GOOD NEWS FOR US WORKERS

ABSTRACT: This Labor Day workers were able to celebrate falling unemployment, increased hiring, improved access to health insurance, and increases in the minimum wage. Expanded eligibility for overtime pay is also in the works. And the US Labor Department has proposed a new regulation that would cover home care workers under minimum wage and overtime rules. (They are currently exempted.) Policies could also be changed that would require more contingent or gig workers to be treated as employees under some or all of our labor laws and/or to require part-time employees to get pro-rated benefits.

Laws that support the right to unionize and bargain collectively could be strengthened, as could the enforcement of existing laws. Higher unionization correlates with lower inequality and a greater portion of national income going to the middle class.

Our public policies need to change, both to reinstitute workers’ bargaining power and to better serve workers in the gig economy. Workers in the US have been getting the short end of the stick for 40 years. Changes in public policies to address these issues are long overdue.

FULL POST: This Labor Day workers were able to celebrate falling unemployment and increased hiring. They could also celebrate improved access to health insurance through the Affordable Care Act (aka Obama Care). Increases in the minimum wage in a number of states and cities are more good news, along with the growing momentum behind the Fight for 15, which is pushing for a $15 minimum wage. Grassroots activism in support of workers specifically, and the middle and working class in general, is on the rise. [1] A number of political leaders have taken on this fight as well, including Senators Bernie Sanders (who is running for President), Elizabeth Warren, Jeff Merkley, Al Franken, Tammy Baldwin, Brian Schatz, Mazie Hirono, and Sherrod Brown. Pope Francis is also advocating for fairer treatment of workers and a reduction in economic inequality.

The momentum for increases in the minimum wage is supported by examples like San Jose, CA, which are refuting the scare-tactic claims of the business community and its political supporters in opposing any increases in the minimum wage. In San Jose, the minimum wage has gone from $8.00 per hour to $10.15. As a result, 70,000 of the city’s 370,000 workers directly or indirectly got a raise. But rather than costing jobs as opponents always assert minimum wage increases will do, unemployment has fallen to 5.4% from 7.4% in March 2013. The hardest hit industry – the restaurant business – has seen a 20% increase in the number of restaurants in the last 18 months. Although restaurants raised prices by an average of 1.75%, business is good and most customers don’t seem to notice that prices went up by a bit. [2]

Expanded eligibility for overtime pay is also in the works. Currently, most hourly workers are required to be paid time and a half for overtime work, i.e., work beyond 40 hours per week. However, employers are not required to pay overtime to salaried workers who are classified as managers or supervisors and are paid over $23,660 per year. (This is below the federal poverty line for a family of 4 people.) This $23,660 cutoff was established in 1975 and has not been updated since. In 1975, 60% of salaried workers qualified for overtime pay; today, less than 10% do. The US Department of Labor is proposing to raise the cutoff to $50,440, which is roughly adjusting it for the inflation of the last 40 years. If implemented, this change in regulations would mean that over 10 million additional US workers would qualify for overtime pay when they work over 40 hours per week. [3]

When the Fair Labor Standards Act was passed in 1938, it excluded domestic services workers and farm labor from its standards, such as the minimum wage and overtime pay. Many believe this happened because these workers were largely black and/or female. Amazingly, this exclusion remains in place today. Partly because of sub-minimum wages for their domestic services workers, the publicly-traded, national home-care corporations are very profitable – gross profits range from 30% to 40%. Furthermore, their CEOs’ compensation has risen 150% since 2004 (after adjusting for inflation), while their workers’ pay has declined 6%. [4]

In 2013, the US Labor Department proposed a new regulation that would cover home care workers under minimum wage and overtime rules. The coverage was supposed to take effect in January 2015, however the home care industry has been vehement in its opposition and has delayed the change by challenging the new regulation in court.

Policies could also be changed that would require more contingent or gig workers to be treated as employees under some or all of our labor laws, such as minimum wage, overtime pay, Social Security, workers’ compensation, and unemployment insurance laws. Rules could be changed to require part-time employees to get pro-rated benefits under many of these laws. Or employers could be required to make contributions to “individual security accounts” for gig workers to help them pay for benefits. [5] [6] Workers would also benefit from laws that regulate their schedules so they have more predictable hours and incomes. (See my post Supporting families is an investment in human capital Part 2 for more detail.)

Laws that support the right to unionize and bargain collectively could be strengthened, as could the enforcement of existing laws. For example, laws could be changed to make it easier for workers in franchised businesses and gig work to form unions and bargain collectively. [7] Enhanced workers’ bargaining power and workplace precedents based on union contracts would benefit all workers and support the revitalization of the middle class. Data over the last 100 years document a strong correlation between higher unionization and lower income inequality. Data from the last 50 years show a strong correlation between higher union membership and a greater portion of national income going to the middle class. [8]

Our public policies need to change, both to reinstitute workers’ bargaining power and to better serve workers in the gig economy. Our policies need to reflect the change from an industrial to a knowledge-based economy. Many current labor market standards, regulations, and economic security provisions were put in place around the Great Depression and responded to the transition from an agrarian economy to an industrial one. They need to be updated and adjusted to better align with current economic realities. [9]

Workers in the US have been getting the short end of the stick for 40 years. The results are stagnant wages, growing economic insecurity for most workers and families, a dramatic increase in economic inequality, and a declining middle class that lacks the purchasing power to keep our consumer-based economy humming. Changes in public policies to address these issues are long overdue.

