Discussing wage inequality and The future of Work with Gordon Lafer

1Huddle Podcast Episode #46

On this Bring It In podcast episode, 1Huddle’s CEO and Founder Sam Caucci sat down with Gordon Lafer, author of Job Training Charade and The One Percent Solution, as well as a former Senior Labor Representative for the U.S House of Representatives, Professor at the University of Oregon’s Labor and Education research center, and economist. 

On this episode of Bring It In season two, Lafer sat down with 1Huddle’s CEO Sam Caucci and discussed job training, what is wrong with the current job market, federal labor laws, and the benefits of unions. 

Audio available on Apple Podcasts, Spotify, and Google Podcasts. 

TOP 3 HIGHLIGHTS

Below are some of the insights Gordon shared during our chat, edited for length and clarity. You can find more Bring It In podcast episodes here.

• “Calling workers lazy is factually wrong.”
• “What used to define the middle class, I think, is just economic security. And that has gotten out of reach for tons of people. And to get that back, it’s not only unions, but that’s one of the most important things we can do.”
• “If I’m running a business and I can’t afford to pay my electricity, I can’t say ‘the electric company is lazy.’ The pressure comes on workers, which is a human being and job creators say ‘oh you should work for less’.”

FULL TRANSCRIPTION

Sam: So Gordon, I really was taken by your book, Job Training Charade, so I was interested in having a conversation. I know the book was written in 2004, but I thought a lot of it was still very relevant today. I wanted to know, the first question for you is how has that work stood the test of time? What has changed?

Gordon: Unfortunately I do think it’s still relevant. And to ever experience the impotence of your own words, you write a book like that and as far as I can see everything in it’s true. Nothing has really been refuted. And the policy doesn’t change. I mean, job training policy is so politically useful that it’s like the undead, you kill it and you kill it again and it keeps coming back. After 9/11, they said they wanted to do that. Every time there’s a recession of some kind, somebody thinks job training is the answer. Oh, job training is the answer for coal miners who are going to be displaced by climate change. Job traders. There’s a very small number of things for which job training is the answer, but not nowhere near the number of things that it gets promoted for. So, yeah, I wish I could say that the book is no longer relevant, but the story is pretty much the same, even though the specific technologies and stuff have changed.

Sam: I have enjoyed the privilege to serve and have sat on the Newark workforce development board for about a year. And I think, as somebody who has not done policy work, or now I’ve been in a room as people try to figure out a lot of policy issues around the workforce, it’s really tough to see how ineffective maybe some of the solutions or some of the work is. I guess my question for you is what can we do? What can we do with the workforce infrastructure in general? Is there anything that can be done for it to be assistive in any way, shape or form to workers that are trying to get back to work right now, given what COVID has done to the workforce?

Gordon: Well, in general, including now, if the problem that you’re trying to solve is unemployment or underemployment or only low wage jobs and not decently paid jobs or getting out of poverty, the solutions, there’s lots of things to do about those things, but they don’t have anything to do with training. And for now too, overwhelmingly the answer is not training. You know what I mean? If you look at the jobs that are hopefully coming back now, as the country comes out of the COVID recession, are basically the same jobs that were there, 12 or 18 months ago before COVID hit, it’s not like there’s been some huge technological transformation of the economy, right?

So all the people who were doing those jobs and most of the jobs in the economy are pretty low skill and pretty undemanding, they’re still there. So the fact that people are not, to the extent to which people are not working, this factor has nothing to do with training, right? Obviously like we’re coming out of the recession, and in some cases there’s a lot of small businesses that either went under or came close to going under, but especially in anything in the retail sector, anything that’s dependent on something that couldn’t be done online, which is a lot of businesses. So now, even those businesses that are starting may not have the money to pay the wages that they need to pay to rehire people. But that’s not a skills deficit problem. It’s a different kind of problem. 

Sam: I was in Newark airport over the weekend. I was able to take my first flight, since COVID, and at the airport, there was the Wall Street Journal, the Washington Post, New York Post, New York Times, and on Saturday, given the jobs, all four front pages had the word “lazy” describing an American worker, given the moment around unemployment benefits. What’s your take on the state of the current moment as we kind of classify workers as lazy with what’s happening?

