America, Spiky and Unequal

Paul Krugman and Bob Herbert both pinged rising inequality as a growing political issue on the oped page of yesterday's New York Times.  Today, Virgina's Senator elect Jim Webb weighs in with a rousing piece in today's Wall Street Journal writing that:

"The most important -- and unfortunately the least debated -- issue in politics today is our society's steady drift toward a class-based system, the likes of which we have not seen since the 19th century...More troubling is this: If it remains unchecked, this bifurcation of opportunities and advantages along class lines has the potential to bring a period of political unrest. ...Working Americans have been repeatedly seduced at the polls by emotional issues such as the predictable mantra of "God, guns, gays, abortion and the flag" while their way of life shifted ineluctably beneath their feet. ... And our government leaders have no greater duty than to confront the growing unfairness in this age of globalization."

I have been devoting a good deal of my work to trying to understand the causes of growing inequality and the increasingly spiky nature of the US and global economies for some time now.

Though it may have been overwhelmed by the book's title, I devoted roughly a third of Flight of the Creative Class to this problem, in a section I called "Losing Our Way,"Download flight_of_the_creative_class.pdf

The key, to me, is to create new institutions that can extend the ability to participate in and benefit from the Creative Economy to many, many more people. The starting point is to recognize that harnessing the creative talents of each and every person is not just ethically responsible or politically advantageous but will bring substantial economic reward.

With all the hemming and hawing over outsourcing and the loss of manufacturing jobs, one place nobody is looking is the Service Economy, which is growing rapidly alongside the Creative Sector and remains the largest absolute source of jobs. Competition is forcing service firms to engage and leverage the creativity of their workers as a source of innovation and productivity improvement. 

Why not a  bi-partisan Service Economy Summit designed to leverage these trends and begin to improve the pay, security and overall working conditions of the tens of millions of service economy workers.

Comments

[Charlotta]

Couldn't agree more...You know some of my research on the importance of the service sector in the Swedish case. In fact, a variety (as well as size)in consumer service supply will explain a great deal of the household migration in our country, not the least migration of highly educated people. The creative sector depends on the service sector a great deal, it is time to realize that and to understand the importance of it. Making service jobs creative is the next step...

[Brian Knudsen]

Richard,
In your USAToday piece, you mentioned Whole Foods. I've noticed something interesting here in PGH. In the East Liberty neighborhood (a struggling, African American neighborhood that was damaged by botched urban renewal projects), we have both a Whole Foods and a Giant Eagle supermarket. I've noticed that, in the same neighborhood, you have two COMPLETELY different groups of people employed by the two stores. To put it mildly, the people working at the Giant Eagle appear to be more "indiginous" to East Liberty. And, I have no evidence to support this, but it seems reasonable to infer that many Whole Foods employees (as well as Starbucks, etc) are making some money on the side while at school. From my experience, that cannot be said of the Shakespeare St. Giant Eagle. These people are lifers. All this said, Whole Foods - following the lead of Walmart - is viciously anti-union. If we are interested in making service jobs good jobs, shouldn't unionization of food-service workers be central component of that push?

[florida@gmu.edu]

Charlotta--You're right! It's clear that service economy workers are treated much better in Sweden and in much of Europe generally--where their considered "professionals." Not only are their wages and job security better, their work has more status.

Brian--Good point. I have not been in Pittsburgh since the new Giant Eagle opened and I also heard that Trader Joes is jumping into the fray. I recall Whole Foods making an deal with the East Liberty Community Development Corp. to employ local people and also to stock a wide range of ethnic foods for neighborhood residents. I'd like to see someone look into the differences among the service workforce across these companies.

[DJM]

I actually believe that starbucks does a great job in this area and it shows in their growth and profitability. Their stores, are mostly owned/managed by corporate yet are now being encouraged to modify themselves to their local conditions (see WSJ link below) and the company allows store managers to engage directly with the local community.

Also, their benefits packages are very worker friendly (when compared to others in the service industry) and they seem to employ from the communities in which they work (at least here in Capitol Hill DC -- regarding Brian's observations)... Their CEO is committed providing a great workplace and it shows in their employee satisfaction surveys and turnover.

This is clearly a case of a company/leader that gets it and his employees, customers, shareholders, communities seem to reap rewards. (and yes I own SBUX stock)

Here is some more info for those interested.

http://www.workforce.com/section/02/feature/23/52/96/

http://btobsearch.barnesandnoble.com/booksearch/isbninquiry.asp?z=y&btob=Y&cds2Pid=1266&isbn=0071477845

http://online.wsj.com/article/SB116312829873619491-search.html?KEYWORDS=starbucks+store+design&COLLECTION=wsjie/6month