Richard Florida
by Richard Florida
Wed Mar 18th 2009 at 3:46pm UTC

The Creative Economy, Bailouts, and Good Jobs

Matt Yglesias has a nuanced and reasoned response to my earlier post.

I think we need to distinguish between the bailouts and the stimulus here. And then within bailouts, we need to distinguish between the auto bailout and the financial sector bailouts.  So, starting with bailouts. The problem comparing the two bailouts is that social justice considerations and economic considerations point in different directions here …

On stimulus, I think that how well this turns out will ultimately hinge to some extent on the success of the programs. In principle, the stimulus spending—which largely goes to infrastructure, to education, and to health care—ought to greatly facilitate economic transition to the kind of “creative” economy Florida’s envisioning. To the extent that that money winds up wasted on programs that are ineffective we will have bought short-term demand at the price of stalling on long-term adjustments. I’d still say that’s a price worth paying, all things considered, but obviously it’s a good deal worse than a scenario in which these investments turn out to pay off in the long-run in the form of a healthier, better educated population able to move on better transportation and take advantage of faster broadband.

Little to take issue with here. His commenters raise the larger and critically important question of how to fill the gap in high-paying, stable, high-quality jobs for folks without, say, college degrees or who are not members of the creative class.

Max writes:

People like Florida have been arguing for trashing the industrial base so long, they don’t seem to notice that, absent finance, we got nothin’… and certainly no employment for the Richard Florida’s of the world.

First things first: I’m not now nor have I ever been anti-manufacturing, anti-industrial base, or anti-working class. My first book with Martin Kenney was entitled The Breakthrough Illusion: Corporate America’s Failure to Move from Innovation to Mass Production (Basic Books, 1990); my second also with Kenney, Beyond Mass Production (Oxford, 1993) summarized the findings from our large-scale study of leading-edge Japanese manufacturing techniques and how Japanese transplants factories like those of Toyota, Honda, and their suppliers were able to successfully build cars in America with American workers. John Krafcik’s study of the GM-Toyota joint venture, NUMMI, showed how GM’s hubris prevented it from learning much about Toyota’s revolutionary production system. Toyota took great advantage – NUMMI became a “laboratory” for how it could produce cars in the States using unionized UAW workers. Then there’s the story of the fit Lee Iacocca threw after recieving a commissoned study of the Japanese transplants – flinging the document against the wall, stomping his feet, and screaming more or less: “They want us to give up our private lunch room and eat with the workers and our own parking spots, the hell with that.” Nuff said.

I have long said that the inspiration for my theory of the creative economy isn’t hip cities, or gay neighborhoods, or even Apple or Google. It comes from my early, ground-level studies of Toyota where top management essentially told me more than 25 years ago: “We will win and the Big Three will lose. The problem is in your heads and the way you manage. You think the key to success is having a big-shot CEO,  lots of engineers, and scads of high-priced MBAs. We know better. The key to our success lies in mobilizing the collective knowledge, intelligence, and creativity of our factory workers.” Time sure seems to have proved them out. And as I have recounted many times, these are more or less the same words my own father – a factory worker of more than 50 years - told me about the plant he worked in.

Josh G. gets to the nub of the matter:

The problem with a “creative economy” is that it doesn’t have any answer about what to do with the large segment of the population that are non-college graduates. Only about 25% of the adult working population has a Bachelor’s degree or higher. Let’s say that we could double that without watering down standards if we put a lot more money and effort into elementary education, reducing child poverty, cheaper college, removing all the lead paint from the slums, and so forth. Great. That still leaves half the population without a degree. What do they do in the “knowledge economy”? The unspoken answer is that they become low-paid servants. In the long run, I don’t see this as being sustainable.

Some people, for various reasons, are simply not intellectually and/or temperamentally suited to a college education. We as a society need to provide these individuals with employment opportunities that allow them to live in dignity and raise families. The old manufacturing economy did this very well. The new “knowledge economy” – not so much.

