Building an Economy that Works for Everyone

Two public policies that would turn every bad job in America into a good job

Republished with permission from Dissent Magazine

By Colin Gordon, republished with permission from Dissent Magazine

What happened to the good jobs? This is the question posed by fast-food workers who walked out in New York and Chicago in recent weeks. [Ed. note: Seattle too!] It is the question posed by activists in those corners of the economy – including restaurants and domestic work and guest work – where the light of state and federal labor standards barely penetrates. And it is the question posed (albeit from a different set of expectations) by recent college graduates for whom low wages and dim prospects are the dreary norm.

There is no shortage of suspects for this sorry state of affairs. The stark decline of organized labor, now reaching less than 7 percent of private-sector workers, has dramatically undermined the bargaining power and real wages of workers. The erosion of the minimum wage, with meager increases overmatched by inflationary losses, has left the labor market without a stable floor. And an increasingly expansive financial sector has displaced real wages and salaries with speculative rent-seeking.

New work by John Schmitt and Janelle Jones at the Center for Economic and Policy Research recasts this question, posing it not as a causal riddle but as a political challenge: what would it take to get good jobs back?

Schmitt and Jones start with a basic distinction between good jobs (those that pay $19 an hour or better and offer both job-based health coverage and some retirement coverage) and bad jobs (those that meet none of these criteria). Each of these categories accounts for about a quarter of the workforce (the rest fall somewhere in between), with the share of good jobs slipping since 1979 and the share of bad jobs creeping up. The goal, by simulating the impact of different policy interventions, is to increase the share of good jobs and to eliminate—as much as possible—the bad jobs entirely.

Some policies—however salutary—would have little impact on this “good job-bad job” distribution. Raising the minimum wage, for example, would boost the earnings of 30 million workers, but it would do so by transforming bad jobs into not-quite-so-bad jobs. A worker earning $10 an hour without benefits, after all, is still pretty far removed from a good job.

The graphic below summarizes the findings of Schmitt and Jones, for men and women, for five policy changes. Gender pay equity, not surprisingly, would yield some small gains for women—a slightly higher percentage of good jobs, and slightly lower percentage of bad jobs. A 25 percent increase in college attainment yields only a modest improvement, a finding consistent with other research suggesting that wages are falling despite increasing educational attainment and not because there is some “skills” mismatch between available workers and available jobs.

good jobs bad jobs

Click to play with this visualization (opens in new window).

There is a stronger payoff for collective bargaining, which Schmitt and Jones simulate with an increase in union density sufficient to capture the same number workers as the increase in college attainment (in the first scenario, 8.7 percent of the workforce are given college diplomas; in the second, 8.7 percent of the workforce are given union cards). This yields not only a union wage premium but higher rates of job-based health and pension coverage. But the payoff is not as big as one might expect, probably because labor’s ability to deliver such benefits to its members has fallen as its share of the workforce has gone down. Simply bumping up the union density rate, in other words, is not the same thing as reclaiming the labor movement of past generations.

The strongest payoff comes with socializing and universalizing health and retirement coverage. Adopting either would erase the bad jobs entirely. Adopting both would push the share of good jobs to nearly half (50 percent for men, 39 percent for women).

This resonates with our understanding of the perverse logic of job-based social policy—which tends to widen inequalities (good jobs, after all, are the ones with good benefits) rather than close them. It resonates with our understanding of the broader benefits of universal social policy—which wipes away not only the waste and stigma associated with risk-rating and means-testing, but the crushing insecurity of going uncovered or uninsured. And it resonates with our political and economic realities, in which incremental progress on social policy (maybe just in the states) seems more likely than a surge in labor organization and more resourceful than deep personal investments in education.

Colin Gordon is a professor of history at the University of Iowa.

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