It was vintage Reich. During a satellite hookup to a Paris economic conference on Jan. 6, Labor Secretary Robert B. Reich was asked about the December employment figures, due for release by the Labor Dept. the next day. Instead of keeping mum to avoid roiling the markets, Reich predicted that 160,000 to 200,000 jobs had been created--far fewer than market expectations. Big mistake: The bond market soared, prompting Administration aides to shoot down Reich's remarks. That just confused the market further. When the job number came in smack in the middle of Reich's range, angry traders demanded the loose-lipped Secretary's resignation.
Fat chance. In fact, despite the inauspicious start, 1994 could be Reich's year. President Clinton's economic guru may have had a tough 1993, as his plans to stimulate the economy, raise the minimum wage, and mandate employer-sponsored job training fell victim to deficit-cutters and business opposition. But this year, the President will be Putting People First--Reich's turf. The resilient 47-year-old Labor Secretary plans to push his programs for bolstering education and helping displaced workers, and they'll be central to Clinton's upcoming State of the Union address. Reich's work-force ideas, says senior White House aide William A. Galston, "are all but canonical in this Administration."
Those concepts stem from Reich's 1991 book, The Work of Nations, a Washington best-seller. In a world of global capital flows and rootless corporations, Reich argued, a country's only dependable asset is its work force. That means better basic education plus "lifetime reeducation"--training to help workers through the half-dozen job changes that Reich maintains will be normal in a worker's career. "We must make it easy for people to get everything they need to move quickly and expeditiously to the next job," he says.
FOUNTAIN OF IDEAS. These theories have captured Clinton's imagination, but putting them into practice is something else again. Treasury Secretary Lloyd M. Bentsen and Budget Director Leon E. Panetta are blocking new taxes or mandates to pay for training. So Reich has gotten the green light for only a modest "reemployment" initiative that will streamline job-search and training services for permanently laid-off workers and, Reich hopes, produce efficiencies that will enable the programs to serve more people. Retraining will fare no better, receiving only a minimal boost in the fiscal 1995 budget. And Reich's overhaul of Uncle Sam's training efforts, which are spread among 14 agencies, is at least a year--and many bruising bureaucratic struggles--away.
If anyone was equipped to make change happen under Clinton, it was Bob Reich. He came to Washington as one of the leading liberal analysts of the changing American economy. For over a decade at Harvard University's John F. Kennedy School of Government, he served as a fountain of ideas for Democrats, especially as the party evolved toward industrial policies that support business as long as business works to meet social needs.
More important, Reich has been a close friend and intellectual mentor to Bill Clinton since the two Rhodes scholars met in 1968 on shipboard while traveling to Oxford. Long talks on Reich's back porch in Cambridge, Mass., grooved Clinton's thinking. Says Education Secretary Richard W. Riley: "The President is already where Bob Reich and I are on education and training."
Reich also has personal strengths that are often overlooked. Stunted by a childhood spinal disease, he has spent much of his life easing the palpable discomfort many people feel about his 4-foot, 10-inch frame. He even turns it to his advantage with such standard speech openers as "Let me be short" and "Do I look like Big Government?" This disarming style carries over into Administration debates: Insiders say Reich defends his views strongly but without rancor. Even in the heated battles over deficit cuts vs. fiscal stimulus, "Bob didn't make enemies," says a Clinton aide.
And he is relentless. If one of his
ideas sinks, it's just a matter of time before it resurfaces in new wrapping. Undaunted after his first economic investment package bombed, he was back almost immediately with a new version. His notion of forcing Corporate America to spend money on retraining pops up regularly even though other Clinton advisers have nixed the idea.
LABOR'S LOVE. Other traits are less endearing--and undercut his clout.
Reich's pessimism, for instance, is one of the things that sapped his credibility in 1993. He didn't give up calling the economic expansion a "jobless recovery" until September, after the recovery had created 1.3 million jobs. And Reich can be cavalier with facts. When Labor was due to report 365,000 new jobs last February--undercutting the Administration's case for a big jobs program--Reich claimed that 90% of the new hires were unwilling part-timers. The department's career economists later pointed out that their data didn't support that conclusion.
Some in business are rooting for him to rise above such gaffes and make progress on his education and work-force agenda. But executives remain edgy about the Labor chief's ties to unions, which survived his enthusiasm for the North American Free Trade Agreement. "When Reich doesn't have strong feelings about an issue, he just lets the laborites take over," frets a business lobbyist.
Reich, for instance, backs a bill to ban permanent replacement of strikers. His commission on labor-law reform is likely to recommend changes that would make it easier for unions to organize workers. And Reich's aides, many of them union veterans, have all but endorsed a bill that would boost penalties for safety violations and impose worker-management safety committees, even at small companies. Reich "has shown his desire to address labor concerns," says John J. Sweeney, president of the Service Employees International Union.
And Reich is still pumping out more ideas--enough to keep several Administrations busy. He has urged investors to put the brakes on corporate downsizing, arguing that companies are sacrificing their human resources without considering other options, such as employee ownership. He's also concerned about the rise of the "contingent work force"--especially contract workers, who, he says, "function like ordinary employees, but with none of the protections or benefits." His aides have discussed mandating benefits for such workers, although no proposals are in the works.
Such ideas infuriate some business leaders. "Reich wants to replace free enterprise with the failed European model, which hasn't created any net new jobs in 15 years," says Jack Faris, president of the National Federation of Independent Business. The truth is more complex: Reich wants to equip U.S. workers to garner high-wage jobs in global competition without sacrificing the flexibility that has made American job creation the envy of the world. Many say that blend, which has never been achieved anywhere, is incompatible.
He won't be able to achieve such grand goals, though, if he can't even get other agencies to coordinate their training and reemployment programs. The Year of Economic Security will test Reich's ability to turn ideas into action. His record to date isn't impressive--but given his determination and closeness to Clinton, no one should count him out.
" IF THE UNITED PROPOSAL [FOR INCREASED EMPLOYEE OWNERSHIP] IS SUCCESSFUL, IT WILL BE VERY DIFFICULT FOR BOARDS FACED WITH THE PROSPECT OF CUTTING PAYROLLS TO AVOID AT LEAST CONSIDERING EMPLOYEE OWNERSHIP, EMPLOYEE PARTICIPATION, AS ANOTHER SOLUTION "
" THIS IS AN INSECURE AGE FOR WORKERS. THE ONLY PEOPLE WITH JOB SECURITY ARE TENURED PROFESSORS, AND THEY'RE A VANISHING BREED"
ON INDUSTRIAL POLICY
" INDUSTRIAL POLICY IS ONE OF THOSE TERMS THAT HAS GONE FROM OBSCURITY TO MEANINGLESSNESS WITHOUT ANY INTERVENING PERIOD OF COHERENCE...DO WE HAVE AN INDUSTRIAL POLICY? WE DO. [DOES IT] ACTUALLY PROMOTE HIGHER REAL WAGES AND COMPETITIVENESS? NOT QUITE"