The Game Has Changed and The Rules Must Follow
Newton’s laws of motion state that objects in motion stay in motion with the same speed, in the same direction, unless acted upon by an external force. The pandemic’s force has brought renewed focus and interest in realigning policies with priorities, addressing obstructions, and resolving contradictory systems.
Complexity comes at a premium
Society’s complex problems can serve as a catalyst for change. “It was fiscal weakness, not war, that did the [Roman] Empire in,” wrote Rachel Nuwer in a prophetic compilation of forecasts about how Western Civilization could potentially collapse. The series won BBC Future’s Best of 2017. Three years later, here we are.
To change course, we will need to get real about debt. Debt threatens entrepreneurship, innovation, and small enterprises. It’s a financial parasite, saddled to the backs of working people. Too many people are unable to keep up with the cost of living, let alone, save for a rainy day — or a prolonged hardship such as the one we're in. For those with credit, the economic downturn leaves little choice but to borrow [more] money as a lifeline to stay afloat. Debt casts shadows over the future and drains hearts of hope and vitality.
People deserve thoughtful attention and action to fix obvious impediments and mend holes in financial safety nets. These repairs would allow working people to weather the changes of the modern world with dignity, and look toward the future, confident in their financial security.
Now is the time to write a new story where policy matches peoples’ priorities.
1) Prioritize people as problem solvers
Create, innovate, incubate and partner
We the people — are a source of our power and prosperity. People are great at building networks that align ideas, interests, and goals. Our imaginations are an unlimited resource. For years, Google has tapped into the collective intelligence of their user base to obtain great ideas. It’s served as an obvious source of innovation. We must not forget the source of our power.
In the U.S. there is a growing group of public-private partnerships created to give STEM entrepreneurs access to needed resources and advice to transform their ideas into sustainable businesses. These types of programs must expand across the country.
This is the time to prepare to respond to the country’s future needs for youth empowerment, promotion of innovation and investment in human capital to increase employment opportunities.
To create the scale of activity necessary to meet our problems, society will need groups to focus on long-term value creation for all stakeholders. This can be achieved by opening new spaces to cultivate and select promising ideas, pilot innovative programs, and create new products, services and partnerships here in the U.S. to generate a robust economic recovery.
2) Prioritize modernizing retirement benefits
Design and adopt a portable benefits system
Employer-sponsored health plans began in response to Roosevelt’s order to freeze wages in 1942. To remain competitive during the wartime labor shortage, businesses began offering benefits in the form of health insurance. The IRS jumped on-board in 1943, making employer-based health insurance tax-exempt. The rest is history.
We’ve changed the way we do business and the way we work.
Today, the share of workers covered by employer-sponsored health plans is on a steady decline. The rate fell from 75 percent in 1991 to 62 percent in 2018 according to the National Compensation Survey results published by the Bureau of Labor Statistics. According to the Department of Labor, only 49 percent of employees at firms with less than 50 workers have a workplace retirement plan, compared to 83 percent of those at firms with more than 100 workers.
Employers have shifted from providing defined benefit pension plans for retirement, to offering less secure defined contribution plans. Only a third of workers contribute to these plans.
It’s worth noting that individual’s gaps in retirement plan coverage affect our entire system. Shortages ripple through the federal, state and local governments and the economy at large. This means higher costs and reduced output in the future.
The beauty of portable benefits is that they’re not tied to a particular job. Instead, the benefits are linked to the worker who can take the benefit from job to job or project to project. These plans should support contributions from multiple employers or clients proportional to dollars earned, jobs done, or time worked; and should cover any worker. This includes independent contractors and non-traditional workers.
The concept of portability is popping-up in other areas of modern business too. For example, Microsoft adopted a shared innovation IP strategy in 2018 that includes portability, rather than imposing contractual restrictions to prevent customers from porting or transferring the shared innovations they own which means they can take their creation from project to project. If we want to promote an innovative workforce and address the gaps in retirement, we’re going to need to address the limitations as they are today, rather than as they were in the 20th century.
