of the same companies continuing to dominate over many business cycles. By focus By cycles. business ofmany many over dominate continuing to companies the same sent just the latest stage in a process ofstage sent just the latest of the disintegration as an organizing struc the firm the future of respects, is nothing new. In many work economic activity. ture for Disruptions to the Firm Structure the Firm Disruptions to companies repre on-demand platform by caused employment Disruptions to traditional TRENDS THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 8 relationship. Technology has now progressedto the point thatin some industries,employment itselfcan be replacedwith an online platform to onboard, schedule,and supervise workers withouttraditional a stableemployment ------19
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http://mercatus.org/ http://www.colorado. found that 57 per found TIME http://www.nber.org/papers/w17716.pdf http://www.themanagementassistancecompany.com/ http://www.burson-marsteller.com/the-workforce-of-the- Unbundling: How Building are and Joining a Supply Chain nd http://www.princeton.edu/~ceps/workingpapers/119blinder. 20 17 http://krueger.princeton.edu/sites/default/files/akrueger/files/katz_ 18 A recent study by economists Lawrence Katz and Alan Krueger found that all of found Alan Krueger and Katz economists Lawrence the by recent study A the increase in by from 2005 to 2015 can be accounted for growth net employment arrangements. work alternative Over the last 15 years, the number of that indepen – the tax form the last 15 years, 1099-MISC forms Over by 22 percent, by the IRS has risen – issued dent contractors used to file their taxes A). Figure (see – has fallen slightly by traditional employees – filed forms W-2 while A 2016 survey of hiring managers sponsored by the Markle Foundation, the Aspen the of Foundation, the Markle 2016 survey sponsored by A hiring managers and Burson-Marsteller, Initiative, of Future Work Institute’s ofcent heavily more rely to expect today labor contract using report who companies less on will rely they 31 percent saying with only years, five the next on them over workers. such A 2014 Oxford Economics survey of 2,700 business executives found that 83 percent found of business executives survey Economics 2,700 2014 Oxford A intermittent em are increasing their reliance on consultants, they of say executives workers. or contingent ployees, ● ● ● ● ● ● ● ● More recently, technology has now progressed to the point that in some industries, em in some industries, progressed to the point that technology has now recently, More Globalization also plays a role in disrupting the structure of a role in access By providing Globalization also plays the firm. For example, a key obstacle to contracting out work is that it can be difficult to establish a establish to be difficult that it can is work out to contracting obstacle a key example, For National Bureau of Economic Research. March 29. krueger_cws_-_march_29_20165.pdf Katz and Krueger 2016. “The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015.” Katz and Krueger 2016. “The publication/evaluating-growth-1099-workforce Different and Why It Matters” National Bureau of Economic Research, Dec. Different and Why It Matters” National Bureau of Economic Research, Dec. Dourado and Koopman 2015. “Evaluating the Growth of the 1099 Workforce.” Mercatus Center. Dec 10. Dourado and Koopman 2015. “Evaluating the Growth of the 1099 Workforce.” Baldwin 2011. “Trade and Industrialisation After Globalisation’s 2 and Industrialisation After Globalisation’s Baldwin 2011. “Trade pdf Blinder 2005. “Fear of Offloading.” Princeton University, Dec. Blinder 2005. “Fear of Offloading.” Princeton University, Dec. edu/ibs/es/alston/econ4504/readings/The%20Nature%20of%20the%20Firm%20by%20Coase.pdf Coase 1937. “The Nature of the Firm”. Economica, New Series, Vol. 4, No. 16. (Nov., 1937), pp. 386-405. 1937), pp. 16. (Nov., 4, No. Nature of the Firm”. Economica, New Series, Vol. Coase 1937. “The future-survey/ Burston Marsteller 2016. “Workforce of the Future Survey.” June 30. Burston Marsteller 2016. “Workforce of the Future Survey.” Oxford Economics 2014. “Workforce 2020: The Looming Talent Crisis.” Talent Looming Oxford Economics 2014. “Workforce 2020: The wp-content/uploads/2014/11/Workforce-2020-The-Looming-Talent-Crisis.pdf 19 20 17 18 15 16 14 cent years: and contingent labor is not new and remains a modest share of the total economy, evidence evidence of and remains a modest share labor is not new and contingent the total economy, re accelerated in has arrangements work alternative toward that the movement suggests ployment itselfployment and supervise to onboard, schedule, with an online platform can be replaced the use of While relationship. employment contract stable without a traditional workers er than produce in-house. This phenomenon is also accelerated by technological innovation, technological innovation, by is also accelerated This phenomenon er than produce in-house. well. them to be offshored as allowing more services tradable, makes which to the global labor supply, businesses can more easily contract with suppliers overseas rath overseas suppliers with contract easily can more businesses labor supply, global to the generally involves searching for vendors and negotiating prices, which can be costly and can be costly which prices, and negotiating vendors for searching involves generally becomes significantly this process emerge, marketplaces But as online time-consuming. and outsourcing. additional contracting fueling more manageable, fair price for the good or service that would otherwise internally. produced be service or that would the good for fair price THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 9 ------https:// - Harvard
2014 22 W-2 FORMS W-2 2010 http://ilr.sagepub.com/con https://www.dol.gov/whd/overtime/ 1099-MISC FORMS 1099-MISC 2006 http://laborcenter.berkeley.edu/pdf/2016/Produc Perversely, these arrangements provide provide these arrangements Perversely, 24
23 2002 1998 FIGURE A. INDEXED NUMBER OF TAX FORMS, 1994-2014 FORMS, TAX OF NUMBER INDEXED A. FIGURE Between 1989 and 2014, the share of 1989 and Between production frontline manufacturing 21 Additionally, the Affordable Care Act’s employer mandate encourages busi mandate encourages employer Act’s Care Affordable the Additionally, 1994 25
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90 110 130 indexed (2000=100) number of tax forms tax of number (2000=100) indexed Note: The Vertical axis does not begin at zero. axis does not Vertical Note: The Source: Dourado and Koopman 2015 calculations of IRS data Labor regulations have also played a role in accelerating this trend towards greater reli a role in accelerating this trend towards also played Labor regulations have This trend has affected more than just traditionally low-wage work, but also manufactur but also work, low-wage traditionally than just more affected trend has This Department 2016. “Final Rule: Overtime.” Wage and Hour Division. May 18. of Labor nprm2015/ Batt, Holman, and Holtgrewe 2009. “The Globalization of ServiceBatt, Holman, and Holtgrewe 2009. “The Work: Comparative Institutional Perspectives on Call tent/62/4/453.abstract Centers,” Introduction to a Special Issue of Industrial & Labor Relations Review 62, no. 4 Relations Review 62, no. Centers,” Introduction to a Special Issue of Industrial & Labor University Press. pg. 77-78. Weil 2014. “The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It.” Fissured Workplace: Why Weil 2014. “The Jacobs, Perla, Perry, and Graham-Squire 2016. “Producing Poverty: Production Jobs in Manu Public Cost of Low-Wage The facturing.” UC Berkeley Center for Labor Research and Education. May. Research and Education. May. facturing.” UC Berkeley Center for Labor ing-Poverty.pdf still-need-government-help/ www.washingtonpost.com/news/wonk/wp/2016/05/10/the-staggering-number-of-people-with-good-factory-jobs-who- Tankerlsey 2016. “A staggering number of people with factory jobs still need government help.” Washington Post. May. 2016. “A staggering number of people with factory Washington Post. May. jobs still need government help.” Tankerlsey 25 23 24 22 21 training investment. employment. of to be the targets making them less likely to