Blueprint for Jobs in the 21st Century

Transcription

About the Association
HR Policy Association, headquartered in Washington, D.C., is the
lead organization representing chief human resource officers of major
employers.
The Association consists of more than 300 of the largest
corporations doing business in the United States and globally, and
these employers are represented in the organization by their most
senior human resource executives.
Collectively, their companies employ more than ten million
employees in the United States, nearly nine percent of the private
sector workforce, and 20 million employees worldwide. They have a
combined market capitalization of more than $7.5 trillion.
These senior corporate officers participate in the Association
because of their passionate interest in the direction of human resource
policy. Their objective is to use the combined power of the
membership to act as a positive influence to improve public policy, the
HR marketplace, and the human resource profession.
For more information visit www.hrpolicy.org.
i
HR Policy Association Board of Directors
J. Randall MacDonald, Chairman
Senior Vice President, Human Resources
IBM Corporation
Susan F. Davis, Vice Chair
Executive Vice President, Human Resources
Johnson Controls, Inc.
Mirian M. Graddick-Weir, Vice Chair
Executive Vice President, Human Resources
Merck & Co., Inc.
Michael L. Davis, Vice Chair
Senior Vice President, Global Human Resources
General Mills, Inc.
Richard R. Floersch, Vice Chair
Executive Vice President, Chief Human Resources
Officer
McDonald's Corporation
Thomas E. Helfrich, Vice Chair
Executive Vice President and Chief Human Resources
Officer
KeyCorp
Eva Sage-Gavin, Vice Chair
Executive Vice President, Global Human Resources
and Corporate Affairs
Gap, Inc
William S. Allen
Group Senior Vice President and
Head of Human Resources
A.P. Moller-Maersk Group
Maureen K. Ausura
Executive Vice President, HR
Lowe's Companies, Inc.
Dale W. Gibbens
Vice President, Human Resources
Koch Industries, Inc.
William A. Blase, Jr.
Senior Executive Vice President,
Human Resources
AT&T Inc.
Allen E. Hill
Senior Vice President, Human
Resources
United Parcel Service, Inc.
J. Thomas Bowler, Jr.
Resources and Organization
United Technologies Corporation
Anne Hill
Senior Vice President, Chief Human
Resources Officer
Avery Dennison Corporation
Jeffrey J. Brundage
Resources
American Airlines Inc.
Angela S. Lalor
Senior Vice President, HR
3M Company
John F. Lynch
Senior Vice President, HR
General Electric Company
John D. Butler
Executive Vice President,
Administration & Chief Human
Resources Officer
Textron Inc.
L. Kevin Cox
Executive Vice President, Human
Resources
American Express Company
Timothy M. Crow
Resources
The Home Depot, USA Inc.
Peter M. Fasolo
Global Head of Human Resources
Johnson & Johnson
Gregory S. Folley
Vice President, Remanufacturing
and Components
Caterpillar Inc.
Roger C. Gaston
Resources
Avaya Inc.
Bonnie C. Hathcock
Senior Vice President and Chief
Human Resources Officer
Humana Inc.
Paul D. McKinnon
Head, Human Resources
Citigroup Inc.
Brian M. McNamee
Resources
Amgen, Inc.
Jack T. Mollen
Resources
EMC Corporation
John M. Murabito
Resources and Services
CIGNA Corporation
Moheet Nagrath
Global Human Resources Officer
The Procter & Gamble Company
Walter M. Oliver
Resources and Administration
General Dynamics Corporation
iii
Marc C. Reed
Resources
Verizon Communications
David A. Rodriguez
Executive Vice President, Global
Human Resources
Marriott International, Inc.
Laurie A. Siegel
Resources & Internal
Communications
Tyco International
Jill B. Smart
Chief Human Resources Officer
Accenture
Larry E. Steward
DTE Energy
Susan M. Suver
U.S. Steel Corporation
Mara E. Swan
Executive Vice President, Global
Strategy and Talent
Manpower Inc.
Sharon C. Taylor
Resources
Prudential Financial, Inc.
Johnna G. Torsone
Executive Vice President and Chief
Human Resources Officer
Pitney Bowes Inc.
Elease E. Wright
Resources
Aetna, Inc.
Dennis Zeleny
Senior Vice President, Chief Human
Resources Officer
Sunoco, Inc.
Table of Contents
ABOUT THE ASSOCIATION........................................................................................................ i
BOARD OF DIRECTORS ROSTER ............................................................................................. iii
FOREWORD ............................................................................................................................ xix
INTRODUCTION ..................................................................................................................... xxi
EXECUTIVE SUMMARY ...................................................................................................... xxvii
I.
THE NEW ECONOMIC, DEMOGRAPHIC, AND SOCIAL REALITIES FACING THE
UNITED STATES: A GLOBAL ECONOMY POWERED BY TECHNOLOGY AND
INTELLIGENCE ...............................................................................................................1
II.
DEVELOPING THE NECESSARY TALENT TO STAFF THE AMERICAN
WORKFORCE OF THE NEW GLOBAL ECONOMY ........................................................23
III.
ATTRACTING THE WORLD’S TOP TALENT TO AMERICA AND RETAINING IT ..........39
IV.
CREATING A REGULATORY ENVIRONMENT THAT ENCOURAGES
INNOVATION AND JOB GROWTH: THE NEED TO REPLACE CONFLICT WITH
CONSENSUS TO ACHIEVE COMPETITIVENESS ............................................................45
V.
REINING IN U.S. HEALTH CARE COSTS TO ENCOURAGE EMPLOYMENT
GROWTH: A CHALLENGE TO ITS HEALTH CARE SUPPLY CHAIN ............................71
VI.
CONCLUSION................................................................................................................85
VII.
APPENDIX .....................................................................................................................87
VIII. ENDNOTES ....................................................................................................................89
v
Detailed Table of Contents
ABOUT THE ASSOCIATION.................................................................................................. i
BOARD OF DIRECTORS ROSTER ..................................................................................... iii
FOREWORD .......................................................................................................................... xix
INTRODUCTION .................................................................................................................. xxi
EXECUTIVE SUMMARY ................................................................................................. xxvii
vii
I.
THE NEW ECONOMIC, DEMOGRAPHIC, AND SOCIAL REALITIES
FACING THE UNITED STATES: A GLOBAL ECONOMY POWERED BY
TECHNOLOGY AND INTELLIGENCE ........................................................................1
Technology and Innovation Are Transforming the Way Work Is Done,
Where It Is Done, and the Skills Needed To Get It Done..............................................2
The Use of Technology to Improve Productivity Is a Permanent Business
Strategy Creating Both Positive and Negative Impacts on Employment
Levels .............................................................................................................................3
Corporations See a World of Opportunities and Deploy Assets Globally
To Take Advantage of Them, Going Wherever Investments Create Good
Returns ...........................................................................................................................5
Labor Costs in the United States Are Relatively High Compared to Many
of America’s Economic Competitors.............................................................................8
The Cost and Administrative Burden of Regulatory Compliance for
American Employers is Too High, Yet Policy Makers Show Little Interest
in Changing That Trend .................................................................................................9
The World is Competing Hard Against the U.S., Yet Job Creation is Not a
Priority of the Federal Government .............................................................................11
America Is Taking Longer to Recover After Each New Recession, With
Job Creation Completely Collapsing During the Most Recent Recession ..................12
The Lack of Focus by Policy Makers in America on Job Creation Prolongs
Unemployment and Erodes Key Workplace Skills .....................................................14
The New Jobs in America Will Be in Service, Professional, and Related
Occupations Requiring More Education and Skilled Training; GoodsProducing Occupations Will Have Little To No Growth ............................................15
The Future American Workforce Will Be Significantly Older and More
Diverse .........................................................................................................................17
Technology and Globalization Concentrate Jobs at the Top and Bottom of
the Economic Rungs of Modern Economies, Shrinking the Middle ...........................18
In Recent Years Government Job Growth Replaced Private Sector
Growth, But the Trend May Be Shifting .....................................................................19
Despite Challenges, America Has Significant Strengths That Policy
Makers Should Capitalize On To Produce Employment Opportunities: The
World’s Largest and Most Stable Economy With More Innovative
Workers ........................................................................................................................20
To Create Jobs, America Needs a National Commitment To Foster
Innovation, Ensure the Necessary Talent is Being Developed, and Then
Capitalize on the Economic Opportunities They Create..............................................22
ix
II. DEVELOPING THE NECESSARY TALENT TO STAFF THE AMERICAN
WORKFORCE OF THE NEW GLOBAL ECONOMY ...............................................23
Too Many Graduates Arrive at Work Lacking Basic Competencies ..........................24
Changing Demographics Are Adversely Affecting K-12 Student Learning ...............26
The Development of Science, Technology, Engineering, and Math Skills
in America Is Not Adequate To Meet the Needs of Employers ..................................27
Not All Good-Paying Career Fields Require a College Degree ..................................30
The Vocational Education System in Secondary Education Is Withering
Despite the Demand for People To Fill Skilled Trades Positions ...............................31
Educators and Employers Are Not Adequately Communicating With One
Another To Ensure Graduates Receive the Education They Need For
Successful Careers .......................................................................................................32
The Federal Government’s Education and Training Programs Lack Focus
and Are Not Adequately Meeting Employer Needs, Particularly for Large,
Multi-State Employers .................................................................................................33
Global Employers Are an Untapped Resource That American Educators
and Policymakers Could Use To Better Understand Successful Learning
Models That Promote Employment .............................................................................34
SPECIFIC RECOMMENDATIONS: .............................................................................................35
1.
At all levels of education, students should have a far better
understanding of the skills and basic competencies needed by
employers as well as the career tracks with the potential for
long-term gainful employment. ............................................................................ 35
2.
There should be an ongoing dialogue between educators and
employers to ensure that educators understand the career
opportunities available to graduates, the competencies and
skills employers are seeking from graduates, and what
colleges and universities can do to increase the probabilities
that graduates will find quality jobs.................................................................... 36
3.
Employees must pursue lifelong learning to improve their job
security. .................................................................................................................. 36
4.
Expanding STEM education and enlarging the number of
STEM teachers and professors, doing more to motivate
students to enter STEM studies, and increasing the number of
Americans who graduate from colleges and universities with
STEM degrees should be among America’s highest priorities. ........................ 36
5.
Career technical education should be expanded and promoted
to support those seeking fulfilling careers in the skilled trades. ....................... 37
6.
Government economic development, workforce development,
and education programs need to be fundamentally redesigned
to work in unison toward the same primary objective:
economic growth. .................................................................................................. 37
xi
III. ATTRACTING THE WORLD’S TOP TALENT TO AMERICA AND
RETAINING IT .................................................................................................................39
America Is Attracting Top Talent, But Not Retaining It .............................................39
America Is Losing Innovative Talent By Forcing Exceptional Foreign
Students To Leave the Country Once They Graduate From American
Institutions of Higher Learning ....................................................................................40
Business Is Now Conducted Globally, But the American Visa Process
Frustrates Companies Trying To Deploy and Retain Talented Foreign
Professionals ................................................................................................................41
American Immigration Policy Is Becoming Even More Restrictive,
Building Barriers to Keep Highly Talented Individuals From Entering the
Country ........................................................................................................................42
1.
The immigration reform debate should address the reality
that there is a global war for talent and that countries are
competing to attract and retain the human capital essential to
a culture of productivity and innovation. ........................................................... 43
2.
It is imperative that the United States avoid enacting new
legislation or issuing new regulations that impose additional
restrictions on visas that would only further dampen
economic recovery. ................................................................................................ 43
3.
Foreign students who acquire advanced degrees in the STEM
disciplines at American higher education institutions should
have a path to U.S. citizenship if they wish to use their talents
in America rather than returning to their country of origin. ........................... 44
4.
The system for determining the number of annual visas
should be revamped to better reflect the needs of the market,
rather than maintaining arbitrary and inflexible caps. ..................................... 44
5.
A more flexible system should be established to maintain
options for both short-term and long-term residence, allowing
professionals to transition from temporary to permanent
status after a period of contributing to the American
economy, without regard to quotas or nationality. ............................................ 44
xiii
IV. CREATING A REGULATORY ENVIRONMENT THAT ENCOURAGES
INNOVATION AND JOB GROWTH: THE NEED TO REPLACE
CONFLICT WITH CONSENSUS TO ACHIEVE COMPETITIVENESS ................45
Employers Strongly Support Fair Employee Protections; It Is In Their
Self-Interest to Treat Employees With Fairness and Respect ......................................48
Nevertheless, the Regulatory Policy Process Governing Employee
Protections Contains Endemic Flaws That, If Not Addressed, Will Further
Stifle Economic Recovery ...........................................................................................48
The Time Has Come For a Comprehensive Review of the Fundamental
Assumptions and Principles Used To Regulate Employment Policy in the
American Workplace ...................................................................................................50
America’s Conflict-Driven Regulatory System Produces Scarred
Employment Policy......................................................................................................50
The American Regulatory System Overlooks the Reality That the Vast
Majority of Employers Treat Their Employees Fairly ................................................52
Employment Policy Tends to Evolve From a Desire to Protect Employees
When an Idea Is First Introduced To Micromanaging the Workplace When
the Final Regulations Are Issued .................................................................................53
Laws Written During the Industrial Age Govern the Workplace of the
Digital Age, With the Prime Example Being the Fair Labor Standards Act ...............54
Job Growth Is Being Hindered by the Costs of the Administrative
Structure Required to Ensure Compliance With the Plethora of
Government Employment Regulations ........................................................................56
Corporate Human Resource Policy Is Unduly Influenced By the Plaintiff’s
Bar Using Ambiguities in Employment Laws and Regulations To Obtain
Large Attorney’s Fees ..................................................................................................58
Several Employment Policy Proposals Under Consideration Would Create
Additional Employer Liabilities at the Expense of American Jobs .............................60
xiv
1.
A 21st Century Employment Law Reform Commission should
be established to ensure a consensus-based review of all
existing laws, starting with the antiquated Fair Labor
Standards Act, to ensure that those laws fit the contemporary
workplace. .............................................................................................................. 62
2.
The formulation of new employment policies should ensure
that abuses are prevented without adversely impacting
competitiveness, utilizing a consensus-building process
involving key stakeholders. .................................................................................. 63
3.
Resolution of all federal employment claims should be
handled by a dedicated administrative process, not through
litigation in federal court. ..................................................................................... 67
4.
The U.S. workplace regulatory scheme should be premised on
fostering the preservation and creation of jobs, targeting
limited resources available for enforcement on those who
mistreat their employees....................................................................................... 68
5.
Employers should be able to maintain uniform human
resource policies in all fifty states through a broad federal
preemption of state and local employment laws................................................. 69
xv
V. REINING IN U.S. HEALTH CARE COSTS TO ENCOURAGE
EMPLOYMENT GROWTH: A CHALLENGE TO THE HEALTH CARE
SUPPLY CHAIN ...............................................................................................................71
To Be Competitive, U.S. Employers Need a Healthy and Productive
Workforce Supported by a Stable Health Care System Providing High
Quality Care at Affordable Prices ................................................................................71
The Health Care System in the United States Is Not Stable Nor Does It
Provide High Quality Care at Affordable Prices .........................................................72
The Cost of Health Benefits in the United States Hinders the
Competitiveness of Employers Doing Business in America .......................................74
The New Health Care Reform Law Does Not Adequately Address
Underlying Cost and Quality Issues. It Has Increased the Cost of Health
Care for Employers and Employees ............................................................................74
The Legal, Legislative, and Political Challenges Confronting PPACA
Leave Employers and Employees in Limbo Regarding the Future of
Health Care, Inhibiting Employers From Implementing Long-Term Hiring
and Benefits Strategies .................................................................................................76
Fueling Uncertainty for Large Multi-State Employers Is the Drift Towards
Shifting the Responsibility for Health Care Reform from a Uniform
Federal Approach to 50 States Going in Different Directions .....................................77
The Cost of Undercompensated Care in the United States Is Unfairly
Shifted by Health Care Providers To Employers and Employees Who
Purchase Care, Driving Up the Cost of Labor .............................................................78
Attempts by Employers As Well As Federal and State Governments to
Rein In Health Care Costs Have Largely Failed to Achieve Their
Objectives ....................................................................................................................79
Two Elements That Drive Healthy Markets—Transparency and Choice—
Are Woefully Lacking in the U.S. Health Care System ..............................................80
The Prevailing Reimbursement System in Health Care Encourages Higher
Volume and Intensity of Services Instead of Providing the Most Effective
Treatments As Efficiently As Possible ........................................................................81
xvi
VI.
1.
The executive, legislative, and judicial branches of the federal
government, as well as state governments, need to move as
quickly as possible to resolve the uncertainties over the future
of the health care system in America. ................................................................. 82
2.
The health care supply chain must accept responsibility for
reengineering itself to improve quality and reduce the cost of
health care in the United States for both employers and
employees in order to make American products and services
more competitive. .................................................................................................. 82
3.
The cost, price, and quality of health care in the United States
must be far more transparent. ............................................................................. 84
4.
The ability of multi-state employers to design and maintain
health care plans that meet their unique needs must be
maintained. ............................................................................................................ 84
CONCLUSION ...............................................................................................................85
VII. APPENDIX......................................................................................................................87
VIII. ENDNOTES ....................................................................................................................89
xvii
Foreword
When you think about national security, it is natural to think first
about the defense of our nation. However, a key element of national
security is financial security which is rooted in the assumption that
America is at work.
I think we can all agree that we are in changing times. Whether we
refer to a flattening world, a revolution of digitization, or the evolution
of the emerging BRIC markets, nothing will be the same ever again.
This is one of those moments where you can look at the state of
American jobs and know things are in flux, but it can be through the
lens of a glass half full or a glass half empty. I have been fortunate to
have participated in this important project from its inception and have
learned a lot in the process. In my opinion, this is a glass half full
moment, but we need to embrace this important workplace change.
There is a popular phrase coined in times that we need to pull
together—this is not an issue of red or blue, it is a moment for red,
white and blue. America is in this together, and we must come
together to pull ourselves forward.
Think of the jobs gained and lost because of the Internet. Think of
the jobs gained and lost because of the PC, and then laptops, and then
Netbooks, and then the iPad. Think of the jobs gained and lost
because of the Kindle, or the iPod, or Netflix. Growing up in the
1960s, “Made in China” meant cheap, and not very good. Today
“Made in China” often means low cost and high quality. This is our
new world.
This report makes a compelling argument for change. Also, based
on the input of over 300 chief human resources officers, it lays out a
number of significant ideas for change. Some are easy, some are
harder, more structural, and will take a while. All are doable.
The key point is that there will be jobs, good jobs, in the 21st
Century. However, most of our workplace rules, educational
standards, and employment norms are rooted in the 20th Century. We
need to come together—all of us—industry, education, government,
labor to make the leap to the new century. A competitive and trained
American workforce is of national interest.
April, 2011
Michael L. Davis
Chair, 21st Century HR Policy Project,
HR Policy Association, and
Senior Vice President,
Global Human Resources, General Mills
xix
Introduction
Jobs.
It is the most significant domestic policy issue facing the United
States today—how to create and sustain quality employment
opportunities in the United States in the new, hyper-competitive global
economy of the 21st century. Americans want fulfilling jobs that
provide security, jobs that hold the promise of a better future, jobs that
can triumph over the economic forces that now move globally at the
click of a computer key.
We are pleased that the federal government now appears to be
willing to address this issue. In a recent speech President Obama said:
We need to out-innovate, out-educate, and out-build our
competitors. We need an economy that’s based not on
what we consume and borrow from other nations, but what
we make and sell around the world. We need to make
America the best place to do business.1
We could not agree more. In the new global economy powered by
technology and tightly woven together by the Internet, America and
American workers are now competing on a world stage. A company’s
research and development center can be in one place, and then the
results of that research can be instantly transferred and utilized
anywhere on earth. Engineering graduates from American universities
are now competing for the same jobs with graduates from excellent
universities in India, Singapore, and other emerging nations. Jobs
characterized by low-skilled repetitive tasks that once paid well in
America are being replaced at an increasingly rapid rate by technology
that can do the same job at a fraction of the cost. The jobs issues for
policy makers in America, therefore, are many and include such
questions as:
•
How do we encourage companies to locate facilities and the jobs
they create in the United States?
•
How can American graduates compete for jobs that can be located
in dozens of different countries around the globe?
•
What jobs are vanishing in America, what are the new career paths
being created by the 21st century economy and what can the
country do to support those new career paths?
•
What economic, education, and regulatory environments will
promote jobs in America?
•
How can America compete and win on the global economic stage?
xxi
Blueprint for Jobs
Introduction
With this report, HR Policy Association provides the perspective
of the chief human resource officers of more than 300 of the largest
companies doing business in the United States today on America’s
jobs challenges and the human capital policy changes needed to make
the President’s dream, and our dream, a reality.
As the top human resource professionals for their companies, HR
Policy Association members are responsible for hiring, training,
promotion, and succession for our organizations. Collectively, the
Association’s members employ more than 20 million people
worldwide, and in the United States they employ more than ten million
Americans, nearly nine percent of the private sector workforce. Most
HR Policy Association members operate globally, and their experience
with hiring, training, assessing, and promoting people in virtually
every region of the world gives them an excellent perspective
regarding the strengths and weaknesses of the American employment
system. Simply put, HR Policy Association members are in the best
possible position to understand how to expand long-term employment
opportunities in the private sector in the United States.
The information and recommendations made in this report are the
product of two years of discussions, surveys, and interviews with HR
Policy Association members. These occurred in small focus groups,
larger membership meetings, conference calls, and one-on-one
sessions with the most senior human resource executives in more than
250 companies. The report is not the independent work product of the
Association’s staff nor any consultant or outside organization; rather,
the Blueprint channels the thinking of chief HR officers regarding
making America more competitive and stimulating job growth in the
U.S. For example, the following are the responses of the membership
to a survey conducted in March of 2011.
What steps could the U.S. Government take that would result in your company hiring more employees
in America over the next 3 years than you currently expect to hire? (Please select no more than five):
51%
47%
38%
34%
31%
23%
21%
19%
12%
11%
7%
4%
2%
7%
Create a less adversarial, more sensible regulatory environment
Provide certainty regarding government regulatory and enforcement requirements
Reform the corporate income tax system and significantly lower the rate
Make significant policy changes to lower health care costs
Increase the supply of qualified workers by improving the U.S. education system and focusing
job training on business needs
Reduce the amount/costs of employment litigation
Nothing, employment levels are driven by economic conditions and business opportunities
Reduce government spending and debt
Enact immigration reform
Increase government spending on research and development
Enact all pending free trade agreements and aggressively pursue more
Increase government spending on infrastructure such as high-speed rail, high-speed internet,
and repairing crumbling roads and bridges
Promote green jobs
Other
xxii
Blueprint for Jobs
Introduction
This paper has five sections which include a series of detailed
recommendations regarding the changes needed in workforce
development, education and training, immigration, and benefits policy
to restore America’s competitiveness.
Section I, “The New Economic, Demographic, and Social
Realities Facing the United States: A Global Economy Powered By
Technology and Intelligence,” describes the fundamentally different
global economy in which the United States is now operating and will
continue to operate for many years to come, and the implications of
this new economic order for students, jobseekers, employees,
educators, and government policymakers, among others.
Each of the report’s remaining sections provides background
regarding the topic of that particular section and then lists a series of
specific recommendations.
Section II, “Developing the Necessary Talent To Staff the
Workforce of the New Global Technology Economy,” calls for a
fundamentally different way of approaching how America develops
the skills it needs to produce and sustain quality employment
opportunities. In it, we encourage employers, educators, and
government policymakers to become far better coordinated in the
deployment of their resources to create lasting employment
opportunities. Our members believe that in the dynamic economy of
the 21st century, there needs to be a fundamental restructuring of the
way in which employers interact with the education community as
well as government training and education policymakers, such that all
three sectors are working together to create the conditions necessary to
promote job growth and employment security.
Section III, “Attracting the World’s Top Talent to America and
Retaining It,” argues that our immigration laws and regulations are
badly out of step with 21st century realities and have a debilitating
effect on the American economy and its global competitiveness. This
section recommends that instead of turning away skilled foreign
workers in critical industries, or discarding the fruits of our
universities by sending brilliant foreign graduates home, America
should capture this talent. Among our proposed solutions, we call for
providing a path to U.S. citizenship for any foreign student who
obtains an advanced degree in the U.S. in the STEM disciplines; the
development of a market-based system for awarding visas, instead of
imposing new restrictions on them that could only damper the
economic recovery; and the implementation of more flexible
mechanisms for allowing professionals to transfer from temporary to
permanent status, irrespective of quotas or their original nationality.
xxiii
Blueprint for Jobs
Introduction
Section IV, “Creating a Regulatory Environment That Encourages
Innovation and Job Growth: The Need to Replace Conflict with
Consensus to Achieve Competitiveness,” proposes a fundamentally
different way of approaching workplace regulation—one that replaces
our current system of conflict-based policy development with a
structure based on consensus. It also discusses why regulatory policy
designed for the industrial age of manual labor makes so little sense in
today’s digital age. It seeks to redefine what is considered success in
the development of employment regulation policy, which is far too
focused on the extent to which the government in power saddles
employers with additional administrative requirements, compliance
obligations, mandates, and liability.
Section V, “Reining In U.S. Health Care Costs To Encourage
Employment Growth: A Challenge to the Health Care Supply Chain,”
discusses the impact of current health care trends on the willingness of
employers to expand employment opportunities and locate work in the
United States. It issues a call to action to the health care supply chain
and government policy makers to address America’s labor costs—
among the highest of any nation—which are driven in large part by
health care costs.
In this paper, we have chosen to accentuate the positive and to
encourage breakthrough thinking to figure out the best path forward.
Each day we read about another organization, another commentator,
another political figure describing how the course the nation is on is
leading to a declining standard of living; we hear that our children will
be worse off than their parents and that the American dream will be a
distant memory. This presumes that America is not able to recognize
the situation it is in, change course accordingly, and pull toward
common objectives to restore its competitiveness. There is no
question that the United States is being severely challenged by the
economic forces sweeping the globe. We see the impact of these
forces in chronic high unemployment, slow economic growth, and the
reluctance among employers to hire new workers in the United States
or expand stateside operations in the midst of this uncertainty.
However, America has experienced tremendous challenges since
forming itself out of a wilderness three centuries ago to become the
dominant economic and military power it is today, and there is no
reason it cannot continue to act creatively to meet today’s challenges.
This paper seeks to lay out the specific changes the nation’s senior
human resource executives believe are necessary to staff the
competitive American workforce of the 21st century and to create the
good jobs for which everyone is looking.
xxiv
Blueprint for Jobs
Introduction
In preparing this paper we have drawn on a variety of sources,
primarily our own experience, captured in membership surveys, focus
groups, committee work, and one-on-one discussions with the
Association’s 300+ member companies. There is one source,
however, which deserves special mention—Rising Above The
Gathering Storm, Revisited: Rapidly Approaching Category 5, by the
National Academies of Sciences.2 The information, opinions, and
recommendations in that paper track very closely the thinking of the
Association on the critical domestic policy issues of the day. It
addresses a wide range of current economic issues, builds on the
human capital strategy subjects it addresses and offers a set of more
detailed recommendations in that subject area.
April, 2011
Jeffrey C. McGuiness
President & CEO
HR Policy Association
Washington, DC
xxv
Executive Summary
In April of 2011, unemployment in the United States was finally
on a downward trend, and the economy appeared to be pulling itself
out of the deepest recession since the Great Depression. Some would
say that policymakers can breathe easy now, and that the jobs situation
in America will heal itself if the nation has the patience to continue
along its current the path.
We could not disagree more.
There is a story behind the monthly jobs report that does not get
the attention it deserves: With each passing recession, America has an
increasingly difficult time recovering. Some may remember the deep
recession of 1981 which, prior to the recession America just
experienced, was the most difficult economic period in United States
since the 1930s. It took two years and four months for the economy to
recover all of the jobs lost during the 1981 recession. However, we
are now facing a situation in which it will take at least seven years,
until 2015, to recover all the jobs lost in the recession of 2008-2009.
The magnitude of what occurred during the recent recession is
staggering. There were as many jobs lost in the last recession as there
were in the previous four recessions. And as America struggles to
regain all those lost jobs, the population will still be growing. In fact,
in 2008, the total U.S. population was just over 304 million people.
By 2015, the population is forecasted to be over 325 million, and of
that number, 163 million are expected to be in the job market as
compared with 154 million today. Where will those additional job
seekers find work?
We do not believe that America’s current economic situation is a
business cycle in which patience and government stimulus can be
relied on exclusively to bring down unemployment to acceptable
levels. We believe America is experiencing fundamental long-term
structural economic changes that require long-term policy changes to
restore the nation’s competitiveness.
The 21st century has brought with it new global economic forces
that are transforming the way work is done, where it is done, by whom
it is done, and the skills needed to get it done. America is no longer an
economic fortress, impervious to forces outside its borders as it was
following World War II. It now competes with myriad economic
powers throughout the world from nations whose citizens desperately
want the same standard of living and security that Americans have
xxvii
Blueprint for Jobs
Executive Summary
enjoyed since the close of that terrible conflict. These emerging
economic powerhouses want innovation, investment, and growth to
produce jobs for their citizens, and they are doing remarkably well
marshalling their employers, educators, and government resources to
achieve these objectives.
Caught in the middle of this transformation is the American
worker, who is discovering that the skills and infrastructure that
enabled success in the 20th century have fundamentally changed in
this century. Technology is being deployed at increasingly rapid rates,
resulting in high productivity and less expensive products and services,
but also lower employment levels. New products and services are
born and then become obsolete in a matter of months, and the skills
needed to produce, market, service, and sell them are in constant
evolution. Americans are not being educated in sufficient numbers to
meet the demands of today’s highly technical work processes and
products. Labor costs in the U.S. are high and going higher, driven in
large part by health care costs that show no signs of abating despite
countless efforts to rein them in. Government places a very high
priority on regulatory compliance and enforcement but too little on
long-term job creation. Most importantly, there is no coordinated
commitment by all the various institutions involved in generating
economic opportunity—employers, educators, government, and
employees—to take the steps necessary to restore America’s
competitiveness and provide employment security.
The members of HR Policy Association are the chief human
resource officers of more than 300 of the largest employers in the
United States. They are responsible for employing more than ten
million Americans. Most of their companies operate globally, and
they have firsthand knowledge of government polices and economic
systems that work as well as those that fail to provide employment
security and job growth for their citizens. This report, Blueprint for
Jobs in the 21st Century, is their vision of the changes needed in
American public policy and the public’s thinking to restore job growth
and competitiveness in the United States.
Short of reading the entire paper, the reader will find a more
detailed discussion of our views of the current situation, together with
our specific recommendations, in the comprehensive table of contents
beginning at page vii. The following is a summary of those
recommendations whereby America would make a national
commitment to grow jobs in the 21st century by fostering innovation,
ensuring the necessary talent is being developed to take advantage of
that innovation, and capitalizing on the economic opportunities thus
created.
xxviii
Blueprint for Jobs
Executive Summary
1. Policymakers and the public must recognize the new economic
realities, namely that:
a. The economic order of the 20th century has
fundamentally changed;
b. Technology will continue to transform all sectors of both
the American and global economy; and
c. The United States now competes on a global stage for
resources, investment, and jobs against other countries
whose citizens want and are working hard to achieve the
same quality of life that Americans enjoy.
2. The American education system must do more to provide
America’s workers with the education, training, and skill
development essential for success in the new 21st century
workplace.
3. America’s students and workers need a much deeper
understanding of what is necessary to achieve successful careers
in the new global economy.
4. The advancement of science, technology, engineering and
mathematics (STEM) skills must become one of America’s
highest domestic policy priorities.
5. America needs to attract and retain the best talent, both
domestically and globally, in order to ensure that the U.S. is an
engine of innovation and job growth.
6. Industrial-age employment laws and regulations being strictly
enforced in the information/digital age need to be overhauled by
using mechanisms to achieve consensus among stakeholders to
establish a contemporary regulatory environment.
7. The health care supply chain in the United States must
reengineer itself to establish a stable health care system that
provides high quality care at affordable prices.
8. For America to thrive in the 21st century global economy,
employers, educators, and government must join forces to create
the conditions necessary for American workers to compete
effectively on the global stage.
To provide leadership within the federal government for this
agenda, we would encourage the White House to establish a
permanent Office of Job Growth. Its director would report directly to
the President, and it would be staffed by those with actual experience
in hiring and developing talent in private sector organizations and
creating employment opportunities in that sector. There has never
been a coordinated effort by the federal government to marshal the
billions of dollars spent on all the various education, training, and
xxix
Blueprint for Jobs
Executive Summary
economic development activities scattered throughout the far reaches
of federal agencies to ensure employment growth. The Office of Job
Growth’s mandate would be to make job creation a central priority of
the U.S. government and demonstrate the government’s commitment
to doing so.
Finally, this paper does not address a number of important policy
options for creating jobs that are typically the purview of other
corporate officers; namely corporate tax reform, trade policy, energy
policy, and payroll tax policy. Each of these policy issues has the
potential to significantly impact job creation in the United States, and a
variety of groups have already made significant reform
recommendations. For example, the Business Roundtable, the
President’s Economic Recovery Advisory Board, the U.S. Chamber of
Commerce, the Treasury Department, the National Commission on
Fiscal Responsibility and Reform, as well as a variety of think tanks,
have all published papers and reports on corporate tax reform and its
impact on job creation. There is no need for us to repeat these reports
here. Instead, this paper makes specific recommendations on issues
that draw the attention of chief human resource officers on a daily
basis. A sampling of these other reports can be found in the Appendix
on page 87.
We invite you to join us in meeting the challenges of the 21st
century workforce agenda by helping us achieve the recommendations
made in our Blueprint for Jobs in the 21st Century. Throughout its
history, America time and again has faced and overcome what seemed
insurmountable odds. There is no reason America cannot meet the
challenges it faces today if all citizens and institutions make the
collective effort necessary to restore America’s competitiveness. We
look forward to the discussion.
xxx
I. The New Economic, Demographic, and
Social Realities Facing the United
States: A Global Economy Powered By
Technology and Intelligence
[Americans] are a bit too pessimistic… I’ve been here for a
few days and everybody is talking about how bad it is.
America still leads the world in technology. You lead the
world in the creativity of your scientists. This is a magnet for
people coming from all over the world to be here. And what
you have got to concentrate on is not just the deficit. You have
got to concentrate on growth: getting growth, getting jobs,
using your technology, selling exports to the rest of the world,
showing the American ingenuity at work in practice. You have
some of the best products that are available, and everyone
around the world wants to buy them… You have got to be more
optimistic.
Gordon Brown,
Former Prime Minister of Great Britain 3
In the summer of 2010, Amazon announced that its latest Kindle
could download and store up to 3,500 books.4 In comparison, when
the British burned the American Capitol and Library of Congress in
1814, Thomas Jefferson sold Congress his library—the largest
personal collection of books in the United States at 6,487 volumes—as
a replacement.5 In other words, two Kindles could have held the
entire Library of Congress in 1814, leaving room for 500 more books.
Put differently, 3,500 books is roughly eight times the number of
books that the average American adult will read in his or her lifetime.6
In just a few years, the rise of e-readers has made much of the
work traditionally associated with publishing books, newspapers, and
magazines obsolete. The Kindle and other e-readers are replacing
book stores, printing presses, and printing companies; all the materials
such as ink, paper, fabric, and glue that go into book printing; the
trucking companies that transport all of the materials used in the
printing process and the final product from that process; and all the
workers associated with all the activities of traditional book printing,
such as publishing, warehousing, and operating retail stores. In
©2011 HR Policy Association
1
Blueprint for Jobs
The New Economic, Demographic, and Social Realities Facing the U.S.
January of 2011, Amazon’s sales of digital books officially overtook
sales of print books for the first time ever.7
The Kindle story is a metaphor for the 21st century economy and
the wrenching changes the United States is experiencing. Today,
America faces extraordinarily high levels of unemployment,
increasingly long periods of significant joblessness, and ever greater
difficulties generating new jobs. There are many reasons for these
trends, but a major contributing factor is technology. Over the past
two decades, constant leaps in technology have enabled companies to
do much more with many fewer people. At the same time, technology
has allowed an increasing amount of work to be done anywhere in the
globe and moved with the click of a computer key.
