The Future of Work: Overview Framing

Working Poor Families Project Policy AcademyJune 4-5, 2015

Maureen Conway and Vickie Choitz

Agenda for Session

• Welcome, introductions and overview of Policy Academy

• Preview “What Do You Want to Learn” exercise

• Future of labor market demand and supply• Shifts in societal values• “Future of Work” framework

Objectives

Participants will gain a mental framework for understanding and discussing the various issues under the broad and multi-dimensional “future of work” concept.

Participants will improve their understanding of 3 key areas concerning the future of work.

Participants will learn about a range of state policy topics concerning the future of work and discuss short- and long-term policy options.

FUTURE OF LABOR MARKET DEMAND AND SUPPLY

% of Job Growth by IndustryApril 2014-April 2015

Mining and logging

Construction

Manufacturing

Trade, transportation, and utilities

Information

Financial activities

Professional and business services

Education and health services

Leisure and hospitality

Other services

Government

Source: BLS Employment Situation Summary, April 2015

15% in goods producing sectors

83% in service sectors

53% of T, T&U = Retail

50% of Prof&Biz Serv = Admin & Waste Servs

16% of Ed&Health in hospitals; 11% in home health & LTC

87% of Leis&Hosp = food & drinking est’s

Proportion of Jobs by Required Level of Education

Proportion of Jobs by Required Level of Education (2012)

35%

65%

2022

Any post-sec ed

HS or less

34%

66%

2012

Any post-sec ed

HS or less

Source: U.S. BLS Employment Projections: 2012-2022 Summary, December 2013

42%

41.6%

16.6%

Other Key Employment Data and Trends

• Salaried vs. hourly paid• Involuntary part-time employment• Long-term unemployed• Labor market participation rate• Contingent work

Salaried vs. Hourly Workers

• In March 2015, 93% of employed workers were wage and salary workers (137 million out of 148 million total workers); the rest were self-employed or unpaid family workers.

• 56% of employed wage and salaried workers were paid hourly (77 million out of 137 million).

Labor Force Participation Rates: 1948-2050

Source: Federal Reserve Bank of St. Louis, using BLS data, October 2013

Contingent WorkersNarrow Definition GAO “Core Contingent” Broad Definition

Temporary employment (regardless of work arrangement); “do not have an implicit or explicit contract for ongoing employment” (BLS)

Lack job stability + have variable and/or unpredictable work schedules

Various non-standard work arrangements (regardless of duration)

Can include wage and salary workers, self-employed, agency temps, independent contractors

Includes agency temps, direct-hire temps, on-call workers, and day laborers

Includes agency temps, day laborers, independent contractors, self-employed, some part-time workers

1.8%-4.1% total employment in 2005

7.9% of employed workers in 2010

40.4% of employed workers in 2010

BLS, CPS special, 2005 GAO , April 2015 GAO, April 2015

FRAMING THE FUTURE OF WORK

Observed Shifts in Societal Values

• Shifting business risk and workplace responsibilities onto workers

• Growth in assumption that the market cannot and should not be regulated; unfettered free market will produce best outcomes for society

• Lack of confidence in government• Business culture prioritizing short-term focus and

maximizing shareholder value Biggest negative consequences for low-wage workers

Future of WorkFramework

The role of technology

Business models, structures and

decisions

Structure of income-earning

and benefits provision

Worker rights and voice

THE ROLE OF TECHNOLOGY

Types of Technologies

• Robotics/automation

• IT/computers

• Artificial intelligence/“smart devices”

How Does Technology Change the Shape of Work – 4 Questions to Ask

• Does technology eliminate a job(s), i.e., labor replacement?

• How does technology change how companies communicate with workers, i.e., scheduling?

• How does technology change the structure of work?

• How does technology change actual jobs?

