Working in the 21st Century

Policies for Economic Growth Through Training, Opportunity and Education

David I. Levine

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781315292595
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Negocios en general

"More and better jobs" is the underlying theme of this insightful new book. David Levine analyzes the current labor market in the U.S. and concludes that social policy must change to cope with the realities of the new economy. Although market forces are now moving U.S. enterprise toward high-skill and flexible workplaces, there is a shortage of workers with adequate skills in problem solving and teamwork. To combat this problem, the author presents an ambitious agenda of lifelong learning that will enable American workers to take advantage of the opportunities afforded by the new economic realities. Levine's analysis recommends specific government policies to encourage early childhood education, to improve schools, to help parents finance college, and to help students make the transition from school to work. He also discusses policies that will improve the regulation of workplaces. The book concludes with policy recommendations for individuals changing jobs, as well as for the unemployed, the disabled, and the poor.

1
INTRODUCTION

Forty years ago, American schools, businesses, and governments all worked more or less the same way: they were rigidly controlled hierarchies. Most Americans attended boring and rigid schools that prepared them to work at boring and rigid jobs. When Americans needed government services, they got them from rigid government agencies. Schools, businesses, and governments all operated in a machinelike fashion to produce a standard output—whether the “output” was a washing machine from a factory, a semiskilled employee from a school, or a Social Security check from the government.

This production method—essentially an extension of Henry Ford’s assembly line—helped raise productivity and standards of living. Schools taught what businesses wanted: punctuality, reliability, and obedience—the virtues of a machine. Businesses put those qualities to work. And government followed suit. Today, however, our major economic challenge is no longer how to produce large quantities of highly standardized goods. Today’s trend is away from standard products and toward both high-quality services and customized products. In today’s economy, semiskilled and unskilled labor are less valuable. Today’s economy needs a different kind of worker—and it isn’t getting it. Today’s economy also needs a different kind of business and a different kind of government—and it isn’t getting enough of those, either.

The result is an economy that has plateaued. Productivity and average living standards are growing much less rapidly than a generation ago. Coupled with low rates of productivity growth, we have high levels of social and economic problems such as child poverty and inequality. Furthermore, businesses aren’t very happy with the quality of employees that they get, and employees aren’t very happy with the businesses that they work for. And of course nobody’s happy with the government.

This volume relates many of our nation’s social and economic problems to the combination of these three rigid systems (school, business, and government) and how they reinforce each other. Conversely, this volume shows that these problems are solvable. We can have better schools, better businesses, and better government. To get these desired improvements, we need more flexible businesses that are responsible more to the customer and less to the hierarchy. We must increase accountability to the “customer,” whether that customer is receiving a product from a business, an education from a school, or a service from the government.

America at Midcentury

A scant forty years ago, Ford, Chrysler, and General Motors were among the most confident, successful, and admired companies in the world. Their market dominance was based on their manufacturing prowess and their leadership in productivity and quality.

The ideal for a 1950s family was a mother at home and a father at work. Unfortunately, the father’s job was often uninteresting: in 1950, 60 percent of jobs were classified as unskilled. The management writings of the time emphasized the efficiency of large hierarchies. In these rigid structures, every worker (and many managers) largely just followed orders and tried to fit in. Moreover, the rigidities of the workplace were repeated in the rigid roles for women, blacks, and other minorities.

On the good side, productivity rose steadily and the fruits of the higher productivity were widely shared. Even regimented jobs such as assembling automobiles provided decent pay. Thus, median family income doubled (after converting into constant 1992 dollars) from $19,000 in 1947 to $39,000 in 1973. Moreover, if the father of this idealized family was a manager or professional, he probably expected that he would have a job for life.

Government at Midcentury

The New Deal and World War II brought government programs a level of legitimacy that was rare in U.S. history. Government policies to make labor markets work better were designed for an idealized version of this economy. For example, employment policy assumed implicitly that health insurance and pensions would be provided by large, stable employers—although such policies remained rare even into the 1950s.

