Rather Than Increasing Public Support for Labor Immigration, Even If There

IMMIGRATION, EMPLOYMENT RELATIONS, AND THE STATE 157

Positive messages from [government] ministers on the economic benefits of labor migration were drowned by the negative messages on asylum. … The public did not, as the government had anticipated, readily tell the difference between an asylum-seeker, a migrant worker or an international student in their neighborhood. (2007: 348, 359)

Rather than increasing public support for labor immigration, even if there is a sound labor market policy case, the use of control signals can compound the political sensitivities of labor immigration policy (Anderson 2013). This indicates that employment relations scholarship needs to account for the external governance dimensions of labor immigration policy relating to immigration control as well as the intrinsic connections with internal governance dimensions relating to migrant worker–employer relations.

CONCLUSION In this chapter, we have examined the connection between employment relations and labor immigration, particularly in relation to the state, whose role in that area has been relatively underexamined within employment relations scholarship. States have many different functions in labor immigration policy. We have distinguished between functions relating to internal governance, which includes regulatory activities that determine where migrants work, their conditions at work, and the terms of their engagement with employers, and those relating to external governance, which includes the many different factors determining states’ immigration selection and control activity. We noted two trends relating to these distinct dimensions of state activity. First, internal governance has increasingly been influenced by unitarist or neoliberal ideas. This influence is reflected in labor immigration schemes allowing employers significant control over migrant workers without an equivalent level of countervailing power in the form of increased enforcement capacity by the state and/or worker organizations. Second, in terms of external governance, states have shown a growing propensity to assert their immigration control credentials in order to demonstrate their sovereign capacity to regulate migration inflows. Looking at labor immigration through the prism of state legitimation, it appears that states have increasingly sought to use labor immigration to address their accumulation and sovereignty imperatives, motivated in large part by economic and immigration control pressures, and have paid insufficient attention to the impact of these strategies on fairness. Attempts to use “control signals” to resolve the inherent tensions between states’ internal and external governance strategies by simultaneously seeking to encourage “wanted” forms of labor immigration and to discourage “unwanted” immigration are inherently contradictory and 158 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

therefore unsustainable. The rise of populist and authoritarian leaders in many parts of the world seeking to blame immigration for growing inequality suggests that new governance approaches may be required. Greater synergy or institutional complementarity between labor immigration policies and employment relations, such as providing the same rights to migrant workers and nonmigrants alike, could help to ensure that they deliver equity outcomes for workers as well as efficiency outcomes for employers.

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Multinational Corporations as Labor Regulators Greg Distelhorst University of Toronto

INTRODUCTION Firms are not labor regulators. Yet a growing number of firms seek to define and enforce labor standards, just like governments do. Even more remarkably, they attempt to regulate across international borders (KPMG International 2008; Thorlakson, de Zegher, and Lambin 2018). Lucrative consumer brands, the glo- balized production of branded goods, and periodic shocks from fatal accidents, child labor, and modern slavery combined to produce this unusual state of affairs. This chapter attempts to answer three questions about multinational corporations acting as labor regulators. First, how do these “private regulators” differ from government regulators? The chapter argues that two salient distinctions are the rulemaking autonomy of firms as regulators and their tools to encourage compliance. Lacking any statutory authority to penalize violators, private sanctions for noncompliance depend entirely on the commercial relationship between the private regulator and its target. This relationship enables commercial sanctions and rewards, including capability-building activities seeking to change the management practices of regulatory targets. At the same time, the commercial relationship can impose stark limits on what firms as regulators can accomplish. Second, how effective are firms as regulators? This chapter distills stylized facts from the past two decades of empirical research. Key findings include the failure of any privately regulated supply chain to reach full compliance, declining returns to enforcement activity, varying efficacy across outcome and process standards, and the possibility of raising standards by improving the management capabilities of targeted employers. Third, how do the commercial activities of firms interact with their regulatory activities? Given the central role of the commercial relationship in private regulation, this behavior has the potential to either reinforce or undermine the goal of achieving higher standards. This topic is an area of active research, but recent studies offer some preliminary answers.

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FIRMS AS REGULATORS OF LABOR STANDARDS Government regulators try to order economic life through authorities granted by the law, including the ability to impose administrative sanctions on noncompliant organizations. Although private regulators engage in many of the same activities, they lack the statutory powers of government agencies. On the other hand, private regulators also lack several constraints that public regulators are subject to. The rise of firms as regulators can be understood in the context of a few major developments in the late 20th century. Falling barriers to global trade led many light manufacturing industries—the most iconic being clothing and shoes—to migrate to the developing world. This globalization of production meant consumers in rich countries were buying huge quantities of goods manufactured in poorer countries. Many of the most popular consumer products (think Levi’s jeans or Nike sneakers) were heavily branded, with corporations spending inten- sively on advertising and celebrity endorsements to cultivate a positive brand image and loyalty among consumers. When media exposés revealed the horrible working conditions in which some of these products were manufactured, activists mobilized to prick the conscience of consumers and hold corporations responsible for labor abuses in their supply chains. In a memorable speech after a series of sweatshop scandals, Nike founder and chief executive Phil Knight said, “The Nike product has become synony- mous with slave wages, forced overtime and arbitrary abuse. … I truly believe that the American consumer does not want to buy products made in abusive conditions” (Cushman 1998). In response to those campaigns, many consumer-facing multinationals adopted supplier labor codes, began conducting inspections, and joined new initiatives around labor rights in the developing world (Bartley 2005; Esbenshade 2004; Rodríguez-Garavito 2005). In the 2000s, those practices spread to more international brands and new industries such as consumer electronics (Raj-Reichert 2011). This defensive response to allegations of sweatshop labor recast multinational enterprises as transnational labor regulators. However, firms differ in important ways from public regulators. This chapter highlights two important distinctions: firms’ flexibility in rulemaking and the tight link between their regulatory authority and their commercial relationships to the targets of regulation.

Rulemaking Flexibility Firms as regulators enjoy greater autonomy than regulatory agencies in defining the workplace standards they attempt to enforce on other firms. Whereas public regulators are tasked with enforcing standards defined by a combination of law and administrative rules, private regulators have some discretion over the workplace rules they will enforce. The rules enforced by firms as regulators appear in codes of conduct and are generally publicly available. These codes often have MULTINATIONAL CORPORATIONS AS LABOR REGULATORS 167 anchoring points in domestic law, but they also enjoy the discretion to go beyond domestic legal constraints. Rulemaking flexibility allows corporations to avoid enforcing some international labor standards that are unappealing or impracticable, given where employers are located. Consider the freedom of association standard in many private regulatory regimes. The International Labour Organization (ILO) convention defining freedom of association states: Workers and employers, without distinction whatsoever, shall have the right to establish and, subject only to the rules of the organisation concerned, to join organisations of their own choosing without previous authorisation. (1948)

Contrast the ILO definition with the entry in Walmart’s Standards for Suppliers. Under the heading “Recognize Freedom of Association and Collective Bargaining,” the private code states: Respect the rights of workers to join, form or assist a trade union, or refrain from doing so, in accordance with applicable law and practice. (Walmart 2017)

The important caveat is “in accordance with applicable law and practice,” which attaches freedom of association standards to local law and practice, rather than to a common understanding of the concept. Similar deference to local redefinitions of freedom of association appears in the labor codes for many major private regulators. Deference to local law in freedom of association can produce absurd results. The world’s biggest exporter of manufactures, the People’s Republic of China (PRC), is well known for arresting labor activists and preventing the emergence of worker organizations outside the official All-China Federation of Trade Unions (Fu 2017; Xu 2013). By any reasonable definition, freedom of association is absent from China’s industrial workplace. Yet, by deferring to local law, some firms as regulators report high compliance rates. Hewlett-Packard’s audits reported compliance with freedom of association standards in over 90% of its suppliers, most of which were in mainland China (Distelhorst, Locke, Pal, and Samel 2015). China is not alone in repressing independent organization of workers. Many major export countries either forbid independent worker organizations or fail to provide a safe environment for their formation. In the 2019 World Justice Project rankings of the global freedom of association index, major exporters Turkey, Myanmar, Bangladesh, and Vietnam rank only slightly ahead of the PRC (World Justice Project 2019). However, private regulators do not only use their rulemaking autonomy to muddy the definition of core industrial relations concepts. Autonomy has also 168 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

allowed firms as regulators to orient themselves around attainable goals in light of local economic conditions. Consider the contrast between public and private regulation of work hours in China. In the mid-2000s, Chinese labor law was understood to cap monthly overtime at 36 hours per month, or an average of nine hours per workweek (Kortelainen 2008; Ngai and Chan 2012). This overtime cap was quite stringent compared with that of other countries. Canadian employment law sets daily minimum rest hours, minimum gaps between shifts, and mandatory rest days, but employees can still work more than nine hours of overtime per week within legal limits (so long as overtime premium rates are paid). The United States places no limitation on weekly hours worked.1 In practice, many of China’s export factories ignored the law and ran much longer hours. Although workers would have preferred to earn higher wages at the same hours, many were willing to work hours in excess of the legal limit in order to maximize earnings. The gap between the realities of the labor market and the standards of labor law made it implausible that any private regulator would induce compliance. At the same time, excessive work hours created significant health risks. Firms as regulators can use their rulemaking autonomy to focus on more achievable compliance goals, even when they violate law. For example, the electronics industry association Responsible Business Alliance (formerly the Electronic Industry Citizenship Coalition) limits supplier monthly overtime hours to 80 (maximum of 60 total hours per week). Although this exceeds the 36-hour limit in China’s labor law, it also represents a compromise between the truly excessive hours observed in some electronics factories and the lower-than-desired legal limit on overtime work.2

Monitoring the Workplace The monitoring techniques used by private labor regulators have many similarities to public regulators. Their primary tools are workplace inspections. In these inspections (known as audits within the private regulatory industry), auditors review payroll and attendance records, inspect physical conditions on the factory floor, and interview workers and managers. Although the techniques of private regulators resemble those used by public regulatory authorities, the quality of the inspections is highly variable. Some multinationals rely primarily on in-house labor auditors, whereas others use third-party monitoring agencies. Third-party monitoring agencies exhibit significant variation. They range from for-profit assurance providers such as Intertek to not-for-profit organizations such as Verité to labor-backed advocacy groups such as the Workers Rights Consortium. The techniques and results of inspections conducted by those organizations clearly vary, although hard evidence on this variation remains somewhat limited. Certain pathologies of firms as labor inspectors appear repeatedly. Some private inspectors have been exposed for unprofessional and technically incompetent MULTINATIONAL CORPORATIONS AS LABOR REGULATORS 169 audit practices (O’Rourke 2000, 2003). Technical competence is especially important in the evaluation of health and safety risks, including proper chemical exposure countermeasures and mitigating risks associated with structures. Infamously, social auditors from RINA awarded a Pakistani production facility SA8000 certification—a standard supposedly reflecting a high level of social responsibility—just weeks before a workplace fire killed over 250 workers. Although private monitoring is intended to overcome limitations in government regulators in settings of weaker governance, there are also numerous allegations of auditor corruption and solicitation of bribes. In 2011, China Labour Watch accused auditors at Intertek of accepting bribes from a toy factory in exchange for favorable labor audit results. Most recently, Kuruvilla, Liu, Li, and Chen (2020) analyzed payroll records from Chinese factories and detected more violations of wage and hour standards than private audits conducted by a major home furnishing brand in 9 of 30 factories analyzed (30%). Notwithstanding these limitations, private auditors do gain access to production facilities and their employees for the purposes of measuring compliance with international labor standards. The commercial relationship enables this access even though private auditors lack the statutory authority that government regulators enjoy. This creates another source of variation for private regulators: factories may scale their cooperation and responsiveness with private auditors in proportion to the importance of the commercial relationship. Factory management might refuse auditor access to certain records or areas, a level of resistance that is more likely when the commercial relationship is less important. Private regulatory inspections generate outputs that have many similarities to those of public regulators. Employers receive a report of the inspection findings, with emphasis on the violations detected. Private regulatory authorities often use euphemisms to describe violations of the code of conduct: noncompliance, non- conformance, etc. However, the nature of the feedback is similar: employers receive a list of violations. In addition to the list of violations, employers also often receive a suggested course of action to correct the violations. These are often called remediation plans or corrective action plans. The rules and inspection activities detailed above are intended to increase compliance with international standards in global supply chains. Do these private systems work?

ARE FIRMS EFFECTIVE LABOR REGULATORS? STYLIZED FACTS Private regulation is understood as a response intended to head off public regulation or forestall further activist campaigns (Baron 2014). Therefore, a real possibility exists that firms as regulators crowd out some government regulation. Even if host country governments in the developing world lack the capacity or will to enforce labor standards, private regulation could forestall government action in advanced economies, such as laws that incentivize corporations to 170 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

reduce labor abuses in their global supply chains. (Recent examples of such legislation include the California Transparency in Supply Chains Act, the UK Modern Slavery Act, and the more sweeping Law on Corporate Duty of Vigilance in France.) If firms as regulators diminish public regulation while simultaneously regulating poorly, the resulting workplace outcomes may paradoxically be worse than they would be in the absence of private regulation. Researchers have therefore tried to learn whether firms are effective labor regulators. An effective labor regulator should bring its regulatory targets (here, firms in the supply chains of multinational corporations) into higher levels of labor compliance, ideally full compliance. Although there is much left to learn, the past two decades of research have produced several stylized facts about the efficacy of firms as labor regulators.

Private Regulation Does Not Lead to Full Compliance Supplier codes of conduct often describe the labor standards they define as minimum requirements for doing business with the customer (i.e., the firm as regulator). For example, the American retailer Target’s supplier code states, “We require all vendors, suppliers, third-party sellers, manufacturers, contractors, subcontrac- tors and their agents (collectively, ‘suppliers’) to abide by the following standards.”3 Such language implies that labor compliance is a minimum requirement of participating in the supply chain. Yet no empirical research on labor compliance in supply chains has found 100% compliance with these standards. This is perhaps the most consistent finding in studies of firms as labor regulators, with similar findings spanning nearly 20 years of research (Anner 2012; Barrientos and Smith 2007; Bird, Short, and Toffel 2019; Frenkel 2001; Locke, Qin, and Brause 2007; Toffel, Short, and Ouellet 2015). In addition to the garment and footwear industries, similar findings emerge from supply chains in consumer electronics (Distelhorst, Locke, Pal, and Samel 2015; Raj-Reichert 2013; Yang and Gallagher 2017), children’s toys (Egels-Zandén 2007, 2014), and agricultural products (Coslovsky and Locke 2013; Dietz, Grabs, and Chong 2019; Riisgaard 2009). Although the employers subject to private regulation are never uniformly compliant, most research finds that they improve over time. Egels-Zandén (2014) revisited an earlier study of troubling labor conditions at Chinese toy manufacturers (Egels-Zandén 2007) and found substantial improvement in all standards besides working hours. (See the discussion of working hours standards in the Chinese context above.) Distelhorst, Locke, Pal, and Samel (2015) found that Hewlett-Packard electronics suppliers improved compliance in nearly every health and safety standard and a few labor standards. Barrientos and Smith (2007) evaluated the Ethical Trade Initiative across several countries and also found improvement across many standards, especially among garment and apparel manufacturers. MULTINATIONAL CORPORATIONS AS LABOR REGULATORS 171

If employers tend to improve but never achieve full compliance, this implies declining returns to private labor enforcement. Indeed, supplier firms tend to improve more in their first few encounters with firms as regulators—and pro- gressively less in later encounters. Figure 1 shows a typical supply base compliance trajectory based on data from Distelhorst and Locke (2018). It shows compliance rates by supplier factories audited at least six times. On average, suppliers improve in all standards displayed. However, the rate of improvement declines over successive audits. Average compliance shows very little improvement from the fourth audit onward. The figure also shows that compliance can plateau at low levels for certain standards. Health and safety and work hours standards reached only 35% and 54% compliance, respectively, by the factories’ sixth encounter with private auditors. This is just one study of a global sourcing agent using a particular code of conduct; one idiosyncrasy is that overall health and safety compliance is damp- ened by the large number of items in its audit. The compliance ceiling likely varies by code and private regulator.

Private Regulation Improves Workplace Outcomes, Not Process Rights Firms as regulators perform better at enforcing standards related to workplace outcomes than those related to processes of employee participation and voice.

Figure 1 Labor Compliance in Successive Audits—Declining Returns

Notes: Average labor compliance rates (%) for 1,254 manufacturers audited six or more times in the supply chain of the sourcing agent studied in Distelhorst and Locke (2018). Audits after the sixth are pooled into the final period. Line thickness shows 95% confidence interval. 172 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Barrientos and Smith (2007) were among the first to document this divergence in their study of the Ethical Trading Initiative. Workers in their studied factories affirmed that various outcomes improved at regulated workplaces, including health and safety, hours, and wages. Yet process rights for workers were left largely unchanged, especially in employee collective voice: “In no case did we find an increase in union membership or the establishment of a collective bargaining agreement as a result of code implementation” (Barrientos and Smith 2007: 723). Similar limitations with regard to process rights and labor voice were observed, even when activism secured independent monitoring of overseas workplaces (Seidman 2007). Where private regulation has led to improved process rights, local civil society has played a crucial role. In an apparent success for private regulation of process rights, pressure from firms as regulators to improve working conditions at Mexican electronics assemblers led to a productive partnership with a local labor organization, which established a dispute resolution mechanism that was viewed as largely successful (Distelhorst, Locke, Pal, and Samel 2015). In turn, local electronics employers improved their treatment of agency workers who were often at the center of disputes. Yet, in the absence of these locally embedded civil society partners, firms as regulators can apparently do little to improve process rights. Moving its focus to China, the same study describes how one employer responded to pressure from Hewlett-Packard to establish local branches of the All-China Federation of Trade Unions. The branch had low employee membership, and labor violations continued unabated in the nominally “unionized” facility. This complementary role played by local civil society may explain the strong country effects observed in private monitoring. Several studies document wide variation in compliance by country, an effect that is overdetermined by local labor market conditions, government efficacy as regulators (i.e., baseline labor compliance), varying stringency of local laws, and other idiosyncrasies. However, this varying richness in domestic civil society may explain some of the country-level variation in compliance levels and trends (Toffel, Short, and Ouellet 2015).

Some Capability-Building Interventions Improve Compliance A final branch of private regulatory research examines corporate programs that attempt to improve labor compliance using techniques other than labor inspections. These programs seek first to change the management practices of regulatory targets rather than uncovering violations and remediating them one-by-one. This capability-building approach treats labor violations as symptoms of deeper pathologies in management practice and therefore focuses on addressing so-called root causes of labor violations. Several recent studies suggest that these interventions can improve labor standards beyond what can be accomplished through monitoring and remediation activities (Locke 2013). A recent field experiment shows that a program to pro- MULTINATIONAL CORPORATIONS AS LABOR REGULATORS 173 mote compliance with labor law in Bangladesh indeed induced this change, with no large adverse effects on productivity or wages (Boudreau 2020). An intervention by Nike to promote lean manufacturing in its garment suppliers was shown to also produce a 15 percentage point increase in labor compliance (Distelhorst, Hainmueller, and Locke 2017). Lollo and O’Rourke (2020) found that multinational-supported improvements to incentive systems simultaneously raised wages and factory profits in a large garment exporter. However, knowledge about these capability-building interventions remains somewhat less developed than other aspects of firms as regulators. Each of the above interventions is idiosyncratic, reflecting the priorities and capabilities of the corporations that implemented it. The apparent positive effects on labor compliance have yet to be replicated in different settings. However, all of the above suggest that private regulators can make up for some of the deficiencies of monitoring and remediation through programs to improve management practices in the targets of regulation.

COMMERCIAL RELATIONSHIPS AND PRIVATE REGULATION The most distinctive feature of firms as regulators is their commercial relationship with the targets of labor regulation. The commercial relationship creates the opportunity to engage in private regulation. Firms can try to shape the labor practices of their suppliers because suppliers want to maintain and perhaps deepen a mutually beneficial commercial relationship. A government regulator seeking to coerce its targets into compliance may fine violators, publicize violations, or even suspend businesses’ licenses to operate. Firms as regulators have regulatory standing only as customers. Firms’ power of coercion comes entirely from the commercial relationship between buyer and supplier. The commercial relationship also creates the motivation, and ethical rationale, for firms to act as labor regulators. The rationale is that buyers profit in part from their ability to source inexpensive manufacturers from countries where workers are more vulnerable to exploitation and unsafe work. Surely, these companies have some responsibility to protect the workers assembling their high-margin goods? Finally, the commercial relationship also defines the scope of firms’ regulatory activities. Often, monitoring and remediation is limited to suppliers with a direct commercial relationship to the firm as regulator, known as first-tier suppliers. If the regulator is a clothing company, the cut-and-sew garment assemblers may be monitored, whereas the suppliers of inputs such as yarn and fabric may be out of scope. In general, lower-tier suppliers experience much lighter private regulatory efforts (Nadvi and Raj-Reichert 2015). However, this does not imply the impos- sibility of extending private regulation to lower levels of the supply chain. For example, Apple has recently extended a supplier monitoring program to its smelt- ers and refiners in hopes of eliminating conflict minerals from its products; in 2018, it reported terminating five processers for failure to meet standards.4 174 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

The apparent importance of commercial relationships suggests an empirical question: Do buyers engage in commercial practices that support their roles as labor regulators? Or do their commercial relationships with suppliers limit or even undermine their nominal goals as labor regulators? Firms could use this commercial relationship to make private labor regulation more effective. They could find ways to reward firms that were more compliant, or showed greater improvement, with higher volumes of orders, a price premium, or more attractive financing or payment terms. They could additionally penalize noncompliant suppliers—for example, by terminating relationships with poor performers. However, commercial practices could also operate entirely according to their own logic, undermining private regulation and even stimulating higher levels of labor violations. This possibility is sometimes characterized using the organization theory concept of “decoupling.” Decoupling involves the adoption of policies that are either unimplemented or are known to not accomplish their nominal goals (Bromley and Powell 2012). Decoupling is especially likely when organizations adopt policies to secure legitimacy from external stakeholders while simultaneously desiring to continue business as usual (Meyer and Rowan 1977). As firms were thrust into the role of labor regulators in part by activist pressure, this maps neatly onto the phenomenon of private labor regulation in global supply chains (Kuruvilla et al. 2020). Both scholars and advocacy organizations have argued that improving the alignment of purchasing practices with the goal of higher labor standards is crucial to effective private regulation (Anner, Bair, and Blasi 2013; Oxfam 2010).

Preconditions for the Relevance of Commercial Relationships Two assumptions underlie the relevance of commercial practices to private regulation of labor standards. In the absence of the following conditions, commercial relationships grow less important to private regulatory practice. First, firms as regulators must enjoy the power to dictate some terms of the commercial relationship with the targets of regulation. The global value (or commodity) chain framework offers a theoretical lens for understanding the balance of power between buyer (regulator) and supplier, emphasizing the heterogeneity of transactions between firms (Gereffi, Humphrey, and Sturgeon 2005). This heterogeneity in turn affects buyers’ power to define the terms of commercial relationships. When buyers have greater power—for example, when buying power is concentrated in a small number of firms, there is excess supplier capacity, and reallocation across factories is inexpensive (Gereffi 2018)—they have greater opportunity to dictate the terms of the commercial relationship. This buyer power could be used to coerce or incentivize suppliers to improve working conditions. Buyers could penalize low-standards suppliers by reallocating their order volume to more compliant factories and could even award high-compliance factories with higher rents. On the other hand, this buyer power could also be used in a variety of ways that undermine labor standards. Buyer power could be used to MULTINATIONAL CORPORATIONS AS LABOR REGULATORS 175 drive prices downward or to force suppliers to accept unfavorable payment terms, placing pressure on wages (Vogel 2007). It could also be used to force suppliers to bear a greater share of risk associated with changes in consumer demand, pushing rush orders to meet unanticipated demand, leading to large temporal swings in employment and overtime hours. Recent scholarship argues that many consumer goods value chains are “buyer driven” in the way envisioned by the global value chains framework. Buyer-driven value chains such as consumer electronics, clothing, and footwear are also industries where we find many multinationals behaving as labor regulators. In the apparel industry, the combination of industry consolidation and excess production capacity has granted multinational buyers considerable power to dictate the terms of production contracts of their suppliers (Gereffi 2018: Chapter 2). Even in buyer-driven supply chains, for the commercial practices of any individual firm as regulator to matter, it must purchase a sufficiently large volume of buyer product (Locke, Amengual, and Mangla 2009). Purchasing volume is therefore the second major precondition for the relevance of commercial relationships, whether to generate labor abuses or to offer incentives for compliance. The behavior of a buyer purchasing 3% of factory output matters much less than that of a buyer of 30% of output. Even in a buyer-led commodity chain where buyers collectively enjoy structural power over suppliers, individual buyers that purchase small shares of factory output may remain unable to reward or penalize their suppliers for their labor practices.

Do Commercial Relationships Support or Undermine Private Regulation? Commercial transactions between buyers and suppliers are difficult to observe, but progress has been made in the past decade through two complementary sources of evidence. The first involves providing questionnaires to the managers of supplier factories (i.e., the targets of regulation). These supplier surveys attempt to uncover which elements of their commercial relationships are favorable to and unfavorable to upholding labor standards. Administrative records of transactions between firms offer a second source of evidence. These records are proprietary and to date have been provided by multinational corporations to researchers under research agreements. Evidence from Supplier Surveys In survey research, supplier management has generally reported that the commercial behavior of buyers is misaligned with their role as private regulators. A 2016 survey by the ILO and the Ethical Trading Initiative showed broad dissat- isfaction with the purchasing (sourcing) practices of global buyers. It drew on results from over 1,400 supplier factories employing more than 1.5 million workers worldwide (International Labour Organization 2017). 176 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Several features of commercial relationships made it difficult to comply with labor standards. Roughly one third of survey respondents reported they had unwritten contracts with some buyers, resulting in uncertainty about the commercial relationship. Only 41% of those contracts mentioned working conditions in the factory, suggesting that many commercial relationships were managed separately from the regulation of labor standards. Roughly half the suppliers said that 30% or more of the orders they received had insufficient lead times. Short lead times can lead to long hours, fewer rest days, and high production pressure as factories race to complete production by the ship date. Most factories (60%) reported coping with peak demand periods by increasing worker overtime, suggesting that seasonal volatility of demand contributes to long work hours. Supplier management also reported very little benefit to complying with minimum labor standards. Although the large majority of buyers (93%) in this sample requested compliance with a code of conduct, only a minority of suppliers (25%) believed buyers would pay higher prices to cover increases in local minimum wage. Price and quality were seen as the most widely used criteria for assigning orders, and only 36% indicated that working conditions played any role in deciding which factories got orders. These findings are corroborated and extended by the regular surveys conducted by another supplier survey initiative: Better Buying. This organization works with apparel firms and department stores to solicit survey evidence from their supplier factories around the world. Better Buying then feeds anonymized results back to the buyers, all of whom engage in some form of private labor regulation. The purpose is to provide data that prompt buyers to improve their commercial practices, thereby reducing economic pressure faced by their suppliers and (perhaps) enabling them to observe higher labor standards. The final Better Buying report of 2018 solicited survey evidence from over 200 supplier factories that employed approximately 385,000 workers (Dickson 2019). In Bangladesh, a region that Better Buying shows exhibited better than average buyer practices in 2018, most factories received demand forecasts from buyers, but more than half reported that the actual orders deviated from the forecast by more than 20%. Inaccurate forecasts led to underutilized capacity, as well as unused material, which can result in warehousing costs and ultimately pressure on supplier finances if buyers do not accept some of the risk. Suppliers also complained that buyers used high-pressure cost negotiation tactics, focusing solely on price targets rather than a combination of price and labor compliance. They also contend that buyers negotiated prices based on volumes greater than buyers ultimately ordered. These price pressures and production disruptions cannot make it easier for factories to comply with minimum labor standards. The survey research is also affirmed by a range of case studies of suppliers and the pressures they face from buyer purchasing practices (Ruwanpura and Wrigley 2011; Starmanns 2017; Vogel 2007). Advocacy organizations have similarly MULTINATIONAL CORPORATIONS AS LABOR REGULATORS 177 argued that sourcing (purchasing) practices are not only decoupled from private regulation but share the blame for permitting or causing labor violations in global supply chains (Human Rights Watch 2019; Oxfam 2010; Worker Rights Consortium 2013). Supplier surveys are valuable for revealing the commercial behavior of firms as regulators. Suppliers know the most about their own operations, and they have less incentive to conceal unsavory behavior by their buyers. On the other hand, surveys asking for retrospective assessments from supplier management have some shortcomings. Survey respondents asked to recall past events may over- or under- report their prevalence, especially as more time passes between the event and the survey (Morgenstern and Barrett 1974; Shachar and Eckstein 2007). A second source of evidence on the commercial practices of firms as regulators is emerging from administrative records of transactions between buyers and suppliers. Evidence from Administrative Records Research on the commercial behavior of buyers using administrative records is more mixed than the evidence from supplier surveys. Several studies suggest that observing higher standards has some payoff for supplier factories. Oka (2012) found that labor compliance was a necessary condition for attracting and retaining reputation-sensitive buyers participating in the Better Factories Cambodia program. Similarly, Distelhorst and Locke (2018) studied a global sourcing agent purchasing from several dozen countries and found that compliant factories received larger order volumes and that improvements in compliance were associated with increased orders from buyers. They cite this as evidence that importers of light manufactures in advanced economies broadly prefer buying from compliant exporters, effectively offering a volume premium to high-compliance suppliers. However, other studies find no rewards for compliance. When Amengual, Distelhorst, and Tobin (forthcoming) examined the commercial behavior of one small and sustainably branded retailer, they found no rewards for compliance and penalties for violations only in extreme cases. Amengual and Distelhorst (2019) studied a larger retailer and found that private regulation was first decoupled and only later aligned with sourcing practices. When commercial practices were aligned with the goals of labor regulation, private labor regulation grew more effective. However, before this alignment, they found no effect of private regulatory grades on future compliance. In unsatisfying summary, firms appear to vary in their use of commercial practices to strengthen private labor regulation. Given the narrowness of the evidence base, it remains unclear how widespread integration or decoupling is. Suppliers consistently testify that buyer practices make labor compliance more, not less, challenging. It seems safe to conclude that commercial relationships are at best uneven in their support of private regulatory activity—and at worst counterproductive. 178 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

CONCLUSIONS What happens when corporations moonlight as transnational labor regulators? The foregoing review shows they generally fall short of enforcing the minimum standards embedded in their codes of conduct. Employers under their regulatory purview improve compliance, and some private regulators use information about labor standards when making their business decisions. Yet the alignment of business practices with the goals of private labor regulation remains highly uneven across organizations. Overall, firms as regulators remain constrained by their primary organizational role: businesses seeking to profit from commercial exchang- es with the targets of regulation. The research also suggests two opportunities for improvement. First, corporations can do more to align their business practices with the goal of enforcing minimum labor standards. Alignment opportunities include amplifying their regulatory voice through supply-chain consolidation (i.e., purchasing larger shares of output from a smaller base of suppliers), strengthening incentives for compliance, and avoiding behavior likely to disrupt production in ways that undermine labor compliance. The recent growth of research into responsible purchasing practices offers guidance on all three points. Second, several studies show opportunities for corporations to improve conditions for supply-chain employees through capability building. These interventions—such as optimizing employee compensation systems or introducing management systems that enhance oper- ator skills—exploit a strength that multinational corporations bring to labor regulation: their expertise in modern management techniques. In addition to constraints related to their primary identities as businesses, firms as regulators are additionally constrained by government policy. Despite roughly three decades of supply-chain responsibility programs, no evidence has emerged showing that firms as regulators can effectively enforce rights to association or collective bargaining. Instead, research suggests that improving these process rights depends on political reforms for which no corporate program is a substitute. This was a major part of the now-scuttled Trans Pacific Partnership. A side agreement with the United States on establishing new rights of association and collective bargaining in Vietnam would have produced a sharp contrast with its neighbor, mainland China (United States Trade Representative 2016). That opportunity has passed, but future progress may come from similar opportunities for political reform. Freedom of association is one thing the firm as regulator cannot deliver.