part-time, workers full-time nesses to move even less security to workers. The U.S. Department of Labor’s revised overtime rule – which rule – overtime Department of revised U.S. Labor’s The less security to workers. even of – is a recent example to 5 million more workers poli coverage overtime expand would W-2 formal for workers contract and contingent to substitute lead businesses cy that may ment, thus encouraging businesses to rely more heavily on contract and contingent work work on contract and contingent more heavily rely ment, thus encouraging businesses to these regulations. by are not covered which wage, overtime, workers’ compensation, unemployment insurance, leave policies, and policies, leave insurance, compensation, unemployment workers’ overtime, wage, of flexibility can raise the cost and decrease the safety workplace formal, full-time employ ance on contingent work. Regardless of their overall merits, regulations like the minimum regulations like of merits, Regardless work. ance on contingent their overall the middle class.” the middle percent to 9 percent. rose from 1 agencies staffing third party by jobs employed ing, which has historically been characterized by well-paying jobs that provided “a ladder to ladder “a provided jobs that well-paying by been characterized has historically ing, which THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 10 The firm itself appears to havemoderating a effecton compensation inequality. So asbusinesses contractout low-wage worksuch as customerservice, the wagesand benefits forthese jobs often fall. ------http:// - Harvard
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But these fairness concerns tend 38
Studies of specific U.S. industries Studies ofU.S. specific 37 29
36 http://ilr.sagepub.com/content/63/2/287.abstract http://laborcenter.berkeley.edu/pdf/2016/Producing-Pov https://www.princeton.edu/~amas/papers/card-mas-moretti- http://www.nelp.org/content/uploads/2015/03/Whos-the-Boss-Restor January 2010 63: 287-306. http://www.nber.org/papers/w21366 http://www.nelp.org/content/uploads/Independent-Contractor-Costs.pdf
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33 The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It.” Fissured Workplace: Why Work Became So Bad for So The
“ 32 Industrial & Labor Relations Review
31 http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2007.00665.x/abstract
30 This is in part because the firm itselfeffect on compensa a moderating have appears to For example, Goldschmidt and Schmieder (2015) examined German data and found that found and data German examined (2015) Schmieder and Goldschmidt example, For Dube and Kalplan 2010. “Does Outsourcing Reduce Wages in the Low-Wage ServiceDube and Kalplan 2010. “Does Outsourcing Reduce Wages in the Low-Wage Occupations? Evidence from Janitors and Guards.” University Press. Weil 2014. Goldschmidt and Schmieder 2015. “The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure.” Na and the Evolution of the German Wage Structure.” Rise of Domestic Outsourcing Goldschmidt and Schmieder 2015. “The Bernhardt, Batt, Houseman, and Appelbaum 2015. “Domestic Outsourcing in the United States: A Research Agenda to Assess Bernhardt, Batt, Houseman, and Appelbaum 2015. “Domestic tional Bureau of Economic Research. July. tional Bureau of Economic Research. July. Trends and Effects on Job Quality.” Center for Economic Policy Research. December. and Effects on Job Quality.” Trends ports/working-paper-domestic-outsourcing-2016-03.pdf Liberal Market Economies,” British Journal of Industrial Relations, 48 (2), 400-435. viewcontent.cgi?article=1350&context=articles Batt, Nohara, and Kwon 2010. “Employer Strategies and Wages in New Service Activities: A Comparison of Coordinated and Doellgast, Holtgrewe and Deery Globalization of Service 2009. The on Call Work: Comparative Institutional Perspectives Centers. Industrial and Labor Relations Review, Vol. 62, No. 4. (Jul., 2009), pp. 489-509 4. (Jul., 2009), pp. 62, No. Relations Review, Vol. Centers. Industrial and Labor ilrreview/vol62/iss4/2/ tent/62/4/453.abstract Centers,” Introduction to a Special Issue of Industrial & Labor Relations Review 62, no. 4 Relations Review 62, no. Centers,” Introduction to a Special Issue of Industrial & Labor Batt, Holman, and Holtgrewe 2009. “The Globalization of ServiceBatt, Holman, and Holtgrewe 2009. “The Work: Comparative Institutional Perspectives on Call Song, Price, Guvenen, Bloom, von Wachter 2015. “Firming Up Inequality.” National Bureau of Economic Research, May. National Bureau of Economic Research, May. Song, Price, Guvenen, Bloom, von Wachter 2015. “Firming Up Inequality.” www.nber.org/papers/w21199 Work.” National Employment Law Project, May. Project, May. Work.” National Employment Law ing-Accountability-Labor-Standards-Outsourced-Work-Report.pdf?nocdn=1 Ruckelshaus, Smith, Leberstein, and Cho 2014. “Who’s the Boss: Restoring Accountability for Labor Standards in Outsourced the Boss: Restoring Accountability for Labor and Cho 2014. “Who’s Ruckelshaus, Smith, Leberstein, National Employment Law Center 2015. “Independent Contractor Misclassification Imposes Huge Costs on Workers and Feder Center 2015. “Independent Contractor Misclassification Imposes Huge Costs on National Employment Law al and State Treasuries.” July. July. al and State Treasuries.” ic Review, Volume 102, Number 6, October, pp. 2981-3003(23) 102, Number 6, October, pp. ic Review, Volume saezAER11ucpay Card, Mas, Moretti, and Saez 2012. “Inequality at Work: The Effect of Peer Salaries on Job Satisfaction.” The American Econom Effect of Peer Salaries on Job Satisfaction.” The Card, Mas, Moretti, and Saez 2012. “Inequality at Work: The 59–75. Berlinski 2008. “Wages and Contracting Out: Does the Law of One Price Hold?” British Journal of Industrial Relations, 46: Law Berlinski 2008. “Wages and Contracting Out: Does the Jacobs, Perla, Perry, Graham-Squire 2016. “Producing Poverty: Production Jobs in Manufactur Public Cost of Low-Wage The ing.” UC Berkeley Center for Labor Research and Education, May. Research and Education, May. ing.” UC Berkeley Center for Labor erty.pdf 38 37 35 36 34 32 33 31 29 30 27 28 26 ing out has become more common, technologies have allowed more services to be provided more services to be provided allowed have ing out has become more common, technologies not to exceed the boundaries of the firm. So as businesses contract out low-wage work such work the boundaries ofnot to exceed contract out low-wage So as businesses the firm. as contract Moreover, for these jobs often fall. and benefits the wages as customer service, tion inequality – fairness concerns on the part of employees prevent the disparity between the disparity between the part oftion inequality – fairness concerns on prevent employees too large. from growing workers and high-wage low- benefits and more turnover (Batt, Holman, and Holtgrewe 2009; Batt, Nohara, and Kwon Nohara, and 2009; Batt, Holtgrewe and Holman, (Batt, benefits and more turnover 2010). agriculture workers (Ruckelshaus, Smith, Leberstein, and Cho 2014). Studies ofStudies center call 2014). Cho and Leberstein, Smith, (Ruckelshaus, workers agriculture and also leads to less 8 percent, roughly by wages that outsourcing reduces found workers have had similar findings: outsourcing lowered wages by 27 percent for manufacturing jobs for manufacturing 27 percent by wages lowered outsourcing had similar findings: have 8 to 24 per janitors and by 4 to 7 percent for 2016); by Graham-Squire Perry, Perla, (Jacobs, for port trucking and 40 percent 30 percent for 2010); by and Kaplan guards (Dube cent for outsourcing caused wages to fall by 10 to 15 percent. to fall by wages outsourcing caused that moving workers outside of the firm’s boundaries generally leads to lower wages and wages lower to leads generally boundaries ofoutside workers firm’s the moving that reduced benefits. ers. While limited data in the U.S. makes it difficult to quantify this effect across all indus effect across this to quantify it difficult makes U.S. limited data in the While ers. suggests industries strongly specific domestic countries and from from other evidence tries, Disruptions Disruptions to Workers work on a significant impact contracting has had outsourcing and reliance on This growing THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 