Future of work: Re-defining work (Part 3: Bad jobs, good jobs and what governments could do about it)

Future of work: Re-defining work (Part 3: Bad jobs, good jobs and what governments could do about it)

Phuah Eng Chye (24 November 2018)

An important step to defining work is to clarify the difference between bad jobs and good jobs. In this context, the label of bad job doesn’t refer to the job per se. The label bad usually refers to working conditions and the perceptions of fairness and choice in relation to pay, benefits and other contract terms. David Graeber defines bad jobs as “ones you’d never want to have. Back-breaking, underpaid, unappreciated, people who are treated without dignity and respect”. But he differentiates bad jobs from bullshit jobs[1]. Bad jobs “usually involve doing something that genuinely needs to be done: driving people around, building things, taking care of people, cleaning up after them.” In contrast, bullshit jobs are “pointless, nonsensical” and “most often paid quite well, involve nice benefit packages, you’re treated like you’re important and actually are doing something that needs to be done – but in fact, you know you’re not. So in that way they’re typically opposites”. On reflection, it does sounds like the problem with bullshit jobs is that there isn’t enough of them to go around.

The closest official definition equivalent to a good job comes from the International Labour Organization (ILO)[2]. The ILO “defines decent work as work that is productive; ensures equality of opportunity and treatment for all women and men; delivers a fair income, security in the workplace and social protection for families; provides prospects for personal development; and gives workers the freedom to express their concerns, organize and participate in decisions that affect their working lives”.

I am using a wider definition of good jobs to cover jobs that are not labelled as bad. This would include bullshit jobs and non-productive activities such as playing football and video games. Generally, the consensus view is that bad jobs have been replacing good jobs in matured economies. This can be viewed from several perspectives.

  • Sector transition. One popular view is that manufacturing jobs are superior to service jobs as they tend to offer higher pay and better benefits. In relation to this, the tendency is to blame globalization for the loss of manufacturing jobs. The implied logic is that policy should focus on bringing back manufacturing jobs. This logic contains two flaws. One is that it is difficult to reverse the declining share of manufacturing as an economy matures due to higher service costs and other structural changes. The other is that it distracts from the more direct, and possibly more effective, approach of improving the quality of bad jobs (services, part-time and gig work).
  • Industry deterioration. The deterioration in job quality is not only due to sector transition but also occurs within industries. Andrew Van Dam and Heather Long identified “six industries that provided an above-average weekly paycheck in the 1990s but now pay less than an average wage…These downgraded jobs have one thing in common: They don’t require a college degree…The careers used to provide less educated workers an avenue to the middle class, but not anymore. And the well-paying jobs of today are often in fields such as health care and finance, which require additional education and training. Warehousing and distribution were once higher-skilled jobs with good pay, but the pay has gone down…Although these six job categories pay significantly less than they did in the 1990s, most have expanded hiring. They have also reduced union participation”. They noted that while employment has expanded in the music and auto industries, nonetheless pay has fallen due to the deflationary pressures from digitalisation. In the case of repair workers of household goods, a 21 percent fall in appliance prices since 1992 made it cheaper to replace rather to repair products. “Employment at warehouses has soared, rising from 515,000 in 2000 to 1,032,000 today…Yet annual pay for warehouse workers (excluding managers) has fallen from a peak of about $42,500 in 2000 to about $38,000 now, adjusted for inflation”. This was due to a transformation of warehousing, which previously offered high-paying industrial jobs, “into a business dominated by lower-paying retail firms”. The food manufacturing industry experienced a shrinkage in well-paying jobs and an increase in lower-paying jobs in slaughterhouses, meatpacking plants and bakeries and was also affected by the relocation to cheaper locations and the use of undocumented workers. The wood products industry was hard hit by cheap imports.
  • Emergence of new work forms. Using a generalised approach, Teresa Ghilarducci, Anthony Webb and Michael Papadopoulos define bad jobs as including “the alternative work arrangements (AWA) of on-call, temp/contract, and gig jobs (excluding independent contractors) and low-wage traditional jobs (paying less than $15,000 per year)”. Their study, focusing on older workers in the US, noted “the share of workers ages 62 and over in bad jobs grew from 14% in 2005 to 24% in 2015”. They highlighted several disadvantages in that “older workers in bad AWA jobs (on-call, temp/contract agency jobs, and gig jobs) are more likely to have lost their previous job involuntarily” (about 17%). In addition, “many older workers in alternative work jobs take on these jobs as a last resort after losing their career jobs. They cannot afford to retire, but also cannot find traditional work in their industry, and view their job prospects as dimmer than most”. Teresa Ghilarducci, Anthony Webb and Michael Papadopoulos also noted “workers in low-paid traditional jobs have been in their current jobs (8.8 years) for longer than those in unstable AWAs (2.1 years). They also face greater deprivation, with 12% reporting having faced food insecurity in the last year (compared to 6% for other workers). These workers appear stuck in their precarious situations, with little prospects of moving into higher paying work”.

