Earlier this month, Andy Stern, the former president of the Service Employees International Union, came through Seattle to talk about jobs and our country’s economic future. On the heels of the inauguration of socialist city councilmember Kshama Sawant and the narrow passage of a $15 minimum wage in SeaTac, Stern believes this country is on the cusp of a major economic shift. JTNews spoke with him prior to his talk at Town Hall Seattle.
JTNews: What are the big changes you see on the horizon?
Andy Stern: There are probably four things that are going to change: First, we have actually arrived at a new economy. We now all have become very conscious that probably 20 years ago the wage growth began to decouple from the job productivity, and now, this century, decoupled from growth.
We can now get GDP growth and productivity growth with wageless growth and jobless growth, which is what we’re experiencing. Since the recession, we’ve gotten back to the same GDP and have grown beyond it, but we have 8 to 9 million less people doing the same amount of work. We are not going back to the good old days of the 20th century. We have a different economy and we need to act on it.
What we’re seeing in places like Seattle in the minimum wage through Kshama’s election is that people kind of get it, but we have not, as a country, come to grips with we’re in a different time.
The second thing is we’re fracturing the employee-employer relationship. Whether it’s bloggers, or temporary adjuncts, freelancers, consultants, 30 to 40 percent of Americans don’t have a full-time employer. It’ll go over 50 percent by the end of the decade, so this whole world that’s built around employers and employees and jobs is all fracturing.
The third thing is we are going to have a tsunami of technology that we’ve not really seen, and a massive amount of change. You’re starting to see it now, people can sort of sense it, obviously in certain industries like newspapers or telecommunications. We’re now going to see it in healthcare and transportation and places we once thought were immune from technological advancement.
The last thing is that kids today don’t see work in the same lens that certainly I did in my generation, where work was both your need, your purpose, income, and social setting. There’s so many other ways that people have social relationships now besides work, and work is not producing the level of income that it once did.
Kids today growing up are seeing their older brothers or their aunts or uncles struggling in this economy. This whole idea, that we live to work — it’s an American tradition — is also changing. So all these things will come together in 20 years and we really have to build policies for that time and not wait for the market to solve our problems.
JT: What’s the price they’re paying?
AS: I think we have today’s transition, where we’re seeing in terms of elections of candidates or passage of minimum wage laws, sort of the opening rebellion of people to an economy where politicians tell them we’re going to grow, we’re going to get more education and improve the education system, seems to ring hollow. People are looking for more direct action, but I don’t think anybody’s really dealing with what happens when all those cashiers aren’t cashiers anymore. Those jobs don’t exist.
People are beginning to be very pessimistic about the future. Who would have thought five years ago about debating the ROI of sending your kid to college? That was such a given, that you had to go school, and now we’re beginning to wonder if that’s the right economic decision for your family.
Andy Grow, who was the founder and chairman of Intel, said there are moments in companies, countries and industries where there’s a strategic reflection, where there’s a turning point, where a confluence of events sends you in one of two different directions, and I think the American economy is coming to that moment where the good old days of the 20th century and where growth was the answer to all questions is not sufficient, and Americans are beginning to feel it.
It’s not anymore just a blue collar, or a low-wage, or person of color, or Appalachian problem. It’s an American problem, and our political system is completely misaligned with the future, and I don’t know what’s going to happen, but I’m here to say that we need to begin to think about that moment because it is coming. The ideas in the marketplace today are insufficient.
JT: How did you come to this point? What made you recognize there’s a problem?
AS: Being around people my age who have college-graduate, 20-year-old kids, watching whether they went to an Ivy League School, or they went to a four-year college, or didn’t finish college, everyone is having trouble finding a job. Or if they find a job, finding a job that has any significant future.
Everywhere you go, hearing people talk about the difficulty that kids are having finding jobs. It’s listening to what’s going on in the world and saying, “Something’s off.”
JT: You talk about the minimum-wage issue, and Kshama’s election, but are you also looking at how technological advances can help or hurt the jobs picture?
AS: Amazon, Google, Facebook, Intel employ so few people. You used to say to your kid, “Go to become an engineer, and get a job at Facebook.” It’s more likely that you can get a job on a professional sports team than you can get a job at Facebook.
Facebook is not looking for your average engineer. They’re looking for the star quarterback, so to speak, of the team, who can really drive the next iteration.
Innovation is important, it produces wealth, it may not produce jobs. And where it was producing jobs, which at least used to make me feel better, it was, “Okay, Apple innovates and China builds.” FoxConn has 1.3 million workers. Well, FoxConn just put in the largest order for robots in the history of the world. And I assume that’s not to add on top of the 1.3 million workers.
JT: The big wild card feels like healthcare — if we don’t have employers providing it, how will people get it?
AS: I think what’s going to happen, for better or worse, more and more employers are just going to give up healthcare to the exchanges. Some of them are doing it already. Some of them see the option that if “I don’t provide it, someone else will.” But now they have a very viable option. Here’s an amount of cash, go on the exchange. So I think we are going to see, at least with healthcare, the erosion of the employer-based system much faster than we probably imagine.
JT: Do you see that as a good thing?
AS: Yeah, I do. I never thought, and certainly going forward, even less so, that employers are in business to provide healthcare. They’re in business to sell a product or provide a service, and if it can be done more efficiently and effectively by building a system, there are many models around the world. It seems to make a lot more sense. For that and retirement and other things, where people are just going to move from job to job, it’s great to have your healthcare and your retirement tied up with the individual market.
JT: Looking five to 10 years into the future, how will you be able to prognosticate how things are going?
AS: One thing that I cannot answer, that is totally, academically correct, is that in other periods where there’s been “creative destruction” like this, is that something else has risen to be the job focus in the private sector of our country. I don’t see where that is. A lot of people say that it was healthcare. I know a lot about healthcare. I don’t think that’s where it’s going to be happening.
I would hope the country would promote a discussion of, if this is happening, are we really going to pay people not to work? No, probably not. But is taking care of your children something we want to pay people to do? Maybe it is. As longevity goes on and on, and we can’t afford to institutionalize people in nursing homes, can we pay family members or say that if you want to get an American dividend, you have a responsibility to do certain things that in the past the government paid for? Or maybe rather than giving companies money to reduce their carbon footprint, we give individuals a share of money to reduce their carbon footprint. Or maybe we shorten the work week and have more employee ownership, give favorable tax treatment to employers so they really want to share in the ownership.
I think there are lots of things that can solve this problem, and so it may be just redefining what work is or what we pay for in this country, but there needs to be a new generation of people who are living this new economy to begin to design the policies.