11 Capital has becomeless“patient” as theaverage holdingperiod fell fromabout eight yearsin the 1960’s to justfour months by2012. - - - - - 42 39 http://dealbook. https://www.washingtonpost. http://ilr.sagepub.com/con 43 For example, Batt et al (2009) found that subcontracted found that Batt et al (2009) example, For 41 These flatter firms also tend to exhibit fewer career pathways, pathways, fewer career exhibit to also tend These flatter firms 40 http://www.epi.org/publication/standard-models-benchmark-costs-globalization/ http://ilr.sagepub.com/content/69/2/405 Generally, business management has relented to these pressures. For years, businesses years, For pressures. to these has relented management business Generally, Second, it caused managers to reallocate resources within the company. While manag While company. the within resources reallocate to managers caused it Second, This new pressure from investors had two effects. First, it pushed managers to focus to First, it pushed managers effects. had two from investors pressure This new Disruptions to the firm structure have also been leading to a decline in labor union power. union power. also been leading to a decline in labor structure have Disruptions to the firm This can also lead to less investment in the workforce. Traditionally, low-wage workers in workers low-wage Traditionally, workforce. in the also lead to less investment This can March 2016 vol. 69 no. 2 405-434. no. March 2016 vol. 69 Waddoups 2016. “Did Employers in the United States Back Away from Skills Training during the Early 2000s?” ILR Review Waddoups 2016. “Did Employers in the United States Back Away from Skills Training Economic Policy Institute. March 22. Economic Policy Institute. Bivens 2013. “Using standard models to benchmark the costs of globalization for American workers without a college degree.” a college degree.” Bivens 2013. “Using standard models to benchmark the costs of globalization for American workers without Eisinger 2012. “Challenging the Long-Held Belief in ‘Shareholder Value.” The New York Times, June 27. New York The Belief in ‘Shareholder Value.” Eisinger 2012. “Challenging the Long-Held nytimes.com/2012/06/27/challenging-the-long-held-belief-in-shareholder-value/?_r=1 Batt, Holman, and Holtgrewe 2009. “The Globalization of ServiceBatt, Holman, and Holtgrewe 2009. “The Work: Comparative Institutional Perspectives on Call tent/62/4/453.abstract Centers,” Introduction to a Special Issue of Industrial & Labor Relations Review 62, no. 4 (2009) 4 (2009) Relations Review 62, no. Centers,” Introduction to a Special Issue of Industrial & Labor com/news/wonk/wp/2016/01/11/feeling-stuck-in-your-job-blame-management-consulting/ DePhillis 2016. “Feeling stuck in your job? Blame management consulting.” The Washington Post. DePhillis 2016. “Feeling stuck in your job? Blame management consulting.” The 43 41 42 39 40 had consistently paid about halfhad consistently of and retained the other half their profits to investors greater share of profits be returned to them. these ers had previously been given the freedom to allocate growing profits between investors, investors, profits between growing the freedom to allocate been given ers had previously demanding a now were investors back into the company, and reinvestment the workforce, specialized units. their business on “core competencies,” contributing, along with technological innovation innovation technological with along contributing, competencies,” “core on business their of more devolution to the aforementioned the firm structure into smaller, and global trade, ed with stock in the company. Capital became less “patient” as the average holding period average Capital became less “patient” as the ed with stock in the company. 2012. months by in the 1960s to just four years from about eight fell as investors began to assert their power over management by demanding higher returns on by management over to assert their power began as investors compensat were increasingly and board members themselves their capital, and executives The decline of the firm structure has also coincided with a rise in investor power. Prior to power. ofThe decline investor a rise in coincided with has also structure the firm and strong labor executives powerful characterized by corporations were large the 1980s, shifted in the 1980s But this dynamic role. passive a mostly playing with investors unions, Rising Pressure for Short-Term Returns for Short-Term Rising Pressure with non-union workers. Workers have lost their voice in corporate governance. in corporate lost their voice have Workers with non-union workers. For decades, unions successfully pressured businesses to share the firm’s prosperity with prosperity the firm’s businesses to share pressured successfully unions decades, For Contracting out and training investments. of benefits, in the form workers higher wages, replacing union workers by contributed to the decline in union power and outsourcing have call-centers invested 50 percent less in entry 50 percent less in training than in-house centers. call-centers invested ing (and wages and benefits). ing (and wages training. for the incentive lowering those low-wage administrative jobs are outsourced, they can end up working for smaller spe for can end up working are outsourced, they jobs administrative those low-wage including train by cutting costs, compete vigorously to firms that have cialized contracting large, vertically-integrated companies are provided more career pathways, and therefore the and therefore pathways, more career are provided companies vertically-integrated large, But when internal talent. cultivate to in its workforce in investing has an interest company overseas, where there can be fewer worker and environmental protections and labor is less is less and labor protections environmental and worker can be fewer there where overseas, wages. on pressure downward additional puts competition This expensive. THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 12 Starting in the 1980s, investor payouts – includingboth dividendsstock and buybackshave – on averageconsumed 90%profits. of In recentyears, payouts toinvestors have actually exceededprofits. - - - https:// https:// https:// 2011 2001 Dividends 1991 44 1981 Profits 1971 profits (see Figure B). profits (see Total Payouts Total 1961 exceeded And second, unlike physical capital and R&D investments that are reported capital and R&D investments physical And second, unlike 1951 49 http://www.businessinsider.com/blackrock-ceo-larry-fink-letter-to-sp-500-ceos-2016-2 http://rooseveltinstitute.org/wp-content/uploads/2015/11/Understanding-Short-Termism.pdf Investments in human capital – such as workforce training – are particularly training – are particularly as workforce in human capital – such Investments
47 48 http://sites.nationalacademies.org/cs/groups/pgasite/documents/webpage/pga_168146.pdf 1 8 7
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-1 In a letter to fellow chief executives, the CEO of CEO the lamented Fink chief Lawrence fellow BlackRock to letter a In executives, FIGURE B. PROFITS, INVESTMENTS, AND PAYOUTS: PUBLICLY TRADED COMPANIES TRADED PUBLICLY PAYOUTS: AND INVESTMENTS, PROFITS, B. FIGURE As investors demanded more, workers got less. got workers demanded more, As investors %of Sales %of is profits plus depreciation. Cashflow Source: Roosevelt Institiute analysis based on Compstant database. 46 45 Short-termist pressures have also impacted businesses’ ability to make long-run invest also impacted businesses’ ability to make have Short-termist pressures Popadak 2013. “A Corporate Culture Channel: How Increased Shareholder Governance Reduces Firm Value” Oct 25. Popadak 2013. “A Corporate Culture Channel: How Increased Shareholder Governance Reduces Firm Value” Summers and Ball 2015. “Report of the Commission on Inclusive Prosperity.” Center for American Progress. January. Center for American Progress. January. Summers and Ball 2015. “Report of the Commission on Inclusive Prosperity.” poole.ncsu.edu/gradecon/images/pages/Popadak_Paper_A_Corporate_Culture_Channel(1).pdf cdn.americanprogress.org/wp-content/uploads/2015/01/IPC-PDF-full.pdf Armenter 2015. “A Bit of a Miracle No More: The Decline of the Labor Share.” Federal Reserve Share.” Bank of Philadelphia. Decline of the Labor Armenter 2015. “A Bit of a Miracle No More: The www.philadelphiafed.org/-/media/research-and-data/publications/business-review/2015/q3/brq315_a_bit_of_a_mira cle_no_more.pdf Institute. Nov 6. Institute. Konczal, Mason, and Page-Hoongrajok 2015. “Understanding Short-Termism: An Investment Agenda for Growth.” Roosevelt Agenda for Growth.” An Investment Konczal, Mason, and Page-Hoongrajok 2015. “Understanding Short-Termism: Sciences. Lerman 2015. “Are Employers Providing Enough Training? Theory, Evidence and Policy Implications.” National Academy of 2015. “Are Employers Providing Enough Training? Lerman Turner 2016. “Here is the letter the world’s largest investor, BlackRock CEO Larry largest investor, Fink, just sent to CEOs everywhere.” Feb 2. 