Lawrence Mishel, president of the Economic Policy Institute in Washington, D.C., didn’t actually use the phrase “I told you so” in his remarks at a panel discussion on labor issues at the Harvard Business School last week.
But he cited some evidence that the national economics discussion is coming around to his way of looking at things — and not just because of the current credit crisis.
He and his fellow panelists painted a largely dark picture of flat or falling living standards, structural changes in industry sectors, and a labor movement ill-equipped to play the role it could in getting the country back on track.
The panel, held Oct. 7, was called “The Dynamics of a Changing Domestic Workforce.” It was part of the Future of Labor Forum, a faculty-staff initiative sponsored by the Labor and Worklife Program at Harvard Law School, Harvard Business School Human Resources, and the Harvard University Office of Labor Relations.
The other panelists were David Finegold, dean of the Rutgers University School of Management and Labor Relations; Greg Thornton, senior vice president for employee relations and operations at the Boston Globe; and Philip Dine, Washington correspondent of the St. Louis Post-Dispatch and author of “State of the Unions: How Labor Can Strengthen the Middle Class, Improve Our Economy, and Regain Political Influence.”
With Mishel providing the macroeconomic overview, Finegold and Thornton surveyed the scene in fields with futures at opposite ends of the brightness scale — biotech and newspapers, respectively.
Dine offered a sharp critique both of the way organized labor communicates with the public and the news media and also of the way the media report on labor. “It’s hard to overstate the dysfunctionality of the relationship between labor and the media,” he said. “Nobody knows why labor still matters.”
For Mishel, a key point is the rupture of the connection between rising productivity and rising standards of living. “That link has been broken.” He cited the expansion from 2000 to 2007 as the first time since 1947 that the average working-class family had less at the end at the end of the cycle than at the beginning. Growth in hourly compensation for “pretty much the entire workforce,” both college and high school graduates, has been flat for most of the period from the 1970s.
He’ll be surprised, he said, “if we don’t hit 7 to 7.5 percent unemployment” in the current slowdown. “We have giant changes in front of us.”
In his survey of one of the sunnier sectors of the American economy, Finegold described biotech as “an underlying enabling technology” that will have the same dramatic effect as the microchip.
He sketched out the reasons to be bullish on biotech, including the fact that health care now represents 18 percent of gross domestic product in the United States, a share about double that of America’s competitors. “Everybody has a program to attract biotech clusters,” Finegold said. The jobs pay well, they require university education, and they tend to be “sticky” — they are less likely to be outsourced or offshored.
But biotech is still a relatively small sector, with a 90 percent business failure rate — a situation likely to worsen in the post-Vioxx era. And although the United States is the undisputed leader in the field, not many new U.S. biotech companies have been started over the past 20 years.
India alone, on the other hand, has 400 biotech firms. And Indian biotech has a different business model that focuses on getting to profitability early — a process-service model that requires much less venture capital than does the American model.
Another trend Finegold cited: personalized medicine. Progress in genetic research means that soon parents will bring a new baby home from the hospital with a $399 map of its genome. In such an environment, “everything is a pre-existing condition,” Finegold said, and the biotech opportunities will expand accordingly.
In contrast with the emerging field of biotechnology, Thornton of the Globe described newspapers as “a very old industry in this country, under seismic economic changes” since 2000 and even more so since 2004-2005, as the ad-based revenue model newspapers relied on for decades “has changed entirely.”
Newspapers have faced “disruptive technologies” — radio and television — before. But the Internet “has had devastating impact on classified ads,” Thornton said.
Long staffed by large numbers of well-paid highly skilled unionized employees, newspapers are trying to cope by pursuing new revenue streams, such as online news services, niche publications based on content already in their systems, and even commercial printing contracts — including printing other newspapers.
“Newspapers that can’t accomplish these changes will disappear,” Thornton said.
In his turn, Dine identified a number of things wrong with the way unions communicate with the public and the news organizations that try to cover them. But he shared a success story, too: that of the collective bargaining agreement that 900 poor black women won in the early 1990s from their employer, Delta Pride of Mississippi, the world’s largest catfish processor. It was “a contract beyond their wildest dreams,” Dine said, and they won it because they strategized intelligently, communicated clearly, engaged their rank and file, and framed their case in terms of values — human dignity and respect, instead of just money.
“Labor spends too much time backing candidate X and not enough pushing its own issues,” Dine said, calling for unions to do a better job framing their issues in terms of values. Job security, he said, is a value no less than is, for instance, opposition to gay marriage.
Mishel concluded the discussion by suggesting a silver lining to be found in the meltdown of Wall Street. The high profits in the financial sector have been seen to distort investor expectations of a reasonable return. As this sector downsizes, there may be more capital available to businesses that actually make useful things and pay their employees better. “That’s a ray of hope.”