Dedicated policy focus can help services create good jobs

Policy makers typically focus on things like minimum wages, collective bargaining and investment in skills. But as important as these are, they are not enough. Productivity is key. The supply of good jobs can only increase when jobs created for the lower and middle of the skill distribution become more productive, enabling higher salaries, greater autonomy and brighter career prospects. Otherwise, mandating higher wages and better working conditions may deprive less educated workers of job opportunities. France, with its high youth unemployment, presents a cautionary tale.

However, another problem is that when policy makers talk about policies that specifically target productivity gains and new technologies, good jobs are treated as a side issue. In the US, the latest crop of such policies target advanced manufacturing such as semiconductors (via the CHIPS Act) and green technologies (via the Inflation Reduction Act); And in Europe, the focus has been on ‘digitization’ alongside the green transition. In both, it is assumed that good jobs will emerge as a byproduct of these programs, even if this is not their primary objective.

Green tech and high-end chip-making are unlikely to be a major source of net job creation for workers who are sick of today’s labor markets. After all, manufacturing employs less than one in 10 workers in the US, and the experience of other countries where manufacturing has done much better suggests that non-industrial employment is extremely difficult to reverse. Since the majority of future jobs will come from services, we must focus our efforts on creating productive jobs for underprivileged workers.

In a study for the Hamilton Project, I describe what an industrial policy for services might look like for America. The local component of my proposal is based on existing development and business support schemes that take the form of collaborative partnerships between development agencies, firms and other stakeholders, aimed at creating decent jobs. Among the national initiatives is an Advanced Research Projects Agency (ARPA) focused on promoting a specific type of innovation: employment-friendly technologies.

Consider what is probably the toughest test case for these ideas: long-term care. This is an area where jobs will rapidly increase as the American population ages and the demand for assisted-life will increase. But since most long-term care work is done in homes (through caregivers) or in poorly regulated assisted living communities, remuneration and working conditions have been poor. The employees are mostly women, and because their work is generally perceived as low-skilled, they are not seen as genuine professionals.

How can jobs in long-term care be improved? MIT economist Paul Osterman suggests three holistic strategies. First, the government can impose standards (for minimum wages, let’s say). Second, policymakers can increase Medicaid and Medicare reimbursement rates for care services to help raise wages. And third, the productivity of direct-care workers can be increased, leading to better service, lower costs and higher wages. While the first two strategies can be useful, increased productivity is ultimately the most reliable source of better jobs. For that, Ostermann suggests an approach that is in line with the way Japanese automakers implement new innovations in construction. It involves a combination of investing in the skills of workers, giving them more discretion and giving them more responsibility for the quality of service.

Care workers who have greater autonomy and decision-making authority can use their knowledge of residents and patients (such as in schedules, meals and treatments) to customize their services and provide greater flexibility. The strategy will also allow the introduction of new technologies that complement the skills of caregivers, such as digital tools with which caregivers can collect real-time information and respond faster and more efficiently to residents’ needs. can do.

These changes will require a willingness to experiment with innovative work practices and a continuum of efforts, moving from research and development and the introduction of new technologies for long-term care to their local adoption, adaptation and relevance in specific communities. . If long-term care is better managed this way, productivity gains can be seen in lower turnover among care workers, lower hospitalization rates, better management of chronic conditions, and a faster and easier transition from acute care facilities. Will give

None of this will be easy. Increasing productivity in services is extremely difficult and is often hindered by a myriad of well-regarded licensing, security and other regulations.

But if we can’t find ways to increase productivity in the businesses to which most of our employees are destined, we’ll end up with an even worse-performing, less inclusive economy full of ‘bad jobs’. ©2022/Project Syndicate

Dani Roderick is Professor of International Political Economy at Harvard University’s John F. Kennedy School of Government, and author of ‘Straight Talk on Trade: Ideas for a Sensible World Economy’.