2016. “Here is the letter the world’s Turner Business Insider. 49 47 48 46 44 45 many years. many term value.” First, their accounting treatment is the reasons. two short-termism for by disadvantaged much of but same as immediate expenses, and spread over is hard to measure their value ments. expense the influence offocused on maximizing near-term profit at the of long- “investors cantly. For nearly 50 years, worker income remained a steady share of share income remained a steady But in worker total national income. 50 years, nearly For signifi fallen has share that years, fifteen last the in notably most and decades, few last the Short-termism Squeezes Workers Short-termism and benefits. pay worker on dramatic effect has had a investors This emphasis on rewarding investors have actually actually have investors within the company. But starting in the 1980s, investor payouts – including both dividends dividends both – including payouts investor the 1980s, starting in But the company. within to payouts 90% of years, consumed In recent profits. on average – have buybacks and stock THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 13 A survey of 400Chief Financial Officers founda majoritythat wouldavoid making aninvestment withpositive a net presentvalue if doing sowould cause thecompany to fallshort of its currentquarterly consensusearnings. ------https://faculty.fuqua. investment opportuni investment lack http://pubsonline.informs.org/doi/ 54
53 The intense focus on the short-run has focus The intense 52 But even these investors might punish companies might these investors But even 50 This in turn created a disincentive for training investments. This in turn created a disincentive https://cdn.americanprogress.org/wp-content/uploads/2015/10/21060054/LongTer 55 https://www.whitehouse.gov/sites/default/files/page/files/20150930_business_investment_in_the_unit http://www.brookings.edu/~/media/research/files/papers/2015/06/30-american-economy-growth-strat http://rooseveltinstitute.org/wp-content/uploads/2015/11/Understanding-Short-Termism.pdf 51 The decline of for inter often pushed also accelerated this trend. Unions union power This has led to a management culture that is biased against long-run value creation. For value creation. long-run against that is biased culture a management to has led This Certainly, there are shareholders who are willing to sacrifice current profits to fund invest fund to profits current sacrifice to willing are who shareholders are there Certainly, Institute. Nov 6. Institute. Konczal, Mason, and Page-Hoongrajok 2015. “Understanding Short-Termism: An Investment Agenda for Growth.” Roosevelt Agenda for Growth.” An Investment Konczal, Mason, and Page-Hoongrajok 2015. “Understanding Short-Termism: Bidwell 2013. “What Happened to Long-Term Employment? The Role of Worker Power and Environmental Turbulence in Turbulence Role of Worker Power and Environmental Employment? The Bidwell 2013. “What Happened to Long-Term Explaining Declines in Worker Tenure.” Organization Science, March 21. 24:4, 1061-1082. Explaining Declines in Worker Tenure.” abs/10.1287/orsc.1120.0816 Furman 2015. “Business Investment in the United States: Facts, Explanations, Puzzles, and Policies” Council of Economic in the United States: Facts, Explanations, Puzzles, Furman 2015. “Business Investment Advisors. Sept 30. ed_states.pdf Institution. June. Institution. June. egy-galston-kamarck/cepmglastonkarmarck4.pdf Galston and Kamarck 2015. “More builders and fewer traders: a growth strategy for the American economy.” Brookings Galston and Kamarck 2015. “More builders and fewer traders: a growth strategy for the American economy.” Graham, Harvey, Implications of Corporate Financial Reporting.” Economic and Rajgopal 2005. “The duke.edu/~charvey/Research/Working_Papers/W73_The_economic_implications.pdf Center for American Progress. Oct. mism-reportB.pdf Jarsulic, Duke, and Madowitz 2015. “Long-Termism or Lemons: The Role of Public Policy in Promoting Long-Term Investments.” Investments.” Role of Public Policy in Promoting Long-Term The or Lemons: Jarsulic, Duke, and Madowitz 2015. “Long-Termism 54 55 53 51 52 50 ways and higher turnover. ways nal labor markets that focused on training and cultivating internal talent. But as investors internal talent. But as investors on training and cultivating that focused nal labor markets businesses had a freer hand to governance, within corporate gained and unions lost power within-firm career path fewer often leading to candidates, external hire already-trained likely contributed to a decline in business investment. contributed to a decline in business likely an investment with a positive net present value iffall to net present value cause the company a positive with doing so would an investment short of earnings. consensus quarterly its current example, a survey ofavoid making a survey 400 Chief example, would found that a majority Financial Officers there would be a perception that the remaining public companies be a perception that the remaining there would to tolerate heavy be unlikely would most patient investors the even Under this scenario, ties. investment. who engage in long-term investments. If firms with ample investment opportunities stay pri If opportunities stay firms with ample investment in long-term investments. engage who investments, over short-term profits favor public capital markets the know because they vate pension funds and insurance companies, which represent about 20 percent of represent about which companies, insurance pension funds and equity own horizon. operate on a longer-term ership, investing in their workforces and businesses with high expense levels. with high expense and businesses in their workforces investing like investors institutional example, For profitability. long-run raise a business’s ments that in Form 10-K to the SEC each year, there is no standardized way to report training invest report training to way is no standardized there each year, to the SEC 10-K in Form businesses between discerning time difficult a have markets capital so investors, to ments THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 14 ------This 56 http://www.bls.gov/opub/ http://stateofworkingamerica.org/chart/swa-wages-figure- 57 http://www.epi.org/publication/understanding-the-historic-di 59
58 technology- and trade-driven firm segmentation on the one hand, firm segmentation and trade-driven technology- 60 http://www.epi.org/publication/raising-americas-pay-data/
Moreover, businesses are phasing out defined benefit retirement plans, in which the which in plans, retirement benefit defined out phasing are businesses Moreover, Stagnating wages are only a part of the story. Employment benefits – such as retirement benefits – Employment a part of are only Stagnating wages the story. But as businesses were pressured to cut their costs by contracting out, and as more and contracting to cut their costs by pressured But as businesses were