Technology and Innovation Are Transforming the Way
Work Is Done, Where It Is Done, and the Skills Needed To
Get It Done
Although an economy that is rapidly innovating can experience
economic distress in the short term for those companies and workers
that have difficulty adapting, over the long term advances in
technology simultaneously improve living standards and create new
employment opportunities.
We often hear news stories of plant closings and job loss, but we
hear too little about the emergence of innovative businesses that are
meeting new needs. The meteoric rise of UPS over the past century is
a good example. Started as a bicycle messenger service delivering
telegraphs and lunch around Seattle in 1907,8 today UPS’ global
ground and air shipping transports nearly four billion packages
annually and employs about 330,600 people in the U.S. and an
additional 70,000 globally.9 At the start of the 1980s, UPS had
trucking and contracted air services covering 31 states, with sales of
roughly $550 million.10 By the end of the decade, after creating its
own FAA-approved airline service in little over a year and introducing
an innovative new parcel tracking system made possible by
developments in computing technology, UPS was able to offer
delivery services to the entire U.S. and as well as six European
nations.11 That meant transporting 2.2 billion packages in 1988, to the
tune of $11 billion in annual sales.12 No airline has ever been created
so quickly.
2
Blueprint for Jobs
Technological innovation has already driven the United States
through two major transformations. In 1790, for example, the U.S.
economy was agrarian, and 90 percent of the population was largely
employed in agriculture.13 That percentage dropped dramatically
when the industrial revolution arrived. Today only 1.6 percent of
Americans work in agriculture, yet the U.S. remains one of the world’s
largest producers of agricultural products. 14 The same transformation
has occurred more recently in manufacturing. The percentage of
Americans employed in manufacturing has shrunk from 21 percent in
1978 to only 8.9 percent today.15 Yet the United States remains the
world’s largest manufacturer in terms of the value of goods
produced.16
Amazon opened its online store in July of 1995, and by 2010 it had
33,700 full-time and part-time employees, with annual revenues of
$34.2 billion.17 The wireless communications industry that
revolutionized the production and distribution side of the publishing
business, started in Chicago in 1983, today employs roughly 190,000
people.18
The powerful new force coursing through the global economy right
now to support these new industries is technology, and it is
fundamentally transforming the way work is done, where it is done,
and the skills needed to get it done. In America, it is reshaping careers
and career expectations. It is forcing the nation to rethink the basic
elements of a successful economy and what society needs to achieve to
be both secure and competitive.
The Use of Technology to Improve Productivity Is a
Permanent Business Strategy Creating Both Positive and
Negative Impacts on Employment Levels
As the industrial age gives way to the digital age, the U.S. is again
going through a structural shift. The introduction of massive amounts
of technology into the workforce is increasing productivity at rates not
seen since the Internet boom of the late 1990s . As a result, companies
today can do far more with far fewer employees than they could 20 or
30 years ago.
For example, from 1983 to 1993, the growth of ATM machines
reduced the number of bank tellers by 179,000 employees, or 37
percent of their workforce.19 Between 1983 and 2000, office
automation cut the number of secretaries and typists that were needed
in half.20 From 1990 to 2004, the number of industrial robots in the
United States more than doubled,21 and the amount of time required to
assemble a car decreased by 18.3 percent from 1998 to 2004.22
3
Blueprint for Jobs
A view of the shop floor of a Hyundai automobile plant in Alabama. Note the number of people and the amount of robotics.
Another major source of productivity growth comes from steps
companies take to increase efficiency. With each recession,
companies shift their focus from growth to rigorously reviewing their
existing assets and operations. Often this results in spinning off or
closing down marginal operations, reducing the size of workforces,
and upgrading and deploying technology. The result is more efficient
operations staffed with fewer people. Hiring typically resumes as the
economy improves, but many companies find they need fewer
employees for their operations.
Also, when new manufacturing operations are created from
scratch, they often are built to maximize the use of technology and
minimize labor costs, including the number of employees.
Nevertheless, efficiency gains, although painful in the short term, are
important in the long run because they usually lead to lower costs and
lower prices, providing households with more money to spend
elsewhere and businesses with more resources to invest in new
activities that are, in turn, a source of growth and jobs for the
economy overall.
4
Blueprint for Jobs
CHART 1
Corporations See a World of Opportunities and Deploy
Assets Globally To Take Advantage of Them, Going
Wherever Investments Create Good Returns
Companies, both U.S. and
foreign, are deploying
resources in emerging
markets to increase their
sales revenue more rapidly
than they are able to by
investing in more
mature economies.
In addition to the technological transformation of the American
economy—and perhaps because of it—another key economic reality
overlaying the jobs issue is globalization. There is an important
distinction between the recessions of the mid-to-late 20th century and
the latest recession. In recessions such as those of 1974 and 1981, the
number of other nations constituting major economic powers was far
fewer than today. Corporations had little choice but to continue
deploying resources in the United States and wait until economic
conditions improved.
While the U.S. continues to struggle in the aftermath of its
recession, China, India, and other Asian countries have vibrant
economies with robust recoveries fully underway, and strong middle
classes are emerging in those nations with higher levels of education.
A recent International Monetary Fund report estimates that emerging
markets will see an annual economic growth rate of 6.5 percent in
2011 and 2012 compared to a much smaller rate of 2.5 percent for
more mature economies, such as the United States.23
5
Blueprint for Jobs
Moreover, Brazil, Russia, India, and China have over 41 percent of
the world’s population,24 and produce 25 percent of the world’s
output,25 and Asia’s middle class is the fastest growing population
group in the world.26 One Asian Development Bank report predicts
that within the next two decades, another 800 million people in Asia
will move from poverty into the middle class.27 As more Asian
households gain disposable income, a substantial share will likely be
spent on food, apparel, household goods, and personal products, and
the producers and retailers of these products likely will reap
considerable economic rewards. For example, in 2008, more cars
were made in China and purchased by Chinese than were made and
purchased in the United States.28 China Mobile is also the world’s
largest individual cell phone operator with more than 500 million
mobile phone subscribers.29
Companies, both U.S. and foreign, are deploying resources in these
emerging markets to increase their sales more rapidly than they are
able to by investing in more mature economies.
Emerging economies like China, India, Brazil, Malaysia, Russia,
and Eastern Europe are creating new markets for global corporations,
and companies are responding by building plants and hiring employees
close to these new market opportunities. Just as Toyota, Honda,
BMW, and Daimler built auto manufacturing capabilities in the United
States, American corporations have expanded their own operations
beyond U.S. borders.
CHART 2
6
Blueprint for Jobs
Where major manufacturers launch new operations, their suppliers
quickly follow to take advantage of the opportunities. For example,
American auto paint manufacturers are building factories in China to
supply Chinese auto manufacturers who are taking advantage of the
booming market for cars in China.
If there is less economic growth in the United States, then it will
have less investment and slower job growth. This is significant
because according to a recent survey, approximately 57 percent of the
HR Policy Association membership sees its greatest opportunity for
growth in the next five years coming from markets outside the United
States. Only seven percent believes its growth will come primarily
from U.S. operations. They see the United States as capable of
growing at no more than one to two percent a year over the next
decade while the emerging economies are capable of five to ten
percent growth a year.
As American companies seek to take advantage of business
opportunities globally, the percentage of their workforce employed in
operations beyond the borders of the U.S. is also increasing, and that
percentage is expected to continue to grow during the next five years.
Half the Association membership sees the percentage of its workforce
outside the United States expanding and the percentage of its
employees based in the U.S. declining.30 That growth is coming
primarily from South and East Asia and South America, which want
growth and are creating environments that attract resources and
investments. Among industrialized nations, the least attractive place
for doing business is in the countries of Western Europe, in part
because of their rigid employment laws and practices as well as high
wage structures.
It is important to remember, however, that the deployment of
resources by American corporations to take advantage of global
opportunities is not a one-way street. Foreign companies are investing
heavily in the United States and have been doing so for years, and they
are an important source of employment and economic growth. The
rapid growth of manufacturers such as Honda, Nissan, BMW,
Hyundai, and Kia together with all the suppliers that they attract offers
just one example. Since the early 1980s, the United States has
received more capital from foreign investors than U.S. residents have
invested abroad.31 The total amount of foreign direct investment in the
economy has increased eight-fold, nearly doubling as a share of U.S.
gross domestic product from 3.4 percent to 6.4 percent.32 From 1988
to 2009, the latest year for which data are available, foreign firms
increased the number of Americans they employed from 3.1 million to
5.2 million, an 67 percent increase, and they have a presence in every
state in the Union (see chart below).33 Moreover, foreign-owned firms
7
Blueprint for Jobs
paid wages on average 14 percent higher than all U.S. manufacturing
firms,34 spent $35 billion on research and development or 14 percent
of the U.S. total, and they accounted for 19 percent of U.S. exports.35
CHART 3
Labor Costs in the United States Are Relatively High
Compared to Many of America’s Economic Competitors
According to the Bureau of Labor Statistics, hourly compensation
costs for manufacturing in the United States in 2009 were higher than
22 other countries, including China and India, but lower than 12
European countries and Australia.36
The high cost of providing health care benefits is one reason that
compensation costs in the U.S. are so much higher than many other
countries. Employer costs for health care exceed the costs for life
insurance, paid leave, and all legally required benefits such as Social
Security and unemployment.37 One RAND study found that faster
growth in health care costs has an adverse impact on employment in
those industries with the highest percentages of employees with
employer-sponsored health benefits (e.g., manufacturing,
telecommunications, education, and finance).38
8
Blueprint for Jobs
CHART 4
There is no question that for some companies, the opportunity to
take advantage of lower labor costs in other countries is important,
especially when producing goods and services for consumers in those
countries. Companies in the United States are no longer competing
with each other; they are competing on a truly global stage. Over
time, labor cost differences do narrow as emerging economies become
more mature; they have already for Japan and Singapore, and are
beginning to narrow even in China. But there will likely be a
significant negative difference between U.S. labor costs and those of
its foreign competitors for decades.
The Cost and Administrative Burden of Regulatory
Compliance for American Employers is Too High, Yet
Policy Makers Show Little Interest in Changing That Trend
According to the Small Business Administration, the total cost of
federal regulations alone on business was $970 billion in 2008, or
$8,068 per employee.39 The cost per employee for the typical U.S.
firm equals 19 percent of payroll expenditures, or twice the amount of
the employer contribution for Social Security and Medicare.40
Moreover, this does not include the regulatory costs imposed by state
and local governments, which were estimated to cost $120 billion in
California alone.41
9
Blueprint for Jobs
For firms with fewer than 20 employees, federal regulations cost
$10,585 per employee per year.42 The cost drops to $7,454 in
medium-sized firms because of greater economies of scale, and $7,755
in large firms with 500 or more employees.43
From 2004-2008, total federal regulator costs increased by $43
billion, and with the passage of the Protection and Affordable Care Act
in 2010, they are likely to increase even faster.44 Although complete
deregulation of the labor market is neither desirable nor necessary to
improve employment growth, President Obama said in a Wall Street
Journal op-ed in January 2011, “Sometimes ... rules have gotten out of
balance, placing unreasonable burdens on business—burdens that have
stifled innovation and have had a chilling effect on growth and jobs,”
and a vigorous review is needed.45 The President then issued
Executive Order 13563, instituting “a government-wide review of the
rules already on the books to remove outdated regulations that stifle
job creation and make our economy less competitive.” 46 The question
is whether the administration will embrace the President’s initiatives.
For example, in the employment context, the reaction of the Secretary
of Labor and senior Labor Department officials has been to increase
enforcement activity and take a series of steps to frustrate the intent of
the executive order.
CHART 5
10
Blueprint for Jobs
Despite these high compliance costs, the United States still ranks
very high on measures of labor market and business freedom
compared to other countries. For example, the U.S. ranks third on an
index that measures various aspects of the legal and regulatory
framework of a country’s labor market, that includes data on
regulations concerning minimum wages, laws inhibiting layoffs,
severance requirements, and measurable regulatory burdens on hiring
and hours.47 The U.S. also ranks 13th on an index that measures the
overall regulatory burden on the ability to start, operate, and close a
business.48 However, the path the federal government is on regarding
regulation and compliance activity is likely to result in the U.S.
dropping in each of those rankings over time.
The World is Competing Hard Against the U.S., Yet Job
Creation is Not a Priority of the Federal Government
In an interview last year, Paul Otellini, CEO of Intel, summed up
the difference between investing in the U.S. and investing in a highgrowth developing market saying:
A new semiconductor factory at world scale built from
scratch is about $4.5 billion—in the United States. If I
build that factory in almost any other country in the world,
where they have significant incentive programs, I could
save $1 billion.49
Countries such as China, India, Brazil, and Singapore are
aggressively seeking foreign investment. They want to be huge global
players who attract investment and resources into their countries so
that more business will be done there and more job growth will occur.
These countries ensure a strong level of cooperation between academic
institutions and the business community to ensure that their schools
and universities graduate highly motivated workers with the skills
needed by employers. They are focused on creating economic
opportunities, and they coordinate the resources of government,
educators, and business to attract the necessary investment.
Even several European countries have taken some action to
remove labor-related impediments and increase jobs since 2005,
including reducing disincentives to work at older ages, decreasing
labor taxes, and improving the design of disability and sickness
benefits and other labor market policies.50
On the other hand, the United States for the past two years has
been absorbed in cranking up enforcement of existing regulations,
many of them woefully out of date, while layering on new obligations
in the midst of a high unemployment and a stagnant economy—
obligations that will provide further disincentives for employers to
expand their American operations. In many rapidly growing
11
Blueprint for Jobs
economies, instead of viewing employers as rapacious and underregulated—as do agencies such as the U.S. Department of Labor—
governments treat them as the engines of job creation. In the United
States, it is front page news when the government signals it
will take steps to work with the business community to grow economic
opportunity. In more dynamic economies, it is the norm, not the
exception.
America Is Taking Longer to Recover After Each New
Recession, With Job Creation Completely Collapsing
During the Most Recent Recession
During its history, the United States has experienced numerous
recessions resulting in high unemployment, but in recent decades it is
taking increasingly longer for jobs to recover following each recession.
As the chart below shows, with each recession over the past 40 years
the economy has had a progressively more difficult time generating the
energy to recover the jobs that were lost.
CHART 6
12
Blueprint for Jobs
For example, it took 28 months for the economy to recover all of
the jobs lost during the deep recession of 1981.51 In 2001, it took more
than 48 months to recover from a downturn that was nowhere near as
severe.52 Following the recession of 2008 and 2009, Federal Reserve
Board Chairman Ben Bernanke recently estimated that “it could take
four to five more years for the job market to normalize fully.”53 This
would mean that it will likely take a total of seven years before the
economy recovers all of the jobs lost at the end of the last decade, i.e.
sometime in 2015.
CHART 7
Part of this is due to the large number of jobs lost in the last
recession (8.8 million), but some of it is due to fundamental/structural
changes that have occurred in the U.S. and global economy over the
past 30 years. As the chart below shows, the new hire rate remains
near its recession lows more than 18 months into the current recovery
and well below the level it was in 2002 and 2003 after the recession
in 2001.
13
Blueprint for Jobs
CHART 8
The Lack of Focus by Policy Makers in America on Job
Creation Prolongs Unemployment and Erodes Key
Workplace Skills
Weak job creation has increased the number of Americans who
have given up looking for work and those who are working part-time
because there are no full-time jobs. Taking into account underemployed Americans, the unemployment rate in the United States was
actually a record 16.7 percent in 2010.54 Further, the average duration
of unemployment was a record-high 33 weeks in 2010, twice the
average high of 16.6 weeks for previous recessions.55 Moreover, in
2010, the labor force participation rate dropped to its lowest level in 26
years as 3.1 million Americans gave up looking for work.56
As Chairman Bernanke recently said, “Long-term unemployment
not only imposes exceptional hardships on the jobless and their
families, but it also erodes the skills of those workers and may inflict
lasting damage on their employment and earnings prospects.”57
14
Blueprint for Jobs
CHART 9
The New Jobs in America Will Be in Service, Professional,
and Related Occupations Requiring More Education and
Skilled Training; Goods-Producing Occupations Will Have
Little To No Growth
According to the Bureau of Labor Statistics (BLS), “more than half
of the new jobs will be in professional and related occupations, and
service occupations.”58 And as the boomers retire, the number of job
vacancies is projected to be more than twice those created by
economic growth alone.59 In a report forecasting employment growth
from 2008 to 2018 the BLS writes:
Projected employment growth is concentrated in the
service-providing sector, continuing a long-term shift from
the goods-producing sector of the economy. From 2008 to
2018, service-providing industries are projected to add 14.6
million jobs, or 96 percent of the increase in total
employment. The two industry sectors expected to have
the largest employment growth are professional and
business services (4.2 million) and health care and social
assistance (4.0 million)…[In contrast,] by 2018, the goodsproducing sector is expected to account for 12.9 percent of
total jobs, down from 17.3 percent in 1998 and 14.2 percent
in 2008… Production occupations are also projected to
decline.60
15
Blueprint for Jobs
Post-secondary education will play an increasingly important role
in the new economy. Those professions that typically require higher
education of some kind are projected to comprise almost half of all
new jobs from 2008 to 2018.61 And the most rapid growth will be in
professions that require an associate degree.62 Overall, the BLS
expects that the fastest growing occupations will be registered nurses
(582,000), home health aides (461,000) and customer service
representatives (400,000).63 Although a high school diploma and
“short- or moderate-term on-the-job training” are all that will be
required for 17 of the 30 occupations with the largest employment
growth, in terms of percent growth, almost one-half of the fastest
growing occupations require a four-year college degree or higher.64
CHART 10
History has shown that there is a direct correlation between the
amount of education and the potential for being employed; namely,
that the more educated a person is, the less likely he or she will be
without a job, as shown by the chart above.65 Further, in the United
States, developing and maintaining expertise in almost any field is one
of the keys to success. However, one trend is very clear: the relative
cost of dropping out of high school has increased in terms of
unemployment risk.66 As technology has changed the occupational
and industrial structure of the labor market, the demand for routine
cognitive work typically found in many middle-skilled, yet wellpaying, manufacturing jobs has significantly decreased.67
Therefore, increasingly higher levels of educational attainment will be
required for the quality jobs of the 21st century.