Two things here. First, the creative class is a broader category than college-educated people. The creative class accounts for 40 million jobs, roughly a third of our workforce – that’s in-and-of-itself bigger than the share of college-educated people in the adult population. And, as my colleague Charlotta Mellander has found (albeit for Sweden), while nine in 10 people with college degrees work in creative class jobs, half the jobs in the creative class are done by workers without such degrees. In fact, it’s why I came up with the concept of  creative class in the first place – I wanted to examine economic growth not just by looking at education level or “what people learn,” but by zeroing in on the actual jobs they do.

Second, the creative economy is made up of three great classes – not two. In addition to the creative class (roughly a third of the workforce and half of all earnings) and the working class (between a fifth and a quarter of the workforce) is the biggest class of all – the service class, with more than 40 percent of all jobs. These are jobs in food prep, retail trade, and the like. They are mainly low-skill and low paying – the lowest paying of all. Creative class workers make twice what working class people make, but three times what members of the service class make. While working class work is relatively stable, and is made up of a lot of  family-supporting “men’s work,” much of the service class work is unstable and concentrated among less-advantaged groups, women, and single-headed households.

So, we can keep wishing and hoping for manufacturing and working class jobs to come back – and trying to breathe life back into them or protect them. Or we can try another route.

We can work to make service jobs better, more stable, more innovative, and higher-paying jobs. Roger Martin and I outline such a strategy in our recent report to the McGuinty government, Ontario in the Creative Age.

It’s doable, actually. We did it once before – by turning a huge number of manufacturing jobs from ”bad” jobs (the kind Marx liked to impugn capitalism for, or what William Blake dubbed “satanic mills”) into the “good jobs” we bemoan losing. This was a big part of the New Deal – the Wagner Act specifically - which made it easier for workers to form and join unions and to bargain collectively. This ultimately helped to accelerate the transformation of factory jobs from low-paying, unstable, subsistence-level work into much higher-paying, stable, family-supporting work. As scholars of post-war “fordism” have shown, it was this mass increase in working class wages which was a key structural force behind mass prosperity.

My factory-worker father told me as much as a young boy: When he started working in the factory at 13 years of age, it took all nine members of his immediate family - my grandfather, my grandmother who worked in a Newark bakery, my dad, and his six brothers and sisters to make a single living wage. But upon returning from infantry service in World War II, all that had changed. Somehow, as if by magic, his bad job had turned into a good one – complete with high wages, good benefits, and stability. It paid enough so my mother could quit her job, they could buy a house, put us through Catholic school, and ultimately through college.

Manufacturing jobs are not pre-ordained as good jobs. We made them good jobs – through worker struggle, public policy change, and massive institutional innovation.

The same kind of thing can – and must – be done with today’s largest class of service jobs. These are the low-skill, port-of-entry analog to the factory jobs of the past. Service jobs come with an added bonus. Many of them are strongly rooted in place and virtually impervious to off-shoring. Whether it’s preparing food, waitering, or cutting hair a huge number of service jobs must be done in-person. That’s why they call them “personal services.”

We can use the same basic principles of the best manufacturing work distilled from quality manufacturing and the Toyota Production system - work teams, worker engagement and involvement, and continuous improvement - to upgrade service work, make it more innovative and productive, and ultimately higher-paying, more stable, and better. Heck, given the massive and geographically uneven hit to manufacturing employment, men are losing their jobs at a much faster pace than women, and many women in service and care-giving occupations have become their family’s main bread-winners.

So Josh G. is right to a point: Left to its own devices without policy change and institutional innovation, our economy will become more and more divided between a creative class elite and “low-paid servants.” But that’s not our only choice. We have a huge opportunity to transform the growing mass of service jobs  into better, more innnovative, more engaged, more dignified, and higher paying forms of work. We did it 70 years ago for manufacturing work. We can surely do it again.

For the life of me, I cannot understand how and why, across the entire the entire United States, there is near-complete silence on the need to upgrade service work. Tomorrow, President Obama should call for a national summit on improving service work bringing together leading companies in the U.S. and across the world from Whole Foods to Starbucks and Ikea who are already doing this. The opportunity, as my mother was wont to say, is “as clear as the nose on your face.”

I’ll have much more to say on how in the future, but for now I’d love to hear what you think.

33 Responses to “The Creative Economy, Bailouts, and Good Jobs”

  1. Swordsman Says:

    Service and retail workers get the shaft a LOT, no joke. Great article and great explanation of the Creative Class and manufacturing jobs in summary.

