Transformed Workplace Op-Ed

No statistic better tells the story of the changed world facing millennials than one closely linked to the American dream ― the belief that children will do better economically than their parents, and will be happier, better educated and more secure as a result.

For many in the previous century, that dream coincided with reality. Children born in 1940 had a 90 percent chance of earning more than their parents by the time they arrived at prime working age. That is not surprising, since for the period from the end of World War II to the late 1970s, growth in per capita gross domestic product and productivity accompanied growth in real earnings.

 

That reality changed dramatically in the late 1970s. The economy continued to grow, but real earnings no longer tracked upward with it. And with that separation of economic growth and earnings came a change in the prospects facing children in the emerging new era. Children born in 1980 ― a few years before the official beginning of millennials, but indicative of their coming challenges ― face a coin-toss chance of doing better than their parents. That’s a reduction from 90 percent to 50 percent in a short span of economic history. This dramatic fall in what economists call “absolute income mobility” provides the cold reality that Michael Hobbes evocatively describes in his HuffPost Highline story “FML”:

 

From job security to the social safety net, all the structures that insulate us from ruin are eroding. And the opportunities leading to a middle-class life... are being lifted out of our reach. Add it all up and it’s no surprise that we’re the first generation in modern history to end up poorer than our parents.

 

One source of the above transformation that has buffeted millennials is a fundamental restructuring of the workplace during that same period, a shift that has only accelerated since the Great Recession. It’s what I’ve called “the fissured workplace.” The modern workplace in many industries is no longer a traditional brick-and-mortar company owned and operated by a single employer. Instead, different job functions are accounted for by layers of temp workers, contractors and subcontractors. As a result, the employment relationship has “fissured” apart. And, as in geology, once fissures start, they deepen: Once an activity like janitorial services or housekeeping is shed, the secondary businesses doing that work deepen the fissures even further, often shifting those activities to still other businesses.

 

Fissuring has spread, and spread rapidly. Two leading labor economists estimate that 94 percent of net employment growth between 2005 and 2015 occurred in fissured workplace arrangements ― independent contracting, staffing and temp agencies, on-call workers and the like. And while early waves of these changes tended to be concentrated in low-wage jobs, the fissured playbook worked its way into occupations with higher educational requirements: journalism and publishing, information technology, academia, even medicine and law. Though ostensibly associated with greater agility and flexibility for workers, the real effects of these employment relationships, across various occupations, include lower and more tenuous earnings, greater volatility in employment, decreased access to benefits, and, as Hobbes notes, increased risk shifted onto workers and away from the organizations employing them ― or, increasingly, contracting with them.

 

Perhaps even more troubling for younger entrants into the workforce, these employment transformations reduce access to social networks that are often the lifeblood of career advancement and professional development. If you were an employee of Kodak or Xerox in days of yore, you had access to internal job ladders that might lead you upward in the organization or provide you access to skills or opportunities that could lead to employment elsewhere. Working today as a contractor to Apple or Amazon provides you access to... your contractor. The job ladders for staffing agency employees do not intersect with those of the companies where they place workers. In some cases, contractors are even required to wear different-colored identification tags to make sure that distinction is clear. “The effect of all this ‘domestic outsourcing’ ― and, let’s be honest, its actual purpose,” Hobbes writes, “is that workers get a lot less out of their jobs than they used to.”

 

The transformation of employment occasioned by the fissured workplace is not the sole province of millennials, but it is the millennial generation whose work experience has often been exclusively based in this world, and defined by it. For this reason, its effects on millennials are acute, and its impact on their economic outlook is greatly different from previous generations, who could at least salvage training, savings and a modicum of security under the old way of doing things.

 

It is probably little consolation to millennials that the tough sledding they face is not exclusive to them. Of greater consolation is that the restructuring of employment (of which they bear the brunt) arose from the choices of people, not from inevitable and immutable forces. As such, they may be remedied by public and private policies that recognize this very changed nature of employment and its impacts.

 

As an academic and a former member of the Obama administration, I am still amazed by how little public recognition there is of the changes in how businesses operate and the effects on working people. A first step in responding is building public awareness that the challenges facing millennials ― and the dimming of their shot at the “American dream” ― will not be remedied by decrying stereotypes of self-absorption, addiction to social media or failure to leave their parents’ basements. Rather, their challenges require fashioning modern social policies to catch up to the transformed world in which they work and attempt to earn a living.