16
Blueprint for Jobs
The Future American Workforce Will Be Significantly Older
and More Diverse
Beyond technology, there is another powerful force at work in our
economy— demographic change. Three major demographic trends—
slowing labor force growth, aging, and increasing diversity—will
continue to have a considerable impact on the profile of the U.S.
workforce in the foreseeable future.
Whereas the U.S. economy benefitted from a fast growing labor
pool from the 1970s through the 1990s, since 2000 the workforce has
grown more slowly—a trend that is projected to continue, and will
likely affect U.S. economic growth over the next decade.68
With the aging of the baby-boom generation, older employees are
expected to make up a much larger share of the labor force in the
future. The Baby-Boom generation was born from 1946 to 1964.69 In
2018, the last of the boomers (those born in 1964) will be 54 years old.
The aging of the labor force also will dramatically lower the overall
labor force participation rate and the growth of the labor force as 78
million members of the baby-boom generation will likely retire
between 2011 and 2029.70
A specific concern for employers is that for many of these jobs,
particularly in the skilled trades and engineering fields, there are
relatively few people in the pipeline who will be able to step into the
shoes of these retirees without considerable training. According to
Aviation Week, larger companies in the aerospace and defense industry
will have 40 percent of their workforce eligible to retire in 2014, and
the expected exodus is causing companies to offer retirement programs
that will ease the transition.71
U.S. companies need to be able to retain retirement-eligible
employees, who otherwise might leave to start drawing their
retirement benefits, in order to maintain valuable institutional
knowledge and human capital and impart that knowledge onto the next
generation of employees.
Recent immigration trends, an increased number of births, and
high labor force participation rates by Hispanics and Asians also will
significantly increase the share of the workforce held by minorities
over the next ten years.72 By 2018, Hispanics are expected to reach
more than 29 million in number, composing 17.6 percent of the labor
force.73 Although the share of Asians in the labor force is relatively
small, the number of Asians has been growing rapidly in the past two
decades and will reach more than nine million workers by 2018.74 The
African American labor force is projected to continue to have a steady
growth of 1.3 percent over the next decade.75
17
Blueprint for Jobs
Increasing globalization requires more interaction among people
from diverse cultures, beliefs, and backgrounds than ever before.
People no longer live and work in an insular marketplace; they are
now part of a worldwide economy with competition coming from
nearly every continent. For this reason, employers need to maximize
and capitalize on workplace diversity in order to become more creative
and take advantage of every market opportunity.
Technology and Globalization Concentrate Jobs at the Top
and Bottom of the Economic Rungs of Modern Economies,
Shrinking the Middle
The U.S. can create new
employment opportunities by
fostering an environment in
which employers,
government, and educators
come together to focus their
resources on developing a
workforce with the skills
necessary to produce
innovation and then
capitalize on the economic
opportunities created by that
innovation.
There is another important societal and economic trend that will
need to be addressed as part of any long-term solution to job creation
in the United States. Since 1979, employment growth in America
appears to be polarizing, with job opportunities increasingly
concentrated in relatively high-skill, high-wage jobs at one end, and in
low-skill, low wage jobs at the other. Too often this trend is
simplistically blamed on corporate greed, and the remedy is seen as
penalizing those in high-skill, high wage jobs. We would suggest a
more sophisticated analysis is required.
A recent study for the Center for American Progress by David
Autor found that from 1979 to 2009, there was rapid employment
growth in both high- and low-education jobs while the number of
middle-skill jobs stagnated.76 This uneven growth pattern has
substantially reduced the share of employment accounted for by
middle-skill occupations—sales, office and administrative workers,
production workers, and operators.77 In 1979, these occupations
accounted for 57.3 percent of employment; by 2009, it had fallen to
45.7 percent.78 American retailers are seeing the same trend and have
begun realigning their product offerings in response.
The polarization of employment is not a uniquely American
phenomenon; it is widespread across industrialized economies.79
Moreover, this polarization is consistent with findings of the Pew
Research Center—that over the past two decades a growing share of
the public has come to the view that American society is divided into
two groups, the "haves" and the "have-nots."80
According to the Congressional Budget Office, technological
innovation and related organizational changes are the key contributors
to this job polarization and responsible for most of the increased
demand for workers with more education and skills.81 Workers who
do not acquire more education and more skills will likely be left
behind.
Since the late 1980s, skill-biased technological change has
decreased the demand for workers doing routine cognitive work
18
Blueprint for Jobs
typical of “middle-skilled” jobs and increased the demand for highly
skilled workers doing more complex/non-routine analysis, evaluation,
and decision making. The demand for manual work that must be done
in a specific location or that involves interacting with people has been
largely unaffected; therefore, technology has had little impact on the
demand for workers such as janitors, waiters, and home health aides.82
CBO also concluded that while changing patterns of international
trade may also have increased the relative demand for workers with
more education, the effect of globalization on wages is inconclusive.
But these trends indicate that in order to create jobs, workers who wish
to have good-paying, quality jobs will need to have greater abilities to
handle more complex tasks. In the future, repetitive, high-paying
manual jobs in auto manufacturing, for example, will be few and far
between.
However, this does not mean that middle-class job opportunities in
the United States are destined to disappear. As noted above, from
2008 to 2018, service-providing industries are projected to add 14.6
million jobs, or 96 percent of the increase in total employment, and
over 65 percent of these jobs provide middle-class incomes.83 For
example, the number of registered nurses, whose average income is
currently $62,450, is expected to grow by 582,000 jobs by 2018. The
same is true of elementary school teachers, who earn on average
$49,330 and whose numbers should increase by 244,000 jobs over the
same period.84 In addition, the numbers of carpenters ($38,940), truck
drivers ($37,270), plumbers ($45,650), and paralegals ($46,120) are
projected to increase by a combined 548,000 jobs.85 Although no one
can be certain what the future will bring, as long as America continues
to innovate it will certainly create new industries and a broad spectrum
of new job opportunities that will include new middle-class jobs.
In Recent Years Government Job Growth Replaced Private
Sector Growth, But the Trend May Be Shifting
Over the past ten years there has been another change in the
character of job creation. From January 2001 to February 2011,
government employment increased by 6.6 percent, or 1.4 million jobs,
while the private sector lost 3.3 million jobs, or 3.3 percent.86 A trend
like this is simply unsustainable over time. In fact, the problem with
growth in taxpayer-funded employment while private sector jobs are
lost has become painfully evident in view of the government budget
shortfalls that have emerged. These shortfalls will have to be closed
by either raising taxes and/or cutting spending, both of which could
threaten the strength and sustainability of the recovery.
19
Blueprint for Jobs
CHART 11
Despite Challenges, America Has Significant Strengths
That Policy Makers Should Capitalize On To Produce
Employment Opportunities: The World’s Largest and Most
Stable Economy With More Innovative Workers
The trend of companies taking advantage of global opportunities
does not mean they have given up on America. Far from it. Despite
the rapid growth of Asian countries, the U.S. remains the largest
economy in the world and, for many companies, the most profitable.
With just 4.5 percent of the world’s population, the United States
continues to produce nearly 20 percent of global output.87 Despite its
economic problems, the U.S. has a highly stable government compared
to many other nations, and its citizens operate under the rule of law,
which makes it an attractive place to do business. Further, the nation
is protected by the strongest military in the world, making it a highly
secure place in which to do business, deploy resources, and make
investments. And when a business begins to fail in the United States,
there are not as many barriers to addressing the situation as there are in
other industrialized countries.
20
Blueprint for Jobs
CHART 12
Among companies operating
globally, many have a special
appreciation for the unique
characteristics of the U.S.
workforce… they find
Americans more innovative…
much more open to new
ideas and coming up with
innovative solutions.
Moreover, among companies operating globally, many have a
special appreciation for the unique characteristics of the U.S.
workforce and the nation’s employment system. They find Americans
more innovative. They see educational systems in countries outside
the U.S. placing too much reliance on rote learning. They see other
countries not encouraging students to think creatively or engage in
integrative thinking. Further, American society is not as hierarchical
as other societies, which means Americans are more willing to
challenge conventional thinking and approach problems in nontraditional ways. Americans are much more open to new ideas and
coming up with innovative solutions. Americans often excel at middle
management in comparison with their counterparts in other countries,
where their cultures make it more difficult to accept the concept of
middle management. Further, while governments at all levels make
the U.S. workplace regulatory structure more rigid each decade, it is
not yet as rigid or inflexible as other industrialized nations.
21
Blueprint for Jobs
To Create Jobs, America Needs a National Commitment To
Foster Innovation, Ensure the Necessary Talent is Being
Developed, and Then Capitalize on the Economic
Opportunities They Create
In his State of the Union address, President Obama said, “We need
to out-innovate, out-educate, and out-build the rest of the world. We
have to make America the best place on Earth to do business.”88 We
agree. Therefore, with capital and technology completely mobile, and
with highly attractive economic opportunities beyond the borders of
the United States aggressively attracting investment resources, what
are the key elements necessary for doing what the President says needs
to be done?
In his State of the Union
address, President Obama
said, “We need to outinnovate, out-educate, and
out-build the rest of the
world. We have to make
America the best place on
Earth to do business.”
We agree.
Innovation is the key to the economic success of any society, and
the world today is replete with examples of countries that made a
conscious, national commitment to foster innovation. As described in
the Gathering Storm, innovation “commonly consists of being first to
acquire new knowledge through leading-edge research; being first to
apply that knowledge to create sought-after products and services,
often through world-class engineering; and being first to introduce
those products and services into the marketplace through extraordinary
entrepreneurship.”89 The Gathering Storm goes on to describe the
principal ingredients of innovation and competitiveness as
“Knowledge Capital, Human Capital and the existence of a
creative ‘Ecosystem.’”90
Because routine jobs requiring low skills are moving to areas
where costs are lower and the citizenry is well educated, the U.S. can
create new employment opportunities by fostering an environment in
which employers, government, and educators collectively focus their
resources on developing a workforce with the skills necessary to
produce innovation and then capitalize on the economic opportunities
created. If such a mutually supportive environment exists, it will
attract resources and investment, which will create jobs.
The following sections of this paper lay out a set of
recommendations that we believe are necessary to strengthen the
Human Capital element of the equation in order to create more
innovation that will produce lasting American employment
opportunities.
22
II. Developing the Necessary Talent To Staff
the American Workforce of the New
Global Economy
Companies evaluate several factors when deciding where to locate
or start new business operations. They include such issues as how
close the operation needs to be to its customers; the cost of the
workforce; the proximity to resources; and the skills of available or
potential employees. But there are intangibles as well, one of the most
important being how willing those at the location are to become
educated, learn new skills, and take on new challenges. If the
employees have an entitlement philosophy or an entrenched view of
their skill sets that falls short of their actual capabilities, the employer
will be inclined to look elsewhere. But if there is a spirit about the
location that places a high priority on learning, adaptability, and focus
on the mission, that spirit will attract work, investment, and resources.
One of the most important responsibilities of chief human resource
officers is to look for that spirit to ensure the company is staffed with
the talent it needs to drive innovation and remain competitive
wherever it does business. To compete in today’s global marketplace,
it is imperative that companies maintain a knowledge-based workforce
committed to continual learning and skills development. American
policymakers should take note of the significant fact that other
countries with dynamic economies set growth as their highest national
priority. In doing so, the energy and resources of employers,
educators, and government, as well as the workers themselves, often
tend to be focused on that objective. All parties work in close
collaboration to ensure the necessary talent is being developed to meet
changing employer needs. That type of collaboration does not exist in
the United States to the extent necessary for America to remain
competitive—a matter of great concern.
This is not to say that American employers are not committed to
developing the American workforce. In fact, it would be nearly
impossible to catalogue all the programs, resources, and initiatives that
large employers alone are devoting to reverse this trend. In 2010
alone, it has been documented that the private sector devoted
approximately $53 billion toward job training, 53 percent of total job
training spending in the United States.91 Nevertheless, Association
members are finding that too many graduates are entering the
American workforce without having developed the skills necessary to
23
Blueprint for Jobs
Developing the Necessary Talent to Staff the American Workforce
succeed in the workplace. And those in the workforce often do not
place enough emphasis on ensuring that their skills evolve along with
the demand for new products and services.
For America to remain competitive with countries achieving rapid
employment growth such as China, India, and Brazil, the United States
needs a fundamental restructuring in the way all those involved in
educating and training American students and employees interact with
one another and go about developing the talent the nation needs.
America is far from where it should be in creating the conditions
necessary to promote and develop a workforce prepared to compete in
today’s world. This section discusses this issue from the perspective
of those responsible for staffing more than ten million jobs and offers a
series of recommendations to help create the talent America needs to
be competitive in the 21st century.
Too Many Graduates Arrive at Work Lacking Basic
Competencies
The fact that graduates do
not have the basic literacy
and numeracy skills to
function properly in the
contemporary workplace
should be viewed by policy
makers and the public as a
national crisis.
The graduates who are applying for jobs today frequently do not
have the basic skills required to work effectively in entry-level
positions. Oddly enough, as Secretary of Education Arne Duncan
points out, despite their low scores in certain critical areas, American
students often feel extraordinarily confident about their academic
abilities. 92 Employers, however, find graduates are generally illequipped to function adequately in today’s high technology work
environment and that they require considerable additional training by
employers in basic competencies.
One recent survey found that “over 42 percent of employer
respondents rate new workforce entrants with a high school diploma as
deficient in their overall preparation for entry-level jobs.”93 Seventytwo percent of employers rate new entrants with a high school diploma
as deficient in writing; 54 percent of employers rate them as deficient
in math; and 81 percent say they are deficient in written
communication skills.94 The fact that graduates do not have the basic
literacy and numeracy skills to function properly in the contemporary
workplace should be viewed by policy makers and the public as a
national crisis.
Significantly, this lack of basic competencies is not confined to
high school graduates. Chief human resource officers are seeing a lack
of basic workforce competencies among many of those entering the
workforce at all levels, including those with master’s degrees.
Companies would prefer to use corporate training resources to build
specialized skill sets; however, many are currently being forced to
sponsor remedial programs that either fix something that was broken
in the new employee’s education process or provide something that
24
Blueprint for Jobs
was not but should have been available in his or her schooling. For
example, many employers are forced to send their new hires to
orientation classes just to learn communications basics so they can
express themselves clearly in e-mails and other forms of written and
oral communication.
CHART 13
Which Skills Do High School and College Graduates
Lack?
Skill
Percent of Employers Who
Say
Skill Is Deficient
High School
Graduates
Four-Year
College
Graduates
Writing in English
72.0%
26.2%
Foreign language
61.7%
40.7%
Mathematics
53.5%
12.0%
History/Geography
45.7%
17.0%
Government/Economics
45.6%
17.4%
Science
44.5%
12.6%
Reading Comprehension
38.4%
5.1%
English Language
21.0%
4.4%
Written Communications
80.9%
27.8%
Leadership
72.5%
23.8%
Basic Skills
Applied Skills
Professionalism/Work
Ethic
Critical Thinking/
Problem Solving
Self Direction/
Life Long Learning
70.3%
69.6%
58.2%
18.6%
9.0%
14.3%
Creativity/Innovation
54.2%
16.5%
Oral Communication
52.7%
9.8%
Ethics/
Social Responsibility
44.1%
Teamwork/Collaboration
34.6%
8.1%
Diversity
27.9%
7.4%
Information Technology
21.5%
3.4%
11.1%
Source: Conference Board
25
Blueprint for Jobs
A key element of the basic competencies set is the ability to think
critically, analytically, and with imagination. Too often, however,
employers find these attributes lacking. A recent opinion piece in the
Washington Post by former Congresswoman Heather Wilson, entitled
“Our Stunted Scholars,” sums up this issue eloquently. Wilson, who
serves regularly on selection committees for the Rhodes Scholarship,
said, “Our great universities seem to have redefined what it means to
be an exceptional student. They are producing top students who have
given very little thought to matters beyond their impressive grasp of an
intense area of study.” She concludes, “Many of our young people
spend four years getting very expensive college degrees. But our
universities fail them and the nation if they continue to graduate
students with expertise in biochemistry, mathematics, or history
without teaching them to think about what problems are important
and why.”95
Importantly, the concern that the author is describing does not just
apply to Rhodes scholars. We live in a wired world where huge
amounts of information can be quickly assembled, but new entrants
often have difficulty seeing beyond the assembly of information to
understand how it relates to other forces and issues at play.
Changing Demographics Are Adversely Affecting K-12
Student Learning
Though the United States may have the world’s greatest
universities and research institutions, the kindergarten through 12th
grade educational system in many parts of the country is woefully
inadequate, and those graduating and moving into the workforce arrive
on employers’ doorsteps in need of considerable remedial education.
Employers understand that one of the reasons for this trend is that
since the 1960s the socioeconomic background of children entering
school has changed dramatically, and that this has significantly
increased the challenges teachers face in the classroom. In 1970,
about 15 percent of children lived in single-parent families or with
another adult. By 2010, that number had doubled to 30 percent.96
Social scientists have found that children growing up in single-parent
families are:
•
four times as likely to need help for emotional and behavioral
problems;97
•
more likely to participate in violent crime;98 and
•
twice as likely to drop out of school.99
26
Blueprint for Jobs
Further, in survey after survey, teachers say that lack of discipline
is their number one complaint, and that the parents of students who
disrupt classes often fail to support the school. Significantly, in one
survey, almost 68 percent of all teachers said removing students with
severe behavioral problems from the classroom would be most helpful
in improving teacher effectiveness.100 Other longstanding challenges
have also increased, including a lack of student proficiency in English
and the mixture of student learning abilities in the classroom. Nearly
twice as many teachers today as in 1992 say that a lack of proficiency
in English hinders learning for at least one-fourth of their students (22
percent vs. 11 percent), and more teachers (43 percent) agree that their
classes have become so mixed in terms of students’ learning abilities
that they cannot teach effectively.101
The Development of Science, Technology, Engineering, and
Math Skills in America Is Not Adequate To Meet the Needs
of Employers
The United States needs both
a comprehensive vision and
the national will to overcome
the shortage of STEM
students and employees with
critical STEM skills.