Technological Unemployment

Frey and Osborne, 2013

Integration of Workers and Technology

BUSINESS MODELS, STRUCTURES AND DECISIONS

Trends

• Outsourcing• Contracting• Flatter management structures and shorter

tenures diminished internal career ladders• Sharing economy

How to Think about Alternative Business Models

• Profit sharing models• Ownership structures, i.e., ESOPs• Governance structures–By shareholders–Democratic governance, i.e., worker-

owned coops, open-book management• Benefit corporations

Businesses Have Choices

For workers…• Unpredictable hours; unstable incomes• Competition keeps wages low; • No benefits

• Company started in 2014 with backing from Coca-Cola

• Start a company that solves a biz problem• Offers businesses way to fill short-term

immediate need

For workers…• Substantial proportion of f.t. jobs• Benefits—vacation, health, retirement• Ownership options• Predictable schedules• Cross-training

Gas station convenience store chain• Per ft2 sales are 50% higher than ind. Avg.• Turnover 13% vs. 59%• Outperforms in profitability and customer

satisfaction

STRUCTURE OF INCOME-EARNING AND BENEFITS PROVISION

• Elements and trends in market-based wages and benefits

• Elements and trends in publicly-provided income and benefits

Stagnating Wages…Even When Productivity IncreasesProductivity growth and real hourly compensation growth, nonfarm business sector, selected periods, 1947–2009

Source: Fleck, Monthly Labor Review, 2011 (BLS data)

Decreasing Employer-Provided Health Benefits

• In 1979, 43 percent of low-wage workers had employer-provided health insurance. In 2010, only 26 percent had health insurance through their employer.

Source: “Health-insurance Coverage for Low-wage Workers, 1979-2010 and Beyond,” John Schmitt, Center for Economic and Policy Research and The Kalmanovitz Initiative on Labor and the Working Poor, Georgetown University, 2012

Retirement Plans for Low-wage Workers

• Participation employer-based retirement plans has declined from 52% in 2000 to 45% in 2010.

• In 2010, only 11% of the bottom fifth of income earners had savings in a retirement account.

• Many low-wage workers do not earn enough to contribute anything to a "defined contribution" plan even if they are covered.

Social Security

• Social Security makes up 50%+ total income for 65% of beneficiary units over age 65. It makes up 90%+ total income for 36% of beneficiary units over age 65.

• Social Security Trust Funds projected to become depleted in 2033, 77% of benefits still payable at that time.

• Proposed reforms bad for low-income workers, i.e., raising retirement age, across-the-board cuts.

Summary

• Wages stagnant or falling (except for the top)• Employers reducing benefits (if they were ever

offered or accessible)• Workers working harder and smarter than

ever (productivity growth)• Wealth wiped out• Even those with higher education are falling

behind

Publicly-provided Income and Benefits

• Income: TANF, EITC, a guaranteed income?• Nutrition benefits: SNAP, WIC• Child care and early childhood education:

CCDBG, TANF-funded child care, Head Start, Early Head Start, some ESEA, Home Visiting

• Health care: Medicaid, Affordable Care Act• People with disabilities: SSI, SSDI

WORKER RIGHTS AND VOICE

Trends in Unionization

• In 2014, union membership in the U.S. included approximately 11% of wage and salary workers, down from a peak of almost 35% in 1954.– Unionization rates among workers in education, training

and library occupations, and protective service occupations have the highest unionization rate at over 35%.

– Unionization rates in the private sector have declined from 16.8% in 1983 to 6.6% in 2014.

– In 2014, median weekly earnings for nonunion workers were 79% of earnings for union members.

Historic Labor Legislation and International Standards

• 1935: National Labor Relations Act (NLRA) gives private sector employees the right to organize into trade unions, encourages collective bargaining and allows collective action. Creates the National Labor Relations Board.

• 1938: Fair Labor Standards Act establishes first minimum wage and 40-hour week.

• 1947: Taft-Hartley Act amends NLRA by adding restrictions on unions including prohibiting certain kinds of strikes and boycotts, monetary donations by unions to federal political campaigns and “closed shops” (in which only union members can be hired). It allowed states to pass “right-to-work” laws that outlaw closed union shops. Today 25 states–mostly southern and western, although recently some northern ones–have adopted “right to work” laws.

• 1948: The United Nations General Assembly adopts the Universal Declaration of Human Rights; Article 23 states that everyone has the right to form and to join trade unions.

“Alt-Labor”• Nonunion worker organizations, such as

worker centers and worker alliances• Growth of worker centers:– 1992: <5– 2007: 160+ in 80 cities, towns, rural areas– 2013: 200+

• Examples: