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.
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.