America’s Choice: Class Conflict or a New
Social Contract at Work
The Future of Work Conference
Thomas A. Kochan
MIT Institute for Work & Employment Relations
MIT Workplace Center
London
June 23, 2003
The Issue: Mismatch of Policies &
Institutions with Work & the Workforce

Key Facts:
– Changes in Work & the Workforce
– Policies & Institutions Designed in 1930s

Result:
– Mismatch creates gap between winners & losers and limits
economic performance and innovation
– A breakdown in the old social contract

The Challenge
– Break the policy impasse by reframing the debate, engaging
new voices, & building on local innovations
– Building a social contract for the future
The Puzzle: Why the Deafening Silence?

Decade of boom & bust leaves working families with:
–
–
–
–
–
–
–

Stagnant, declining incomes
Increased inequality
Longer working hours
Less retirement savings; fewer health care benefits
Broader job insecurity
Breakdown in trust in corporate leaders
Loss of worker voice in society
Current government policies producing:
–
–
–
–
Further cuts in services & jobs
Tax policies that further increase inequality
Deep divisions over war policies
Direct attacks on workers, unions, and core values
One Scenario: An Era of Tension, Division,
Conflict, Decline, and Potential Backlash

Government service cuts at state & local level

International tensions and anti-Americanism intensify

Anti-globalization protests

Racial tensions

Widening income inequality—domestic and global

Work and family conflicts

Loss of confidence in key institutions

Growing sense of Helplessness

High potential for backlash and extremism
An Alternative Scenario: A New Social
Contract

Engaging the Public: Can it be a force for Change?

Revisiting basic values: The moral foundations for work

Work & its Role in Society

Expanded View of the Key “Actors” & Institutions

Multiple Stakeholder View of the Firm

Expanded Roles for Unions/Associations

Expanded Role for Labor Market Intermediaries &
Community Groups

Recast Government as a Catalyst for Change
Starting Points: The Moral Foundations for
Work

Efficiency: Necessary but not Sufficient

Work as a Source of Dignity and Personal Development

A Living Wage

Respecting Diversity & Equality of Opportunity

Solidarity & Social Cohesion: The Common Good

Voice & Participation

Local Control: Solving Problems at the Source

Integrating Work, Family, and Community Responsibilities

A Social Contract
A Holistic View of Work in Society
Economic Function
Individual Value
• security
• standards
of living
• efficiency
• quality
goods &
servicesWorld
of
Work
• dignity
• respect
• identity
• voice
• social
interaction
Place in Society
family
community
citizenship
The Firm & its Multiple Responsibilities
Shareholders
& Customers
Government
Agencies
Communities
The Firm
Labor Market
Networks
Union
Partnerships
Employees
Suppliers &
Contractors
The Challenge
“Managing a company, not a share price, means
balancing the requirements of shareowners, customers,
employees, and communities. And managing a company
for the long-term, not just the short-term, requires building
sustainable value for shareowners and customers and
employees and communities. And these relationships of
sustainable value require real trust and real candor.”
Carly Fiorina, CEO, Hewlett Packard, October 12, 2002
The Opportunity
“There has never been a time when corporations have
had the reach, the resources, the knowledge, and the
expertise to make a difference that we do today. Now, more
than ever, corporate leaders have an opportunity to redefined
the role of the corporation on a world stage; to leverage our
ability to improve the live of people, communities, and nations
for the better.”
Carly Fiorina, CEO Hewlett Packard, October 12, 2002
Realities: Changing Role of the Firm

The New Business Model: Core Competencies
– More difficult to perform labor market functions
– Unstable boundaries: Unstable Partnerships
– Premium on Flexibility; Adaptability to Uncertainty

Increased Role of Knowledge/Human Capital
– Knowledge “Workers” or “Work Systems?

Must Work Collaboratively with other Institutions

Today’s Reality: Diversity in Organization Forms

Transparency, Trust, & Accountability: Laws, Leadership,
& Employee Voce
Multiple Purposes of the Next Generation
Unions
Political
Voice
Coalition
Partner
Direct
Participation
Next
Generation
Unions
Mobility &
Occupational
Community
Collective
Bargaining
Strategic
Partnerships
The Realities: Void in Worker Voice

Workplace
– Pre-depression levels of union membership
– Representation Gap increasing

Collective bargaining in decline
– Can’t take wages out of competition
– Declining power of the strike

Enterprise—struggling to find a forum
– Partnerships, ESOPS, Shareholder Resolutions….

Absence of voice in national political affairs
Will there be a Next Generation Labor
Movement?

Diverse Labor Force Wants & Needs Diverse
Forms of Participation & Representation

Unions as Extended Networks Require:
–
–
–
–
–

Continuous membership over full career
New approach to membership recruitment
New sources of power
New coalitions
Different structures--coordination across union
boundaries
Question: Can the labor movement adapt and
reform or will it require a rival movement?
Emerging Labor Market Institutions
Job Matching
Information
Services
Coordinating
Networks
Labor Market
Intermediaries &
Community Groups
Family Advocacy
& Services
Worker
Advocacy &
Coalition
Building
Training & Life
Long Learning
Intermediaries & Community Groups

Multiple Functions
–
–
–
–

Job Matching
Life Long Learning
Advocacy: Living Wages; Work & Family
Institution Building
Major Challenges:
– Sustainability
– Building Power
– Moving to Scale: Having a National Impact
Government: A Catalyst for Change?
Linking Macro
Policies
Investing in
Human Capital
Promoting State
& Local
Experiments
Experimenting
with SelfGovernance
Supporting
Mobility
Government
Updating
Labor Law
Experimenting
with ADR
Setting &
Enforcing
Minimum
Standards
Current Realities

Demise of the U.S. Department of Labor
– From the days of George Shutlz & John Dunlop
– To a silent White House Puppet

Current Assaults on Worker Rights
– Department of Homeland Security: “Collective
bargaining cannot be allowed because it is a
threat to national security.”

Continuing Business-Labor Gridlock
A Shadow Government Policy: A
Realignment of Roles

Federal Govt. as Catalyst for Change

Increased Role for State & Local Govt.

Increased Role for International Agencies
– ILO, IMF, World Bank, WTO…and NGOs

A Comprehensive Reform/Updating of labor and
Employment Law

Greater reliance on private institutions for
enforcement/dispute resolution

Return to Professional Leadership in Labor &
Employment Policy
The New Approach in Action: Building a
Family Centered Labor Market Policy

Firm-Based “Family Friendly” Policies

Employee Participation to Support Use and
Adapt Government Regulations

Collective Bargaining to Expand Coverage

Networks to Promote Family Based Model

State, Federal Policies to Fill Gaps, Extend
Coverage, Provide Resources, Support Local
Adaptations & Experiments
Making it Happen

New Ideas

More Innovations

Public Engagement

Full Range of Voices:
Labor, Management, Community Groups, Women &
Family Advocates….

National Leadership?