US Labor Policy and Employment

Thinking out loud:

Back in January of 2009 I wrote the blog post below. Since then, the White House, and several part of the executive branch, with the support of congress, have attempted to shore-up American labor with stimulus funds and various other efforts. I believe much of their effort is misguided because they do not look at the complexity of the relationships involved, nor the implications of their efforts.

It seems to me, at a time of recession, when the majority of work is generated locally, and by small business, getting out of the way of small business, not through loans, but through tax breaks that let the money stay local. One of the biggest issues with a bigger central government is the issue of coordination costs. As money flows into central repositories and is redistributed, significant costs are involved that may be rounding errors to the US government, but add up to real money and lost opportunity locally.

I continue to believe that what the administration is unwittingly doing, has created a groundwork for a more freelance worker population, unfortunately, by guiding funds primarily to large firms (despite the recent moves to small business through loans – which at $42B is a dip in the collective bucket where Fortune 500 earnings were up 335% in 2009 to $391B – although the collection of companies reporting those profits differed from the pre-recession mix)

The administration is taking multiple swipes at small business while large businesses have invested in automation to make themselves more nimble (for the short term at least) against further shifts because they can turn up and down processes much more easily than they can shed jobs, and with much fewer ramifications (from the expense of layoffs to the expense of re-training).

Congress and the White House need to recognize that employment has fundamentally changed and that unemployment is not longer the right way to look at the issue. We need to think about the displaced workforce not as unemployed workers for some large enterprise, but as underdeveloped entrepreneurs with valuable knowledge and skills against a world market.

If we remain insular, and try to re-create a mythical American dream, when we will miss the opportunity to create the next set of dreams, that may be very different, may be very uncomfortable at the onset, but will ultimately carry the nation and its talent forward in a world of under-skilled labor and inexperienced management looking for knowledge to complement the resources of the developed West. The US and Europe will not be able to feed the world, or cloth it or produce all of the good and services needed in the developing world. That task is overwhelming. So rather than think about competition, we should think about cooperation. Our skills and knowledge can help them help themselves. Unlike manufacturing and agriculture, where we have limits, the knowledge of our workforce is some we can leverage at scale, and something the world is willing to buy. We just have to realize that our value to the world is not as its ultimate consumer driven economy, but it ultimate knowledge driven economy. If we take that context, we can start making better, more rational decisions about how we invest in our future.

We can move from the simplicity of shovel-ready roads, to the wealth of knowledge exchange that increases the net value of the entire world, and can be delivered in cost effective ways that don’t damage the environment. So let’s us teach our best lessons, and share our worst, so that the world may take advantage of our knowledge, and avoid our mistakes.

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Why Obama’s Rush to Labor Regulation May Drive Reinvention Rather Shore Up the Safety Net

Reposted From the Future of Work blog 1/22/2009T

he cover story for the January 19, 2009 Workforce Management Magazine reads:

More Labor for HR

which speculates on the following litany of legislation from the Obama team, to be lead by soon-to-be Secretary of Labor, Hilda Solis:

• Easier formation of unions
• Support for pay discrimination legal action
• Guaranteed paid sick days

all covered in one way or another by…

• the Employee Free Choice Act
• the Lilly Ledbetter Fair Pay Act
• and the Healthy Families Act

Although all well intended, the workforce no longer exists at the behest of industry. Current layoffs demonstrate the disposable nature of human capital investments, and emerging models of employment favor contingent work that is in many cases more amendable to individuals and more easily managed than employees by organizations.

This legislative agenda may well precipitate the redefinition of labor in America rather than shoring up traditional shortcomings. Over the next decade the relationships between people and those who pay them (note, I did not say employers) is well positioned for a fundamental shift to freelance work where the workers manage their own benefits, manage their own healthcare and obtain training and benefits via associations rather than employers.

As the new administration and congress move to be swift and bold, they also need to be thoughtful and cognizant about the outcomes they enable, some of which may run counter to their intent.