February 18, 2013 8 Comments
Most Americans still believe that our economy is based on this basic premise: that it is possible for most people to work their way to the middle class, however loosely that’s defined; that hard work and education will lead to success for most people and if people struggle, that’s mostly due to poor decisions, sub-par work ethic, or lack of personal responsibility.
The recent suggestion by President Obama to raise the federal minimum wage is based on the premise that many people are working full-time jobs and still not making it. Which is true, many are. But many (more?) are stuck in situations where full-time jobs are not options– and not due to personal choice or failures or even personal and family conditions. A job market that is full of mostly retail and service positions is not one that is predominantly “full-time” (for purposes here, full-time employment is 36-40 hours per week even though legal definitions usually permit the employer or industry to define what is full-time in their sector or market). There’s been quiet but growing attention in the media to the changing face of employment. Stories in the New York Times (here, here, here) and NPR (this and this) have pointed out that a growing majority of retail and service jobs prefer to operate with part-time workers because it better meets the demands of their business and allows flexibility of scheduling to meet the level of traffic, down to 15-minute increments. Profits expand when labor costs can be micro-controlled using mini-shifts of 2 to 3 hours or even placing employees on unpaid on-call status throughout the week. This is bad for workers, who have no set schedules, can’t get enough hours to earn a living, can’t arrange childcare or even pick up the necessary second and third part-time job to meet their monthly expenses. Lifting the minimum wage can help— but its effects will be limited if the whole idea of it is based on a “living wage for full-time work.” This is not just about the obvious employers like Walmart and Jamba Juice. The health care industry is also prone to giving part-time hours and, even less stable from the worker’s point of view, PRN (on-call, as-needed) shifts. The education sector, particularly universities and vocational-technical schools also rely heavily on adjunct faculty and associate professors who similarly have no guarantees and no stability, teaching perhaps two classes one semester and then none for one or more semesters. And then there’s the increasing use of temporary staffing services which provide short-term jobs, generally low-paying, with lag periods between assignments when no work is available. As an increasing number of companies use these staffing services in place of hiring full-time, permanent employees, the job market offers even less traditional full-time jobs.
The traditional job market most Americans believe in didn’t go away entirely due to the Great Recession. The traditional job market has been changed by an economy that’s fundamentally different from the past. The new job market does have full-time permanent positions: but what proportion of jobs are covered by that? A light majority, possibly, but, it appears, a declining one. Even when the economy recovers to, optimistically, 5% unemployment, the signs seem to indicate that the new economy, the recovered economy, will actually be majority part-time, PRN, and temporary employment. The new job market in 2 to 3 years will be based in no small part on jobs that are non-traditional and impermanent. The new condition for a growing plurality of Americans will be under-employment not by choice, lack of education, or personal “fault,” but due to an economy that works differently than it ever has in the modern era.
Without some change to wages or even social supports (TANF, UI, WIC) and employment regulations, this new mode of employment will be bad for everyone. The individual workers and their families will be affected immediately. But even in the short-term, businesses are affected by lack of demand as people cannot afford to purchase goods and services for themselves. In the medium to long-term, it will affect finance and the world of money in the U.S. writ large: how do the permanently under-employed and permanently transient workers qualify for credit? How would solid loans be made to workers who work for a staffing agency one quarter of the year and spend the following three quarters in various part-time jobs? How stable would be credit given to people who cannot demonstrate a reasonable ability to repay that credit because they have no reliable income? So the choice of lenders would be between denying all such applications (very, very bad for the national economy) or risking the entire credit and financing system on sub-grade, high-risk loans. Housing crisis, anyone? Fiscal crisis, anyone?
