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January 27, 2008

Richard Florida

Good Jobs

« Why the Giants Will Win the Super Bowl | Main | On Inspiration »

Creating good high-paying jobs is a huge issue all over the world. It's clear that the global economy is dividing employment into what UCLA economist Ed Leamer calls higher-paying "geek" jobs and lower-paying, less secure "grunt" work.  Increasingly, in the advanced economies those grunt jobs are in the service economy.  A key challenge of our time is how to make those service economy jobs better, higher-paying, more creative, and more rewarding jobs.  The Toronto Star's John Spears reports on my challenge to Toronto's Prosperity Agenda:

Appearing before the city's economic development committee to discuss its Agenda for Prosperity, released earlier this month,Florida challenged the common thinking that counter work in franchise outlets is somehow worthless ... In fact, he said, government, business, labour and academic leaders should consider holding a "service summit" to map just such a plan ...

"Why can't we do for those jobs what we did for my father's job in a factory?" he asked. "Why can't we make those service jobs good, high-paying, secure jobs?" ...

"The food cluster is one," he said. "Everyone knows we have great chefs. What about the rest of the food chain – the food support worker, the food preparation workers and the agricultural sector. What about hotel and retail? If we're going to do tourism, if we're going to do trade, if we're going to do retail, how do we strengthen that?"


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One thing I've noticed in Toronto is the number of small franchises (e.g. fast food places) that seem to be run by a family of immigrants. I've never asked, but my guess is that one of the people behind the counter actually owns the franchise and came to Canada under the "entrepreneur class". (Unlike the skilled immigrant class, this category doesn't award points for degrees etc. but requires business experience and a pledge to start a business that will create jobs.)

Obviously, not everyone working in retail can own the place -- but if my guess is right, it's an interesting variation on the service job model.

Zoe B

A friend recently sent me this link:


It tells the sentimentalized story of a grocery store bagger who improved his customers' lives by putting a "Thought for the Day" in every order. The bagger is credited with improving the entire store's attitude toward service (presumably resulting in increased profits).

The story said nothing about whether any of this monetary reward went to the guy with the good idea. Did he get a raise? A percent of the additional profits? A royalty? I will guess that (in some informal manner) he got a little more job security, but how do you institutionalize that when managers or owners change?

Ian Graham

Richard, I am not sure that most service jobs will ever be able to command a premium in terms of salary. In my opinion the key constraint working against service industry jobs is that of value. Value with respect to these types of jobs could be summed up as; the knowledge required performing the task, the cost to replace a worker and market forces. I am sure there are probably other factors but consider this a starting point.

The time it takes to train and replace a person in the service industry is relatively small and could probably be measured in terms of weeks rather than months or years. If a service industry worker vacates a position the time and cost to replace them is relatively low. This low “switching cost” does not encourage the business owner to place significant value on the position and this is reflected in a lower wage. In knowledge based businesses the switching cost is generally much higher and it can be difficult if not impossible to replace an employee with skills and knowledge developed from a combination of education and experience.

Market forces are also a significant factor. Basically what will someone pay for this service? The service industry is often a commodity business that competes on price. In a commodity business it is difficult to pay a premium for wages when the sole driving force in the market place is price.

Yule Heibel

It's an intriguing idea, especially given that "creatives" have always worked at service jobs until their avocation pays enough to become a sustaining career. I live in Victoria, BC, and just last night I helped adjudicate a grant proposal for a theatre group, one of whose board members is described by her creative role and by the fact that she's a server in a local restaurant.

I've been following your work for a long time, Richard, but only comment today because coincidentally our local paper has an article about Tourism BC's human resources association (go2), which just launched a new division (PROPEL) that will report on "how effective the province's apprenticeship and training models are for cooks, bakers and meatcutters and how they can be improved to ensure more students get through the courses and into jobs in the hospitality industry."

It's prompted by the extreme labour shortages we're experiencing in BC's urban service sector (Victoria, Vancouver): "Labour shortages in the foodservice sector are at a crisis point and there is a severe lack of trained workers in the cooking field and other foodservice occupations."

At some point, those jobs have to become more valuable because there's more competition to find employees.

I'm curious to see what PROPEL does to "add value" to the stream ...and whether they're paying any attention to what you're saying!

(The article in the Times-Colonist to which I refer is very brief, but here's its url: http://tinyurl.com/2u98yp )

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