The development of individuals with science, technology,
engineering, and math skills—the STEM skills—has been badly
neglected in the United States, creating national security issues and
hobbling the economy. A constant theme heard from nearly all HR
Policy Association members is that companies are having difficulty
finding and attracting persons with adequate STEM skills for jobs in
the United States. They feel the development of STEM skills is badly
neglected in America by both the educational system and society as a
whole. They believe that government, the education community, and
society generally should do far more to promote and develop these
critically important skill sets. They see the lack of investment in these
programs as hobbling the ability of the American economy to grow for
a long time to come.
Furthermore, as the current crop of STEM workers from the baby
boomer generation approaches retirement age, employers are
concerned that, given the STEM deficiency of U.S. citizens entering
the workforce, the next generation will be unable to step in and fill the
massive vacancies in STEM-related positions that are coming.
Defense contractors, for example, anticipate tens of thousands of
highly skilled engineers retiring during the next five years, and nearly
all the new entrants will need to be U.S. citizens who can pass
government security requirements. There is, however, nowhere near
the number of students needed in the pipeline to fill these jobs.
27
Blueprint for Jobs
CHART 14
The reality is that in American universities, the percentage of
American students enrolled in the STEM fields of study is far too low.
In 2003 just 13.5 percent of American college students were enrolled
in science, technology, engineering, or mathematical fields, compared
to 24.3 percent who were enrolled in education, the social sciences,
and humanities.102 In 2006, just 15.7 percent of bachelor degrees were
awarded for the sciences, engineering, and computer and information
sciences, compared to 27.6 percent for education, consumer services,
and communications.103 Moreover, the number of STEM-related
bachelor degrees, as a percent of all four-year degrees, has been
declining since 2003.104
28
Blueprint for Jobs
CHART 15
Most employers believe tracking students is necessary to develop
those with adequate STEM skills. There is a widespread feeling that if
students interested in STEM subjects are not identified and supported
for STEM studies in middle school (grades six through eight), it will
be difficult to stimulate their interest in the subject matter by high
school, and even more difficult, if not impossible, to get them admitted
to an engineering or technical university. Employers also believe that
in their efforts to support students gifted in STEM areas, society must
be careful to encourage women and minorities to enter these fields, as
they are often overlooked as prospective STEM workers at a young
age.105 In contrast with the American experience, our members see
countries like China, India, Korea, and Singapore aggressively
identifying those students predisposed to STEM studies and
facilitating their participation in those studies. As a result, these
countries are producing hundreds of thousands of engineers annually
in their universities.
There is no question that some cities and counties in the United
States are doing an excellent job of developing specialized schools for
STEM students and then attracting promising students to these
schools. For many employers, however, these programs fall under the
purview of local school boards who design their programs and agendas
apart from the input of employers.
29
Blueprint for Jobs
Not All Good-Paying Career Fields Require a College
Degree
Not only is the United States not supporting STEM education to
the degree necessary for America to remain competitive, it is also
neglecting the development of the skilled trades. In the United States,
one of the prevailing policy axioms is that everyone should have an
undergraduate degree, and therefore, anyone who does not enter and
graduate from college is, by and large, a failure. Such thinking,
unfortunately, has done a tremendous disservice to those who cannot
or have chosen not to pursue a college degree. In fact, the majority of
students never receive a degree from an institution of higher education.
The U.S. Department of Education reports that of every 100 students
who enter the 9th grade, only 75 graduate high school. Of the 75 who
graduate high school, only 51 enter college. Of the 51 who enter
college, five graduate with a two-year degree within three years and
another 17 graduate with a four-year degree within six years.
Statistically, of every 100 students who enter 9th grade, only 22 end up
with a degree within six years.106 More must be done to help the other
78 students who want to enter the workforce and land fulfilling,
productive careers, and there is a readily available solution.
CHART 16
30
Blueprint for Jobs
Even in the current period of high unemployment, certain jobs are
going begging, and many of them are skilled trades and other “bluecollar” positions. For example, welders are in constant demand no
matter what the economic climate. Utilities always need line workers,
and while it can be a tough job, it often comes with an excellent
compensation package. Yet lineworkers are in chronically short
supply. Other very productive and rewarding careers in fields such as
health care occupations, auto technicians, and information technology
require some education and training that results in certification, but do
not require a degree from a four-year institution. The key point here is
that we live in a world interwoven by and highly dependent on
technology, and those with the appropriate skills needed to
manufacture, install, service, and maintain all that technology will be
well paid for doing so. And for those jobs, a traditional bachelor’s
degree is not necessarily the path to acquiring the
necessary skills.
One of the best ways to address this situation is to expand and
promote career technical education within the high schools. Career
technical education not only helps students explore career options, it
can teach them skills that can be leveraged through apprenticeships or
certificates into productive and meaningful careers that are vital to
our economy.
The Vocational Education System in Secondary Education
Is Withering Despite the Demand for People To Fill Skilled
Trades Positions
From 1950 to 1980, vocational education, as a share of secondary
education, declined in almost every educational system.107 By 1990,
just six percent of the U.S. population ages 18 to 34 years old were
taking vocational courses.108 From 1978 to 2000, California lost more
than 80 percent of its vocational programs, and the number of high
school vocational education courses dropped from about 40,000 in the
late 1980s to approximately 24,000 in 2005.109
With the pending retirement of the baby-boom generation, millions
of well-paid skilled trade and production employees who received
vocational education training in the 1950s and 1960s will have to be
replaced. Manufacturers, for example, are going to need to find an
estimated 143,000 welders, 415,000 assemblers, and 434,000 metal
and plastic workers to replace retiring employees.110 Yet there does
not seem to be a realization that in the United States there is
considerable job growth potential for these blue-collar jobs, that many
of these jobs pay well, and that companies in good economic times and
bad are having difficulty filling trade positions.
31
Blueprint for Jobs
According to the Bureau of Labor Statistics, from 2008 to 2018
almost two million new construction employees will have to be found
to replace all of the workers expected to retire.111 This includes
160,000 carpenters, 112,000 plumbers, and 168,000 electricians—
relatively high-paying jobs for which there are fewer and fewer
prospective employees with the adequate skill sets.112 All the new
technology that runs the modern workplace needs to be built and
maintained, and while these well-paying jobs do not require a college
degree, they do require specialized vocational and technical training.
The future of career tech in America is highly uncertain. It has
great support by some and is stiffly opposed by others. There is a
bipartisan career tech coalition in Congress that is now 90 members
strong. At the same time, the President’s 2012 Department of
Education budget request cuts spending on career technical education
by $265 million even though unemployment remains high and
America is not producing the employees needed to fill the demand for
the blue-collar jobs of both today and tomorrow.
Educators and Employers Are Not Adequately
Communicating With One Another To Ensure Graduates
Receive the Education They Need For Successful Careers
HR Policy Association members recognize the incredible benefits
a society reaps when its citizens are well educated. Education is
critical to a properly functioning democracy and to the general
fulfillment, enjoyment, advancement, and intellectual enrichment of a
nation’s residents. Without a well-educated citizenry, the United
States cannot flourish as it has for more than 200 years. We have full
confidence that most educators are passionately committed to their
students and developing solutions for the education system.
From the perspective of many employers, however, educators often
seem unwilling to hear what employers are saying about what
graduates need for successful careers upon graduation. They believe
providing such skill is not part of the academic mission. We
understand that some professors are wary of the suggestion that there
needs to be serious discussions among employers and educators
regarding the skills graduates need to be successful in the modern
workplace. We understand that our leading universities do not want to
be seen as what some would describe as “vocational schools for large
employers.” But the fact remains that most students at both the
undergraduate and master’s level have a very difficult time moving
into quality employment positions after graduation without significant
additional education and training in basic competencies that should
have been learned in school.
32
Blueprint for Jobs
The Federal Government’s Education and Training
Programs Lack Focus and Are Not Adequately Meeting
Employer Needs, Particularly for Large, Multi-State
Employers
In 1998 Congress passed the Workforce Investment Act (WIA), to
replace the patchwork federal job training system that had developed
over the previous 60 years, replacing it with a locally designed and
driven system to improve the quality of the workforce; enhance the
productivity and competitiveness of the nation; and reduce welfare
dependency. In spite of the improvements the law has brought about,
far more remains to be done. In fact, large employers remain
frustrated with these government education and training programs.
In a 2010 survey of the Association membership, 54 percent of our
member companies reported not taking advantage of government
training programs, 43 percent use them only modestly, while only
three percent make strong use of them. Only nine percent of
Association members are satisfied with the government programs that
they use. More than 60 percent believe that federal, state, and local
policymakers need to spend far more time ensuring that their training
resources fit contemporary workforce needs. Two-thirds believe that
there is too much red tape and bureaucracy in these programs, and 65
percent believe employers should be given a far greater voice in the
design and administration of them.
To promote employment growth in the private sector, the
Association believes that there needs to be a far more integrated
approach by the federal government. The Commerce Department has
economic development programs. The Labor Department has
employment and training programs. The Education Department
provides funding for education and vocational training programs.
However, employers do not see these programs as being effectively
coordinated to assist individual employers in expanding employment
opportunities in the United States or to promote national strategies to
create competitive economic opportunities. In February 2011, the
Government Accountability Office (GAO) issued a report that shows
in fiscal year 2009, nine federal agencies spent approximately $18
billion to administer 47 separate employment and job training
programs. In the report, GAO could not conclude whether the
programs had any meaningful benefit despite the large federal
investments.
Joint planning across federal agencies is badly needed if new and
emerging industries are to have the workforces they need to expand
and advance quickly. What occurred in clean technology,
unfortunately, is a typical example. While the U.S. Department of
Energy was investing billions of American Recovery and
Reinvestment Act (ARRA) funds in cutting-edge developments in
33
Blueprint for Jobs
clean energy that are critical to our nation’s energy independence,
millions in job training programs were being invested in low-skill
weatherization programs that rarely resulted in jobs. In fact, a $4
million New Jersey weatherization job training program was closed
after only seven of 184 participants found jobs in the fields.113 Other
ARRA-related weatherization programs funded by the U.S.
Department of Labor met substantial delays while waiting for another
part of the U.S. Department of Labor to develop a prevailing wage rate
for weatherization work. Without better coordination between and
within federal agencies, job training funds will be squandered on lowskill training when they should be invested in new and emerging fields
that offer great employment opportunities.
Further, in the United States large employers operate in a multistate business environment, yet federal training dollars and programs
are disbursed on a state-by-state basis, then passed out by formula to
local areas. By federal law, job training funds pass from the U.S.
Department of Labor to the states and territories according to a
formula. The states and territories keep 15 percent of the funds for
administration of the program and discretionary grants. The remaining
85 percent of the funds pass directly on to the local workforce
investment areas, which then design and run local programs in
accordance with federal regulations and state guidance. This means
that a large employer seeking to establish a national training program
that may result in hiring and/or training dozens or hundreds of workers
in multiple states must form separate, independent, and often different
relationships with each of the state and local governments with which
it chooses to work. This is a burden that most private sector multistate employers believe is simply not worth the effort.
Global Employers Are an Untapped Resource That
American Educators and Policymakers Could Use To Better
Understand Successful Learning Models That Promote
Employment
Global employers have firsthand knowledge of the educational
systems in a variety of countries and the effectiveness of these systems
in producing graduates with the requisite skills for their companies.
They see countries such as Singapore and China doing an excellent job
motivating citizens to move in partnership with their educational
systems to support emerging economic opportunities. These countries
operate sophisticated technical schools and universities that identify
those students who can succeed in positions requiring STEM skills.
These learning institutions are closely aligned with the business
community so that graduates are easily placed in growing industries.
34
Blueprint for Jobs
In his 2011 State of the Union speech, President Obama said that
in order to “win the future” America must “out-innovate, out-educate,
and out-build the rest of the world.”114 The following are specific
recommendations made by the Association to enable the United States
to achieve this vision.
Specific Recommendations:
1.
At all levels of education, students should have a far better
understanding of the skills and basic competencies needed by
employers as well as the career tracks with the potential for
long-term gainful employment.
Graduates often come into the workplace with either a lack of
understanding or false impressions of the competencies and skills
needed to become successful in a career. At the same time, students
and jobseekers receive information from a variety of sources—
teachers, guidance counselors, parents, friends, and relatives—but they
rarely hear directly from the people in the best position to advise
them—employers who hire. Much more needs to be done to ensure
that students have the desire to learn what these skills and
competencies are, that they are in a position to obtain those skills and
competencies from learning institutions, and that employers are giving
students the information they need. To fulfill our responsibility in
providing this information, HR Policy Association is in the process of
creating a website that will serve as the communications platform
where students and graduates can hear directly from Chief Human
Resource Officers and other senior business executives responsible for
hiring and career development about their workforce needs and
expectations.
Today, too many college graduates are discovering that simply
spending tens or hundreds of thousands of dollars getting an
undergraduate or graduate degree is no guarantee that there will be a
job available upon graduation. More needs to be done to ensure that
students interested in having a job in the private sector following
graduation know what careers are in demand, what skills are required
for those careers, where those skills can be obtained, and how best to
acquire them.
35
Blueprint for Jobs
2.
There should be an ongoing dialogue between educators and
employers to ensure that educators understand the career
opportunities available to graduates, the competencies and
skills employers are seeking from graduates, and what
colleges and universities can do to increase the probabilities
that graduates will find quality jobs.
In the coming months, HR Policy Association will be organizing
an ongoing series of discussions between small groups of chief human
resource officers from Association member companies and educators
interested in sharing perspectives on changes that could be made to
ensure graduates have better opportunities to enter the workforce upon
graduation. We welcome those educators to participate in this effort.
3.
Employees must pursue lifelong learning to improve their
job security.
As the change produced by the global economy continues to
accelerate, lifelong learning has become an essential characteristic of
the workplace. Career paths are constantly shifting as new
technologies, new industries, and new work processes replace older
ones at an increasingly rapid pace. In fact, because of the pace of
today’s economies, companies often change more quickly than many
of their employees can adapt to that change. People are hired and
trained to do particular jobs, and at times it can be difficult to adjust
when that job is no longer needed. Yet change is both inevitable and
accelerating, and education cannot end with a high school or college
degree. Employees must make lifelong learning a priority, and
employers, educators, and innovators need to come together to make
more learning opportunities available outside traditional classrooms.
4.
Expanding STEM education and enlarging the number of
STEM teachers and professors, doing more to motivate
students to enter STEM studies, and increasing the number
of Americans who graduate from colleges and universities
with STEM degrees should be among America’s highest
priorities.
STEM studies, STEM careers, and recognizing that the nation’s
future depends on Americans embracing and supporting STEM skills
should be among the highest priorities for the United States. We live
in a global world that functions on technology, and the importance of
technology will only increase in the coming decades. The United
States, therefore, needs both a comprehensive vision and the national
will to overcome the shortage of STEM students and employees with
critical STEM skills.
36
Blueprint for Jobs
The United States needs to encourage and expand STEM
scholarships and other forms of financial aid for STEM studies, as well
as retention programs for undergraduate STEM students, so that
American institutions of higher education successfully graduate far
more students from the STEM disciplines. Further, America needs to
encourage and incentivize the preparation of STEM-certified primary
and secondary school teachers to ensure that U.S. colleges and
universities produce enough qualified secondary teachers of science
and math. At the same time, if America hopes to make a difference in
producing students with employable STEM skills, the authority for
these institutions should be placed in the hands of those who are more
closely aligned and in tune with the career paths for STEM students.
To a degree, the problem also reflects a fundamental irony that in a
country so dependent on technological development and innovation,
American popular culture rarely encourages students to study STEM
fields. From Hollywood to Facebook, STEM figures persistently rank
near the bottom of the social totem pole. Therefore, it is imperative to
motivate the media, parents, and teachers to provide a more positive
view of STEM careers, emphasizing the end goal and the huge demand
and potential for success in these fields. No matter one’s opinion of
Bill Gates or of the social skills of innovators like Mark Zuckerberg,
their success is highly attractive to students in the rest of the world;
why not in America?
5.
Career technical education should be expanded and
promoted to support those seeking fulfilling careers in the
skilled trades.
During the past three decades, the American educational system
has largely removed vocational education and career technical
education programs from the secondary school system. In view of
current and coming demands for skilled trade workers, policy makers
need to return this form of education to our nation’s schools as quickly
as possible.
6.
Government economic development, workforce development,
and education programs need to be fundamentally
redesigned to work in unison toward the same primary
objective: economic growth.
As our nation struggles to recover from the broadest and deepest
recession in modern history while reducing our nation’s deficit and
debt, our political leaders must take this opportunity to question the
purpose, existence, and effectiveness of the economic development,
workforce development, and education programs funded by the federal
government. They need to fundamentally redesign them around the
same primary objective of economic growth. The pressures that
caused the most recent recession are easing, but the underlying
37
Blueprint for Jobs
structural weaknesses they exposed threaten to restrain our future
economic growth for years, if not decades, to come if not addressed.
Among those primary weaknesses are the fact that our education
system is not preparing students for success in the rapidly changing
workplaces of America; our job training system is not linked closely
enough with the needs of employers so that those who receive training
have highly desired skills; and the economic development programs
designed to expand economic opportunity too often work in isolation
and apart from the needs of employers.
Federal investments to prepare the workforce and drive economic
competitiveness are considerable. However, these investments are
dispersed through different Federal agencies with different priorities
under different leadership. Very little inter-agency communication
occurs. Federal agencies must begin to coordinate their efforts with
each other around the single purpose of job creation. We hope that in
the major governmental reorganization outlined by President Obama in
his 2011 State of the Union speech, this approach will be given serious
consideration.
38
III. Attracting the World’s Top Talent to
America and Retaining It
The United States remains a magnet for many talented individuals
from overseas. Many already have skills that are in short supply;
others come to the United States to acquire them through a higher
education system that continues to be highly coveted by the rest of the
world. When America turns away foreign professionals or sends
promising graduates home, it does itself a grievous disservice. Out of
economic necessity, global companies will pursue talent regardless of
where it is physically located. The key question for the United States
is whether it wants that talent employed in America or in the nation of
one of its global competitors.