ENDNOTES 1. Specifically, there is no US federal limit on work hours for employees age 16 and older. http://bit.ly/38q8S9c 2. The Responsible Business Alliance code of conduct also states that “working hours are not to exceed the maximum set by local law.” It does not explicitly enforce standards below local law. However, overtime hours in Chinese export factories broadly continue to exceed 36 per month. MULTINATIONAL CORPORATIONS AS LABOR REGULATORS 179

3. Target Vendor Code of Conduct. http://bit.ly/2wz9lIX 4. Apple Inc. Conflict Minerals Report. http://bit.ly/38ltQWL

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Emancipation in the Idea of Transnational Labor Law Adelle Blackett McGill University

“The ultimate mark of power may be its invisibility; the ultimate challenge, the exposition of its roots.” —Michel Rolph Trouillot Silencing the Past: Power and the Production of History

“I’m coming out, no less invisible … but coming out nevertheless. And I suppose it’s damn well time. … there’s a possibility that even an invisible man has a socially responsible role to play.” —Ralph Ellison Invisible Man

INTRODUCTION We are living in troubled times. Those committed to the idea of social justice as essential to universal and lasting peace, as the 1919 constitution of the International Labour Organization (ILO) proclaims, recognize the danger of a moment that kindles hatred rather than social redistribution. The moment also brings to the foreground the need to rethink labor governance, transnationally. Thinking transnationally means engaging closely with the difference between protectionism and social protection. It requires rethinking of the role of social policy in economic governance, globally. It also means staring down the risk that organized labor will sacrifice an inclusive social mandate for narrow political gain. The global history of slavery offers all too easily forgotten insights into that calculus. This chapter calls instead for the regulation and governance of work to be reimagined through emancipation, transnationally. Alternatives may be closer than we think: social regionalism allows alternatives to be crafted through—rather than in the place of—a commitment to open trade multilateralism.

Protectionism At a March 2017 G20 meeting of finance ministers and central bank governors, the current US administration put protectionism squarely and unapologetically onto the table. Said German Finance Minister Wolfgang Schaeuble in an attempt to downplay disagreements over the ministerial messaging on “protectionism”

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in trade that ensued: “It’s not true we are not agreed. It’s completely clear we are not for protectionism. But it wasn’t clear what one or another meant by that” (Sharman 2017). Contrast that with the 1998 Declaration on Fundamental Principles and Rights at Work, in which the ILO foregrounded its “rules of the game” of a globalization that must be anchored in social justice limits. The ILO was under considerable pressure to mirror the 1996 WTO Singapore Ministerial Declaration’s consensus on protectionism. The ILO Declaration stressed that labour standards should not be used for protectionist trade purposes, and that nothing in this Declaration and its follow-up shall be invoked or otherwise used for such purposes; in addition, the comparative advantage of any country should in no way be called into question by this Declaration and its follow-up. (International Labour Organization 1998).

While strategic, 20 years later it still remains to be seen whether the statement was ultimately helpful to the ILO’s constitutional responsibility, in the Declaration of Philadelphia, “to examine and consider all international economic and financial policies and measures” in the light of its “fundamental objective” as stipulated in the 1919 Constitution that founded the ILO: “all human beings, irrespective of race, creed or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity” (International Labour Organization 1944). The ILO was founded on the premise that world peace can be established only if it is based on social justice (Supiot 2010). So is there really a commonality of purpose between trade and labor constituencies? At best, the 1998 Declaration reaffirmed the sense that the word “protectionism” could mean different things to different constituencies. At worst, it left room to fear that the international institution with a strong survival instinct may have lacked the courage or the ability to ensure normative, directional control in a world economy desperately in need of a new vision of how the social and the economic should be mediated in the contemporary global era. Other members of the ILO constituency, such as the vice chair of the ILO Workers’ Group, Sir Leroy Trotman of Barbados, tried at the time to articulate a more reassuring, affirming position that of course the ILO should be protectionist when it comes to eradicating forced labor and child labor. Trotman’s seemingly innocuous message—certainly in keeping with the ILO’s 1919 constitutional link between social justice and world peace—seemed somehow not only politically unsustainable but institutionally suicidal for the chastened international defender of the principle that “labour is not a commodity” (International Labour Organization 1944). The work of articulating the boundaries was delib- EMANCIPATION AND TRANSNATIONAL LABOR LAW 185 erately left to the World Trade Organization in decisions ranging from a French labor law ban on a proven carcinogen (asbestos) to the use of preferential measures that enabled carve-outs for indigenous participants to continue to hunt seal (both cases, incidentally, involving Canada). While the ILO has become a rather more visible (and welcome) participant in global economic policy making, over time it has contributed to—rather than openly challenging—the emergence of a consensus toward the cosmopolitan, open benefits of trade that acknowledges without problematizing labor dimensions. The nuanced but all too cautious messaging has not quite incarnated workers’ intimate recognition of their own forced dis- inheritance from the post-war embedded liberal bargain. Neither has the international messaging made the deeper claim for necessary regional and multilateral approaches to adjustment a part of the cataloguing of the relationship between labor and trade. “Effective protection” and the ability to recognize the significance of adjustment policy measures for labor—as economist Max Corden (1985, 1997) would have urged—has just not been on the table.

MEDIATING THE SOCIAL IN THE ECONOMIC IN THE GLOBAL ECONOMY The familiar account of the construction of the international economic order— and the foundations of multilateral trade—serves as a reminder of Polanyi’s double movement (1944/2001). We would do well to remember that Polanyi wrote at a time of deep fascism in Europe, which he considered to be intimately connected to the rise of market liberalism. Embedded liberal policies—John Ruggie’s term (1982)—enshrined social citizenship rights and social welfare entitlements for paradigmatic workers in the global North in exchange for the progressive liberalization of the economy beyond national borders. The post-war international regime was designed to accommodate Keynesian welfare state policies, not to sustain a transnational challenge to the dismantling of those policies. Moreover, the international architecture never quite allowed actors the space to grapple in the global North with what workers in the global South have always known: the embedded liberal bargain—although normatively controlling—was only ever enjoyed by a limited class of industrial citizens, chiefly in the global North, and then, only temporarily. Embedded liberalism via the Keynesian welfare state contained the seeds of its own demise. Part of that demise is neoliberalism’s chastening of all those who failed, morally, to live up to the discipline that markets require—not spoiled progressives’ spending spree in the name of redistribution for the few that was said to characterize the heyday, but a “natural” neoliberal discipline that could not only be applied to the self, but could justify chastening—and relinquishing responsibility for—any others (Konings 2015). An obscured role of the state fosters the perceived inevitability of a particular model of neoliberal globalization and of the active role of the state in building 186 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

it. In the context of global restructuring of capital, in which shareholder primacy and financial capital predominate (Fraser 2013), transnational corporations hone the ability to use a number of states to bypass the regulation of any particular state, and ultimately of all. They do so through distinct forms of state capture, but in a moment in which very particular states—and one in particular—claim to be willing to seize regulatory power, not over culture wars and specific man- ifestations of morality, but on behalf of “we, the people,” addressed quite starkly as the (white) US working class, at a moment of unparalleled pummeling of traditional labor unions (Temin 2017).

THE RISK OF THIS MOMENT FOR ORGANIZED LABOR Unions and their labor lawyers might be forgiven for wondering about the relationship between labor law and transnational engagement—they went on record early as expressing cautious optimism about the prospects for labor in what are increasingly unmistakable aspects of a nascent, neofascist regime, and some have praised the approach to trade negotiations and closed border policies (Garden 2017). Yet it is a tragic mistake for those concerned to build a counterhegemonic transnational labor law to speak to the text of the far right embrace of the morality of working-class legitimacy claims without acknowl- edging the unmistakable subtext: white supremacists “emancipate hatred” (Butler 2016) as they name and reframe white working-class rage in ways that perpetuate the inability of poor white citizens to imagine common cause with anyone other than white billionaires (Roemer, Lee, and Van der Straeten 2017). W.E.B. Du Bois, in Black Reconstruction in America (1935) notes the paradox inherent in the great divide that allows US society to talk about major working-class mobilization without even referencing slavery. Yet slavery was an integral part of the territorial dispossession of indigenous populations that is at the heart of colonial society. And just like the persistence of settler colonialism, slavery’s legacies are ongoing. Part of the historically understood US bargain on labor has been that no matter how poorly the white working class might fare relative to the white planter class, they would always be able to compare themselves favorably along racial lines to blacks who embody the unfree, the enemy within, in Orlando Patterson’s words (1982). The enemy within is the opposite of the morally responsible, hard-working, hard-done-by working class. These understandings encompassed the deliberate and largely persisting omission of occupational categories linked to the legacy of slavery, such as agriculture and domestic work from the New Deal bargain and from industrial subsidies policy. They flow through the implicit but unmistakable appeals to racialized fears through electoral politics, which have been the foundation of white backlash since 1968 (Jones 1998; Roemer, Lee, and Van der Straeten 2007; Temin 2017; Wilson 1996). EMANCIPATION AND TRANSNATIONAL LABOR LAW 187

These categories have not disappeared, but they are increasingly inhabited by other others—demonized migrants from Mexico and beyond, and members of the Islamic faith, while African American and indigenous populations of the United States are otherwise expulsed—incarcerated at the most alarming rates and forced to work at for-profit prisons (Alexander 2010). They all are construct- ed as the enemy within, and no longer indirectly but blatantly. Neofascism needs and relies on the demonized, dehumanized other (or many of them). And as Peter Temin, while applying Arthur Lewis’ dual economy theory to the United States to explain the vanishing middle class through the US history of slavery and its aftermath, sums this up pithily: “Sometimes ‘black’ is a metaphor for others” (2017: 18). When Donald Trump speaks to a working class that could not even be named as other than “middle class” a decade ago, he is overwhelmingly understood to be making a moral claim, speaking to the deserving, white, working-class America. And he is seen as “emancipatory” because he enables that coded working class to have that exchange without the mask. One might imagine that the demise of the welfare state and strong unions that helped to lift those workers into the middle class would yield resentment of societal elites. Instead, the ability to mar- shal and perennially renew a racially divisive discourse for which reparatory/ restorative justice was never seriously contemplated enables those most directly responsible for the demise of embedded liberalism to kindle the margins that it maintained, and sail above the flames.

THE TRANSATLANTIC SLAVE TRADE IS PART OF THE STORY OF TRANSNATIONAL LABOR LAW It is easy to read this as yet another story of US exceptionalism. But we know that the variety of capitalism that has prevailed in the United States and the United Kingdom since the Thatcher–Reagan era educes policy strictures in other liberal market economies and exerts inordinate pressure for change in coordi- nated market economies. My claim is that the rest of the world does not simply lie outside of the story of slavery in the Americas with the United States as epi- center. Rather, I contend that we cannot understand transnational law in the age of anger without taking seriously the proposition that the three-century-long transatlantic slave trade was a global institution (Beckert 2014; Williams 1944) that also enabled colonialism. Slavery is often framed as a “peculiar” institution, despite the fact that the legal liberal order emerged through it rather than despite it. Transatlantic slavery was a transnational system of labor regulation, a relation of domination in the Marxian sense in which violence and unfreedom were central to the development of capitalism and its institutions, including the law. Its triangular—or some would argue multi-angular—nature spared few contemporary Western states from its system of production. Whether building the boats, 188 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

or selling the cod fish in Newfoundland and New England or the corned beef in Mendoza that kept the slaves alive, or repatriating the capital that enabled industrialization, “slavery created the modern world, and the modern world’s divisions are a product of slavery” (Grandin 2014). For Du Bois, slavery became a way to a freedom under capitalism that depended on the racialized, subordi- nated other, worldwide (Du Bois 1935). Slavery’s legacy, paradoxically, is also its own historical “social death” (Patterson 1982). The word can barely be spoken. The embedded liberal bargain relied on the convenience of colonialism—that is, of colonial patterns of unidirectional exchange of goods between colonies and metropolitan territories, as well as unidirectional migration (of expatriates) toward the global South. Yes, threats to immigration—largely from the former colonial territories—are obliquely and increasingly crudely cultivated as threats to citizens’ material well-being (Blackett 2010). Both the prevalence of migration to sustain particular low-wage relationships and the separation of migration status from political membership enable a not dissimilar bargain to the colonial division of labor to persist alongside an eroding citizenship at work. Some developing states continue to pay dearly for challenging this balance.

IMAGINING ALTERNATIVES THROUGH RATHER THAN DESPITE OPEN TRADE? ON SOCIAL REGIONALISM Yet here we are in a moment in which it seems possible to acknowledge that we do not have or even aspire to an ideal of truly free trade that would necessarily entail liberalizing all factors of production, including labor via the movement of persons (Unger 2007). We acknowledge a necessarily politically mediated form of managed trade that entails building consensus—or compromise—on appro- priate democratic, human dignity–enhancing limits, across differently negotiated, and often regional, space. This has not led to conversations about the mediation of the social in the economic, transnationally. Western liberal states, through the rise of nationalism, are empowered to engage in increasingly blatant “othering.” Cloaked in protectionism, they avoid deeply redistributive claims. They rely on readily available postcolonial divisions to do so. And they do so at precisely the moment when transnational capital at once entangles itself in the mechanisms of political representation while disentangling itself from the control of any particular state, and therefore, of all (Beckert 2014). And its citizens? Their membership in an American dream of perpetual com- moditization and consumer consumption comes through the promise of perpetual or revolving credit: a lifetime of indebtedness; for some, real debt servitude. This moment lends credence to the view that capitalism seems to advance even in the face of inequality and that it is the democratic state that faces the threat. Many are even less sanguine about the survival prospects of capitalism itself EMANCIPATION AND TRANSNATIONAL LABOR LAW 189

(Streeck 2016). It is perhaps through attention to global inequality that we recognize why it is crucial to “transcend the limits of methodological nationalism” (Milanovic 2016). One of the implicit affirmations of this short text with big aspirations—a text that is speaking very deliberately from the situatedness of an academic located in a middle power that had historically played a significant, mediating, international role and that seeks to promote a progressive trade agenda—is that it is dangerous to appease the powerful who demonize the weak, in the hope of achieving a transnational new deal for a working class who knows its name. At the very least, emancipatory social justice claims must avoid easy denials that “identity” matters. The denials do not erase the past; they simply ensure its invisibility and therefore its persisting power to prevent the kind of lasting national—and transnational— solidarity that is critically necessary for paradigm-shifting responses. Rather, any attempt to build a counterhegemonic (Santos 2002) transnational labor law through trade must insist on painstaking engagements that emerge from rather than despite its others—and from rather than despite its margins (Blackett 2017). I would suggest instead that this is where it becomes possible to understand most robustly the kind of work that centering labor can accomplish in transnational law—and what a focus on the transnational enables: taking regulatory border crossing seriously, by reclaiming labor law for development (Levitt 2005). This includes challenging mainstream historical starting points to the narrative of what counts as labor law, rejecting a rigid dichotomization between the repro- ductive and the productive, and understanding labor law’s scope of distributive justice as beyond the state (Blackett 2011). It also entails mapping a different kind of move—at times focusing just a little less on the normative force of international labor law, and a little more on the dynamic process in which law is thickened, or at times rendered more fluid (Delmas-Marty 2013). It requires us to be alive to how law may be troublingly “flexibilized”—with attention to how international labor law is used transnationally. This effort includes taking a lot more seriously the space for deliberation offered by the ILO (Blackett, forthcoming). This posture makes it harder—not simpler—to imagine how developed democracies might begin to address problems historically framed as requiring targeted adjustment. Overdue calls for universal benefits mechanisms and for transnational and regional forms of adjustment (including Germany’s “Marshall Plan for the African continent,” a direct consequence of the so-called migrant crisis) are gaining increased contemporary traction, and these calls imply realist recognition that individual developing countries or regions cannot be expected to assume alone the distributional costs of their own adjustment (Ruggie 2008). On the latter, experimental governance moves beyond the past iteration of targeted and largely unsatisfactory adjustment policies adopted in a variety of industrialized market economies (Hall 2013). Those experiments failed to engage with the need 190 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

to extend universal social protections beyond the borders of industrialized states to those states—trading partners—who need a social baseline. Indeed, it might have taken a crisis of the magnitude of the COVID-19 pandemic for the call for a global fund for universal social protection to be considered seriously (Burrow 2019, 2020). Social regionalism provides a basis on which to begin to apply principles of experimentalist governance—and to address those issues within and beyond individual states.

CONCLUSION Transnational solidarities must be alive to multi-issue politics, must be attentive to the structuring role of racism and distribution, must be able to foster solidarities beyond them. It is certain they will remain invisible if we continue to fail to force ourselves to see them, and name them, when they are right in front of us. They are a sine qua non for any transnational labor law that seeks to be emancipatory.

REFERENCES Alexander, M. 2010. The New Jim Crow: Mass Incarceration in the Age of Colorblindness. New York, NY: The New Press. Beckert, S. 2014. Empire of Cotton: A Global History. New York, NY: Alfred A. Knopf. Blackett, A. 2010. “Trade, Labour Law and Development: A Contextualization.” In Labour Law and Worker Protection in Developing Countries, edited by T. Teklè. Washington, DC: Brookings Institution Press. Blackett, A. 2011. “Emancipation in the Idea of Labour Law.” In The Idea of Labour Law, edited by G. Davidov and B. Langille. Oxford, UK: Oxford University Press. Blackett, A. 2015. “Social Regionalism in Better Work Haiti.” International Journal of Comparative Labour Law and Industrial Relations 31 (2): 163–186. Blackett, A. 2017. “ ‘A New Thing: Shall Ye Not Know It?’ On Living Metaphors in Transnational Labour Law.” In The Daunting Enterprise of the Law: Essays in Honour of Harry W. Arthurs, edited by S. Archer, D. Drache, and P. Zumbansen. Montréal, QC: McGill-Queen’s University Press. Blackett, A. forthcoming. “Transnational Futures of International Labour Law.” In Oxford Handbook of Transnational Law, edited by Peer Zumbansen. Oxford, UK: Oxford University Press. Burrow, S. 2019. “It’s People Not Technology That Will Decide the Future of Work.” World Economic Forum. https://bit.ly/2XdF4ZX Burrow, S. 2020. “Social Protection Systems Underpin the Most Successful Government Responses to COVID-19.” Medium. https://bit.ly/3ajuuFt Butler, J. 2016 (Oct. 18). “Trump is Emancipating Unbridled Hatred.” Interview. Zeit Online. http://bit.ly/3cCb1SQ Corden, W.M. 1985. Protection, Growth and Trade: Essays in International Economics. Oxford, UK: Basil Blackwell. Corden, W.M. 1997. Trade Policy and Economic Welfare. Oxford, UK: Oxford University Press. Delmas-Marty, M. 2013. “Du concept au processus. Le juriste est-il un architecte ou un paysagiste?” Afterword. In La densification normative: Découverte d’un processus, edited by C. Thibierge et al. Paris, France: Mare et Martin. EMANCIPATION AND TRANSNATIONAL LABOR LAW 191

Du Bois, W.E.B. 1935. Black Reconstruction in America 1860–1880. New York, NY: Atheneum. Ellison, R. 1952. Invisible Man. New York, NY: New American Library. Fraser, N. 2013. “A Triple Movement? Parsing the Politics of Crisis After Polanyi.” New Left Review 81 (May–Jun.): 119–132. Garden, C. 2017 (Mar. 15). “Unions Are Wondering: Resist or Assist?” The Atlantic. http:// bit.ly/38zTEyR Grandin, G. 2015. The Empire of Necessity: Slavery, Freedom, and Deception in the New World. New York, NY: Henry Holt. Hall, P.A. 2013. “The Political Origins of Our Economic Discontents: Contemporary Adjustment Problems in Historical Perspective.” In Politics in the New Hard Times: The Great Recession in Comparative Perspective, edited by M. Kahler and D. Lake. Ithaca, NY: Cornell University Press. International Labour Organization. 1944. “The Declaration of Philadelphia.” Annex to the ILO Constitution. 26th International Labour Conference, Philadelphia, PA, May 10. https:// bit.ly/3ewZ160 International Labour Organization. 1998. “ILO Declaration on Fundamental Principles and Rights at Work.” Declaration adopted by the International Labour Conference at Its 86th Session, Geneva, Switzerland, Jun. 18. (Annex revised Jun. 15, 2010.) https://bit.ly/2VCo131 Jones, J. 1998. American Work: Four Centuries of Black and White Labor. New York, NY: W.W. Norton. Konings, M. 2015. The Emotional Logic of Capitalism. Stanford, CA: Stanford University Press. Levitt, K. 2005. Reclaiming Development: Independent Thought and Caribbean Community: Kingston, Jamaica: Ian Randle. Milanovic, B. 2016. A New Approach for the Age of Globalization. Cambridge, MA: Harvard University Press. Patterson, O. 1982. Slavery and Social Death: A Comparative Study. Cambridge, MA: Harvard University Press. Polanyi, K. 1944/2001. The Great Transformation: The Political and Economic Origins of Our Time. Boston, MA: Beacon Press. Roemer, J.E., W. Lee, and K. Van der Straeten. 2007. Racism, Xenophobia, and Distribution: Multi- Issue Politics in Advanced Democracies. Cambridge, MA: Harvard University Press. Ruggie, J.G. 1982. “International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order.” International Order 36 (2): 379–415. Ruggie, J.G. 2008. Taking Embedded Liberalism Global: The Corporate Connection. InEmbedding Global Markets: An Enduring Challenge, edited by J.G. Ruggie. London, UK: Routledge. Santos, B. de Sousa. 2002. Toward a New Legal Common Sense: Law, Globalization, and Emancipation. Cambridge, UK: Cambridge University Press. Sharman, Jon. 2017 (Mar. 18). “US ‘Forces G20 to Drop Any Mention of Climate Change’ in Joint Statement.” Independent. https://bit.ly/2XKf8Ht Streeck, W. 2016. How Will Capitalism End? Essays on a Failing System. Brooklyn, NY: Verso. Supiot, A. 2010. L’Esprit de Philadelphie: La justice sociale face au marché total. Paris, France: Seuil. Temin, P. 2017. The Vanishing Middle Class: Prejudice and Power in a Dual Economy. Cambridge, MA: MIT Press. Trouillot, M.R. 1995. Silencing the Past: Power and the Production of History. Boston, MA: Beacon Press. 192 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Unger, U. 2007. Free Trade Reimagined. Princeton, NJ: Princeton University Press. Williams, E. 1944. Capitalism and Slavery. Chapel Hill, NC: University of North Carolina Press. Wilson, W.J. 1996. When Work Disappears: The World of the New Urban Poor. New York, NY: Vintage Books. chapter 9

Basic Income Guarantees Kourtney Koebel Dionne Pohler Centre for Industrial Relations and Human Resources, University of Toronto

INTRODUCTION Around the world, the concept of a basic income is receiving increased interest as a policy option among academics, politicians, and the broader public. Commissions have formed in Canada and Germany to explore the policy’s feasibility, and recent experiments have been undertaken in Canada, Finland, Italy, Spain, and the United States, to assess the effect of a basic income policy on a variety of individual and household-level outcomes.1 The idea of a basic income is, however, not new: Canada has had a form of basic income—a guaranteed annual income—in place for seniors and families with children for many decades. In fact, a guaranteed annual income for working-age individuals was also endorsed and recommended by a Special Canadian Senate Committee on Poverty as far back as 1971 (Croll 1971). During the 1970s and 1980s, many basic income experiments were conducted in both Canada and the United States to inform debates about social security structuring (Hum and Simpson 1993). Despite this long-standing policy interest, to date no country has implemented a national basic income that benefits the working-age population.2 In the United States, Andrew Yang, one of the 2020 Democratic primary candidates, revived the idea of a basic income and is perhaps its most prominent current advocate. Yang’s signature campaign policy, the Freedom Dividend, was a $1,000 monthly universal basic income (UBI) distributed to all American adults over the age of 18, irrespective of work status, income, or any other individual or household characteristic. The policy rationale for Yang’s UBI proposal was to insure Americans against job loss caused by automation and other technological shifts. A basic income is often proposed to address growing concerns about automation and the potential for mass displacement of jobs by technology, as well as a solution to problems associated with gig work and precarious employment. While these motivations may translate into effective political strategies to build support for a basic income among young people and the middle class, the extent to which a “jobless” future is likely and/or imminent is still a matter of much debate (see Chapter 4 of this volume). Moreover, the “jobless future” rationale for a basic

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income downplays more immediate and similarly important reasons for its consideration. For instance, a basic income would provide compensation for societally valuable work outside paid employment (i.e., childcare, eldercare, volunteering). It could supplement the employment earnings of many low-income workers, while also placing a floor beneath those who have been completely excluded from the labor market. A basic income would enable workers to refuse bad jobs and, in effect, reduce some inequality in bargaining power between workers and employers by eliminating Weber’s “whip of hunger.” Notable American advocates of a basic income, from Milton Friedman to Martin Luther King Jr., argued that a basic income would be more efficient at reducing poverty and inequality than existing social security systems in most liberal market democracies, which are known to be stigmatizing, paternalistic, and difficult to access, particularly for the most vulnerable people. Notwithstanding these rationales for the introduction of a basic income, there are many concerns with the policy that have ultimately prevented its implementation. For example, widespread beliefs about the potential effects of a basic income on (dis)incentives to work have reduced public support, and thus the interest of and endorsement by, politicians. Moreover, because work has intrinsic value by providing important psychological and social benefits, some have argued for the creation of a guaranteed jobs program instead of a basic income (see Chapter 10 of this volume). Others have suggested that basic income programs may backfire as a result of unknown general equilibrium effects. For instance, cash transfers to individuals and families could lead to inflation and/or may be expropriated by landlords via rental increases. Behavioral responses by firms and/ or high-income individuals resulting from some proposed changes to the tax and transfer system to pay for a basic income could negatively impact innovation and economic growth. But perhaps the biggest critique associated with basic income has to do with its cost. Financing a basic income program would require large tax increases and/or reallocation of current program spending, inevitably creating winners and losers in moving from the existing tax/transfer system to a new one. The extent to which a basic income (dis)incentivizes work will further increase the cost of the program, as well as the amount of redistribution that needs to take place to finance it. In this chapter, we focus on these latter political economy issues surrounding work disincentives and cost. We discuss the distributional consequences associated with the introduction of a basic income in advanced liberal market democracies, and we review theory and research on the labor supply effects of cash transfers. We posit that concerns about the effect of a basic income on work (dis) incentives are much more widespread among academics, policy makers, and large portions of the public than the fear of worker displacement by technology. We highlight why conducting more basic income experiments will not provide com- pelling answers to the question of whether or not countries should introduce a BASIC INCOME GUARANTEES 195 basic income. We recommend that academics interested in basic income should only put forward proposals that seriously consider the distributional consequences of various designs as well as the real (and perceived) impact of these designs on work disincentives. It is only through the development of affordable and politically feasible basic income proposals that policy makers will move toward the phased introduction of a basic income in liberal market democracies. We outline the details of our own policy proposal for a hybrid basic income and earnings subsidy program that directly seeks to address concerns about work disincentives and in which we consider the distributional consequences in moving from the current tax/transfer and income security system to a new one that includes a basic income. While our proposal is targeted to the Canadian context, our program is structured such that it builds out from the Canada Workers Benefit (CWB), an already existing earnings subsidy program with major parallels to programs such as the Earned Income Tax Credit (EITC) in the United States and the United Kingdom’s Working Tax Credit.

BASIC INCOME PROPOSALS There are different ideas about the principles necessary to constitute a “basic income” policy. The most stringent view requires that a basic income is a fully adequate, universal, unconditional, periodic, individual cash (i.e., not in-kind) payment (Basic Income Earth Network 2020), while other views may relax one or all of these characteristics. As a result, terminology and proposed designs for what people refer to as a basic income also vary widely. The term universal basic income (UBI) is often used interchangeably with guaranteed basic income or guaranteed annual income (GBI/GAI); however, UBI generally refers to an individual demogrant (cash payment to each person regardless of income), while GBI/GAI more often refers to a targeted program administered to individuals or families through the tax system on the basis of their income. The UBI adheres most closely to all of the core principles listed above; however, unless the basic income is set very low (i.e., far below the level required to cover basic needs), UBI proposals are cost prohibitive for most countries. Indeed, cost is the single biggest critique of the universal version of a basic income (Hoynes and Rothstein 2019).3 The most feasible policy proposals for a basic income in liberal market democracies thus often relax the principle of universality in favor of income testing, proposing GBI/GAI variations of a negative income tax (NIT). An NIT is structured so that the benefit is subject to a tax-back rate: as individual/household income increases, the amount of the transfer is gradually reduced to zero. This means that only individuals (or families/households) whose income falls below some specified income threshold receive a cash transfer from the government. As a result, the basic income is automatically targeted toward those with lower incomes, making it guaranteed and universally accessible rather than universally distributed. 196 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

While income-tested basic income programs are much more affordable than universal programs, they are necessarily more complex, requiring many more design decisions that take into account interactions between different labor and social programs, as well as tax credits and marginal effective tax rates. These interactions become even more complicated in political federations such as Canada and the United States, where different levels of government (i.e., federal, provincial/state, municipal, First Nations, etc.) have jurisdiction over different programs and policy domains. Given this complexity, with few exceptions (e.g., Boadway, Cuff, and Koebel 2018a; Koebel and Pohler 2019; Stevens and Simpson 2017), most basic income proposals do not go into the details of policy design and ignore interactions with the existing income security and tax/transfer system. As a result, most proposals also fail to address two important political considerations that continue to stymie the realization of a basic income in liberal market democracies beyond net cost: the distributional consequences associated with a transition from the current income security system to a basic income program, and concerns about work disincentives. We address each of these considerations in turn.

THE POLITICAL ECONOMY OF BASIC INCOME: IMPLEMENTATION BARRIERS Distributional Consequences of Financing a Basic Income While the largest implementation barrier for a UBI is the overall cost of the program, the largest barrier to a targeted basic income is the tax reforms that would be necessary to finance it. All existing affordable basic income proposals (e.g., NIT versions) (Boadway, Cuff, and Koebel 2018a; Koebel and Pohler 2019; Stevens and Simpson 2017), in recommending to move from the current income security or tax/transfer system to a new one that includes a basic income, ultimately create net beneficiaries and net contributors; in other words, some individuals/families receive the basic income while others face increased taxes to finance it. Because tax reform—and, particularly, tax increases—is a delicate topic among the voter base of any liberal market democracy, the mere suggestion of increased taxes will immediately reduce interest in and support for basic income among most political elites vying to maintain support from a variety of different interest groups. We refer to this as net contributor resistance. One way to mitigate this issue is to reallocate tax expenditures currently ear- marked for income support toward the partial financing of a basic income. The income security and taxation systems of most liberal market democracies consist of a complex mix of programs offered by different levels of government and communities. Often, these programs are targeted to lower-income individuals and households, but many also benefit middle- and high-income earners. In Canada, the mix of programs includes, but is not limited to, seniors’ Old Age Security BASIC INCOME GUARANTEES 197 and Guaranteed Income Supplement, child benefits, carbon tax and sales tax rebates, social assistance and disability payments, earnings subsidies such as the Canada Workers Benefit (similar to the Earned Income Tax Credit in the United States and the Working Tax Credit in the United Kingdom), the Canada/Québec Pension Plan, (un)employment insurance, workers compensation, and a myriad of nonrefundable tax credits that reduce tax liabilities.4 Each of the aforementioned Canadian programs have varying requirements that determine ongoing access to benefits, as well as individual and/or household eligibility. Eligibility for certain programs may also result in access to other supports, such as subsidized housing and childcare and job-related training programs. The programs differ, however, in the extent to which they are: (1) universal, universally accessible, and/or based on some demographic characteristic; (2) means and/or income tested; (3) considered a tax, social, labor, or insurance program; and (4) (non)contributory. Although each program has been designed or has evolved to address particular problems—poverty, job loss, disability, horizontal or vertical tax equity, retirement security, or facilitation of labor force participation—all are similar in that they provide a direct cash transfer, tax subsidy, or benefit from the government on the basis of individual or household income and/ or other demographic characteristics. Each program has different overall costs for different levels of governments and results in specific (dis)incentive effects and benefits for different beneficiary groups. In using some or all of these programs to finance a basic income, however, the issue of net contributor resistance is not overcome if the benefits lost outweigh the basic income gained for some individuals. For example, in Canada, both low- and middle-income seniors receive a very generous guaranteed annual income. In using the seniors’ programs to finance a basic income targeted at all individuals in the bottom of the income distribution, middle-income seniors become net contributors to the new basic income scheme (Boadway, Cuff, and Koebel 2018a). The effect of this is to ultimately reduce support for basic income among a very powerful voter base. As such, even in using existing spending on income assistance programs to finance a basic income, one has to be conscious of the distributional effects on different groups of taxpayers (and voters). In addition to using spending on current programs and/or tax expenditures to finance a basic income, which would allow for revenue neutrality in government spending, there are many other methods through which a basic income may be financed, each of which affects the distributional outcomes of various actors differently. For example, the creation of sales or robot taxes, the elimination of personal and business tax credits, and/or increases to statutory tax rates on individual/business income have all been proposed as ways to pay for a basic income. These proposals are often put forth in principle and at a high level, and yet each funding proposal has completely different consequences and unique behavioral implications for different individuals and groups. For example, 198 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

increasing the corporate tax rate to finance a basic income may result in changes in business and capital flows to jurisdictions with lower tax rates. Increased personal income tax rates may incentivize individuals to engage in arbitrage, particularly within federal systems, if a basic income is not introduced nationally and people (or at least their income) have freedom of movement. The introduction of a basic income requires clear decisions about the particular form that redistribution will take because net contributors will likely fight hard to avoid a loss (e.g., Kahneman and Tversky 1979). While it is popular to sell the idea of “soaking the rich” to pay for a basic income, thoughtful basic income funding proposals in Canada have shown that removing even the most regressive nonrefundable tax credits to fund a basic income places the highest tax burden on those who fall squarely in the middle class (Boadway, Cuff, and Koebel 2018a). Moreover, the lowest-income individuals and those who cannot work (i.e., people with severe disabilities) may also lose in the introduction of a targeted basic income if a universally accessible benefit replaces the more generous means- and/or disability-tested welfare programs that are currently provided to this smaller group of people. While the design and funding options are theoretically limitless both within and across countries, basic income proposals that actually outline their proposed financing plan and simulate the distributional consequences associated with the proposed program choices should be taken more seriously by policy makers than those that simply call for tax increases on corporations and the wealthy. Most financing proposals downplay not only the distributional consequences of the recommendations but also the potential short- and long-run behavioral responses to different types of tax increases that may reduce overall tax revenue and/or increase the cost of the policy.5 Alternative design and funding decisions around any basic income program will have different impacts on the distributional outcomes across businesses, individuals, and household types (gender, family composition, income level, etc.). Given the complexity of existing social security systems throughout the developed world, it is important to emphasize that, in thinking about how to implement or design a basic income program, no country is starting with a blank slate. As such, to increase both political support and the likelihood of basic income implementation, a primary goal of all basic income proposals should be to minimize the number of net contributors necessary to fully finance it.

