Jobs and Opportunity, America’s Most Pressing...
Dr. Rajiv J. Shah

Dr. Rajiv J. Shah President, The Rockefeller Foundation

October 09, 2017

Jobs and Opportunity, America’s Most Pressing Challenge

Dr. Rajiv J. Shah

Dr. Rajiv J. Shah President, The Rockefeller Foundation

October 09, 2017

 

Last month I was in Michigan for the fourth annual Detroit Homecoming, an event that brings together people who grew up in the Detroit area, as I did, to re-engage with the city and learn how they can help it continue to bounce back from its 2013 bankruptcy. It was great to be home, and to share some of my perspective on what the Rockefeller Foundation sees, here in America, as the defining issue of our time: jobs and economic opportunity.

I was fortunate to grow up outside the city that gave America the notion of what makes a good job – one where if you work hard and play by the rules, you could have not only economic stability, but also opportunity: more than just get by, you’d be able to get ahead. Back when the Big Three sold 9-out-of-10 cars nationwide, that promise of the American Dream drew people to southeast Michigan from all over – including immigrant families like my own. I was born and raised around Detroit because of the promise of a good job for my father, first at Bendix Aerospace in Ann Arbor, and then at Ford Motor Company, where he worked for over three decades. Hardworking families, including immigrant families like my own, could expect a multigenerational career with one employer, and good public schools for their kids. It wasn’t perfect – we saw proof of that in the 1967 uprising, and the deep-seeded structural racism that still exists today – but it did afford one the chance at upward mobility and opportunity.

“I was born and raised around Detroit because of the promise of a good job for my father.”

I’ve thought about this a lot since I joined the Rockefeller Foundation and we’ve begun to focus more intensely on jobs and opportunity. We’re living at a time of great economic insecurity and inequality. Some call it America’s second Gilded Age, as we’ve seen since the 2008 recession, the great majority of income gains just go to the top 1 percent. For many, work is in fact losing its value as a source of pride, identity, and basic human dignity – the absence of work now proven to be closely correlated with increase in challenges around mental health, anxiety and despair. As I look at our legacy and learn about our prior work on economic fairness, I’ve been asking, how can we help renew confidence in the American Dream and bring hope back to communities that have seen it fade?

There’s a lot we’re still learning, but we do believe the answers can be found in three pillars of opportunity that lie at the heart of the American Dream.

The first pillar is a job that affords people a real middle-class wage – more than a minimum wage or a living wage, a wage that enables workers to share in the profits they create; that allows them to be active consumers; that lets them save for a comfortable, secure retirement; and provides greater upward socioeconomic mobility to more people. That’s what Henry Ford paid his workers a century ago when he doubled their wages to $5 dollars a day. Ford’s motivation was hardly pure: he wanted to reduce turnover. But it also meant workers could suddenly afford the same Model T’s they were building. And company and workers both prospered.

Above: Our tour of the Ford Dearborn Truck Plant, which has manufactured the Ford F-150, their most popular vehicle for 40 years running. One truck is made every 52 seconds and this is the same plant where Henry Ford paid workers $5 per day to ensure his workers could afford to buy a Ford.

Employers, including Ford, didn’t always appreciate this lesson. Workers and unions had to fight, bleed and, sometimes, die to secure the second pillar of opportunity in America: the system of labor protections, policies, and benefits that most workers expect – things like a 40-hour workweek with weekends off and overtime pay, workers’ compensation, and employer-sponsored healthcare and retirement benefits. And the third pillar is America’s safety net: policies and programs intended to make sure no one who works hard has to suffer just because they lose their job, get sick, become disabled, or retire. Together these three pillars unlock opportunity and economic mobility, and give workers a measure of dignity.

It’s true these pillars are most sturdy when they rest on a foundation of economic growth. But it’s also true that not all growth is equal. In my years leading the U.S. Agency for International Development, I saw some countries harness growing economies to lift living standards for millions. In others, growth only enriched those at the top. One lesson I took away – which bears repeating in Washington – is that economic growth alone will not secure the American Dream for all those who seek it. It requires active leadership from government, the private sector, and throughout civil society.

“Not all growth is equal.”

