Posted by: Dr Pano Kroko Churchill | September 8, 2015

Gig Labor vs Education in obtaining the American Dream

Conceived by America’s labor unions as a testament to their cause, the legislation sanctioning the holiday was shepherded through Congress amid labor unrest and signed by President Grover Cleveland as a reluctant election-year compromise in 1894.

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It all started in Pullman, Illinois, that was a railroad car manufacturing company town, founded in 1880 by George Pullman, president of the railroad sleeping car company. Pullman designed and built the town to stand as a utopian workers’ community insulated from the moral and political seductions of nearby Chicago. The town was strictly, almost feudally, organized: row houses for the assembly and craft workers; modest Victorians for the managers; and a luxurious hotel where Pullman himself lived and where visiting customers, suppliers, and salesman would lodge while in town.

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Its residents all worked for the Pullman company, their paychecks drawn from Pullman bank, and their rent, set by Pullman, deducted automatically from their weekly paychecks. The town, and the company, operated smoothly and successfully for more than a decade.

But in 1893, the Pullman company was caught in the nationwide economic depression. Orders for railroad sleeping cars declined, and George Pullman was forced to lay off hundreds of employees. Those who remained endured wage cuts, even while rents in Pullman remained consistent. Take-home paychecks plummeted.

And so the employees walked out, demanding lower rents and higher pay. The American Railway Union, led by a young Eugene V. Debs, came to the cause of the striking workers, and railroad workers across the nation boycotted trains carrying Pullman cars. Rioting, pillaging, and burning of railroad cars soon ensued; mobs of non-union workers joined in.

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The strike instantly became a national issue. President Grover Cleveland, faced with nervous railroad executives and interrupted mail trains, declared the strike a federal crime and deployed 12,000 troops to break the strike. Violence erupted, and two men were killed when U.S. deputy marshals fired on protesters in Kensington, near Chicago, but the strike was doomed.

On August 3, 1894, the strike was declared over. In an attempt to appease the nation’s workers, Labor Day was born…

The movement for a national Labor Day had been growing for some time. In September 1892, union workers in New York City took an unpaid day off and marched around Union Square in support of the holiday. But now, protests against President Cleveland’s harsh methods made the appeasement of the nation’s workers a top political priority. In the immediate wake of the strike, legislation was rushed unanimously through both houses of Congress, and the bill arrived on President Cleveland’s desk just six days after his troops had broken the Pullman strike.

1894 was an election year. President Cleveland seized the chance at conciliation, and Labor Day was born. He was not reelected.

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In 1898, Samuel Gompers, head of the American Federation of Labor, called it “the day for which the toilers in past centuries looked forward, when their rights and their wrongs would be discussed…that the workers of our day may not only lay down their tools of labor for a holiday, but upon which they may touch shoulders in marching phalanx and feel the stronger for it.”

Labor Day was once the nation’s most blatantly political national holiday — created by the trade-union movement to celebrate the right of working people to bargain collectively and to stage strikes to press their demands. “Strike the right of associating for the sale of labor from the privileges of a freeman, and you may as well at once bind him to a master.”

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Even before Congress created the federal holiday in 1894, New York hosted the nation’s first Labor Day parade when 10,000 workers took off from their jobs to march from City Hall to Union Square. As the movement grew, so did the parades and celebrations.
But times have changed. Today, Labor Day is largely an occasion for sales, end-of-summer cookouts and back-to-school preparations. Why? Because the movement has sharply diminished and dramatically changed.
In 1954, more than one in three American workers was a union member. Today, it’s less than one in 14 private-sector workers — but, in a huge shift, more than one-third of public-sector workers. Indeed, 40 percent of all union members today work for government.
Yet even as pro-union a president as Franklin Delano Roosevelt — who did more than any other chief executive to extend organized labor’s reach — was certain that unions had no place in government service. As he wrote in 1937: “All government workers should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service.”
And strikes by public employees, he wrote, are “unthinkable and intolerable.”
The way FDR’s warning has gone by the wayside is probably a major reason why public support for unions is way down — and why huge Labor Day parades are a distant memory.
But a day of thanks and a public salute is still due to all those working men and women who — in the words of one of the holiday’s originators, AFL co-founder Peter McGuire — “from rude nature have delved and carved all the grandeur we behold.”

