Waking up to the Jobs Crisis

The wake up call delivered by the public via recent elections and opinion polls has stirred the Administration to action on two dimensions of America's jobs crisis: the jobs' deficit and wage stagnation. But Congress is still reluctantly stumbling out of bed without a clear agenda for the task at hand.

Let's be clear what's at stake here: If the Administration and Congress fail to accelerate the pace of job creation and improve wages, they will be held accountable by an increasingly angry public, the human capital base of the country will be further dissipated, and the workforce will be scarred in ways that will affect their attitudes, behaviors, and incomes for years to come, if not for their full working lives.

A quick tour of the job market numbers illustrates the depth and scope of this crisis.

The Jobs' Deficit. The Congressional Budget Office tells us that the economic recovery alone will not replace the 8.4 million jobs lost since the beginning of the current recession, much less generate the additional 2 million needed to keep up with population growth. Instead, unemployment will remain above 9% through 2011 and likely remain above 7% through 2012, leaving about a 4.5 million jobs deficit at the end of 2012. It could be even worse if the "jobless recovery" trend of the last two recessions prevails.

These average unemployment rates mask even more serious problems facing specific groups. Nearly 30% of teenagers are either unemployed or out of the labor force and 50% of recent college graduates are working jobs that do not require a college education. Forty percent of those unemployed have been out of work more than half a year and are again at risk of losing unemployment benefits.

Wage Stagnation. Median worker wages have been stalled since 1980, when the post war social contract began breaking down. As unions steadily declined in coverage and power, ordinary workers got less and less of the productivity gains they helped produce. Since the 1990s the top one percent of the population captured approximately 50 percent of the income gains from economic and productivity growth, thereby generating levels of inequality not seen since before the Great Depression.

Deteriorating Attitudes and Loss of Trust. Although workers lack the bargaining power to counteract these trends, they have become increasingly frustrated with their jobs and their employers. The Conference Board recently reported that for the first time since it began collecting national survey data, overall job satisfaction fell below 50% (45% in 2009 compared to 61% in 1987). Not surprisingly, young workers (under 25) express the lowest levels of job satisfaction, declining from 56% in 1987 to 35% in 2009. In airlines where one quarter of the jobs have disappeared and wages and benefits of survivors have been cut by 30 to 40 percent, surveys report less than 20% trust management's ability to lead the industry out of its crisis.

No wonder the Administration now is scrambling to find new approaches to creating jobs and improving wages. It pressed for and just signed an extension of unemployment benefits and has endorsed a job creation or payroll tax credit, expanded investments in green jobs and energy saving technologies, additional aid to state and local governments to offset their budget shortfalls, and expanded aid and incentives to keep teachers employed and to promote education reform through a "race to the top" programs But it cannot make these investments happen unless it keeps the pressures on Congress to pursue a meaningful "jobs agenda" rather than stumble along with half-baked, minimalist measures like the $15 billion for payroll and investment tax incentives to business currently being considered.

On the wage front the Administration has announced it intends to implement a "high road" policy by holding government contractors accountable for complying with the full range of labor and employment laws and paying good wages. This is long overdue but must be done in ways that promote both high wages and high productivity, in essence the private sector equivalent of the "race to the top" approach being taken in education. Two decades of research has demonstrated that wages can grow by implementing and sustaining productivity focused workplace innovations that in turn achieve high levels of organization performance. "High road" strategies require matching financial and technological investments with: (1) investments in worker training, (2) employment practices that engage workers' skills and knowledge and provide the teamwork and coordination across occupational groups, and (3) partnerships between union and management leaders. Examples of companies leading the way with high road strategies can be found in almost every industry. What has been missing to date are government policies that encourage these practices along with strong enforcement of labor and employment laws to level the playing field with employers preferring to follow low road strategies. The government should not mandate specific practices but instead hold organizations receiving stimulus dollars or government contracts accountable for paying good wages and benefits and encourage labor, business, and academic groups to work together learn from each other and help spread the productivity improvement practices that work best across their specific industries.

But sustained improvements in wages, productivity, and living standards cannot be achieved by government action alone. Workers have to be given the tools to take care of themselves by restoring their ability to gain a voice at work through collective bargaining and by working in partnership with their employers to transform labor management relations to support productivity growth. It is nothing short of an American disgrace that today those who want to join a union have no realistic opportunity to do so without a long drawn out battle with their employers, a battle that the record shows ends in failure essentially 90 percent of the time. Concretely, this calls for passage of a modified and reframed Employee Free Choice Act (EFCA) that ensures timely and fair elections, strengthens penalties for violating the law, ensures a collective bargaining agreement is reached by having arbitration as a backstop, and a commitment to work proactively with business and labor leaders to build the productive partnerships that have been shown to produce the results workers want and the economy needs. Modifying the EFCA in this way would link it directly to the economic policy and recovery initiatives.

So Washington is waking up from its jobs' slumber. Taking these steps would ensure that workers share in the benefits of the economic recovery, help sustain it, and begin rebuilding their trust and satisfaction with their jobs, employers, and government. The American public would do well to keep the pressure on until these results are achieved.

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