mlr/2012/12/art1full.pdf Wiatrowski 2012. “The last private industry pension plans: a visual essay.” Bureau of Labor Statistics. Bureau of Labor last private industryWiatrowski 2012. “The a visual essay.” pension plans: We cannot attribute all the decline in employer-provided health coverage to the changing relationship between businesses We cannot attribute all the decline in employer-provided health coverage to the changing relationship between Bivens and Mishel 2015. “Understanding the Historic Divergence Between Productivity and a Typical Worker’s Pay: Why It Worker’s Bivens and Mishel 2015. “Understanding the Historic Divergence Between Productivity and a Typical and employees, as rising health care costs have undoubtedly also played a role. Matters and Why It’s Real.” Economic Policy Institute. Sept 2. Real.” Economic Policy Institute. Matters and Why It’s vergence-between-productivity-and-a-typical-workers-pay-why-it-matters-and-why-its-real/ Bivens, Gould, Mishel, and Shierholz 2014. “Raising America’s Pay: Why It’s Our Central Economic Policy Challenge.” Economic Challenge.” Our Central Economic Policy Pay: Why It’s 2014. “Raising America’s Bivens, Gould, Mishel, and Shierholz Policy Institute, June 4. groups of workers, 1995–2013.” The State of Working America. groups of workers, 1995–2013.” The 4a-change-total-economy/ Economic Policy Institute 2014. “Cumulative change in total economy productivity and real hourly compensation of selected Economic Policy Institute 2014. “Cumulative change in total economy productivity and real hourly compensation 60 58 59 57 56 nesses provide defined benefit plans to less than a fifth of their workers, down from over a down from defined benefit plans to less than a fifthworkers, nesses provide of their 1990s. third in the early business assumes the risk of longevity, replacing them with plans like 401(k)s, a form of a form 401(k)s, replacing them with plans like the risk ofbusiness assumes longevity, busi Today, oflevel same the security. retirement not provide does that savings personal ment coverage has declined from over half has declined from over of has to 42 percent, and health insurance workers ment coverage half. declined from 70 percent to just over curity. But over the last few decades, businesses have provided their workers with fewer and fewer with their workers provided businesses have decades, the last few But over curity. retire employer-provided 1979 and today, data, between According to Census benefits. fewer and health insurance – have historically provided workers with much-needed economic se workers provided historically – have and health insurance verged, with productivity continuing to rise but real hourly compensation stagnating. compensation continuing to rise but real hourly with productivity verged, degree. with a college workers for is true even made the company profitable. made the company compensation di worker and productivity to shareholders, were diverted more profits agreement: as businesses became more successful, workers and owners together shared in together and owners workers successful, agreement: as businesses became more a cost, but an asset that were not just workers The bargain recognized that the prosperity. For most of the post-war period through the 1970s, productivity and real hourly worker worker and real hourly most of productivity period through the 1970s, For the post-war This reflected an implicit and benefits – rose together. includes wages compensation – which Stagnating Worker Pay and Benefits and Pay Worker Stagnating business, leaving workers with less pay, greater economic insecurity, and fewer opportuni and fewer economic insecurity, greater with less pay, workers leaving business, skills training. ties for THESE TWO TRENDS THESE TWO – and workers contract between on the other – are undermining the social and short-termism PROBLEMS THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 15 ------http:// 67 62 69 https://www.whitehouse.gov/sites/default/ http://www.nytimes.com/2006/10/29/books/ A recent Accenture survey shows that shows survey Accenture recent A 66 This is because, according to a report from This is because, 68 http://www.hitachifoundation.org/storage/documents/DWDG_ http://research.upjohn.org/cgi/viewcontent.cgi?article=1175&contex http://www2.itif.org/2012-senate-finance-manufacturing.pdf But unfortunately, personal savings has also fallen: the average fallen: the average has also savings personal But unfortunately, http://papers.nber.org/tmp/79075-w20733.pdf 61 Over this same time period, formal programs that combine on- programs that combine same time period, formal this Over 65 http://ilr.sagepub.com/content/69/2/405 This decline in training was widespread, across industries, occupations, occupations, industries, across widespread, was training in This decline 64 Over the last decade, businesses spending on training as a share of businesses spending last decade, the Over the economy 63 http://www.youtheconomicopportunities.org/sites/default/files/uploads/resource/Accenture-Solving-the-Skills-Para Moreover, many low- and middle-wage workers do not benefit from existing training in training existing from not benefit do workers middle-wage and low- many Moreover, The decline in worker benefits – dubbed in 2006 by Jacob Hacker as “The Great Risk Great “The as Hacker Jacob by 2006 in – dubbed benefits worker in decline The Weber 2014. “Apprenticeships Help Close the Skills Gap. So Why Are They in Decline?” Wall Street Journal. April 27. So Why Are They Weber 2014. “Apprenticeships Help Close the Skills Gap. www.wsj.com/articles/SB10001424052702303978304579473501943642612 Levine, Popovich, and Strong 2013. “Doing Well or Doing Good: Pioneer Employers Discover Profits and Deliver OpportunityLevine, Waddoups 2016. “Did Employers in the United States Back Away from Skills Training during the Early 2000s?” ILR Review March Waddoups 2016. “Did Employers in the United States Back Away from Skills Training Web_Final.pdf for Frontline Workers.” The Hitachi Foundation. September. for Frontline Workers.” The 2016 vol. 69 no. 2 405-434. no. 2016 vol. 69 Atkinson 2012. “Hearing on Tax Reform Options: Incentives for Capital Investment and Manufacturing.” Information Technology and Manufacturing.” Information Technology Reform Options: Incentives for Capital Investment Atkinson 2012. “Hearing on Tax and Innovation Foundation. March 6. files/docs/cea_2015_erp.pdf Council of Economic Advisors 2015. “Economic Report of the President: 2015.” Lerman, McKernan, and Riegg 2004. “The Scope of Employer-Provided Training in the United States: Who, What, Where, and Scope of Employer-Provided Training McKernan, and Riegg 2004. “The Lerman, How Much?” In Job Training Policy in the United States, Christopher J. O’Leary, Robert A. Straits, and Stephen A. Wandner, How Much?” In Job Training 211-244. Upjohn Institute, pp. eds. Kalamazoo, MI: W.E. t=up_bookchapters Wolff 2014. “Household Wealth Trends in the United States, 1962-2013: What Happened over the Great Recession?” National in the United States, 1962-2013: Wolff 2014. “Household Wealth Trends Bureau of Economic Research. Dec. Bureau of Economic Research. Dec. ture. ture. dox.pdf Smith, De Leon, Marshall, and Cantrell 2012. “Solving the Skills Paradox: Seven Ways to Close Your Critical Skills Gaps.” Accen Marshall, and Cantrell 2012. “Solving the Skills Paradox: Seven Ways to Close Your Smith, De Leon, review/Leonhardt.t.html?_r=0 Leonhardt 2006. “The Shrinking Safety Net.” The New York Times, Oct 29. York New Shrinking Safety Net.” The 2006. “The Leonhardt 69 69 67 68 65 66 64 62 63 61 investments designed to achieve specific business objectives. to achieve designed investments the Hitachi Foundation, training investments are often managed as worker benefits – which – benefits worker as managed often are investments training Foundation, Hitachi the development rather than workforce – higher-paid workers towards are skewed themselves vestments because businesses disproportionately direct their training expenditures to the their training expenditures direct because businesses disproportionately vestments highest-paid and highest-educated workers. most effective programs – have fallen by 40 percent. 40 by fallen have – programs effective most years. five training in the last employer-provided received workers in five one only and demographic groups. considered to be the classroom education – generally the-job learning with mentorships and Figure C). in half. cut was The twin trends of firm segmentation and short-termism have also led to businesses invest The twin trends of also led to businesses have and short-termism firm segmentation em the percent of that received workers Since the mid-1990’s, ing less in their workforce. (see 42 percent and 36 percent, respectively by fell or on-the-job training ployer-sponsored Workforce Disinvestment Workforce and downs ofand downs the economy. 1983 and 2013. between $14,000 over by fell net worth household’s Shift” – has forced workers to rely more on personal savings to shield them from the ups the ups them from to shield savings on personal more to rely workers forced – has Shift” THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 16 Since the mid- 1990’s, the percentof workers that received employer-sponsored or on-the-job trainingfell by 42 percentand 36 percent,respectively. - - - 8.4 2008 https://www.white 11.2 https://www.cbinsights. While our recent 72 Employer Paid for Training Employer Paid Training On-the-Job