Yet today the reality, is that maybe because Unions have been largely destroyed, average Americans have an increasingly difficult time rising from the bottom of the economic playing field.

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Part of the reason is because of the severe poverty that exists in some parts of the US –- people have a harder time rising to the top because they start further behind. What’s worse is that people born into poverty tend to stay there.

At least five major studies in recent years have found the United States to be less mobile than comparable nations. An economist at a Swedish university, found that 42% of American men raised in the bottom fifth of incomes stay there as adults. That shows a level of persistent disadvantage much higher than in Denmark (25%) and Britain (30%)—a country famous for its class constraints. Meanwhile, just 8% of American men at the bottom rose to the top fifth. That compares with 12% of the British and 14% of the Danes.
The income compression in rival countries may also make them seem more mobile. A Danish family can move from the 10th percentile to the 90th percentile with $45,000 of additional earnings, while an American family would need an additional $93,000.

The bottom line is incomes have stagnated for working class Americans, driven in part by technological advances. The GDP and productivity rates, traditional measurements of economic growth, have slowed greatly over the last decade. While many believe these fail to take into account significant technological advances such as the iPhone, Uber, and other digital creations, it’s clear that the economy is not working for all Americans.

While digital technologies will help economies grow faster, not everyone will benefit equally. Digitization is creating new types of economic disruption. In part, this reflects the fact that as computers get more powerful, companies have less need for some kinds of workers. Even as it races ahead, technological progress may leave some people—perhaps even a lot—behind.

It’s not worth disputing this fact. But it is important to discuss how we respond. The opportunity is there for us to leverage the forces of change.
Today’s digital shift occurs in concert with a massive movement of jobs from traditional employers to freelance marketplaces. These marketplaces, long stuck under the radar, are now exploding and growing 20% faster than offline work. They’re as varied as Uber and Lyft for transportation, Care.com for babysitters, home-health workers, and dog walkers, Postmates, and Caviar, for food delivery, and TaskRabbit for nearly any errand. And they are creating a new career path for a lot of people. According to newly released statistics from the Government Accountability Office, over 40% of all U.S. workers are contingent, which includes temp workers, contractors, on-call workers, part-time employees, and the self-employed.

According to McKinsey, by 2025, online work will add $2.7 trillion to the global GDP and enable 540 million people to access work. Yet our job training infrastructure, especially our publicly funded colleges and vocational schools—the basis for the kind of meritocracy my parents sought when they moved here—lags dramatically behind that of other countries.
Many federal and state-funded job training programs lack awareness of the explosive growth of the contingent and increasingly web-mediated economy. Community colleges, a system of schools designed to put people to work, have a 70% dropout rate nationwide. And even when people do manage to finish, they emerge with training that doesn’t equip them to succeed in the new economy—skills like marketing one’s talents in an online profile, submitting applications for project-based work, and developing new skills using on-line resources. Many of the non-profits providing free educational resources, including websites like Code.org and Khan Academy, mainly attract wealthier people who grew up using the internet and learning to be autodidacts.

But there are some promising efforts out there to alter this reality. The state of Colorado and the city of Phoenix have recently partnered with the Markle Foundation, which has convened a diverse group of CEOs, educators, thought leaders, and community advocates to expand opportunity for all Americans. Working directly with local communities, Rework America is currently focused on creating a skills-based labor market to better inform job seekers about the skills needed for meaningful work and to better connect them to those jobs, as well as help create a pipeline of more qualified workers to fill middle-skill jobs.

Some skills might seem obvious to those of us who grew up with computers in the home. If you’re reading this on a smartphone, tablet, or computer, you likely have a hard time understanding why the flood of websites offering part-time work at higher than minimum wage have a hard time finding applicants. The answer: our publicly-funded job training infrastructure doesn’t teach people how to navigate these systems. I’m not talking about coding, which has become a national obsession. I’m talking about the more basic skills required to find and, in some cases, perform part-time, project-based work through the internet. Skills like data entry, internet research, and an understanding of technologies like Gmail and Google Docs to secure one of the many jobs posted for virtual administrative or customer support in rising categories like Real Estate, Law, HR and Accounting.

