The Solution Is Not Always Stomping On Workers

Photo credit: NurPhoto - Getty Images
Photo credit: NurPhoto - Getty Images

April's jobs report was disappointing relative to expectations: while 266,000 jobs were added, it was well off the one million-plus anticipated. There's likely a cocktail of forces operating on this, as economist Diane Swonk laid out on Twitter, from a lack of access to childcare—which is keeping mothers out of the workforce—to potentially continuing concerns about whether workplaces are safe. (It was probably too early to see real benefits of widespread vaccination last month.) Swonk suggests there were significant job losses in some sectors due to a larger shift, as the country more broadly reopens, from providing goods to providing services. And another element may well be that in some cases, workers who are receiving boosted unemployment benefits do a natural cost-benefit analysis comparing their current situation to a particular job opening and choose not to take the job. This incentive structure is suboptimal, but the response from the United States Chamber of Commerce was achingly predictable.

"The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market," the Chamber said in a statement dashed off almost immediately after the report was released. "One step policymakers should take now is ending the $300 weekly supplemental unemployment benefit. Based on the Chamber’s analysis, the $300 benefit results in approximately one in four recipients taking home more in unemployment than they earned working."

Nothing says Objective Analysis like when the numbers are run by a business lobbying group. Also, you do need to prove you are actively seeking a job to continue receiving unemployment insurance. But of course the Chamber was going to seize on one economic data point—one month's employment numbers—as evidence that benefits should be slashed, even if people receiving them are hardly living high on the hog. This would crowd out the other possible solution to reshaping the aforementioned incentive structure: raising wages and offering stronger benefits in order to attract workers.

That path—offering workers a bigger chunk of the pie, or otherwise making jobs suck less—is never an acceptable route. The American model of corporate governance for the last few decades necessitates that workers' wages stay low while Shareholder Value and executive compensation go up. Never mind that the wages at gigantic—and gigantically profitable—firms like Walmart and McDonald's are low enough that many of their workers are on food stamps and Medicaid. (While Walmart announced plans to raise average wages to $15 an hour in February, this meant some 730,000 employees would still see less. The starting rate is still $11 an hour.) This has the effect of corporate welfare: the state, and thus taxpayers, are forced to step in to deliver a minimal standard of living for the American citizens employed by these firms while the Walton family, presiding over Walmart, controls more than $200 billion in assets.

Photo credit: Rick T. Wilking - Getty Images
Photo credit: Rick T. Wilking - Getty Images

But no, there's only one solution here, we're told, and it does not involve making jobs more attractive to entice workers. Yes, the labor market has been shaped from the outside by government intervention, but that is always the case to varying degrees. It's just that, for decades, the decisions made by government have rarely prioritized the needs and livelihoods of workers over their (increasingly big and increasingly powerful) employers. This was down, in part, to a combination of an increasingly corporate-friendly Democratic Party in the post-Clinton era and an increasingly anarcho-capitalist Republican outfit. Running a business is not easy, particularly when you're small in the American big-fish pond, and there's some debate to be had on, say, where and how fast to raise the minimum wage. But the solution to everything cannot be maintaining an underclass of powerless workers living on the edge of desperation.

And this attitude is evident even at smaller firms, as is what appears to be a kind of disease afflicting far too many C-suite types in which they begin to believe they have ascended to a place between god and man. In what now serves as an incredible historical document, the CEO of Washingtonian Media, which publishes the Washingtonian magazine, took to the pages of the Washington Post to say the quiet part out loud.

While some employees might like to continue to work from home and pop in only when necessary, that presents executives with a tempting economic option the employees might not like. I estimate that about 20 percent of every office job is outside one’s core responsibilities — “extra.” It involves helping a colleague, mentoring more junior people, celebrating someone’s birthday — things that drive office culture. If the employee is rarely around to participate in those extras, management has a strong incentive to change their status to “contractor.” Instead of receiving a set salary, contractors are paid only for the work they do, either hourly or by appropriate output metrics. That would also mean not having to pay for health care, a 401(k) match and our share of FICA and Medicare taxes — benefits that in my company’s case add up roughly to an extra 15 percent of compensation. Not to mention the potential savings of reduced office space and extras such as bonuses and parking fees.

This is a pretty astounding philosophy of life at your firm to air out in the pages of a national newspaper. Cathy Merrill seems determined here to demonstrate not just that she does not view her employees as partners in the enterprise, but that she is willing to vandalize labor protections in order to secure their acquiescence to the hierarchy. I want this particular model for our return-to-office, and if you don't agree, you might not have health insurance anymore. As is often the case, the brazenness of it is as important as the actual content. This is someone who could not dream of consequences for treating workers as disposable cogs in a machine. And this is at the firm that publishes the Washingtonian, a venerable magazine that thrives on the personality and point of view of the people who contribute to it. Even their individual worth is, potentially, erased and replaced. If you don't like it, you can go drive for Uber—where you will also be classified as a contractor in order to deny you benefits.

Photo credit: Esquire
Photo credit: Esquire

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