What will it really take to give America a raise? A lot of well-credentialed policy experts have been writing nonsense about why Americans can’t be paid more.
One bogus story is that young people and working moms (whatever happened to working dads?) love the new “flexible” economy of Task-Rabbits working odd jobs. Or they’re Uber drivers or Starbucks clerks, marking time until their economic adulthood begins.
Some of these people imagine themselves to be high-tech entrepreneurs-in-waiting. Recent college grads who hope that they are just one killer app away from financial success are the well-educated equivalent of inner-city kids hoping for a tryout in the National Basketball Association. For every one who makes it, there are hundreds who don’t.
I have a British friend with a son in his 30s. The lad is having a hard time gaining economic traction. When I saw my friend recently, I inquired: “How’s William doing?” “He’s doing great,” said my friend. “He’s a barrister.” “Really?” I replied, surprised and impressed.
“Well,” my friend smiled, “I think it’s actually pronounced, barista.”
A second mistaken explanation blames education and technology. For decades, as work’s pay and career horizons deteriorated, many economists have argued that in order to earn more, Americans need better education.
Technology enters into it because machines are increasingly replacing human workers. People who want reliable jobs, the argument goes, need advanced skills. This sounds plausible — until you drill down into the details.
For starters, the wage premium commanded by college-educated workers over high-school graduates has been narrowing for more than a decade. In fact, income inequality has been increasing among college graduates. A great many of those polite baristas have college degrees. As for barristers — lawyers in American English — there’s a glut.
So that’s really at work here? The reality that many expert commentators don’t acknowledge is a huge and intensifying power shift. Technology is the enabler of this shift, not the cause.
Jobs that used to be structured as regular payroll positions are being redefined as temp work, contract work and other forms of contingent employment that allows management to pay lower wages and no benefits. According to David Weil, author of the definitive new book on the subject, ‘The Fissured Workforce’, about one job in three is now contingent. And the shift is accelerating.
Contrary to what you may hear, this is not all about technology requiring flexibility. Some hotel workers are paid as salaried employees, while others are part-timers and temps. Some warehouse workers have regular salaries from their actual employers; others work for intermediary temp agencies. UPS drivers are classified as salaried employees, while FedEx drivers are categorised as independent contractors. Some Comcast cable guys are on salary, others are freelancers.
Employers get away with this job debasement because they can, when they can. The labour regulations that protect workers from these abuses are not well enforced. Most were designed for an era when payroll employment was the norm.
Two other factors are at work. The weakening of unions means that workers have less power to bargain for regularised work.
The years of high unemployment rates, both officially measured and disguised, also gives management more power to impose its new model. If we had full employment, a lot of workers would not have to settle for these new debased jobs.
Reversing these trends will take efforts across many fronts — higher-minimum-wage legislation, better enforcement of labour laws on the books, a revision of the definition of who is an employer, so that McDonald’s doesn’t hide behind its franchisees and Wal-Mart can’t claim that its warehouse workers really work for a temp agency.
Above all, it will depend on having full employment and a restoration of the right to unionise.
That policy package is a heavy lift. It’s far easier to call for more education. But education, while desirable for all people as citizens, won’t fix what’s broken in the job market.
It will just get us better-qualified baristas. Will that be for here or to go?