  2. Ian David Moss Says:

    Great post. My immediate observation is that while they are certainly in the minority, a few prominent companies such as Starbucks and Whole Foods have taken steps to treat their service-class employees as professionals rather than chattel. Southwest, as well.

  3. Michael Wells Says:

    As you say, the thing that made manufacturing into good jobs was collective bargaining. Even non-union manufacturing industries like high-tech pay their workers well and have good benefits to keep unions out — so the workers benefit. Service jobs will become good jobs when their workers organize, whether in traditional AFL-CIO unions or not. As Buzzcut pointed out a couple of posts ago, the unions can also be hidebound obstacles to progress whether its keeping out minorities, continuing the unhealthy “working class” lifestyle and 1950’s attitudes, or standing in the way of industrial reorganization.

    Second, the companies that are figuring out how to use service workers have to make it part of their whole culture. As I’ve ranted on this blog before, Starbucks service in airports is qualitatively inferior to the streetcorner Starbucks. And Whole Foods seems to have happy employees but their products are mediocre. In Portland the local chain New Seasons way outperforms Whole Foods in quality and freshness of produce and fish, as well as employee attitudes. In the long run “organic” by itself won’t cut it. Southwest seems to be able to keep adapting and innovating and many of their original flight attendants are now millionaires from employee stock options.

  4. Kelly Houston Says:

    Florida’s commentary above stands in stark contrast to his comments earlier in the week on the quality-of-life and life satisfaction of members of the working class. Turning personal service jobs into family-supporting, stable jobs makes the jobs better, but does not create a class of people whose life quality is necessarily better than that of the (educated) people in the creative class. Whole Foods and Starbucks play lip service to the well-being of their employees, but paying marginally higher wages than the local supermarket or donut chain and calling your employees “Team Members” does not mean that their employees are treated like professionals. In fact, I would argue that, in order to change in personal service professions into jobs with the potential to contribute to *both* the intellectual and economic well-being of workers, there would need to be a broad cultural shift in our approach to these kinds of work.

    My husband and I have recently relocated to Germany, where it is interesting to note that there is a cultural expectation that that people who work in many service jobs are truly professionals. Expats often complain about the lack of service here, but my experience is that service professionals generally have a professional level of knowledge which is recognized by their clients and customers. In the US, it has been my experience that personal service workers are not well-respected for their knowledge and experience, whether or not they are well-paid and/or trained by their employer. This is a major barrier to applying a Japanese-style employee management and training framework to the service sector. A manufacturing plant is a contained environment where a culture of professionalism and respect can be cultivated. Service work, by its nature, is not only about the relationship between employer and employee, it is also about the relationship between employee and customer. And as a whole, American customers may not be ready to give up their “servants”.

  5. Richard Florida Says:

    Kelly – Thanks for the comment. I agree entirely. In fact, this is almost exactly what my colleague Charlotta Mellander has been saying about Sweden.

    A few quick points.

    (1) I concur about that the examples are far from perfect. But the represent some alternative models that Americans and American policy-makers can begin to look at. They can and must be pushed further. But we can use even better examples if folks out there have them. Ultimately, we need a 21st century analog of the New Deal and Wagner Act to “push” the service economy into creating the kinds of jobs we need.

    (2) I think the Japanese management analog holds better. The best companies see a triangle of relationships employer-employee-customer. Engaged, well-paid, secure and motivated workers are the key node in that triangle. The SAS Institute has made this explicit in the way they organize and treat creative-professional workforce. But they also have done so with the service workforce they employ. SAS tends not to outsource this work, instead they internalize much of it, creating secure, relatively high-pating jobs (I touch on this in my article with SAS founder Jim Goodnight in the Harvard Business review). So service workers are in a good position to complete this triangle. I know Best Buy has made steps in this direction seeing employee engagement and the empoyee-customer connection as key. Sure, there is a lot more to be done here, but at least there are some starting points.

