America Needs to Restore The Dignity of Work
By Marco Rubio | The Atlantic
There was once a path to a stable and prosperous life in America that has since closed off. It was a well-traveled path for many Americans: Graduate from high school and get a job, typically with a local manufacturer or one of the service industries associated with it, and earn enough to support a family. The idea was not only that it was possible to achieve this kind of success, but that anyone could achieve it — the American dream. That dream defines my family’s history, and its disappearance calls me to action today.
In 1956, my parents left behind a life of poverty in Cuba when they departed Havana with my 7-year-old brother for New York, and then for Miami soon after. My father started off taking whatever day jobs he could find before eventually becoming a bartender for most of his career, working various other jobs during the gaps. Once my younger sister and I were old enough, my mother started working again as a maid.
Between their two salaries and my dad’s tips, they made a good living, and I had a privileged childhood. My parents made enough to own a house, raise four children, and even allow my mother to spend most of her time at home when I was young. I was able to play football, go to college, and earn a law degree, because of the solid foundation built on the sacrifices my parents made for me and my siblings.
At some moments in our history, this sort of upward mobility has proved elusive. But when the United States has enjoyed booming new industries that offer good-paying jobs to large numbers of people, effective institutions of training and assimilation, and a strong communal spirit of aid and shared purpose, such opportunities have been broadly shared.
Today, though, outside of a few concentrated pockets of high growth in digital technology, American industrial innovation has slowed and workers in once-populous industrial regions have lost stable employment. For increasing numbers of Americans, enrolling at a four-year college is more likely to lead to debt and ambiguity than to a clear and productive career. Local organizations that once provided workers with a sense of representation and community, such as unions, have seen their memberships and budgets decline into near-oblivion.
To feel the absence of the American dream, and to desire to re-create an America in which it exists, is to experience nostalgia, but of a particular kind. It is not necessarily a desire for the old things, for low-tech assembly lines, male-only colleges, or debilitating labor disputes. It is a desire for an old promise, that no matter what America looks like or how it has changed, a stable and prosperous life should be attainable for the many. It’s an undying spirit that defines and unites us as Americans.
I’m proud that my mother and father could provide, through their hard work and commitment to our family, the opportunity for me and my siblings to flourish. They came to America in a time of prosperity, when working-class immigrants could assimilate and thrive alongside Americans whose families had been here for generations.
When I was born, in the early 1970s, the median income for families like mine, with a few kids and parents with only high-school degrees, was nearly two and a half times the poverty line. Today it’s less than one parent’s paycheck away from the poverty line. Simply put, if my family faced the exact same circumstances today, we would not be middle class; we would be falling behind. And if hardworking Americans don’t have stable jobs that pay enough to buy a home and raise a family, our nation is in very serious trouble.
Many policy makers in Washington and commentators in New York realize that the 21st-century economy is causing deep disruptions to Americans’ work lives, and that something new must be done to help them succeed. The debate over the “future of work,” though, is too often concerned with what workers need to do in order to become more useful to businesses, placing the responsibility of adjusting to automation and outsourcing by pursuing job retraining on workers themselves. In the process, the discussion absolves government and business of any responsibility for creating an economy that exists to benefit working Americans.
Offering workers retraining and career education is a big part of the answer to our current dilemma. But constantly scrambling to keep up with the ever-shifting forces of globalization and automation is not the American dream. Applying these ex post facto fixes to a misaligned economy is not an attempt at a solution, but a justification. We’ve done better before, and we can do better now.
At its core, the American dream is about the opportunity to earn happiness. This kind of happiness is only made possible for most Americans by the dignity of work. If we do not rediscover and embrace that simple truth soon, low-paid rootlessness will be the future of work, and our nation will suffer for it. On public policy, both the right and the left are stale and sclerotic. Neither a singular focus on economic growth nor a reliance on more government is going to solve the challenges of our time. In this essay, I hope to present some other options.
For all of the criticism it has received, the 2017 Republican tax law addressed a universally recognized problem: an old corporate tax structure that left us uncompetitive with the rest of the world. But let’s not mistake this first step for the final destination. The question workers face going forward isn’t whether tax cuts will bring capital back to the United States; it’s where that capital will go once it’s here.
