The World Is Flat (42 page)

The universal pension format would make rollover simple, easy, and expected, so pension lockup per se would never keep someone from moving from one job to another. Each employer could still offer his or her own specific 401 (k) benefit plan, as an incentive to attract employees. But once a worker moved to another job, the investments in that particular 401 (k) would just automatically dump into his or her universal pension account. With each new job, a new 401 (k) could be started, and with each move, the benefits deposited in that same universal pension account.

In addition to this simple, portable, and universal pension program, Will Marshall, president of the Progressive Policy Institute, proposes legislation that would make it much easier and more likely for workers to obtain stock options in the companies for which they work. Such legislation would give tax incentives to companies to give more workers more options earlier and penalize companies that do not. Part of making workers more mobile is creating more ways to make more workers owners of financial assets, not just their own labor. “We want a public that sees itself as stakeholders, sharing in the capital-creating side of the flat world, not just competing in global labor markets/' argued Marshall. ”We all have to be owners as well as wage earners. That is where public policy has to be focused-to make sure that people have wealth-producing assets as they enter the twenty-first century, the way homeownership accomplished that in the twentieth century.“

Why? Because there is an increasing body of literature that says people who are stakeholders, people who have a slice of the pie, “are more deeply invested in our system of democratic capitalism and the policies that keep it dynamic,” said Marshall. It is another way, besides home-ownership, to underpin the legitimacy of democratic capitalism. It is also another way to energize it, because workers who are also owners are more productive on the job. Moreover, in a flat world where every worker is going to face suffer competition, the more opportunities everyone has to build wealth through the power of markets and compounding interest, the more he or she will be able to be self-reliant. We need to give workers every stabilizer we can and make it as easy for them to get stock options as it is for the plutocrats. Instead of just being focused on protecting those with existing capital, as conservatives so often seem to be, let's focus instead on widening the circle of capital owners.

On the health-care side, which I won't delve into in great detail, since that would be a book unto itself, it is essential that we develop a scheme for portable health insurance that reduces some of the burden on employers for providing and managing coverage. Virtually every entrepreneur I talked to for this book cited soaring and uncontrolled healthcare costs in America as a reason to move factories abroad to countries where benefits were more limited, or nonexistent, or where there was national health insurance. Again, I favor the type of portable health-care program proposed by PPL The idea is to set up state-by-state collective purchasing pools, the way Congress and federal employees now cover themselves. These pools would set the rules and create the marketplace in which insurance companies could offer a menu of options. Each employer would then be responsible for offering this menu of options to each new employee. Workers could choose high, medium, or low coverage. Everyone, though, would have to be covered. Depending on the employer, he or she would cover part or all of the premiums and the employee the rest. But employers would not be responsible for negotiating plans with insurance companies, where they have little individual clout.

The state or federal pools would do that. This way employees would be totally mobile and could take their health-care coverage wherever they went. This type of plan has worked like a charm for members of Congress, so why not offer it to the wider public? Needy and low-income workers who could not afford to join a plan would get some government subsidy to do so. But the main idea is to establish a government-supervised, -regulated, and -subsidized private insurance market in which government sets the broad rules so that there is no cherry-picking of healthy workers or arbitrary denial of treatment. The health care itself is administered privately, and the job of employers is to facilitate their workers' entry into one of these state pools and, ideally, help them pay for some or all of the premiums, but not be responsible for the health care themselves. In the transition, though, employers could continue to offer health-care plans as an incentive, and workers would have the option of going with either the plan offered by their employers or the menu of options available through the state purchasing pools. (For details, go to ppionline.org.)

One can quibble about the details of any of these proposals, but I think the basic inspiration behind them is exactly right: In a flattening world, where worker security can no longer be guaranteed by Fortune 500 corporations with top-down pension and health plans, we need more collaborative solutions-among government, labor, and business-that will promote self-reliant workers but not just leave them to fend for themselves.

When it comes to building muscles of employability, government has another critical role to play. Each century, as we push out the frontiers of human knowledge, work at every level becomes more complex, requiring more pattern recognition and problem solving. In the preindustrial age, human strength really mattered. Strength was a real service that lots of people could sell on the farm or in the workshop. With the invention of the electric motor and steam engine, though, physical strength became less important. Small women could drive big trucks. There is little premium for strength anymore. But there is an increasing premium for pattern recognition and complex problem solving, even down on the farm. Farming became a more knowledge-intensive activity, with GPS satellites guiding tractors to make sure all the rows being planted were straight. That modernization, plus fertilizer, put a lot of people out of work at the previous wage they were earning in agriculture.

Society as a whole looked at this transition from traditional agriculture to industrialization and said, “This is great! We will have more food and better food at lower costs, plus more people to work in factories.” However, muscle-bound field hands and their families said, “This is a tragedy. How will I ever get a job in the industrial economy with only muscles and a sixth-grade education? I won't be able to eat any of that better, cheaper, plentiful food coming off the farms. We need to stop this move to industrialization.”

Somehow we got through this transition from an agriculture-based society one hundred years ago to an industrial-based one-and still ended up with a higher standard of living for the vast majority of Americans. How did we do it?

“We said everyone is going to have to have a secondary education,” said Stanford University economist Paul Romer. “That was what the high school movement in the early part of the twentieth century was all about.” As economic historians have demonstrated in a variety of research (see particularly the work of Harvard economists Claudia Goldin and Larry Katz), both technology and trade are making the pie bigger, but they are also shifting the shares of that pie away from low-skilled labor to high-skilled labor. As American society produced more higher-skilled people by making high school mandatory, it empowered more people to get a bigger slice of the bigger, more complex economic pie. As that century progressed, we added, on top of the high school movement, the GI Bill and the modern university system.

