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Future of Work

New Awards Approved in Core RSF Programs

November 19, 2014

Thirteen new research projects in the Russell Sage Foundation’s Behavioral Economics, Social Inequality, Immigration, and the Future of Work programs were recently funded at the Foundation’s November 2014 meeting of the Board of Trustees.

The Foundation’s Behavioral Economics program supports research that incorporates the insights of psychology and other social sciences into the study of economic behavior. The following projects were recently funded under the program:

New Awards Approved in Social Inequality and Future of Work Programs

July 15, 2014

Several new research projects in the Russell Sage Foundation’s Social Inequality and the Future of Work programs were funded at the Foundation’s June meeting of the Board of Trustees.

The Foundation’s Social Inequality program examines the social and political consequences of rising economic inequality. Recently, the program has turned to in-depth examinations of public education and intergenerational social mobility, funding projects that examine access to early education, growing wealth disparities in the U.S., and the effects of household wealth on child development, among others. The following projects were funded under the Social Inequality program:

Job Quality in the United States

July 1, 2013

Writing in the journal Social Forces earlier this year, Vicki Smith of University of California, Davis, praised two of our recent books on job polarization trends -- Good Jobs, Bad Jobs (Arne Kalleberg) and Good Jobs America (Paul Osterman and Beth Shulman) -- as important additions to the growing literature on "employment precariousness":

Good Jobs, Bad Jobs methodically traces the causes and consequences of the polarization of jobs into good and bad, and the rise of precariousness across occupations and professions. Seeing the current era of uncertainty as a moment in an ongoing “double movement” (a concept coined by Polanyi) between flexibility (characterized by the dominance of unregulated markets and the subsequent disruption of social life) and security (characterized by the dominance of government interventions that buffer individuals and families from market dynamics) over the course of industrial capitalism, Kalleberg carefully addresses each facet of polarization and precariousness, analyzing data from a wide variety of sources to answer questions that have been debated vigorously by sociologists and economists. His goal is to weave together many different strands of precariousness and polarization (indeed, they are mutually constitutive, in that developments in one domain often exert pressure on another) that have created a deeply worrisome set of employment relationships.

[...]

Osterman and Shulman reveal the flaws in popular myths about the low-wage labor market and about social mobility in the United States. today. Two are striking: adults’ participation in low-wage markets is transient (thus, we shouldn't fuss too much about it as an impediment to long-run social mobility), and they simply need to develop their human capital to ascend from them. Osterman and Shulman argue that the vast majority of people who hold low-wage jobs are stuck there. The jobs are dead-end and offer no opportunity for learning new skills or for vertical mobility. Furthermore, Osterman and Shulman doubt that increasing education or skill levels is sufficient to enable many workers to access “good” jobs. Their goal is straightforward: below-standard jobs must be improved, by paying better wages (not wages that consign people to membership in the working poor), building job ladders that link low-wage positions to better compensated positions at higher levels in and between organizations, and instituting training programs for low-level employees.

Workplace Violation Rates in the Low-Wage Sector

February 22, 2013

After President Obama's call for a higher federal minimum wage, much of the public debate over the proposal, including on this blog, has focused on the impact of the minimum wage on the labor market and on business profits. But a new study funded by the Foundation suggests that the potential disemployment effects of a minimum wage hike -- if any -- should be only one part of a wider discussion of working conditions in the low-wage sector. Using a novel measurement technique, the study investigates how many employers in low-wage industries pay the existing minimum wage -- and its results are quite sobering.

In their article in the latest Social Forces, Annette Bernhardt, Michael Spiller and Diana Polson draw from a landmark representative survey of frontline workers in low-wage industries to reveal disturbingly high rates of workplace violations, including minimum wage, overtime and other employment laws. The study is especially notable because measuring labor law violations is notoriously difficult: low-wage workers are hard to reach (and to accurately sample), and employers are unlikely to admit to breaking labor laws. For their data, the authors rely on the 2008 Unregulated Work Survey, which used Respondent-Driven Sampling to reach more than 4,300 workers in low-wage industries in Chicago, Los Angeles and New York City. The authors summarize their conclusions:

We found high violation rates of a wide range of employment and labor laws, with fully 67.5 percent of our sample having experienced at least one form of wage theft in the previous work week. We also document high rates of employer retaliation when workers made a complaint or tried to organize a union, and a workers' compensation system that is essentially nonfunctional in this part of the labor market. These prevalence rates, combined with the substantial amount of stolen wages (15% of wages due, on average), suggests that workplace violations are becoming standard practice in the low-wage labor market.