When conservatives think of business tax cuts, we too often think that corporations are all like General Motors in the 1950s — functioning, productive companies making American goods with American labor. That’s just not how it works anymore. Many large corporations today act more like financial assets, allocating capital as if their stock price and dividend payout were the firm’s products instead of the goods or services that drove their success to begin with.
Trusting in a corporate tax cut alone to generate innovation and boost productivity is the thinking of the past. A corporate tax-rate cut makes all corporate assets more valuable, causing a bigger return to investment no matter how it is used. In our globalized and financialized economy, though, it’s as likely to induce stock buybacks as it is to spur the construction of new American factories.
It doesn’t have to work this way. Supply-side theory — that increased investment benefits workers in the long run — only works if investment actually increases. That is why, in our 2015 tax plan, Senator Mike Lee of Utah and I argued that the top priority of tax reform should be encouraging capital investment. And that is why I will soon introduce a plan to expand and make permanent the full-expensing provisions from last year’s tax-law effort and end the tax code’s favoritism for companies that spend their tax cuts on stock buybacks.
By allowing businesses to immediately deduct their investment in improving their products and workers, full-expensing better increases the value of investments that are tied to American labor. The Heritage Foundation called it the “most important [reform] for economic growth” because “it benefits businesses that are actively investing and creating jobs in the U.S.”
It’s not always in the financial interest of nationless corporations to increase their investment in American workers. Changing that will require a stick to accompany the carrot of full-expensing. At present, Wall Street rewards companies for engaging in stock buybacks, temporarily increasing their stock prices at the expense of productive investment. While companies should be free to buy their own stock, there should be no tax advantage for stock buybacks over other forms of capital allocation, as the deferral of capital-gains taxes currently allows.
Taxing stock buybacks at the same rate as dividends would ensure that corporations are not reducing their investment merely for tax purposes. Under my proposal, a company that wants to use its tax cuts to build a new factory could deduct the costs of the facility, but a company that wants to use its tax cuts to buy back its own stock wouldn’t get any additional tax benefit for doing so.
The conventional wisdom among corporate management and investors today is that buybacks don’t come at the expense of investment, because they return capital to shareholders to be put to better use elsewhere. This objection misses the point. When a corporation uses its profits to buy back stock, it is actively deciding that returning capital to shareholders is a better activity for business than investing in the company’s product or workforce. The tax preference for buybacks tilts the scale in this direction, creating a bias against productive investment.
We shouldn’t be surprised that an economy that encourages indefinite financialization over confidently making big bets on building the future has yielded a work life that is fractured, unstable, and low paying. To reassert the dignity of work, we need to start building an economy that invests in its workers and the things they make. Making American corporations act like the drivers of investment they once were would be a start.
There is perhaps no greater cultural expression of what we consider dignified work than the priorities of our education system. We praise the achievement of a four-year-college degree, but look down on technical-skill certifications. We count ridiculous classes on pop culture as credits toward college degrees, but not wood shop. We subsidize high-end universities’ tuitions and endowments, but tax the paychecks of young workers gaining experience in the field.
Higher education has gone from being an accelerator of opportunity, as it was after World War II, to being a main driver of economic and social inequality today. The status quo model of higher education stifles competition, encourages soaring tuition costs, traps competent potential workers in unproductive academic bureaucracies, and limits opportunities for nontraditional students, such as working parents. Families and students need a system that embraces the new ways people can learn and acquire skills without having to go the traditional four-year-college-degree track.
The Higher Education Innovation Act, which I introduced with Democratic Senator Michael Bennet of Colorado, would start to address these challenges. It proposes an alternative accreditation system that would allow new institutions to meet students’ needs with innovative educational products. Imagine some high-school seniors interested in becoming aircraft mechanics. Hands-on learning supplemented by low-cost online engineering courses might suit them better than a more expensive traditional degree built around a core curriculum.
We should reform student loans, too. We can increase transparency for borrowers by abandoning the current interest-based model, which hides the true cost of the loan and reduces incentives for colleges to bring down their tuition costs. If students instead pay a single, upfront loan-financing fee, which could be spread out through the lifetime of the loan, they could see on the front end exactly what they would be getting into, while avoiding the trap of ever-growing interest payments that delay graduates’ financial ability to start a family and build a life after school.