[1] Hightower, J., Sept. 2015, “The rebellious spirit of Matthew Maguire’s first Labor Day is spreading again across our country. Join the parade,” The Hightower Lowdown

[2] Clawson, L., 6/16/14, “In San Jose, a minimum wage increase and falling unemployment,” Daily Kos (https://www.dailykos.com/story/2014/06/16/1307351/-In-San-Jose-a-minimum-wage-increase-and-falling-unemployment?detail=emailclassic)

[3] Wise, K., 9/3/15, “Labor Day 2015: Important gains, many challenges for MA workers,” Massachusetts Budget and Policy Center (http://www.massbudget.org/report_window.php?loc=Labor_Day_2015.html)

[4] Rogers, H., Summer 2015, “A decent living for home caregivers – and their clients,” The American Prospect (http://prospect.org/article/decent-living-home-caregivers%E2%80%94and-their-clients)

[5] Ramos, D., 9/6/15, “The sharing revolution and the uncertain future of work,” The Boston Globe

[6] Chen, M., 9/14/15, “This is how bad the sharing economy is for workers,” The Nation (http://www.thenation.com/article/this-is-how-bad-the-sharing-economy-is-for-workers/)

[7] Johnston, K., 9/6/15, “Work’s dark future,” The Boston Globe

[8] Clawson, L., 5/26/14, “The tight link between unions, the middle class and inequality in two charts,” Daily Kos (https://www.dailykos.com/story/2014/05/27/1301209/-The-tight-link-between-unions-the-middle-class-and-inequality-in-two-charts?detail=emailclassic)

[9] Goodman, M.D., 9/6/15, “Public policies fail to keep pace with changing economy,” The Boston Globe

WORKING HARD, GAINING LITTLE

FULL POST: We recently celebrated the Labor Day holiday and workers in the US do have some things to celebrate, but in general the outlook is bleak. First, the bad news, and then in my next post the good news.

Wages (adjusted for inflation) fell 4% between 2009 (when the recovery officially started) and 2014. The fall was the greatest for low income workers – even in industries where hiring was strong – such as restaurant cooks (down 8.9%), home health aides (down 6.2%), and retail workers. Many workers are worse off than they were 20 years ago. [1]

Hourly wages for the typical worker have been basically stagnant since 1970, despite significant increases in worker productivity. From 2000 to 2014, for example, productivity grew by 21.6% while hourly compensation grew by just 1.8%. The value of the increased productivity has primarily gone to highly paid managers, business owners, and shareholders. Workers are not getting the fruits of their increased productivity because the rules of our economy have changed over the last 40 years to the benefit of employers. Workers’ power, through collective bargaining and other means, has been intentionally eroded by policy decisions by federal and state governments at the behest of powerful corporations. [2]

An important factor in these stagnant and falling wages is the growth of the number of workers who are not full-time employees; those who are temporary, part-time, or contract workers. This reflects the growth of what is called the gig economy. Roughly 40% of US workers were contingent or gig workers in 2010, up from 35% in 2006. [3] Roughly 27 million Americans are working as independent contractors or temporary workers, while another 24 million work at a mix of traditional and freelance work. These workers not only suffer from low wages, they also typically do not receive benefits and are not protected by labor laws covering health, safety, and working conditions, such as minimum wage and overtime pay laws. Furthermore, much of the safety net for workers in the US depends on being a regular, full-time employee: health insurance, retirement benefits, unemployment insurance, and workers’ compensation and disability insurance (for being unable to work due to an injury or a health issue). [4]

Our current employee-focused policies provide perverse incentives for employers because costs and administrative burdens are lower with non-employees than employees. As a result, employers actively work to maximize the use of contingent workers and minimize the number of full-time employees. They also misclassify workers as contractors to avoid paying payroll and unemployment taxes.

The gig economy means less economic security for workers now and in the future. Their jobs can disappear at any moment with no unemployment benefits to tide them over to the next job. Their weekly hours and income fluctuate. And typically they have no retirement benefits and no health insurance. If they buy health insurance on their own, they may have caps and high deductibles that could leave them in a financial crisis if a serious accident or illness were to occur. The risk of economic changes and recessions now falls primarily on employees, with little support from employers or our public safety net.

My next post will review good news for workers, including policy changes that would recapture workers’ bargaining power and better serve workers in the gig economy.