In the Netherlands, Monique Kremer, Robert Went and André Knottnerus noted issues were raised relating to “bad flexibilisation. Flexibility is negative when it is associated with great insecurity that causes continuous financial stress, lack of recognition at work and unclear life prospects and when it always affects the same people in the case of temporary employment. Flexibility is also negative when it undermines innovation, e.g. due to a lack of commitment by employees. Likewise, flexibility is not the obvious choice for work that has little or nothing to do with cross-border trade – e.g. education, healthcare, cleaning work – and work for which it is also important to retain specific, long-term knowledge”.

On microtask platforms, a recent ILO study[3] asked whether this was a desirable path for the future because it ‘has the potential of deskilling work and also displacing or replacing some forms of skilled labour with unskilled labour…Many microtasks are simple and repetitive, and some are ethically questionable…providing fake reviews…Many also found it difficult to transfer their offline skills to the digital work trajectory…crowdwork offers few opportunities towards career advancement and economic mobility”.

Leonid Bershidsky points out “it’s possible, of course, that the gig-economy platforms were never designed to provide full-time work that pays the rent and feeds the kids. If they only work for occasional supplementary income, that’s an excuse for a take it or leave it approach to labor. Or is it? Should a modern society tolerate jobs that come with no worker rights and no possibility of dignified survival for those who can find no other employment? And even if such jobs are allowed, should they be offered by huge tech companies that provide outsize returns to shareholders even if they don’t turn a profit?”

To put matters in perspective, bad jobs are not a function of technology. They have been around forever – casualised or indentured labour on farms, plantations, mines, construction sites, ports and repressed workers in industrial mills. Government policies transformed many, but not all, of these bad jobs into good jobs through legal reforms that defined the rights of workers and upheld their dignity to earn a livelihood to support their families. The progress of society is closely connected to the social frameworks that develop the bedrock of households.

Technology should be advancing the social cause further. But what happened instead is that businesses have moved ahead of governments in reacting to information disruption. In the competition for market share and valuations, firms have used technology to cut total personnel expenditures by reducing the number of permanent employees, stripping benefits and shifting risks (idle time, search costs, contingencies) to workers. In the absence of government intervention, technology has been used as a tool to dismantle the social framework and to replace good jobs with bad jobs.

Governments can reprise their role of turning bad jobs into good jobs as they did in the previous century. But governments have had their heads turned to put business interests ahead of labour. From a macro perspective, the government’s policy stance position profits (rather than wages) as a driver of economic growth and this is reflected in the declining labour share of income[4]. To be fair, the government’s hand may have been forced. In the hurly-burly of information disruption, it is not quite clear what policies would be effective in improving the quality of jobs and wages. In fact, traditional remedies such as prohibitions, licensing, minimum wages, trade unions and collective bargaining seems to have lost efficacy. The structural changes are recent and therefore it will take time to figure out the right approaches.

Broadly, the policy options lie along three strategic paths: namely (1) promoting good job creation; (2) eliminating or transforming bad jobs; and (3) providing income alternatives to jobs.

Generally, job creation is framed within the industrial-skills development framework to address unemployment. But technology has affected the quality rather than quantity of jobs. The challenge of addressing job quality raises questions as to whether it is appropriate to rely on the traditional macroeconomic paradigm of industrial productivity and full employment to guide policies. In my view, the problem for matured economies is not the export of jobs abroad. The loss of good jobs created a vacuum (unemployment). This vacuum was filled by bad jobs due to the shortfalls in creating good jobs. In this regard, the ILO[5] noted “less attention has been placed on the types of jobs that will be created, and whether these jobs will be decent.”