We are concerned that the U.S. debate over immigration reform
often fails to place immigration policy in the broader context of
education and competitiveness policy, particularly when it comes to
meeting America’s needs for greater talent in the fields of science,
technology, engineering, and mathematics (STEM). Unfortunately, in
recent decades, policymakers have proved largely unable to adjust
immigration rules to admit the manpower —both Ph.D. scientists and
farm workers— that U.S. companies require to grow.
America Is Attracting Top Talent, But Not Retaining It
We have made clear in this report our strong belief that, from the
beginning of its history, the United States’ economic dynamism has
depended on its technological prowess and gift for innovation. What
makes the challenge more daunting in the new century is that nations
around the globe other than the United States are now aggressively
competing for the best and brightest. Clearly, America can regain its
edge only if it remains open to talent wherever it might be, attracting
and retaining both science students and mature scientists. And yet,
despite this clear imperative, America seems to be moving in the exact
opposite direction. Restrictive quotas limit the number of skilled
immigrants admitted each year. Misconceived policies and
burdensome, bureaucratic rules constrain where and how they can
work. Instead, the U.S. should actively work toward retaining the
foreign scientists we have educated just as they are reaching their most
productive years.
39
Blueprint for Jobs
Attracting the World’s Top Talent to America and Retaining It
By paying insufficient attention to the economic forces that drive
immigration, the system currently restricts the entry of foreign workers
and the duration of their stay, while failing to allow for changes in the
marketplace—i.e., shifts in U.S. labor supply and demand, or the
increasingly integrated nature of global labor markets. Because of the
way immigration ceilings are set—in most cases, only Congress can
tweak the quota—American immigration policy is largely unable to
adjust to market realities, and most of its annual ceilings have
remained unchanged for 20 years through all the churning fluctuations
of the world economy.
America Is Losing Innovative Talent By Forcing Exceptional
Foreign Students To Leave the Country Once They
Graduate From American Institutions of Higher Learning
More than half of the science
and engineering graduate
students in U.S. universities
are from outside the U.S.
Roughly 24 percent of all
college-educated workers in
science and engineering
occupations are foreign born,
and that number rises to 40
percent for doctorate holders
in these same fields.
The immigration system often views newcomers as inert widgets,
not dynamic human beings—failing to recognize that people may
come to the U.S. for one reason but stay for another, defying the
categories—“permanent” and “temporary”—that structure the part of
the immigration system that is employment-based. When it comes to
the critical STEM disciplines, this creates two severe problems—one
involving foreign students, the other involving workers who travel to
the U.S. through an employment-based visa.
American colleges are more popular than ever with international
students. The number of foreign students attending colleges in the
United States climbed for the third straight year, according to the
Institute of International Education. Roughly 671,600 international
students attended colleges and universities in America during the
2008-2009 school year, with first-year enrollment rising almost 16
percent. Moreover, more than half of the science and engineering
graduate students in U.S. universities are from outside the country.
Roughly 24 percent of all collegeǦeducated workers in science and
engineering occupations are foreign born, and that number rises to 40
percent for doctorate holders in these same fields. In comparison, the
current H-1B visa cap for temporary foreign workers in specialty
occupations is 65,000, and each year the limit is reached within a few
months of the start of the new fiscal year.115
Even if global competition were not a factor, it would still make
sense for the United States to do everything possible to entice foreign
students to stay on after graduation, because key American industries
are in desperate need of more trained and talented workers. But
instead of welcoming them with a path to citizenship or even
permanent residence, America makes it hard for foreign students to get
visas and then limits where they can work. As of now, the only
avenue open to most graduating foreign students is a temporary H-1B
visa, which leads to another major concern.
40
Blueprint for Jobs
Business Is Now Conducted Globally, But the American
Visa Process Frustrates Companies Trying To Deploy and
Retain Talented Foreign Professionals
As President Obama stated in
his 2011 State of the Union
Address, “it makes no sense”
that, as soon as foreign
students obtain advanced
degrees at U.S. higher
education institutions, “we
send them back home to
compete against us.”
Similar to the situation facing foreign students, American
immigration policy also results in the loss of talented professionals
who have already begun their careers. Many come to the U.S. with a
temporary H-1B visa. Issued for three years and renewable once in
many if not most cases, the H-1B is an indispensable tool for
employers of highly-skilled workers—more easily and quickly
obtained than a permanent visa, or green card. But an H-1B is not
always the best answer—in some companies and some personal
circumstances, a permanent visa would be more appropriate.
However, because employment-based green cards are in such short
supply, the H-1B is often used with the hopes of it becoming a
stepping stone toward a permanent visa. Unfortunately, highly skilled
workers find themselves caught in a holding pattern, facing hurdles in
seeking to work for another employer other than the one who
sponsored them, unable in many if not most cases to change jobs or
even move up the ladder as long as the visa lasts. This rigidity hurts
employers and employees alike, undermining the productivity of these
knowledge workers and the positive effect that they could have on our
economy, while also reducing the United States’ appeal to highly
desirable skilled workers who are being enticed to locate elsewhere.
At the heart of the problem is a fundamental, structural mismatch
between the size of existing temporary programs, including but not
limited to H-1B, and the number of permanent visas, or green cards,
available for employment-based immigrants with college degrees. The
number of temporary visas issued to skilled workers—H-1B, TN, O,
and L-1 combined—are nearly 300,000 annually. Yet America still
grants only 140,000 employment-based green cards a year.
The persistent shortfall has created huge backlogs; in some cases
the wait for a permanent visa is as long as a decade. The H-1B visa
holders America should be wooing cling desperately to their
temporary status while they wait for permanent residence. In the
meantime, it is difficult for them to change jobs, and it is hard for their
employers to promote or assign them more productively. Their
spouses cannot work, and they often remain hesitant to put down roots,
buy homes or invest in the United States. It is a classic lose-lose—
unwelcoming and economically inefficient, bad for U.S. employers
and foreign talent alike. The only people who benefit are America’s
global competitors.
41
Blueprint for Jobs
American Immigration Policy Is Becoming Even More
Restrictive, Building Barriers to Keep Highly Talented
Individuals From Entering the Country
For more than 20 years, Congress has proved unable or unwilling
to expand the number of available employment-based green cards, and
this constricted pipeline simply can no longer accommodate the
increased flow running through the easier to use and ever more
popular temporary programs. And yet, despite the backlogs, the
bottlenecks, and the waste of highly sought global talent, there is no
relief in sight.
Ultimately, what is needed is
an immigration policy that
harnesses rather than hides
from or tries to block the
dynamism of the new global
economy— one that allows
market mechanisms, not
politics as usual, to
determine what those
interests are.
If anything, policymakers in recent years have been more inclined
to impose further encumbrances on existing worker visa programs.
The problems start on the ground where would-be employers and
employees are finding immigration officials and policies increasingly
less friendly. Agencies adjudicating visas have become not just
increasingly strict, but also capricious. Applications of a kind
routinely granted in the past are now being routinely denied. Even
workers already issued visas are finding it difficult to renew them
under the new, arbitrary standards. Similar and even more threatening
changes are occurring at the regulatory level: the Departments of
Labor and Homeland Security are rewriting the rules for existing
temporary worker visa programs and, invariably in the past two years,
making them harder to use.
Meanwhile, the viability of these programs is being threatened by a
number of proposals that may be considered by Congress. In the past,
these proposals have included arbitrary caps on the number of foreign
workers an employer can sponsor, restrictions on how and where they
can work, and an array of costs that will price temporary visas out of
reach for many employers. Even proposals for comprehensive reform,
generally seen as bringing relief for business, contain a buried threat:
the current broken system would be replaced with an appointed
commission, politically unaccountable and more than likely hostile to
the free market, which would set visa quotas and recommend how
programs work.
Ultimately, what is needed is an immigration policy that harnesses
rather than hides from or tries to block the dynamism of the new
global economy—a policy designed to serve U.S. economic interests
and one that allows market mechanisms, not politics as usual, to
determine what those interests are.
42
Blueprint for Jobs
1.
The immigration reform debate should address the reality
that there is a global war for talent and that countries are
competing to attract and retain the human capital essential
to a culture of productivity and innovation.
Typically, the highly charged immigration debate is dominated by
social and moral issues. Yet the critical question that must be
addressed is whether the immigration system is helping American
employers regain the edge against global competition. The U.S. can
only do this by attracting and retaining the kind of human capital that
spurs technological change, enhances productivity, launches
businesses big and small, and sustains the American culture of
innovation.
As was noted in a 2010 report by the World Economic Forum
entitled Stimulating Economies Through Fostering Mobility:
Countries need to prepare to face the challenges of
demographic shifts and a fast-changing labor market
environment by defining adequate education and migration
policies…to prepare for the era of extreme labor scarcity,
significant talent mobility and a truly global workforce.116
As other countries wake up to this fact, so should the United
States.
2.
It is imperative that the United States avoid enacting new
legislation or issuing new regulations that impose additional
restrictions on visas that would only further dampen
economic recovery.
In view of some of the pending proposals, as bad as current policy
is, it would be better if Congress did nothing. Among the legislative
measures we believe should be resisted are those that would impose
additional impediments on the issuance of employment visas,
including not only H-1B visas but also those issued under the L-1
program, which allows companies operating in the U.S. and abroad to
temporarily transfer employees from a foreign location to a U.S.
worksite. We are particularly concerned about any proposals that may
seek to cap the L-1 program, or impose location and unrealistic
compensation restrictions on L-1 employees.
43
Blueprint for Jobs
3.
Foreign students who acquire advanced degrees in the STEM
disciplines at American higher education institutions should
have a path to U.S. citizenship if they wish to use their talents
in America rather than returning to their country of origin.
As President Obama stated in his 2011 State of the Union Address,
“it makes no sense” that, as soon as foreign students obtain advanced
degrees at U.S. higher education institutions, “we send them back
home to compete against us.” This situation should be remedied by
authorizing permanent residency for foreign students receiving
advanced STEM degrees in the U.S. and exempting them from
numerical limitations on H-1B visas.117
4.
The system for determining the number of annual visas
should be revamped to better reflect the needs of the market,
rather than maintaining arbitrary and inflexible caps.
Employers, not the government, have the best sense of which
workers they need for their businesses. No government agency is
capable of determining the attributes needed to fill the many, varied,
and constantly changing jobs in the U.S. economy. As the diminished
immigrant influx of recent years demonstrates, the global labor market
corrects itself when times are tough and works efficiently to regulate
the flow of workers seeking to enter the country. Arbitrary, inflexible
caps only impede this self-adjusting flow, to the detriment of the
economy. The current system should be replaced by one that is more
demand-driven, reflecting the actual skill needs that employers are
facing, while maintaining protections for U.S. workers with those
skills being displaced.
5.
A more flexible system should be established to maintain
options for both short-term and long-term residence,
allowing professionals to transition from temporary to
permanent status after a period of contributing to the
American economy, without regard to quotas or nationality.
Two decades of debate about visas for highly skilled workers have
driven home a critical lesson: the more flexible the system is, the
better it will work. Not all newcomers want to stay permanently.
Many come initially on a temporary basis to meet short- to mediumterm labor needs. Some then decide to go home—generally to the
benefit of their home countries—while others end up staying
permanently in the U.S. and earning legal permanent residence. A
rational immigration system would permit both options, providing
flexibility for immigrants and employers alike.
44
IV. Creating a Regulatory Environment That
Encourages Innovation and Job Growth:
The Need to Replace Conflict With
Consensus to Achieve Competitiveness
Cheryl is a business analyst with a major insurance company in the
United States. This is a highly specialized position that includes
helping the company manage its work flow and deal with new
business ideas, trends, and concepts. In her work, Cheryl uses the
most current and most advanced office technology. Cheryl is six years
out of school and has a master’s degree in Business Administration,
and she earns an annual salary of $75,000. Eventually, she hopes to
earn more as a senior financial analyst, which is the next logical step in
her career. To move up, she knows she has to work very hard, which
includes occasional weekend work. But, far more frequently, it
includes staying in touch with her supervisor and her co-workers on a
regular basis. In addition to answering e-mails and checking voice
mails on her Smartphone before and after working hours, she often has
to work from home since she has two school-age children.
Most of the time she works in the office on a regular schedule, but
she frequently has to arrive late or leave early. This practice does not
concern her supervisor because she knows that Cheryl more than
makes up for it by keeping in touch when she is away from the office
and that at times she arrives early or leaves late. The point is, no one
is tracking Cheryl’s hours because she is getting the work done.
Cheryl has made great strides in her very promising career, but
most of the time she is being given direction by a senior analyst, who
exercises the necessary discretion and judgment when a critical
decision must be made.
Although Cheryl makes the equivalent of $28.84 per hour, or
roughly four times the minimum wage, her company is very likely
violating the 1938 Fair Labor Standards Act (FLSA). Even though the
work she performs requires a considerable amount of expertise and
experience in navigating complicated financial rules and principles,
the fact that she does not exercise discretion in doing so likely
disqualifies her from falling within any of the so-called “white collar”
exemptions under the FLSA. Because of this and other arcane rules
largely written in the 1950s, countless engineers, pharmacists,
accountants, highly-compensated sales persons, paralegals, and others
45
Blueprint for Jobs
Creating a Regulatory Environment That Encourages Job Growth
have been deemed by the Department of Labor and the federal courts
to be “nonexempt.” In other words, they are covered by the FLSA,
which mandates tracking of hours and dozens of other requirements,
including calculations of potential overtime.
Because of this, Cheryl’s employer is sitting on a litigation time
bomb. Even though Cheryl feels she is being paid fairly (as much as
any employee does) and likes the flexibility of not having to punch a
time clock, she is still likely covered by the FLSA, regardless of
whether she wants to be.
Why? Under the Fair Labor Standards Act, the company is
required to track and keep records of all “hours worked” by a
nonexempt employee and pay time-and-a-half at the employee’s
“regular rate” for every hour worked over 40 in a particular workweek.
For Cheryl, this means the company is likely to be committing the
following violations:
•
Failure to pay “time and a half” for every hour worked over forty
in any given workweek. Moreover, in calculating the “regular
rate” on which this is based, the company has to factor in any
performance bonuses Cheryl has received;
•
Failure to monitor and keep records of the time Cheryl is engaged
in work, either at the office or away from the office, with the
exception of any “de minimis” work. This is a somewhat elusive
standard but is viewed by many legal experts to be any work taking
less than six minutes; and,
•
Though the law is unsettled on this, the company may also be in
violation by failing to track and pay Cheryl for her commuting
time on days when she performed more than a de minimis amount
of work before or after her commute. Under this view, the
workday begins and ends with the first and last act of work,
respectively.
Cheryl’s company is very large, and there are 250 other employees
with her same job title and duties. If, like many American companies,
Cheryl’s company is sued in a class action brought on behalf of all of
these other employees, the company could owe overtime back pay that
could easily be in seven-digit amounts.
What can Cheryl’s company do to protect itself? Companies that
have found themselves in this situation have had to take a number of
steps that have proven very unpopular among their employees.
46
Blueprint for Jobs
First, it must convert Cheryl and all other employees in her
position to hourly status, an action that is often viewed by employees
as an unfair diminishment of their place within the organization in
view of their level of education, experience, and responsibilities. In
other words, those whose status is being changed to hourly feel a loss
of dignity and respect by their employer and co-workers.
Second, the company must begin tracking Cheryl’s time, which
means Cheryl is responsible for filling out and turning in time sheets
on a weekly basis. Early arrivals, late arrivals, early departures, and
late departures must all be included in the time sheets.
Third, the company must decide whether it needs to impose new
restrictions on Cheryl’s work outside the office. Compliance with the
law requires that all time worked that is not de minimis be tracked and
paid for and, as indicated previously, perhaps commuting time as well.
Out of concern that the only way they can ensure compliance is by
requiring all employees to perform all work in the physical workplace,
many companies have banned the use of smartphones and laptops
outside the workplace for any work by their nonexempt employees. In
companies where such tools are provided to their employees at the
company’s expense, they are denied to nonexempt employees.
“If Washington expects to
partner with the private
sector to lead the effort
toward economic recovery,
we must address the
regulatory uncertainty felt by
many of our small and large
businesses.”
– Sen. Mark Warner (D-VA)
As litigation and DOL enforcement of the FLSA continues to
proliferate, more and more employers are taking these steps and it is
not being well-received by their Generation X and Millennial
employees. They want smartphones connected to the office grid, and
they want to access their worksite remotely. But for most employers,
particularly at a time when the Department of Labor has stepped up
enforcement of the FLSA, they are not willing to risk a lawsuit by
being flexible.
This example demonstrates why, in seeking to rebuild and
restructure its economy to match the challenges of the 21st century
global economy, the United States must restructure its system of
employment regulation.
As Senator Mark Warner (D-VA) noted, “If Washington expects to
partner with the private sector to lead the effort toward economic
recovery, we must address the regulatory uncertainty felt by many of
our small and large businesses.”118 In making this point, the Senator
cited a Small Business Administration study that estimates the annual
cost of federal regulations on businesses in 2008 to be $970 billion,
and goes on to note that, according to the Office of Management and
Budget, the federal government has issued more than 132,000 final
rules since 1981, and more than 1,200 of those rules have an estimated
economic impact of greater than $100 million each. Employment
regulation plays no small part in this broad problem.
47
Blueprint for Jobs
Employers Strongly Support Fair Employee Protections; It
Is In Their Self-Interest to Treat Employees With Fairness
and Respect
At the outset, we wish to emphasize that in thinking through a
modernization of America’s regulatory structure for employment
policy, we are not suggesting a race to the bottom that abandons
fundamental employment protections. Indeed, the vast majority of
laws regulating the workplace address legitimate concerns, and they
rest upon a set of core principles that nearly all people believe should
be part of the employer-employee relationship. For example, there is a
broad consensus that:
•
Employees should be treated with respect by employers;
•
Employees should not be taken advantage of by employers;
•
Employees should not be discriminated against in hiring,
compensation, advancement, and termination using inappropriate
factors or criteria;
•
Employees should not have to fear or suffer from bodily harm in
their workplace that is reasonably preventable; and,
•
Employees should be able to form a union and engage in collective
bargaining if they choose to do so in an atmosphere free of
coercion by either the employer or union organizers.