Real (and Perceived) Work Disincentives Associated with a Basic Income The second major critique of basic income and underlying barrier to its implementation has to do with challenges associated with both real and perceived work disincentives of the policy. In some ways, this concern is more problematic for the introduction of a basic income than the distributional consequences discussed above. Ideas about work disincentives are rooted in neoclassical labor theory, which did and continues to profoundly shape public policy decisions, as well as BASIC INCOME GUARANTEES 199 long-standing societal beliefs about who does and does not deserve governmental support. These ideas are nearly impossible to change in the short term. Basic Income and Real Work Disincentives: Neoclassical Theory and Evidence In a simple labor supply model, where leisure is a normal good and work is disutility, income support payments such as a basic income affect labor market behavior through two mechanisms. The first mechanism is called the income effect. A basic income has an income effect because it unambiguously increases the after-tax income of recipients, which effectively changes their time available for nonmarket activities (i.e., leisure); simply, the income effect suggests that recipients of the basic income will use the additional income to purchase more leisure, thereby reducing labor supply. Also note, however, that basic income proposals that include financing through redistribution will also effectively reduce the after-tax income of net contributors. As a result, net contributors will also respond to the basic income—or, more accurately, to the financing of a basic income—through an income effect by increasing their labor supply. Overall, the income effect predicts that a basic income will reduce work incentives for recipients or net beneficiaries (i.e., a negative income effect) and increase them for net contributors (i.e., a positive income effect). The second mechanism is referred to as the substitution effect and only applies to an NIT version of a basic income. The substitution effect works by changing recipients’ marginal after-tax wage rate and thus only applies to actual basic income recipients (or net beneficiaries). Recall that affordable basic income proposals must use a tax-back, or clawback, rate to reduce the income guarantee. It is through this tax-back rate that the substitution effect produces a negative labor supply response to the basic income because the tax-back rate essentially penal- izes recipients for working. For example, if the tax-back rate of the basic income is 50%, each dollar of additional earned income will reduce the basic income by 50 cents. In effect, as individuals earn more income, they lose more of the basic income, which ultimately reduces incentives to work. As such, many basic income proposals try to minimize the tax-back rate on the guarantee. Applying these theoretical predictions to a basic income policy, the extent to which individuals would rely on a basic income in lieu of market-based work largely depends on its generosity. Prior proposals by Canadian public economists stipulate a guaranteed basic income of $20,000/year (adjusted for household size) and have simulated a small labor supply response for hours worked (the intensive margin; e.g., Boadway, Cuff, and Koebel 2018a), suggesting they are not overly concerned about large negative effects. Modeling dynamic labor supply effects, however, relies on a number of controversial assumptions, and the potential benefits of a basic income are also rarely modeled when determining net costs or downstream savings (e.g., improved health, reduction in crime, increased education) for a similar reason. As such, these simulation-based predictions are limited in what they can tell us about labor supply responses to a basic income in the real world. 200 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

In addition to these simulations, many economists have attempted to test the labor supply effects of unconditional cash transfers using natural experiments and randomized control trials. Overall, this research suggests that labor supply reductions in response to a basic income are likely to be small. In an extensive review of the literature on unconditional cash transfers, Marinescu (2017) concludes that the NIT experiments of the 1970s and 1980s reveal modest reductions in labor supply and that more recent research on lottery winners confirms the findings of early NIT experiments. She also notes that studies examining the Alaska Permanent Fund Dividend—often deemed a UBI—reveal no employment effects. Although the small labor supply responses found in the literature may help to build support around a basic income and offer reassurance to policy makers, there are two main reasons we should interpret such results with caution. First, the perception still exists that, if enough people stopped working in the labor market (or reduced their labor supply) and subsisted on the basic income, it would both raise the costs of the program and reduce government income tax revenues. Potential benefits of a basic income that result from improved population health outcomes (e.g., Forget 2011) and reduced crime rates (e.g., Marinescu 2017) are less likely to be realized immediately. And because any negative impacts on labor supply would occur in the shorter term, the theoretical possibility reduces the likelihood that a government sensitive to the election cycle and concerned about work disincentives would support the implementation of a basic income. Second, although countries have undertaken various basic income and welfare-to-work pilot experiments since the 1970s (e.g., in Canada, the basic income experiment in Dauphin, Manitoba, in the 1970s; the self-sufficiency projects in British Columbia and New Brunswick in the 1990s; and, most recently, the basic income pilot in Ontario, which was canceled in 2018), no universally accessible, income-tested but otherwise unconditional, cash transfer program that gets all citizens (particularly working-age citizens) above a poverty threshold has ever been introduced at scale in a liberal market democracy. As such, it is not possible to know for certain what the long-run general equilibrium effects might be of such a policy, and, unfortunately, conducting short-term pilots cannot help us much in this regard. This is because these experiments are localized, of limited duration, not universally accessible, and rarely integrated into the tax/transfer system (Hoynes and Rothstein 2019; Pohler and Koebel 2018). Marinescu (2017) also notes that the existing literature does not address the effect of financing on outcomes, further limiting the applicability of this empirical research to inform the current debate on basic income. To address issues surrounding work incentives, some advocates suggest that governments could follow a more incremental or phased approach by introducing a small basic amount in a first-stage introduction that may not get everyone above the poverty line but allows any adverse effects on work disincentives to be BASIC INCOME GUARANTEES 201 observed before implementing a more generous guarantee (Van Parijs and Vanderborght 2017). As mentioned above, many economists also suggest using a low tax-back rate for social benefits to mitigate work disincentives. In Canada, welfare receipt is known to negatively affect labor force participation because of high tax-back rates (sometimes over 100%) on social assistance in most provinces (Torjman and Battle 1993). An additional approach implemented by many governments to overcome the work disincentive concern is to introduce earnings subsidies or refundable tax credits that help low-income people. These types of programs aim to incentivize work, though more recent evidence suggests that it is not clear whether these programs achieve the stated policy objectives (Kleven 2020). Prior reviews of the empirical evidence on the effects of refundable working tax credits and earnings subsidies do highlight some negative impacts on labor supply, though they are fairly minimal and mostly affect mothers (Brewer, Duncan, Shephard, and Suarez 2006; Eissa and Hoynes 2004; Eissa and Liebman 1996). In fact, most studies suggest a positive response at the extensive margin (i.e., labor force participation), with small negative or nonexistent effects on the intensive margin of hours worked (Meyer 2010). There has been very little research in Canada on the labor supply effects of refundable working tax credits, but the research on child benefits similarly shows positive effects on the labor supply of single, divorced mothers and small negative effects on married mothers (Koebel and Schirle 2016). In Canada’s current income security system, there are two groups with particularly high work disincentives: working-age people on social assistance, who face a “welfare trap” associated with high marginal effective tax rates on entering the labor market (or working more than a nominal amount depending on the province); and those in the lowest income tax bracket—the working poor—who often make too much to qualify for social assistance and related benefits and yet also receive little benefit from nonrefundable tax credits and contribution-based programs tied to work, such as employment insurance. The higher relative costs associated with working for individuals in these groups, and the often low-paid, part-time, temporary, and contingent nature of their employment, requires that any proposed basic income program concerned about work disincentives first consider its potential effects on their labor supply. Basic Income and Perceived Work Disincentives: The Politics of the “Nondeserving” Poor In addition to the possible “real” work disincentives associated with a basic income, it is equally important to consider the public’s perceptions about the effect of a basic income on disincentivizing work. Beliefs that a basic income will create work disincentives may reduce support for a universally accessible basic income, while continuing to perpetuate support for application-based, means-tested approaches to delivering income security programs. Although these beliefs are 202 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

embedded in somewhat problematic assumptions about the disutility of work (i.e., work is a lousy, painful activity, or a curse; e.g., Budd 2011; Kaplan and Schulhofer-Wohl 2018), the perceived negative impact of a basic income on work can lead to a belief among those who are net contributors (or even those who are not) that a basic income is unfair. Whether one agrees or disagrees with these beliefs about the fairness of a basic income, they should not be discounted because they are likely rooted in prevailing societal norms and values about the importance of work (Budd 2011) and about reciprocity—that is, what individuals should be required to contribute (or not) to their communities in exchange for access to public benefits (Rossiter 2018). Societies should not dismiss expectations that citizens will “give back” to the extent that they are able because all citizens benefit from the production of public goods. In short, beliefs about the importance of work and expectations of reciprocity are not the main barrier for realizing a basic income. The more problematic assumptions and beliefs include the following: (1) only market-based work is viewed as meaningful (see Budd 2011); (2) some individuals are seen as more “deserving” of a basic income (e.g., single parents, seniors, children, people with disabilities), while others are viewed as lazy (see Young and Mulvale 2009); and (3) public benefits provided to low-income individuals should be more heavily monitored than those provided to higher-income individuals (see Wolfson 2018). Given these prevailing beliefs, it is thus not a coincidence that many liberal market democracies provide more generous benefits to seniors and children than to working-age individuals. As mentioned above, in Canada both of these groups already have access to a guaranteed basic income. The introduction of the Guaranteed Income Supplement and Old Age Security has markedly reduced the poverty rate among seniors in Canada (Myles 2000), and, although the parameters and administration of family allowances and child benefits have changed over time, these programs have also reduced the number of children living in households below the poverty line (ESDC 2018). However, neither seniors nor children face expectations about participation in the labor market, and low-income individuals who fall within either of those groups are generally seen as deserving of government support. In contrast, many low-income working-age individuals, particularly single individuals without children, fall through the cracks of patchwork income security systems because, unlike seniors, children, single mothers, and persons with disabilities, they are perceived as the “unde- serving” poor. Indeed, one of the demographic groups with significantly higher rates of low income in Canada is unattached people between the ages of 45 and 64, who are also more likely to be male (Canada 2016). One of the few benefits accessible to single working-age individuals in Canada is social assistance (welfare). However, current social assistance levels provide inadequate support for raising individuals above the poverty line, while at the same time creating a “welfare wall,” given that marginal effective tax rates for BASIC INCOME GUARANTEES 203 those on social assistance can exceed 100% in some provinces (Torjman and Battle 1993; Wolfson 2018)—that is, for every dollar earned on the labor market, welfare recipients lose a dollar of social assistance and sometimes other benefits associated with being on social assistance (such as housing subsidies). Although other refundable tax credits are available to low-income working-age individuals and families in the form of earnings subsidies, such as the CWB in Canada and the EITC in the United States, these programs depend on participation in the labor market. Moreover, the maximum CWB benefit level is not very high, and, while the EITC is more generous, it is far less so for single individuals without children. Employment insurance is temporary and only available to those with recent access to a job and who have worked enough to qualify for benefits prior to becoming unemployed.

Overcoming Implementation Barriers: Designing a Basic Income Sensitive to Voter Preferences In the pursuit of basic income implementation, changing attitudes and beliefs about work disincentives is difficult. An alternative approach is thus required if a basic income—in particular one that includes working-age individuals—will ever be introduced in this lifetime. We propose that including a work incentive in the design of a basic income program would help to alleviate widely held concerns about work disincentives and reciprocity, thereby increasing political support. For example, the EITC is among the largest cash transfer programs in the United States (Jones and Michelmore 2018), and, although other benefits and entitlements are often derided by American politicians, the EITC has faced relatively little criticism. The program receives wide public support, and there have been bipartisan proposals to expand it (e.g., Cass 2018; Hoynes 2014; Marr, Horton, and Duke 2017). The EITC continues to be a popular policy for reducing poverty because it is universally accessible and designed to encourage and support work, an activity that Americans strongly value (e.g., Porter 2010). Again, whether one agrees with these values or not, what constitutes a contribution that is seen by a community as deserving of social benefits is ignored at the peril of improvements in social benefit provision. In what follows, we propose a politically feasible basic income that mitigates both real and perceived concerns about work disincentives by combining a guaranteed basic income with an earnings subsidy like that of the EITC in the United States or Canada’s CWB. All previously proposed NIT variants of a basic income include a tax-back rate (also referred to as a phase-out or clawback rate). However, by incorporating an earnings subsidy focused on incentivizing labor force participation, our hybrid basic income program also includes a phase-in component. In other words, our proposal provides an income-tested (but otherwise unconditional) guaranteed basic income; however, we also build in some conditionality based on working for individuals to achieve the maximum amount of the transfer. 204 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

We seek to mitigate work disincentives in our proposed hybrid design by (1) providing a modest basic income guarantee for individuals with no employment income, (2) incorporating a work incentive focused on labor supply at the extensive margin (i.e., the decision to enter the workforce), and (3) minimizing the benefit’s tax-back rate. Full optimization of these parameters is constrained by the revenues available from the proposed funding sources in a particular country, in our case, Canada. In the next section, we outline our program in more detail.

PROGRAM DESIGN Industrial relations scholars understand how important contingencies across countries can be for understanding how to design effective policies and programs. Thus, it is important to note that the basic income program proposed in this chapter was originally designed and calibrated for the Canadian setting, taking into account the unique mix of Canadian institutions, tax and transfer policies, and income security programs (Koebel and Pohler 2019). We make attempts throughout this section to point out areas in our decision making that may not be applicable to scholars designing a basic income scheme outside of Canada. We also direct those interested in a similar approach to ours in the American context to Leff (2020), who proposes a set of “UBI-like” reforms to the EITC. For the reasons outlined earlier in this chapter, our program takes the form of an NIT version of a basic income rather than the universal demogrant. Our proposed basic income is administered through Canada’s existing federal income tax infrastructure and takes the form of a refundable tax credit, which is phased in and out using individual income and is given to tax filers between the ages of 18 and 64 years old (because children and seniors in Canada already receive a basic income). Countries without such programs need not condition the basic income on age. Consistent with a core basic income principle, we specifically target our program at individuals rather than households, both in terms of the income used to measure benefit entitlement and for the provision of the transfer (i.e., the benefit/guarantee is unadjusted for family or household size). Using the individual instead of the household creates some inefficiency in redistribution for poverty reduction because low-income spouses or adult children of high-income earners will receive the basic income. If family income instead of individual income was used to determine eligibility for the basic income—for instance, by allocating half of the family income to each spouse, as has been proposed elsewhere (e.g., Boadway, Cuff, and Koebel 2018b)—this would reduce the cost of the program, improve its targeting, and/or allow an increase to the basic guaranteed amount. Another option includes adjusting the basic amount provided to a household using the square root scale (e.g., OECD, no date; Stevens and Simpson 2017). However, our preference is to use individual income for the following reasons. BASIC INCOME GUARANTEES 205

First, although norms are changing, women still perform most of the unpaid care, domestic, and volunteering work in Canada (Moyser and Burlock 2018) and may not have equal access to family income if intrahousehold bargaining power is dependent on women earning their own independent income (e.g., Anderson and Eswaran 2009). As such, there is a gender-based equity rationale for recognizing this societally valuable work through a basic income. Second, basing the benefit’s phase-in and phase-out on individual income avoids economic distortions to intrahousehold bargaining and avoids distorting work incentives for married individuals because their transfer is not affected by their spouse’s income (particularly for married women; Schirle 2017). Third, we did not want to penalize family formation or multigenerational families or create incentives to misreport family or household status. Fourth, there are many classic liberal arguments that provide support for an individual basic income because it pre- serves the dignity, autonomy, and freedom of individuals to have the opportunity and real material freedom to make their own decisions (see Van Parijs and Vanderborght 2017; Young and Mulvale 2009). Finally, as a pragmatic matter, using individual income is most consistent with the design of the personal income tax system in Canada—this may not be the case in other countries.

Program Parameters To address concerns about work disincentives, our proposed basic income design is a hybrid program consisting of both a guaranteed basic income coupled with an employment earnings subsidy along the lines of the current CWB in Canada and the EITC in the United States. In this section, we describe the following parameters of our program: income threshold for receipt of maximum benefit transfer, basic income guarantee, employment earnings subsidy rate, and phase- out (or clawback) rate. Earned Income Threshold for Receipt of Maximum Benefit Our basic income is set such that individuals must earn some minimum employment income to receive the maximum amount of the guarantee. The income threshold for receipt of this maximum benefit transfer is a function of other parameters we set in our design (which we describe below), as well as the combined current personal income tax rates across levels of government (i.e., federal and provincial/state tax rates). The formula for calculating this income threshold is as follows (see Appendix A for the derivation): 206 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

where

e IM is an individual’s net employment earnings before tax at the entry of the maximum transfer (i.e., beginning of the plateau range), which is a function of IB, the target disposable income for an individual (ideally based on some relevant poverty threshold for an individual on the basis of her or his geographic location)

T0 is the maximum benefit transfer received when income is zero dollars (i.e., the basic income guarantee)

φw is the employment earnings subsidy (i.e., phase-in) rate

Our target disposable income for an individual is the market basket measure (MBM) of poverty (ESDC 2018). The MBM is an absolute measure of poverty, and other countries likely use different approaches for setting poverty income thresholds than those in Canada. Under our design, individuals reach a maximum benefit transfer when the combination of the transfer (i.e., the guaranteed basic amount plus the earnings subsidy) and their own disposable labor market earnings (net employment earnings minus income tax) results in an income that places them at their poverty threshold based on their geographic location in the country. Once an individual’s disposable income reaches the poverty threshold (i.e., the MBM in Canada), the phase-out rate could either begin immediately or after a very small benefit plateau range. Basic Income Guarantee The basic income amount represents the cash transfer received by individuals who have no employment earnings. We propose to set it at the maximum income that a single, able-bodied individual (without children) would currently receive on welfare. In Canada, this differs across provinces because social assistance falls under provincial jurisdiction. For example, in 2017, individuals on welfare received $9,461 per year in Ontario and $8,124 per year in British Columbia. In our proposal, this guaranteed amount would automatically go to every individual who earns zero dollars of income. The basic income guarantee was set at this amount so that the lowest-income individuals in our program would not be made worse off in the transition from social assistance to a basic income. Employment Earnings Subsidy Rate Our program aims to incentivize individuals to enter the labor market by implementing a 30% employment earnings subsidy—that is, individuals receive an additional $0.30 for every dollar earned in wages and self-employment income. The pre-tax employment earnings subsidy rate applied to the guarantee should take into account both federal and provincial tax rates. For instance, in our Canadian proposal, the employment earnings subsidy rate varies between 50% BASIC INCOME GUARANTEES 207 and 60% (depending on the individual’s province). In other words, to ensure a 30% after-tax earnings subsidy in every province, the phase-in rate is set so that after federal and provincial tax rates are applied to the first dollar earned, the individual receives a net subsidy of 30% (i.e., the marginal effective tax rate is −30%). For example, the phase-in rate of our design in Ontario is set at 50.05%; on the first dollar earned, 15% of an individual’s employment income is collected by the federal government, 5.05% is collected by the Ontario government, and 30% is received by the individual as the earnings subsidy. Countries that start taxing income on the first dollar earned will also need to use this approach to fully incentivize employment. For countries with basic personal exemptions, it is not necessary to add the additional phase-in percentages to account for tax rates. The only reason for doing so is to ensure that individuals receive a full 30% after-tax subsidy (or at whatever rate the phase-in is set). Although a system of nonrefundable tax credits means that Canadians are not currently taxed on the first dollar earned (for example, the federal basic personal amount in Canada excludes the first $12,300 of income earned from taxation), we have added the federal and provincial tax rates to our earnings subsidy rate because our proposed funding model removes this basic personal amount and other tax credits to partially finance the basic income (our financing model is described below), which results in taxation on workers’ first dollar earned. Phase-Out (Clawback) Rate The phase-out rate is set as a function of the chosen benefit plateau range and the dual goals of minimizing the marginal effective tax rates and approximating revenue neutrality based on the proposed funding model. Unlike the phase-in rate, which is applied to employment earnings, we propose to apply the phase- out rate on the basis of total individual net income. Thus, if an individual’s net e e income is greater than IM , the phase-out will apply regardless of the value of IM . Although this reduces the strength of the employment earnings incentive for these individuals, it also reduces the program cost, improves its targeting to low-income workers, and avoids providing a benefit to high-income individuals with little or no employment earnings and high capital income. Once an individual’s net income places him or her at the end of the benefit plateau range, the transfer begins to be clawed back at a phase-out rate that we have set at 50%. We adopt an income threshold rather than a wealth threshold for access to our program to remove the requirement for means testing and enable our program to be more easily administered through the personal tax system; however, to the extent that wealth information is or could easily be collected through personal tax returns, an additional wealth threshold could be adopted as a cutoff. This program design is graphically illustrated in Figure 1 (next page) using Ontario as an example. 208 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

FIGURE 1 Proposed Design (Ontario)

Cost, Financing, and Distributional Implications The gross cost of our proposed program design is less than one fifth of what a pure UBI would cost in Canada. In a fully simulated version of our proposal, we include tables that show the average tax implications and distributional impacts of implementing our program across household income deciles and family types in Canada (Koebel and Pohler 2019). The results of our simulations are not provided here, but we refer interested readers to our 2019 paper. We fully finance our program by consolidating the direct cash transfers of many federal and provincial government programs targeted at low-income working-age people (e.g., welfare, refundable sales tax credits) and also eliminating most nonrefundable tax credits in the personal income tax system. Because we exclusively use existing social program spending and tax expenditures to fund the basic income, our program is completely revenue neutral to governments. Further detail on our financing proposal is also available in our aforementioned paper. Our program does not require an increase in personal, corporate, or small business tax rates,6 though others may wish to simulate a design that adopts these funding choices. What is important is that all of the proposed funding choices, as well as the design of the basic income program, be simulated to show the distributional consequences on different groups. For our simulations, we use Statistics Canada’s Social Policy Simulation Database and Model (SPSD/M, Version 27.0). Similar simulations of this design could be run for the United States and other countries using their own internal data and tax simulation software. BASIC INCOME GUARANTEES 209

Implications of Program Design We consider the implications of our program design on labor supply and demand in this section, as well as its impact on individuals with disabilities. We also highlight several administrative and implementation considerations of our program in the context of a federal political system. Work Incentives and Labor Supply Under our design, working-age Canadians can reach the relevant poverty threshold based on their geographic location by working between 9.3 and 16.5 hours per week at the current provincial minimum wage in each province (or alternatively, earning between $5,656 and $9,613 annually, depending on the province). We calculate this required minimum hour range using the current provincial minimum wages and the annual net employment income that individuals would need to earn to obtain the maximum transfer in each province. Importantly, our program design and these calculations assume that provinces would not lower minimum wages after program introduction. In addition to the benefits that this design provides in addressing the political challenges associated with real and perceived work disincentives, we justify incentivizing a certain amount of labor force participation for a number of reasons. First, because employment has well-documented economic, psychological, and social benefits, policy makers should strive to keep individuals in the labor market so they can obtain these intangible employment benefits. Second, rather than requiring individuals to work a full-time job to realize both tangible and intangible employment benefits, our basic income program gives recipients more flexibility and freedom to choose fewer hours spent in market-based work to pursue other societally valuable activities. Third, and just as important, there are likely many individuals who currently want to work but are not able to afford to. Indeed, as a proportion of their income, lower-income individuals face higher fixed costs of working relative to both higher-income individuals and those who do not work. Such individuals may require additional income through a basic income to offset these costs and overcome barriers to labor market participation. One consequence of using different program parameters across the provinces (or at any subnational level in other countries, for instance, across states in the United States) is the substantial provincial (state) variation in terms of the employment earnings necessary to obtain the maximum benefit. For example, under our proposed scheme, individuals residing in Québec must earn roughly $6,188 on average (or work an average of 9.9 hours at the provincial minimum wage) to qualify for our maximum benefit amount; in contrast, individuals in Nova Scotia need to earn $9,212 (i.e., 16.1 hours a week at the provincial minimum wage). Thus, residents of Nova Scotia must work more than those in Québec to obtain an income at the poverty line. This outcome is a function of the current provincial minimum wages as well as setting different basic guarantee amounts across 210 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

provinces (i.e., at the current provincial level of welfare) for individuals with no income. There is a trade-off in Canada between designing a system whereby every individual, regardless of province of residence, has to work exactly the same hours to get to the poverty line and setting the basic income guarantee such that current welfare recipients are not worse off after the implementation of our program. Our program design places more weight on the latter priority. One of the unavoidable challenges of any NIT design is that, at the income threshold where the clawback rate kicks in, there will be an immediate increase in the marginal effective tax rate (METR) for individuals who are subject to the clawback and now face a possible work disincentive (Kesselman 2018). A METR captures the combined sum of all tax-back rates on income and benefits, and large increases in the METR can pose problems by distorting labor supply decisions. However, there are a few improvements of our design over the status quo of current income security programs in terms of the METRs faced by individuals. First, one of the ways to mitigate high METRs is through adopting a low tax-back rate, which softens the reinforcing substitution effect that, as we described previously, theoretically reduces labor supply for beneficiaries. We have set our phase-out at 50% in every province, which is lower than the current clawback rates for all provincial welfare programs apart from Ontario (which is exactly 50%). Almost all welfare recipients will face lower METRs in our program compared with the status quo, in addition to the higher transfer they receive under our program than in the current system. Second, the exit threshold of our program occurs much higher in the income distribution relative to current welfare benefits (for example, around $40,000 of individual net income in Ontario). Individuals earning around this income are less likely to be subject to a work disincentive arising from the complete phase- out of benefits for three reasons: (1) they have already overcome the fixed costs associated with working (extensive margin/participation decision); (2) at the point at which the benefit fully phases out, they are more likely to be working in full- time jobs and thus are less able to reduce hours worked (intensive margin decision); and (3) reduction in their labor supply would ultimately reduce their overall disposable income. We also posit that the net effects of working on disposable income are more salient for most low-income individuals (and even accountants; see Chetty and Saez 2013: 2–3) than the income and substitution effects that primarily concern tax and labor economists. To address critiques about METRs, policy analysts and program designers should consider interactions with statutory tax rates of different levels of government, as well as the effect of other funding decisions on the loss of benefits for targeted groups. We do not fund our program through removal of administrative costs of current social assistance programs, employment assistance and training programs, or in-kind provision of social services (e.g., housing, medical, and dental benefits), so these do not factor into our METR calculations. BASIC INCOME GUARANTEES 211

Demand-Side Considerations and People with Disabilities One issue with our basic income proposal is that it does not directly address labor demand and assumes that individuals will be able to find at least 9 to 16 hours of work per week at the current minimum wage in each province. This is a fairly low income–work threshold required to receive the maximum benefit in our program; however, we acknowledge that this could still pose challenges for those who live in low-development areas with few employers or who may not have the necessary skills for the jobs available. Perhaps most problematic is that our program design does not provide a basic income above the poverty threshold (adequacy of support) for those who are unable to work. According to the Canadian Survey on Disability, of the almost 3.8 million Canadians who reported some type of a disability, just less than half reported a severe or very severe disability (approximately 5% of the entire Canadian population; Statistics Canada 2015). The number is much lower if we exclude seniors (for whom the prevalence of disability is substantially higher than for working-age Canadians) and children, both of whom receive disability supplements through other programs that we do not propose to change. However, a small number of working-age individuals with severe disabilities may end up slightly worse off under our proposed system restructuring. Medical certificates are already required to receive certain types of disability supplements and services, so one option to address the inadequacy of our program for those who cannot work would be to create an additional disability supplement. An alternative option would be to increase the basic guarantee for everyone to the amount currently provided to people with disabilities to reduce any stigmatization associated with applying for and obtaining a disability supplement. However, this option substantially increases both the cost and the real and perceived work disincentives for employable individuals, thus reducing the political feasibility of the basic income. Ultimately, we believe that the tax and transfer system is an inappropriate place to address the specific needs of the relatively small proportion of Canadians who are completely unable to work at least nine hours per week at the minimum wage as a result of severe physical and mental disabilities. In addition, severely disabled individuals may face additional costs compared with other Canadians who could still be inadequately covered by adopting a design with either a higher basic guarantee or an additional disability supplement. People with disabilities often have heterogeneous needs, and some may require much larger supplements than others to help pay for specialized supports. These supports cannot be ade- quately provided within the design of a less intrusive and less stigmatizing income security program administered by ensuring horizontal equity in the tax and transfer system; indeed, “to achieve a broader social policy objective, direct support measures [for disabled individuals] undertaken outside the tax system are likely to be more effective” (Smart and Stabile 2006: 420). 212 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Administrative Considerations In principle, the determination of eligibility and the benefit transfer amount in our program could be administered by the Canada Revenue Agency on top of the current income tax system by simply changing the parameters of the CWB. While our program could theoretically be separated from the income tax sched- ule, we think it should be directly incorporated into the tax system to reduce administrative costs. We assume the same could be done with the Internal Revenue Service and the EITC in the United States, though we are not experts on the unique administrative challenges associated with that government tax agency or the EITC program. Our own proposal requires substantial tax and social reform, particularly if not all provinces participate, and certain elements of the tax harmonization agreements between the provinces and the federal government would need to be revisited. However, if the program is administered through the tax system, no application need be required for participation in the program because eligibility can be determined on the basis of the information collected on the personal income tax return. One major concern about consolidating the income security system into one program administered through the personal tax system is its lack of responsiveness to within-year fluctuations in income (Tedds 2017). The program should thus be structured to allow individuals to apply for advanced, regular payments of the benefit, as is currently allowed under both the CWB and the EITC. Other concerns raised about social transfers and benefits administered through the personal income tax system include the observation that some individuals do not have a consistent address or may not regularly file taxes. In Canada, specific concerns have also been raised about the lack of access to benefits that are administered through the tax system for First Nations individuals living on-reserve (AFOA Canada and Prosper Canada 2018). Given that our proposal does not eliminate any administrative funds associated with the provision of current social programs, this funding could be reallocated away from screening people into (and out of) welfare and toward helping those who currently struggle to access their benefits to be able to better do so. For instance, government case workers could provide help with tax filing, a location to pick up benefit checks, assistance with finding jobs, and so forth. Another administrative challenge associated with our basic income is how to avoid adjustments to reported self-employment earnings to maximize the benefit, a well-known issue with the EITC in the United States (Chetty, Friedman, and Saez 2013). The inclusion of self-employment earnings may require greater consideration by policy makers because these earnings can be more easily manipulated than wages to maximize benefit receipt. Notwithstanding this challenge, there are also compliance issues in the current income security system, and those issues would be reduced and more easily monitored by the implementation of a consolidated program with consistently applied parameters across all individuals. BASIC INCOME GUARANTEES 213

A Final Note on Federalism Canada’s treaties, constitution, jurisprudence, and currently accepted policy give First Nations, the federal government, and provincial governments sole jurisdiction over certain policy areas and shared jurisdiction over others. Several other liberal market democracies (e.g., the United States) also have federal systems, where different governments have jurisdiction over different (and often overlap- ping) areas of economic and social life. For instance, Canadian provinces are primarily responsible for most labor and social policies, and yet they have entered into various agreements with the federal government allowing it to administer and fund particular income security programs (e.g., the Canada Pension Plan, CWB, and child and senior benefits). The federal government’s relationship with First Nations differs across communities, but First Nations, tribal councils, or both are responsible for the administration of many on-reserve social programs (Broad and Nadeau 2012). Federal governments can play a facilitative role in bringing First Nations/ provinces/states together, as well as a redistributive role in reducing regional income inequalities. Provinces/states can benefit from economies of scale in the federal coordination and implementation of programs. However, the federal government’s role and perceived effectiveness is often politically contested by other levels of government and local communities—in Canada, there are often legal disputes and jurisdictional tensions between different governments over tax and transfer policies (Béland et al. 2017). Because of the multilevel roles of governments in the tax and transfer system, we propose that a basic income is less feasible without the participation of an entire country. Perhaps more important, no adequate basic income is affordable without including both federal and provincial/state contributions to its financing. For instance, a full Canadian federal rollout of a basic income based on the recent experimental pilot design in Ontario has been estimated at $76 billion for 2018– 2019, yet the federal government currently spends less than half that on direct transfers to groups that would benefit from this particular design (Canada, Parliamentary Budget Office 2018). Creating a revenue-neutral program requires consolidating and restructuring most current federal and provincial income security programs, as well as instituting some tax reform (Boadway, Cuff, and Koebel 2018a). In addition, the jurisdictional responsibilities for, and interaction effects between, existing programs and federal–provincial tax collection agreements must be considered (Tedds 2017), as well as the distributional implications across households and provinces. In Canada, the challenges of fiscal federalism are different but no less pronounced for the federal government’s current funding and program arrangements with First Nations communities. There is also moral hazard in the federal government’s implementation of a federal basic income without full cooperation of the entire country. If provinces/ states do not hold the amounts they spend on social programs constant (e.g., 214 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Boadway, Cuff, and Koebel 2018a) or if federal and provincial/state income security programs lack integration, individuals may seize arbitrage opportunities across jurisdictions. More specifically, low-income individuals may move to provinces that provide a basic income and, to the extent that a basic income is funded through tax increases, high-income individuals may move to provinces that do not (similar effects may occur on and off reserves in Canada), which would effectively exacerbate income inequality across the country. The potential for arbitrage among high-income individuals is a well-known problem in a political federation (e.g., Musgrave 1971; Oates 1968), and the concern about jurisdiction hopping among low-income individuals has been raised elsewhere in discussions of a global basic income guarantee (Van Parijs and Vanderborght 2017). The aforementioned issues require consideration of whether universal cooperation between multiple levels of government is necessary and, if the answer is yes—which we believe it is—the extent to which it is realistic. Given the opportunities and challenges that we have outlined with federalism, where should one begin in developing a framework for a countrywide basic income? What type of framework would encourage cooperation? What type of framework could be developed and implemented in a short period of time to avoid changes in governments and shifts in policy priorities? We propose that the best approach would still be a version of our proposal— expanding on a well-established federal program that already exists across the country and is a variant of an NIT. There are programs that fit this description in Canada, the United Kingdom, and the United States. For instance, the CWB operates as an earnings subsidy for those who earn between a minimum and maximum amount. The benefit of using the CWB as the foundation for a basic income is that it already addresses many of the challenges of federalism that we raise in this section. For instance, although the CWB is a national program, provinces can tailor it (Mah 2017), subject to certain general constraints such as preserving actions to improve work incentives for low-income individuals and families, provision of a minimum benefit, cost neutrality to the federal government, and harmonization with existing federal programs (Kesselman 2019). Expanding on a program that already has multilevel government support would considerably reduce implementation barriers arising from federalism.