The features of a good job are not restricted to good pay and benefits. Even if it is low-paying, a good job can satisfy other criteria. For example, jobs can be designed to provide access to opportunities (to a career or to become entrepreneurs) or to provide a sense of assurance, fulfilment or recognition.

A distinction also needs to be made between expanding the quantity of jobs versus creating good jobs. It is possible the indiscriminate creation of jobs may actually result in bad jobs crowding out good jobs. The latter scenario is consistent with labour monopsony theories which suggest employers prefer to offer bad jobs rather than to improve their offers under certain conditions[6].

Hence, efforts to create good jobs will be more effective if it is accompanied by policies to eliminate or transform bad jobs; or more specifically jobs that didn’t contribute towards meeting social needs[7]. Governments can choose to implement policies to eliminate or transform jobs that are deemed to offer little or no benefits to society. Minimum wages and collective bargaining are examples of such policies. In this respect, manufacturing jobs are better than non-manufacturing jobs only because they were subjected to higher levels of regulation and worker representation. Stringent regulation can thus be used to improve the quality of bad non-manufacturing jobs.

Monique Kremer, Robert Went and André Knottnerus suggest there is room for governments, labour, employers and customers to work together to facilitate good flexibility and discourage bad flexibility. First, there can be agreements to limit flexibilization or improve collective bargaining around flexible work. Legislation could stipulate minimum standards and other requirements to combat unfair competition. In addition, “currently, it is financially beneficial for employers not to enter into a permanent arrangement”. To address this, incentives can be considered to reward “employing organisations that offer more people stability and security”.

Second, employing organisations can be modernised by facilitating greater flexibility in collective agreements. This can include “agreement about ways of customising working arrangements more so as to benefit both employers and employees”. If people have more functional flexibility to be deployed more widely and to organise their own work, this will reduce external flexibility (the hiring of self-employed or agency workers). “Moreover, self-employed persons will be more interested in entering the employment of a more modern, freer employing organisation. Small businesses could also find less comprehensive collective agreement helpful in allowing them to take on more permanent employees”.

Third, national and local governments should set an example and review their use of temporary and outsourcing contracts. They can intervene in pricing and work with the trade unions to develop procurement policies and codes of conduct. Fourth, efforts could be made to inculcate societal and moral preferences among consumers and clients to place greater emphasis on quality and other non-price aspects in selecting a service provider or supplier of goods.

Fifth, efforts could be made to promote “new forms of community in the labour market” to “improve the job security of people with temporary jobs and the self-employed”. “Examples include cooperatives of employees, products and suppliers, businesses in which the employees have a say, collaborative ventures between self-employed persons and labour pools. In addition, innovations and forms of cooperation between self-employed persons can, where necessary, be encouraged. Even small businesses could be encouraged to share risks in this connection”.

Sixth, consideration should be given to radical overhaul of social security. “It is no longer realistic to maintain clear dividing lines in the social security system. If people are alternating between or trying to combine care and work, social security designed around work is no longer appropriate. If work is a bundle of tasks, people will increasingly perceive work as a portfolio of activities, for which payment is received in different ways. All these changes in the position and significance of work therefore require a social security system in which the source of income no longer determines its form”. Options worth exploring include the single employment contract or “phased-in contract” which “is based on the principle that entitlements are built up gradually so that there is no longer a clear split between permanent and temporary employment”. Another concept is the “basic welfare state based on citizenship, in which everyone is required to participate in the most basic forms of social security” where all citizens will “have a minimum level of insurance arranged by the government covering illness, incapacity for work, pension, care leave and unemployment”. These concepts can be considered in conjunction with basic income or a personal savings-social security account.

Nonetheless, the difficulty of transforming or eliminating bad jobs shouldn’t be underestimated. As mentioned earlier, some jobs have been intractably bad and this is characterised by persistently high vacancies. It is not clear why wages or working conditions did not adjust to attract labour supply. This could be due to a variety of reasons including commercial viability if labour-related costs went up. Generally, governments have been “flexible” in allowing labour shortages in farming, plantations, construction, services and transportation to be filled by legal and illegal immigrants. Nonetheless, unfilled vacancies and stagnant wages are a sign that labour markets aren’t working well and requires policy attention. It provides fertile ground for experiments to turn these bad jobs (unfilled vacancies) into good jobs or for automation (since nobody wants these jobs).