In government, as in the successful businesses of the day, hierarchy was the rule. The New Deal had spawned a set of major social and labor-market programs, such as unemployment insurance, job training, and a small program to give cash grants to widows that evolved into Aid to Families with Dependent Children (AFDC). Most of these programs were run by complex partnerships of federal, state, and local agencies. Typically the federal government gave directions with books of rules and regulations, state governments transmitted those directions and added on further rules, and local offices administered the hundreds of programs.

America at Century’s End

The fathers who worked during the 1950s have largely now retired. Their sons and grandsons, as well as their daughters and granddaughters, are working in an economy very different from the economy described above.

Ford and Chrysler have each almost gone out of business (before successful rebirths). The defeated nations that America aided in the 1950s now rival the United States in terms of living standards and technology. Within the United States, productivity growth has slowed to a trickle.

Thus, the typical family’s income has barely budged since the early 1970s. (If median family income had continued to grow at the 1949–73 rate, it would have almost doubled again, growing to more than $70,000.)

Moreover, the productivity growth that remains is no longer evenly shared (Figure 1.1). Although all portions of the income distribution benefited from growth in the generation after World War II, even the much lower benefits of growth have not been enjoyed by the less advantaged in the last quarter century.

While even in the 1950s most employees had insecure jobs, by the 1990s perceptions of insecurity now pervade all levels of the organization. Even managers working for large employers often fear for their jobs.

Families have changed dramatically as well. Most mothers now work for pay, as well as in the home. In addition, most children spend time living with only one parent, almost always a mother. Unfortunately, almost half of female-headed families are poor. While 14 percent of children lived in poverty in 1970, 22 percent were in poverty by 1996.

The declining labor market prospects for many low-skilled workers are matched by increasing costs of failed social policy. For example, the nation can expect to pay roughly $70,000 for prison costs for the average male high school dropout. (This calculation discounts future costs over the next thirty years into current dollars. It is the average for all dropouts; the figure for those who actually go to prison is much higher.)

In contrast to the United States at midcentury, by the year 2000 only 12 percent of new jobs are expected to require low or no skills (Hoye and Tegger 1996). The new economy has increased opportunity for those who excel at working as teams and solving problems. These new skills have become essential even on the automobile assembly line. They are even more crucial in the growing number of jobs dealing with information, computers, and customer service.

In spite of the slowdown in growth, new technologies and new ways of organizing work hold the potential for more interesting jobs and more productive workplaces. Most large organizations are redesigning themselves to be more flexible and responsive to their customers. A modest number of workplaces have reorganized so that front-line workers have more skills, more autonomy, and more rewards for solving their customers’ problems. These innovative workplaces can produce better outcomes for both businesses and employees.

Figure 1.1 Family Income, Average Annual Change

Source:Mishel, Bernstein, and Schmitt 1997, 57.

A Government for the New Century

Unlike the post—World War II era, the government is now held in low esteem by much of society. The small program to give cash grants to widows has grown into a welfare state. The great programs of the New Deal are now commonly thought of as morally bankrupt (welfare) or as soon-to-be literally bankrupt (Social Security).

Too many programs provide citizens (as employees, welfare recipients, managers, etc.) with poor incentives. Too many programs are based on rigid command-and-control rules. These rules, in turn, too often provide government agencies and service providers with poor incentives. Too often, multiple agencies with conflicting rules and uncoordinated approaches address a common problem. The resulting decisions often focus on the short run or on solving a piece of a problem, not on creating value for the nation’s citizenry. It is always important to spend money cost-effectively, but the urgency rises as government spending declines in purchasing power. It is equally crucial for programs to improve continuously. Unfortunately, our government programs are often not as cost effective as they could be.

Overview of the Book

The bad news is that American productivity and living standards are no longer increasing at the rate of a generation ago. Moreover, because of rising inequality, living standards are actually declining for large segments of the population (chapter 2).