Gordon: You know, I think it’s factually wrong and I think it’s offensive. What you’re saying to a large degree is that employers don’t want to pay the wages or provide the conditions that it takes to hire people. And there’s no other part of the economy, I don’t think where, when somebody is not willing to pay the market price, we say there’s a shortage.

Like if I say “I need to buy a new tablet. I only have 25 bucks to spend on it, and I can’t find any, there’s a tablet shortage”. Is there a tablet shortage? No, there’s not. There’s a ‘I’m not paying the right price’ shortage. We don’t say, if anything, at least in the retail sector, if you were going to call something a shortage, you might say there’s a real estate shortage. There’s not a shortage, but it’s a crisis of small businesses not having been able to pay their rent over the last 12, 14 months, it’s a huge crisis. And figuring that out, it’s going to hit homeowners too, if the moratorium on evictions runs out, whenever that runs out. But figuring out all right, who in the economy should eat that cost? But then you get to labor, you get to workers and employers say there’s a labor shortage, either because they’re not paying high enough wages, Or, in some cases, you’re talking about restaurants where a lot of people are still worried about going back to work until there’s herd immunity, or maybe when you’re talking about, in many cases, a lot of low wage workers, a lot of workers of color who are disproportionately hit by COVID who work in the back of the house, I’m talking about restaurants and hotels, right? So they’re not the waiters and waitresses, which often means they’re in low-paid jobs because they’re considered tipped employees, but nobody’s getting much tips now, if your occupancy is limited to 50% and so people are reluctant to come back to work for all kinds of reasons.

The unemployment benefits vary by state, but if you look at what the unemployment benefits are, it’s not very much money. And in general, from a public policy point of view, we want unemployment benefits to be more generous, mostly so people can make it through the recession. But also it’s good if the wages of jobs have to be bid up. Because the point, as an individual, you could say, “oh, I liked, I liked that people create small businesses because I appreciate entrepreneurial-ism and creativity and drive” and stuff like that. But from a public policy point of view, what there is to appreciate about businesses is that they create jobs.

Well, if they’re not creating decently paying jobs, I don’t mean jobs that people get rich off, but jobs that you can be kind of secure on, then that’s not good for the policy. And this is always what happens, the claim of laziness has always been trotted out over and over and over again.

But I think Americans work more hours per year than I think considerably more than any other industrial democracy. When people say, oh, Americans don’t want to do these jobs, you know, every American cleans toilets and waits tables and puts up construction sites and does every job there is.

So there’s nothing else where, if I’m running a business and I can’t afford to pay for my electricity, I can’t say that the electric company is lazy. But because people have consciousness and can be kind of manipulated whether by politics or policy or ideology or something like that, then the pressure comes on workers on the one kind of input, which is a human being like. “Oh, you should be willing to work hard for less”. I can’t say that to the bank. I can’t say that to my landlord. I can’t say that to the electric company. I can’t say that to my suppliers. I can say it to workers. 

Sam: I know from reading some recent interviews and articles your perspective on unions, what do we need to do? The Amazon vote was obviously disheartening for many, what’s your perspective on what’s to come?

Gordon: You know, it’s hard to know what’s to come. Federal labor law needs to change. It’s very, very hard to organize and very intimidating and people always get fired in organizing drives, as soon as you say federal labor law needs to change, then the question is, well, how the hell are you going to do that? Are you going to get 60 votes for that in the Senate? And I don’t see that right now. So I don’t know. I don’t know what’s going to happen.

But I think it is one of the critical things that could be done to address the crisis of economic inequality. Certainly much more powerful than training, because the same people who say that workers are lazy, say a union will drive companies out of business.

Well, the last people who want to drive a company out of the business are the people who work there. Like in the cases when a company goes out of business, especially if it’s a reasonably sized company, the owners still have their house and their car and  they’re okay. The workers are wiped out.

The goal of every union is to, in a way you could say, get as much as you can while keeping the company financially healthy. And because it’s not a one size fits all government mandate, it’s not like saying, “all-level one machinists will make $18 an hour with these kinds of benefits”. It’s saying we’re just going to give people the power in every company to negotiate with the management around the particular circumstances that that company’s in. So you can see it in all kinds of statistical ways, you can see it in McDonald’s in Denmark or someplace, places in Europe pay like 20 bucks an hour.