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Labor looks different in the 21st century. And so should our job training programs. In 2011, the US alone spent $18 billion on 47 programs that resulted in poor tracking and overlapping missions. Two major shifts would help us prepare more people for today’s workforce.

First, all organizations receiving federal or state funds for job training should be required to have an online jobs component to their training programs, regardless of the type of job we’re training people to perform. Using the internet to secure employment is as vital to a construction worker as it is to a software engineer.

Second, we need to do more to ensure that people are not left out of the benefits afforded by technological progress.

Third, it appears that the gig economy, or the sharing economy, is upending “Work” as we know it. People are up and running on sites like Uber, Upwork and TaskRabbit without any training whatsoever. From those that have graduated and go on to complete freelance contracts, we’ve seen a 27% increase in hourly wages, which tells us this model is a successful model for change.

Today I am taking three university course online, that are totally free and rather interesting. One is physics from MIT, one other is big data from Harvard and one in bioengineering from Stanford. These fully immersive courses are totally free of any cost, and are offered by world renown professors… And am also taking a Development Economics course too, from the leader of the field.

So with the Gig-Economy, allowing for labor time flexibility, abundant career changes, and economic support of unorthodox lifestyles, and with the addition of the MOOC education out there — we can rebuilt the pursuit of the American Dream for all.

Today so many free university courses are available out there, allowing anyone to be an autodidact all the way to becoming a University Professor via this internet education without having to pay college and university fees — that it makes me trust that we are surely entering the new era of education where traditional universities will be seen as anachronisms similar to the failed large automakers that have to be bailed out by the taxpayer, or like the taxi cab cartels of the large cities that are tottering and crumbling in the face of Uber barbarians coming along to serve the people and the workers alike in a new way…

Let’s support this change and not try to stifle it.

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Let’s do this also for economic reasons, because it is far easier and less expensive to help a newborn elephant to stand up, rather than trying and failing with all your might, to prop up a massive old elephant who is falling down and dying…

Yours,
Dr Kroko

PS:
So this Labor Day, think about how we can give more people the opportunity to participate in today’s changing world of work, education, and the pursuit of the American dream.

It is time to encourage your local politicians to support online education, online work initiatives, and the sharing economy of the internet, and to look closely at the education and labor policies your presidential candidate of choice represents.

If you’re in the position to do so, consider hiring someone from one of the many online work platforms or through one of the job training programs we talked about, because I still believe in the dream I was taught when I was young, in equal opportunity for all and an inclusive view of the future of work.

Yet let us not forget that we live in an age of disruption – and that’s a good thing.

Industries will be transformed. Major companies will fall. Old systems will collapse and new ones will come up as entrepreneurs figure out how to optimize and reinvent inefficient businesses, products, and services to provide consumers with all things better, faster and cheaper.

Since the 1960’s 90% of the Fortune 500 companies have disappeared into bankruptcy or worse. And that was 50 years in the making. Yet today this change is accelerating as we are facing another faster and more massive disruptive economic change. According to the Olin School of Business — more than 50% of today’s Fortune 500 companies will be gone in the next 10 years.

A quick look at the list of the five industries to be disrupted the most is self evident. Education, Healthcare, Banking & Finance, Insurance, and the Military Industrial Complex — will all fail and get replaced by new ones, yet to be born as today’s companies are revealed to be old and sick elephants.

These huge behemoths are already dead — they just don’t know it, … yet.

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And as giant corporations go, these ones are far too ripe for disruption and obsolescence. Full on upheaving disruption, within this decade; due to their own cancerous growth, due to societal and technological progress, and due to the equalizing power of the Internet. This ripening for change along with simple maths, global internet enabling, mobile transfers, big data, clouds and artificial intelligence will upset all your toys in the bathtub…

Adding further injury and insult to the mix, we should admit that this looming change will convince anyone that clearly it is the big data and the internet of all things, along with A.I. and automation that will change every industry this decade… and Labor will benefit mightily.

All industries will change, but none more so than these five.

So let’s get cranking because it’s not that we need a new American Dream, but that we need a very different approach in achieving it, and technology has already risen to the occasion.


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