The Report: Setting the Stage

The Future of Work
In today’s ever-changing economy, the jobs that are in demand are not necessarily the same jobs that were in demand 10, 50, or 100 years ago. From 1947 to 2009, manufacturing jobs shrank from more than a quarter of the gross domestic product to a ninth. In the same time frame, white-collar work started at less than one fifth and rocketed to nearly half. Government, retail, information, and construction all have stayed relatively constant at about one third of the economy.

If you look a bit deeper, however, there is more at play. While the number of manufacturing jobs shrank immensely over 60 years, the manufacturing industry itself boomed. Indexed to 1945, manufacturing output has increased six times in that same time frame.

This is just one case study in the complex relationship of the work of the future in the United States. Some industries are relying on fewer workers to do the same, if not more, work. Other industries, however, are changing in ways that will make it difficult to predict their effect on the labor market.

Take, for example, driverless vehicles. Many companies are racing to make this technology available on a large scale in five to ten years. Its impact on jobs, however, will be dynamic over time and across industries. Some studies estimate that the number of jobs will decrease as driving professions will be less in demand. Other studies indicate that there will be an increased need for technology jobs to understand and deploy this kind of technology and still more trade jobs to work on the vehicles themselves. At the same time, the first few years of deployment of this technology will require additional supervision within the vehicles themselves, which may lead to a temporary increase in the number of driving professionals needed.

What we have learned from our research and meetings is that no one job or sector will be affected the same way going forward and that leading experts in their fields disagree over what the jobs of tomorrow will be and how the changes will impact workers today. What we have learned from history, however, is that this transition will happen quickly and its effects will be felt deeply by families across the country. We must engage in thoughtful research and conversations now to make sure that we do not leave people behind in the inevitable transition. We have the ability to shape how an increase in automation and technology will impact our workforce if we move quickly and enact thoughtful policies.

Changes in Corporations:
Technological change is not the only factor driving the changing nature of work. Changes to rules, regulations, and economic policy, along with concurrent changes to business practices, have altered the relationship between businesses and the workers they employ. Changes to tax policy, corporate governance, and antitrust policy have shifted corporate priorities from investing profits in workers and job-creating expansion to paying out shareholders and CEOs. Every corporation includes a number of stakeholders — managers and shareholders, but also workers, other businesses in the supply chain, and customers. When businesses are generating profits and sharing them across these stakeholders, everyone benefits. But today, most publicly traded corporations operate only to reward their managers and shareholders. This means not only giving the lion’s share of profits to CEOs and shareholders, but even reducing the wages and benefits to workers, squeezing smaller suppliers to produce more for less, and gouging customers when possible. This drive for higher shareholder prices, combined with the increasing power of employers over employees, has led firms to reduce their obligations to employees by using contract workers. The phenomenon, often referred to as the “fissured workplace,” describes the trend of workers being paid as contractors rather than direct employees. Without the direct employment relationship, workers are not eligible for traditional benefits received from employers and studies show that their compensation is often lower than their counterparts in a traditional employer-employee relationship. An estimated 29 million people in just 10 industries studied are impacted by this phenomenon according to the U.S. Department of Labor, and the problem continues to grow.

In a more competitive environment, workers (and suppliers and customers) could simply look elsewhere. But lax antitrust enforcement has allowed firms to consolidate across industries, resulting in a smaller and smaller number of employers being able to control the wages and conditions of a larger and larger share of workers. Today, the majority of labor markets are highly concentrated. This is especially true in rural areas where only one or two employers are posting jobs for a given occupation at a time. This means employers have the discretion to set wages and working conditions on their own terms, without fearing that their workers could check their power by finding another job.

If these trends remain un-addressed, working Americans will see more instability in their jobs, regardless of technological change.

The Future of Wages
We are living through a time of long-term wage stagnation for the American worker. In 2017, wages were only 10 percent higher than they were in 1973, showing annual real wage growth just below 0.2 percent. At the same time, however, worker productivity is soaring. Between 1973 and 2016, worker productivity increased by almost 74 percent, but hourly pay only increased by 12.5 percent. That productivity has grown 5.9 times more than pay is alarming.

Figure 1

Many factors have impacted low wage growth, as reflected in the decline of workers’ income as a share of economic output. The portion of national income received by workers fell from 64.5 percent in 1974 Q3 to 56.8 percent in 2017 Q2. Among the reasons for this phenomenon are technological progress and offshoring of labor-intensive production where compensation is typically lower. Another undeniable reason is corporate greed.

Figure 2

Shifts in policy and business strategies over the last forty years have led managers to prioritize rewarding shareholders and CEOs rather than investing in worker compensation or job-creating strategies. The recent tax cuts are just the latest example of this trend. In the first quarter of 2018, 57 percent of corporate savings due to tax cuts went to shareholders as either stock buybacks or dividends, compared with just 6 percent going to employees in the form of wage increases, bonuses, or benefits.