The third approach is to accept the fatalistic scenario that technology will eliminate work in the future. Many technologists, at the forefront of automation efforts, are coming to this view and support basic income schemes as an alternative to work. I argue instead the social role of work is too important to be neglected and will explore the concept of participation in a forthcoming article.

The next important task is to clarify the role of governments. Governments have a central role in job creation and job quality either through direct interventions to create jobs and through laws and enforcement that influence outcomes. They cannot absolve themselves of the blame for wage stagnation. Not only did governments dilute employment protections, their policies reduced the quality (and quantity) of good government jobs either through spending cuts or through outsourcing and privatisation that fostered an environment that saw bad jobs replacing good jobs.

This leads to an interesting debate on whether governments should enhance their role in job creation. Government creation of jobs is viewed with suspicion. Max Gulker notes “I don’t like the phrase job creation. It implies that there is a fixed stock of jobs in the economy and that addressing unemployment requires inventing new ways for people to get paid…just look at one of our most potent job creators, the Department of Defence. Talk about cutting the Pentagon’s massive budget today and your main source of pushback is likely not to be bluster about America’s military strength, but howls of how such cuts would kill jobs…it’s safe to say a significant amount of these jobs exist because of the peculiarity of our political process where congresspersons will fight tooth and nail to prevent any cuts in their districts”.

Hence, concerns over government profligacy lends support to policies to downsize the public sector and to allow the private sector, assumed to be more efficient and productive, to take on more economic functions. At the early stages when policies such as privatisation were implemented, there were substantial benefits. But after several decades, efficiency benefits have diminished considerably while the private sector focus on compounding profit growth meant that workers have not shared equitably in the wealth creation process.

In my view, rather than to leave it to chance, there is certainly policy space for governments to play a significant role in promoting good job creation. Well-defined policies can provide a focal point and provide impetus for the creation of good jobs or lay the groundwork for cooperation with other stakeholders. In relation to this, Max Gulker offers some interesting ideas “to not just create jobs but empower people to do work of greater value”.

  • Build people’s networks and social capital. “Invest in their social capital, and you’ll steer them to the kind of value-creating jobs that lead to economic growth, not just a paycheck to get them by. Imagine a group, loosely based around a low-income neighbourhood, that holds weekly meetings. Around the room, you’ll see people interested in finding work, people who have recently found work, and people more established from both inside and outside that community. They talk about the challenges they’re facing, bounce around ideas…Such a group would cost almost nothing to run…Their benefits don’t just add up, they multiply as they unlock the many degrees of connections in people’s networks. As jobs open up, they’re less likely to pull someone already in the workforce, and more likely to connect with someone aspiring to be”.
  • Fund public projects through innovation. “Local governments can leverage technology such as crowdfunding platforms to find and fund projects people most want done…While crowdfunding does not fully solve the free-rider problem with public goods, it does allow for real skin in the game and decentralized decision-making and restores some of the incentive and information-discovery features of markets…Residents could apply a certain amount of their local tax dollars to the crowdfunding platform…The market-oriented features of crowdfunding would allocate labor to projects people actually value rather than the best guesses of a planning agency”.
  • Targeted education. “Market forces combined with philanthropy and community involvement can help get the right kinds of education to the right people”. This includes an equity-based model for student loans such as Purdue University’s income-sharing agreements where “students are given a fixed amount of money upfront to cover college costs, and then they pay back a certain percentage of their income for a predetermined length of time… exemplifies the innovation that is possible when solutions are small, local, and targeted”.

Max Gulker adds the need to adjust to the changing landscape; to “forget about One Person, One Job.” “The hours, working conditions, and pay from multiple smaller jobs are not necessarily worse than one big job. Instead of trying to impose the jobs of 50 years ago on today’s world, we should make today’s jobs work for people. The idea that everyone should get health insurance from the firm employing them made considerably more sense when people stayed at a single job for their career. We need reforms to help people buy insurance themselves. When we stop trying to create jobs that don’t make sense in the modern economy, we remove impediments to more people becoming fully employed”.

