Economic context

How Can the Forces of Change Be Harnessed to Create an Inclusive and Equitable Labor Market?

Joe Peck November 22, 2022

The forces of climate change, automation, and digital transformation could widen inequities and leave workers—particularly those in low-wage industries and others facing structural disadvantage—further behind. The decline in worker power and inconsistent investment by employers in training and upskilling are also long-term trends that need to be addressed and, ultimately, reversed to support workers’ economic mobility.

These were some of the insights shared by an expert panel of researchers and practitioners convened by WorkRise as part of its October annual conference. The panel, moderated by WorkRise Deputy Director Elisabeth Jacobs, grappled with whether policymakers and other stakeholders can harness the forces of change to create good jobs with opportunities for wage growth, economic security, and career advancement.

Longer-term threats: disinvestment in training and decline in unionization

Carl E. Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers, the State University of New Jersey, argued that employers’ ongoing disinvestment in training has damaged workers’ economic mobility, placing the burden of learning and upskilling on individual workers, most of whom don’t have money to pay for training. Studies that quantify employer-provided training are scarce. One recent nationally representative survey found significant disparities in employer-provided training among people of different racial and ethnic groups and levels of educational attainment. Simultaneously, the public education system isn’t able to fill that gap, as most taxpayer-supported education stops after high school with individuals on the hook to pay for college or other forms of postsecondary education.

Michelle Holder, distinguished senior fellow at the Washington Center for Equitable Growth, said the major challenge to worker mobility over the past 40 years has been the erosion of worker power. Declining unionization in the United States has been accompanied by and, some would argue, resulted in flat wages. At least 20 states still have a minimum wage set at $7.25 an hour, contributing to a category of the working poor (a phrase Holder said shouldn’t be in our lexicon). All the while, corporate profits have been rising, she noted.

Jason Walsh, executive director of the BlueGreen Alliance, agreed with Holder that the greatest long-term threat to worker mobility is extremely low unionization. The most immediate consequence of this reality is that very few workers have the power to collectively bargain for better pay, benefits, and working conditions. He argued that stagnant wages, income inequality, and the erosion of faith in our democracy all stem from the decline of unions, which has also led to fewer pro-labor politicians being elected to office at the local, state, and federal levels.

Creating a just transition to a green economy

As jobs in carbon-intensive industries make way for those in green industries, there is increased interest in a so-called just transition that will help workers retrain and adjust. Walsh argued that only policymakers can ensure that any move to a greener economy is fair for low-wage workers. The government could make targeted investments to support green energy jobs, particularly in regions like Appalachia, that will be hit hardest as the economy transitions away from oil and gas. The Inflation Reduction Act offers a good start, as it could support as many as 1,600 training centers across the country, allowing apprentices to earn while they learn. Unprecedented levels of investment in renewable energy and climate infrastructure since 2020 could create millions of jobs. Whether these investments can overcome systemic inequality and improve working conditions is yet to be seen, as is true with advances in technology more widely.

Van Horn and Walsh agreed that the current unemployment insurance system encourages workers to find a new job as soon as possible, rather than pursue education or training that could lead to a sustainable career. Life-long learning accounts, such as those recently proposed in New Jersey, could better help people prepare when they’re out of a job, giving people the opportunity to retrain in areas they want to retrain in, including the growing sector of green jobs.

Alexander Bartik, assistant professor of economics at the University of Illinois Urbana-Champaign, proposed that the Clinton-era Trade Adjustment Assistance for Workers program, which helped workers adjust to job loss after the North American Free Trade Agreement sent US jobs to Mexico, could be a mode. But evidence shows there wasn’t a huge take up of these programs. To be successful, the government would need to ensure greater awareness and participation in these retraining programs, which could be achieved through more generous financial assistance.

Climate change has had disparate impacts on different geographical areas, leading to climate refugees—or people who are displaced because of wildfires, sea level rise, and other extreme weather events. Bartik believes the government needs to focus on creating more affordable housing in places where people might seek refuge and new job opportunities. There are regulatory constraints on housing construction in many places, a lack of investment in growth in the housing manufacturing industry, and a dearth of new subsidized housing. Improving this situation will require federal funding as people seek to relocate to safer areas.

Leveraging automation to improve work

Research suggests up to 30 percent of all work hours globally could be automated by 2030, bringing new challenges to low-income workers who might see their work grow obsolete. Van Horn expressed concerns about the privacy and social justice implications of greater automation, as many of the jobs being replaced with technology are likely to be those held in low-wage industries, such as retail or warehousing.

Bartik had a different take, arguing it’s hard to predict how automation will affect the mix of jobs and the nature of work. Large language models, for example, could displace more jobs requiring higher rather than lower levels of education. Further, technological development is not a fixed thing we have no control over. Government investment and policy choices can influence how technology develops and whether it can do so equitably.

Holder took a slightly more relaxed view, arguing that automation is a permanent feature of our economy and has been since the industrial revolution. As certain industries disappear, new ones appear. In some cases, automation may enhance work. The key is to ensure equipment and training programs provide for workers even as their industries change. One immediate remedy is for investments to alleviate the digital divide between urban and rural areas. This could be an area prime for public-private investment, as rural employers would benefit from being more connected.

Digital equity is key to workforce equity

Not only is digital access key to help workers transition to jobs where automation may be more integrated into their work, but it will also enable workers to access more remote or hybrid forms of working, which were introduced by the COVID-19 pandemic but appear to be here to stay. As Walsh argued, one of the foremost responsibilities of an employer is to keep their workers safe. Hybrid work could enable them to do this, whether it is because of a global pandemic, serious weather event, or something else.

Van Horn argued that, because of this new phenomenon, policymakers and employers need to ensure Americans have digital equity, or equal access to broadband, high-speed internet access. Horn described this as a “last mile problem,” in which government needs to ensure everyone has reliable internet access in their homes and on their devices. Many low-income people need this connection and the requisite technology so they can be involved in the economy. Potentially, utility regulators could impose a subsidy on wealthier rate payers to raise money and provide technological tools for those without them.

What must happen next?

To conclude, each of the panelists was asked what immediate solution they would offer to help ensure economic mobility for low-wage workers is protected in the coming decades. Van Horn and Bartik argued for greater investment in job training and other workforce services, Holder for a higher minimum wages, Walsh for Congress to pass the Protecting the Right to Organize (PRO) Act to make it easier for workers to join or form unions. As the dust settled after the 2022 midterms, Congress and the administration will hammer out their legislative priorities. Although it is unlikely that the PRO Act will pass in its current form or immediate action is taken on raising the federal minimum wage, investments in job training or broadband access may emerge as areas of consensus.

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