71 And if prefer workers 70 8.6 2004 12.4 11.7 2001 16.7 the company in the long run. the company OR ON-THE-JOB TRAINING, 1996-2008 TRAINING, ON-THE-JOB OR hurting and Burson-Marsteller found that 43 percent of and Burson-Marsteller found on-demand 13.1 http://www.nelp.org/content/uploads/Independent-Contractor-Costs.pdf TIME 1996 19.4 FIGURE C. PERCENT OF WORKERS RECEIVING EMPLOYER-SPONSORED RECEIVING WORKERS OF PERCENT C. FIGURE But it may also be true that businesses are simply focused on short-term focused businesses are simply also be true that But it may For example, if workers are increasingly valuing alternative work arrange work alternative if valuing example, are increasingly For workers workers like the independence and flexibility of their new work arrangements, of the independence and flexibility like work arrangements, workers their new the security and benefits of prefer (41 percent) would working as many nearly employers can reduce payroll costs by as much as 30 percent, and gain more costs by payroll can reduce employers variable costs. to fixed labor costs by shifting flexibility with survey cost-cutting. By using contingent work rather than traditional employment, employment, traditional than rather work using contingent By cost-cutting. In fact, if the trained worker quickly takes a job with a competitor, the invest a job with a competitor, In fact, if takes quickly the trained worker end up ment may ments – which, given the rise of possible is certainly given ments – which, dual-earning households, be accommodating them. simply may – then employers companies. to profitable be won’t investments training job, to job from move to But might this simply be a response to changing worker preferences? be a response to changing worker But might this simply Employers are increasingly reliant on contract work rather than traditional rather reliant on contract work are increasingly Employers as much in their workers. investing aren’t and they relationships, employment Have Worker Preferences Changed? Preferences Worker Have 5 0 15 10 20 Percent Note: Fraction of workers ages 18-65 recieiving training of any duration in the last year. Note: Fraction of workers ages 18-65 recieiving training of any duration Module); CEA calculations Source: Census Bureau, Survey Topical of Income and Program Participation (Employment and Training Council of Economic Advisors 2014. “Work-Life Balance and the Economics of Workplace Flexibility.” June. June. Council of Economic Advisors 2014. “Work-Life Balance and the Economics of Workplace Flexibility.” house.gov/sites/default/files/docs/updated_workplace_flex_report_final_0.pdf com/reports/1099-Problems.pdf Schütte and Poynton 2015. “(10)99 Problems and W2s Ain’t One.” Core Innovation Capital. September. Schütte and Poynton 2015. “(10)99 Problems and W2s Ain’t One.” National Employment Law Center 2015. “Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal Center 2015. “Independent National Employment Law and State Treasuries.” July. July. and State Treasuries.” 72 70 71 THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 17 ------https://faculty.fuqua. 74
Moreover, declining employ declining Moreover, 73 and worker disinvestment affect us all. Eco us all. affect disinvestment and worker , http://asr.sagepub.com/content/79/1/159.abstract http://macroblog.typepad.com/macroblog/2015/06/falling-job-tenure-its-not-just-about-millennials. https://www.princeton.edu/ceps/workingpapers/172farber.pdf This may be driven by changing worker preferences, but it may also be but it may preferences, worker by changing be driven This may 75 The role that shifting worker preferences plays in these employment and in these employment plays preferences worker The role that shifting It does appear that private job tenure has been falling for the last few de few the last falling for tenure has been job that private It does appear quences for the American economy. the quences for training trends deserves further research. But the findings of further research. But the findings training trends deserves report are this greater econom cause, research question: no matter the to this not sensitive significant conse training have ic insecurity and falling employer-provided higher levels of training. higher levels worker decline of labor unions may have also played a role: as previously noted, unions noted, a role: as previously also played decline ofhave labor unions may for and advocated labor markets internal training-intensive often reinforced that as businesses invest less in their workforce, workers are forced to switch to switch are forced workers workforce, less in their invest that as businesses The their career. to advance option remaining only as the jobs more frequently cused on short-run profits and forgoing long-run investment. forgoing and short-run profits cused on cades. for traditional companies with less flexibility. less with companies traditional for trend of broader with the fits training er-provided fo being more businesses
http://www.aspeninstitute.org/about/blog/time-magazine-gig-economy-future-of-work-aspen-institute For example, stagnant wages and greater economic insecurity have led to falling living led to falling living and greater economic insecurity have stagnant wages example, For
Princeton study: Married female tenure report: childbirth suggests that worker tenure declines among male and nev is no longer as disruptive to a career as it once was. This data by the separate er-married women are indicative of a broader labor market instability, but this is somewhat masked in the trend of the changing norms and policies surrounding women in the workplace. Atlanta Fed analysis: html Atlanta Fed re-aggregated the data by birth year instead of survey year, and found that tenure was actually falling among all Second, a study by Henryage groups over time. University explains that it is important Farber at Princeton to focus narrowly on the BLS data do private sector tenure, which has fallen, rather than including public sector tenure, which has risen. And finally, risen, which offsets show that tenure is falling for male and never-married female workers, but that married female tenure has the American Sociological Review found that married female job tenure has risen is because A study for the male decline. keep in mind. First, the job tenure trends in the BLS data appear sensitive to changes in aggregation method – for example, the keep in mind. First, the job tenure trends in the BLS data appear sensitive to changes in aggregation method Some have noted that the raw BLS data actually suggests that tenure is in fact not falling. However, there are three points to Some have noted that the raw BLS data actually suggests that tenure is in fact not falling. However, there Reed, Bridgeland, and McKay 2016. “What Do On-Demand Economy Workers Want? We Asked Them.” The Aspen Institute. Jan Aspen Institute. The Reed, Bridgeland, and McKay 2016. “What Do On-Demand Economy Workers Want? We Asked Them.” 7. Graham, Harvey, Implications of Corporate Financial Reporting.” Economic and Rajgopal 2005. “The duke.edu/~charvey/Research/Working_Papers/W73_The_economic_implications.pdf 74 74 75 73 and hard work. These effects all combine to create a virtuous cycle that benefits everyone. benefits cycle that create a virtuous all combine to These effects and hard work. base of demand; where workers have the potential for upward mobility, and thus businesses mobility, upward the potential for base of have workers demand; where the luck of access to a pool of shaped less by intelligence have and more by their birth workers where workers and shareholders alike benefit from training and higher long-run productiv and shareholders alike workers where stablea have businesses where thus and rising wages, experience workers where growth; ity nomic growth does not exist in a vacuum. Rather, it is the product of it is the product Rather, a broader economic in a vacuum. does not exist nomic growth businesses have training opportunities and thus where ample have workers where ecosystem the long-run, and thus in businesses can invest where force; labor access to a well-trained STAGNANT WAGES, ECONOMIC INSECURITY ECONOMIC WAGES, STAGNANT CONSEQUENCES THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 18 Reports from bothS&P and MorganStanley point towage stagnationas one reason whythe latest economicrecovery has beenso anemic. ------This This 81 80 76 Stagnant encourag 77 , a disturbing “op http://blogs.wsj.com/econom