While Detroit has such leadership today, that hasn’t always been the case in the last 50 years. And we’ve seen the effect on people’s lives. But in this, the economic experience of Detroit isn’t unique – it’s become the economic experience of a large part of American society. Last December the economist Raj Chetty found that for the first time since World War II, American children have only a 50-50 chance of earning more than their parents. That’s proof of how our jobs and economic system is broken, across all three pillars of opportunity in America.

Above: A fascinating discussion with members of Ford’s workforce training program, which has been recognized by the White House and Department of Labor.

Today, Americans no longer share in the profits they create. In the last three-and-a-half decades, most American workers have seen their hourly wages stagnate or decline, even as real GDP grew by 149 percent and net productivity climbed 64 percent. Some of the manufacturing jobs that drove middle-class prosperity were offshored; even more were automated. And it’s gotten harder for folks at the bottom of the ladder to find jobs where they can get ahead.

It used to be, if you spent your day creating value for a company, you could expect to be paid for it. When you spend time online today, you create terabytes of data that companies sell for profit, but it’s unlikely you’ll ever see a cut of that. These companies also require much smaller workforces. In 1979 General Motors’ $50-billion-dollar market cap rested on the work of 850,000 people. Facebook’s market cap today is nearly 10 times the size, but with only 17,000 employees – 98 percent less than GM. Faced with fewer big-company job prospects, more Americans are becoming self-employed, whether as an Uber driver, a housecleaner, contractor, or freelancer. They don’t enjoy the protections and benefits that labor unions fought so hard for.

Meanwhile our social safety net doesn’t reflect what work is like today and, too often, it doesn’t come through when people really need it. For instance nearly 60 percent of Americans today can’t cover a $500-dollar unplanned expense, like new brakes on their car or taking a family member to the emergency room.

If nothing changes, it will get worse. Automation and artificial intelligence will displace retail and service workers, just as they replaced factory jobs. Soon they’ll start displacing white collar workers, as well, like accountants, risk analysts and legal researchers.

We all have a role to play in addressing these problems. Employers need to own their responsibility to support workers. Unions need to go beyond their traditional roles to help members recognize that work itself is changing, and workers may need new and sometimes very different skills. Meanwhile workers themselves – and perhaps some politicians – need to recognize that some jobs just aren’t coming back, and be more open-minded about how their talents can be applied to the good jobs that actually exist.

For philanthropy’s part, we know we can’t be the engines of job creation. Nor is it our place to swoop in and claim we have all the answers. But we can take chances on bold ideas that are too risky for others, yet might pay off big. The Rockefeller Foundation has some experience with making big, bold bets – and while our history is most known for our work on health and food, the truth is economic opportunity has long been one of our animating principles. In the early 1900s we fought to eradicate hookworm in the South after learning it was the single greatest obstacle to people holding down work. In the Great Depression we seed-funded the American Public Welfare Association, which helped pave the way for Social Security. Much more recently, we developed what’s known as impact hiring – helping companies address entry-level talent needs while also improving job outcomes for people facing barriers to opportunity. Over the last two years, our work has spurred better hiring practices at five of the 10 largest employers in America. And just last year we saw some of these and other companies hire more than 100,000 young Americans who weren’t in school or working. We’re eager to build on this work as we go forward.

Above: The 100,000 Opportunities Initiative’s opportunity hiring forum and fair focused on hiring “opportunity youth” – an untapped source of talent. Photo credit: 100,000 Opportunities Initiative

For 104 years, our foundation’s mission has been to promote the well-being of humanity throughout the world. That’s why as we begin to try to tackle these problems, we will always be mindful of what work does for a person’s well-being.

Because we know a job is about much more than paycheck. It’s about feeling pride and self-worth. It’s what makes someone feel independent, and confident that they’re a productive part of their community and their family. It says to everyone we meet that we have something to offer and something to contribute to society, and that no matter what our faults, flaws, or failings might be, there is somewhere we belong, where we have a role and our contribution is valued. It tells us that our lives have meaning beyond our own.

That’s what a job has meant to generations of Americans. It’s what my dad’s job meant to him, and to our family, for more than three decades in Detroit. We’re confident that can still be the case for generations yet to come – and we look forward to helping make that possible.

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