CONCLUSION In this chapter, we proposed a hybrid basic income program that integrates an earnings subsidy with a basic guaranteed amount. We addressed the political economy challenges associated with implementation of a basic income in liberal market democracies by expanding on the framework and design of existing earnings subsidy programs in these countries. Our primary goal was to design a program that considered the economic issues addressed in other proposals, such as adequacy of support, cost, and financing, while at the same time addressing BASIC INCOME GUARANTEES 215 major critiques that limit the political feasibility of prior proposals. More specifically, we consider the political economy implications related to distributional consequences, as well as the real and perceived impact of a basic income on work disincentives. What we have ultimately proposed is a comprehensive tax, social, and labor policy reform, and it remains to be seen whether politicians and policy makers across multiple levels of government can agree on the development and implementation of a universally accessible income security program that addresses the challenges of current patchwork income security systems existing in many liberal market democracies. The major critique of our program from basic income advocates is that receipt of an adequate (i.e., above the poverty threshold) guarantee is conditional on working, and thus we are not proposing a true basic income. We do not dispute this critique. However, we believe that certain trade-offs across core basic income principles of universality, unconditionality, and adequacy are required to enhance the economic and political feasibility of a basic income in Canada and elsewhere. The choices we made in our design are a result of our continued struggle to eval- uate these trade-offs against each other. We propose that only by sacrificing the principle of universality for a more targeted (and universally accessible) approach will a basic income be affordable, and that adequacy will be ensured for who have the highest need. We also propose that political feasibility is enhanced by incorporating some work conditionality into receipt of a portion of the benefit, particularly for the working-age population. This latter goal can be achieved, while at the same time removing the stigmatization present in the current welfare system, by expanding out from earned income tax credits and subsidy programs that already exist in most liberal market democracies. Others would inevitably choose different trade-offs than ours. There is no perfect basic income design, and we hope our proposal will create debates about our chosen trade-offs, as well as inspire other proposals. Any serious policy proposal, however, should consider the political economy implications of its design, as the devil is in these details. We hope our proposal helps move us toward a discussion of what a politically feasible basic income would look like that would provide both a floor under which no worker can fall and some basic insurance for workers as technology and labor markets continue to evolve.

ACKNOWLEDGMENTS Parts of this chapter have been reprinted or adapted from “Expanding the Can- ada Workers Benefit to Design a Guaranteed Basic Income,” published by the authors in Canadian Public Policy, with permission from the University of Toronto Press (https://utpjournals.press). Citation: Koebel, K., and Pohler, D. 2019. “Expanding the Canada Workers Benefit to Design a Guaranteed Basic Income.” Canadian Public Policy 45( 3): 283–309. 216 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

ENDNOTES 1. The Finland experiment is often called a basic income program. However, because it was distributed only to young unemployed individuals and those experiencing long-term unemployment, the experiment is closer to an employment insurance scheme than a basic income. 2. One exception is Greece, which has made a minimum guaranteed income a constitutional right. The national policy, called the Social Solidarity Income, is targeted toward Greek citizens living in extreme poverty (World Bank 2019); however, the minimum income is not sufficient for recipients to meet basic needs. 3. The cost estimate for an individual UBI of $22,000/year is approximately $650 billion in Canada, which is around 38% of annual GDP (authors’ calculations). The cost of Andrew Yang’s proposal of $12,000/year has been estimated at $3.8 trillion, 21% of US GDP (see Jaeger 2018). Some advocates propose that the next best option to a demogrant payment to all residents of Can- ada is to provide a UBI up front and then tax it back later. However, if a UBI is provided to all citizens and then taxed back according to income, the proposed benefits of a UBI over the negative income tax design are primarily philosophical rather than economic, particularly if adjustments can be made to the timing and receipt of payments in the latter to address within-year income fluctuations (see Van Parijs and Vanderborght 2017: 32–40). The payment of a basic income up front, only to be taxed back from the majority of the population later, also has additional administrative and tax compliance costs that must be considered in costing these proposals. Individual receipt of larger tax bills at the end of the year could also create financial hardship for those who do not plan accordingly. However, even if those costs and challenges could be addressed, the largest deterrent to that approach is the initial cost of the program, which in year one would be equivalent to the cost of an unconditional UBI. While we agree with prominent advocates who say that it is rational to focus on net cost, such an approach to providing a basic income guarantee has even been acknowledged by those advocates as less politically feasible than an NIT (see Van Parijs and Vanderborght 2017). Given that political feasibility matters greatly for what policy ideas get implemented, we rule out a UBI as unrealistic at this point in time, at least for countries such as Canada and the United States. 4. In Canada, nonrefundable tax credits are tax expenditures used to reduce taxes owed. They are available only to taxpayers who have sufficient taxes owing to benefit from their application in the first place, and they are regressive over the income range for which an individual’s tax liability is less than the total value of the individual’s claimable nonrefundable tax credits. For income ranges with tax liabilities greater than the value of the nonrefundable tax credit, the tax benefit is uniform; thus, over that income range, the benefit would be greater for lower-income individuals or households than higher-income individuals or households as a percentage of income. See Boad- way (2015) for a more detailed analysis of the inequity of nonrefundable tax credits. 5. For instance, where corporations operate across multiple jurisdictions in Canada, they can use tax planning strategies to shift income in ways that could lead to reduced government revenues (Mintz and Smart 2004). 6. While our program does not require an increase in personal tax rates, it does increase average taxes paid for individuals and households starting around the fifth income decile because of the removal of the nonrefundable tax credits. BASIC INCOME GUARANTEES 217

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APPENDIX A: DERIVATION OF FORMULA FOR CALCULATING INCOME THRESHOLD FOR RECEIPT OF MAXIMUM BENEFIT The income threshold at which individuals obtain the maximum benefit transfer (i.e., the beginning of the plateau range) is calculated by determining the point at which after-tax employment earnings, together with the maximum benefit transfer, place the individual at the set poverty line [i.e., the relevant provincial market basket measure (MBM) of poverty]. In other words, the maximum benefit transfer an individual can receive,T M, is a function of the individual’s employment earnings at the entry of the maxi- e mum transfer (i.e., beginning of plateau range), IM ; the federal and provincial e taxes the individual pays on those employment earnings, IM ; and the relevant MBM for the individual, IB. This relationship is expressed in Equation (A.1). e TIMB ()1 IM (A.1)

e Equation (A.2) provides additional information required to calculate IM in our program. Here, the phase-in rate, expressed by the sum of the federal and

provincial tax rates, τ , and the employment earnings subsidy rate, φW , is a function of the maximum benefit transfer, TM; the maximum benefit transfer at which individual net income is $0, T0 ; and the employment earnings that represent the e beginning of the plateau range, IM .

(A.2)

e Substituting (A.1) into (A.2) and rearranging and solving for IM , we obtain

e e WMIIBM1 IT 0

e e WMII1 M ITB 0

e () W 1 IIIM B T0 (A.3)

e ()1WMIIB T0

e ITB 0 IM 1 W BASIC INCOME GUARANTEES 221

That is, an individual’s employment earnings at the entry of the maximum benefit is equivalent to the maximum transfer at which income is $0 subtracted from the MBM, divided by one plus the employment earnings subsidy rate. chapter 10

Guaranteed Jobs or Guaranteed Income? Lessons from a Canadian Jobs Program Marc-André Pigeon University of Saskatchewan

INTRODUCTION The financial crisis changed everything. After almost 30 years of neoliberal emphasis on shrinking the role of the state, exiting active labor market policies and scaling back income-support programs, there has been a resurgence of interest in radical policies to attenuate the excesses of unrestrained capitalism. The threat of climate change, concerns about income and wealth inequality, and the potential workplace disruption caused by artificial intelligence have only inten- sified this openness to new, more radical solutions. Of note has been the idea, largely dormant since the early 1970s, of introducing a guaranteed annual income (GAI) to supplement or replace existing income-support programs (Widerquist 2017). While there are many variations in the design of a GAI, they share a common commitment to offering an unconditional income stream to all adult-age citizens.1 Notwithstanding the growing support and interest in a GAI, there remain concerns that this kind of program could reduce work incentives and be unaffordable.2 Parallel with the revival of the GAI conversation, there has been renewed interest in a competing (but potentially complementary) policy proposal for an employer of last resort (ELR) program (Forstater 2012). Like the conversation around a GAI, the discourse around ELR had languished since the 1970s. Also like the GAI, there are many potential variations in terms of the design and implementation, but all are based on an underlying commitment of offering a job to anyone willing and able to work. The design proposals also share a commitment that ELR jobs would not compete or replace private or (mainstream) public sector employment. By focusing on income derived from employment as opposed to a straight transfer, proponents say the ELR addresses one of the main critiques of a GAI—namely, that it could undermine labor-force attachment. Nevertheless, even as the GAI conversation garners an increasingly broad base of academic and policy-making attention,3 the same does not yet appear to be true for the ELR proposal. The idea for an ELR has a long pedigree, but the recent academic and policy-making attention has been relatively narrow in scope, centered around a scattered group mostly of economists, many of whom are or

223 224 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

have been associated with the Levy Economics Institute at Bard College in upstate New York (Darrity and Hamilton 2018), and policy makers such as Alexandria Ocasio-Cortez, who has helped propel the idea back into the public discourse through her Green New Deal. At the same time, one of the ELR’s most prominent scholars, Pavlina Tcherneva, writes that there have been “countless” direct employment programs around the world, but those have often been short-lived and/or targeted to narrow segments of the population such as youth (Tcherneva 2018). In terms of large-scale programs that have implemented ELR-type policies,4 scholars tend to focus on three—the New Deal employment programs of the 1930s, the Plan Jefes y Jefas de Hogar Desocupados (Program for Unemployed Male and Female Heads of Households) in Argentina from the early 2000s, and the ongoing National Rural Employment Guarantee Act in India. In her survey of design and implementation considerations associated with an ELR, Tcherneva also documents a handful of smaller-scale programs, some delivered by social economy enterprises. From this analysis, these scholars have concluded that an ELR program can be up and running in short order,5 provides work (and income) opportunities for millions of unemployed workers (particularly women), and delivers significant macroeconomic benefits. To my knowledge, however, ELR scholars have not explored a little-known Canadian policy experiment called the Community Employment Innovation Project (CEIP), a federally funded, three-year employment program for individuals on income assistance or (un)employment insurance. While not touted as an ELR policy, the program effectively embodied many of the design principles advocated by ELR academics, including federal (sovereign-level) funding, local democratic control over spending, job creation by social enterprise entities, a community-based living wage, and a job offer that did not come at the expense of losing access to other government supports. The program was designed carefully to track outcomes against a control group, measure economic costs and benefits, and provide an overall assessment of the program’s efficacy. As such, it can provide some useful insights for ELR researchers. At the same time, the careful work of ELR scholars to stitch their policy proposal into a larger macroeconomic framework may offer important insights for the design of future employment programs. The analysis of the CEIP also sheds some light on the ongoing debate between GAI and ELR scholars about the relative merits of each program, finding, for example, that the vast majority of CEIP participants stayed in the program despite the ready option of going back on employment insurance or income assistance. The CEIP evaluation also found important benefits to participants in the form of enhanced income, social capital, and volunteer activity. Again, this suggests that there is at least some significant subset of the population who might choose work over a straight income transfer and, moreover, who would derive significant benefits from this kind of program. After reviewing the history and core design GUARANTEED JOBS OR GUARANTEED INCOME? 225 features of an ELR, I describe the CEIP program and benchmarks it against ELR design principles. Drawing from this analysis, I conclude by offering some policy recommendations.

EMPLOYER OF LAST RESORT: HISTORY AND DESIGN PRINCIPLES While interest in the GAI has deep roots in a number of countries, the research and policy emphasis on an ELR program has, until very recently, been largely confined to the United States. The idea for an ELR took root with the Works Progress Administration and Civil Conservation Corps, two New Deal–era programs that at their peak employed millions of Americans in the midst of the Great Depression (Darrity and Hamilton 2018). During and around the end of World War II, the Roosevelt administration enshrined the idea in its 1944 Economic Bill of Rights that, among other things, promised every citizen “the right to a useful and remunerative job” and “the right to earn enough to provide adequate food and clothing and recreation” (Darrity and Hamilton 2018). The legislation did not, however, prescribe a mechanism for achieving this objective. In 1946, the US government passed legislation (the Employment Act) that pledged the pursuit of “maximum” employment, an objective that fell well short of the more ambitious “full employment” guarantee that seemed inherent in the Bill of Rights. As with the Bill of Rights, the Employment Act did not prescribe a mechanism for achieving this objective. The next three decades of prosperity— with unemployment rates as low as 2%—did little to dampen interest in the idea of an ELR. It garnered support from high-profile individuals such as the first black woman economist, Sadie Mosell Tanner Alexander, and later Martin Luther King Jr. (Darrity and Hamilton 2018; Forstater 2002). In the 1972 presidential election, Democrat George McGovern integrated an ELR into his platform (after considering, as an alternative, a GAI). Around the same time, Richard Nixon’s Republican administration introduced legislation that would have paid an income guarantee to all working families (thus representing something of a blended GAI/ ELR). This proposal, however, was defeated in the Democratic-controlled Senate (London Review of Books 2019). Then, in 1978, the idea found its way into the Humphreys–Hawkins Act (formally known as the Full Employment and Balanced Growth Act), which charged the US Federal Reserve (i.e., Central Bank) with ensuring the US economy operated at full employment.6 As Darrity and Hamilton (2018) note, this was the apogee of the ELR movement, and the idea would lay dormant over the following two and a half decades. In the 1990s, however, there was a revival of interest in the idea among a small group of academics, including, most prominently, William Vickers (a Nobel Prize winner in economics), Hyman Minsky (an economist with a high profile among Wall Street bankers), and several of Minsky’s mentees, notably including 226 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

L. Randall Wray and several of his associates (Tcherneva and Stephanie Kelton in particular). From there, the idea has found its way to Ocasio-Cortez, who brought the issue back into the public debate by integrating it into her Green New Deal project. ELR scholars have been careful to distinguish their proposal from “workfare,” which is understood as coerced, heavily monitored, and punitive work programs whereby income and other social services are conditional on willingness to work— often in tasks perceived as menial that are dictated by distant bureaucrats. In her design proposals, Tcherneva (2014, 2018) stresses the importance of framing the ELR as a permanent complement to existing social support programs rather than a substitute.7 Beyond paying a living wage, Tcherneva advocates for an ELR that is federally funded but locally administered in partnership with not-for-profit community organizations and cooperatives, or, more generally, the “social economy.” The assumption is that these organizations can make the adjustments necessary to absorb (and release) ELR workers; provide a jobs bank of meaningful work; make training, education, and apprenticeship programs available; allow for flexible working arrangements (e.g., part-time work or accommodations for people with physical or mental challenges); and ultimately provide useful goods and services to their communities. By setting the bar of a minimally acceptable job, the ELR would act as a reverse Gresham’s law, driving out “bad jobs” in the private sector that offer poor pay and work conditions. Relative to GAI scholars, ELR researchers tend to give greater emphasis to the benefits of formal employment relationships, citing research showing how paid work can enhance emotional and social well-being by providing a mechanism for people to integrate into their communities, develop and deepen social networks, and allow for a sense of contribution to the broader community that an income transfer (i.e., a GAI) may not easily deliver. In response to critics who have expressed skepticism about the kinds of work that might be available under such a program and whether such work might displace private and public sector jobs, ELR scholars have pointed to the potential for meaningful work tied to care of the environment (planting trees, tackling soil erosion, maintaining parks), care of community (cleanup of vacant lots, school gardens, urban farms), and care of people (after-school activities, visits with senior citizens). Of particular note, Levy Institute scholars have made the ELR proposal a centerpiece of their larger macroeconomic modern monetary theory (MMT) research program (Nersisyan and Wray 2019; Wray 1997).8 From this perspective, an ELR would—beyond the obvious humanitarian objectives—provide important macroeconomic benefits by operating as an automatic stabilizer that absorbs displaced workers in a downturn (and thus helps sustain aggregate demand) while putting otherwise idled workers to productive use in a way that provides communities with needed goods and services. In so doing, the ELR would help workers maintain their human capital. By setting a living wage with GUARANTEED JOBS OR GUARANTEED INCOME? 227 a suite of ancillary social programs, the policy would also anchor broad price indices (i.e., inflation) by operating much like an agricultural “buffer stock” that absorbs (buys) excess labor in a downturn and releases it (sells) in periods of expansion (Mitchell and Mosler 2001). The ability to quickly mobilize jobs would be key in this respect. It would also serve as a benchmark for the private sector, which would recognize that the ELR offer—and the suite of ancillary benefits that would come with it (e.g., health and dental care, daycare) was an effective minimum wage. In a macroeconomic simulation of a hypothetical ELR (Wray et al. 2018), found that, even in a period of relative prosperity, an ELR program in the United States would likely have employed upward of 15 million people in 2018 (with disproportionate beneficial impacts on women and minorities), helped generate a further 4.2 million private sector jobs through the multiplier effect, added half a trillion dollars to the gross domestic product, and improved the fiscal situation of state governments (by increasing taxation revenue and reducing social service costs), all at a relatively modest (and conservatively estimated) net cost to the federal government of increasing the budget deficit by 1.53% per year over the first five years of the simulation and 1.13% in the last five years. The simulation also estimates a negligible impact on inflation—between 0.68 and 0.74 percentage points. ELR academics like to point out that given the “embedded” nature of capitalist economies (Polyani 1992), the societal question boils down to a stark choice between letting workers absorb the costs of economic cycles in the form of job loss and increased outlays in the form of income assistance, prison costs, addic- tion, and other deleterious consequences or absorbing the casualties of the economic cycle into a program that offers them a job. ELR academics are fond of citing Keynes in this respect, who famously wrote that the Conservative belief that there is some law of nature which prevents men from being employed, that it is “rash” to employ men, and that it is financially “sound” to maintain a tenth of the population in idleness is crazily improbable—the sort of the thing which no man could believe who had not had his head fuddled with nonsense for years and years. (Keynes, cited in Tcherneva and Wray 2005)

The ELR proposal is not without its critics. Most prominently, (Sawyer 2003) has argued that not only would the program be more costly and potentially inflationary than advocates suggest, it would be difficult to imagine how it could accommodate flows of workers in and out of the program without serious disruption to those receiving the ELR services (for example, in the event of an out- flow of ELR workers providing home visits to the elderly), those managing the provision of the services (ELR managers), and the workers themselves (who might suddenly flow into the ELR program as a result of a major economic shock). 228 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Sawyer also questions how the ELR program could produce socially useful work since, in his view, these kinds of jobs are by definition created by governments and the private sector. If the ELR were to provide socially useful work, it would be competing with the private sector and/or government, something ELR scholars have consistently rejected in their design proposals. As a result, Sawyer suggests that ELR jobs would be of the low-skilled, nonengaging variety and likely to lead to underemployment in the sense that at least some workers would not be using their skills to the fullest. Given the low-skilled nature of the work paired with ELR proposals for a fair wage, Sawyer argues that ELR employees would effectively be appropriating a disproportionate share of the economy’s spending power (relative to their productivity). ELR academics and researchers have responded to these and other critiques forcefully.9 They insist, for example, that an ELR can provide work for all willing and able individuals without necessarily adding to aggregate demand and hence inflation (Mitchell and Wray 2005). Government authorities maintain discretion over fiscal policy, but workers won’t bear the consequences of badly timed or implemented stimulus. If anything, ELR scholars say the program is likely to have some inflationary-mitigating effects by augmenting the skills and aptitude for work of those who take up the ELR jobs. ELR scholars also question the assumption that the private sector and government alone can define socially meaningful work, pointing to private sector low-wage fast food jobs or work in areas that many would consider socially harm- ful (e.g., production of pornography, prostitution, harvesting of old-growth for- ests, cigarette manufacturing). Others might point to bloated bureaucracies of people who generate little obvious output. With respect to underemployment, ELR scholars emphasize that the ELR is designed to hire off the bottom, employing those who are the last to be hired in an economic expansion and the first to be fired in a downturn. Professional and/or skilled workers who find themselves out of work will likely have compensation packages to hold them over for weeks if not months while they search for new work. These individuals are also likely to have the kind of job opportunities that make them unlikely candidates for the ELR (although they would certainly be welcome). With respect to the potential disruption caused by cyclically induced ELR inflows and outflows, ELR scholars note that the private sector and government routinely manage these same kinds of inflows and outflows. They question why critics such as Sawyer assume that an ELR program will be inherently less capable at managing these flows. With respect to the disruptions to service provisioning, they suggest that, where policy makers observe that an ELR program is providing a service that recipients begin to view as essential, the provision of this service could be converted into more typical civil servant jobs. They also suggest that there will likely be a steady core of ELR workers, at least some of whom enjoy the work enough to stay regardless of the economic cycle. GUARANTEED JOBS OR GUARANTEED INCOME? 229

Crucially, however, ELR scholars are careful to note they do not have all the answers. As Mitchell and Wray note: Certainly, many of the details surrounding implementation and operation of an ELR program remain to be solidified. And one can conceive of a poorly formulated program. But why would progressive economists want to propose a “make-work” program that prevents workers from using any skills or education, that fluctuates wildly from zero to millions of employees, and that prohibits part- time work or job search while employed? Why not create a “paid work” program with flexible work schedules and positive social benefits? (2005: 13)

COMMUNITY EMPLOYMENT INNOVATION PROGRAM Canada has a long history of targeted employment programs aimed at particular regions of the country or at helping transition employees laid off as a result of economic circumstances. The final evaluation report of the CEIP, for example, discusses a range of programs from the 1970s and 1980s that aimed to create jobs while provide community benefits. In the 1970s, these included the Local Initiatives Program, the Local Employment Assistance Program, and Canada Works, short-lived and targeted programs focused on assisting workers laid off from seasonal industries. In the 1980s, the employment support programs included the Industry Labour Adjustment Program—geared toward helping laid-off steelworkers—and Community Futures. Of these programs, only Community Futures has endured. It was introduced, according to the CEIP, to “assist communities facing major layoffs, plant closures, chronic unemployment, or economic decline, and aimed to reduce unemployment permanently by promoting the creation of permanent jobs, supporting existing employment, providing training, or moving unemployed workers out of a local labour market.” As such, it was less of a direct jobs program and more an economic development strategy that, notably, was governed through a local decision-making process. According to the final CEIP evaluation report, these efforts—with the notable exception of the Community Futures program—encountered three main types of challenges: • Short-termism: The community services that resulted from these work programs were often not sustainable after the end of the program, “pos- sibly leading to hardship for those who relied on (them)” (Gyarmati et al. 2008: 5). • Governance challenges: While the programs sometimes attempted to build in a degree of local control, many decisions were in the hands of local business elites who had a tendency to create work that served their interests and not necessarily those of the broader community or its 230 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

unemployed workers. As the final CEIP evaluation report notes, there was “rarely a strong link between projects and any broader community development goals” (Gyarmati et al. 2008: 7) because project sponsors were either public agencies or private firms with their own objectives. “Arguably, this is a result of models that lack an overriding commitment and structure for creating community control, and one in which public agencies or private firms are typically the only source of job creation” (Gyarmati et al. 2008: 8). • Misaligned incentives: Some of the employment programs appear to have created a degree of dependency—partly because they counted toward weeks worked that would help an individual qualify for employment insurance—and have done little to provide workers with the kinds of skills needed to transition to more full-time permanent employment.

The CEIP was designed to address these challenges. It was not, however, conceived as an ELR program. Rather, it was meant as an active re-employment strategy over a three-year period of eligibility that paid a “community wage” to individuals receiving employment insurance or income assistance who volunteered to work on locally developed, community-based projects. In so doing, it was hoped the three-year pilot project would maintain and augment participants’ social capital (and, indirectly, human capital) while “supporting the ‘third sector’ and encouraging activities that are meaningful for both the participant and the community” (Gyarmati et al. 2008: 1, 13). Ultimately, the pilot was designed with an eye toward testing whether the CEIP could be a “cost-effective option that governments could use alongside traditional transfer payments” (Gyarmati et al. 2008: 12). From a design perspective, the voluntary nature of the program and “community wage” was important because they allowed the federal government to test the assumption—embedded in many preceding programs—that workers prefer to receive income transfers (i.e., employment insurance, income assistance) over earning income through work. The federal government rolled out the pilot project in the economically depressed area of Cape Breton, Nova Scotia, effectively offering participating community organizations 2,250 worker-years of free labor (Gyarmati et al. 2008: 19). With an economy that has historically been dependent on the fishing, coal mining, and steel manufacturing industries, the region had an unemployment rate of almost 20% in 2001 and 14.7% at the conclusion of the employment-portion of the program in 2005.10 In and around the period in question, this region of Nova Scotia was buffeted by the closure of its steel mill and most of its remaining coal mines, and ever-present fluctuations in the fisheries sector.11 As the CEIP design report notes: The economy has been highly dependent on resource-based activities, typically seasonal in nature. Efforts to diversify the economy GUARANTEED JOBS OR GUARANTEED INCOME? 231

using traditional development approaches (for example, locating public sector activities in Cape Breton and offering financial incentives to attract manufacturing enterprises to the area) have had only limited success. The regional unemployment rate has remained high relative to the provincial and national rates. In addition, for the past 30 years the industrial heart of Cape Breton County has been undergoing a process of “deindustrialization” associated with the decline of its historic industrial underpinnings—the coal mines and the steel mill. (Greenwood et al. 2003: 34–35)

Cape Breton was also chosen because, unlike the other regions considered for the program (Gaspésie, northern Ontario mining towns, one-industry towns in British Columbia), it had a long history of grassroots community development that at once increased the potential for the program to succeed while decreasing some of the applicability of the program in other parts of the country (Gyarmati et al. 2008). Each targeted Cape Breton community had access to a $30,000 planning grant and was tasked with setting up a democratic community board that would work with local social economy enterprises12 to develop jobs for prospective participants. Interestingly, participants in the CEIP could opt to create their own work through a self-directed program. While resources were made available to help people choosing this option (one week of entrepreneurship training and 11 weeks to fine-tune their proposal), no participants pursued this opportunity to its conclusion (Greenwood et al. 2003: 17). The CEIP also budgeted funds to help the resulting community boards hire outside advisors and staff to help with a range of governance and operational activities, including strategic planning and marketing and communications activities. Importantly, the CEIP was designed to control for the effects of the intervention by comparing the outcomes of recipients (treatment group) with individuals who were ineligible for the program (control group). In all, the program enlisted 1,500 individuals for the pilot project (1,000 employment insurance and 500 income assistance recipients), half of which were randomly assigned to the program (treatment) and the other half assigned to the control group. The study also sought to assess the impact of the intervention at the community level through two approaches. The first, called a theory of change approach, compared the impact of the program on communities against theoretical assumptions validated with the community before the program’s onset, the premise being that, while not definitive, this approach would lend some legitimacy and plausibility to the results. The second approach consisted of a quasi-experimental comparison of communities where the program was offered with a selection of communities where it wasn’t, all carefully chosen to roughly match the demographic and economic profile of treatment communities. 232 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

The individuals who took up the CEIP offer were expected to work 35 hours a week making insurable earnings (i.e., they could file an employment insurance claim). They were paid the local minimum wage ($9.25/hour by completion of the program), were able to accumulate personal days that could be used as hol- idays or sick days, and could choose to enroll in a private health plan with pre- miums costs split with the employer.13 Interestingly, participants were allowed, and even encouraged, to shift jobs/employers over their three years of employment under the CEIP, although their eligibility would cease if they returned to employment insurance or income assistance. Along the way, participants were given “an employability assessment, basic job-readiness training, limited transferable skills training, and job-search support, to aid in the transition to other market employment” (Gyarmati et al. 2008: 12). In its final evaluation report for the federal government, the Social Research and Demonstration Corporation (SRDC) concluded that “results from the evaluation of CEIP provide significant new evidence about the merits of locally driven employment programs that are implemented in partnership with communities, and that aim to utilize the social economy” (Gyarmati et al. 2008: 124). It based this conclusion on the following findings: • Work continuity: There was very little drop-off among program participants—those who volunteered to take part in the program stayed in the program, suggesting that “large and sustained reductions in receipt of [employment insurance] and [income assistance] benefits can be expected throughout the program” (Gyarmati et al. 2008: 120). It also suggests that the community created meaningful jobs. • Strong labor market attachment: The program demonstrated strong interest among participants in community work and led to increases in employment and earnings (during the three years of CEIP employment) relative to the control group. Few participants returned to employment insurance or income assistance during the three-year CEIP work period, providing evidence that people prefer to work at a community wage in relatively stable (and, again, meaningful) jobs over receiving income transfers. Furthermore, CEIP was successful not only in increasing employment rates during the employment period, but also in shifting some program group members who received employment insurance or income assistance into occupations that were higher-skilled than jobs they would have otherwise held. In addition, the program appears to have achieved a balance of providing participants with varied and multiple job opportunities, while also improving the duration of a primary job held. This afforded many program group members more varied work experience and increased job stability. • Positive post-work outcomes: While many participants were unable to find work immediately after the three-year program’s completion and, as a GUARANTEED JOBS OR GUARANTEED INCOME? 233

result, initiated employment insurance claims, those who did find work by month 54 of the evaluation period (which included 36 months of program delivery) tended to secure higher-skill work than they would have otherwise (based on the control group observations). Further, the employment rates in the employment insurance treatment group were similar to those in the control group by month 54, while there was a 12 percentage point drop in income assistance claims for participants relative to the control group by month 72, an outcome the SRDC interprets as evidence of greater labor market attachment. Among employment insurance recipients, the program produced “higher persistence, lifelong learning, adaptability, and systems thinking,” while income assistance recipients in the program showed evidence of a “sense of responsibility and receptiveness to continuous life-long learning” (Gyarmati et al. 2008: 121). • Social capital: The evaluation report found evidence that program participants experienced improved “bridging capital” (i.e., growing social networks on which they could call for job search help) during the program, with some persistence particularly among employment insurance recipients after completion of the three-year employment period. At the same time, the CEIP appears to have led to sustained increases in volunteer activity both during and after the three-year employment period. • Quality of life: During their three years of CEIP employment, participants experienced less poverty and financial hardship and, especially among the sample receiving employment insurance, said they were more satisfied with life relative to the control group. Notably, however, these results were not sustained (relative to the control group) after the three- year employment period. • Community capacity: The CEIP showed that most of the targeted communities were able to put together a democratically representative board that was able to recruit enough social economy organizations to create the needed jobs. Further, these organizations were able to create a variety of jobs by skill and type despite short deadlines and virtually no core/ capital funding. That said, this outcome was not universally observed. The smallest treatment community, Dominion, failed to develop the necessary community projects. As the CEIP final report notes, “Evi- dence suggests that the small size of the community may not have provided the critical mass needed for successful, sustained involvement and mobilization.” (Gyarmati et al. 2008: 88). • Community outcomes: Social economy enterprises are often challenged by inadequate staffing and an inability to plan for the longer-term, given the short-term nature of their funding. The participating organizations said the CEIP helped them address both these needs. This in turn helped 234 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

those organizations provide needed community services. Further, survey evidence showed improved levels of trust in the treatment communities relative to the control communities. • Cost effectiveness: The CEIP was formulated in the late 1990s, a period when the federal government dramatically scaled back its size in a (successful) effort to balance its budget, retreated from active labor market policies, and generally made a sharp neoliberal turn. As a result, it placed considerable emphasis on testing the cost effectiveness of the CEIP. The evaluation report looked at the question from several vantage points. For the government, it found that the net present-value cost, after accounting for increased taxes and reduced transfer payments, was $26,000 and $23,000 per employment insurance and income assistance program group member, respectively.14

From the perspective of the participants, the evaluation found that at month 54, the employment insurance participants had gained $5,500 (in present-value terms), while income assistance participants were up $10,000. The community experienced even more dramatic gains from the increased array of services, with net benefits measured at $22,000 per program member. From a broader societal perspective that includes intangible benefits such as social capital, the evaluation found that the net benefit to society was as much as $5,000 per employment insurance program member and $15,000 per income assistance program member. This translated into a net benefit to society of $1.21 and $1.61 for every dollar in government expenditure for employment insurance and income assistance recipients’ participation, respectively.