    (3) Work in factories was and still can be horrible work, just terrible. And as my earlier posts showed, states with large concentrations of working class jobs tend to have poor economic outcomes and to be not-so-great places to live. Service class jobs have few of these built-in issues and externalities. In some cases, it seems to me easier to transform service class work into more of knowledge based work and respected work. You can almost see glimmers of it already, even in the US, in the greater cultural “similarities” between elements of the creative class and some service workers like barristas, Whole Food workers, hair cutters and the like, than between the creative class and members of the working class. I don’t want to over-stress or push this point to far, there are real divides here, but there are pathways for economic and cultural change and common-ground here as well.

    I also should add that a big part of the problem is that we also need to upgrade lots more manufacturing work into knowledge work, and transform many more manufacturing plants into better, more human places to work.

    4) All that said, you are spot on about the cultural divide that still persists. People in the US had well better get over any residual “servant” menatality. In the last chapter of RISE I called on members of the creative class to “grow up.” This is exactly what I meant.

  6. Buzzcut Says:

    Well, my view is that unionism had nothing to do with rising wages. Simple productivity did.

    How would we go about resolving the difference in opinion. Is it provable one way or the other?

  7. Buzzcut Says:

    Regarding the knowledge of retail workers, Circuit City is a great example of how that knowledge is not valued at all by consumers. Circuit City had workers that were paid commissions, and tended to have a good knowledge of what they were selling. Best Buy just pays a straight wage, and its employees often don’t even know what’s in stock (seriously, you know more if you check BB’s web site).

    Best Buy is in business, and Circuit City is gone. What does that tell you?

    With the internet, there’s a lot of ways for consumers to educate themselves these days. Having a knowledgable salesperson isn’t valued, I think, as a result. I myself can’t tell if a salesperson is trying to impart knowledge, or is just full of it and trying to sell me on something I don’t really need. It’s not a good feeling.

  8. Michael Wells Says:

    Buzzcut,

    You seriously think the workers you referenced earlier who are making $200,000 a year are getting paid those wages, double time for overtime, etc. because of productivity only?

    As Daniel Moynihan said, you’re entitled to your own opinion, you’re not entitled to your own facts. Read any history of the 1920’s to 1940’s for the role of unionism in rising living standards.

  9. Swordsman Says:

    Productivity is not tied to wage increases. The last 8 years proved that without a shadow of a doubt.

  10. Buzzcut Says:

    Like I asked Michael, how would we prove one way or the other?

    Sorry, I don’t take the opinions of historians, Marxists to a one, as gospel.

    There is data. How would we go about analyzing that data to prove one thesis or the other? Maybe analyze wage gains in unionized industries vs. non-unionized?

    Keep in mind that wage data in more recent times needs to take benefit levels into account, especially heath insurance.

  11. Swordsman Says:

    I think you’ll find average productivity from 2000 to 2008 has gone up on nearly all accounts and median wages have stagnated or gone down, and there is a higher percentage of people with less benefits, including but not limited to health care.

    Buzzcut, it would be really hard to argue the opposite.

    http://worthwhile.typepad.com/worthwhile_canadian_initi/images/uswages.png

  12. Buzzcut Says:

    Swordsman, that’s actually a very timely issue. There is some evidence that our productivity measurements are being skewed by outsourcing. Work is being done for multinational corporations offshore, and that work is not being captured by our existing productivity statistics. So the stats are better than reality.

    There is academic work going on on this issue. It’s an interesting story, but it remains to be seen if it is true or not.

  13. Charlotta Says:

    Last year in November, Kevin Stolarick of the Martin Prosperity Institute was visiting me here in Sweden and sent an email to me and Richard about the differences in service levels in Sweden compared to the US which was in line with Kelly’s note above. This is completely in line with what I think, and this I have been saying for years — we have upgraded the service class to a much higher extent than what you’d find in North America. I assume there are several reasons for this, but one is the higher minimum wages. If you have to pay more, you expect more from your employees. However, this also implies that services are much more expensive, which in the end affects the demand for them. Not all people can afford this. So, instead, we clean our own houses, do our own laundry, pack our own food in bags in the grocery stores etc — and this takes time, not the least for the so called creative class.

    And this I think raises some very interesting question — is it, from a holistic perspective, really an optimal use of time for creative workers, whose time might be more valuable in some other economic activity? But also– I constantly hear my NA academic colleagues talk about how they want an upgrade of the service class — but this implies paying higher wages (because of the productivity increase), and are people in general interested in this? Is the creative class willing to give up this “privilege”, to have cheap labor supporting them with cheap services?

