If we are to address the challenge that income inequality poses to our economy, our society and to the American ideal, improving the ability of Americans to make a living through their work is crucial. The vast majority of American families rely on earnings from work, but in recent decades earnings for the majority of working people have been stagnant even as the economy has grown. Consider that in 2002 median earnings among all working people in the U.S. were $33,683, according to the Census Bureau. By 2012 median earnings were $31,921.
One potential remedy is to help individuals improve their education and skill levels so they can find better jobs. Certainly education and workforce training are important, and we've seen progress over the past decade in rates of high school graduation and college attendance and in training strategies that are linked to industry needs. But education on its own does not change the nature of work. Continued work to improve access to education, reduce costs and improve quality is certainly important. But we can't expect the education sector to transform the world of work on its own. Consider that, in 2001, 34 percent of recent college graduates were in jobs that did not require a college degree, but, by 2012, it was roughly 44 percent, according to researchers at the New York Federal Reserve. Over the past two decades, the rate of underemployment among all college graduates has held steady at 33 percent -- so one in three college-educated workers typically holds a job that does not require a college degree. However, for recent college graduates a second trend has emerged, which is that the quality of these non-college jobs has also become lower, with a greater proportion of graduates in part-time, low-wage jobs in 2012 and fewer in non-college jobs (such as in the skilled trades) that are higher-wage, full time jobs.
The important role of the service sector in providing employment to college graduates is not surprising -- our economy has been transitioning from a production-based to a service based economy for quite some time. This trend continued over the past decade -- in 2002, 15.8 percent of jobs were in the goods producing sector and 76.3% were in the service sector. By 2012, those numbers were 12.6 percent and 79.9 percent respectively. Now there are many well-paying jobs in the service sector to be sure, but there are also substantial segments of the service sector -- such as restaurants, retail, hospitality and more -- that have large numbers of low-wage jobs. And these jobs are not likely to disappear over the next decade; indeed, they are expected to grow.
Fortunately, there are some business leaders that have re-imagined what the structure of work can look like in these industries, and how work can be more rewarding for workers and drive great results for companies. Companies like QuickTrip, a chain of gas stations and convenience stores, have figured out how to create jobs with good wages, reliable schedules, and benefits, and have combined a more committed workforce with operational choices to improve the bottom line. Zeynep Ton describes these choices and how work can be transformed so that investors and workers can win, citing other large, successful and growing companies that have invested in their workers and seen it pay off in terms of business performance. Interestingly, more large corporations have been moving in this direction. Both the GAP and IKEA publicly announced that they are raising base wages for their workers. And it's not only large corporations. Relatively small businesses like the restaurants Plum Bistro in Seattle or Zazie in San Francisco, offer employees wages above the minimum while also providing paid sick leave and other benefits. While these small businesses were concerned about what these policies might cost when they implemented these policies, they found that the policies actually helped their business--they reduced turnover and helped stabilize their workforce, which in turn helped them grow their businesses.
The work of leaders in business who are finding business models that work for companies and for workers need to be highlighted and explored more. If we are truly to address the challenge of inequality, then business leaders will have to be engaged and involved in thinking about transformational strategies in the world of work that can both advance working people and support strong businesses. The education sector needs to help get people ready for a range of work to be sure, but we need the business sector ready to re-think how to organize work in order to inspire and take advantage of the best workers have to offer, and to build strong companies that are good for workers, (and customers) too.