DISCUSSION: ELR VERSUS CEIP By design, the CEIP was meant as a short-term pilot project. It could not offer the scale or permanence that would come from a fully implemented ELR program. It also actively encouraged re-entry into the labor force, an ancillary but not overarching goal of an ELR program. As Table 1 (pages 236–237) shows, however, it embodied many core ELR design principles. From that perspective, the CEIP provides evidence that a broad-based, federally funded program delivered through social economy entities could deliver meaningful jobs. Further, while the program was delivered in an economically depressed area, it was nevertheless a period of relative prosperity in a country that closely approximates the United States (where most of the ELR scholars reside). The CEIP also offers some important lessons for ELR scholars. These include the following: • ELR academics have not, to my knowledge, stressed the importance of providing base funding for the community and organizations that are charged with delivering the needed jobs. This consideration could sig- GUARANTEED JOBS OR GUARANTEED INCOME? 235

nificantly increase the costs—but also the efficacy in terms of job avail- ability, quality, and democratic control—of the intervention. • ELR academics have generally assumed that all communities are equally capable of delivering the necessary work. However, the CEIP findings show that, even with base funding, the smallest treatment community, Dominion, lacked the capacity to organize a community board or mar- shal the necessary jobs from the social economy. • ELR academics have generally assumed relatively strong take-up from the unemployed and the population that is out of the labor force. In their effort to model the impact of a US ELR program paying $15 an hour and offering a healthcare benefits and daycare, Wray et al. (2018) estimate that anywhere from 68% to 86% of unemployed workers would take up the program.15 They assume a further 5% to 5.4% of the out-of-the-labor-force population would join an ELR. The CEIP offers a benchmark against which to assess these assumptions. In the CEIP, the take-up rate on the initial outreach soliciting volunteers from the population of unemployment insurance or income assistance recipients (via a mail-out) was 27% and 60%, respectively. Of those who showed up for the initial information session, two thirds of unemployment insurance recipients took up the offer compared with more than 90% of income assistance individuals. The unemployment insurance recipients who showed up at the information session and declined to participate cited the low wage as their primary reason for not following through. There was also some expectation that they might return to their previous jobs. By contrast, the 10% of income assistance individuals who declined to follow through cited personal, family, or health reasons rather than program features for declining. • While ELR scholars readily acknowledge the important benefits that would accrue to social economy organizations that deliver on the job guarantee, the CEIP offers some insight into the specific benefits that would accrue from their involvement. These include increased capacity to engage in long-term planning. • While ELR scholars clearly acknowledge the important social benefits that might flow from an ELR, they have not framed these benefits in terms of network (bridging) capital, nor have they had the opportunity to measure the benefits concretely. The CEIP provides both a method for measuring benefits but also evidence that a carefully designed jobs program can deliver these outcomes. • Finally, from a cost–benefit analysis perspective, ELR academics have tended to focus on the macroeconomic perspective rather than the microeconomic perspective taken by the CEIP evaluation team. Each group can learn from the other. 236 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT Community Employment Innovation Program (CEIP) Program Innovation Community Employment Federal/provincial Local: Community boards $30,000 per participating community Yes and also exit/ could change jobs (within the program) workers Yes; if they but they had to exit the program to the program, return insurance or income assistance to employment returned employment received of Cape Breton in the targeted region Persons insurance or income assistance explicitly addressed Not Implemented control/ with rigorous as a pilot project conceived program No; and limited eligibility groups treatment participants made to match program to jobs that attempts were Yes; participants and skills; program deemed their interests reflected transitional jobs until a compatible given were ready” not “work position became available TABLE 1 TABLE Employer of Last Employer (ELR) Resort Federal Local: Municipal governments identified as a cost Not Yes Yes willing and Anyone able to work as partTheorized of a larger macroeconomic model Suggested Yes Yes Comparison of Conventional ELR Programs with the Canadian CEIP Program ELR Programs Comparison of Conventional Design/Program source Funding Oversight/control grants Planning economy jobs bank Social participation Voluntary Eligibility framework Macroeconomic framework evaluation Rigorous job offer Universal Training GUARANTEED JOBS OR GUARANTEED INCOME? 237 No, although workers could take leaves for education or health could take leaves although workers No, or personal reasons led to important that effectively wage” CEIP set a “community Yes; in household income increases Community-oriented services; option for participants to develop work their own CEIP found important benefits for the participating social economy benefits in terms of additional capacity; entities, including obvious up time for the CEIP funding helped free granular level, on a more long-term strategic planning leadership to engage in more communities, CEIP was in the treatment and measured; Modeled social capital (particularly bridging capital) and found to improve in trust increase lead to a generalized only level but microeconomic Yes, Yes acts as an Yes—ELR minimum effective wage with the aim of lifting families out of poverty for peo - care Providing ple, the community, - and/or the environ ment assumed but not Yes, explicitly addressed noting the beyond additional capacity of community organiza - on their tions to deliver mission modeled Not but macroecnomic Yes, only level Job flexibility: Part time or full flexibility: Job wage Minimum/living of work Types to the social economy and Benefits economy organizations capital Social Cost–benefit analysis 238 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

For policy makers, the ELR approach points to the importance of framing any future desire to roll out a large-scale CEIP-type program in a macroeconomic context—one that recognizes the important “buffer stock” roll that an ELR can play—and frames the deployment of a CEIP-like program by contrasting it with the current approach to managing the economic cycle (i.e., unemployment). Informed by modern monetary theory, a large-scale CEIP program would similarly put less emphasis on the fiscal cost of the program and more on the real benefits of a job guarantee.

CONCLUSION In his recent paean to the guaranteed annual income, London Review of Books writer John Lanchester concludes that a GAI may be one of the only policy proposals that can help mitigate some of the challenges arising from the lingering effects of the financial crisis, the impact of climate change, and the potential work disruption posted by artificial intelligence. He approvingly cites Milton Friedman who wrote that only a crisis—actual or perceived—produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable. (Friedman, quoted in Lanchester 2019)

Friedman then concludes that “the list of progressive alternatives which currently fit that description is one item long: universal basic income.” The historical and policy record suggests, however, that the GAI may not be the only solution on offer. In fact, a longer historical perspective points to the fact that, at least in the North American context, a jobs program may be a more natural fit in a culture that assigns a great deal of value to paid work. For some GAI scholars, this culture is precisely the problem that needs to be addressed because so much of what constitutes “work” is pointless and hence demoralizing and dehumanizing. Lanchester, for example, cites Gallup research that found 33% of US workers and 11% of UK workers feel engaged by their work. Picking up on this zeitgeist, anthropologist and best-selling author David Graeber turned a short essay for STRIKE!, a radical (“dissident collective”) magazine, into a popular book titled Bullshit Jobs. The essence of Graeber’s argument (2013) is that not only are most of the better-paying jobs useless (e.g., the proliferation of “sal- aried paper pushers” in human resources, administrative, legal, financial, and accounting positions) but that society’s most important, productive, and fulfilling work (the caring professions in particular) tends to be gendered and poorly remu- nerated. As a result, Graeber and others—while often politically aligned with GUARANTEED JOBS OR GUARANTEED INCOME? 239

ELR scholars—are deeply skeptical of any work program, no matter how well intentioned. ELR scholars have generally countered that their proposed scheme is not workfare. It would not be coercive. It would not be punitive. It would avoid stigmatization. It would offer good jobs that people want. Over the years, leading scholars such as Tcherneva have fine-tuned the ELR proposal to emphasize this philosophical approach, stressing the noncoercive, community-controlled nature of their guaranteed jobs proposal. These proposals have, however, largely been speculative or informed by large-scale programs such as the New Deal suite of programs or the Argentinean Plan Jefes y Jefas intervention, as well as much smaller-scale, local, one-off social economy programs. From that perspective, the CEIP fills a gap, even though it was not explicitly framed as a jobs guarantee program. It used a careful multiple methods design— including random assignment, theory of change, and quasi-experimental methods—to attribute as accurately as possible the benefits that could be associated with the CEIP intervention. It funded and used local, democratically controlled structures to organize the effort. It used the social economy to create meaningful jobs. And it paid the workers community wages, with the possibility of additional health and other benefits that measurably improved their take-home pay, skills, and bridging capital. For social economy entities, the CEIP facilitated longer-term planning and led to more output. For the communities that were targeted for the CEIP treatment, it resulted in more goods and services as well as intangibles such as higher levels of trust. Further, the vast majority of program participants stayed with the program despite the ready option to fall back on employment insurance or income assistance. In so doing, it shed some light on one of the major critiques of a GAI—namely, that it could undermine work incentives. The CEIP experiment provides some grounds for concluding that the work-disincentive argument is flimsy at best, especially if there are good jobs on offer at decent (community- level) wages.16 Ultimately then, the CEIP seems to offer up evidence that supports an argument for both policy interventions. This, interestingly, is precisely the position taken by some of the more conciliatory voices on both sides of this policy divide. It is also the choice taken many years ago by the Freedom Budget, which was supported by people such as Martin Luther King Jr. and advocated precisely this kind of approach (Forstater 2012). Policy makers, particularly in Canada and the United States, have cobbled together welfare systems that encompass elements of both policy approaches, but all too often without giving serious weight to a community-driven, bottoms-up approach. The upshot is that the distance between ELR and GAI activists may not be that great—more a matter of debate about the process than the desired outcomes. 240 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

As two of the most prominent ELR scholars, Mitchell and Wray, note: The future of paid work is clearly an important debate. The traditional moral views about the virtues of work—which are exploited by the capitalist class—need to be recast. What is the best way to make the transition into a system of work and income generation that expunges the yoke of the work ethic and the stigmatisation of “non-work”? While a broader concept of work is the first phase in decoupling work and income we do not advocate imposing this new culture of non-work on to society as it currently exists. Social attitudes take time to evolve and are best reinforced by changes in the educational system. ELR provides a progressive role for the state in rebuilding a sense of community and the purposeful nature of work that can extend beyond the creation of surplus value for the capitalist employer. It also provides the framework whereby the concept of work itself can be extended and broadened to include activities that we would dismiss as being “leisure” using the current ideology and persuasions, as well as to encourage private sector activities currently counted as “productive” in a narrow sense that societies of the future will view as socially destructive. (Mitchell and Wray 2004: 10).

ENDNOTES 1. The renewed interest in a GAI is starting to translate into action. Several jurisdictions have introduced pilot programs. The province of Ontario, for example, introduced a three-year program, subsequently truncated to one year (Ontario 2018). Finland, similarly, introduced a two-year pilot project. It found that recipients experienced a considerable decrease in anxiety (increase in happiness), but it did not translate into a hoped-for increase in willingness to work part-time jobs (Wikipedia, “Basic Income Pilots,” no date). In Switzerland, citizens mobilized to hold a referendum on whether to introduce a GAI. It was, however, soundly defeated (Wikipedia, “2016 Swiss Referendums,” no date). 2. GAI researchers have, however, provided evidence to challenge these assumptions (Koebel and Pohler 2019). 3. See, for example, Lanchester (2019). 4. Importantly, ELR scholars have identified shortcomings in all these programs (Tcherneva 2018). 5. The Plan Jefes y Jefas was up and running in less than six months after being announced (Tcherneva 2018). 6. Forstater (2012) says that early versions of the act included a commitment to an ELR program. 7. In the GAI literature, there is a debate between those who advocate stripping away existing social programs to “pay for” the GAI and those who advocate layering a GAI on top of some configuration of social existing programs. There is also a debate between those who favor a means-tested program and those who insist on the universal nature of the program. 8. MMT posits that sovereign governments with their own free-floating currency and central bank have more fiscal space than is commonly assumed. This fiscal space is defined by an inflationary constraint rather than a deficit or debt-to-GDP ratio, as is conventionally assumed. GUARANTEED JOBS OR GUARANTEED INCOME? 241

9. It is beyond the scope of this paper to discuss macroeconomic critiques of ELR or responses from ELR/MMT scholars. 10. Statistics compiled by the author from Statistics Canada public-use data. Cape Breton’s unemployment fell to a low of 12.8% in 2008 before rising again with the financial crisis. It was 15.3% in 2018. 11. The Sydney steel mill closed in 2000 after nearly a century of operation; Cape Breton’s last underground coal mine closed in 2001 (“Cape Breton’s Last Underground Coal Mine Closing,” 2001). 12. While no formal definition of “social economy” was imposed on participating communities, the program evaluation team defined the contested concept by referring to the common elements of most definitions; namely, “organizations and institutions which neither entirely produce goods and services for sale in the market, nor entirely operate as part of a tax-funded government bureaucracy, but which share characteristics of both private and public sectors—often referred to as the ‘third sector’” (Gyarmati et al. 2008). 13. Canada’s health plan does not cover prescription drugs, dental services, or paramedical services such as physiotherapy, massage therapy, and acupuncture. 14. I was unable to find a reference to the total cost of the program, but these figures suggest it cost—in net terms—about $19 million. 15. The upper-bound estimate assumes that all unemployed workers other than those on temporary layoff take up the ELR; the lower-bound estimate excludes individuals unemployed fewer than five weeks because those individuals are assumed to be looking for a private sector job in their field. 16. In his article, Lanchester (2019) reviews other evidence that undermines this critique.

REFERENCES “Cape Breton’s Last Underground Coal Mine Closing.” 2001 (Nov. 22). CBC News. http:// bit.ly/3b5mTuJ Darrity, William, and Darrick Hamilton. 2018. “Full Employment and the Job Guarantee: An All-American Idea.” In Full Employment and Social Justice: Solidarity and Sustainability, edited by Michael J. Murray and Mathew Forstater, pp. 195–204. London, UK: Palgrave Macmillan. Forstater, Mathew. 2002. “ ‘Jobs for All’: Another Dream of the Rev. Dr. Martin Luther King, Jr.” Forum for Social Economics 31 (2): 45–53. Forstater, Mathew. 2012. “Jobs and Freedom Now! Functional Finance, Full Employment, and the Freedom Budget.” The Review of Black Political Economy 39 (1): 63–78. Graeber, David. 2013 (Aug.). “On the Phenomenon of Bullshit Jobs: A Work Rant.” STRIKE! http://bit.ly/3b4zONC Greenwood, John, Claudia Nicholson, David Gyarmati, Darryl Kyte, Melanie MacInnis, and Reuben Ford. 2003. “The Community Employment Innovation Project.” https://bit.ly/2VE- Dobd Gyarmati, David, Shawn de Raaf, Boris Palameta, Claudia Nicholson, and Taylor Shek-Wai Hui. 2008. “Encouraging Work and Supporting Communities: Final Results of the Community Employment Innovation Project.” http://bit.ly/3b8e6Z0 Koebel, Kourtney, and Dionne Pohler. 2019. “Expanding the Canada Workers Benefit to Design a Guaranteed Basic Income.” Canadian Public Policy 45 (3): 283–309. 242 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

London Review of Books. 2019. “Good New Idea: John Lanchester Makes the Case for Universal Basic Income.” Book review. London Review of Books 41 (14). https://bit.ly/2UFgqAW Mitchell, William F., and Warren Mosler. 2001. “Unemployment and Fiscal Policy.” In Unemployment: The Tip of the Iceberg, edited by William Mitchell and Ellen Carlson, pp. 219–232. Sydney, Australia: Centre for Applied Economic Research, University of New South Wales. https:// bit.ly/3crPlYy Mitchell, William, and L. Randall Wray. 2004. “In Defense of Employer of Last Resort: A Response to Malcolm Sawyer.” Working Paper 04-03. Newcastle, Australia: Centre of Full Employment and Equity. https://bit.ly/3crPY4m Mitchell, William, and L. Randall Wray. 2005. “In Defense of Employer of Last Resort: A Response to Malcolm Sawyer.” Journal of Economic Issues 39 (1): 235–244. Nersisyan, Yeva, and L. Randall Wray. 2019. “How to Pay for the Green New Deal.” Working Papers Series 931. Annandale-on-Hudson, NY: Levy Economics Institute of Bard College. Ontario. 2018. “Ontario Basic Income Pilot.” Toronto, ON: Ministry of Children, Community and Social Services. http://bit.ly/2w7mTfb Polyani, Karl. 1992. The Great Transformation. Boston, MA: Beacon Press. Sawyer, Malcolm. 2003. “Employer of Last Resort: Could It Deliver Full Employment and Price Stability?” Journal of Economic Issues 37 (4): 881–907. Tcherneva, Pavlina. 2014. “The Social Enterprise Model for a Job Guarantee in the United States.” Annandale-on-Hudson, NY: Levy Economics Institute of Bard College. Tcherneva, Pavlina. 2018. “The Job Guarantee: Design, Jobs and Implementation.” Annandale- on-Hudson, NY: Levy Economics Institute of Bard College. Tcherneva, Pavlina R., and L. Randall Wray. 2005. “Employer of Last Resort: A Case Study of Argentina’s Jefes Program.” SSRN. https://bit.ly/2XLopPt Widerquist, Karl. 2017 (Oct. 18). “Basic Income’s Third Wave.” openDemocracy. http:// bit.ly/3d8RsBH Wikipedia. No date. “2016 Swiss Referendums.” http://bit.ly/3b6OWdh Wikipedia. No date. “Basic Income Pilots.” https://bit.ly/2z6WVta Wray, L. Randall. 1997. “Government as Employer of last Resort: Full Employment Without Inflation.” Working Paper 213. Annandale-on-Hudson, NY: Levy Economics Institute of Bard College. https://bit.ly/3bnPcVO Wray, L. Randall, Flavia Dantas, Scott Fullwiler, Pavlina R. Tcherneva, and Stephanie A. Kelton. 2018. “Public Service Employment: A Path to Full Employment.” Annandale-on-Hudson, NY: Levy Economics Institute of Bard College. chapter 11

Digital Kelsoism: Employee Stock Ownership as a Pattern for the Online Economy Nathan Schneider University of Colorado Boulder

In the early 1960s, Detroit autoworker and unionist James Boggs extrapolated theory from the rise of the machines that he experienced firsthand from the factory floor: Automation is that stage of production which carries the contradic- tions of capitalism to their furthest extreme, creating and sharpening inside capitalist society the conflicts, antagonisms, clashes between people that make for social progress and the inevitable struggle that goes with it. (Boggs 1963)

Boggs regarded himself an enemy of capitalism. Yet his analysis of the problem was not unlike that found in The Capitalist Manifesto (1958), published a few years earlier by a little-known San Francisco lawyer, Louis O. Kelso, and the famous philosophy professor Mortimer J. Adler. Its underlying vision was mainly Kelso’s, and at its root was the conundrum of automated productivity that diminished the leverage of labor. In a 1975 60 Minutes interview, Kelso told Mike Wallace: Kelso: The scientist, the engineer, and the manager is hell-bent on destroying employment. That’s how he measures his success: how much employment he can destroy.

Wallace: By putting in machines?

Kelso: By substituting machines for men, right. (Speiser 1977: 9)

While Boggs sought a workers’ revolution against capitalism, Kelso wanted to save capitalism by transforming it, by making capitalists out of the workers. And to an uncommon degree—but far short of his aims—Kelso succeeded. He devised the Employee Stock Ownership Plan, or ESOP, in the mid-1950s, then he ushered its passage into US employee-benefits law starting in the mid-1970s. By the time of Kelso’s death in 1991, the ESOP had enabled on the order of ten

243 244 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

million US employees to earn not only wages but capital income from the companies where they worked (Kelso and Kelso 1986). Today, ESOP participants number around 14 million employees in over 7,000 companies (National Center for Employee Ownership 2019). Both Boggs and Kelso should be regarded today as prescient. They identified ways in which technology was poised to undermine both the order of industrial production and the forms of worker solidarity that might counteract its abuses. Simply put, as worker labor becomes more peripheral to production, and as workers lose their ability to demand a share of the surplus, ever more spoils go to the small class of capitalists. Boggs offered a distinctive yet nonetheless familiar Marxist synthesis in response to the impending crisis. Kelso’s broader outlook has not been widely remembered, however, despite the widespread adoption of the ESOP. Together with his collab- orator (and eventual spouse), Patricia Hetter Kelso he had in mind much more than the ESOP. They proposed a series of similarly structured plans that involved leveraged financing for broad-based ownership among stakeholders beyond just the employment relationship, situated in a distinct theory of political economy. This chapter argues that Kelso and Kelso’s proposals deserve reconsideration in an age of an increasingly dominant online economy. Although first envisioned in another time, the proposals anticipated frequent anxieties and ambitions surrounding digital networks, from gig work and big data to universal basic income. Kelsoism, as I will call their body of work, appears to have accurately predicted the growing share of wealth in advanced economies since the 1970s accruing to capital, as opposed to labor (Karabarbounis and Neiman 2013), together with the concurrent rise in the inequality and concentration of wealth (Alvaredo, Atkinson, Piketty, and Saez 2013). The proposals also come with financing mechanisms and policy tools that, as with the ESOP, could make them scalable and self-perpetuating, especially if unions and other forms of organized solidarity participate. The chapter reconsiders several Kelsoist strategies in light of the digital economy and raises concerns from critical research on the ESOP legacy. First I outline the contours of Kelsoism and the career of Louis Kelso, including both the horizon it sets forth and the critiques that have been leveled at his legacy. Next I consider applications of Kelsoist proposals beyond the ESOP to challenges that have arisen in the platform economy. Following that, I offer reflections on Kelsoism as a practical political strategy. I conclude with more speculative reflections on the intertwining of democratic ownership and democratic citizenship. For one familiar with Kelsoism, its current political absence is conspicuous. Andrew Yang, a long-shot but Internet-viral 2020 Democratic presidential can- didate, ran as a venture capitalist promoting universal basic income through a value-added tax—a salve for the capitalism he believed in through nonlabor income. Yet his campaign manifesto (2018) makes no mention of Louis Kelso DIGITAL KELSOISM 245 or the practical proposals Kelsoism offers toward similar ends. This omission is common among other recent basic-income writings as well (e.g., Van Parijs and Vanderborght 2017). Even venture capitalists like Yang turn to redistributive taxation, rather than the mechanisms of capital ownership to which they owe their own wealth, as a means of generating wealth for others. One need not identify as a venture capitalist, or a capitalist at all,1 to find insight in a body of work that offers unusually well-tested strategies to reorient the circu- lations of wealth downward and reduce more people’s dependence on the drudgery of labor. The fresh challenges and stark inequalities of the online economy make the Kelsoist proposals more timely than when they were first proposed.

KELSOISM IN BRIEF To the extent that Louis Kelso’s name is remembered today—almost 30 years since his death, in 1991—it is in the context of the ESOP. The ESOP’s impact on the livelihoods of millions of families alone makes it a remarkable feat of legal and policy innovation. Yet his early writings on political economy (e.g., Kelso and Adler 1958) barely mention workers owning stock in their companies, and his final book (Kelso and Kelso 1986) downplays his best-known invention. Its subtitle is Extending the ESOP Revolution; the extension it refers to is a vision for economic democracy that eclipses the employment relation rather than further entrenching it. Kelso’s retellings of his intellectual Bildungsroman (Speiser 1977; Kelso 1984; Kelso and Kelso 1986, 1989) went something like this: As a teenager from a poor family outside Denver, and then as a finance and law student at the University of Colorado, he witnessed the ravages of the Great Depression and sought to understand their cause. He devoured Karl Marx’s analysis of capitalism but came out siding with capital, not labor as such. (Milton Friedman, after calling Kelsoism “crackpot,” described it as “Marx stood on its head” (“The Man Who Would Make Everybody Richer,” 1970).) New Deal employment programs seemed to him arbitrary and wasteful, producing jobs for the sake of jobs—later he would call them “boondoggle jobs” (Kelso and Kelso 1982)—rather than going to the root of the problem in the allocations of capital. During World War II, while assigned to Panama as an intelligence officer, Kelso composed a manuscript called The Fallacy of Full Employment. But upon the war’s end, Congress unknowingly set out to refute him with the Employment Act of 1946, which fixed jobs as the bedrock of economic policy. Seeing the tide turning against him, Kelso put the manuscript in his closet and set about becoming a successful corporate lawyer. That is just what he had done by the time he began attending Great Books courses under Mortimer Adler in 1951 and became the philosopher’s attorney. Adler convinced him to edit down the manuscript into The Capitalist Manifesto, which became a bestseller, meriting even a lengthy and critical review in the official Soviet newspaper Pravda (Speiser 1977: 136). 246 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Kelsoism is fairly straightforward to systematize because, over the course of Louis Kelso’s adult life, it remained largely consistent. (It nevertheless went by various names, including two-factor theory, binary economics, and democratic capitalism.) The underlying mantra is that there are two distinct factors of production—labor and capital—and capital is the preferable half (Kelso and Kelso 1986; Ashford 1990–1991). When capital investments automate production, it doesn’t make labor more productive, as the economic jargon tends to claim; it makes capital more dominant and labor less essential. If capital circulates mainly among only a small subset of the population, a growing mass of people become ever more extraneous to the economy. The task of economic policy, therefore, should be to help convert “labor workers” to “capital workers”—to ensure more people remain economically relevant by holding and deriving income from capital ownership as labor income dwindles. Kelsoism regards that as better than more jobs because capital income liberates time for activities other than working for money. It also contends that a diffusely capitalist economy would be more efficient and depression-proof. Kelso stressed that his view was not just a matter of economics or business but political economy. He understood democracy as resting on the dual legs of economic and political power. Each must be distributed among all citizens. Without “universal capitalism,” economic oligarchy would corrode any democratic mechanisms in political life. Like Abraham Lincoln’s Homestead Act, which granted Western land to landless settlers, Kelso sought to raise capital among those who lacked it, believing that the future of democratic society depended on so doing (Moyers 1990). By the lights of the economic profession, Kelsoism has been mainly ignored or dismissed as an eccentricity. The one prominent contemporary economist who engaged with Kelso at length, Paul Samuelson, cited the stability of labor’s share of income to refute Kelso’s claims (Samuelson 1977; Speiser 1977); that was in the 1970s, however, just around the time that the labor-share began declining, as it has consistently since (Karabarbounis and Neiman 2013). Political philosophy does not offer a school of thought that precisely maps to Kelsoism, either. If anything, it most closely resembles the dictates of distributism (e.g., Novak 1984), a Catholic-aligned vision that advocates widespread property and capital ownership, following the teachings of Pope Leo XIII. Among more recent cur- rents, Kelsoism bears some kinship with the accelerationists, who seek to accel- erate capitalist logics toward a utopia of automation and universal basic income (e.g., Srnicek and Williams 2015). But none of these schools fully captures Kelso’s eccentricity—nor his pragmatism. For much of his career, Kelso was a partner at the San Francisco firm Brobeck, Phleger & Harrison, which would later play a leading role in the rise of Si;ocpm Valley until the firm’s bankruptcy in the dot-com bubble. There he brokered major corporate and real estate deals, witnessing firsthand how the capitalist elite DIGITAL KELSOISM 247 does business. In the words of fellow lawyer Stuart M. Speiser, author of the only book-scale assessment of Kelso’s legacy, “He couldn’t help but notice that the wealthy, whether corporations or individuals, had a habit of acquiring more capital by letting it pay for itself” (1977: 131). The basic, persistent impulse of Kelso’s proposals was to equip the undercapitalized masses with the means of capital acquisition and management that the rich already enjoyed, and to do so without undue exposure to risk or expectations of expertise.

