 |
|
 |
 |
 |
|
|
|
||||||||||||
|
||||||||||||
| Cherish |
| Making the News |
| Success/Excess |
| Letters |
Sports |
| E Line |
Classes |
| Q&A |
First-Person |
| Alumni Passages |
Huskiana |
| From the Field |
Success/Excess
On February 13, political economist, Brandeis professor, and former U.S. secretary of labor Robert Reich discussed his new book, The Future of Success (Knopf, 2001), at the Ford Hall Forum in Boston’s Old South Meeting House. The following text was adapted from that address.
The last time I had the privilege of addressing the Ford Hall Forum years ago, before I went to Washington, I was six foot one. Washington took a lot out of me.
“Politics” comes from the Greek root “poly,” meaning many, and “tics,” small bloodsucking insects. Now, I don’t really mean that—I enjoyed my years in Washington immensely. In fact, that enjoyment itself got me into a bit of trouble.
After about four years of working in the Clinton administration, I loved my job so much that I discovered I had lost contact with my family, particularly my two boys, who were then young teenagers. And I didn’t realize it until one night.
Bill Clinton had called another meeting at the White House. I called home to explain that to the two boys. The younger boy answered the phone. I said, “Look, I’m terribly sorry, Sam. I just can’t come home tonight. I’ll see you in the morning.” He said, “That’s okay, Dad, but would you please wake me up when you get home?”
And I said, “Well, no, that doesn’t make sense. You have school tomorrow, and I’ll see you first thing in the morning. Go to bed.” Sam said, “I really want you to wake me up, because I just want to know that you’re here with us.”
I can’t tell you what exactly happened at that point, even four years later, but it was as if there was a little dagger in my heart. It sounds a little hokey talking about it, but it wasn’t at the time. I knew I had to leave the best job I ever had and come home. And I told the president that I would be leaving.
So I went home and said to [wife and NU law professor] Clare [Dalton] and the boys back here in Cambridge, “I’m home!” They said, “Great, we have other things we’re planning to do. We’ll fit you in, Dad.”
I can tell you something about teenage boys. They are like clamshells. They’re absolutely tightly shut. And then, every once in a while, the clamshell opens, and there’s something beautiful inside, something soft and vulnerable. But you don’t know when it’s going to open. And as soon as it does, it clams up shut right again. If you’re not there at the time, you might as well be on another planet.
A Very Personal Decision
In the wake of my decision to leave the administration, I got a lot of letters, a lot of e-mails, a lot of telephone calls—a lot of people wanting to know just what I thought I was doing. They were not all positive, by any means.
Many people said to me, “It’s fine for you. You can get another job that pays almost as well, and you can have more time and more flexibility for other things in your life. I don’t have that luxury. I have to work all the time. What kind of signal are you sending? You’re secretary of labor. You should be more sensitive to the fact that most people don’t have that ability.”
And I got a number of letters and e-mails and telephone calls from professional women who said, in effect, “We have been struggling all our adult working lives for the proposition that one does not have to make the choice between a high-powered job in the fast track and one’s family. And here are you, the secretary of labor, sending a signal saying that you must make that kind of a choice.”
I did not intend to send a signal to anybody. I just did what I had to do. There is no lesson here for everybody else. People have to make their own decisions. But there is perhaps one thing that is relevant here, and that is that I did not know until that wake-up call from my younger son what priorities I was setting. We need to be at least self-aware. We cannot be in denial about the priorities we are setting, particularly in this New Economy.
During the 1990s, there were more and more jobs. Unemployment went down. Productivity went up. Even with the slowdown we are now experiencing, still unemployment is down to a historically low level. Beginning in 1993, extending all the way to the year 2000, 23 million net new jobs were added to the United States economy. I was labor secretary through most of those years. I single-handedly am responsible for most of those new jobs. [Audience laughter] Thank you.
Yet, despite all that economic activity, the average couple with children in the year 2000 was working, if you totaled all their hours up, seven weeks more than they worked ten years before. And that is the continuation of a pattern that extends all the way back into the 1980s.
The Death of Repose
In fact, those seven weeks extra don’t even include the intrusiveness of e-mail, of cell phones and voice-mail and pagers, and all the other things that keep all of us on guard in this 24/7 economy. There’s a little sentry in the back of our minds saying, Anytime now, we could be intruded upon.
Now, don’t get me wrong. This New Economy creates enormous opportunities for many people, particularly people who are well educated. But what struck me as I did my research—and during my free-floating focus group as secretary of labor—was the extent to which this very dynamic economy is demanding more and more and more from us.
This is something of an economic puzzle, because economists assume that as the economic pie grows, as productivity increases, particularly as incomes rise—at least for people in the top 20, 30, 40 percent—people will opt for leisure.
What’s the answer here? Why the economic puzzle? Why all the stress and strain? In The Future of Success, I offer up three major reasons. Number one: One feature of this New Economy is a lack of predictability about future earnings and future jobs.
People in this New Economy don’t know, to a much greater extent than they didn’t know five, fifteen, or twenty years ago, what they’re going to earn next year or even, sometimes, next month.
Earning streams are variable, and I’m not only talking about all the so-called contingent workers—the temps, the part-time workers, and all the people who are contract workers, who are self-employed. There are many of them. Estimates vary from 10 to 30 percent of the workforce.
Even if you are a full-time worker in this economy, chances are that you are on a variable system of pay. More hourly workers, for example, are dependent on overtime pay, to a far greater extent than they were, say, twenty years ago. If you are a professional, you are more and more dependent on commissions than you were before, or you’re dependent on billable hours.
And it’s not just commissions and billability, it’s also pay for performance. Companies increasingly are paying people in part for how well they are doing, how well their group is doing—profit-sharing schemes or productivity-based bonuses, or, for some people, stock options.
Shouldering the Burden
Companies are pushing so much of the risk of economic dynamism onto their employees because companies are in a much, much tougher competitive fight today than they were ten or twenty years ago. This economy no longer depends on economies of scale. It’s not an oligopolistic economy, where you have the Big Three automakers or the Big Five chemical manufacturers.
It’s an economy in which you have a lot of innovation and a huge amount of consumer and investor choice around the world. Consumers and investors can switch to better deals, sometimes as fast as the click of a mouse. That means companies have to hustle harder to attract and keep every customer and every investor.
Do you see the connection? They’re almost two sides of the same coin. The benefits for us as consumers are enormous. As investors, we have enormous capacity to switch. We are getting better products, better services. In a materialistic sense, we are better off, most of us. Not all of us, by any stretch of the imagination, and I’ll talk about that in a moment.
But as workers, we are hustling harder, and we don’t know what we’re going to earn in the future. We have to make hay while the sun shines.
There is also a second phenomenon, which I call the fast track/slow track phenomenon, and it’s closely related to the first. Many of my students from Brandeis come back and say, “I really am working very, very hard, Professor Reich.” Some are at law firms, or in management consulting or investment banking. Those who are making the most money, interestingly, are working the hardest in terms of hours.
They say they are putting in eighteen hours a day. They are in their twenties, their thirties. They don’t have families, or if they do have families, they don’t see them. They’re in airplanes all the time. They’re out of town four or five days a week.
Wait A Minute . . .
Many of them get to be in their late twenties or mid-thirties and say to themselves, Wait a minute. Maybe there is something else in life. But if I get off the fast track, I’m sacrificing a huge amount. And there is not a middle track. It’s either fast track or slow track.
If I’m on the slow track, I may not have very much job security. If I’m on the slow track, I’m certainly not going to get those big bonuses, those big promotions; I’m not going to make partner, maybe. If I’m on the slow track, I may never get back on the fast track.
And then we come to the third phenomenon, which has to do with the widening inequality of income and wealth. Now, in this country, since 1998—because the labor market has been pretty tight and unemployment quite low—inequality, at least with regard to people at the bottom, has not widened as much as it was widening before.
Or I should state that in a slightly different way. People at the bottom who are working have more opportunities to work more hours, and that means their incomes have stopped dropping as they were dropping, adjusted for inflation, through most of the 1980s and the early 1990s.
But what happens when inequality widens, as it has? People in the bottom third have to work harder to make ends meet. And people in the top third are working harder because the opportunity costs to them of not working that hard continue to get higher and higher.
In fact, interestingly, there is a direct correlation between the disparities of income and wealth in a country and how hard and long people in that country work. The wider the disparities, the longer the average workweek.
The smaller the disparities, the shorter the average workweek.
People who are at every point in the economic spectrum are working harder, and they see their families less. What do we do about this? Should we do anything about it? Maybe it is not a problem. Some people like to work hard. We’re not necessarily facing a problem here. But there are social consequences.
My former colleague Bob Putnam produced a book about the declining social capital in America, the inability or unwillingness of many people to join organizations, to be involved in their communities: a declining civic culture, in part because of the lack of time, because of the involvement of work.
Families are also shrinking in size. People are getting married later. A lot of women are deciding not to have children at all. In Massachusetts last year, the average age for a woman having her first child was over thirty years old, the highest it has ever been in Massachusetts.
A New Reform Era
The choices we face are not unlike the choices we faced as a country a hundred years ago, at the dawn of the mass production age, when we understood that we were approaching a new era of industrialization that promised many, many benefits to us but also imposed new kinds of costs.
We didn’t say no to economic progress and development, and the new dynamism of the mass-production economy. We said “yes, but.” We wanted the dynamism, the higher living standards, but we also wanted to reduce the excesses and injustices of the then new economy. So we passed laws banning child labor; laws requiring a forty-hour workweek, with time and a half for overtime; laws providing a minimum wage; laws providing for Social Security. These were not easy to enact. There were battles over many of them.
In my book, I talk about what we can do now. How can we enjoy the dynamism of the New Economy and at the same time have more humane lives? For example, unemployment insurance is now available to only about a third of the workers who lose their jobs in this economy. Why is that? Because so many people who lose their jobs are contract workers, temporary workers, or part-time workers. Under most state unemployment laws, they do not qualify for unemployment insurance, and yet they are more vulnerable than most workers. Why shouldn’t we provide unemployment insurance to them on a prorated basis, depending on how much time they put in on an average workweek?
Why should we not have earnings insurance? One of the great problems facing people is volatility of earnings. As long as unemployment stays—in Massachusetts, for example—at 3.5 percent, people who are losing their jobs are not going to be unemployed for a long period of time. They’ll get new jobs. The danger for them is that they’ll get a new job that pays less, and yet they still have car payments and housing payments.
Why not, to take another example, a small transaction tax on the sale of shares of stock? A small transaction tax that acts like a little bit of sand in the wheels of commerce, reducing the speculative excess that we see all around us.
Why should we have mandatory overtime, particularly for people who have child-care obligations, who must be able to predict when they are going to be home, who must be able to carpool? Now, in this country, we still have mandatory overtime, a vestige of an industrial era in which most people who had overtime were male breadwinners.
Rethinking Tax Cuts
If we’re going to have a tax cut, President Bush, why should it not be a tax cut that helps people in the bottom third or the bottom 20 percent? They are paying more in Social Security, FICA, payroll taxes than they are paying in income taxes. So why not exempt, say, the first $7,000 of their income from payroll, FICA, Social Security taxes? In fact, exempt everybody’s first $7,000 of income. It just means more to those people, because they are not earning very much and the Social Security tax is a very regressive tax—instead of coming up with a tax cut in which 43 percent of the benefits go to the top 1 percent.
The new administration in Washington talks a lot about family values. They talk a lot about community values. But I believe they are ignoring the 3,000-pound gorilla in the center of the table. If you are talking about strains on families, I can guarantee you that the New Economy and the stresses of work are playing a very large part. And to ignore all that and talk merely about cultural and moral decline, it seems to me, is not being completely clear or straightforward, or is denying what is before everybody’s face.
Many people, when they consider their multiple roles and obligations—work, parenting, family, community, friends—have a sense of personal inadequacy. They say, “You know, I wish I could be a better parent, or child to an elderly relative, or worker, or member of my community. I wish I could be a better friend.”
What I am suggesting to you is that—although personal choices do matter, and personal responsibility is very critical—there is something else going on here that is affecting all of us, that has to do with structural changes in the very nature of work and our economy.
On February 13, political economist, Brandeis professor, and former U.S. secretary of labor Robert Reich discussed his new book, The Future of Success (Knopf, 2001), at the Ford Hall Forum in Boston’s Old South Meeting House. The following text was adapted from that address.
The last time I had the privilege of addressing the Ford Hall Forum years ago, before I went to Washington, I was six foot one. Washington took a lot out of me.
“Politics” comes from the Greek root “poly,” meaning many, and “tics,” small bloodsucking insects. Now, I don’t really mean that—I enjoyed my years in Washington immensely. In fact, that enjoyment itself got me into a bit of trouble.After about four years of working in the Clinton administration, I loved my job so much that I discovered I had lost contact with my family, particularly my two boys, who were then young teenagers. And I didn’t realize it until one night.
Bill Clinton had called another meeting at the White House. I called home to explain that to the two boys. The younger boy answered the phone. I said, “Look, I’m terribly sorry, Sam. I just can’t come home tonight. I’ll see you in the morning.” He said, “That’s okay, Dad, but would you please wake me up when you get home?”
And I said, “Well, no, that doesn’t make sense. You have school tomorrow, and I’ll see you first thing in the morning. Go to bed.” Sam said, “I really want you to wake me up, because I just want to know that you’re here with us.”
I can’t tell you what exactly happened at that point, even four years later, but it was as if there was a little dagger in my heart. It sounds a little hokey talking about it, but it wasn’t at the time. I knew I had to leave the best job I ever had and come home. And I told the president that I would be leaving.
So I went home and said to [wife and NU law professor] Clare [Dalton] and the boys back here in Cambridge, “I’m home!” They said, “Great, we have other things we’re planning to do. We’ll fit you in, Dad.”
I can tell you something about teenage boys. They are like clamshells. They’re absolutely tightly shut. And then, every once in a while, the clamshell opens, and there’s something beautiful inside, something soft and vulnerable. But you don’t know when it’s going to open. And as soon as it does, it clams up shut right again. If you’re not there at the time, you might as well be on another planet.
A Very Personal Decision
In the wake of my decision to leave the administration, I got a lot of letters, a lot of e-mails, a lot of telephone calls—a lot of people wanting to know just what I thought I was doing. They were not all positive, by any means.Many people said to me, “It’s fine for you. You can get another job that pays almost as well, and you can have more time and more flexibility for other things in your life. I don’t have that luxury. I have to work all the time. What kind of signal are you sending? You’re secretary of labor. You should be more sensitive to the fact that most people don’t have that ability.”
And I got a number of letters and e-mails and telephone calls from professional women who said, in effect, “We have been struggling all our adult working lives for the proposition that one does not have to make the choice between a high-powered job in the fast track and one’s family. And here are you, the secretary of labor, sending a signal saying that you must make that kind of a choice.”
I did not intend to send a signal to anybody. I just did what I had to do. There is no lesson here for everybody else. People have to make their own decisions. But there is perhaps one thing that is relevant here, and that is that I did not know until that wake-up call from my younger son what priorities I was setting. We need to be at least self-aware. We cannot be in denial about the priorities we are setting, particularly in this New Economy.
During the 1990s, there were more and more jobs. Unemployment went down. Productivity went up. Even with the slowdown we are now experiencing, still unemployment is down to a historically low level. Beginning in 1993, extending all the way to the year 2000, 23 million net new jobs were added to the United States economy. I was labor secretary through most of those years. I single-handedly am responsible for most of those new jobs. [Audience laughter] Thank you.
Yet, despite all that economic activity, the average couple with children in the year 2000 was working, if you totaled all their hours up, seven weeks more than they worked ten years before. And that is the continuation of a pattern that extends all the way back into the 1980s.
The Death of Repose
In fact, those seven weeks extra don’t even include the intrusiveness of e-mail, of cell phones and voice-mail and pagers, and all the other things that keep all of us on guard in this 24/7 economy. There’s a little sentry in the back of our minds saying, Anytime now, we could be intruded upon.
Now, don’t get me wrong. This New Economy creates enormous opportunities for many people, particularly people who are well educated. But what struck me as I did my research—and during my free-floating focus group as secretary of labor—was the extent to which this very dynamic economy is demanding more and more and more from us.
This is something of an economic puzzle, because economists assume that as the economic pie grows, as productivity increases, particularly as incomes rise—at least for people in the top 20, 30, 40 percent—people will opt for leisure.
What’s the answer here? Why the economic puzzle? Why all the stress and strain? In The Future of Success, I offer up three major reasons. Number one: One feature of this New Economy is a lack of predictability about future earnings and future jobs.
People in this New Economy don’t know, to a much greater extent than they didn’t know five, fifteen, or twenty years ago, what they’re going to earn next year or even, sometimes, next month.
Earning streams are variable, and I’m not only talking about all the so-called contingent workers—the temps, the part-time workers, and all the people who are contract workers, who are self-employed. There are many of them. Estimates vary from 10 to 30 percent of the workforce.
Even if you are a full-time worker in this economy, chances are that you are on a variable system of pay. More hourly workers, for example, are dependent on overtime pay, to a far greater extent than they were, say, twenty years ago. If you are a professional, you are more and more dependent on commissions than you were before, or you’re dependent on billable hours.
And it’s not just commissions and billability, it’s also pay for performance. Companies increasingly are paying people in part for how well they are doing, how well their group is doing—profit-sharing schemes or productivity-based bonuses, or, for some people, stock options.
Shouldering the Burden
Companies are pushing so much of the risk of economic dynamism onto their employees because companies are in a much, much tougher competitive fight today than they were ten or twenty years ago. This economy no longer depends on economies of scale. It’s not an oligopolistic economy, where you have the Big Three automakers or the Big Five chemical manufacturers.
It’s an economy in which you have a lot of innovation and a huge amount of consumer and investor choice around the world. Consumers and investors can switch to better deals, sometimes as fast as the click of a mouse. That means companies have to hustle harder to attract and keep every customer and every investor.
Do you see the connection? They’re almost two sides of the same coin. The benefits for us as consumers are enormous. As investors, we have enormous capacity to switch. We are getting better products, better services. In a materialistic sense, we are better off, most of us. Not all of us, by any stretch of the imagination, and I’ll talk about that in a moment.
But as workers, we are hustling harder, and we don’t know what we’re going to earn in the future. We have to make hay while the sun shines.
There is also a second phenomenon, which I call the fast track/slow track phenomenon, and it’s closely related to the first. Many of my students from Brandeis come back and say, “I really am working very, very hard, Professor Reich.” Some are at law firms, or in management consulting or investment banking. Those who are making the most money, interestingly, are working the hardest in terms of hours.
They say they are putting in eighteen hours a day. They are in their twenties, their thirties. They don’t have families, or if they do have families, they don’t see them. They’re in airplanes all the time. They’re out of town four or five days a week.
Wait A Minute . . .
Many of them get to be in their late twenties or mid-thirties and say to themselves, Wait a minute. Maybe there is something else in life. But if I get off the fast track, I’m sacrificing a huge amount. And there is not a middle track. It’s either fast track or slow track.
If I’m on the slow track, I may not have very much job security. If I’m on the slow track, I’m certainly not going to get those big bonuses, those big promotions; I’m not going to make partner, maybe. If I’m on the slow track, I may never get back on the fast track.
And then we come to the third phenomenon, which has to do with the widening inequality of income and wealth. Now, in this country, since 1998—because the labor market has been pretty tight and unemployment quite low—inequality, at least with regard to people at the bottom, has not widened as much as it was widening before.
Or I should state that in a slightly different way. People at the bottom who are working have more opportunities to work more hours, and that means their incomes have stopped dropping as they were dropping, adjusted for inflation, through most of the 1980s and the early 1990s.
But what happens when inequality widens, as it has? People in the bottom third have to work harder to make ends meet. And people in the top third are working harder because the opportunity costs to them of not working that hard continue to get higher and higher.