The good news is that flexible, customer-focused workplaces can improve productivity and the quality of worklife (chapter 3). Just as rigidities almost put Ford and Chrysler out of business, important lessons can be learned from their revival. Unfortunately, both government and markets work imperfectly—and a number of these imperfections reduce the adoption of flexible and customer-focused workplaces (chapter 4). We appear to be trapped in an inefficient but fairly stable situation where most employers choose rigid workplaces, in part because of a shortage of skilled employees. Government programs, in turn, are also typically rigid and hierarchical (in spite of the important efforts to begin moving to more flexible models).

The argument of this book can be summed up by looking at the interaction of the structure of workplaces, the skills of the workforce, and the design of government programs (Figure 1.2). Each of these is both a cause and an effect of the other two.

The increasingly demanding standards of customers are inducing many enterprises to move to high-skill and flexible workplaces. At the same time, these high-skill workplaces remain the minority. This relative rarity in part reflects market imperfections that lead to relatively few workers who have the needed skills (chapter 4). The ensuing shortage of workers skilled in problem solving and teamwork slows the spread of high-skill workplaces (path A in Figure 1.2).

Figure 1.2 Connections Between New Workplaces, New Skills, and New Government Policies

The solution for this problem is found in schools. For generations, a key goal of many schools has been to teach students to show up on time and follow rules. These were often key skills of the nation’s industrial economy at midcentury.

In the new economy, an increasing fraction of workers must know how to work together to solve problems. Because work, technology, and organizations change so rapidly, workers also need the skills of continuous learning.

We must undertake an ambitious agenda of lifelong learning to help American workers respond to the challenges of, and grasp the opportunities afforded by, the new economic realities. Schools, training programs, and skills certifications for students and employees must go beyond the basics to include teamwork, problem solving, and other skills of the new economy (path E in the figure; see chapters 5, 6). Increasing the proportion of the workforce trained in these skills is important because having a workforce with skills such as teamwork and problem solving lowers the cost of creating high-skill jobs in flexible, customer-focused workplaces (path B in the figure; see chapter 3). More generally, government regulations and programs must encourage, not impede, workplaces that create high-skill, high-wage jobs. Government policies for the new economy must certify and reward these high-skilled workplaces while removing legal and other barriers (path D in the figure; see chapters 7, 8).

The public sector must change as rapidly as the private sector. We must take the management lessons of today’s best organizations and apply the relevant ones to improve government policies. Although many government programs are not as effective as they should be, reinvented programs can do much better (path C in the figure; see chapter 4). To do this, reinvented government programs should use skills such as teamwork and problem solving (path F in the figure; see chapters 4, 7) to implement five key lessons.

First, reinvented programs must provide good incentives for citizens in their many roles: taxpayers, workers, employers, welfare recipients, and so forth. For example, nobody should ever be made worse off by working, even if they currently receive welfare or a disability stipend.

Second, incentives do not matter just for welfare recipients. The federal government must also provide good incentives for those who provide most government services: states, local governments, suppliers, and direct service providers such as nonprofit organizations. Often the federal government can provide incentives to service providers by giving citizens more discretion concerning where they will receive government-funded services. In other instances, states or localities should have increased autonomy. In all cases, increased autonomy should be accompanied by accountability for results.

Third, the programs should focus on satisfying citizens’ needs, even if the government has to reorganize. From the customer’s point of view, the organization of the government, statutes, funding streams, and congressional committees should not interfere with good service. This simple idea should hold whether the customer is a welfare mother, a small business owner, or an employee looking for safety information. Advanced information technologies such as the Internet often are key elements of customer-focused solutions.

Fourth, each prog...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of Boxes and Figures
• Series Editor’s Foreword
• Acknowledgments
• 1. Introduction
• 2. Stagnation for Most, Decline for Many
• 3. Getting Into This Mess
• 4. Getting out of This Mess: Invest and Reinvent
• 5. A Life Cycle of Learning: The School Years
• 6. A Life Cycle of Learning: After High School
• 7. Policies to Improve Workplaces
• 8. Reinventing Workplace Regulation
• 9. Ending Public Housing as We Know It
• 10. Gilding the Ghetto, Not!
• 11. Reinventing Disability Policy
• 12. Politics
• 13. Lessons Learned
• Bibliography
• Index