Jobs Summit: Photo Op or Opportunity?
Arizona's Hopi 5 Hotshot Ian Nuvamsa, at left, watches as teammate Peterson Hubbard, cuts a burning stump while battling the Little Bear fire near Ruidoso, N.M., on Monday June 11, 2012. (AP Photo/Albuquerque Journal, Adolphe Pierre-Louis) / Adolphe Pierre-Louis
Thomas A. Kochan is the George Maverick Bunker Professor of Management at the MIT Sloan School of Management and co-director of the Institute for Work and Employment Research. He is co-author of Healing Together: The Labor-Management Partnership at Kaiser Permanente (Cornell University Press, 2009).
When the President convenes his Dec. 3 "Jobs Summit," he and the participants have a choice: Will they simply pose for another one-shot photo op - or will they seize the opportunity to lay the groundwork for a new social contract between workers, business, and government, one that will ensure that workers are not left out of the economic recovery.
Getting wages moving again now and setting the stage for well-paying, sustainable jobs in the future requires a broad fix of labor-management relationships and structures that have been broken for three decades. The President needs to use this historic occasion to break the ideological stalemate over the legitimacy of unions and to replace outdated labor law and systems with productive, 21st century models.
Current data on jobs and wages show why such long overdue fixes matter not only to working families, but to the entire economy. Unemployment is at a quarter-century high and, according to the Congressional Budget Office, will remain above 10 percent in 2010 and 9 percent in 2011. Unless stronger actions are taken, up to 20 percent of the nation's human capital will remain unemployed, underemployed, or out of the labor force for the next three years. That is an unacceptable outcome that will further delay and weaken economic recovery. After all, nearly 8 million jobs are required just to replace those lost since the beginning of the recession.
Wage data are equally unacceptable. Average worker incomes remained flat or fell during the recession. Nor did they grow over the seven years of the past economic recovery. Indeed, workers have been getting a declining share of the productivity they helped create for the past three decades. Because consumption accounts for 70 percent of the U.S. economy, a wage-less recovery is a weak and unsustainable recovery.
A number of ideas to create jobs and increase wages are already on the table. These include a work-sharing proposal that would provide unemployment benefits for reduced hours of work, an employer tax credit for creating new jobs, use of TARP funds to provide credit for small business, additional stimulus funds for local and state governments, and expanded investments in infrastructure and other construction.
These proposals are all worth considering, though none is a silver bullet. But more than backing any specific proposal, the President needs to call upon workers and their unions and associations to work in partnership with employers - especially those receiving taxpayer support -- to build the high-performance workplaces and work processes that are needed to generate high productivity and high service quality.
For starters, the President should announce his support for speedy passage of a reframed and expanded Employee Free Choice Act, which is currently stalled in Congress. He should call for a bill that not only restores workers' ability to join a union and gain access to collective bargaining, but also one that transforms labor-management relations in ways that get wages again growing in tandem with productivity and economic growth. Provisions should be added to the Act to create a national labor management advisory council to oversee implementation of the new law and to provide advice on how to promote productive, innovative, and cooperative labor management relations.
Despite all the ideological posturing, workers and business, and the economy, would all benefit from passage of such a revamped act. Evidence from manufacturing, healthcare and other industries shows that major financial and technological investments pay off in high productivity only when they are matched with state-of-the-art workplace practices and cooperative labor-management relationships.
Labor, business, community, and government leaders must also work together at local levels to translate stimulus funds for infrastructure repair, weatherization, and green jobs into projects that are completed on time, on budget, safely, and that generate job and career building opportunities for women and underrepresented minorities.
None of this will happen easily or quickly. But if the upcoming jobs summit sets the right tone and stage for an era of productive and innovative labor-management relations, it will deserve to be recorded as a historic achievement, not just a political footnote.
By Thomas A. Kochan:
Copyright 2009 CBS. All rights reserved. When the President convenes his Dec. 3 "Jobs Summit," he and the participants have a choice: Will they simply pose for another one-shot photo op - or will they seize the opportunity to lay the groundwork for a new social contract between workers, business, and government, one that will ensure that workers are not left out of the economic recovery.
Getting wages moving again now and setting the stage for well-paying, sustainable jobs in the future requires a broad fix of labor-management relationships and structures that have been broken for three decades. The President needs to use this historic occasion to break the ideological stalemate over the legitimacy of unions and to replace outdated labor law and systems with productive, 21st century models.
Current data on jobs and wages show why such long overdue fixes matter not only to working families, but to the entire economy. Unemployment is at a quarter-century high and, according to the Congressional Budget Office, will remain above 10 percent in 2010 and 9 percent in 2011. Unless stronger actions are taken, up to 20 percent of the nation's human capital will remain unemployed, underemployed, or out of the labor force for the next three years. That is an unacceptable outcome that will further delay and weaken economic recovery. After all, nearly 8 million jobs are required just to replace those lost since the beginning of the recession.
Wage data are equally unacceptable. Average worker incomes remained flat or fell during the recession. Nor did they grow over the seven years of the past economic recovery. Indeed, workers have been getting a declining share of the productivity they helped create for the past three decades. Because consumption accounts for 70 percent of the U.S. economy, a wage-less recovery is a weak and unsustainable recovery.
A number of ideas to create jobs and increase wages are already on the table. These include a work-sharing proposal that would provide unemployment benefits for reduced hours of work, an employer tax credit for creating new jobs, use of TARP funds to provide credit for small business, additional stimulus funds for local and state governments, and expanded investments in infrastructure and other construction.