http://www.salon.com/2013/10/23/vid http://www.epi.org/publication/safety-net-savings-from-rais
If these trends continue, the next recovery may be may If recovery the next continue, these trends 78 Our Kids: The American Dream in Crisis in Dream American The Kids: Our http://www.epi.org/publication/wages-and-transfers In fact, there are reports of managers of low-wage workers actively actively In fact, there are reports of workers of managers low-wage 79 their workers to supplement their meager wages with public assistance benefits. wages their meager to supplement their workers Fewer workforce investments are another area that threatens the broader economic eco are another area that threatens investments workforce Fewer Wage stagnation and fewer employer-provided benefits also mean that more workers will workers more that mean also benefits employer-provided fewer and stagnation Wage This makes the economy less resilient. While the economy’s productive capacity (along capacity (along productive While the economy’s less resilient. economy the This makes But stagnant wages and economic insecurity are also bad for the overall economy. Con economy. overall the also bad for and economic insecurity are But stagnant wages eo_mcdonalds_tells_workers_to_get_food_stamps/ Eidelson 2013. “Video: McDonald’s tells workers to get food stamps.” Salon. Oct 23. Eidelson 2013. “Video: McDonald’s Cooper 2014. “Raising the Federal Minimum Wage to $10.10 Would Save Safety Net Programs Billions and Help Ensure Busi Cooper 2014. “Raising the Federal Minimum Wage to $10.10 Would Save Safety Net Programs Billions and nesses Are Doing Their Fair Share.” Economic Policy Institute. Economic Policy Institute. Fair Share.” nesses Are Doing Their ing-minimum-wage/ ics/2014/09/22/why-wall-street-cares-about-inequality/ Da Costa 2014. “Why Wall Street Cares About Inequality.” The Wall Street Journal. Sept 22. Wall Street Journal. Sept 22. The Da Costa 2014. “Why Wall Street Cares About Inequality.” enough to play a very significant role in economic growth. https://dmarron.com/2010/05/27/consumer-spending-is-not-70-of-the-economy/ http://www.va.gov/HEALTHPOLICYPLANNING/ffc/2009/FFC2009_Program.pdf trillion, making consumer spending 68 percent of GDP. But some economists point out that a portion of this consumer spending trillion, making consumer spending 68 percent of GDP. is on imports, which are not counted in GDP (imports are subtracted from exports to get net exports); in other words, if this Carl Chentrens and spending isn’t counted in the numerator, it shouldn’t be counted in the denominator either. BLS economists Arthur Andreassen calculated that excluding consumer spending on imports results in it constituting roughly 60% of GDP – still Arithmetically, this is true: over the last ten years, GDP has averaged $15.6 trillion while consumer spending has averaged $10.6 Arithmetically, this is true: over the last ten years, GDP has averaged $15.6 trillion while consumer spending tom four deciles (Table 3). tom four deciles (Table The $7.3 billion calculation was made by multiplying the $178 $7.3 billion calculation was made by multiplying the million workers in the bot annual change in benefits by the 40.7 The 80 81 79 78 77 76 Putnam 2015. “Our kids: The American Dream In Crisis.” New York : Simon & Schuster. American Dream In Crisis.” New York Putnam 2015. “Our kids: The 76 er debt. Each of these options can have negative effects on the economy. effects er debt. Each of negative these options can have There is a significant body system. of research on the importance of human capital to eco by 2.5 percentage points, and public expenditures would rise by $7.3 billion annually. $7.3 rise by would and public expenditures points, percentage 2.5 by net, or high cuts to the social safety reductions in public investments, leads to higher taxes, pushes costs onto taxpayers: for example, a $1 per hour reduction in wages for the bottom for a $1 per hour reduction in wages example, for pushes costs onto taxpayers: increase the participation rate in public assistance programs 40 percent of would workers programs. ing become more reliant on public safety net programs, with a hefty cost paid by the taxpayer. by the taxpayer. with a hefty cost paid net programs, become more reliant on public safety net benefits from one or more social safety About a quarter of receive already wage-earners economic recovery has been so anemic. has been economic recovery anemic as well. strong consumer demand is often necessary to pull the economy out of demand is often necessarystrong consumer pull the economy to Reports recession. the latest stagnation as one reason why point to wage Stanley from both S&P and Morgan wages and greater economic insecurity thus lead to weaker and more volatile demand. and more volatile to weaker greater economic insecurity thus lead and wages ofwith the growth trajectory, pool) determines the long-run economic growth the labor sumer spending represents 70 percent of spending represents sumer depends in part economic growth as a result, GDP; demand, most of consumer on strong and stable workers. by is generated which generation is not likely to do better than their parents in terms of to do better than their parents is not likely generation economic mobility. thodically catalogues in his book, catalogues in his book, thodically and this not” families, and “have children from “have” between has emerged portunity gap” standards for many Americans. This violates one of This violates Americans. of fundamental tenets the many for standards American off aspire to be better can each generation society: that This has been it. the one before than me Putnam Robert As danger. in currently is it but ofmost for true history, country’s this THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 19 receive benefitsfrom one or moresocial safety netprograms. Wage stagnationand fewer employer-providedbenefits also thatmean more workerswill become more reliant onpublic safety netprograms, with heftya cost paid theby taxpayer. Abouta quarter of wage-earners already ------http://www.pariss https://hbr. 88 87 http://www.sciencedirect.com/science/article/pii/016722319090028J http://science.sciencemag.org/content/344/6186/843.full?ijkey=75Wfa..Upt6b6&key Investments in human capital boost economic growth in two ways: by by ways: two in growth economic capital boost human in Investments 84 This skills gap is caused in part by a failure of in part This skills gap is caused work and our educational
86 83