CAPITAL DIFFUSIONS: KELSOIST PLANS Each “plan” that Kelso and his collaborators proposed followed a pattern: finance the acquisition of capital on the expectation of future earnings, use the fresh capitalization to fund growth, and ensure the earnings of capital from that growth become nonlabor income for what he called the “new capitalists” (Kelso and Adler 1961). He called for government to form an entity called the Capital Diffusion Insurance (or, later, Reinsurance) Corporation, which would provide federal backing to spur such transactions. Its purpose would be “debunking the savings mystique” (Kelso and Kelso 1986: 113)—replacing the expectation that a borrower must have existing wealth with a system of commercial insurance-based finance for capital investments. He also hoped that unions would pivot from mainly brokering labor arrangements to organizing capital work, so as “to minimize the toil and maximize the earnings and leisure of each member” (Kelso and Kelso 1986: 152). Kelso’s early books focused on a “financed-capitalist plan,” which applied the pattern to acquisition of public stocks (Kelso and Adler 1958, 1961). Employees co-owning their place of employment was a matter of only brief consideration. By that time, however, he was already experimenting with forming ESOPs, beginning with the conversion of Peninsula Newspapers, a Bay Area media chain, to employee ownership in 1956 (see a schematic in Figure 1, next page). These experiments pro- liferated to the point that, in 1970, he left Brobeck to create a firm of his own and an investment bank, both specializing in implementing Kelsoist strategies. After repeated entreaties to Republican politicians—including Barry Goldwater, Gerald Ford, and Richard Nixon—Kelso found his policy champion in a centrist Louisiana Democrat, Senator Russell Long (Speiser 1977; Levin 1985–1986). Long became a convinced Kelsoist but didn’t see a political opening for the likes of a Capital Diffusion Insurance Corporation. Instead, starting in 1974, he brokered the inclusion of the ESOP as a “qualified” retirement plan in the Employee Retirement Income Security Act, which included favorable tax treatment for a company’s contributions to an ESOP, its lender’s interest payments, and its capital gains. This was not all that Kelso had hoped for, but it was a start, and ESOPs began proliferating across the economy. He regarded the ESOP, at least, as “the Trojan Horse for democratizing American capitalism” (Kelso and Kelso 1986: 53). 248 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

FIGURE 1 Employee Stock Ownership Plan (ESOP)

Source: Kelso and Kelso (1986), reproduced with permission.

The most mature set of Kelsoist “financing tools for democratizing capitalism” appears in Kelso and Kelso (1986),2 following an epigraph from William Blake: “He who would do good to another / must do it in Minute Particulars.” The plans described there are summarized in Table 1. Each of the plans serves a common purpose: to finance economic growth while enabling widespread capital ownership. In several cases, the capital owners would have a participatory relationship with their assets. In all but the last case, as with the ESOP, a trust entity mediates ownership on the beneficiaries’ behalf, simplify- ing finance and governance. These plans might also be combined; for instance, an electric utility might have a CSOP for its customers and an ESOP for its employees, while financing new transmission lines through a GSOP made up of people in the community that the lines will serve. This kind of multi-stakeholder approach to utility ownership could be especially well suited to the multi-stakeholder nature of Internet platforms.

CRITIQUES OF ACTUALLY EXISTING KELSOISM The Kelsoist proposals might seem far more fanciful were it not for the actually existing example, the ESOP. ESOPs have become widespread and are generally functional. They appear to exhibit productivity gains, especially when paired with participatory governance, and they reduce the likelihood of layoffs (Blasi, Kruse, and Freeman 2018); employee profit sharing may also have beneficial macroeconomic effects (Weitzman 1984). All this testifies to the promise of fur- DIGITAL KELSOISM 249

TABLE 1 Kelsoist Plans as Presented in Kelso and Kelso (1986) Plan Summary Employees borrow to buy stock in their Employee stock ownership plan (ESOP) employer Employees or community members Mutual stock ownership plan (MUSOP) borrow to buy stock in a diversified pool of smaller companies Habitual customers of a business bor- Consumer stock ownership plan (CSOP) row to gain an ownership stake in it Eligible people borrow to finance and General stock ownership plan (GSOP) co-own public works projects Eligible people borrow to invest in Individual capital ownership plan (ICOP) eligible businesses Eligible people borrow to invest in Commercial capital ownership plan (COMCOP) commercial real estate Eligible people borrow to privatize and Public capital ownership plan (PUBCOP) own government assets Residents borrow to purchase a home Residential capital ownership plan (RECOP) through low-cost commercial finance ther SOPs, were we to give them a chance. Yet in the minds of many, Kelsoism has become coterminous not only with the ESOP idea but with the specific implementation of it in US employment and tax law. As a result, the critical literature on Kelso’s legacy mainly concerns the ESOP as such.3 These critiques still offer lessons for any broader application of Kelsoist proposals. One notorious critique of the ESOP came in a paragraph from the Seventh Circuit appeals court decision of Judge Richard Posner (2006) regarding the disastrous United Airlines ESOP-involved bankruptcy. “The time may have come to rethink the concept of an ESOP,” he suggested, citing in particular the lack of diversification that, in the case of United, doomed the ESOP participants’ retirement accounts. (ESOPs frequently exist alongside diversified accounts such as a 401(k).) Posner went on, “The tax advantages of the form do not represent a social benefit, but merely a shift of tax burdens to other taxpayers.” He dismissed the economic logic that employee ownership might confer productivity benefits and referred to the challenge of managing an ESOP as a retirement plan as “awk- ward.” The one advantage he could think of was that ESOPs might depress interest in unionization (cf. Levin 1985–1986; Posner 2007). From the inverse perspective of concern for worker power, David Ellerman (1985) compares the ESOP with the worker cooperative and regards the former as “second-class ownership without control,” an inferior kind of democracy that 250 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

dwells only in property rights, not personal rights. Paradoxically, adds Michael Murphy (2005), the productivity benefits ascribed to ESOPs seem to depend on the cultivation of participatory workplaces—an add-on to the model not required by or provided for in ESOP law. Murphy further points out that the stock- repurchase obligation for retiring employees can represent a crippling constraint. Most recently, Jedidiah Kroncke (2018) compiled several decades of such assessments. He emphasizes how the ESOP’s design “completely divorced worker participation from ownership,” making it most inviting for purposes such as management capture and accruing tax subsidies for businesses that are already successful. When the subsidies abated after 1989, so did new ESOP formation. He concludes it is “a legal form that ultimately led to more problems and abuses than it transformed any particular workplace or assuaged growing inequality.” While many advocates and ESOP participants would contest this charge, it deserves to be taken seriously. Many of the concerns about ESOPs, again, fall more on the particular circumstances of the model’s implementation in US employment law than on the Kelsoist agenda more broadly. Kelso himself hoped that employee ownership would have a policy vehicle more maneuverable than a retirement plan. A broader Kelsoism might further address Posner’s concern about diversification by enabling people to participate simultaneously in several distinct kinds of SOPs. The ESOP experience also suggests that the greatest benefits arise when ownership occurs in tandem with participatory management, as Kelso’s vision of the capital worker implies; future iterations might more intentionally link ownership and governance. Labor unions have meanwhile largely rejected ESOPs as antithetical to their role of forcing con- cessions from capital (Cramton, Mehran, and Tracy 2008; McElrath and Rowan 1992), but—this being the subject of the final section of his final book, in fact— Kelso held out hope that unions might find a powerful “new role” as asset stewards for the new democratic capitalists (Kelso and Kelso 1986). The critiques that most directly challenge orthodox Kelsoism are those that raise the specter of commodification. As Ellerman (1985) puts it, if the goal is to advance democratic society, “worker capitalism” should be traded for “worker democracy.” It is not enough, the claim goes, to turn the firm into a more widely accessible commodity; rather, firms should evolve into a kind of commons, able to seek not just financial profit but social purpose. Kelsoism’s faith in broad-based commodification stands guilty as charged, in my view, although Kelsoist capitalism turns out to be a moving target.

PLANS FOR A DIGITAL KELSOISM The jacket copy for The Capitalist Manifesto (1958) begins with words that, in the years since the 2008 financial crisis, would be hard to imagine arranged in this sort of way: DIGITAL KELSOISM 251

When you read this book, you must be prepared for a shock— particularly if you are among the millions of Americans who feel complacent about the material well-being that now prevails in this country. The Capitalist Manifesto will compel you to examine, recon- sider and question many dangerous economic factors and political tendencies you have accepted as inevitable—and will show you how you can do something about them.

The publisher, that is, understood Kelso and Adler’s argument to stand on a premise of an economy in danger, a premise not likely to correspond with the intuitions of its intended readership. Putting aside the widespread exclusions along lines of race, gender, and class from the “well-being” circa the late 1950s Pax Americana, the social contracts of industrial capitalism were on the up and up; lifelong, unionized work was attainable for many, capable of supporting a nuclear family and its growing armada of consumer accessories. Kelso’s choice to spur his revolution with the ESOP reflected that reality; employment was the typical family’s most reliable economic relationship. This condition has changed. The dust jackets of economic bestsellers in the United States now tend to presume a shared mood of crisis, not upward mobility. Even what appears to be the most up-and-coming quarter of the economy, the online platforms, announce their successes as “disruption,” prompting anxious discussions in philanthropy, academia, and public media about the yet-unknown “future of work.” In such a context, the post-workist tendencies of Kelsoism might have particular usefulness. In a time of transient, unstable work, there can be less pretense that the ESOP alone will be sufficient; the eye of a digital Kelsoist drifts toward other possible plans before that one. And these plans offer salves for trou- bles that lie beyond matters of stock dividends alone. Ownership, that is, can be a mechanism for governance and accountability, not just value capture. By the digital in “digital Kelsoism,” I refer to the ever-greater digitization of economic and social life. This process provokes concerns about a rising, global “precariat” class that lacks the protections of a robust social contract (Standing 2011), together with the specters of automation (Brynjolfsson and McAfee 2016), labor exploitation (Scholz 2017), and corporate consolidation (Khan 2017). Some claim that data has become a new form of labor (Posner and Weyl 2018), except rather than through regulated employment contracts, companies acquire it by means of surveillance (Pasquale 2015; Zuboff 2019), putting new guises on old kinds of marginalization (Eubanks 2018; Noble 2018). Changes in the real economy may not have lived up to the platforms’ hype—the real extent of gig work, for one thing, appears less than boosters claim (Mishel 2018)—but the hype alone has begun communicating and instilling certain cravings for the better parts of what the existing platform disruptions dubiously promise: a more flexible, creative economy of self-determination, sharing, and low-cost services (Schor 2014; Srnicek and Williams 2015). 252 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

This section presents three adaptations of Kelsoist proposals for the conditions of the online platform economy—one focused on the identity category of users, one for the category of rank-and-file investors, and one for a universal entitlement in a world where labor contributes yet receives a declining share of the economic pie. Each remains mainly speculative at present and, like the ESOP, would likely require regulatory support in order to thrive. Yet each builds on the ESOP’s legacy enough that it may be unexpectedly feasible, both economically and politically.

User Work The term “user” in the context of platforms is an ambiguous one. People who hold accounts on platforms play a variety of roles: consumer, worker, spectator, producer, investor, expert, organizer, moderator, and more. None of these roles, however, is quite what it seems. In the realm of what Shoshana Zuboff (2019) calls “surveillance capitalism,” any of these roles contributes “behavioral surplus” that platforms collect as data in order to produce the market capture and behavior modifications that are the platforms’ most lucrative product. A user’s perceived role is thus alien- ated from realities an economic analysis might reveal. Pairing usership with capital ownership could lessen that alienation and stem its potential abuses. Louis Kelso’s second most well-developed proposal was the consumer stock ownership plan, or CSOP (Figure 2), which he tested with a California company called Valley Nitrogen, beginning in 1957. Valley Nitrogen was a fertilizer producer financed through a trust established on behalf of its farmer–customers, much as an ESOP would be financed through an employee trust. Kelso and Kelso (1986) envisioned the CSOP as best suited for “public utilities and of other business corporations having monopolistic or oligopolistic consumer relationships, or having a substantial body of steady consumers who purchase its goods or services in large quantities year after year.” These might include, in the Kelsos’ view, power companies, neighborhood grocery stores, department stores, gas stations, and the like—the hard-to-avoid staples of consumer life. A new set of hard-to-avoid staples have arisen in our digital lives. CSOPs might, for instance, finance broadband expansion and improvement in underserved areas, as cooperative and municipal models have successfully done (Talbot, Hessekiel, and Kehl 2017). CSOPs could use capital gains to supplement the incomes of platform producers, such as ride-share drivers, home-sharing hosts, and retail-platform sellers; platform companies such as Airbnb, Lyft, and Uber have already sought the legal license to distribute stock to such users (Schneider 2019). In cases where the user relationship is primarily nonmonetary, such as among social media platforms, a CSOP could be a vehicle for leveraging voting rights to counteract pressures for excessive data extraction. The CSOP might thus function as a kind of users’ union, representing their economic and privacy interests in the boardroom. Why would a company invite such a creature into its midst? ESOPs are arrangements that companies adopt voluntarily and organize on behalf of their DIGITAL KELSOISM 253

FIGURE 2 Consumer Stock Ownership Plan (CSOP) in Kelso and Kelso (1986)

workforce. Trustee governance tends to be pliable to board or management interests. In the same way, companies could see benefits in better aligning the incentives of users and investor–owners, which appears to be why Airbnb, Lyft, and Uber want to make user stock distributions. The Google-affiliated Sidewalk Labs project has proposed a semi-independent “civic data trust” to manage the data its “smart city” sensors collect (McDonald 2019). But the arrangement need not necessarily be so cordial. Independently organized user CSOPs could engage in leveraged hostile takeovers. A reinvigorated anti-trust regime could also require user ownership as a check against abuses by monopolistic platforms (Vaheesan and Schneider 2019). Threats of external regulation surrounding certain behaviors could provoke platforms to adopt CSOPs as a sort of self-regulation. Regardless of the motivation, making the CSOP model available and conducive to financing could help ensure that the value users contribute to platforms, and the users’ human rights, are better accounted for in the workings of ever-more powerful platforms. David Ellerman (2015) has raised the concern that the economics would become difficult in an “SOP” not able to rely on tax-advantaged employee compensation for its loan repayment, as ESOPs have tended to do—rather than relying on dividends, as Kelso hoped. This concern is especially applicable in the online economy, as many startups avoid dividend distributions for long periods in order to invest in growth. User CSOPs might need to ensure that companies can regard equity distributions as tax-advantaged compensation; in other cases, users could hold a nondilutive class of shares with special governance rights, issued at no cost. User ownership need not pantomime all the features of investor ownership. 254 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Capital Work One outgrowth of Internet platforms has been to render more accessible the activities and subjectivities of what Kelso called capital work. For instance, online investing platforms promise to enable anyone to partake in the trading of stocks and other securities, informed by an informational onslaught of tickers, graphs, and investing-gossip blogs. Crowdfunding platforms enable users to bet on and back new startups, products, and public goods; in some cases, those can involve direct equity offerings for nonaccredited investors. More recently, the advent of cryptocurrencies has birthed a subculture of speculation and innovation on purely digital assets. Kelsoism similarly seeks to universalize the investor class. But rather than through one-off engagements by individuals, Kelsoist models approach the task as a structural and collective endeavor. The General Stock Ownership Plan (GSOP), the Individual Capital Ownership Plan (ICOP, Figure 3), and the Commercial Capital Ownership Plan (COMCOP) described in Kelso and Kelso (1986) would enable undercapitalized people to undertake leveraged investments in pre-vetted enterprises. Unlike the ESOP or the CSOP, these models may not arise from direct transactional relationships with the enterprises in question, although eligible investors might be expected to have at least some stakeholder relationship. For instance, a GSOP structure could be employed for the development of community assets for which stakeholder accountability can help contribute to the asset’s success. Consider, for instance, if residents of a neighborhood secured GSOP financing to develop and own a fiber-to-the-home broadband network.

FIGURE 3 Individual Capital Ownership Plan (ICOP) in Kelso and Kelso (1986) DIGITAL KELSOISM 255

Their company could next invest in “smart city” technology, and the neighbors would ensure that the data collection and machine-learning systems would operate in ways accountable to them, both financially and ethically. A further application might be a modification of the proposed “community information district” model (Galperin 2017), which envisions funding local journalism and information systems through a taxation model akin to a library district; rather than using taxation, a GSOP could secure financing for equity investments in local news organizations, the returns on which could in turn remain among the community’s citizen–investors. The ICOP, which would allow individuals to make leveraged investments in the stock of vetted businesses—particularly ones too small to participate in public stock markets—could be a means of escalating and mainstreaming the still- marginal market for “equity crowdfunding.” Loan guarantees, combined with platform marketplaces (a growing number of which are already in operation), could enable community members to invest significantly in businesses without necessarily having the consistency of the relationship presumed by the CSOP. By making leveraged investments, people of modest means would be risking little or none of their own money. Kelsoist tools could enable fledgling markets like equity crowdfunding to reach their potential, inviting many more people to adopt the occupation of capital work. In the Kelsoist vision, this would mean access to a growing share of nonlabor income and the opportunity to engage in strategic thinking about how best to nourish the economy in their communities.

Post-Work The aforementioned presidential campaign of Andrew Yang is but one sign of swelling interest in further universalizing nonlabor income, particularly in the context of the digitizing economy. Strenuous debates persist about whether increased automation inevitably leads to the singularity of “technological unemployment” or not, but to expect inevitability is to misstate the question. Kelsoism, along with some recent advocacy of universal basic income, stresses that society should make an active choice to embrace automation in a way that delivers not merely new kinds of work but livelihoods that liberate more time for leisure (Kelso and Kelso 1968, 1986). In contrast to typical prescriptions for universal basic income (e.g., Van Parijs and Vanderborght 2017; Yang 2018), however, Kelsoism proposes not a redistributive cash transfer—assessed, for instance, by a value-added tax or a financial transaction tax on capital markets—but a policy-aided expansion of access to capital ownership. One structural benefit for this kind of approach is that, as more people can shift toward less dependence on labor income, they remain integrally involved as direct stakeholders in the productive economy. In contrast, taxation-based cash transfers may lead to a growing gulf between the 256 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

capital-holding few, who orchestrate the productive flows of the economy, and the many, who become relegated to a cycle of consumer purchasing and redistributive transfers. The basis for universal dividends might be found in Kelso and Kelso’s (1986) PUBCOP proposal (Figure 4), which facilitates privatization of public assets through citizen investment, or Hockett’s (2007) proposal for RentSOPs, which distribute incomes from the private use of public assets. The latter, especially, resembles the Alaska Permanent Fund, which US universal basic income advocates frequently use as a template. (Louis Kelso took part in legislative efforts for several such regional schemes, recounted in Speiser (1977).) Kelsoist models also bear resemblances to financing mechanisms proposed in Bruenig’s (2018) sketch of a federal Social Wealth Fund for America. But mature Kelsoism does not rely on any one mechanism, and it eschews direct, governmental entitlement programs. Its purpose is to furnish an array of diverse capital strategies through which people use asset ownership to withdraw from dependence on labor and assume the time-liberating opportunity of capital work.

COMMODITY OR COMMONS? We have seen that some critics, especially those less enamored with capitalism than Louis Kelso, have feared that ESOP-like schemes lead only to further commodification of life, rather than to a more strenuously democratic economy

FIGURE 4 Public Stock Ownership Plan (PUBCOP) in Kelso and Kelso (1986) DIGITAL KELSOISM 257

(Ellerman 1985; Murphy 2005). Turning more people into capital owners, that is, further turns society as a whole toward profit-seeking at all costs, above other conceptions of what constitutes the common good. This critique echoes older concerns, such as consumer co-op advocate Beatrice Webb’s (1904) contention that worker-owned cooperatives would replace exploitation of the public by capitalists with exploitation of the public by worker–owners. In reality, the legacy of the cooperative movement, including worker co-ops, has been mixed in this regard (Schneider 2018a). While some co-op businesses seem indistinguishable from other businesses, or worse, others have succeeded in using economics to make space for genuine democratic politics within them—often in ways that only aid in economic flourishing. The same might be said for the legacy of ESOPs, many of which have become exemplary employers and community assets, especially when the ESOP aligns with participatory management and a strong sense of collective purpose (Blasi, Kruse, and Freeman 2018; Kelly 2012). Alongside some conventional economic analysis, theories of common-pool resource management (Ostrom 1990) predict that a strong sense of shared ownership, prop- erly governed, can produce attractive economic and social effects. In the implementation of a Kelsoist program, various choices might prioritize value maximization, economic democracy, or social benefits. For instance, rather than the retirement-plan trust of the ESOP, future SOPs could employ perpetual-purpose trusts (Michael 2017; Schneider 2019). They might explicitly include cooperative-like governance, as some recent ESOPs have done (Staubus 2017). Following Canadian examples, they might employ cooperatives, rather than trusts, as the stock-holding entity (Bhowmik 1994; Ellerman 2019). Through benefit corporation status, companies can also enshrine an overriding social purpose alongside their SOP ownership. And forms of pre-determined co-determination, such as among employees of many European corporations, could accompany any degree of ownership stake. Emerging governance mechanisms, such as liquid democracy (Hardt and Lopes 2015) and quadratic voting (Posner and Weyl 2018), offer new means to facilitate large-scale community governance.4 With such an expanded menu of options, Kelsoism could not merely extend capitalism but transform it beyond recognition.

KELSOISM AS A POLITICAL STRATEGY When I asked her about the challenge of advancing Kelsoist goals, Patricia Hetter Kelso confessed, “Louis and I were not astute” (personal communication, 2019). She was surely selling herself and her husband short for their unlikely and nearly single-handed achievements with the ESOP. These achievements, despite the unfinished work she sees before her, reveal Kelsoism as not merely a set of abstract objectives but a strategy for achieving them. This strategic legacy need not con- strain the possibilities of future Kelsoist efforts, but it should at least be considered at the outset. 258 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Speiser quotes Louis Kelso as having told him, when they met at the Waldorf Astoria hotel in New York, “This won’t be a grubby revolution. Nobody will have to eat worms!” (1977: 40). For better or worse, Kelso made good on the promise. The decades-long process of advancing the ESOP and other proposals involved no noisy street demonstrations or populist uprisings. It was a campaign of per- suasion, aimed at the most elite possible audiences. Rather than spinning up new bureaucracies on the model of a New Deal or Great Society, Kelsoism seeks targeted interventions in the existing system—a policy change here, a legal innovation there, each orchestrated to reinforce one another. These interventions should also be win–win for all stakeholders to the extent possible. Kelso’s writings reject anything that smacks of redistribution or outright power transfers. Kelsoism aims to extend power and wealth to where they are lacking rather than disturb the bastions where they presently lie. It aspires to a logic of earning rather than receiving. The win–win approach extends not just to the public policy design but to the private implementation. “When I invented the ESOP, I started a whole new industry,” Kelso told Bill Moyers (1990). To an extent this is true. As a lawyer, he had a knack for designing mechanisms that would generate revenue for people like him, in turn offering such professionals an incentive to promote the mechanisms to their clients. After developing the ESOP, he turned it into a business for himself. The online Provider Directory of the National Center for Employee Ownership currently lists over 300 ESOP service professionals in the United States, including law firms, banks, accountants, and myriad consultants. A further outgrowth of Kelsoism’s win–win minimalism is its bipartisanship. Just as Kelso sought out both Republican and Democratic politicians, employee ownership through ESOPs has come to represent a quiet consensus across the US political spectrum, even in the most polarized of times. The 2016 platforms of both the Republican and Democratic parties included support for employee ownership—albeit with distinct rationales; Republican Representative Paul Ryan and democratic–socialist Senator Bernie Sanders have been long-standing supporters of ESOPs, despite little else in common between them. Congress passed the Main Street Employee Ownership Act in 2018, the most significant piece of related legislation in recent years, with nearly down-the-middle bipartisan cospon- sors. It is hard to think of another “revolution” that is so politically ambidextrous. A Kelsoist strategy applied to the platform economy would need to invite in a new set of stakeholders, including some who might not otherwise likely see eye to eye. For instance, it might offer new options for growth financing or liquidity for existing platform owners, such as founders and venture-capital investors. Selling their stake to platform users, workers, or other “new capitalist” stakeholders could be an alternative to conventional liquidity events like a public offering or acquisition. Adding new exit options could have effects across the entrepre- DIGITAL KELSOISM 259 neurial ecosystem, enabling investors to finance a wider range of startups and inspiring new kinds of business models attuned specifically toward cultivating strong stakeholder relationships with a company’s future capital workers. New ownership and financing options might be most eagerly embraced among the entrepreneurs who have been neglected by current startup communities, such as participants in the Zebras Unite network, led largely by founders who are women and people of color (Griffith 2019). Having faced barriers to capital access by the predominately White and male investor class, such entrepreneurs could welcome opportunities for raising capital through their undercapitalized users and communities. In doing so, they can find common cause with organizations that advocate for social justice in the digital economy, such as Allied Media Projects, Color of Change, the Electronic Frontier Foundation, Free Press, and Mozilla. A Kelsoist strategy is not likely to succeed, finally, without the support of policy makers, who alone can enact the tax arrangements, regulatory guardrails, and financing apparatus that will lean the existing system away from its bias toward concentrated ownership. Digital Kelsoism could be as politically ambidextrous as the ESOP has been. It should appeal to politicians looking to impose reforms on the mounting excesses of the tech industry, by adding a dose of economic democracy alongside anti-trust enforcement, privacy protections, and labor rights. But Kelsoism can appeal also to politicians most eager to ensure the flourishing of business because it would introduce attractive new techniques for financing corporate growth. Future Kelsoist strategies could improve on the ESOP legacy by ensuring that any particular implementations of policy or business design do not become sub- stitutes for the vision as a whole. This means continuing to articulate that vision alongside advocacy for particular models. While Kelsoist techniques are necessarily partial and finite, Kelsoism itself might act more like an ever-beckoning horizon, calling adherents to further expanding and deepening economic democracy. Measured by the scale of intervention (a series of targeted adjustments to existing legal frameworks) and the resulting effect (millions of employee owners across diverse firms), Kelsoist strategy in the form of the ESOP has been uncommonly effective, and a renewed Kelsoism could have even greater effects today. However, Jedidiah Kroncke may be right to question the adequacy of “the private, gradual and non-conflictual transformation that Kelso imagined” (2018: 320). To unseat entrenched power, he argues, the powerful will on some level need to be confronted and defeated: “No genius of pure legal innovation can escape politics.”

CONCLUSION: CAPITAL WORK AND CITIZENSHIP In societies where most people’s economic lives consist of producing widgets through labor and buying them as consumers, the abstractions of Kelsoist capital 260 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

work might seem remote. Even now, no more than half of US households own any company stock, directly or indirectly (Wolff 2017). It is thus not surprising that, among the Kelsos’ various plans, the ESOP was the first to take hold in US law and business practice. But in societies where economic value increasingly changes hands virtually, where many of our closest relationships to platform companies occur at little or no monetary cost, Kelsoism may hold fresh attrac- tions. When key stakeholder relationships are no longer so transactional, when economic processes are ever more autonomous and automated, capital becomes the critical means remaining for popular economic participation. And as the social significance of platforms grows, control over them may even become a prerequisite for full citizenship. In the wake of the 2016 US election, and the controversies surrounding Facebook’s role in it, CEO Mark Zuckerberg issued a reflective essay titled “Building Global Community.” In it, among other things, he envisioned ways that Facebook could not only address its shortcomings but contribute toward shaping the next stage of human society as a whole. He suggested that a step toward the new social contracts would be cultivating participatory governance within Facebook itself. “Building an inclusive global community,” for instance, “requires establishing a new process for citizens worldwide to participate in community governance” (Zuckerberg 2017). It’s notable that he wrote of “citizens” rather than “users”—as if he were beginning to understand Facebook as not just a company but a polity. The essay concludes with a quotation from Abraham Lincoln. At the time, speculation abounded that Zuckerberg might be planning a run for president, but some pointed out that running Facebook might already be more powerful than that office. “In a lot of ways Facebook is more like a government than a traditional company,” Zuckerberg has reportedly said (Foer 2017). Two years later, after ever-mounting scrutiny and criticism of the platform, he abandoned this vision of “global community” for a more atomizing platform society based on private, encrypted messaging (Zuckerberg 2019). Yet the earlier Zuckerberg was likely right about at least one thing: networked platforms have the capacity to reshape the social and political order on a global scale. And because platforms are typically owned and governed through corporations, the manner in which these corporations are owned and governed should be of pressing importance. While much debate around these platforms has focused on external regulation of their behaviors, a Kelsoist approach5 could take on platform ownership and governance from the inside. It could also, as Zuckerberg implies, contribute to a redefinition of global citizenship. The ESOP as currently instantiated has been a phenomenon bounded within national borders as an aspect of US law related to employment and retirement benefits. Future Kelsoist structures might be less constrained, especially if they are attuned to the intrinsically transnational nature of the platform economy. If DIGITAL KELSOISM 261 corporate platforms begin competing with or replacing nation-states as arbiters of such things as identity, reputation, and monetary transactions, they may become arbiters for new equivalents of citizenship. And just as citizenship in democratic societies should involve a right to co-govern, real citizenship on corporate platforms might come to mean a right to co-own. This ownership can be more dynamic, pluralistic, and border-crossing than national citizenship is today. But to prevent capital-based citizenship from reiterating the petty aristocracy that now owns the platforms, ownership-expanding Kelsoist techniques are needed. Being a user may need to become intertwined with democratized capital work. This will not be a universally welcome prospect. Capital ownership comes with a checkered pedigree, from its associations with the Atlantic slave trade (Baucom 2005) to the short-termist ills of shareholder primacy (Stout 2013). Just as 20th-century policies to expand home ownership in the United States resulted in such practices as discriminatory “red lining,” 21st-century platforms exhibit signs of algorithmic discrimination (Noble 2018); Kelsoist plans could further entrench such inequalities, intentionally or otherwise. Yet making capital ownership more widespread could serve as what André Gorz (1968) called a “non- reformist reform”—transforming, that is, the meaning of capital ownership by adjusting the terms by which it occurs. In the ESOP experience, one can find companies that appear to be so transformed through co-ownership and participatory management, while others appear to advance a familiar capitalist logic. The prognosis is inconclusive, even 14 million employee owners later. I hope this chapter serves to whet more appetites for the study of Kelsoism— as not simply an eccentric idea that culminated in the ESOP but as a broader horizon of economic democracy toward which the ESOP served as a preliminary experiment. This horizon may be especially relevant for a time when economic life increasingly takes place across virtual terrains, when the returns to labor fall chronically behind the gains of capital, and when that capital is in danger of concentrating to ever more feudal levels. While the ESOP is an arrangement for compensating labor, full Kelsoism envisions a world with less need for labor, in which people retain their participation in production ever more through their creative, leisurely capital work—and benefit through their capital gains. If the capitalist corporation is to remain a basic economic unit, and if the capitalist oligarchy’s raids on political democracy are to be counteracted, the Kelsoist demand that citizenship should entail ownership deserves further consideration. Otherwise, many people may experience the ever greater marginalization Kelso and Kelso (1986) feared in a society that “denies the capitalless majority of citizens their right to be productive—a right dependent in our industrial age upon effective opportunity to acquire, own, and protect capital.” 262 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

ACKNOWLEDGMENTS The author gratefully acknowledges input from David Ellerman and Christopher Mackin, as well as support through a Louis O. Kelso Fellowship from the Rutgers University School of Management and Labor Relations.

ENDNOTES 1. I do not. 2. Hockett (2007) presents a comparable listing of such mechanisms with several interesting differences. He also usefully links his proposals to existing US policies supporting housing and education lending. 3. One exception, Speiser (1977), assails Kelso’s “two-factor” economic theory mainly on the grounds that the rhetoric of devaluing labor undermined the proposals’ political prospects. 4. Liquid democracy is a delegative system that, in a rolling referendum process, allows voters to delegate votes to people they deem to have more time and expertise; quadratic voting is an efficient mechanism for weighing diverse levels of voter commitment. 5. Kelsoism can be regarded as a strategic accompaniment to platform cooperativism (Schneider 2018b), which takes root in the cooperative tradition specifically.