3) Prioritize a resilient society
Gaps in unemployment have historically left American workers vulnerable
Unemployment Insurance (UI), is a great example of the relationship between values and policy, and the way the two can positively impact lives. To qualify for UI, workers must have a W-2 employment relationship with their employer. Non-traditional workers who are W-2 employees are covered by UI, but they typically receive less coverage compared to traditional workers. This includes the growing sector of short-term jobs: temp-agency workers, on-call workers, and subcontracted workers who work multiple jobs and excludes independent contractors.
Contrary to the common myth, most jobless workers do not receive benefits; that’s because UI is designed for traditional, full-time work rather than “non-traditional” jobs — independent contractors, freelancers, gig workers and the self-employed. These folks are exposed to more volatility without a safety net.
Millions of people suddenly filed for unemployment in response to COVID-19 last month. Up until recently, UI coverage had been shrinking according to the U.S. Department of Labor. The percent of unemployed workers who receive unemployment benefits fell from an average of about 50 percent in the 1950s to about 35 percent in the 1990s, to under 30 percent since 2010. These coverage gaps left workers vulnerable and insecure.
In a promising move last week, the CARES Act legislation introduced a Federal Pandemic Unemployment Compensation (FPUC) program that will temporarily increase the amount of weekly unemployment assistance workers receive and extends how long they can receive it. For the first time in history, UI expands eligibility to freelancers and other non-traditional workers who can show proper work and pay documentation. As reported by the DOL, eligible individuals who are collecting certain UI benefits, including regular unemployment compensation, will receive an additional $600 in federal benefits per week for weeks of unemployment ending on or before July 31, 2020.
4) Prioritize health and family
Improve economic security for workers caring for family
Balancing work and family responsibilities are a significant challenge for millions of American families. It’s not a simple matter of how much money you have in your budget, but how much time you have to care for children and older relatives and also to remain an active professional. As anyone who has ever cared for someone with a serious health condition can attest, most conditions don’t resolve in a timely window of 12 weeks.
The number of households led by single parents is rising and will potentially expand depending on the impact of COVID-19. Parenting in America, a Pew Research summary of findings indicates a link between family structure and poverty. Sixty-six percent of households today include two working parents. Many people find themselves raising children while also caring for the medical needs of an aging parent — unable to save for their own retirement. Universal access to paid family and medical leave should be a key component of our civic agenda. As stated above, gaps in retirement plan coverage affect more than the individual — shortages ripple through the governments and the larger economy, leading to higher costs in the future.
5) Prioritize investing in the future
Expand access to high-quality training
With new skills and experiences, a world of possibilities opens. The problem is that most of these opportunities are not accessible to everyone but rather — only to those whose parents and grandparents can afford them. This is where the power of policy comes into play.
Automation alone could partially automate over 90 percent of occupations over the next decade according to a 2017 McKinsey & Company report on the future of jobs, skills, and wages. Investing in people, also known as human capital, and research and development (R&D) are key drivers of economic growth. With this in mind, a Worker Training Tax Credit could mirror the policy design of the popular federal R&D Tax Credit to boost the incentive for employers to invest in workers.
Investing in people is one of many ways to help transition the workforce. There are many possibilities to explore such as creating ways workers can invest in the training of their own choice, offer quality apprenticeship programs, and reshape career counseling and reemployment services.
Apathy and denial are a dangerous combination
While the laws of nature are based on scales of ordered patterns, laws of society are based on cultural values that give government legal powers to put policies into effect. Too often, inertia and self-interest have been permitted to prevail — maintaining policies that are ineffective, outdated, or simply not in the best interests of the American people. Breaking through the pattern of apathy and denial requires a partnership between elected officials and the public. Together, we have the power to make strategic decisions to free ourselves from old policies that no longer serve as effective solutions.
The world is changing fast. Our ability to adapt, innovate and respond to change is key to society’s success in this new era. Humanity has faced precarious choices in high stakes circumstances in the past. We can do it again if we’re prepared to face our challenges head-on with courage, determination and the will to prioritize what matters most — people.