Reviewing the Research on the Minimum Wage

February 19, 2013

Last week, we shared some of our research on the minimum wage's impact on labor markets. Anrindrajit Dube, one of our grantees (and co-author of this important study on San Francisco's living wage ordinance), appeared recently on MSNBC's Up With Chris Hayes show to give a broad overview of the conventional economic wisdom on the minimum wage, and why recent empirical evidence (including his own work) has complicated the argument. Watch the clip below (Dube starts to speak around the 4:00 minute mark):

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The Impact of Raising the Minimum Wage

February 13, 2013

In his State of the Union address, President Obama voiced support for raising the federal minimum wage, a deeply controversial move that has often divided economists and policymakers. Conventional economic theory suggests that raising the minimum wage will lead firms to cut production costs and jobs. Over the past decade or so, the Russell Sage Foundation has funded several studies that assessed the actual impact of minimum wage increases in cities and states across the country. Links are included below:

  • Schmitt, John and David Rosnick. 2011. "The Wage and Employment Impact of Minimum‐Wage Laws in Three Cities," Center for Economic Policy and Research.
  • This report analyzes the wage and employment effects of the first three city-specific minimum wages in the United States –San Francisco (2004), Santa Fe (2004), and Washington, DC (1993). The authors use data from a virtual census of employment in each of the three cities, surrounding suburbs, and nearby metropolitan areas, to estimate the impact of minimum-wage laws on wages and employment in fast food restaurants, food services, retail trade, and other low-wage and small establishments.

  • Powers, Elizabeth T. 2009. "The Impact of Minimum-Wage Increases: Evidence from Fast-Food Establishments in Illinois and Indiana," Journal of Labor Research Vol. 30 (4), pp. 365-394. (Gated)
  • Fast-food establishments in Illinois and Indiana were surveyed during a period of state-mandated minimum-wage increases in Illinois. While entry-level wages of Illinois establishments rose substantially in response to the mandated increases, there is little evidence that Illinois establishments ameliorated wage increases by delaying scheduled raises or reducing fringe benefit offerings. There is little evidence of ‘labor-labor’ substitution in favor of women, better educated, or teenaged workers, or increased worker tenure at the new wage, but weak evidence of increased food prices. In contrast, there are large declines in part-time positions and workers’ hours in Illinois relative to Indiana. Aggregate figures from the Bureau of Labor Statistics support relative declines in total fast-food employment in ‘downstate’ Illinois counties, as hypothesized. However, establishments’ responses do not appear proportionate to the strength of the minimum wage change.

Praise for RSF's book Good Jobs, Bad Jobs

January 24, 2013

In the latest issue of the American Journal of Sociology, sociologist David Grusky reviews Arne Kalleberg's RSF book, Good Jobs, Bad Jobs, a wide-ranging, empirical investigation of polarization in the American labor market. Calling Kalleberg's account "masterful," Grusky writes:

The real contribution of Good Jobs, Bad Jobs lies in showing that economic and noneconomic forms of polarization are coming together, with the implication that those at the top are not just securing an ever-larger share of national earnings but also an ever-larger share of the available autonomy, authority, and other forms of control over the work situation. If once there was a substantial band of middle-class jobs with middling amounts of autonomy or authority, now that middle class has withered away and U.S. workers either have good jobs with much control over the work situation or bad jobs with virtually none. At the same time, Kalleberg shows that the mean level of many noneconomic rewards has increased over time, although job security has decreased and is accordingly an important exception to this overall upgrading trend.

Precarious Work in Polarizing Times: A Symposium on the RSF Book Good Jobs, Bad Jobs

November 28, 2012

long-term careWork and Occupations, an international journal of sociology, has published a special issue that analyzes Arne Kalleberg's RSF book, Good Jobs, Bad Jobs. Published in 2011, the volume shows the rise of precarious employment since the 1970s and suggests policy strategies to address the effects of today's volatile labor market. The journal contains several contributions from several RSF authors; their abstracts are reprinted below. To read the entire issue, click here; to learn more about Good Jobs, Bad Jobs, read our interview with him.

Eileen Appelbaum: Reducing Inequality and Insecurity: Rethinking Labor and Employment Policy for the 21st Century
In Good Jobs, Bad Jobs, Arne Kalleberg examines the institutional changes in the United States that led to a polarization of income and job quality, a rising share of poor quality jobs, and the increasing precariousness of work across the educational spectrum. He proposes reversing these developments through a new social contract that builds on the design principles that underlie flexicurity policies in the Netherlands and Denmark—flexicurity with an American face. This article discusses the roots and promise of flexicurity to address the problems Kalleberg has identified. It also examines the limits to flexicurity and proposes additional policies to fulfill this promise.

