Millions of Americans spend every day preoccupied with whether they can make a better life for themselves than their parents did, and whether they can pass on that opportunity to their children. They are concerned that you can no longer accomplish these goals in America simply through hard work and perseverance. They see social mobility waning, inequality soaring, wages only now starting to accelerate after 15 years of dormancy. And they fear entry into a workplace of the future that looks disconnected and powerless.
Conservatives tell a coherent story in reaction, even if it’s a non sequitur — government regulations and government taxes sap the initiative from job creators. So does the left, if you seek out their views — corporate greed and power captures too much of the gains of productive work. The muddle has come from those in the political center, dumbfounded about how to combat forces they helped set in motion. And they haven’t gotten any better at it since Trump’s election shattered their world.
Last week, the Aspen Institute’s Future of Work Initiative issued a report called “Toward a New Capitalism,” identifying challenges facing the American workplace and specific steps to fix it. You can’t place yourself much closer to the political center than with the team that produced this document. With financial support from nine foundations, Apple and asset management giant BlackRock, the co-chairs included center-left Senator Mark Warner, center-right former Indiana Governor Mitch Daniels, George W. Bush’s Domestic Policy Council director John Bridgeland and his immediate predecessor, Bruce Reed, former head of the Democratic Leadership Council. It doesn’t get more mainstream and technocratic.
To their credit, the authors wrestle with a legitimate problem: the broken social contract between workers and employers. Corporate America, obsessed with short-term growth, squeezes its labor force to help achieve it.
Modern businesses, when not outsourcing jobs abroad, have stepped up reliance on independent contractors who aren’t employees, and therefore not entitled to most benefits. Lawrence Katz and Alan Krueger estimate that nearly all the net employment in the Obama era came from so-called “alternative work arrangements” like freelance or temporary work. According to the report, these trends lead to lower wages, reduced benefits, a lower labor share of national income, stagnant economic growth and living standards, workforce disinvestment and more reliance on government safety nets. “The failure to shore up democratic capitalism,” the report concludes, “poses grave dangers to democracy and capitalism alike.”
With that wind-up, you might expect a radical break with the status quo, something that could really ensure broadly shared prosperity for everyone who participates in the economy. You wouldn’t expect 13 different types of tax breaks, which I counted in the solutions chapter of the document.
This includes a wide variety of business tax cuts for worker education and training, a typical obsession of centrist types who implicitly blame workers for not having the right skills to compete in the global economy. In this case, the recommendations effectively bribe companies to finance these programs. Other tax breaks encourage employee stock ownership and wage increases. Workers would get a few of these tax benefits directly, but most would be funneled through their employers.
The conceit here is that the tax code offers too many incentives for physical investment capital rather than human capital. But the recommendation is not to roll back those investment capital giveaways, but to slash business taxes further in a bank shot to benefit workers. The only result is drastically reduced corporate tax revenues, and less money available for social insurance. Later in the document, the authors recommend an overhaul of the tax code to lower rates and broaden the base, but virtually all the tax cuts preceding it would tighten that base through targeted tax breaks. It’s all carrots to businesses, and nearly no sticks.
It’s in reacting to the so-called “on-demand economy” that the technocratic center reveals itself. As I’ve written before, the mode of survival for the Ubers of the world lies in harvesting giant government subsidies to make their sketchy business models work. In the name of helping workers, the Aspen Institute report goes right along with that.
The authors recommend that unemployment insurance offices should maintain an updated directory of on-demand, app-based jobs, effectively becoming a publicly funded headhunter service for private companies seeking desperate labor. They even suggest “states should be allowed to experiment with using a portion of unemployment funds to buy equipment to lend out to beneficiaries.” So public money — perhaps even taken out of unemployment insurance checks, though that’s not clear — would go to buying used Chromebooks that the recently unemployed could borrow to get on Taskrabbit or Lyft.
I don’t recall unemployment programs ever lending workers power tools, or a bus pass or any other equipment they might need to land a job. But government should spare no expense in funneling the unemployed into the very contract-labor positions the report’s authors spent an entire paper identifying as contributing to the decline of the American workplace?
The real goal here appears to be to kick people off public assistance. “If evidence shows on-demand platforms lower barriers to employment, then work requirements should be applied to certain safety net programs as appropriate,” the report recommends. This would force people into contingent labor arrangements to keep their benefits. On-demand companies wouldn’t benefit more from these recommendations if they wrote them on their own.
There are a few nice ideas in the report, from boosting worker representation on the job (not through unions, which are barely mentioned, but worker councils) to encouraging long-term investment to exploring portable benefits that freelance or temp workers can use (though only with state-level pilot programs). But the reliance on tax breaks and the special dispensation for on-demand work lets the slip show. The cure for an atomized workplace is further atomization, fragmenting collective worker power. The only way for workers to achieve success is through bribing employers and hoping the crumbs fall from the C-suites into their hands.
If that’s the considered response from the establishment center to our economic problems, it’s no surprise that populism is on the rise. Ideas like bolstering unions or breaking up concentrated markets sit far outside the centrist range of conception. They’re so far removed from the experience of workers that they can’t imagine how to use policy tools to truly empower them. Democrats must break away from these managerial-class solutions if they want to deliver for anyone but the powerful.