These proposals are all worth considering, though none is a silver bullet. But more than backing any specific proposal, the President needs to call upon workers and their unions and associations to work in partnership with employers - especially those receiving taxpayer support -- to build the high-performance workplaces and work processes that are needed to generate high productivity and high service quality.
For starters, the President should announce his support for speedy passage of a reframed and expanded Employee Free Choice Act, which is currently stalled in Congress. He should call for a bill that not only restores workers' ability to join a union and gain access to collective bargaining, but also one that transforms labor-management relations in ways that get wages again growing in tandem with productivity and economic growth. Provisions should be added to the Act to create a national labor management advisory council to oversee implementation of the new law and to provide advice on how to promote productive, innovative, and cooperative labor management relations.
Despite all the ideological posturing, workers and business, and the economy, would all benefit from passage of such a revamped act. Evidence from manufacturing, healthcare and other industries shows that major financial and technological investments pay off in high productivity only when they are matched with state-of-the-art workplace practices and cooperative labor-management relationships.
Labor, business, community, and government leaders must also work together at local levels to translate stimulus funds for infrastructure repair, weatherization, and green jobs into projects that are completed on time, on budget, safely, and that generate job and career building opportunities for women and underrepresented minorities.
None of this will happen easily or quickly. But if the upcoming jobs summit sets the right tone and stage for an era of productive and innovative labor-management relations, it will deserve to be recorded as a historic achievement, not just a political footnote.
By Thomas A. Kochan:
As Politico noted over the weekend:
"It?s one of the oldest tricks in the presidential playbook: when you want to focus attention on an issue, hold a meeting and call it a 'summit.'"
"President Barack Obama?s already done a 'Fiscal Responsibility Summit,' a 'Health Care Summit,' an 'H1N1 Flu Preparedness Summit,' and even a 'Distracted Driving Summit.'"
"Next up: a 'Jobs Summit' Thursday, and if Obama thought fighting the flu or getting health reform done was tough, wait until he faces the hard truth that presidents ultimately face when they need an economic quick-fix."
"There isn?t one."
Nevertheless, with much fanfare and photo ops, the President will be holding a jobs summit where he's invited "business executives, labor leaders, community activists, economists and others to the White House to spur ideas."
Interestingly, Bill Clinton's former secretary of labor and ultra-liberal Robert Reich states: ?Most presidents don?t have all that much control over creating jobs. They can affect things at the margin.?
While Mr. Reich is half-correct (Presidents cannot create jobs, nor can government-at-large), he misses a larger point: Presidents and government, with ill-conceived policies, can and do kill jobs.
A near-bankrupt treasury, higher taxes, excessive regulation and uncertainty over big government proposals like health care nationalization and 'cap and trade' all have a strangulating on the creators of jobs.
Another piece of legislation that is creating great uncertainty and, therefore, a reluctance to create jobs is the delusionally-dubbed Employee Free Choice Act (or EFCA).
Even though the President, according to AFL-CIO boss Richard Trumka, has pledged to advance EFCA after the health care debate is over, Thomas Kochran suggests above that the President's "jobs summit" should be used to push for EFCA.
The problem is, EFCA (which, as written, replaces secret-ballot elections on the question of unionization with majority 'card-check' and gives government-imposed arbitrators the power to dictate wages and benefits) is a job destroyer.
As renowned Professor Richard Epstein wrote earlier this year:
"The likely consequence of EFCA will be to retard the formation of small businesses, as fledgling entrepreneurs will reassess their prospects of success to take into account the danger of derailment at an early stage in the process. In the long?term the EFCA will reduce the rate of firm formation, and thus deprive the economy of a central driver of new job creation and technology growth."
And for larger firms?
"Faced with these constraints, a firm?s ability to shift and meet the rising competition from new firms could easily result in the loss of jobs from the failure of certain business lines, or the conscious redeployment by management of assets and new investment to locations that have lower costs and greater flexibility ?traits most often associated with nonunion operations. The decision to send more activities offshore is also a distinct likelihood."
In 2005, even Andy Stern of the now-infamous Service Employees International Union seemed to implicitly acknowledge that unions hurt jobs when he presented statistics on a PowerPoint slide indicating that manufacturing jobs that were unionized suffered a much higher loss than did overall manufacturing jobs.
More relevant to Thursday's "jobs summit" is President Obama's own Larry Summers. Prior to his joining the Obama administration, Mr. Summers seemed to get it.
Just a few years ago, Mr. Obama's current Director of the National Economic Council wrote that unionization is a cause of long term unemployment.
"Another cause of long-term unemployment is unionization. High union wages that exceed the competitive market rate are likely to cause job losses in the unionized sector of the economy. Also, those who lose high-wage union jobs are often reluctant to accept alternative low-wage employment...."
"There is no question that some long-term unemployment is caused by government intervention and unions that interfere with the supply of labor...."
As the meeting of the minds come together on Thursday to hold a photo op and give the appearance they are doing something to try to curb unemployment, perhaps they will get a sudden revelation that they, in fact, may be partly to blame for the high unemployment.
But, then again, the expectation that common sense economics would prevail from an administration that was paid for by union bosses may be asking too much.
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"I bring reason to your ears, and, in language as plain as ABC, hold up truth to your eyes." Thomas Paine, December 23, 1776