Equally troubling is the idea that neither public nor private entities appear to be accurately measuring these trends, let alone coming up with solutions to them. Unemployment is still measured largely by people who self-report through the Current Population Survey that they are both unemployed and looking for full-time work. This misses, as is so often said, those who are underemployed, temporarily employed, or so frustrated they’ve dropped out of the labor market entirely. The Bureau of Labor Statistics is working on a number of alternative metrics but those aren’t the norm right now— and it always depends on the level of communication between government agencies and how the data is used. And even then, there are the questions. Who is measuring and compiling all the necessary elements of this new labor economy: the nature of the jobs in existence, the jobs that will be created? Do they measure only the number of jobs by industry or are they doing an accurate job of measuring by type (part-time, full-time) and by stability (temporary, seasonal, intermittent, permanent)? Of course, how these terms are defined makes a world of difference: permitting industry to define “full-time” may be useful for questions of safety— truck drivers, air traffic controllers, or surgeons— but is much less useful in questions of employment and wages. If the measurement of employment, like unemployment, is both incomplete and based on self-reporting, the measurement will be inadequate to provide the data needed to create solutions to the problems of the new economy.
Current benefits programs like unemployment insurance (UI) and Temporary Assistance for Needy Families (TANF) are already being used as income supports by many who are already stuck in and limited by the new economy, which means benefits are being used in ways they weren’t designed for and for purposes they aren’t efficient or effective at meeting. The UI system was intended for people who are involuntarily unemployed in the short-term. The media and the government have already focused heavily on the problem of the long-term unemployed. However, there is a growing use of UI benefits by underemployed, part-time, temporary, and on-call workers– people who are employed. In many cases, their income is absolutely inadequate to meet their basic needs but they may make too much money to qualify for TANF, WIC, or similar programs and UI will only cover them for a limited period (in Indiana, it’s 26 weeks). In many cases, these benefits are difficult to navigate for working people precisely because they were intended for the impoverished— and, in American mind and American policy, these are two characteristics that weren’t intended to elide.
Like unemployment and wages, the systems of these benefit programs also rely heavily on self-reporting and the nature of the corresponding laws for these programs requires time-consuming interviews and paperwork to ascertain eligibility for the benefits. Here again, eligibility is defined by being unemployed, not “under-employed,” and unemployed in the short-term. Think “Welfare to Work”. The problem is, assistance frequently comes weeks after people have already fallen into desperation. And assistance stops when partial employment, temporary, or on-call employment has been accepted or, at least, after that under or temporary employment has become “customary”. If the long term trajectory of the nature of jobs in this country is trending toward extended under, partial, and temporary employment for a significant portion of Americans, these programs are and will be insufficient to provide what will be needed.
Is a new benefit program needed as a form of income support? Politically, that would be nearly impossible.
Are new regulations needed to protect workers? (And protect businesses and the overall economy?) Again, that would be nearly impossible to achieve, politically.
Will we need to change the way creditworthiness is defined and go to micro-loans at low interest rates?
Do we require a change to how we think about wages and place people/workers on “retainers”– a minimum amount of monthly income to remain on jobs where the number of hours must be flexible and inconsistent? Who would pay these retainers? The government? Federal or state? The employers?
What probably can’t happen is changing the economy back to one where full-time, 40 hours per week, permanent jobs are the norm. The businesses and services we have, need, and expect don’t function that way. The peculiarly American insistence that our desires and needs alike be met 24 hours per day or delivered the next day creates businesses and services which don’t fit neatly into 40 hour per week boxes. Of course, businesses could change the dynamic so they use less workers for more hours per week and/or pay reasonable wages– both of which have benefits and problems of their own and will never happen as long as businesses’ goals are mostly maximizing profits and increasing growth in terms of “now” and “this quarter.” Sure, we could have jobs that are busy-work: the old digging holes and then filling them conundrum. But this is not a reasonable solution. It isn’t reality-based.
The problem is not being adequately measured, let alone addressed. Nostalgia and denial are standing in the way. Too many in power don’t yet recognize the problem or at least, don’t acknowledge that there has been a significant and probably permanent change in the nature and demands of work– but no change to the real needs and overabundance of supply of workers to fill the “decreased” or, rather, intermittent, micro-variable roles that need filled (by hour, not year). And even good policy solutions like lifting the minimum wage, EITC, TANF, and UI are based on a world and economy that lies in the past: a world of full-time permanent jobs. So, of course, we should continue with the good policy solutions– they address real problems. They just don’t address this one. And that is the Real Problem.
So what do we do?