Starting in the 1980s, corporations began to adopt the idea that a firm’s primary purpose is to serve shareholders. Over the next several decades, policymakers rolled back regulations that had essentially banned share buybacks and lowered taxes on dividends and capital gains, making it easier and more lucrative for CEOs to reward shareholders and inflate stock prices. Today, payouts to wealthy shareholders account for more than 90 percent of all corporate profits. In fact, this shareholder-first approach casts workers as a cost-center to squeeze by cutting wages and benefits or shifting workers to contract employment.

Some workers, however, have fared better than others. Workers’ wages in the top quarter have seen a 27 percent increase and the upper-middle quarter have seen wages increase by 12 percent. The bottom 20 percent of workers, however have actually seen their real wages fall over the same period. This kind of unequal growth has not always been a fixture of the U.S. economy, though, with overall income growth actually tilted toward the lower end of the distribution from 1946 through 1980 and incomes rising faster in the bottom half of the income distribution than in the top 10 percent or top 1 percent.

Another major factor in the decline in wages is the decrease in union membership.

The Future of Labor
Every person in the labor market today owes a debt of gratitude to labor unions. Without them, many of the policies we take for granted would not exist or would be severely diminished. Among them are:

· The 40-hour work week
· Paid sick leave
· Child labor laws
· Social Security
· Minimum wage
· Paid family leave
· Employer-based health coverage
· Workplace safety laws

The benefits of being represented by a labor union are also numerous. The relative decline of union membership over the last 35 years has coincided with a decline in the middle class’ share of national income. It is also true that during the height of labor union membership, in the 1940s and 50s, income inequality was at its lowest point in American history.

Empirically, union members are in many ways better off than their non-union counterparts. A report compiled by the Democratic Staff of the U.S. House Committee on Education and the Workforce has a more complete analysis of the multitude of positive contributions unions make to our society, but a selection is below.

Unions raise wages of unionized workers by almost 20 percent and raise total compensation, including wages and benefits, by 28 percent. The benefits are even more pronounced for workers of color. Women are also better off with union representation, with the size of the wage gap being half as big in union jobs than in the economy as a whole. The most significant financial advantage for union workers, however, is non-wage compensation. Union workers are more likely to receive paid leave, are up to 28 percent more likely to have employer-sponsored health insurance, and are up to 54 percent more likely to be enrolled in employer-sponsored pensions. Not only do workers have better access to pensions, but their employers contribute an average of 28 percent more toward pensions than non-union employers.

The benefits of unionization are felt far beyond the individual worker. Geographic union density tends to lead to higher wages and benefits for all workers regardless of union status because of increased competition. Even the businesses that sometimes fight unionization receive benefits — with higher worker retention and productivity.

Union organizing, however, has become increasingly difficult over the years. Employers have become more and more hostile to workers taking collective action, as evidenced by a number of statistics from a recent study published by the Economic Policy Institute. When workers become interested in forming unions:

· 54 percent of employers threaten workers in such meetings;

· 75 percent hire outside consultants to run anti-union campaigns;

· An employee who engages in union organizing faces a one in five chance of getting fired;

· Nearly 60 percent of employers threaten to close or relocate their businesses if workers elect to form a union;

· When workers become interested in forming unions, 92 percent of private-sector employers force employees to attend closed-door meetings to hear anti-union propaganda; 80 percent require supervisors to attend training sessions on attacking unions; 78 percent require that supervisors deliver anti-union messages to workers they oversee; and 75 percent hire outside consultants to run anti-union campaigns.

Unfortunately, labor organizing faces even higher barriers in light of the decision in Janus v. American Federation of State, County, and Municipal Employees, Council 31, in which a corporate-friendly Supreme Court majority ruled that agency fees charged to non-union members by public-sector unions violated the First Amendment. Because public sector unions are obligated to represent all employees in the bargaining unit regardless of union membership, agency fees are critical to offset the financial burden of conducting essential union functions on their behalf. Without this financial support, unions anticipate experiencing a significant “free-rider” challenge and have already been forced to cut back on staff and other expenses.

A decrease in union financial resources is not a byproduct, but in fact a goal of corporate interests seeking to further skew the power balance in their favor. Frank Manzo of the Illinois Economic Policy Institute and Robert Bruno of the University of Illinois at Urbana-Champaign project that union membership of state and local governments could drop by 8.2 percentage points because of this decision. This has a compounding effect, because fewer members translates to fewer resources, preventing the union from engaging in aggressive action and organizing. A weaker union will be less capable of advocating for wage increases, worker safety, and adequate benefits for workers, resulting in the further consolidation of power in the hands of CEOs and shareholders. All experts agree that while the decision is only applicable to public unions, attacks on private unions are not far behind.

Written by

A vision for the American Workforce. An effort launched by Representatives Mark DeSaulnier, Mark Pocan, Donald Norcross, and Debbie Dingell.

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade