Since the 1960s, median real wages in the United States have been flat or declining. Despite unemployment levels having fallen to 5 percent, an eight-year low after the 2008 recession, the tightening labor market has failed to produce a significant increase in real wages.1 According to Pew Research Center and the Bureau of Labor Statistics, the contemporary average hourly wage, after adjusting for inflation, has no more purchasing power than it did in 1979.2 Not only have America’s jobs been providing stagnant wages, but post-recession job growth has been concentrated in low-wage occupations such as retail, food service, and administrative and support services.3 Many of these jobs are examples of bad jobs—characterized not only by low wages, but also by unpredictable schedules, few opportunities for success and growth, and a lack of meaning and dignity. This is the situation for millions of working Americans.4
Transforming these bad jobs into good jobs—with decent wages, predictable schedules, opportunities for success and growth, and meaning and dignity for workers—is essential for the U.S. economy and democratic capitalism. American capitalism was grounded in the ability to achieve economic mobility. Today, however, economists warn that such economic mobility may be moving out of reach for millions. Christine Lagarde, head of the International Monetary Fund, warned that if left unchecked, four forces in the U.S. labor market—“participation, productivity, polarisation, and poverty—will corrode the underpinnings of growth and hold back gains in U.S. living standards.”5 Political and social unrest are also among the consequences of bad jobs.6
This disturbing change is not irreversible. It is possible to transform bad jobs into good jobs in a way that benefits companies and their customers. Research shows that across a wide range of industries, from low-cost retail to manufacturing to healthcare, offering good jobs is not only possible but also profitable.7, 8 However, that transformation into a Good Jobs Strategy will be neither easy nor fast.
The transformation requires a clear understanding of what needs to change. Increasing employee investment alone, through higher wages, better benefits, and more training, is not sufficient if companies want to offer great value to their investors and customers. For employee investment to work in a way that benefits investors and customers, it has to be coupled with specific operational choices that increase the contribution of employees, allow them to be highly productive, and involve them in continuous improvement. These operational choices are the enablers of the Good Jobs Strategy. Investment in people and operational choices must also be complemented with values emphasizing customer focus, continuous improvement, and seeing employees as the most important resource rather than as a cost to be minimized.
As a result, the transformation into a Good Jobs Strategy will require a system change. Companies will need to change the way they operate, from re-examining their service and product offerings to redesigning jobs, processes, and performance management to strengthening their commitment to values. All this will take time and upfront investment with a long payback period. During the transformation, performance will likely decline before it improves.9 Few companies will attempt change at this scale unless they are encouraged by every stakeholder—government, worker groups, business leaders, investors, and customers.
Creating a Good Jobs Certification (GJC) is one way to create a blueprint to (a) help companies make such systemic change, (b) unite different stakeholders to encourage companies to provide good jobs to employees, better service to customers, and superior returns to investors, and (c) identify and celebrate companies that do so.
1 BLS—Employment Situation Summary, May 6, 2016, http://www.bls.gov/news.release/empsit.nr0.htm (accessed May 2016).
2 Drew Desilver, “For Most Hourly Workers, Real Wages Have Barely Budged for Decades,” Pew Research Center, October 9, 2014, http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-wages-have-barely-budged-for-decades/ (accessed April 2016).
3 National Employment Law Project. “The Low Wage Recovery.” Data Brief. April 2014. http://www.nelp.org/content/uploads/2015/03/Low-Wage-Recovery-Industry-Employment-Wages-2014-Report.pdf (accessed April 2016).
4 Zeynep Ton, The Good Jobs Strategy. Boston: New Harvest, Houghton Mifflin Harcourt, 2014.
5 https://www.imf.org/external/np/speeches/2016/062216.htm (accessed June 2016).
6 Roger Martin, “A Creativity Imperative for the Future of Capitalism,” Catalyst 14. (Spring 2015): 02–07.
7 Ton, Good Jobs Strategy.
8 E. Appelbaum, J. Gittell, and Carrie Leana, “High-Performance Work Practices and Sustainable Economic Growth,” Center for Economic and Policy Research, April 2011.
9 John D. Sterman, Nelson P. Repenning, and Fred Kofman, “Unanticipated Side Effects of Successful Quality Programs: Exploring a Paradox of Organizational Improvement,” Management Science 43(4) (April 1997), http://web.mit.edu/jsterman/www/ADI.pdf (accessed April 2016).