Katherine V.W. Stone is the Arjay and Frances Miller Distinguished Professor of Law at UCLA School of Law. She is the author of “From Widgets to Digits: Employment Regulation for the Changing Workplace” (Cambridge Univ. Press) and “Rethinking Workplace Regulation: Beyond the Standard Contract of Employment” (with Harry Arthurs). (Russell Sage Foundation 2013). This post originally appeared in The Huffington Post.
Hillary delivered a masterful debate performance last night, and trumped Trump on many issues. But on one important issue, most commentators give him the point – and that is trade. Trump, and Sanders, have both made enormous political capital by blaming U.S. trade deals – particularly NAFTA –for the plight of American workers. Hillary has not come up with a good response, and she needs to.
The problems of American workers are not simply due to increased global trade. Most economists attribute the decline in the middle class to automation. They contend that new digital technology favors workers with higher skills, so that workers who lack a college degree have been pushed out of the jobs that, in the past, provided middle class incomes. Industrial factory jobs, clerical jobs, supermarket cashiers and many other jobs have disappeared due to “skill biased technological change.” To be sure, trade exacerbates the problem because it enables firms to move the lowest skilled jobs to countries that have low labor standards.
However, to blame trade or/or technological change does not fully account for the decline in America’s middle class. Their problem is not merely the disappearance of old jobs; it is that new jobs, and even the jobs remaining, have changed. No longer do jobs come with the kind of security they had in the past. In the past, having a job meant having an implicit promise of job security, as well as steady and rising wages, health benefits, vacations, sick leave, and the promise of a secure retirement. These types of jobs have disappeared. Instead, many firms have replaced regular workers with temporary workers or independent contractors. And many regular workers have found that the security and benefits they had assumed was part of the job package have disappeared.
Today firms often hire for a particular project, with the explicit understanding that the job only lasts until the project is completed. Even when they hire for an open-ended position, they make it clear that the worker can be let go at any time. Some job-seekers have to endure unpaid internships just to get a point of entry, even though it carries no promise of a job. Many retail workers have been put on just-in-time schedules, where their hours vary from day to day while never amounting to a full time job. And many workers have become on-demand workers for platforms such as an Uber driver or a Task Rabbit, and thus are not considered an employee at all.
The consequences of the changing nature of work are far-reaching and dire. Workers face declining incomes not only because of stagnant wages but also because they move in and out of the labor market and do not get steady, fulltime, pay. Part-time, part-year workers do not accumulate much social security, and there has been a marked decrease in pension coverage. The result is burgeoning foreclosures and homelessness. Rural areas and declining rust-belt towns are experiencing escalating gambling. Drug addiction and domestic violence have become epidemic. And income inequality has mushroomed.
What should Hillary say about all this? First she needs to describe the problem. It is not enough to say the middle class has declined. She needs to talk about the lived experience of workers who lost steady jobs and can only get temporary work or on-demand work, or who work for a series of employers without accumulating benefits or raises from any one of them. She needs to talk about the problems that job insecurity imposes on families and single people who are trying to juggle multiple and sporadic jobs while trying to arrange child care, get retraining, and hang onto their homes.
Second, she needs to discuss policies that would address the new labor market landscape. Most of our social program were designed for workers with regular, stable, full-time jobs. Unemployment insurance assumes a worker has had a steady job for some period before being laid off. Health insurance and pension programs, when they did exist, were employer-based, meaning that if you lost your job, you lost your coverage. Our labor laws were designed to provide union representation to workers who had long term attachments to a stable bargaining unit. These programs no longer work for today’s transitory workers.
Today most people will experience discontinuities in their careers. They will move in and out of the labor market, with occasional bouts of unemployment, time spent doing entrepreneurial activities, and time off for care work. In addition, people will need training and retraining at various times during their lives because skills today need to be frequently upgraded. Many are also moving into and out of retirement. One of the most important challenges for social policy is to provide for people during transitions.
There are proposals currently under discussion to address the problems workers face today. For example, last year President Obama proposed a system of wage insurance to provide pay protection for workers who lose jobs and cannot find new ones at their former pay level. And California is considering a pension fund that would apply to workers whose employers do not offer pensions.
A more comprehensive proposal was made by Nick Hanauer and David Rolf in an article in Democracy Journal last fall. They proposed a program they called “Shared Security,” in which all employment would carry with it prorated, portable, and universal benefits. Under their proposal, all employers of an individual—whether the employee is part time or full time—would be required to deposit a percentage of the wage into the worker’s Shared Security Account. Over time, the worker’s account would accumulate funds to provide sick leave, paid vacation leave, 401(k) pension contributions, and health insurance premiums. It would also provide social insurance, including unemployment compensation, workers compensation, and paid maternity, paternity, family, and medical leave.
My proposal is for what I call a workplace sabbatical — a program that would enable workers to accumulate time in the labor market – whether for one employer or multiple ones – that they could use to take paid time off in order to improve their position in the labor market. They could use their sabbatical to engage in training, entrepreneurial activity, changing jobs, public service work, or carework for dependents. It could also help cushion a bout of involuntary unemployment. The workplace sabbatical would be a right that the individual could invoke on an optional basis to navigate career transitions, thereby giving flexibility and security in an era of uncertainty.
These are the kinds of proposals that Hillary should advance. Admittedly, they will require some fuller elaboration, but they are useful as illustrations of the kinds of programs needed to respond to the problems of working people today. Hillary’s calls for raising the minimum wage and for requiring paid family leave are all immensely valuable, but they are not enough.