85 82 http://eml.berkeley.edu/~dromer/papers/MRW_QJE1992.pdf The result is that businesses have a less-valuable workforce upon which to draw. Em which to draw. upon workforce a less-valuable is that businesses have The result Education and skills acquisition is also an important vehicle for upward mobility. The mobility. upward for is also an important vehicle and skills acquisition Education If only a few employers took this approach to talent acquisition, the economic impacts took this approach to talent acquisition, If employers a few only The traditional education system is an important source of human capital investments, source of is an important system education The traditional human capital investments, Kochan, Finegold, Osterman 2012. “Who Can Fix the “Middle-Skills” Gap?” Harvard Business Review. Dec. Kochan, Finegold, Osterman 2012. “Who Can Fix the “Middle-Skills” Gap?” Harvard Dec. Business Review. org/2012/12/who-can-fix-the-middle-skills-gap Cappelli 2012. “Why good people can’t get jobs: The skills gap and what companies can do about it.” Philadelphia: WhartonCappelli 2012. “Why good people can’t get jobs: The Digital Press. choolofeconomics.eu/docs/darcillon-thibault/lucasmechanicseconomicgrowth.pdf Lucas 1988. “On the Mechanics of Economic Development.” Journal of Monetary Economics 22 (1988) 3-42. Romer 1990. “Human Capital And Growth: Theory and Evidence.” Carnegie-Rochester Conference Series on Public Policy, Carnegie-Rochester Romer 1990. “Human Capital And Growth: Theory and Evidence.” 1990, vol. 32, issue 1, pages 251-286. Vol. 344, Issue 6186, pp. 843-851 344, Issue 6186, pp. Vol. type=ref&siteid=sci Autor 2014. “Skills, education, and the rise of earnings inequality among the “other 99 percent” Science Magazine. May 2014. Autor 2014. “Skills, education, and the rise of earnings inequality among the “other 99 percent” Science Magazine. Mankiw, Romer, and Weil 1992. “A Contribution to the Empirics of Economic Growth.” Quarterly Journal of Economics. (1992) 107 (2): 407-437. Cappelli 2012. “Why good people can’t get jobs: The skills gap and what companies can do about it.” Philadelphia: WhartonCappelli 2012. “Why good people can’t get jobs: The Digital Press. 88 86 87 84 85 82 83 we all suffer. we exceptional natural ability are less likely to rise to be identified, depriving businesses of depriving to rise to be identified, natural ability are less likely exceptional and skilled, and dynamic, less resilient, becomes ecosystem The economic their services. ployers are by far the largest source of far the largest are by training, so a decline in training investments skills ployers with mobility means that workers And less upward to a less skilled workforce. leads directly ship between skills and wages has grown stronger over time, suggesting that it is becoming is it that suggesting time, over stronger grown has wages and skills between ship training. more difficult to rise without skills most common way for workers to rise up the income ladder is by continuing to acquire continuing to rise up the income ladder is by workers for most common way In fact, the relation paycheck. and justifying a bigger productive thus becoming more skills, help their employees acquire skills. acquire help their employees force systems to provide better pathways from school to employment, with the education, with the to employment, from school better pathways provide to systems force of jobs fill the can Americans ensure that could credentials and training, fu the and today reluctant to businesses are increasingly the simple fact that But it is also caused by ture. There is evidence that a shortage of “middle-skill” employees is already undermining U.S. U.S. undermining of already is shortage a that evidence is There employees “middle-skill” competitiveness. would be minimal. But in the aggregate, the damage to the economy can be significant. can be significant. the economy to the damage minimal. But in the aggregate, be would hire already-trained workers from elsewhere rather than training low-skill workers for the the for workers low-skill training rather than from elsewhere workers hire already-trained job themselves. as are parents, friends, family, and the community. But the most important source of But the most important job-re and the community. family, friends, as are parents, are trying businesses to however, Increasingly, themselves. is often businesses lated skills nomic growth. nomic adoption. and technological innovation spurring and by more productive workers making THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 20 - - for three simple reasons: First, the forces ofFirst, the forces simple reasons: three for
The goal ofgoal of model The new a inspire to is agenda policy accompanying the that capitalism But the future of ofis too uncertain and the pressures and competition work innovation
empowering workers. Like any broad agenda, no one stakeholder will love every proposal every will love no one stakeholder broad agenda, any Like workers. empowering be built on the promise of bargain must – but a new and the purpose, collaboration, shared to be bold. courage works for everyone. Our policy agenda relies on four separate approaches: realigning busi on four relies policy agenda Our everyone. for works and governance, corporate reforming public information, strengthening ness incentives, the incentives right. the incentives century is far too complex and the gears of bureaucracy far too slow to expect government of century and the gears is far too complex government to expect slow far too bureaucracy a common interest in getting have and government industry, But workers, it, either. to solve dangers to democracy and capitalism alike. dangers the 21st own. Likewise, all these problems on their solve expect companies to too fierce to sures on the average worker. Second, companies are increasingly responsive to short-term responsive companies are increasingly Second, worker. on the average sures capitalism poses grave the failure to shore up democratic Third, from investors. pressures WE BELIEVE A NEW COURSE IS NECESSARY IS COURSE NEW A WE BELIEVE pres intensify than ameliorate the economic to and competition are more likely innovation SOLUTIONS THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 21 ------
The authors would also like to thank Russ Sullivan, Radha Mohan, Danielle Dellerson Mohan, Radha Sullivan, Russ to thank would also like The authors The authors would like to thank the many experts who reviewed drafts drafts and of this paper who reviewed experts to thank the many would like The authors
fer Brown of Brown fer Security. Institute on Retirement National the Loan Genius, Virginia529, Brown Advisory, Doug Cohen and Mayree Clark, Grant Thornton, Doug Cohen and Mayree Advisory, Brown Virginia529, Loan Genius, Jenni and Partners, MBO Etsy, Nellen ofAnnette Capital, José State University, Village San Hayes, William Sanderson, and Gabriel Bitol of McGuire Woods for their assistance in policy for Sanderson, and Gabriel Bitol of William Woods McGuire Hayes, ofinput the facilitating for and experts, academic and development, stakeholders business Student Starbucks, Pearson, GradFin, Linkedin, Foundation, Joyce Navigator, including Ed they nor their organizations necessarily endorse its findings or conclusions. endorse its findings nor their organizations necessarily they and Robert Brown of JUST Capital; Shivaram Rajgopal of of Rajgopal Brown Shivaram Capital; Robert and and School; Business the Columbia JUST the report, neither reviewed have of they Although LLC. Kennedy Research, Joe Kennedy and Society Program; Marc Jarsulic, Karla Walter, Brendan Duke, Alexandra Thornton, Har Alexandra Brendan Duke, Walter, Karla Program; Marc Jarsulic, and Society of Hanks Angela Knauer and Andy American Progress; for the Center Valenti, ry Joe Stein, Smith-Ramani, and David Mitchell of and David Smith-Ramani, Program, Maureen Con Aspen Financial Security the of ofSamuelson way Judy Program; Opportunities Economic Aspen Business Aspen the the Kogod School of Business Tax Policy Center; Barbara Dyer of and of Center; Barbara Dyer School the Hitachi Foundation Policy Kogod Business Tax Men Lenny of ofMIT Sloan School Foundation; Murphy Ed Management; the Peterson Smith, Joanna Jeremy doca, director emeritus of Ida Rademacher, & Company; McKinsey stitute; Jonathan Gruber ofstitute; Jonathan Institute ofthe Massachusetts Technology; Larry Mishel and of Institute; Caroline Bruckner of Bivens Policy the Economic Josh University American the MacGuineas of the Committee for a Responsible Federal Budget; Norm Eisen of Federal Budget; MacGuineas of the Brook Responsible for a the Committee Institution; Eli Lehrer ofings In Marshall of the R St Institute; Will Policy the Progressive cago Booth School of Booth School cago of Business; Laura Tyson of Hass School the UC Berkeley Business; of director former Orszag, Peter the Office Henderson Rebecca and Budget; of Management Maya of and Beth Gutelius of Briggs Foundation; Xav Business School; Harvard the Ford provided helpful thoughts and insight, including Austan Goolsbee of Goolsbee of Austan including insight, and thoughts helpful University the provided Chi ACKNOWLEDGEMENTS THE PROMISE OF OPPORTUNITY AND THE FUTURE OF WORK | PAGE 22
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