In this regard, “we need a social safety net that’s more locally focused, rather than one system prescribed for all. People can deliver services in a more personal way and copy good ideas from other communities. People often react to the idea of more local control with concern that the quality of services will be different in different communities”.

Overall, the future of work is approaching a critical intersection. The replacement of good jobs with bad jobs has shifted income from wages to profits and decreased the labour share of income. It is time to reverse the trend; i.e. to create good jobs to replace bad jobs. The traditional paradigms of productivity and full employment are not equipped to address the deterioration in job quality and the diminishing social role of work. Governments need to step up to the plate to provide the leadership. It could set an example by ensuring the jobs it creates either directly or indirectly are good jobs. It should also seek to align other policies and incentives towards supporting the creation of bad jobs and the elimination of bad jobs. Towards achieving this objective, efforts should shift away from trying to create good jobs that are production-related towards creating good jobs based on information.

References

Andrew Van Dam, Heather Long (4 September 2018) “How the U.S. economy turned six good jobs into bad ones”. Washington Post. https://www.washingtonpost.com/business/2018/09/04/how-us-economy-turned-six-good-jobs-into-bad-ones/?noredirect=on&utm_term=.e9775b212886

David Graeber (2018) Bullshit jobs: A theory. Allen Lane.

David Graeber, Chris Brooks (August 7, 2018) “Imagining a world with no bullshit jobs”. https://roarmag.org/essays/graeber-bullshit-jobs-interview/

Janine Berg, Marianne Furrer, Ellie Harmon, Uma Rani, M Six Silberman (2018) “Digital labour platforms and the future of work: Towards decent work in the online world”. International Labour Organisation. https://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_645337.pdf

Leonid Bershidsky (25 September 2018) “Gig-economy workers are the modern proletariat: The so-called future of labor looks like a relic from Marx’s time”. Bloomberg. https://www.bloomberg.com/view/articles/2018-09-25/gig-economy-workers-are-last-of-marx-s-oppressed-proletarians

Max Gulker (29 October 2018) “The real path to lower unemployment”. American Institute for Economic Research (AIER). https://www.aier.org/article/real-path-lower-unemployment

Monique Kremer, Robert Went, André Knottnerus (May 2017) “For the sake of security, the future of flexible workers and the modern organisation of labour”. The Netherlands Scientific Council for Government Policy (WRR). WRR Investigation No. 36. file:///C:/Users/user/Downloads/V036-For-the-sake-of-security%20(1).pdf

Phuah Eng Chye (2 June 2018) “Labour share of income (Part 2: The difficulty of overcoming wage stagnation)”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/labour-share-of-income-part-2-the-difficulty-of-overcoming-wage-stagnation/

Phuah Eng Chye (7 July 2018) “Labour share of income (Part 7: The respective roles of wages and profits)”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/labour-share-of-income-part-7-the-roles-of-wages-and-profits/

Phuah Eng Chye (10 November 2018) “Future of work: Re-defining work (Part 2: Bullshit jobs and post-work)”. Economicsofinformationsociety.com. http://economicsofinformationsociety.com/future-of-work-re-defining-work-part-2-bullshit-jobs-and-post-work/

Teresa Ghilarducci, Anthony Webb, Michael Papadopoulos (2018) “The growth of unstable and low-wage work among older workers.” Schwartz Center for Economic Policy Analysis and Department of Economics, The New School for Social Research, Policy Note Series. http://www.economicpolicyresearch.org/images/Bad_Jobs.pdf

[1] Phuah Eng Chye “Future of work: Re-defining work (Part 2: Bullshit jobs and post-work)”.

[2] Janine Berg, Marianne Furrer, Ellie Harmon, Uma Rani and M Six Silberman.

[3] Janine Berg, Marianne Furrer, Ellie Harmon, Uma Rani and M Six Silberman.

[4] Phuah Eng Chye “Labour share of income (Part 7: The respective roles of wages and profits)”

[5] Janine Berg, Marianne Furrer, Ellie Harmon, Uma Rani and M Six Silberman.

[6] Phuah Eng Chye “Labour share of income (Part 2: The difficulty of overcoming wage stagnation)”.

[7] e.g. provide sufficient income to meet rising bills for education, transportation, rentals and healthcare and the ability to accumulate savings to buy a car and a house

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