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PART IV: DISCUSSANTS

267 discussants: union-side professional

What Is Old Is New Again: Unions and the Future of Work Lisa Jordan United Steelworkers

Talk of the “future of work” is everywhere. In a recent episode of The Simpsons (episode no. 674), Homer fears the coming robot-led apocalypse, Lisa is trapped in an educational algorithm, and Bart is playing app-based video games to train for the future gig economy. Only the new media promoter of cannabis is deemed safe from the threat of artificial intelligence and robotics! Lisa Simpson, always wise, realizes that other than a few gifted students, the educational algorithm is preparing them for insecure contract work. She rails against this, asserting, “Nobody knows what the jobs of tomorrow will be!” In the end, the fictional town of Springfield is saved from this educational algorithm and the bleak predictions about the future of work by collective action—a stream of one-star reviews for the school. A billboard near Carnegie Mellon University in Pittsburgh, Pennsylvania, declares “CMU Robotics Department Still Hiring Humans.” It is funny, but it’s not funny. Conversations about the future of work are everywhere: popular culture, social media blogs, academia, union halls, board rooms, and the political arena. Twitter is full of conversations about the artificial intelligence revolution and the blogo- sphere responds. As Aleks, Maffie, and Saksida point out in Chapter 4 of this volume, “The Robots Are Coming, and They Want Your Job” is a common headline in the media, but the title no longer feels cautionary or speculative; instead, it has become an accepted reality. In the world of politics, this is reflected in Andrew Yang’s now suspended campaign platform he had built around the coming loss of jobs caused by automation and globalization. In January 2019, the International Labour Organization’s Global Commission on the Future of Work published its study on how to achieve a future of work that provides “decent and sustainable work opportunities for all” (International Labour Organization 2019: 46). They spent 18 months working with governments, employers, and worker organizations—including holding meetings in 110 countries. The topics of discussion included work and society, decent jobs for all, the organization of work and production, and the governance of work. The collection of essays in this volume enters this conversation and reimagines the regulation and governance of work. Many offer concrete ways in which union

269 270 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

structure and collective bargaining initiatives, legislative action, and other forms of regulation may evolve to meet the transformation of work as technology changes, as the gig economy grows, as artificial intelligence takes over more and more currently existing jobs, as the ideology of the social accord between labor and capital continues to crumble under the weight of neoliberal policy, and as economist and sociologist Thorstein Veblen (1857–1929) described, “business” has overtaken “industry.” Each chapter raises important questions: Where do we go from here? What do these changes mean for workers and how might we mitigate the impact? And yet as Lisa Simpson reminds us, “No one knows what the future of work will be” or what union representation or workplace regulation will look like. What is clear is that any debate about the future of work must also include the voice of workers and their unions. The course and impact of technological change are not inevitable. In fact, in the 1950s and 1960s, the growth in technology-driven productivity was increasing more rapidly than it is now, but, unlike today, lower-income workers benefited more than those at the top. This was a time when organized labor had a much higher density and was significantly stronger. These things are not unrelated. If workers are to have a voice in the coming future of work, we must have a strategy to build and exert power to shape the direction of this new wave of technological transformation. The AFL-CIO Commission of the Future of Work and Unions was established by a mandate issued at its convention in 2017, to “rethink ways of building bargaining power and providing economic security for millions of Americans” and to “make sure that we as a movement are effectively organized and structured to get it done.” To that end, the commission spent two years working with researchers from across the United States and Europe to assess the impact of artificial intelligence, managerial algorithms, massive data collection, workplace monitoring, robotics, and a host of other technology that impacts workers, and to determine the role unions should play in responding to those changes. The commission’s report, published in September 2019, summarizes the meetings, reviews the current status of organized labor, assesses the likely impact of technological change on employment and bargaining, and offers recommendations for union structure and legislative activity to ensure that benefits of technological change are shared broadly, instead of the consequences being imposed on workers. The report makes clear that working people and their unions must have agency in shaping the future of work. For the working class, the story of new emerging forms of work, changing technology, and capitalist attacks on organized labor is an old one. Unions have had to constantly adapt to build worker power to counter capital’s structure and agenda. This dance is at the core of the labor question, “Who will do the work and under what social and economic conditions?” Inseparable are the questions DISCUSSANTS: UNION-SIDE PROFESSIONAL 271 of how unions should be structured and whether their role is to represent primarily their members or the working class as a whole. Regardless, organized labor must continue to re-create itself as capitalism evolves, production methods change, and ideologies shift. It must create the institutions, relationships, and movements necessary to protect the working class. The question is, What do those structures look like in the future? The chapters in this volume echo and complement the AFL-CIO’s report. Taken together, they address a number of central themes: • The impact of changing technology on the future of work and workers’ lives • The role of legislative policy and governmental structures in creating sustainable and fair work standards and mitigating the impact of unrestrained capitalism and job loss due to technological demands • The role of capital as a regulator of markets, and labor’s ability to con- strain capital through both investment and capital ownership • The ability of unions and other forms of worker organizations to organize, collectively bargain, and influence governmental policy to ensure that workers are protected from the negative externalities of technological change and that the benefits are broadly shared

With these themes in mind, using the findings of the AFL-CIO’s Commission on the Future of Work and Unions and experiences of the United Steelworkers (USW), the largest manufacturing union in North America, I will insert workers voices in the conversations in this collection.

TECHNOLOGY Technology refers to more than the machinery and equipment used to produce a product or provide a service—it is also the processes and structure of how work gets done. Like the chapters in this book, in addition to the role of robots, artificial intelligence, virtual work, and advanced manufacturing methods, the AFL- CIO’s report examines the impact of outsourcing, fissured work, potential job losses, work algorithms, and labor law structures that don’t match the current work environment. Aleks, Maffie, and Saksida point out in Chapter 4 that, while there is a long history of “technological anxiety,” this new round of digitized change seems different—impacting more highly skilled workers and perhaps being more pervasive. They summarize the literature about job creation and destruction related to digitization, the role of algorithms in the work process, and the relationship between robots and people in the workplace. They consider the impact these will have on the skills workers will need to have and workers’ ability to connect with one another. Moreover, questions arise about the holistic well-being of the workers. Gunderson, in Chapter 1, also considers the consequences of “disruptive 272 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

technologies” on the growth of nonstandard and precarious work. Both chapters discuss the challenges faced by labor in organizing those sectors and offer concrete ways for unions to respond to changes through collective bargaining. The AFL-CIO also has a strong focus on this issue in its report: Our Commission recommends that unions, through the AFL-CIO, collectively form a technology institute to develop expertise and gain access to critical information concerning new technologies that may transform work and displace workers, but also can help union more effectively represent working people. (AFL-CIO 2019: 33)

Significantly, the AFL-CIO report goes further than this research volume in reviewing the potential for strategies that take advantage of positive aspects of technological change. For example, the authors in this volume suggest that increasing productivity could lead to a “leisure dividend” or that technology could make work safer. They note that the NFL Players Association has arranged for players to be able to collect their own biometric data through wearable devic- es. At the same time, other professional athletic association contracts limit such collection. The AFL-CIO argues that technology does not necessarily lead to weaker worker bargaining power or greater inequality: “If America makes the right choices, we would have the ability to conquer poverty and workers could spend less time at work while enjoying far higher standards of living” (AFL-CIO: 17). First, given the central role in public financing of basic research that has led to much of the innovation, workers should demand to be involved in decisions about innovation and public policy. All government-supported investment should take social impacts into consideration. The AFL-CIO suggests that the labor movement should engage in the process of research and development and apply for federal grant money to ensure “that publicly funded or assisted research and development has broad societal benefit” (AFL-CIO: 19). There must be a targeted industrial policy that focuses on creating and sustaining good jobs in the manufacturing economy. Recommendations include building universal broadband as well as investing in developing the “green economy” and rural communities. The commission’s manufacturing subcommittee pointed to “better batteries; solar power; wind power; biofuels; commuter rail; electric cars; carbon capture and storage; and other technologies needed to address our environmental crisis” (AFL-CIO: 21). And the AFL-CIO is building the infrastructure to support these proposals by developing partnerships with universities with advanced manufacturing, robotics, and artificial intelligence specialties, such as Carnegie Mellon University. The USW is responding to both the opportunities and challenges presented by technological change. DISCUSSANTS: UNION-SIDE PROFESSIONAL 273

New Media Department Since its debut in 2011, the USW New Media Department has steadily grown and adapted. In 2014, the USW’s Canadian National Office created a New Media and Information Technology Department to expand the use of digital strategy across North America. Using a combination of web-based, video, and other digital tools, the department aims to bridge the gap between online and offline action. The department’s top priories are finding ways to communicate faster, smarter, and in more targeted ways so that we can successfully spread the stories of Steelworkers members, increase the effectiveness of our bargaining and activism, and take our issues and fights to the entire world at the touch of a but- ton. We have used tools ranging from text messaging and social media to more sophisticated Internet Protocol–targeted, Wi-Fi–based, and geofenced ads and have worked closely with data scientists to be more effective and efficient at -cut ting through the noise, with a particular focus on using digital strategy and messaging in organizing campaigns.

Online Organizing We first attempted an exclusively online organizing campaign about ten years ago—a group of closed captioners. What the digital campaign required was that we rethink most of what we know about organizing. There was no in-person contact. The campaign brought a number of challenges to the traditional organizer. How do we assess without looking someone in the eye? How do we build lists? While we were not successful, it was our first attempt to organize digital workers digitally, and we learned a number of lessons. First, we must develop new ways of assessing members. One proposal is to use a number of small tasks to determine commitment. Second, those who do their work virtually don’t expect face-to-face connection and communication in organizing in the way workers might have historically. Finally, that first campaign was nearly ten years ago. Today, not only does technology present new challenges, but new digital resources can provide tools to organize—including video conference calls, alternative platforms for worker meetings, and, even in more traditional campaigns, Internet Protocol targeting and geofencing. Our challenge is to transition the way we think about organizing.

Organizing Precariat Workers in the Digital Sector A group of about 80 contracted Google employees voted to join the USW in September 2019. The analysts work on Google projects, and their workplace is Google’s Pittsburgh office. The majority of the workforce is in the marketing portion of the company’s business, and they work alongside Google workers; however, their work is contracted through an Indian outsourcing firm, HCL America. News outlets around the world covered the story. 274 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

In some ways, the organizing drive was very traditional. The workers seeking unionization complained that they did not receive paid sick leave, and wages hadn’t increased to meet inflation. Workers came together in person to organize; HCL conducted an anti-union campaign. Emails sent out by HCL management attempted to discourage workers by saying, “The Steelworkers are typically ‘blue collar’ workers, not workers in a tech industry like us. … Do you really think the Steelworkers understand our needs, our industry, our business, or even what you do on a daily basis? I don’t.” In the end, workers voted 49–24 in favor of joining the USW. What makes this extraordinary is that it was essentially Google workers. Google has a “shadow” workforce of 135,000 contracted employees in addition to its 115,000 direct employees. Maria Somma, the USW’s director of organizing, told The Guardian that she hoped HCL’s vote would inspire more tech workers across the industry to unionize: The HCL workers are the first group that’s daring enough—understanding the precarity of their situation—to say we’ve got to take a step. That to me is unbelievably brave. You want to see working-class heroes in today’s modern world, look at them.

HCL and the tech workers of Pittsburgh are currently at the bargaining table. Like most workers, their top priority is compensation, but they have also expressed the desire to be able to work from home. “Workers at HCL deserve far more than they have received in terms of compensation, transparency and consideration, and it has gone on like this for much too long,” said HCL employee Renata Nelson. Thus, both the chapters “The Role of Collective Bargaining in a Digitized Workplace” and “If Nonstandard Work Is the New Normal, What Should We Do About It?” provide important insights for our conversations with workers and our ability to bargain for better wages and work environments. They provide a rough map in a contested terrain.

Responding to Advanced Manufacturing The USW represents perhaps the most highly automated aluminum production facility in the world. It is therefore likely that robotics, GPS autonomous operations, 3D printing, and programmable logic control will impact many of the sectors represented by the USW. Preparing the union and our members for these changes and building the capacity to help them through this transition is a major initiative of the union. Accordingly, the president of the USW, Tom Conway, recently toured a facility that could use 3D technology to print a tire. The union is working to develop checklists and questions that our servicing staff can use in bargaining over the effects as these various technology-based systems are introduced into the workplace. The union already offers some main- tenance tech training and other skills-based programs, but those programs are DISCUSSANTS: UNION-SIDE PROFESSIONAL 275 in large part focused on the traditional trade and craft skills. The USW is looking beyond those efforts. To that end, the union is thinking about what kind of training programs are necessary and how they should be designed so that it can retain as much work as possible. As Aleks, Maffie, and Saksida conclude in their chapter, “the future of work is still uncertain. … Unions, policy makers, and others will play an important role in crafting the institutional environment that sets the trajectory for the future workplace.” Like the authors of this volume, the USW is asking questions about the appro- priate role of the government as a regulator, the nature of organizing and bargaining in the gig economy, how we respond as automation and globalization continue to erode jobs, and what organizing methods and bargaining structures are likely to be the most effective as we move forward. And we believe that a free and independent union for workers is the most important mechanism to address those changes. Unions are willing to fight on all fronts; the problem is our waning power.

Government/State as a Labor Market Regulator For those of us in the labor movement, the role of government as regulator is complex because legislation sets the rules under which we operate and the floor from which we negotiate. Therefore, we are continually lobbying to impact the direction of legislation and working to elect labor-friendly candidates. If we are to increasingly rely on the state to regulate the workplace and set minimum income standards, rather than using collective bargaining, what are the appro- priate arenas for government regulation and what issues should be left to union negotiations? How do we understand the origins of pro-worker policy, and how can we put faith in legislative action when we know that it can easily go away? These questions arise in a period where organized labor in the United States has suffered under 40 years of policies that have empowered the wealthy and weakened our bargaining power. In 1976, the wealthiest 10% of Americans controlled 47% of the wealth; today it is nearly 80%. At the same time, we have historically been the supporters of minimum wage, occupational health and safety, equal employment, and prevailing wage laws. Every chapter in this book discusses a central role for government as rule set- ter, and many suggest the state as an alternative to collective bargaining. Together, they consider the role that policy has played in immigration and trade, the definition of an employee and the rules under which one can organize, an employee’s ability to control her or his own data and the ways in which workers can be monitored, the ways that wages can be set both in the workplace and by legislative action, and the structures under which an employee can control the means of production. Some authors consider minor changes in labor law to accommodate changes in the labor–management relationship such as those created by an 276 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

increasingly precariat workforce; others imagine what happens as jobs disappear and government serves to retrain workers who are made redundant, serve as an employer of last resort to those laid off, or provide a guaranteed minimum income. One of the concrete examples offered of the state as a proxy for collective bargaining is the Fight for $15 campaign. Spicer, Manduca, and Kay note in Chapter 2 that those campaigns have been tremendously successful in achieving pay raises for more than 22 million low-wage workers. Lichtenstein (Chapter 3), like the AFL-CIO commission’s report, points out that, in addition to the victories of the Fight for $15 campaign, there have been a number of other high-profile worker actions, including strikes by teachers in traditionally conservative states. He argues that sectoral bargaining with governmental institutions could play a role in mediating the relationship between capital and labor and set wages as the power of enterprise unions wanes. And, while he doesn’t mention them, there are a number of other examples: app-based drivers from 27 different countries launched the International Alliance of App-Based Transport Workers, which followed the work of domestic workers to unite globally—an effort that culminated in 2013 with a victory and the adoption of new global standards that define domestic work as work and provided a foundation for the reform of state and national laws. These global examples support Lichtenstein’s case for sectoral bargaining and setting standards either through legislation or an agency. But they also show the ability of labor to adapt. No one knows what labor institutions will look like in the future. Where labor has power or there are mass mobilizations, living-wage ordinances are being passed. But those gains can be easily lost. For example, when the city of Birmingham, Alabama, passed a living-wage ordinance, the conservative state legislature preempted its ability to enact it. The symbiotic relationship among movements and institutions, organized labor, and legislative outcomes as an essential element of the story is missing in much of this research volume. For example, Spicer, Manduca, and Kay don’t mention the central role that the Service Employees International Union has played in financing and supporting the Fight for $15 campaign. Others, like Lichtenstein, acknowledge the skepticism labor holds toward governmental regulation as an alternative to collective bargaining. He does this with both current and historic examples. His discussion of the Fair Labor Standards Act and the fight for the minimum wage, and the Wagner Act and the right to organize and bargain collectively provides examples of where this cynicism comes from. Both laws, passed in an era of broad labor action, including general strikes and organizing, were significantly weakened in the late 1940s when a more conservative government came to power and labor had, amid the Cold War, retreated. He also notes problems of sustainability. The slogan is really “$15 and a Union,” and while thousands of workers are better off, the union has gotten few new members. So, questions of sustainability arise. How can the institution that supported the movement survive if those in the movement do not also support the institution? DISCUSSANTS: UNION-SIDE PROFESSIONAL 277

What government gives, it can take away. If “conviction bureaucrats” are to gain the power to make the legislative and structural changes necessary, they will need a strong and independent labor movement or a well-resourced social movement to support them. Many of the authors seem to have much more faith in the role of government in regulating labor markets than I do. In reflecting on this, I believe it may be that so many are Canadian. Again, it is funny, but it is not funny. The level of inequality in Canada is far less than the United States in terms of income, opportunity, and power. The US political system is corrupted by money, particularly since the Citizens United ruling, and the social accord is broken. Unlike Canada, the United States has no federally mandated paid family leave, overtime regulations, vacation, or healthcare; we have little culture of social democracy. And while it has been discussed in our union in Canada, the notions of a guaranteed minimum income (GMI) or the government as an employer of last resort are almost invisible in labor and public discourse in the United States. Recently, the GMI has received some attention through the presidential candi- dacy of Andrew Yang and the New Green Deal, but there is no discussion of it in the AFL-CIO commission’s report. What is discussed are the following topics: • The elimination and misclassification of employees for purposes of collective bargaining • The inclusion of agricultural workers, domestic workers, and low-level supervisors in the right to organize and bargain collectively • The passage of three new pieces of labor legislation: the Protecting the Right to Organize (PRO) Act, which was passed in the House but blocked in the Senate; the Public Service Freedom to Negotiate Act; and the Public Safety Employer–Employee Cooperation Act.

ORGANIZED LABOR AND THE FUTURE OF WORK Perhaps the most important question is, Are unions prepared to take on this challenge? Lichtenstein addresses this question. He rightly points out that “opponents of … unionism—among employers, politicians, anti-union law firms, and the conservative judiciary—have had decades to perfect their legal and organizational weapons so that today even the most robust and imaginative organizing drive can be defeated. …” And “the structures of capital have shifted too much, the managerial mindset has become too hostile, and neoliberalism has been embedded too securely within the nation’s labor-law regime.” In the end, he paints a fairly bleak vision of enterprise unionism, quoting Larry Cohen, the former president of the Communications Workers of America, who said, “It is now clear that enterprise-based organizing and bargaining in the U.S. has a dim future.” David Rolf of the Fight for $15 movement is quoted as saying, “The 20th century model is dead. It will not come back.” Instead, Lichtenstein 278 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

proposes that unions may have a path forward using sectoral bargaining where, instead of collective bargaining, social bargaining through the state becomes the primary source for workers to improve their standard of living. But I’m not as willing to count enterprise unions out yet. Lichtenstein’s piece brought to mind the words of George Barnett in his presidential address to the American Economic Association: American trade unionism is slowly being limited in influence by changes which destroy the basis on which it is erected. It is probable that changes in the law have adversely affected unionism. Certainly, the growth of large corporations has done so. But … over and above these influences, the relative decline in power of trade unionism is due to occupational changes and to technological revolution. … The changes—occupational and technological—which checked the advance of trade unionism in the last decade appear likely to continue in the same direction. It is hazardous to prophesy, but I see no reason to believe that American trade unionism will so revolutionize itself within a short period of time as to become in the next decade a more potent social influence than it has been in the past decade.

Of course, that was 1932, and the CIO would soon emerge as a powerful force and unionize an army of industrial workers that was emerging in the country. In fact, in 1930, the unionization rate was only 12%; by 1941, it had grown to 27%. My union, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, commonly known as the Steelworkers or USW, grew out of that movement. The Steelworkers Organizing Committee was created as part of the CIO’s strategy. While the move to organize on an industry-wide basis may seem obvious now, the transition within the labor movement was difficult and led to deep divides. Competing paradigms of worker representation have been a mainstay in the history of labor. The CIO was in sharp contrast to the AFL that Samuel Gompers had established in the late 1800s and early 1900s. That was a period of widely competing notions about the relationship between labor and capital, how unions should be structured, and the issues we should address. The AFL’s model focused primarily on wages, hours, and working conditions and organized craft workers. This model conflicted substantially with other labor organizational structures during the early 1900s on issues such as immigration, the role of contracts, and the nature of capitalism. For example, while Gompers supported the Chinese Exclusion Act, Eugene Debs, a founding member of the Industrial Workers of the World, reached out to all workers when he said, “You have got to unite in the same labor union and in the same political party and strike and vote together, and the hour DISCUSSANTS: UNION-SIDE PROFESSIONAL 279 you do that, the world is yours.” The CIO formed a pragmatic middle ground. Workers could garner the power to substantially change the conditions of their lives only by organizing all industrial workers and, while many of the original organizers were socialist, the union sought to work within the system, not destroy it. To those ends, the Steelworkers was founded on a set of principles to reflect those same values: to welcome all workers to membership, to focus on setting minimum wage and hour floors, and to fight for government regulation that protected workers. These principles continue to guide much of what we do and how we approach the role of the union as market regulator, but who we represent has changed. Our largest local unions include a university in Ontario, a hospital in California, and the shipyards in Newport News, Virginia. Our fastest-growing sectors currently are in healthcare and universities. Most recently, we have had successful organizing drives at a tire facility in Georgia, a library in Pennsylvania, and with HCL, the Google membership drive I discussed earlier. The question of the future of unions is central to much of our strategic planning. We know we must adapt. We must take advantage of the recent “stirring,” as Lichtenstein describes it. We must use all the technological resources at our hands to communicate with, represent, and organize members. In one of his earliest speeches in his role as USW president, Tom Conway reminded us: This is an enduring union. No one is going to take it from us; no one is going to break us. We are going to continue to grow. We are going to continue to give opportunities and training. We are going to let you see what you can do. Because only in the union can a millwright or nurse’s aide sit across the table from management and their lawyers who think they are so smart … and say this is what we expect; THIS is what we demand. We are on an equal footing and it is only because of this union and our strength through it. Our union is a union of inclusion; our union is a union of growth and our union is a union of the future and of possibility. And YOU are going to help us build our union.

Conway is pushing us to adapt. He is using our resources to organize in different ways, to expand the tools we use, and to be smarter in bargaining. He is focused on building a plan for successorship and increasing transparency in the union. He is pushing for new ideas and new ways of developing leaders. He is leading in our efforts to engage with the impacts of new technology in the workplace and to leverage it for our benefit. For a number of years, we have been broadening our traditional roles. We formed Workers Uniting, the first truly transatlantic union, with Unite the Union in the United Kingdom, with whom we share over 110 employers. We financially underwrote the College Athletes Players Association—not intending to get members but to support other workers. 280 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Legislation is now being passed across the United States to protect college athletes. We helped organize the Firestone Plantation workers in Liberia and housed Napoleón Gómez, the president of Los Mineros, while he was in exile in Canada. Are any of these the answer? Perhaps not, but no one knows. Recently, when asked if he is optimistic about the future of the labor movement, Conway responded, Absolutely. While the gig economy creates a changed workplace, the internet also provides a platform for workers to organize and build power. Younger workers want more out of their lives; they don’t want to work long hours and sacrifice their families. Those are the things we have always fought for. And not only do surveys tell us that unions are more popular than they have been in a long time, but low unemployment makes workers more willing to take a chance. Our job is to build an institution that responds to the needs of workers today. Our job is to make the work place better … whereever that is and whatever it looks like.

Are unions prepared for the challenge of steering technological change in ways that improve rather than denigrate workers’ lives? Are unions prepared for organizing and bargaining in a digitized workplace? Are unions ready to make sure that governmental regulation supports the interests of the working class? Perhpas not yet. But, for workers and their unions, it remains their primary mission.

CONCLUSION At the turn of the 20th century, Samuel Gompers, the founder of the AFL said, “What does labor want? We want more schoolhouses and less jails; more books and less arsenals; more learning and less vice; more leisure and less greed; more justice and less revenge; in fact, more of the opportunities to cultivate our better natures.” Today, unions want what we have always wanted: family-supportive jobs, sustainable communities and workplaces, and social democracy. Our job has always been to organize to build power both within our organizations and across unions and to work to mobilize and create government structures at the local, national, and international levels to increase the power of all workers. To do that, we need ideas—lots of ideas. Economists would say a marketplace of ideas. We are working to put some of the ideas of the AFL-CIO’s Commission on the Future of Work and Unions and those raised in this volume into practice. Taken together, the work of the AFL-CIO, the ILO report, and the authors of this volume provide us with a range of ideas, analysis, and recommendations and help us see our own history-making potential. As Marx said, “Ideas never lead beyond the established situation, they only lead beyond the ideas of the established situation. Ideas can accomplish absolutely DISCUSSANTS: UNION-SIDE PROFESSIONAL 281 nothing. To become real, ideas require people to apply a practical force.” Workers and their unions are that practical force. Ultimately, as my USW colleague John Lepley says, “It is the workers, not the scholars [or] the pundits, [who] will determine the future of the labor movement.”

Talk of the Future of Work Is Everywhere Throughout this volume, the authors have discussed employees who express fear about the coming robot-led apocalypse, workers who say they feel trapped in “management by algorithm,” and young people who are being told to reduce their expectations in the new gig economy. In an attempt to understand these fears, academics and labor activists have come to realize that there can also be a leisure dividend, new forms of union structure, and legislative regulation. Although what Lisa said in that episode of The Simpsonsmight be true (“Nobody knows what the jobs of tomorrow will be!”), in the end, the working class is saved from the worst possibilities of management algorithms, artificial intelligence, and the bleak assertions about the future of work by collective action.

REFERENCES AFL-CIO. 2019 (Sep.). “AFL-CIO Commission on the Future of Work and Unions: Report to the AFL-CIO General Board.” Washington, DC: AFL-CIO. https://bit.ly/2UtEd7l International Labour Organization. 2019 (Jan.). “Work for a Brighter Future: Report of the Global Commission on the Future of Work.” Geneva, Switzerland: International Labour Organization. https://bit.ly/3bxJ5hi discussants: management-side professional

Reimagining the Regulation and Governance of Work Bill Dirksen Ford Motor Company

It was an honor to be invited to review and comment on this volume. I knew from the title alone that this was an important topic, but it wasn’t until reviewing all the chapters that I realized how truly far reaching and complex it is. There is arguably nothing more fundamental in our field than the regulation and governance of work. And few would argue with the notion that the environment in which work takes place is rapidly changing—to a degree that calls out for a re-examination of the rules of the road that govern it. This volume is timely. By way of overview, I found all of the chapters contained in this volume to be very impressive, both in their depth and creativity of analysis and in the breadth of ideas and trends that are covered. A number of potential options for the future are described and explored. Some chapters describe strategies in great detail that are actionable now, if the political will exists, because the changes proposed might often be difficult for some stakeholders. Other chapters provide more of a long- term vision, upon which specific implementation tactics can be built. No chapter failed to stimulate a great deal of thought, and each could serve as a platform for interesting and stimulating debate. All readers will, of course, bring their individual biases to their analysis of the volume. For me, the views I hold are certainly influenced by the 35 years I spent working in labor relations and human resources at Ford Motor Company, a global, highly unionized and regulated company with over 115 years of history. Most of the examples I cite to amplify my commentary are drawn from my Ford experience, especially as it relates to working with the United Automobile Workers (UAW) in the United States. At the same time, I have tried my best to provide a balanced, thoughtful commentary. As I read through the wide-ranging discussion on the reimagining of regulation and governance of work, I concluded that many of the most powerful ideas sorted naturally into three categories based on how change would be initiated and managed: • Grassroots efforts and individuals taking collective action on an ad hoc basis • Unions becoming more active and effective at driving change • Governments taking legislative or administrative action

283 284 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Let’s start with discussion of actions taken at the grassroots level. It is clear that the dramatic increase in the ease and effectiveness of information sharing and communication, including among employees, is already having an impact on the workplace and the ability of workers to understand and impact their working conditions. Several great examples of digitization providing new tools to workers are discussed in Chapter 4 of this volume, such as Uber drivers coor- dinating their interface with the app to create surge waves that increase prices. There is also a growing use of blogs, chat groups, and websites designed for the sharing of information in a way that enables workers to take action, either indi- vidually or collectively, to improve their pay or conditions. These opportunities are often episodic, but they will no doubt continue to grow as technology evolves and workers discover and design methods to use these technologies to deliver positive outcomes for themselves. Taking grassroots energy to the next level by organizing it into a sustainable social movement is another method to regulate work that has shown some recent success. Chapters 2 and 3 reference the Fight for $15 movement and other sectoral approaches. While the Fight for $15 was confined to wages only in discrete geographical areas as opposed to a full collective bargaining effort, it has proven successful in workplaces that have not been able to improve wage outcomes through more traditional means. Clearly, there are limitations to this approach because it generally requires legislative action, and there are barriers such as state preemption that make it more difficult. In addition, it seems that a strategy like this one that focuses on a local labor market will need to concentrate on jobs that are specifically tied to that market—often service jobs such as lodging, restau- rants, or transportation. More mobile jobs such as those in light manufacturing are too easily moved to another city or state with lower labor costs. A federal approach would obviously be more effective, but even with that there are global options for employers, depending on the economics and competitiveness of the industry. One final comment on grassroots efforts: consumers, in addition to employees, can have an impact on companies, as detailed in Chapter 6. Consumers can, and increasingly are, demanding social responsibility from the brands they want to purchase. This can drive corporate self-regulation, which though imperfect and not a substitute of government action, can be a very effective tool to improve working conditions in a company’s global supply base. The first step to drive improvement in this area is for companies to be clear with their suppliers about their expectations and then follow up with a plan to measure results and make changes as necessary. The process of self-regulation will not be a silver bullet to resolve all issues in a company’s global supply base, but it can be an important part of an overall strategy. A second theme running through this volume is the evolving role of traditional unions in the governance of work. Unions, in the private sector in the United DISCUSSANTS: MANAGEMENT-SIDE PROFESSIONAL 285

