How To Create 'Good Jobs'

MIT professor Paul Osterman spoke with Governing about his ideas for state and local governments that want to create "good jobs" in their area.
by | September 21, 2011
 

Job creation has become a hot phrase in the national discourse. A question asked less often: What kind of jobs should be created? Paul Osterman, a professor at MIT's Sloan School of Management, took that issue to task in a new book, Good Jobs America: Making Work Better for Everyone.

In it, Osterman and his co-author, the late Beth Shulman, lament the number of Americans working in low-wage jobs, many of them lacking benefits and an opportunity to grow. Governing sat down with Osterman to discuss bad jobs and what state and local governments can do to encourage businesses in their area to provide workers with quality work conditions, livable wages and future career paths.

For his purposes, Osterman defines a "good job" in terms of wage level. Employees working a good job would earn above a poverty-level wage -- what it would take to raise a family of four -- which amounts to a little more than $10 an hour. Osterman says he considers that to be a "very conservative" description of a good job, as other aspects such as decent benefits and acceptable work conditions are not considered.

Using those parameters, Osterman estimates that 20 percent of Americans currently stuck in "bad jobs." If the other factors were taken into consideration, he says the percentage "would be so high... it would strain credulity, even though it would be right." There is no singular source for this, he says, but a stagnant minimum wage, which is lower when adjusted for inflation than it was in 1968, and the weakening of workers unions served as a couple of catalysts to the influx of bad jobs.

"I'm very concerned," Osterman says. "Over the last 20 years, there's been a great surge in inequality in the labor market with people at the bottom facing much more difficult circumstances and getting a smaller and smaller share of the national income."

In the book, Osterman made the Rio Grande Valley in Texas a focal point of his research. According to his estimates, from January 2000 to January 2010, employment in that area grew by 42 percent, compared to one percent nationally.

Osterman's closer look found that between 2005 and 2008, the median wage for adults was $8.14, well below Osterman's target for a living wage. One in four adults earned less than $6.19 an hour. He documents stories of hardship from people living on meager compensation. Type 2 diabetics declined to treat their disease; parents were forced to miss teacher conferences for their kids because they couldn't take time off work.

Those conditions aren't sustainable for a healthy society, Osterman says. But what would he say to those who would argue that one must choose between more "bad" jobs or fewer "good" jobs? Isn't it better to employ more people, even if they earn less money and have fewer benefits?

"That's a false trade-off. You don't have to make that choice," Osterman says. He points to France, with its higher minimum wage, and Germany, with its strong labor movement, as two competitive developed economies that employ more people with better jobs than the U.S. "Now I'm not suggesting we adopt those countries' specific policies... but I would not accept that dichotomy."

But how can such fundamental change be achieved? Given the present national political climate, Osterman says he isn't optimistic that the federal government will institute any radical reforms in the near future. But he does see positive movement at the local and state level. For example, in 2006, minimum wage referendums passed in six states.

As for corporations, change would have to come via a carrot-and-stick approach by "partly convincing, partly compelling" them, Osterman says. Eventually, he says,  the benefits of better wages and working conditions will become self-evident as productivity improves and turnover slows down.

It will be a gradual and laborious transition, Osterman admits, but state and local governments have a variety of tools at hand to facilitate it.

Higher state minimum wages and requiring living wages as a prerequisite for job creation tax incentives would be an easy place to start, Osterman says. Other tactics he lists: Link approval of large-scale developments with living wage requirements for construction workers and future employees. Encourage employees to have a voice through unions or community groups. Work with companies to develop and fund training programs for their employees, which could lead to more opportunities to grow and advance.

Osterman says he is encouraged by some of the innovations he sees in some states and municipalities around the U.S. on these fronts. In Pennsylvania, legislation passed in 2005 injected $91 million into training programs for high-demand occupations. In Maryland, the Baltimore Alliance for Careers in Healthcare has given non-union workers an opportunity to move up the career ladder. Project QUEST and the Wisconsin Regional Training Partnership are other well-known examples of innovative career advancement projects, he says.

"It's hard today to be too encouraged about the economy or politics at the national level, but I think that we're going to see more and more state and local activity on these issues," Osterman says. "I think there is reason to be hopeful that it will aggregate and build up over time."

"I want people to believe two things," Osterman continues, outlining his hopes for the book. "One that the myths that block action -- that you can't do it, that it's counterproductive and you have to choose between jobs and job quality -- those myths are wrong. Then, I want people to see that there are policies out there that are effective."

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