“These were big ideas,” noted Romer, “and what is missing at the moment is a political imagination of how do we do something just as big and just as important for the transition into the twenty-first century as we did for the nineteenth and twentieth.” The obvious challenge, Romer added, is to make tertiary education, if not compulsory, then government-subsidized for at least two years, whether it is at a state university, a community college, or a technical school. Tertiary education is more critical the flatter the world gets, because technology will be churning old jobs, and spawning new, more complex ones, much faster than during the transition from the agricultural economy to the industrial one.

Educating more people at the tertiary level has two effects. One is that it produces more people with the skills to claim higher-value-added work in the new niches. And two, it shrinks the pool of people able to do lower-skilled work, from road maintenance to home repair to Starbucks. By shrinking the pool of lower-skilled workers, we help to stabilize their wages (provided we control immigration), because there are fewer people available to do those jobs. It is not an accident that plumbers can charge $75 an hour in major urban areas or that good housekeepers or cooks are hard to find.

America's ability from the mid-nineteenth century on into the midtwentieth century to train people, limit immigration, and make low-skilled work scarce enough to win decent wages was how we created a middle class without too disparate an income gap. “Indeed,” noted Romer, “from the end of the nineteenth century to the middle of the twentieth, we had a narrowing of the income gap. Now we have seen an increase of that gap over the last twenty or thirty years. That is telling us that you have to run faster in order to stay in the same place.” With each advance in technology and increase in the complexity of services, you need an even higher level of skills to do the new jobs. Moving from being a farmhand to a phone operator who spoke proper English and could be polite was one thing. But moving from being a phone operator after the job got outsourced to India, to being able to install or repair phone-mail systems-or write their software—requires a whole new leap upward.

While expanding research universities on the high end of the spectrum is important, so is expanding the availability of technical schools and community colleges. Everyone should have a chance to be educated beyond high school. Otherwise upper-income kids will get those skills and their slice, and the lower-income kids will never get a chance. We have to increase the government subsidies that make it possible for more and more kids to attend community colleges and more and more low-skilled workers to get retrained.

JFK wanted to put a man on the moon. My vision is to put every American man or woman on a campus.

Employers have a critical contribution to make to lifetime learning and fostering employability, as opposed to guaranteed employment. Take, for instance, CapitalOne, the global credit card company, which began outsourcing elements of its backroom operations to Wipro and Infosys in India over the past few years. Competing in the global financial services market, the company felt it had to take advantage of all the cost-saving opportunities that its competitors were. CapitalOne began, though, by trying to educate its workers through workshops about the company's competitive predicament. It made clear that there is no safe haven where lifetime employment is possible anymore -inside Capital-One or outside. Then it developed a whole program for cross-training of computer programmers, those most affected by outsourcing. The company would take a programmer who specialized in mainframes and teach him or her to be a distributed systems programmer as well. CapitalOne did similar cross-training on its business side, in everything from auto loans to risk management. As a result, the workers who were eventually let go in an outsourcing move were in a much better position to get new jobs, because they were cross-trained and therefore more employable. And those who were cross-trained but retained were more versatile and therefore more valuable to CapitalOne, because they could do multiple tasks.

What CapitalOne was doing, out of both its own self-interest and a feeling of obligation to workers it was letting go, was trying to make more and more of its workers into versatilists. The word “versatilist” was coined by Gartner Inc., the technology consultants, to describe the trend in the information technology world away from specialization and toward employees who are more adaptable and versatile. Building employee versatility and finding employees who already are or are willing to become versatilists “will be the new watchword for career planning,” according to a Gartner study quoted by TechRepublic.com. “Enterprises that focus on technical aptitude alone will fail to align workforce performance with business value,” the Gartner study said. “Instead, they need to build a team of versatilists who build a rich portfolio of knowledge and competencies to fuel [multiple] business objectives.” The Gartner study noted that “specialists generally have deep skills and narrow scope, giving them expertise that is recognized by peers but seldom valued outside their immediate domain. Generalists have broad scope and shallow skills, enabling them to respond or act reasonably quickly but often without gaining or demonstrating the confidence of their partners or customers. Versatilists, in contrast, apply depth of skill to a progressively widening scope of situations and experiences, gaining new competencies, building relationships, and assuming new roles.” TechRepublic quoted Joe Santana, director of training at Siemens Business Services: “With flat or even smaller budgets and fewer people, managers need to make the most of the people they have... They can no longer see people as specialty tools. And their people need to become less like specialty tools and more like Swiss Army knives. Those 'Swiss Army knives' are the versatilists.”

In addition to their own self-interest in making more of their own employees into human Swiss Army knives, companies should be encouraged, with government subsidies or tax incentives, to offer as wide an array as possible of in-house learning opportunities. The menu of Internet-based worker-training programs today is enormous-from online degree programs to in-house guided training for different specializations. Not only is the menu enormous, but the cost to the company for offering these educational options is very low. The more lifetime learning opportunities that companies provide, the more they are both widening the skill base of their own workforce and fulfilling a moral obligation to workers whose jobs are outsourced to see to it that they leave more employable than they came. If there is a new social contract implicit between employers and employees today, it should be this: You give me your labor, and I will guarantee that as long as you work here, I will give you every opportunity-through either career advancement or training- to become more employable, more versatile.