Effective human capital strategies are a primary concern of today’s
employers, and the foundation of those strategies is commitment to
fairness. Having low turnover and a highly committed and engaged
workforce is essential for maintaining competitiveness and
profitability. All that will not happen unless a company’s employees
believe they are being treated fairly and with dignity
and respect.
Nevertheless, the Regulatory Policy Process Governing
Employee Protections Contains Endemic Flaws That, If Not
Addressed, Will Further Stifle Economic Recovery
At present, the system used by the U.S. Congress and
administration to develop regulatory policy has a number of endemic
flaws that, if left unaddressed, could further stifle economic recovery
and long-term growth:
48
Blueprint for Jobs
•
In developing employment policy, the United States uses a
conflict-based system in which various interest groups typically
engage in political warfare with one another instead of conducting
reasoned discussions regarding the development of sound public
policy promoting the mutual objectives of competitiveness,
employment security, and employee protections.
•
Rather than embracing the traditional American approach of
presuming a party is innocent until proven guilty, contemporary
employment law assumes that employers will abuse their
employees and seek to circumvent both legal and ethical
obligations; therefore, it operates on the basis that a strict set of
laws, regulatory requirements, and severe penalties are necessary
to cover every conceivable abuse.
•
Concomitantly, a higher priority is placed on anticipating and
providing protection against every conceivable wrongful act that
an employer could potentially engage in than is placed on ensuring
a regulatory scheme that promotes employment by minimizing
regulatory excesses.
•
As even the U.S. Department of Labor has learned through recent
litigation with its own employees over the use of smartphones,
most employment laws being strictly enforced today, in the
digital/information age, were written in the industrial era, and they
address a workplace far different from what is commonplace
now.119
•
Rigid, mechanistic requirements ensuring overly broad worker
protections limit the ability of employers to provide flexibility to
meet the changing demands of today’s employees.
•
The ability of the vast majority of conscientious employers to
maintain compliance with the myriad employment regulations is
severely taxed as precious resources are drained by legal expenses
and unending administrative tasks.
•
Instead of seeking a prompt settlement of employment law
disputes, the U.S. system instead foments costly and lengthy
litigation that has contributed to the fact that U.S. firms spend
twice as much on lawsuits as they do on research.120
Although it would seem that a thorough review of our existing
framework of employment regulations is long overdue, policymakers
in recent years have instead proposed a plethora of new regulations,
expanding existing ones while adding wholly new obligations
and restrictions.
49
Blueprint for Jobs
The Time Has Come For a Comprehensive Review of the
Fundamental Assumptions and Principles Used To
Regulate Employment Policy in the American Workplace
The entire way the United
States goes about the
process of developing and
reviewing employment policy
needs to be fundamentally
changed.
We believe the time has come to undertake a comprehensive
review of the fundamental assumptions and principles the United
States has followed regarding the role of government in the workplace.
We are encouraged by President Obama’s signing of Executive Order
13563, seeking to “remove outdated regulations that stifle job creation
and make our economy less competitive,”121 as well as a number of
regulatory reform proposals currently pending in Congress. We view
these as an acknowledgement of the need to closely examine what is
already in place with an eye toward improving its relevance and
workability in the contemporary workplace. At the same time, it
would be a departure from strict enforcement of laws that are no
longer relevant to the way people live and work.
However, a much bolder approach needs to be taken. The entire
way the United States goes about the process of developing and
reviewing employment policy needs to be fundamentally changed.
Finally, it should be emphasized that, at a time when the federal
government is struggling with reviving the economy in a way that does
not add to the federal deficit, regulatory reforms can achieve those
goals with practically no cost to the federal budget.
America’s Conflict-Driven Regulatory System Produces
Scarred Employment Policy
For the past several decades, the success of a particular Congress
or administration is often assessed by the extent to which it has
increased certain employee protections and employer liabilities
through legislation, regulation, enforcement actions, or all three. The
impact of those changed policies on competitiveness, the ability of
employers to expand employment opportunities, and compliance
burdens are given hardly any consideration. Rather, it often becomes a
power game. One set of interest groups and politicians seeks to
triumph over other sets rather than there being a reasoned dialogue
among key stakeholders to address the real abuses without further
impeding the competitiveness of those employers who are not the
problem. It is both easy and highly rewarding politically to paint
certain groups as villains and then enact legislation or issue regulations
to curb their villainous behavior. What is far more difficult and far
less rewarding is trading polemics for polite conversation that takes in
a variety of views and then seeks to develop solutions that promote the
common good.
50
Blueprint for Jobs
Instead, Congress usually moves employment legislation at the
behest of one or more interest groups in a highly adversarial manner,
with the proposal reflecting the approach most desired by those
groups, regardless of whether it makes sense for key stakeholders.
Upon enactment of the new legislation, a federal agency is typically
authorized or required to issue regulations implementing the new law,
resolving ambiguities, and providing the regulated parties greater
detail as to what is required. In issuing these regulations, the agency
must then typically follow the Administrative Procedures Act (APA),
which generally requires public participation in the rulemaking
through various notice and comment procedures.122 Employment
legislation is generally no different in this regard. However, as long as
the regulatory agency follows the specified steps in the APA, there is
no mechanism for guaranteeing that all affected parties play a
meaningful role. This is exacerbated by the fact that the agency
employees—both political appointees and career—do not necessarily
have “real world” experience to inform the rules they write.
While most American employers are likely to view European
workplace laws as focusing excessively on job protection at the
expense of job mobility and growth, there is one component of the
European Union’s system that deserves a closer look. Articles 138 and
139 of the European Community Treaty give both business and
labor—the so-called “Social Partners”—a right to preempt all
European Commission proposals by agreeing upon their own jointlydrafted rules. The Commission is required to allow the parties nine
months to reach a “framework agreement,” and may generally only
proceed if the parties fail to reach agreement within that time frame.123
Though the details of the social partners’ preemption system are
embedded in the highly unique European Union system of governance,
the concept itself is transportable. Indeed, a recent example of this
approach took place in the United States during consideration of the
Americans with Disabilities Act Amendments Act of 2008
(ADAAA).124 After a bill with broad bipartisan support was strongly
opposed by employers, the business community and disability rights
groups, with strong encouragement by Congressional leaders including
Rep. Steny Hoyer (D-MD), decided to seek an alternative they could
both support. At the time, the legislation was being driven by certain
court decisions interpreting the Americans with Disabilities Act
(ADA), which most agreed would or should not be allowed to stand
because they narrowed the definition of “disability.” However,
employers were concerned that Congress would go much further in
seeking to overturn those decisions, effectively deeming almost every
minor impairment a covered “disability.” Thus, the task of the groups
was to find a way to reverse the court decisions with a scalpel, not a
meat cleaver.
51
Blueprint for Jobs
We see a disturbing trend in
the recent regulatory climate
that seems to view employers
as an inherently irresponsible
group that, absent strong
governmental enforcement
schemes, will take advantage
of employees at every turn.
The result of the negotiations was a more evenly balanced
approach, ultimately passed by Congress as the ADAAA, which
reversed the decisions but avoided disruption of the workplace by
ensuring that the “reasonable accommodations” employers would have
to provide under the ADA would be limited to the more severe
conditions that the ADA was originally intended to address.125
Significantly, the legislation passed the House by a vote of 402 to 17,
and unanimously by the Senate.
Unfortunately, this collaborative process ended with the enactment
of the new law. The Equal Employment Opportunity Commission
(EEOC) was charged with implementing the ADAAA by issuing new
regulations, and its initial proposal completely undermined the
compromise that Congress had enacted. The result was the launching
of another battle, with all sides pressing their views with the EEOC
instead of coming back to the table to make sure their agreement was
fulfilled by the regulations.
Fortunately, after the proposed rules were in limbo for over a year,
new members of the Commission were able to revisit the proposed
regulations and forge a bipartisan agreement that moved much closer
to what Congress had intended. Significantly, these delays and power
struggles could have been avoided in the first place with a negotiated
rulemaking process that involved the outside stakeholders who best
understood what they had agreed upon.
The American Regulatory System Overlooks the Reality
That the Vast Majority of Employers Treat Their Employees
Fairly
One of the most serious flaws in the existing system of
contemporary U.S. employment law is the tendency to “regulate from
the bad.” The most significant driver of the American economy for
the past two centuries has been the ability of the private sector to
create economic opportunities and jobs. Yet we see a disturbing trend
in the recent regulatory climate that instead seems to view employers
as a malevolent force that must constantly be placed under severe
restraints. There appears to be a general belief among many
policymakers that, absent strong governmental enforcement schemes,
employers will take advantage of employees at every turn.
There is no question that there have been many instances over the
years of certain companies taking actions that harmed employees.
However, the political system in the United States is such that public
policy addresses the misdeeds of a few bad actors by foisting harsh
regulatory schemes on all employers, regardless of their past behavior.
52
Blueprint for Jobs
Rules are crafted, down to the most trifling of regulatory nuances,
under the assumption that every potential loophole must be closed and
every conceivable employer abuse must be anticipated. In stark
contrast to our system of criminal laws, which bends over backward to
presume innocence on the part of every accused wrong-doer,
employment regulations generally start with the assumption that most
employers will abuse employees unless they are regulated into
compliance. The end result is a tangled web of rules that, ultimately,
will have a greater impact on conscientious, responsible employers
who are likely to spend precious time, energy, and resources ensuring
compliance with rules not aimed at them in the first place. If they
stumble into a violation, it is more likely to be a so-called “gotcha”
rule or a genuine disagreement over what the confusing law requires.
A prime example of this perversity is a Fair Labor Standards Act
(FLSA) rule that requires an employer to include certain bonuses paid
to employees in their base pay for purposes of calculating their “time
and a half” overtime premium.126 The rule is driven by a fear that
employers will try to lower the employees’ overtime rate by paying
them bogus “bonuses” rather than including those amounts in their
hourly rates. This little-known rule has tripped up many well-intended
employers who were motivated exclusively by the desire to reward
their employees with a bonus. As a result, employers tend to reserve
bonuses for exempt employees.
Employment Policy Tends to Evolve From a Desire to
Protect Employees When an Idea Is First Introduced To
Micromanaging the Workplace When the Final Regulations
Are Issued
It is instructive to see how employment laws evolve from their
original motivation to the specific rules that are ultimately
promulgated. A case in point is the Family and Medical Leave Act
(FMLA), which provides employment protection for employees who
need to take leave from the workplace following the birth or adoption
of a child or to recover from “a serious health condition.”127 The law
was enacted after Congress heard testimony from employees who had
faced severe economic hardships following termination by their
employer after childbirth or during a severe medical condition. With
regard to the latter, examples were provided of employees with heart
attacks, heart bypass or valve operations, cancer, strokes, spinal
injuries, appendicitis, and pneumonia.128
These were the kinds of “serious health conditions” contemplated
by the statute. Yet, when the law was ultimately implemented, the
regulations had effectively written the word “serious” out of serious
health condition such that it now includes common colds.129 As a
result, the FMLA has become one of the most problematic laws for
53
Blueprint for Jobs
employers to comply with—not in those situations such as childbirth
and truly serious conditions that generated the law in the first place,
but in the more nuanced situations created by the broad definition of
“serious health conditions.”130 Further, rather than reserving FMLA
leave for those severe situations the law sought to address, some
employees have learned how to game the system so they can simply
take more time off. They view “FMLA leave” as an addendum to the
annual leave and personal leave already granted by their employer.131
Moreover, the fact that the law allows such leave to be taken in
increments as small as one hour creates serious disruptions for
employers in maintaining their operations, not to mention the
administrative burdens of tracking the time increments as part of the
recordkeeping required under the law.
Laws Written During the Industrial Age Govern the
Workplace of the Digital Age, With the Prime Example
Being the Fair Labor Standards Act
The problems that employers
have with regulatory policy
are further compounded by
the absence within our
employment regulation
system of any mechanism to
ensure that the laws and
regulations are regularly
reviewed and upgraded to
ensure relevance to the
existing workplace.
The problems that employers have with regulatory policy are
further compounded by the absence within our employment regulation
system of any mechanism to ensure that the laws and regulations are
regularly reviewed and upgraded to ensure relevance to the existing
workplace. The recently-signed Executive Order 13563, which
instituted “a government-wide review of the rules already on the
books, to remove outdated regulations that stifle job creation and make
our economy less competitive,” was a good first step. However, it
remains to be seen how successful this effort will be, especially
because the underlying problem is frequently the statute itself.
Of all employment laws and regulations that are out of sync with
today’s workplace, the most troublesome for both employers and
employees is the FLSA, enacted in 1938 during the Great Depression.
On its face, the FLSA is a sincere attempt to protect employees against
exploitation and “sweatshop” working conditions. The dual purpose
of the law is to provide a minimum wage (currently $7.25 per hour)
and ensure that workers who are not otherwise exempt (i.e.,
“nonexempt”) are paid time-and-a-half overtime for hours worked in
excess of forty in a given workweek. The most common exemption is
for “white collar” employees who must be paid a salary.
Unfortunately, these simple concepts have been translated into
countless vague, inconsistent rules and exceptions that are increasingly
out of step with the times, as in the example used at the outset of
this chapter.
54
Blueprint for Jobs
Employers regularly deal with the following kinds of situations
forced by the statute’s inflexibilities:
•
Work schedules are carefully designed to avoid overtime. Thus,
even if employees would prefer to work eight days in a row, with
six days off in a row, the employer cannot afford such a schedule
because it would involve at least two full days of overtime.
•
Because employers fear that FLSA violations will occur due to
employees engaging in work that is not being tracked, they impose
restrictions on the use of e-mail, Internet or social media outside of
working hours. Thus, nonexempt employees are discouraged or
prohibited from checking emails off-hours due to the risk of not
reporting their time worked. In occupations such as off-site repair,
where the use of Blackberries, iPhones or other personal digital
assistants (PDAs) is essential, some employers require the
employee to keep these at one of the employer’s locations after
hours, picking it up and dropping it off there, regardless of the
location of site visits.
•
The law creates disincentives toward engaging nonexempt
employees in trouble-shooting and decision making because of
overtime issues. Thus, nonexempt employees may be routinely
excluded from off-site meetings or trips that could be beneficial to
both them and the company because of the administrative
difficulty of determining what time is compensable and the actual
cost, once determined. In team situations where nonexempt
employees are actively involved in deciding how the work is to be
performed, the employer often has to discourage them—to the
point of imposing discipline—from engaging in “after hours”
discussions with their co-workers or engaging in any other work,
such as writing a proposal for addressing a particular problem.
This caste system based on job classifications is increasingly out of
sync with corporate cultures that depend on teamwork. Further,
the inability to participate in off-hours or off-site events stunts the
career growth of nonexempt employees who lose the benefit of
these activities.
•
At a time when upgrading the skills of American workers is a
priority, employers are discouraged from offering optional training
to their employees because of FLSA regulations. Those rules
require that employees be paid for the time spent during the
training unless it is “not directly related” to their jobs, even though
they are not being required to take it. For example, an employer
may provide training for a new software program that only some of
its computer programmers will use. Clearly, the employer should
pay for the training time for those employees. However, other
programmers also may wish to learn the program to broaden their
55
Blueprint for Jobs
expertise. Yet the employer may decide not to offer it to them
because its lawyers say it may be viewed as “directly related” to
their jobs.
The disconnect between the
FLSA and the modern
workplace will continue to
grow if the law is left
unchanged, increasing
tensions between employers,
employees and regulators,
with the only true beneficiary
being the plaintiff’s bar.
All of these problems are exacerbated by the continuing
uncertainty over which employees are covered by the overtime
requirements and which are exempt, according to rules largely written
to cover the workforce of the 1950s. The inability of even the U.S.
Department of Labor itself to make these determinations has been
exposed by a recent action brought against the Department involving
the exempt status of more than 1,900 employees, resulting in a number
of these employees being awarded back pay. In addition to a large
number of administrative employees, those eligible included highly
paid computer professionals, paralegals, litigation support specialists
and pension law specialists, as well as highly paid wage and hour
division compliance specialists.132
The disconnect between the FLSA and the modern workplace will
continue to grow if the law is left unchanged. It will increase tensions
among employers, employees, and regulators, with the only true
beneficiary being the plaintiff’s bar. Congressional attempts at
incremental reforms stalled in the 1990s, leaving a bitter taste in many
policymakers’ mouths and making them reluctant to make another
attempt. Yet the pressure will steadily increase, and it will become a
problem that is increasingly more difficult to ignore.
Job Growth Is Being Hindered by the Costs of the
Administrative Structure Required to Ensure Compliance
With the Plethora of Government Employment Regulations
The comprehensive structure of U.S. workplace laws, regulations,
and taxes plays a role in virtually every decision an employer makes
with respect to hiring, promotions, terminations, scheduling, sharing of
data, use and design of facilities, changes in operations, and location of
work. All of these laws and policies have a cost, and with each
additional mandate or tax, another cost is layered onto
employment decisions.
An example of an area where significant costs are imposed on
employers even when they are acting in full compliance with the law is
Executive Order 11246, which imposes affirmative action
requirements on federal contractors regarding women and
minorities.133 Our member companies pride themselves on their
diversity and inclusion programs, and we firmly believe that, in
general, American companies are a beacon for the world in providing
opportunities to women and minorities. Yet, even those with the
proudest record in this area must spend significant resources ensuring
compliance with the executive order as enforced by the Office of
56
Blueprint for Jobs
Federal Contract Compliance Programs (OFCCP). Just to prove they
are in compliance, every year federal contractors spend over 12.5
million hours on paperwork alone, compiling data and conducting
detailed statistical analyses of county-level Census data on the
availability and utilization of women and minorities for all of their
recruitment areas.134
These costs are growing. OFCCP has taken a stepped-up
enforcement approach that involves more contractors being subjected
to on-site, full compliance audits, regardless of whether there are
indicators of potential discrimination or other violations. The new
regime replaces the previous approach that terminated investigations
where initial indicators showed no signs of systemic discrimination.