I’ll readily admit that those entrenched in the higher-education system and those who are unwilling to adapt stand to lose from reforms such as these. That’s partly the point. We simply cannot afford to waste our money and young peoples’ future work lives on the four-year-degree-industrial complex.
The old consensus, which made a a college degree a requirement for success, has harmed young Americans and their dignity, shoving them out of an honest day’s work and into the complicated world of ambiguous skills and unambiguous debt. We need to transform it into a well-trod path to prosperity for the many.
Any discussion of the dignity of work should mention unions. No other American organizations occupy the same unique space as labor unions, which straddle the line between jobs and community. At their local levels, unions have historically served as an integrating force for the dignity of work.
This has not been the case for big-name organized labor for some time now, and workers know it. Since 1983, the number of private-sector union members fell by about 37 percent, from about 12 million to 7.6 million. Only 7 percent of the private-sector workforce is unionized. The overwhelming majority of Big Labor’s political activities are focused on helping Democrats, while an increasing share of its membership votes Republican. Time and time again, when given the opportunity to form a classic adversarial-model union, workers have opted against doing so.
This is the unsurprising outcome of a labor-organization model that no longer represents the interests of its workers. But the decline of unions, insofar as they represented important places for workers and their families to secure the conditions of the American dream, is not something to be celebrated.
One of my earliest political memories is of marching the picket line with my father, a casino bartender in Las Vegas at the time, in a Culinary Workers Union strike. I didn’t fully grasp the issues involved then, but I knew my father and the workers at the other hotels were asking to just be treated fairly for their work. This concept — that they created value for the hotel and had a right to share in that value — is not radical.
To have labor organizations that represent workers’ interests again, we should go back to the basics. As my father understood then, and as most workers understand today, workers are productive for their employers. They can organize to ensure that their compensation is commensurate to their value, like my father’s union did in that strike, but also to increase their value, like by providing a good American community for my immigrant family, or in building the skills of young workers.
Labor organizations could still serve these valuable roles today, if only we would abandon an old model of regulation that doesn’t. The backbone of labor law remains the National Labor Relations Act of 1935, and many of the law’s major provisions have remained unchanged since 1947. It enshrines a model of labor relations that pits worker against manager, in which government regulation tells workers what they should value and success is defined as gaining power over the other side, without regard for the value workers and employers might create together.
Federal labor law should be reformed to make possible a more productive relationship between workers and employers. As Oren Cass proposes in his book The Once and Future Worker, this could take the form of new labor “co-ops” in the model of Germany’s sectoral workers’ groups, which negotiate wages and benefits, and provide training and apprenticeships for their workers.
These voluntary, dues-paying organizations and their associated worker representatives could receive federal charters that would allow them to administer benefits such as unemployment insurance and worker-training programs. They would be banned from the kind of institutional political organization Big Labor has become bogged down in and would have the flexibility to negotiate beyond the extent of federal labor law in some areas.
Rebuilding the dignity of work means fighting for a work life that suits the needs of our workers. By recognizing the legitimate value of labor organizations and embracing creative ideas for restoring their importance in workers’ lives, we can better align the interests of our economy with the dignity of workers.
For too long, government and business leaders alike have stood back and endorsed supposedly unstoppable global forces that have made life harder for working Americans. But inaction will not restore the dignity of work or usher in a new American century that values dignified work and wages like the last one.
The 21st century offers a real opportunity to reconstruct the great American middle class. By making companies and workers more productive, helping students be better prepared, and improving the working lives of the working class, we can create fields and industries that never existed before, offering careers and jobs that pay decent wages and provide stability to working families.
The “dignity of work” is not an ideology, nor is it a total theory of what is wrong with our country, however much we may crave one in a polarizing time. It is the lived reality of Americans: the day-in, day-out work to provide for their families and build a future for their children that is better than what they had to begin with. The “dignity of work” is both a recognition of how hard it is to achieve the American dream, and the reward for getting there.
To begin rebuilding a flourishing nation, we need to remember that, and make dignified work possible for the many.
Originally published at www.theatlantic.com on December 13, 2018.