When a job isn’t enough When a job isn’t enough

New Boston Fed initiative focuses on promoting ‘quality jobs’ and their impacts New Boston Fed initiative focuses on promoting ‘quality jobs’ and their impacts

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October 29, 2018

These are heady economic times by a host of measures, but the benefits aren’t apparent everywhere in New England, and certainly not in every working family. 

Nearly a third of workers in New England make less than $15 per hour, and most of those workers are their family’s primary wage earner, according to the Federal Reserve Bank of Boston. Meanwhile, research by Pew indicates the wages of low- to moderate-income workers have been stagnant for decades, with the average hourly wage buying the same now as it did in 1978.

Simply having a job is not a guaranteed ticket to financial health. Increasingly, having a higher-quality job is what matters, and a new effort by the Boston Fed is focusing on ways to create more of them. 

The Quality Jobs initiative is about raising awareness of the need for such jobs and working with business, government, and nonprofits to generate them. On Wednesday, the Boston Fed kicked off the initiative in Providence by bringing together thought leaders from the private, public, and academic sectors for a conference, “Raising the Floor: Strategies That Make Jobs Work for All.” 

“The country is doing pretty well in the aggregate, but some people just don’t share in the benefits of an affluent economy,” said Boston Fed Executive Vice President Jeff Fuhrer. “It doesn’t have to be that way. We believe quality jobs can make a significant difference.” 

Defining a quality job is a subjective exercise, but a few key characteristics are important for most low-wage workers:   

  • A living wage. A worker should be paid enough to support his or her family’s basic needs without relying on public assistance. 
  • Meaningful benefits. These are benefits, such as healthcare, a retirement plan or paid leave, that contribute to individual’s economic security.
  • Predictable or advance schedule. Last-minute, unpredictable schedules make it difficult for workers to balance various responsibilities, such as child care or another job.
  • Stable income. Jobs that don’t deliver predictable income levels over defined time frames – perhaps because work hours vary week to week – create stress and make it difficult for workers to pay bills on time.
  • Worker engagement/voice. In quality jobs, workers feel heard in ways that offer influence and dignity.

Lower-quality jobs today are concentrated in retail and certain service sector segments, such as home health and personal care aides, restaurant servers and cooks, janitors, and childcare workers. But these jobs do not have be lower quality forever, said Anjali Sakaria, who joined the Boston Fed to help lead the Quality Jobs initiative. She noted factory jobs that were once considered low quality became staples of the middle class in the 20th century, but she added that wouldn’t have happened without changes in labor policies and business practices.

“We’re not saying there are two buckets, one with low-quality jobs, one with high-quality jobs. There is a continuum,” Sakaria said.  “The question is, ‘How do we make jobs better for more people?’”

Today’s tight labor market is pushing employers to make improvements that can help retain workers, but the market alone can’t solve the problem. A reason for that is norms have changed from prior decades, when employers felt greater obligations to solve the kinds of problems lower-wage workers face, Fuhrer said. Now, it’s more common for employers to leave it to the labor market to dictate conditions like pay, benefits and schedule predictability, he said. 

Barbara Fisher, a fast-food worker in Massachusetts, said her employers always seemed to expect her to put her job before her kids’ needs, even when asking her to fill shifts at the last minute.

“And at the end of the day, it doesn't matter what your kids need,” she told Invested magazine, a Boston Fed publication. “The managers need me to be there to work for them, and if I can't, then it's, ‘Oh well, you get a write-up.’”

There’s no doubt increased global competition and technological change create real pressure on employers to run as lean as possible, Fuhrer said. But he added it’s also true that despite those pressures, businesses today in most sectors are seeing healthy – often record – profits. “So there is some margin to make improvements,” Fuhrer said. 

The Boston Fed’s Quality Jobs initiative aims to shed light on the individual and societal costs of a lack of quality jobs. Wednesday’s conference brought together businesses and researchers to highlight best practices that promote quality jobs and spread their positive impacts. 

The Reserve Bank ultimately needs to understand impediments to creating higher-quality jobs and what kind of research could help inform new approaches and policies that work for everyone, Fuhrer said. 

When people don’t have quality jobs, there are broad costs like increased public spending on social safety nets, but the bigger price may be in lost potential, similar to when people aren’t working at all, Fuhrer said. If these millions of workers were able to fully participate in the economy, they’d create more income, which creates more demand for goods and services. 

Fuhrer added that creating higher-quality jobs doesn’t have to be a zero-sum game – where a few firms that step out to increase wages and benefits take a commensurate hit to their businesses. If a systemic change in wages enabled firms to coordinate increases so the costs were spread out across industries, the resulting system-wide benefits like higher demand, more jobs, more companies and more brainpower at work would help both employers and workers.

“We’d see more innovations, and the size of the economic pie would be growing,” Fuhrer said. “That’s good for everyone.” 

 

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