States in particular, are struggling to maintain their influence. They are working to develop new strategies and methods designed to stop a decline in membership and then enhance organizing efforts to drive growth. There are examples of union responses to this challenge in this volume and also in my experience with Ford and the UAW that may help point to a successful way forward. The growth of nonregular work and a contingent workforce as detailed in Chapter 1 is a case in point. Ford, like many employers, benefits from a segment of the workforce that comprises temporary employees. They provide a lower labor cost and increased flexibility, both of which help the company to stay viable in a very competitive industry. At the same time, a temporary workforce is contrary to the principles of equity and job security that drive the UAW. The joint parties have worked on this issue over the past several contracts and have developed solutions that have met at least some of the key interests of each side. The most recent collective bargaining agreement between Ford and the UAW, for example, allows for increased utilization of temporary employees, which helps the company to be more competitive while at the same time creating a new guaranteed career path with clear timing to permanent employment for all temporary employees. This is an example of a union enhancing its effectiveness by creatively working to help the employer be more competitive, thus protecting jobs and at the same time improving the conditions of its members. Another issue discussed in this volume, and very relevant in today’s world, is the impact of new technologies on jobs—and whether unions should fight their introduction. Should unions negotiate agreements with barriers to new technologies such as robots or should they push for legislation such as a robot tax? In many ways, this may come down to how unions will prioritize short- and long- term goals. In the short term, preventing introduction of a new technology may avoid the imminent loss of jobs. Unfortunately, that technology almost certainly will be implemented by competitors—locally, regionally, or globally—and it will likely only be a matter of time before that fact impacts the competitiveness of the represented firm, which could ultimately cause a larger and more permanent job loss. The approach many unions have taken, including the UAW and the Teamsters in my experience, is to become very knowledgeable about the industries they represent so that they can understand ahead of time what technologies are coming and how they will impact jobs—both jobs disappearing and jobs being created. They are then able to work with employers to ensure their members have the training and preparation to move into the new jobs that will be needed in the future. This strategy protects workers in the long term and keeps their unions relevant. It also ensures those unions keep a seat at the table for the future, much as the Finnish and Portuguese unions did during the European restructuring of the past decade, as described in Chapter 5. But what can unions do beyond just maintaining members? They need to find ways to grow to increase their abilities to regulate and govern the work of 286 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

the future. An issue discussed in Chapter 4 that struck me as a great opportunity for unions to offer solutions to workers is in the area of privacy. Protecting employee data and privacy could very well be the emotional flashpoint for today’s workers to push them to collective action, just as industrial justice was the impetus in the past. Addressing privacy issues may really appeal to younger workers in particular, as much or perhaps even more than the traditional “gains” offered by unions. The final thread that runs through several chapters of this volume that I’d like to explore is whether and how to engage governments directly to be more effective in regulating work through legislation and public policy. The public sector could play a bigger, or at least different, role in directly regulating labor markets to enhance pay and working conditions. Alternatively, public policy could focus more on a broad and comprehensive social safety net, arguably making direct labor market intervention less necessary. One opportunity to change the framework of regulation of work in the United States is to move from an enterprise-based collective bargaining approach to a sectoral approach, either through mandated sectoral bargaining, as is more common in other parts of the world, or to establish some terms and conditions for an industry or occupation centrally through wage boards or similar entities. It appears that most recent successes in this area have occurred at the state or city level. Continuing to make progress at the local level is likely the most pragmatic approach, but, as discussed earlier, it is also likely limited to jobs that are captive to the local labor market, primarily in the service economy. For jobs that are more mobile, a sectoral approach at the federal level would be more effective. An alternative that would not require government intervention would be for unions to organize most or all of an industry and then implement pattern bargaining. This was a very effective strategy for the UAW in the automotive industry for many years, when they represented the great majority of US autoworkers. They continue to use a pattern bargaining approach today, but, with less than 50% of the US autoworkers as members, owing to the growth of non-union producers, their ability to establish standardized pay outcomes is greatly diminished. Replicating a strong pattern bargaining strategy in the automobile or any other industry would require a much higher level of union penetration, a goal that itself may require new federal legislation to achieve. A more promising tactic may be to place less emphasis on further direct labor market regulation and focus instead on establishing a much more robust and comprehensive social safety net. The rationale here is that it would be more effective, and perhaps more politically expedient as well, to recognize the inevitability of globalization and also the power of markets to create jobs and wealth. While some regulation of markets will clearly always be needed, this approach would create a large-enough safety net that additional direct regulation of labor markets could be minimized. The fact that the changing economy (for example, the movement from fossil fuels to alternative energy) will create winners and losers DISCUSSANTS: MANAGEMENT-SIDE PROFESSIONAL 287 would be accepted, but the system would provide enough support for those whose jobs are negatively impacted that they would have the resources to enable them be to rejoin the economy in another way. There are a number of good ideas on how best to create such a social safety net in this volume, in particular Chapters 9 and 10. A guaranteed basic income (GBI), while certainly complex, is potentially the most straightforward method to pursue this strategy. Although a GBI is a long way from attaining a critical mass of public support, the fact that it is on the agenda and generating active discussion during the 2020 US presidential campaign is progress. A jobs program (employer of last resort) approach is another method. It would have the political advantage of being a program that rewards work, rather than being an income transfer. Its challenge, at least in the United States, would be to overcome the perception of growing the public sector, potentially at the expense of the private sector, as well as its inherent administrative complexity. A strategy smaller in scope than either of those would be to strengthen and enhance a series of existing programs so that the safety net in total would be significantly stronger. These actions could include bolstering healthcare guarantees, education assistance, unemployment insurance, and retraining programs, to name just a few. For those who believe that the size of the overall economic pie will be bigger by letting global capitalism function relatively unfettered, fundamental change to social systems such as a GBI could be a key tool to bring a much-needed element of equity to the equation. This approach has the appeal of basic fairness, and from a practical political standpoint, it could make the global capitalist system more sustainable. If income and wealth become too unevenly distributed, without something like a GBI in place, a political backlash that upends the entire system could eventually result. In conclusion, I have found this to be a very thought-provoking volume of work. Many issues around the regulation and governance of work have been identified, and a wide range of options and solutions have been proposed. The need for change and progress in this area is clear. The difficulty in making these changes is equally clear, whether they be led at the grassroots, union, or governmental level. The necessary changes, however, must start with an idea and a plan. This volume does an excellent job of providing that start—yet there is more work to do! discussants: academic

Sectoral Approaches to Workplace Regulation in the New Gilded Age Sara Slinn Osgoode Hall Law School, York University

INTRODUCTION Labor regulation strategies of the mid- and late 20th century have failed to keep up with the profound changes occurring in organization of production and work, and in work itself. This has led some scholars to label the current period a “new Gilded Age” (Herbert 2019; Milkman 2013). The regulatory power of the state and firm-centered unionization and collective bargaining has receded, and there is widespread recognition that the economic and labor relations environments have changed too fundamentally for that 20th century model to be revived (Lichtenstein, Chapter 3, this volume). Therefore, the urgent question becomes which—if any—regulatory actors, structures, and policies can fill this regulatory and governance void to promote acceptable workplace standards? Ruth Milkman has recently observed that “just as the nation’s political economy increasingly resembles that of the late 19th- and early 20th-century Gilded Age, so too do labor’s emerging strategies and tactics” (Milkman 2013: 648). Although this comment was directed at developments in the United States, much the same diagnosis applies elsewhere in North America and beyond. In seeking a way forward in this new Gilded Age, many scholars and policy makers are turning to strategies of an earlier era, and, indeed, several of the labor regulation approaches addressed in this volume have clear roots in pre–New Deal or New Deal initiatives. In the first Gilded Age, in both domestic and international spheres, enterprise was in many instances the primary labor regulatory authority. Will the future belong to private labor regulation? Alternatively, will the state resume a progressive role in labor regulation, and will this involve tripartism and social partnerships? Finally, will labor regroup and reconstitute as an effective counterweight to business interests, perhaps successfully pressuring the state to adopt protective worker initiatives? A spectrum of regulatory forms is addressed in contributions to this volume, ranging from private regulation by firms to tripartite forms engaging social dialogue to, at the other extreme, direct government intervention. Applying a historical lens, this commentary first addresses the two ends of this spectrum: Distelhorst’s (Chapter 7) assessment of multinational corporations (MNCs) as

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private labor regulators, and direct government intervention by way of statutory determination of minimum compensation in the form of legislated living-wage minima, as discussed by Spicer, Manduca, and Kay (Chapter 2) in the context of the Fight for $15 efforts in the United States, and basic income as proposed by Koebel and Pohler (Chapter 9). Finally, in light of Tassinari and Donaghey’s (Chapter 5) assessment of the resilience of European social partnerships in the face of the Great Recession, this commentary addresses Lichtenstein’s (Chapter 3) discussion of reinvestigating forms of sectoral tripartite standard setting and bargaining mechanisms. The conclusion also considers Gunderson’s (Chapter 1) recommendations regarding policy choices for workplace regulation.

REGULATING LABOR IN THE NEW CENTURY Private Enterprise as Regulator With globalization and the concomitant growth of MNCs, private actors have the potential to effectively determine working standards. Recognizing this fact, and the growing power of MNCs relative to that of states, international bodies such as the United Nations and its specialized agency, the International Labour Organization, have sought to influence those private interests by leveraging states’ international human rights responsibilities to pressure MNCs to comply with social policy guidelines established by these agencies and directed at business (International Labour Organization 1977; United Nations 2011).1 Partly in response to such international and domestic pressures, in recent decades firms have engaged in a variety of workplace standards initiatives, such as supply-chain codes of conduct. Drawing on two decades of research, including his own contemporary work, Distelhorst, Chapter 7, assesses MNCs as private labor regulators. His assessment, while not wholly negative, clearly indicates that enterprise is not a substitute for state regulation of workplace standards. Although private regulation improves compliance, no privately regulated supply chain has been found to have achieved full compliance. Moreover, Distelhorst reports that researchers find diminishing returns to enforcement activity, varying effectiveness between outcome and process standards, and uneven alignment of labor standards goals and business practices. A key insight is that, in contrast to state regulation, the sanctions and rewards available to promote compliance by private regulators are limited to the commercial relationship between the regulating enterprise and the target—and that these limitations are substantial. However, Distelhorst identifies two avenues for potential improvement. First, with respect to business practices: consolidating supply chains to align business practices with labor standards compliance, increasing incentives for supplier compliance, and avoiding production disruptions undermining compliance. Second, regulator enterprises could implement capability-building mechanisms, which appear to be more effective, instead of labor inspection as the primary DISCUSSANTS: ACADEMIC 291 compliance mechanism. Whether MNCs have any incentive to make such changes is a question that remains. Overall, Distelhorst concludes that MNCs—at least in the supply chain context—are not capable of filling the regulatory void, do not effectively enforce workers’ associational or collective bargaining rights, and require state support to achieve a minimal level of compliance with labor standards. In short, he concludes that “improving these process rights depends on political reforms for which no corporate program is a substitute.”

Direct Government Intervention In counterpoint to private regulation, living-wage movements, taking the forms (among others) of minimum hourly wage and basic income lobbying and experiments rely on direct government intervention, typically in the form of legislation. Living-wage movements were prominent in the early 20th century and are the historical antecedents of sectoral wages councils, wage boards, and statutory minimum wages in the United States and elsewhere (see, e.g., Blackburn 1991, Blackburn 2007, Harris 2000). The experience of the living-wage movement of the early 20th century in the United States, and the subsequent wage boards, has some parallels to the issues raised by this volume’s authors in relation to contemporary Fight for $15 and basic income movements. First, like the contemporary Fight for $15 initiative, the earlier living-wage movement embodied a goal of “absolute fairness,” recognizing a living wage as a worker’s personal prerogative rather than a civil or political right or a share of social goods, thereby establishing an ethical basis for the initiative and a single standard. However, the “absolute fairness” approach was not ultimately incorporated into national minimum wage legislation (Harris 2000: 46). Second, similar to today, political and regional challenges exist to direct government imposition of standards. Seth Harris, in a detailed history of the early US living-wage campaign, contends that its absolutist approach was ill suited to the political context of the time (Harris 2000). In contrast, the wage boards that were subsequently legislated at the state and national levels were animated by different conceptions of fairness that did not rely on absolute standards (Harris 2000) and incorporated regionally specific approaches to establishing standards. The two chapters in this volume addressing examples of direct government intervention to regulate basic working standards, indicate that policy makers face similar issues and limitations in establishing such tools today as they did historically, and their recommendations reflect these challenges. Fight for $15 Noting that living-wage campaigns have re-emerged in recent years in many countries with relatively weak labor institutions, Spicer, Manduca, and Kay (Chapter 2) address the Fight for $15 in the United States and the complexity of 292 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

that simple regulatory tool. The authors focus on the strategic transformation of the Fight for $15 from a municipal-level movement to seeking living-wage regulation at the national level. The authors identify serious structural challenges arising from this “scale jump.” Primary among the challenges is the difficulty of applying a national, uniform wage floor across regions with different economic conditions and different cost structures. The authors contend that not only are additional policy and organizing strategies necessary for different regions but that additional policy reforms may be necessary adjuncts to minimum wage standards, such as affordable housing supply and supplemental programs such as child- and healthcare. Basic Income Guarantee The idea of guaranteed basic income is also experiencing a recent revival of interest in many jurisdictions. In this volume, Koebel and Pohler (Chapter 9) outline and propose a hybrid basic income and subsidy program, partially conditional on working. As the authors note, a basic income was proposed and experimented with in Canada and the United States in the 1970s and 1980s, and long-established guaranteed annual incomes exist for seniors and children in Canada. In addition to the content of Koebel and Pohler’s basic income proposal, the authors’ strategic approach to developing their proposal is significant. It is pragmatic, recognizing that such proposals operate within the political marketplace, and it is targeted. They explicitly consider distributional consequences, real and perceived work disincentives, and key critiques that hampered the political feasibility of earlier basic income proposals. They identify three “core income principles” across which trade-offs would be required to achieve political feasibility: universality, unconditionality, and adequacy. Ultimately, Koebel and Pohler conclude that “only by sacrificing the principle of universality for a more targeted (and universally accessible) approach will a basic income be affordable, and that adequacy will be ensured for those who have the highest need.” They also contend that political feasibility would be increased by including making a portion of the entitlement conditional, especially for working-age recipients.

Tripartite and Sectoral Approaches Between the two poles of private regulation by enterprise and direct statutory regulation lies an array of tripartite and sectoral approaches, relying on forms of consultation and bargaining to establish workplace standards. Social Partnerships The resilience of tripartism and the importance of recognizing that labor organizations do not have homogeneous interests or priorities and that these differences pose a challenge to tripartism and sectoral initiatives, are highlighted in Tassinari and Donaghey’s (Chapter 5) examination of the effect of the Great Recession on European social partnerships. DISCUSSANTS: ACADEMIC 293

Rather than unilateral government response to the crisis, the authors find a variety of approaches among countries to relying on social partnerships in “crisis-responsive governance.” Key findings are that, while crisis-response liberalization included changes in the content of the social partnership (such as toward concession bargaining), the “formal” dimension of the partnership may persist. Reflecting the heterogeneity of interests and priorities of different unions, Tassinari and Donaghey also find that the Great Recession involved difficult strategic -cal culations for unions and that differences among unions’ political–ideological approaches led to divided support by labor federations. In general, the authors reject diagnoses of the “death of social pacts,” finding that, although state uni- lateralism increased during the economic crisis, social partnership negotiations at the macrolevel were also crucial. Ultimately, the positioning between moderate unions (that tended to compromise) and labor federations contributed to the likelihood of macro-concessionary bargains during the crisis. Sectoral Standard Setting and Bargaining Lichtenstein, in Chapter 3, queries whether “sectoral bargaining” is the “path forward” for workplace regulation. Voluntary and statutory sectoral standard setting and bargaining were widely adopted in the Progressive and New Deal eras in the United States, among other countries. In addition to voluntary sectoral bargaining, state- and federal-level wage boards establishing wage and hours of work were legislated during that period. As Lichtenstein notes, voluntary sectoral bargaining in the United States has since largely dissipated, except for a few instances in particular occupations. Meanwhile, wage boards—and particularly the federal board established by the Fair Labor Standards Act (FLSA)—were effectively gutted by conservative lawmakers in the mid-20th century. Lichtenstein characterizes the wage board mechanism as “social bargaining with the state on behalf of all workers.” As Harris (2000: 21) notes, wage board “public bargaining” legislation aimed to relocate minimum-standard setting from the labor and political markets to a public administrative forum. But wage boards are fundamentally administrative standard setting with structured, tripartite input. It is important to recognize that wage boards—though their standard- setting process may take various forms, including different forms of tripartism— are fundamentally consultative mechanisms for standard setting by government and are not a forum for true collective bargaining (see Slinn 2019). Nonetheless, some wage board systems, such as the UK wages council or Ontario Industrial Standards Act boards, were designed to build capacity among participating employer and employee representatives to be able to ultimately graduate from the wage board process to independent collective bargaining (Slinn 2019). Therefore, while wage boards (including those in Lichtenstein’s proposal) do not, themselves, offer sectoral bargaining, it is possible that these mechanisms can provide the foundation for parties to undertake sector-based collective bargaining. 294 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Arguing that in this political moment the “door seems open” to reinstituting a mechanism to set wages and working conditions, Lichtenstein broadly proposes creation of wage boards to promote worker voice during wage board hearings to establish standards. Worker voice would be fostered by wage boards encouraging worker self-organization, providing workplace access to unions, protecting employees from captive audience meetings and employer retaliation, and providing dues checkoffs for industry worker organizations. In this way, the system might insti- tutionalize worker activism, and thus protect it from dissipating. Sectoral standard setting tends to take wages (and potentially other working conditions) out of competition among sector employers. Lichtenstein notes that this system may combat workplace fissuring and relieve the tremendous burden on unions to organize such workplaces. The author also contends that standard- izing wages in a sector will reduce employer opposition. However, employers within a sector are not homogeneous. Some rely on wage competition, and there is the potential for larger enterprises with greater capacity to absorb higher labor costs to exploit the situation in the context of sectorwide standards to squeeze smaller competitors. Recent Canadian experience in seeking to adopt sectoral bargaining legislation cannot be ignored in this regard. This threat was the basis for much of the employer objection to sectoral bargaining (Slinn 2020). Finally, while Lichtenstein suggests the political environment is ripe for adopting wage boards, Seth Harris’s (2000) detailed historical analysis observes that US wage boards arose in the early 20th century in a very different political moment from today with a different motivating conception of fairness. The FLSA, as it was enacted at least, embodied “competitive fairness,” providing limits to low wages and working hours as a means of limiting the use of labor cost cutting for competitive advantage so as to remedy underconsumption and ensure fair competition in product markets (Harris 2000: 22). It is not clear that this same concern for competitive fairness motivates the renewed interest in sectoral standard setting. As a result, the type of sectoral mechanism that might be politically feasible today might look very different from the FLSA-type wage board that arose in that earlier, different, political and economic moment.

CONCLUDING OBSERVATIONS The chapters in this volume address an array of approaches to regulating labor in the new era, and a number of them have clear antecedents in the 20th century. Some lessons can be drawn from those earlier experiences. First, enterprise as private regulator of work standards cannot fill a void left by retreating state and collective worker power. Distelhorst’s review of MNC supply-chain regulation centrally addresses this shortcoming. Second, the political marketplace is relevant to the design as well as likely adoption of initiatives, and different political moments may permit different solutions. Spicer, Manduca, and Kay recognize this point with respect to the Fight for $15, as do Koebel and DISCUSSANTS: ACADEMIC 295

Pohler with respect to guaranteed basic income proposals, and those considerations strongly animate Lichtenstein’s sectoral wage board proposal. Third, differences are a crucial challenge to regulation and fundamentally shape the nature of regulatory responses. Differences within groups of actors and regional differences are illuminated in the context of intra-labor movement and international differences in an examination of regulation involving social partnerships (Tassinari and Donaghey). Regional differences are also highlighted as a regulatory challenge to living-wage initiatives (Spicer, Manduca, and Kay). Finally, Gunderson (Chapter 1) provides a comprehensive look at categories of work. He notes that the majority of the workforce continues to operate within standard employment, notwithstanding the growth of nonstandard forms of work. Observing that nonstandard is not identical to precarious or contingent work, Gunderson, therefore, urges that policy makers not abandon protecting standard employment and focus on vulnerable disadvantaged workers—not limited to nonstandard work arrangements. Gunderson also emphasizes the need for more causal—rather than anecdotal or correlational—verification to support evidence-based policy making. The chapters in the volume addressed here reflect both of these imperatives.

ENDNOTES 1. The International Labour Organization’s Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy (1977), revised in 2017, includes guidelines for MNCs relating to employment, work conditions, training, and industrial relations and is the primary international instrument of this type. The United Nation’s Guiding Principles on Business and Human Rights (2011) addresses implementation of the “protect, respect and remedy” framework arising from the 2008 Ruggie report, outlining a state duty to protect, a corporate responsibility to protect, and access to effective remedies relating to business activities and human rights.

REFERENCES Blackburn, Sheila. 1991. “Ideology and Social Policy: The Origins of the Trade Boards Act.” The Historical Journal 34 (1): 43–64. Blackburn, Sheila. 2007. “Must Low Pay Always Be with Us? The Origins of Britain’s Minimum Wage Legislation.” Historical Studies in Industrial Relations 23–24: 61–101. Harris, Seth D. 2000. “Conceptions of Fairness and the Fair Labor Standards Act.” Hofstra Labor & Employment Law Journal 18 (1): 19–166. Herbert, William. 2019. “Janus v. AFSCME Council 31: Judges Will Haunt You in the Second Gilded Age.” Relations industrielles/Industrial Relations 74 (1): 162–173. International Labour Organization. 1977 “Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy.” ILO Doc. 28197701. Geneva, Switzerland: International Labour Organization. https://bit.ly/340Em5o Milkman, Ruth. 2013. “Back to the Future? US Labour in the New Gilded Age.” British Journal of Industrial Relations 51 (4): 645–665. 296 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Ruggie, John. 2008 (Apr. 7). “Protect, Respect and Remedy: A Framework for Business and Human Rights.” Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises. Geneva, Switzerland: United Nations Human Rights Council. https://bit.ly/341bnyw Slinn, Sara. 2019. “Wage Boards for the 21st Century: Revisiting Sectoral Standard-Setting Mechanisms for the Workplace.” Paper presented at the Labor Law Research Network Conference, Pontificia Universidad Católica de Valparaíso, Valparaíso, Chile, Jun. 24, 2019. https://bit.ly/3awzuY1 Slinn, Sara. 2020. “Broader-Based and Sectoral Bargaining Proposals in Collective Bargaining Law Reform: A Historical Review.” Labour/Le Travail 85: 1–39. United Nations Office of the High Commissioner. 2011. “Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework.” Vienna, Austria: United Nations. https://bit.ly/3aza2Bp About the Contributors

EDITOR Dionne Pohler is an associate professor, the CIBC Chair in Youth Employment, and acting director at the Centre for Industrial Relations and Human Resources at the University of Toronto. Her research, which has received several international awards, covers a broad range of topics on work and employment, unions and labor relations, cooperative governance and development, and public policy implementation. Dionne developed a model of rural cooperative development alongside settler and indigenous communities in western Canada as one of the co-investigators on the Co-operative Innovation Project. She was also a founding board member of Co-operatives First, a nonprofit organization dedicated to working with rural communities to address their needs.

CONTRIBUTORS Rachel Aleks is an assistant professor of management and labor in the University of Windsor’s Odette School of Business. She received her Ph.D. in industrial relations and human resources from the University of Toronto. Her research interests include union organizing strategies, gender and leadership within unions, workplace sexual harassment, and digitalization of work. She teaches primarily in the areas of labor relations and conflict in the workplace. Rachel previously worked as a union organizer for the Service Employees International Union and the Canadian Union of Public Employees.

Adelle Blackett is the Canada Research Chair in Transnational Labour Law and Development at the Faculty of Law, McGill University. Her research covers topics in labor and employment law, trade regulation, law and development, critical race theory, and slavery and the law, and her most recent book is Everyday Transgressions: Domestic Workers’ Transnational Challenge to International Labour Law (Cornell University Press 2019). She was awarded the Bora Laskin National Fellowship in Human Rights Research, and she directs the Labour Law and Development Research Laboratory. Adelle has been an ILO expert on international standard setting on decent work for domestic workers and in a labor law reform process in Haiti. She also served as a human rights commissioner in Québec.

Stephen Clibborn is a senior lecturer in the Discipline of Work and Organizational Studies at the University of Sydney Business School. His research in employment relations and law focuses on the regulation of low-wage work, including the working experiences of immigrants and the roles of stakeholders such as the

297 298 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT government, employers, unions, NGOs, and civil society, in the application and enforcement of employment laws. He is also an editor for the Journal of Industrial Relations and an experienced employment lawyer. Stephen has extensive industry experience in both Australia and the United States as a senior associate in a national commercial law firm, a legal manager in the headquarters of a multinational corporation, and a not-for-profit organization representing the interests of low-wage and unemployed workers.

Bill Dirksen was vice president, labor affairs, for Ford Motor Company from January 2014 through his retirement in December 2019. He was responsible for global labor policy, collective bargaining, and hourly healthcare management covering Ford’s 120,000 union employees, and he led successful negotiations with the UAW in 2015 and 2019. Bill previously served as executive director, US labor affairs, where he played a leadership role in UAW negotiations in 2007, 2009, and 2011. He joined Ford in 1985 and was the senior human resources leader in Ford Credit and Ford Australia prior to moving into labor affairs. Bill has a bachelor’s degree in economics and political science from the University of Notre Dame and a master’s degree in industrial and labor relations from Cornell University.

Greg Distelhorst is an assistant professor at the University of Toronto at the Centre for Industrial Relations and Human Resources and the Rotman School of Management. His research focuses on global trade, multinational corporations, and worker rights. It has appeared in peer-reviewed social science journals, including the Industrial and Labor Relations Review, American Journal of Political Science, and Management Science. He previously lived in mainland China for five years, where he held fellowships through the US Fulbright Program and the Yale–China Association. He received a Ph.D. in political science from the Massachusetts Institute of Technology.

Jimmy Donaghey is professor and co-director at the Centre for Workplace Excellence at the University of South Australia. He received his Ph.D. from Queen’s University of Belfast, where he also worked as lecturer from 2003–2010. From 2010–2019, he worked at the Industrial Relations Research Unit at the University of Warwick as associate professor and professor. His research interests focus on the implications of globalization for employment relations, with a particular focus on social pacts, worker voice, and employment relations in supply chains.

Morley Gunderson is a professor at the Centre for Industrial Relations and Human Resources (where he served as director from 1985–1997) and the Department of Economics at the University of Toronto. He has been a visiting scholar at the International Institute for Labour Research in Geneva and at ABOUT THE CONTRIBUTORS 299

Stanford University. In 2002, he was awarded the Industrial Relations Research Association Excellence in Education Award in Labor Economics and in 2003 the Gérard Dion Award for Outstanding Contributions to the Field of Industrial Relations. In 2008, he was elected as a Fellow of the Royal Society of Canada, in 2011 he was the first Canadian to be elected as a Fellow of the Labor and Employment Relations Association, and in 2015 he was given the Carolyn Tuohy Impact on Public Policy Award.

Lisa Jordan received her Ph.D. in labor economics from the University of Notre Dame and has divided her career between academia and the labor movement. Lisa joined the United Steelworkers in 2008 as the director of the education. Before becoming a labor educator, she worked with the United Auto Workers, and United Food and Commercial Workers, and taught at the universities of Minnesota and Illinois. The daughter of a Teamster and granddaughter of a Mineworker, Lisa understands that policy decisions aren’t simply academic. They impact access to healthcare, education, and family supportive jobs. She knows that every policy choice has real consequences for families.

Tamara Kay is an associate professor of global affairs and sociology at the University of Notre Dame. Her research focuses on the political and legal implications of regional economic integration, transnationalism, and global governance for labor and environmental movements, NGOs, and policy formation. She is the author of Trade Battles: Activism and the Politicization of International Trade Policy (Oxford 2018) and NAFTA and the Politics of Labor Transnationalism (Cambridge 2011).

Kourtney Koebel is a Ph.D. student at the Centre for Industrial Relations and Human Resources at the University of Toronto. Her research explores labor market and social policy, in particular focusing on poverty reduction strategies and policy evaluations using applied econometrics. She has published several peer-reviewed papers on the design and financing of a basic income guarantee in Canada by simulating a revenue-neutral basic income and examining the effects it could have on the poverty rate, labor supply, and distribution of income in Canada. Kourtney also advised Canada’s federal Parliamentary Budget Office on the costing of a basic income.

Nelson Lichtenstein is Distinguished Professor in the Department of History at University of California, Santa Barbara, where he directs the Center for the Study of Work, Labor, and Democracy. He is the author or editor of 16 books, including a biography of the labor leader Walter Reuther and State of the Union: A Century of American Labor (Princeton University Press 2003). Some recent books are Achieving Workers’ Rights in the Global Economy (ILR Press 2016); The 300 REIMAGINING THE GOVERNANCE OF WORK AND EMPLOYMENT

Port Huron Statement: Sources and Legacies of the New Left’s Founding Manifesto (University of Pennsylvania Press 2015); The ILO from Geneva to the Pacific Rim: West Meets East (Palgrave Macmillan 2016); The Retail Revolution: How Wal-Mart Created a Brave New World of Business (Metropolitan Books 2009); The Right and Labor in America: Politics, Ideology, and Imagination (University of Pennsylvania Press 2016); A Contest of Ideas: Capital, Politics and Labor (University of Illinois Press 2013); and American Capitalism: Social Thought and Political Economy in the Twentieth Century (University of Pennsylvania Press 2007). Nelson was elected to the Society of American Historians and received the Sol Stetin Award for lifetime achievement in labor history from the Sidney Hillman Foundation.

Michael Maffie is an assistant professor of labor and employment relations at Penn State University. He received his Ph.D. in industrial and labor relations from Cornell University. His research interests include the gig economy, digital organizing, conflict resolution, and online platforms. He teaches primarily in the areas of labor relations, negotiation, and human resource management.

Robert Manduca is an assistant professor in the Department of Sociology at the University of Michigan. His research focuses on social stratification, the social consequences of rising inequality, and the determinants of urban and regional economic development.

Marc-André Pigeon is an assistant professor at the Johnson Shoyama Graduate School of Public Policy (University of Saskatchewan) and director of the Canadian Centre for the Study of Co-operatives. His research is centered on the intersection of public policy and co-operatives. Previously, he worked as assistant vice president at the Canadian Credit Union Association, where he was responsible for monitoring, researching, and advocating for credit unions. He has served as an advisor to the Canadian federal Department of Finance, a lead analyst for the Senate Banking and House of Commons Finance Committees, an economist at the Levy Economics Institute at Bard College, and a Bloomberg Business News reporter.

Tina Saksida is an associate professor of management with the University of Prince Edward Island’s Faculty of Business. She obtained her honors bachelor of science (psychology) and Ph.D. (industrial relations and human resources) from the University of Toronto. Her research interests include gender and leadership, age and generational diversity at work, gender representation in business education, digitalization of work, and management in the nonprofit sector, including unions. Her work has appeared in such outlets as Human Resource Management, Applied Psychology: An International Review, and the International Journal of Human ABOUT THE CONTRIBUTORS 301

Resource Management. She teaches primarily in the areas of organizational behavior, research methods, evidence-based management, and negotiation.

Nathan Schneider is a journalist and an assistant professor of media studies at the University of Colorado Boulder, where he leads the Media Enterprise Design Lab. His most recent book is Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy (Bold Type Books 2018).

Sara Slinn is associate professor and associate dean, research and institutional relations, at Osgoode Hall Law School, York University. Her research focuses on models of collective worker representation and bargaining.

Jason Spicer is an assistant professor of economic development/planning in the University of Toronto’s Department of Geography and Planning. He completed his Ph.D. in political economy at the Massachusetts Institute of Technology in 2018. His research examines alternative economic development approaches and the role that politics, planning, and policy plays in enabling or hindering their success. His academic research has been published in urban planning, economic geography, and political economy outlets, and has been quoted in the Washington Post, PBS NewsHour, and Foreign Policy.

Arianna Tassinari is a postdoctoral Max Weber Fellow at the European University Institute in Florence. She holds a Ph.D. in industrial relations from the University of Warwick. Her research interests span across comparative political economy, industrial relations, and social policy. Her recent research has appeared in Work, Employment and Society and Socio-Economic Review.

Chris F. Wright is an associate professor in work and organizational studies at the University of Sydney Business School. His research covers topics related to the intersection of employment, globalization, and public policy, with a particular interest in immigration, labor market regulation, and supply chains. He has written commissioned research reports for the UK, Dutch, and Australian governments, the International Labour Organization, and the Lowy Institute for International Policy. Chris has authored over 70 scholarly publications, and he has received several prestigious awards, including the 2015 International Labor and Employment Relations Association Luis Aparicio Prize. Chris has a Ph.D. from the University of Cambridge. LERA Executive Board Members 2020–21

President Adrienne Eaton, Rutgers University President-Elect Wilma Liebman, former chair, National Labor Relations Board Past President Dennis Dabney, Kaiser Permanente Secretary-Treasurer Andrew Weaver, University of Illinois at Urbana-Champaign Editor-in-Chief J. Ryan Lamare, University of Illinois at Urbana-Champaign National Chapter Advisory Council Chair William Canak, Middle Tennessee State University Legal Counsel Steven B. Rynecki Executive Board Members Daniel Altchek, Miles & Stockbridge, PC Ezio Borchini, George Washington University Heather Boushey, Washington Center for Equitable Growth Robert Chiaravalli, Strategic Labor and HR, LLC Paul Clark, Pennsylvania State University Julie Farb, AFL-CIO Shannon Gleeson, Cornell University Cyndi Furseth, Portland General Electric Kati Griffith, Cornell University Beverly Harrison, Arbitrator/Mediator Erin Johansson, Jobs With Justice Brad Markell, AFL-CIO Tamara Lee, Rutgers University Jim Pruitt, Kaiser Permanente Javier Ramirez, Federal Mediation and Conciliation Service Jake Rosenfeld, Washington State University, St. Louis Kim Sullivan, Encompass Health David Weil, Brandeis University

302 ILR AND LERA A Long-Standing Partnership

Shaping the Future of Work

COLLABORATING SINCE 1947 ilr.cornell.edu

Cornell’s ILR School is transforming the future of work, employment and labor through our teaching, research and outreach. In these difficult times driven by the COVID-19 pandemic, our focus on labor and employment relations and our partnership with LERA is more important than ever. Workers are being challenged and stressed in ways that no one could have anticipated. Together, ILR and LERA have been at the heart of extraordinary changes in the workplace and in the lives of workers. We will move forward with our important mission, together, as the preeminent organizations in our field. ILR will continue drawing on the richness of the LERA community to drive positive impact for people and society, today and in the future. Kaiser Permanente and the Partnership unions thank all our managers, physicians and employees — including more than 130,000 union-represented workers — for 23 years of partnership.

Affordable, quality care. Today Kaiser Permanente is It started in California’s America’s largest nonprofit shipyards and steel mills during health care delivery World War II, serving working organization. And our Labor men and women on the home Management Partnership is front. Today we continue this the largest, longest-running and history of service to our most successful such partnership community with skilled, in the country. Together we union caregivers. create award-winning results for our members, patients and workforce.