So when you look at the crisis that has been, not the COVID crisis, growing for 40 years, I would say the crisis of the huge growing number of people in America, who can’t support themselves and their family and just can’t find economic security. Which is just like, okay. I’m not always like a paycheck away from homelessness. I don’t have to worry about getting sick. I don’t have to worry about being in poverty when I’m old. I can help my kids a little when they grow up like that. What used to define the middle class, I think, is just economic security. And that has gotten out of reach for tons of people. And to get that back, it’s not only unions, but that’s one of the most important things we can do. 

Sam: Companies that are startups and entrepreneurs, there’s a good wave of younger startups that are trying to do things a little bit different, trying to fix things, and I guess, given your experience on the hill what type of advice do you have for me or other business owners that are trying to bring about change?

Gordon: I mean, honestly, I don’t know that I’ve ever been asked this question by a business person before, so I may not know. There may be things I think of after we finish the call, but off the top of my head, a lot of it is lobbying. I would say if there’s a number of businesses, like you’re describing, to create whatever you want to call it, a business association of those businesses, because the existing, the big employer associations, the chamber of commerce, the NFIB, the NAM, they’re all very loudly advocating in the other direction for policies that I would say are going to increase inequality. And so, you, as an individual, are not going to do much. But even to have a counterweight to say, there’s more than one voice of business, and if it’s the voice of young dynamic entrepreneurs in tech or whatever it is, that carries a certain cache.

I think  part of the reason to advocate for policies obviously is because it’s widespread, but also, everybody operates in a competitive market. So if in general, like if one firm decides to tremendously increase its wages and benefits, for instance, it’s not always true, but in a lot of cases then it’s going to go out of business because it’s going to lose bids to competitors who are low-balling things. And so there’s a limited degree to which one can be an exemplary employer, if you don’t kind of raise the playing field for the industry as a whole, And to do that, usually you need some kind of law or regulation to do that. 

Sam: This is the last question, the future of work is a topic that largely is like, robots are coming and they’re going to take everybody’s job. And I think instead of focusing on that, which isn’t even certain, what is your hope, Gordon, for the future of work?

Gordon: Well, if I was going to be philosophical, you know the truth about this, when people say there’s a skills crisis, people don’t have enough skills, when you survey people, what people have been like 80, 90% of people say is I never get asked to use my brain on my job. A monkey could do my job. I don’t have to use even the things I learned in high school.

So ideally more, more people would be able to use their intelligence, use their creativity and have work be something that is not as mind numbing. So apart from how much you make, I do think, there are some important opportunities coming up that is not like changing the whole future, but if Congress passes a big infrastructure, and if we continue to upgrade the infrastructure of the country, which is huge tunnels and bridges and the water infrastructure and the electric infrastructure, there’s a lot of work to be done for a long time.

And a place where training can be helpful here is, you need to be very skilled to get into a union apprenticeship program, any kind of apprenticeship program. People hear apprentice and they think, oh, I’m starting knowing nothing, but it’s not true. You need to be quite skilled already because those are super skilled occupations.

So there have been programs when cities or different governments wanted to create programs for communities that have not traditionally had access to good paying construction jobs to get in, they create pre-apprenticeship training programs. So we’re saying, “okay, we’re going to go to poor neighborhoods in Newark and say, ‘I want to create a pre-apprenticeship training program’”.

And it’s going to be a condition of the next time we dredge the New York Harbor or rebuild the bridges because there’s bigger boats coming through the Panama canal or whatever the big infrastructure projects are, and we’re going to set aside a number of those jobs, that kind of stuff, it’s really making a difference in who gets the jobs, but it can make a real difference in communities that you’re trying to raise out of poverty.

And there’s an opportunity to do infrastructure, I think in a way that could have a significant impact. And so it’s still just a small part of the answer to your question, but it’s one thing that’s coming up that is realistic and doable. 

Sam: Gordon. Thanks for talking with me. 

Gordon: Good meeting you.

Topics Discussed: Unions, Federal Labor Law, Infrastructure, Unemployment Benefits, Economy