  14. Swordsman Says:

    Buzz, I hadn’t thought about outsourcing (oh, boy, you do NOT want to get me started on THAT), but interesting take.

  15. Swordsman Says:

    Charlotta, I’ve found the same thing about service employees in the Netherlands. People chose to do what they did for a living, it wasn’t that they could not find another job. And they could make a living at what they did, maybe not a stellar living, but they weren’t starving to death or taking welfare checks either. It seemed a happier deal all around, IMHO.

  16. tom barthelemy Says:

    Perhaps another question should be thrown into the mix: Why has it become so difficult over the past ten years to recruit new workers into the skilled trades? These are jobs that pay quite well and are in little danger of being outsourced to other countries, but enrollment at trade schools has been on a steady decline.

    Of course the construction trades are suffering through the housing crisis, but a significant part of the workload for HVAC folks, plumbers, others, is in service work which is only going to increase as the average age of our housing stock is increased.

    I am a carpenter myself, one with undergrad and grad degrees, but I still work with my hands. The work is rewarding and creative. Why so few people in their 20’s are going into it is beyond me.

  17. Alex Matheson Says:

    It sounds like Tom is happily engaged in what society perceives as “underachieving work”. That is he could use his education more directly in a ”creative class” occupation yielding more income and less callouses, although not necessarily more satisfaction.
    It may be that this type of work involves a certain area of his brain, while allowing other areas simultaneously to follow fancy contemplating aspects of society and thought.
    In a sense he may effectively be giving himself more enjoyable free time. With the dual opportunity he may be using more of his brain than the so called creative class worker.
    Most of us probably know people who are deemed ‘underachievers’ by society, but really aren’t. They may in fact be overachievers, but not in the way society measures.

  18. Buzzcut Says:

    Tom, the trades themselves are responsible for this. They do very little recruitment. Kids don’t know that you can get into these apprenticeship programs and GET PAID to learn. The schools do very little to make these programs known, either. Teachers, being college grads themselves, are very college oriented, and may not be confortable pointing kids in a direction that they’re not familiar with.

    Basically, unless you have family in a trade, you are very unlikely to even know that it’s an option. And this is in trade heavy Indiana, it must be even worse in areas where the trades are a much smaller % of the workforce.

  19. Buzzcut Says:

    There are a lot of creative aspects to the trades. For example, they don’t call them “pipe fitters” for nothing. Getting stuff to fit and work takes a lot of analysis and yes creativity. This is absolutely the part of the job that most tradesmen like the most. That, and telling the engineer (me) how I messed up.

  20. Swordsman Says:

    That’s interesting. These folks might fit into what Richard terms “technicians” in Flight of the Creative Class.

  21. tom barthelemy Says:

    Construction tradework involves varying levels of what is commonly called creativity, but it all involves problem analysis and problem solving. I might be somewhat guilty of being thinskinned, but am always ready to push back if someone starts talking about using my brain instead of my back. Just try doing a simple framing project without straining the brain.

    We see lots of athletic types who are unable to do the conceptualization required to come up with solutions that work. Also botched-up projects done by folks from the professional world, hopefully on their own homes, but not always.

    I was drawn to carpentry because it involved bringing ideas from the theoretical to solid reality. I have specialized in finish work because that’s where the highest level of aesthetics is found. And I’ve personally designed 80% of my projects.

  22. Michael Wells Says:

    Buzzcut,

    I’ve been out of town a few days so this will refer back a bit. But I would like to discuss the union question. Are we talking about the same thing? I wouldn’t disagree that productivity has created the increasing operating surpluses out of which rising wages are paid. If that’s what you’re saying, then we agree.

    But if you’re saying that as productivity goes up, companies would automatically increase the wages of their hourly workers without other factors including unions, I’d disagree. Yes, there is numerical data and you can analyze it. But there is also factual history of organizing, strikes and political campaigning over decades that resulted in things like the minimum wage, extra pay for overtime, and countless labor agreements that have raised wages. I’m not sure who you go to for history if not historians, but this isn’t opinion — it’s documented events.

