OPINION:
Wars, pandemics and recessions shake up businesses and labor markets.
By the end of last year, GDP was up 3.1% from just before COVID-19. Yet, employment was down 2.1% — implying more than a 5% jump in productivity.
Still, the economy is operating well below its potential, because millions of adults quit the labor force during the pandemic and have not come back.
The problem is most acute where it is most apparent. Help wanted signs abound in the windows of restaurants, small retailers, the backs of delivery trucks and elsewhere for low-skilled workers. Many are for jobs that pay less than $20 an hour and missing in action most are workers with just a high school diploma or less.
The progressive intelligentsia that inspired Build Back Better are quick to pipe that these folks need paid sick leave, family leave, subsidized child care, free community college tuition and so forth.
Certainly, those make working more attractive, but a recent Harvard study of low-wage workers indicates what counts most for frontline workers are hours and pay, predictable work schedules and proximity to home. Way down the list are items like flexible sick time, child-care assistance and paid tuition.
A sympathetic boss counts for a lot, but the obsessions of the Acela class that monopolize the public policy conversation are way down on the list.
Turnover is terribly high at warehouses, hospitality jobs and similar activities.
Even before the pandemic, employment for workers with only a high school diploma or less was growing slowly, because of worker shortages and nonmarket, public pressure to pay higher wages — the avalanche of increased state minimum wages and media attention — were inspiring retailers and others to implement robotics and artificial intelligence to replace cashiers, customer service reps and other employees where they could.
Most sit down restaurants offer menus that appear on smartphones via QR codes, customers at Dave & Buster’s and others around the country now use tablets to let customers order food and drink, and combining the two technologies is not hard.
At many restaurants waiters takes orders and present checks, but someone else delivers the food. It’s not a big jump to send patrons menus and bills via smartphones and eliminate waiters altogether.
Many low-skilled workers have two or three jobs. The Affordable Care Act requires businesses with more than 50 workers to provide health insurance to those employed more than 29 hours a week, and federal regulations require overtime pay for those who work more than 40 hours.
Employers respond by chopping up positions, and workers get erratic schedules and pushed to take two or three jobs to piece together a living wage.
It’s time for a grand bargain — I can hear the Chamber of Commerce and AFL-CIO screaming now. Raise the minimum wage to $15 an hour but eliminate the ACA and overtime pay requirements. Impose an hourly excise tax on all wages not associated with employer health insurance and use the receipts to provide Medicaid enrollment for uncovered workers.
Since February 2020, the biggest drop in workforce participation is among those with only a high school diploma or less. Making work more attractive and upskilling those workers is essential to avoid the high costs and terribly explosive socio-political dynamics of an expanding class of adults reliant on government benefits to live at poverty levels.
Many firms — such as Levi Strauss and Verizon — have implemented programs to retrain retail workers for positions requiring more digital skills. And firms like Amazon, Disney and Walmart are creating career pathways for lower-wage workers that may take them to opportunities beyond their firms — even with eventual quits for better jobs elsewhere they will have less employee turnover.
That’s great for large corporations with the advantages of scale and cross-functional integration. A small chain of five regional hardware stores or stand-alone restaurant does not have the kind of HR expertise and scope of inhouse opportunities to mount aggressive programs.
Integrating those into Department of Labor apprenticeship programs makes sense. Those wed larger businesses with young folks looking for training with positions that generally pay $15 an hour and then promise a job at fairly good wages.
It’s time to bring together large business training programs into cooperatives with smaller establishments. Smaller businesses won’t keep workers permanently — they would move on to their corporate partners after a few years. However, by engaging workers in training that offers a next step, smaller businesses could still reduce worker turnover, provide more stable work to employees and lower labor costs.
Hoisting parcels at Amazon or waiting tables at an Italian restaurant should be a first step, not a last.
• Peter Morici is an economist, emeritus business professor at the University of Maryland, and national columnist.
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