[1] Schwartz, N.D., 9/3/15, “Pay has fallen for many, study says,” The Boston Globe from The New York Times

[2] Economic Policy Institute, 9/2/15, “Gap between productivity and typical workers’ pay continues to widen,” Economic Policy Institute (http://www.epi.org/press/gap-between-productivity-and-typical-workers-pay-continues-to-widen/)

[3] Johnston, K., 9/6/15, “Work’s dark future,” The Boston Globe

[4] Ramos, D., 9/6/15, “The sharing revolution and the uncertain future of work,” The Boston Globe

SUPPORTING FAMILIES IS AN INVESTMENT IN HUMAN CAPITAL Part 2

ABSTRACT: More than one out of every five American workers is working a non-standard work schedule. This increases stress for parents, hurts their ability to be good parents, and adversely affects child and adolescent outcomes. Providing predictable work schedules for parents and allowing them flexibility to meet parenting responsibilities is good for them and their children.

The prevalence of non-standard work schedules is increasing. For hourly workers, over half (including 44% of those who are mothers with a child under 13) know their work schedules less than 2 weeks in advance and for almost three-quarters of them the number of hours they work (and hence their income) varies from week to week. The lack of a consistent work schedule often prevents these workers from being able to take a second job to increase their typically low incomes.

Non-standard work schedules can prevent parents from being able to adequately care for, supervise, and be engaged with their children. As a result, their children’s cognitive and behavioral outcomes are likely to suffer.

Changes in labor policies could benefit workers with non-standard work schedules and provide incentives for employers to give workers more consistent work schedules. Because these policy changes are almost certain to improve worker morale, absenteeism and turnover are likely to go down and productivity is likely to go up. The cost savings these produce for employers will offset some if not all of any costs to employers of these policy changes. These policies would be a step toward implementing genuine family values for America’s working parents.

FULL POST: More than one out of every five American workers is working a non-standard work schedule. These work schedules include hours outside of the normal 9 to 5 work day or that vary from week to week. In some cases, the number of hours worked varies from one week to the next making income uncertain and managing a budget difficult at best. Non-standard work schedules increase stress for parents, hurt their ability to be good parents, and adversely affect child and adolescent outcomes. [1]

Providing predictable work schedules for parents and allowing them flexibility to meet parenting responsibilities is good for them and their children – an investment in our human capital. If our society truly values families, we will support them with work schedules that allow them to be good parents. (See my post Big ideas to help working parents for a set of policies, including predictable work schedules, that would help working families.)

The prevalence of non-standard work schedules is increasing. One reason is that the number of part-time and temporary or contingent jobs is increasing as the number of full-time jobs is decreasing. Another reason is that computerized scheduling programs now allow employers to match staffing levels to customer demand with greater precision and, therefore, to engage in “just-in-time” scheduling of employees. In some cases, employers call employees to come into work on short notice or require them to work beyond their scheduled shift if there is unexpectedly high demand. They also may send employees home (without pay) when they show up for scheduled work if business is slow.

For hourly workers, over half (including 44% of mothers with a child under 13) know their work schedules less than 2 weeks in advance and for almost three-quarters of them the number of hours they work (and hence their income) varies from week to week. For hourly food service workers, over 80% know their schedules less than 2 weeks in advance and for 90% of them the number of hours worked varies from week to week. The lack of a consistent work schedule often prevents these workers from being able to take a second job to increase their typically low incomes.

Non-standard work schedules can prevent parents from being able to adequately care for, supervise, and be engaged with their children. They may not be able to be home when children leave for school or arrive home – resulting in latch-key children who are home alone. Similarly, they may not be able to make regular child care arrangements, which is likely to decrease the quality of care a child receives. Scheduling doctors’ appointments and teacher meetings may be difficult as well.

In general, parents working non-standard work schedules cannot provide children the consistent schedules and nurturing that are critical to healthy child growth and development. As a result, their children’s cognitive and behavioral outcomes are likely to suffer. For example:

Their toddlers exhibit problems with language development, problem solving, and learning.
Their preschoolers have more negative behaviors – anxiety, withdrawal, and aggression.
Their adolescents are more likely to exhibit delinquent, aggressive, and other negative behaviors. [2]

Non-standard work schedules are more common for younger, less educated, lower income, and minority workers. In addition, they are more common for single mothers. All of these characteristics of parents increase the risk of compromised child outcomes, and the higher likelihood of non-standard work schedules further increases this risk.

Changes in labor policies could benefit workers with non-standard work schedules and provide incentives for employers to give workers more consistent work schedules. Labor laws could require employers to give workers at least 4 weeks’ notice of their work schedules and require that they be paid for scheduled hours even if business is slow. Employers could be required to pay time and a half for extended shifts or work hours outside of the standard 9 to 5 window.

Because these policy changes are almost certain to improve worker morale, absenteeism and turnover are likely to go down and productivity is likely to go up. The cost savings these produce for employers will offset some if not all of any costs to employers of these policy changes. These policies would be a step toward implementing genuine family values for America’s working parents.

[1] Morsy, L., & Rothstein, R. (8/6/15). “Parents’ non-standard work schedules make adequate child rearing difficult,” Economic Policy Institute (http://www.epi.org/publication/parents-non-standard-work-schedules-make-adequate-childrearing-difficult-reforming-labor-market-practices-can-improve-childrens-cognitive-and-behavioral-outcomes/)

[2] Morsy, L., & Rothstein, R. (8/6/15). See above.