    A few comments:
    In another post we had this exchange: “Another benefit is that the company will pay the upwards of $200k with all the overtime and doubletime that people work.” “No doubt, it is great work if you can get it (at least on the money side. The work itself is tough). And to get it, you need to have an “in” with the union.” Leaving aside the sins and faults of unions, aren’t you agreeing that these wage levels come from union bargaining?

    I teach one graduate course at Portland State and belong to the AFT. Oregon faculty are paid less than in peer states and the legislature gave the university extra funds to raise faculty pay last year. The administration refused to raise pay. Adjunct faculty worked without a contract for over 6 months of dragged out bargaining. I attended one session and was floored by the administration’s refusal to provide basic information or discuss proposals. This was finally settled on the eve of a strike. Much the same thing happened with regular faculty, but I wasn’t present for that. It is absolutely clear that without the union, the university would have kept the funds for other (no doubt worthy) purposes and faculty salaries would have stayed static.

    Back in the 1980’s my girlfriend was a mid-high level executive in a large high-tech company. In talking to her and her peers and superiors, they were absolutely forthcoming in saying that a primary reason they paid good wages and benefits was to keep unions out. So a wage comparison with a union industry wouldn’t show that unions had no effect on wages.

  23. Swordsman Says:

    Many of the regulations we take for granted today: minimum wage, a 40-hour work week, overtime pay, OSHA regulations, child labor laws, equal pay for equal work, medical leave, vacations, and so forth, are due to union pressure. We’ve just forgotten that fact.

    The hate for unions is strong among a lot of the population. I’m not sure that’s because of how corrupt the unions were 30 years ago, or because of 25 years of propaganda from corporations.

  24. Buzzcut Says:

    But if you’re saying that as productivity goes up, companies would automatically increase the wages of their hourly workers without other factors including unions, I’d disagree.

    I think that I can figure out the data we’d need to do some correlations: unionization rates, wage rates (somehow have to get benefits spending in there as well), prices of the industries’ products (perhaps a lot of productivity is now going towards lower pricing), and corporate profitability.

    Is there a correlation between wage rates and unionization rates, controling for those other things? Maybe take it on a company by company or industry by industry basis.

    Those of you who have college library access would be in a better position than me to see if this kind of analysis has been done. Seems to me like it would have been done in some labor economics graduate program somewhere.

    aren’t you agreeing that these wage levels come from union bargaining?

    No, because I’m non-union, being a professional, and I’m pretty darn well compensated (I don’t work quite the hours some of these guys work, so I don’t make THAT much money).

    They’re compensated at those levels because of the industries that they’re in (energy and steel).

    Look, the US Steel mill in Gary used to have 100k employees, and now they’re down to less than 10k. Yet they make 7 or 8 times as much steel as they used to. It’s the productivity that allows these guys to be so well compensated. It is simple math. If they were not so productive, they simply could not be as well compensated as they are.

    If the money isn’t going to employees, where is it going? CEO pay? I don’t think so, they’re not overpaid to that extent. Is there any evidence that corporations are an order of magnitude more profitable than they were in the past? Has inflation been slayed on the backs of workers? If productivity is growing twice as fast as wages (which is the graph that Swordsman liked to), where is the money going?

  25. tom barthelemy Says:

    1. The non-union auto manufacturers – Toyota, BMW, Mercedes – are compensating employees at close to UAW wage rates, but without the union work rules that tend to strangle productivity. The UAW has yet to win a vote to bring the union to those plants.
    2. The modernization of the worker environment was largely accomplished by the unions, but their movement metatisized into something dedicated to keeping people out, to giving retirees the world on a platter while feeding off their younger members, and to keeping their own leadership in power as their indutries were driven off a cliff. The short story is that although the unions made valuable contributions to our work culture, that doesn’t mean they have their heads on straight today. I was a union member for ten years, but the local fell apart due to foolish foolish moves by both the union leadership and the local contractors. Everyone ended up in a hole.
    3. Buzzcut, the money is largely going to the stockholders, a group that yes, includes the workers and the executives. Unfortunately, this value can melt away rather quickly. Companies whose stockholders will accept a real-world rate of growth will have more $$ to pay everyone and invest in future technology. The market is a necessity and a good thing, but when companies are too focused on hitting quarterly numbers they are less focused on producing their product or service.

