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Splitting Jobs From Benefits Has a Long Way to Go

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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Good jobs come with benefits, Americans have been taught for the past 65 years. But what if things were different?

Imagine a world in which employers or employer-like entities were responsible for a high standard fair wage, for humane and adequate scheduling, for non-discrimination, for safe workplaces and nothing else. Then imagine a more robust social contract, actually owned by workers and citizens -- portable, universal, prorated -- that provided a tremendous amount more flexibility and more choice than anything we saw attached to the institutional economy of the 20th century.

That was David Rolf, president of the Service Employees International Union Local 775 in Seattle and one of the most interesting figures in the modern American labor movement. He was speaking at an Aspen Institute conference on “portable benefits for independent workers” that I attended last week.

Would the world that Rolf describes be better than the one we have now? For some Americans, absolutely. For a lot of others, though, it isn’t so clear -- because they get pretty good benefits already through their jobs. Here’s one view of the breakdown, from the Bureau of Labor Statistics’ most recent Employee Benefits in the United States survey:

There are similar divides if you compare

  • Highly paid workers and low-paid workers.
  • Government workers and private-sector workers.
  • Workers at goods-producing organizations and workers at service-producing ones.
  • Workers at large organizations and workers at small ones.

Some of this can be chalked up to skill. Companies trying to attract people with unique, in-demand talents will offer better benefits. Some of it is about the law: Small employers are subject to fewer government mandates than big ones.

Then there’s power. Government workers are five times more likely to be in a union than private-sector workers; workers in goods-producing industries (manufacturing, mining, construction) are more likely to be unionized than those in most service industries. The uniquely American packaging of jobs with benefits has its roots in the 1950 Treaty of Detroit negotiated by the United Auto Workers and General Motors, so it should be no surprise that the package has held together better in more-unionized sectors.

Overall, depending on the benefit you’re looking at, somewhere between half and three-quarters of U.S. workers have access to it. In some cases those benefits are pretty skimpy, so let’s say the overall split between those with OK benefits attached to their jobs and those without is something like 50/50. In some cases this is by choice -- part-time work usually doesn’t come with the benefits of a full-time job, and most part-timers in the U.S. only want to work part time. Overall, though, it’s hard to avoid the impression that we’ve created a two-tier workforce.

This isn’t entirely new -- the labor reforms of the 1930s generally left out agricultural and domestic workers, as did Social Security. But the decline of manufacturing employment and of private-sector unions and the rise of service work have put growing pressure on the jobs-benefits link. And in the past year or two, the rise of on-demand contract work enabled by new platforms such as Uber and TaskRabbit has raised all sorts of questions about what jobs are and how benefits can be provided to those who do little bits of work for lots of different people.

This last phenomenon, although still only affecting a tiny segment of the labor force, has brought much new attention to the question of whether and how jobs and benefits should be connected. It has led people such as Rolf to believe that the time is ripe for a “21st-century social contract” that takes benefits out of the hands of employers and puts workers in control.

Maybe that is the way we’re headed. Right now, though, about half of U.S. workers still have access to pretty good benefits through their employers. Things will probably have to get a lot worse for them before they’ll embrace dramatic change.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
James Greiff at jgreiff@bloomberg.net