Annette Bernhardt: The Role of Labor Market Regulation in Rebuilding Economic Opportunity in the United States

In the search for policy solutions to rising inequality and precariousness in the United States, this essay argues for the central role of labor market regulation. It presents research and policy evidence for a three-pronged approach: (a) strengthening the floor of labor standards (wages, health and safety, and right to organize chief among them); (b) vigorously enforcing that floor; and (c) leveraging government contracting and grants to build a base of good jobs on top of that floor. The essay concludes that getting to scale in the current political climate will require ratcheting up from state and local policy campaigns to federal reform.

Wal-Mart Wages

November 26, 2012

Thousands of Wal-Mart employees protested working conditions over the Thanksgiving holiday weekend. Retail workers have many complaints, including Wal-Mart's low wages ($8.81 on average) and its recent decision to start Black Friday at 8 p.m. the night before. In a recent op-ed, Annette Bernhardt, a former visiting scholar and co-author of Low-Wage America, argues that Wal-Mart could improve workers' conditions without sacrificing its profitability:

There is nothing inevitable about Walmart's low wages, because plenty of retailers, including Costco, are profitable while paying a decent wage. In fact, a new report by Demos asked what would happen if all large retailers in the U.S. raised their starting wage to $25,000 a year (a quite modest benchmark). The researchers found that 1.5 million workers and their families would be lifted out of poverty. The cost would equal just 1 percent of total annual sales, presumably something these companies can absorb, given that many have been making record profits during the recovery (Walmart alone made more than $15 billion in profits last year). Moreover, study after study shows that when workers are paid more, they are more productive and stay on the job longer, cutting retraining and turnover costs. Still, let's say retailers passed on half the cost to consumers; Demos estimates we'd pay a mere 15 cents more in each shopping trip, or $17.73 a year.

Medicaid and Long-Term Care: An Interview with Leonard E. Burman

Rohan Mascarenhas, Russell Sage Foundation
November 6, 2012

long-term careLeonard E. Burman is Professor of Practice in Public Administration and International Affairs at Syracuse University. An expert in public finance and modeling the effects of government policies on individuals' and firms' decisions, Burman contributed a chapter to RSF's free e-book, Universal Coverage in Long-Term Care in the United States.

Q: First, we should establish some facts. How do Americans pay for long-term care? Is it mostly informal, unpaid work – assistance from families and friends – or do private insurance and Medicaid pay most of the bill?

A: Family and friends provide a lot of informal care and most people with long-term care needs live in the community, not in nursing homes. Medicaid pays for about 40 percent of the cash costs and Medicare pays for 23 percent. The rest is paid for by private insurance or out-of-pocket.

Q: You write that if current trends persist, we could face a fiscal “catastrophe.” How big of a burden is long-term care on the Medicaid budget, and why do you think it will increase “dramatically” in the coming decades?

A: Medicaid is a large and growing share of the federal and state budgets and almost one-third of Medicaid goes to cover long-term care expenses—a share that will rise over time. In 2009, federal and state spending on Medicaid was about 2.7 percent of GDP. That is more than half of spending on defense, which is less than 5 percent of GDP. In 2008, 30 percent of Medicaid spending paid for long-term care, but that percentage will increase dramatically over time as baby boomers age and their long-term care needs rise. Assuming a continuation of current policy, demographic and health cost trends, federal and state spending on Medicaid will exceed spending on defense by 2040.

Two factors drive this rapid growth. First, the proportion of the population aged 85 and over will almost double between now and 2040. More than one-fifth of this group was in nursing homes in 1995. Second, health care costs continue to grow faster than the economy—by more than two percent per year on average. Assuming nursing home costs track health care spending, this translates into steadily increasing Medicaid spending relative to GDP.

Q: A major argument in your chapter is that “the incentives in our long-term care system are all wrong.” I wanted to focus on this point – are you saying that if Medicaid didn’t exist, more Americans would save more for long-term care insurance? Isn’t it also possible that Americans simply underestimate their future need for long-term care, or that the private insurance market isn’t a viable option for many?

A: There’s a lot of evidence that people underestimate the cost of long-term care and the private insurance market certainly has a lot of problems, but public policy should aim to address those problems. Instead, it exacerbates them. Medicaid amounts to a 100-percent tax on assets above the threshold for eligibility for assistance (typically, $2,000 for a single person), which provides a powerful disincentive to save. Medicaid also strongly discourages purchasing long-term care insurance because much of what is covered under private insurance simply replaces services provided for free under Medicaid.

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