  26. tom barthelemy Says:

    Michael Wells: When productivity goes up it is usually because management invests in productivity and workers are trained to use it. This makes workers more valuable to the company and their retention more valuable. Junking or chasing away the people you have trained doesn’t make sense, so wages tend to increase.

  27. Michael Wells Says:

    Tom,

    Good comments.

    I wasn’t arguing the pros and cons of unions, many of them have certainly got their problems. I was just floored by Buzzcut’s statement that “unionism had nothing to do with rising wages. Simple productivity did.” And I wouldn’t argue that there aren’t other factors. Although in the last few decades there’s a correlation between declining union influence and stagnate wages for the lower 50%.

    Interesting sidelight, three companies have broken ranks with big business on the employee free choice act and they’re the service leaders mentioned above: Starbucks, Whole Foods and Costco. So the best service industry employers aren’t as afraid of unions. Probably a message there.

  28. Buzzcut Says:

    Michael, just wondering, why is the Oregon State admin “stiffing” the union? What’s in it for them?

    BTW, I’m pretty agnostic on private sector unions, but I think the public sector unions like yours should be banned. You can make an argument that need to ban together to have a similar level of power as business, but who are public sector employees banning together against?

    Taxpayers, that’s who.

    It is very unusual for public sector “management” (which is what your administration is) to fight very hard against the demands of their employees. And public employee unions throw their money and manpower behind their preferred candidates to such an extent to make a mockery of representative democracy. They have so much more at stake than the average citizen that it just isn’t fair.

  29. Michael Wells Says:

    Buzz,

    I was pretty surprised myself. The legislature added a few million to the University’s budget for faculty salaries, but didn’t spell out how it would be spent. To the extent they could keep salaries low, the administration could put the money in their general fund. I sat in on the bargaining session out of curiosity and because the union rep is an old friend who wanted some bodies in the room — it was a real eye opener.

    From my point of view, the legislature’s (taxpayer) contribution is minor. Graduate tuition for my class is $840. I regularly have 20 to 30 students, so the class earns roughly $20,000 a term. They pay me roughly $3,000 a term. They obviously have administrative costs and building expenses, but it’s still a pretty profitable class — especially since the fixed costs are there anyway. When I do a private training I get paid at least twice the amount for the same time.

    Part of our difference is you see the union as banding together “against” the administration and I see it as “for” the employees. In my case, I teach one section a term and have turned down additional sections. It’s not a major source of income and not worth putting in extra time. But some people pull together classes in a couple of colleges to jerry-rig a full time job paying maybe $25-30,000 a year. Increasingly, Universities use adjuncts to keep from paying high-priced full professors.

  30. Swordsman Says:

    Having been an adjunct prof in the past, I want to second Michael’s post. A lot of colleges, community colleges especially, hire a LOT of part-time faculty and pay them starvation wages. It’s basically a scam, but that’s what you get when you cut and cut and cut budgets. Eventually something gives somewhere.

  31. Buzzcut Says:

    It’s basically a scam, but that’s what you get when you cut and cut and cut budgets. Eventually something gives somewhere

    “Cut and cut and cut” the budget doesn’t jibe with tuition inflation across the industry.

    Like I asked with wages vs. productivity, I ask where is the money going? If tuition is inflating so quickly, but the schools are paying “starvation wages”, where is the money going?

  32. Swordsman Says:

    I have no idea, but it’s a damn good question.

    And Buzzcut, you’re right about tuition inflation too, and that’s a HUGE problem if we want to have a decently sized creative class that’s competitive globally when other countries make it quite affordable for their citizens to go to colleges.

  33. donald Says:

    Just stumbled across this post, but familiar with your work. Doubt anyone will see it, but a few points.

    1) There isn’t a real causal opposition between unionization and higher productivity in terms of pay increases. When labor is cheap, firms invest less in productivity-enhancing technology; when it’s expensive, they invest in it more, and that form of productivity goes up. Simple. If you want to jack up productivity for the long run, enforce increasing wage rates.

    2) It seems that the best option is combining characteristics of service and production industries, making tailor-made products for general consumers through networks smaller, team-based firms. Then you get the higher margins available in production sales over service sales.