In fact, interestingly, there is a direct correlation between the disparities of income and wealth in a country and how hard and long people in that country work. The wider the disparities, the longer the average workweek.
The smaller the disparities, the shorter the average workweek.
People who are at every point in the economic spectrum are working harder, and they see their families less. What do we do about this? Should we do anything about it? Maybe it is not a problem. Some people like to work hard. We’re not necessarily facing a problem here. But there are social consequences.
My former colleague Bob Putnam produced a book about the declining social capital in America, the inability or unwillingness of many people to join organizations, to be involved in their communities: a declining civic culture, in part because of the lack of time, because of the involvement of work.
Families are also shrinking in size. People are getting married later. A lot of women are deciding not to have children at all. In Massachusetts last year, the average age for a woman having her first child was over thirty years old, the highest it has ever been in Massachusetts.
A New Reform Era
The choices we face are not unlike the choices we faced as a country a hundred years ago, at the dawn of the mass production age, when we understood that we were approaching a new era of industrialization that promised many, many benefits to us but also imposed new kinds of costs.
We didn’t say no to economic progress and development, and the new dynamism of the mass-production economy. We said “yes, but.” We wanted the dynamism, the higher living standards, but we also wanted to reduce the excesses and injustices of the then new economy. So we passed laws banning child labor; laws requiring a forty-hour workweek, with time and a half for overtime; laws providing a minimum wage; laws providing for Social Security. These were not easy to enact. There were battles over many of them.
In my book, I talk about what we can do now. How can we enjoy the dynamism of the New Economy and at the same time have more humane lives? For example, unemployment insurance is now available to only about a third of the workers who lose their jobs in this economy. Why is that? Because so many people who lose their jobs are contract workers, temporary workers, or part-time workers. Under most state unemployment laws, they do not qualify for unemployment insurance, and yet they are more vulnerable than most workers. Why shouldn’t we provide unemployment insurance to them on a prorated basis, depending on how much time they put in on an average workweek?
Why should we not have earnings insurance? One of the great problems facing people is volatility of earnings. As long as unemployment stays—in Massachusetts, for example—at 3.5 percent, people who are losing their jobs are not going to be unemployed for a long period of time. They’ll get new jobs. The danger for them is that they’ll get a new job that pays less, and yet they still have car payments and housing payments.
Why not, to take another example, a small transaction tax on the sale of shares of stock? A small transaction tax that acts like a little bit of sand in the wheels of commerce, reducing the speculative excess that we see all around us.
Why should we have mandatory overtime, particularly for people who have child-care obligations, who must be able to predict when they are going to be home, who must be able to carpool? Now, in this country, we still have mandatory overtime, a vestige of an industrial era in which most people who had overtime were male breadwinners.
Rethinking Tax Cuts
If we’re going to have a tax cut, President Bush, why should it not be a tax cut that helps people in the bottom third or the bottom 20 percent? They are paying more in Social Security, FICA, payroll taxes than they are paying in income taxes. So why not exempt, say, the first $7,000 of their income from payroll, FICA, Social Security taxes? In fact, exempt everybody’s first $7,000 of income. It just means more to those people, because they are not earning very much and the Social Security tax is a very regressive tax—instead of coming up with a tax cut in which 43 percent of the benefits go to the top 1 percent.
The new administration in Washington talks a lot about family values. They talk a lot about community values. But I believe they are ignoring the 3,000-pound gorilla in the center of the table. If you are talking about strains on families, I can guarantee you that the New Economy and the stresses of work are playing a very large part. And to ignore all that and talk merely about cultural and moral decline, it seems to me, is not being completely clear or straightforward, or is denying what is before everybody’s face.
Many people, when they consider their multiple roles and obligations—work, parenting, family, community, friends—have a sense of personal inadequacy. They say, “You know, I wish I could be a better parent, or child to an elderly relative, or worker, or member of my community. I wish I could be a better friend.”
What I am suggesting to you is that—although personal choices do matter, and personal responsibility is very critical—there is something else going on here that is affecting all of us, that has to do with structural changes in the very nature of work and our economy.