Ultimately, the ability of employers to add new jobs to the
economy depends to a large extent on the costs associated with each
particular job. A key point here for policymakers is that it is not just
the dollar amounts involved in wages and benefits that influence
decisions regarding staffing levels. Such decisions also include
numerous other factors regarding whether it is economically feasible
to even continue an existing position, let alone add new ones. When it
comes to workplace regulation, these factors include:
•
The administrative costs associated with compliance with a law or
regulation, including the tracking and recordkeeping associated
with the data needed to demonstrate compliance;
•
The time spent by human resource officers, supervisors, managers,
and company leadership in planning and ensuring compliance with
each workplace rule;
•
The legal costs associated with establishing protocols to ensure
compliance while maintaining continuous internal auditing to
make certain that these protocols are being followed;
•
The potential legal costs for addressing complaints and, ultimately,
litigation, as well as defending against enforcement actions
brought by the government or private parties where allegations of
noncompliance are involved (including the costs of settlement
where the expense of defending such actions may exceed the
potential liability); and
•
The inability to achieve savings or competitive advantages as a
result of restrictions that preclude the development of more
efficient and productive workplace policies and procedures, even
when they may be to the mutual benefit of both the employer and
the employees.
57
Blueprint for Jobs
The failure to contemplate those costs—particularly at a time when
the United States is pursuing an agenda which, in President Obama’s
words, “will make America a better place to do business and create
jobs”135—is a serious deficiency in the nation’s system.
Corporate Human Resource Policy Is Unduly Influenced By
the Plaintiff’s Bar Using Ambiguities in Employment Laws
and Regulations To Obtain Large Attorney’s Fees
Despite the economic crisis
the country has faced over
the past two and a half years
and its impact on
employment, policymakers
have generally failed to focus
on ways to alleviate the
megaload of existing
employment regulation.
Every large employer has stories about overly aggressive
government enforcement authorities who have little understanding or
regard for business realities. However, the biggest concern for
employers is the explosive growth of employment litigation.
Over the years, the plaintiffs’ bar has learned ways of enriching
itself through ambiguities in the law, and the fact that employers
generally prefer to avoid the noisome experience of proving
themselves innocent. As a result, corporate litigation costs have
skyrocketed. This has led one blue ribbon panel to lament:
This tends to discourage even prudent risk-taking and consumes resources and vast amounts of time and imposes a
severe opportunity-cost. Similarly, the judicial process for
resolving disputes tends to be cumbersome and timeconsuming, such that firms often have no choice but to
settle even frivolous cases if they are to avoid still further
damage. This legal process often consumes years or even
decades to arrive at a resolution to a dispute, yet many
businesses are born, prosper and sometimes fail in five
years or less.136
Again, the FLSA provides one of the most egregious examples of
this trend. As previously noted, the 1938 law has failed to track the
dramatic changes in the workplace, resulting in a disconnect that
inevitably leaves all parties—employers, employees, and often even
the U.S. Department of Labor itself—guessing at what exactly the law
requires. Moreover, many of these difficulties involve the exempt
status of certain highly compensated professionals, where the back pay
award for unpaid overtime is substantial, particularly when it is folded
into a large class action involving all similarly situated employees of a
large company. Thus, the number of FLSA lawsuits has quadrupled
from about 1,500 per year in the early 1990s to over 6,000 in 2009, 137
and this does not count the number of cases brought under state laws,
which often vary from the federal law. Faced with the uncertainties of
the law, companies often settle these cases, with a median settlement
cost of $7.4 million for federal cases and $10 million for state cases.138
In 2010, two companies settled FLSA class action cases involving
misclassified employees for $44.0 million and $42.0 million.139
58
Blueprint for Jobs
The proliferation of nuisance
lawsuits exploiting areas of
uncertainty in the laws has
become a major economic
drain, stifling economic
growth.
Even employers who are in compliance with the law spend a
considerable amount of time and resources dealing with nuisance
lawsuits driven by the plaintiffs’ bar. All too frequently, these suits
are filed with the objective of shaking the employer down for a
settlement in return for withdrawing the case, particularly in cases
where the law is ambiguous. Moreover, after the plaintiffs’ lawyers
take their cut of the settlement for both fees and “expenses,” plaintiffs
are often left with crumbs. In the case of class actions, which are now
available for most employment laws, the problem is compounded as
lawyers often walk away with huge fees while individual plaintiffs
may only receive a modest share of the recovery. It should come as no
surprise that among all the industrialized nations, the United States has
the highest number of lawyers per capita.140
The proliferation of nuisance lawsuits exploiting areas of
uncertainty in the laws has become a major economic drain, stifling
economic growth. In addition to the direct costs of litigation, critical
employment decisions are often driven as much by protecting the
enterprise against costly litigation as by making sure the right person is
in the right job, which, from a human resources perspective, is the key
to the competitiveness of the enterprise and, ultimately, the entire
U.S. economy.
CHART 17
59
Blueprint for Jobs
Several Employment Policy Proposals Under Consideration
Would Create Additional Employer Liabilities at the
Expense of American Jobs
Despite the economic crisis and its impact on employment over the
past two and a half years, policymakers have generally failed to focus
on ways to alleviate the burden of existing employment regulation.
Instead, they have dwelt on a plethora of proposals, some of which
have become law. Rather than fixing existing problems, these would
add or have added to the costs of employment by mandating new
benefits and/or creating new layers of regulation. Among others, these
proposals have included:
The government should view
employers as partners, not
adversaries, in seeking to
ensure that essential
employment protections are
in place without impeding
practices that promote
employment growth in a way
that benefits employers
and employees.
•
The Lilly Ledbetter Fair Pay Act of 2009141, which effectively
eliminated the statute of limitations for many if not most pay
discrimination actions by triggering a new period with each
paycheck, thereby enabling individuals to bring allegations of
discrimination years or even decades after the discrimination takes
place, despite the fact that statutes of limitations exist for nearly all
other criminal and civil laws to avoid fact-finding when memories,
documentation, and witnesses have become inaccessible;
•
The Paycheck Fairness Act, which would ignite a new explosion of
litigation by establishing unlimited jury awards of compensatory
and punitive damages for pay discrimination claims and setting a
precedent for the same change in all other discrimination laws,
while making it easier to prevail in such actions even where the
employer used nondiscriminatory factors such as experience,
productivity, and education in making selections;
•
The Healthy Families Act, which would directly add to the costs of
employing American workers by mandating paid sick leave
policies—covering all full-time and part-time employees—that
would extend well beyond the policies of most large and small
businesses;
•
The Employee Free Choice Act, which is designed to unionize
more workplaces through so-called “card checks” that deny
employees the ability to adequately assess the pros and cons of
unionization and exercise their choice in an uncoerced confidential
manner, while having government-appointed arbitrators decide the
wages, benefits, and all other terms and conditions of employment
in newly-unionized workplaces;
•
New wage and hour reporting requirements, which the U.S.
Department of Labor has announced will be proposed in 2011, that
would invite employees and independent contractors to pursue
litigation against companies based on disputes as to whether they
are exempt or nonexempt; and
60
Blueprint for Jobs
•
The Working Families Flexibility Act, which would insert the
federal government into the decision between an employer and
employee on the scheduling and location of work by regulating
how the employer responds to those requests and generating
litigation where they are denied in whole or in part.
What is most troubling is that these major policy changes, and
numerous others, would be considered on a piecemeal basis, with little
consideration for the broader perspective of how they would
collectively add to the costs of employment, which are already
significant under existing requirements. The change in Congress
which followed the 2010 elections may slow consideration of the
adverse legislative proposals described above, but the U.S. Department
of Labor has clearly stated that the election results have had no impact
on its agenda. This was underscored when, two weeks after the
election, the Department launched a partnership with the American
Bar Association (ABA) “to help workers resolve complaints received
by DOL’s Wage and Hour Division,” establishing a toll-free number
that will connect complainants to an ABA-approved attorney referral
service “so they can find a qualified lawyer to help with their
claims.”142 Indeed, this “partnership” with the plaintiffs’ bar
highlights one of the most significant concerns we have with the
existing system—the toll the costs of excessive litigation takes on
employment growth.
61
Blueprint for Jobs
1.
A 21st Century Employment Law Reform Commission
should be established to ensure a consensus-based review of
all existing laws, starting with the antiquated Fair Labor
Standards Act, to ensure that those laws fit the contemporary
workplace.
Ideally, laws should be constantly reexamined and either finetuned or overhauled to reflect both the lessons learned under the law
and changes in the activities being regulated. For many federal laws,
including those governing most discretionary spending programs, this
is ensured by periodic expiration of the law, generally after four or five
years, forcing Congress to consider whether the program should be
extended and, if so, how. It is true that Congress rarely allows these
laws to expire, but by being forced to reconsider them, refinements are
made, with some aspects being expanded and others being contracted
or even abandoned. While the results are anything but perfect, at least
the most obvious needs are addressed—often by consensus of all
affected parties.
Regulatory laws, in contrast, virtually never sunset, with
employment laws being no exception. Because they never have to be
reauthorized, these laws and regulations are placed on the books
without any built-in mechanism for reexamination or improvement. If
anything, they become more complex and difficult for employers and
their employees to navigate through the addition of layers of
regulations and interpretations by the courts.
To sunset all federal workplace laws would be both politically and
practically untenable. Still, a mechanism should be established for
requiring the kind of periodic reexamination that occurs under federal
spending laws. Clearly, the need is no less strong.
To fill this void, we propose the establishment of a 21st Century
Employment Law Reform Commission. Its purpose would be to audit
all existing and future employment laws and propose changes to
ensure they are relevant to the existing workplace and responsive to
the needs of employers and employees. The Commission would be
primarily composed of private sector representatives, drawn from the
business community and other key stakeholders. The public sector
would be represented for purposes of review of any law whose
coverage includes federal and/or state/local employees. Under the new
system, the revision of employment laws would be achieved through a
strong consensus—though not necessarily unanimity—of key
stakeholders.
62
Blueprint for Jobs
The review of each law would be subjected to a staggered schedule
so that, at any given time, only one or two laws would be under
review. Because it is so far out of step with the modern workplace, we
would recommend starting with the Fair Labor Standards Act. The
Commission would be charged with issuing a set of recommendations
within a fixed period for each existing law. To ensure a consensus, a
high percentage of commissioners—say 60 percent—would have to
reach agreement. This would ensure that no side gets marginalized
while also protecting against a small minority being able to thwart an
otherwise broad consensus.
The key to such a system would be ensuring that the
recommendations truly represent a consensus. This can be achieved
by structuring the Commission in such a way that no single
stakeholder has numerical strength to simply impose its will on all
others. One potential way to ensure this would be by giving the
President the power to appoint half of the commissioners and
congressional leaders from the opposite party the power to appoint the
other half. In addition, for each law under review, at least one current
and/or former federal official from each party holding office in the
agency with jurisdiction over that law would hold the powers of a
Commissioner for purposes of that law’s review.
All too often, our employment laws are shaped by one group of
stakeholders exerting its political strength to enact a law that meets its
needs but not necessarily those of all others. This has a tendency to
turn employment policy debates into political warfare even though,
underneath the rhetoric, there may be areas of consensus. Under the
proposed system, stakeholders would still be free to pursue their
objectives, and Congress could still act upon their proposals. The
value of the new system would be to engage all key stakeholders in a
dialogue seeking common ground and, where a consensus exists,
enabling Congress to act upon it.
2.
The formulation of new employment policies should ensure
that abuses are prevented without adversely impacting
competitiveness, utilizing a consensus-building process
involving key stakeholders.
Just as existing laws need to be reviewed for their impact on
America’s competitiveness and their relevance to today’s workplace,
new laws and regulations going forward must also meet this test. To
do that, we must rethink how they are formulated. This can be done in
the following ways:
63
Blueprint for Jobs
A. Requiring Certain Components in Any New Law. Congress
should impose on itself new constraints before passing any new
employment law, requiring that the law include:
•
A sunset provision to ensure the law’s reconsideration
within a fixed period of time based on experience under the
law;
•
An analysis of the additional costs the new law will impose
on hiring and retaining employees (see item C);
•
Involvement by essential stakeholders at all stages of the
process, beginning with a reasonable period of time for
them to agree upon the terms of any new legislation prior to
enactment, while also requiring that the enforcement
agency utilize negotiated rulemaking prior to issuing the
implementing regulations (see item D);
•
An administrative enforcement scheme that ensures prompt
resolution of claims, avoiding lengthy and costly litigation
(see recommendation #3); and
•
A broad federal preemption of any state or local laws
regulating the same behavior (see recommendation #5).
B. Asking the Right Questions. Instead of asking whether the law has
identified every single potential abuse by an employer imaginable,
policymakers should also ask:
•
Is the proposed policy contemporary?
•
Is the proposed policy readily understandable by all those
affected by it?
•
Can the proposed policy be easily and consistently applied
and enforced?
•
Is there sufficient flexibility in the rules such that
employers can accommodate the need for family-friendly
and employee-friendly policies without running afoul of the
policy?
•
Is the proposed policy consistent with what today’s
employees genuinely want and need while providing
sufficient protections for vulnerable workers?
•
What is the objective of the proposed policy, and what is
the best way to achieve that objective without causing
undue disruptions to employers?
64
Blueprint for Jobs
•
Can the proposed policy account for changes and does it
allow for changes in the use of technology, the workplace,
and employee lifestyles?
•
Do policymakers and regulators fully understand the
consequences of the proposed policy’s regulatory scheme
as designed before it has been implemented?
•
Does the proposed policy demand information that
employers do not have or cannot easily obtain without
incurring new costs?
•
Does the proposed policy contain any elements or
requirements that unnecessarily create ill will among
employees?
•
In the case of regulations, do they impose requirements that
are not contained in the statute?
C. Analyzing the Economic Impact on Hiring and Retaining
Employees. Currently, before passing laws and issuing
regulations, Congress and the agencies are required to perform
various analyses of economic impact, paperwork burdens, costbenefit ratios, and so forth. Surprisingly, however, none of these
required analyses specifically addresses the impact of employment
regulations on the costs of hiring and retaining employees. At a
time when real unemployment is at unacceptably high levels and
likely to stay that way, we believe that an analysis should be
conducted of all policy proposals to determine their potential
impact on hiring and retaining employees, specifically by
examining the following:
•
The administrative costs associated with compliance;
•
The costs entailed in time spent ensuring compliance by
human resource departments and other levels of
management;
•
The legal costs associated with establishing protocols
coupled with regular audits to ensure compliance;
•
The potential costs of defending against and/or settling
litigation and enforcement actions, recognizing that even
employers who diligently comply with the laws are
subjected to these; and
•
The lost efficiency, productivity, and competitive
advantage denied by precluding the development of certain
workplace policies and procedures.
65
Blueprint for Jobs
Any new employment
legislation enacted
henceforth by Congress
should require the agency
charged with promulgating
regulations to first give
employers and other
constituencies a reasonable
period of time to achieve a
consensus approach before
acting on its own.
D. Involvement of Essential Stakeholders in the Formulation of New
Policies. The previously described experience under the ADAAA
has proven the value of having rules formulated by those actually
affected by them, where possible. We recognize that the European
social partners-style approach may not work in all instances when
it comes to legislation. The dynamics of the American legislative
process are such that it is rarely clear that a particular piece of
legislation will become law. Nevertheless, we would encourage
Congress to follow the ADAAA model when enacting all future
employment legislation.
Regulations, however, are far more amenable to this process.
Once a law is passed, regulations are a virtual certainty, and the
affected parties know that, unless they reach agreement, a regulatory
scheme may be imposed that bears little or no resemblance to
workplace realities and may become subject to years of litigation.
Currently, the process of “negotiated rulemaking” is rarely used
and is typically limited to highly technical areas such as environmental
rules where much of the process is driven by scientific data. Yet the
experience in passing the ADAAA shows that workplace rules are also
amenable to negotiated solutions. Thus, any new employment
legislation enacted henceforth by Congress should require the agency
charged with promulgating regulations to first give employers and
other constituencies a reasonable period of time to achieve a consensus
approach before acting on its own. If a consensus is achieved, the
agency should be required to adopt it as agreed upon by the parties.
In those cases where it is clear that regulations are not necessary in
implementing the new law, the agency should be expressly forbidden
from issuing regulations absent a negotiated rulemaking by the
interested parties. This new approach to employment regulations
could either be achieved on an ad hoc basis as a component of all new
laws or, better yet, it could be achieved through amendment to the
APA that would apply generically to all new employment regulations.
66
Blueprint for Jobs
3.
Resolution of all federal employment claims should be
handled by a dedicated administrative process, not through
litigation in federal court.
The United States is one of the few nations that provides for
enforcement of many of its employment laws through private actions
before juries. These frequently result in significant monetary
damages, including liquidated or punitive damages, that go far beyond
making the aggrieved employee whole for his or her loss, and cause
lengthy delays in the final resolution of employment claims.143
According to a recent report by the prominent law firm Seyfarth Shaw:
“[T]he last several years have seen an exponential increase in class
action and collective action litigation involving workplace issues. The
stakes of this type of employment litigation can be extremely
significant, and the financial risks of such cases are enormous.”144
Many employers have tried to address this problem through the
formation of alternative dispute resolution (ADR) mechanisms that
seek to resolve differences internally before resorting to litigation. If
anything, federal employment policy should encourage this, yet
policymakers have instead shown more interest in restricting ADR.145
If no other employment regulation reforms are enacted, improving
the way those laws are enforced would be a major step toward
improving competitiveness in and of itself. The objectives of the
scheme should be to:
•
Ensure that protections and remedies are quickly available for
those individuals who have been wronged by an employer’s
violation of the law;
•
Deter employers from violating the law; and
•
Avoid having employers dragged into lengthy litigation over
frivolous and/or nuisance actions based on far-fetched
interpretations of the law or facts in the case.
As noted, civil litigation often goes on for years, and it is not
uncommon, particularly in class actions, for the plaintiffs to receive
little after attorney’s fees, costs, and expenses. Thus, the law should
facilitate the resolution of claims and grievances internally before
resorting to administrative enforcement. Employers should be
encouraged, but not required, to implement mechanisms such as
alternative dispute resolution and other internal grievance claims and
grievance processes.
For disputes that cannot be handled by employers’ own internal
systems, the creation of an administrative hearing process that would
be the exclusive adjudication forum would save precious resources and
time for both employees and employers.
67
Blueprint for Jobs
The administrative process would be initiated by an employee
outlining the details of an alleged violation in a charge filed with the
agency responsible for enforcing the law. The agency would do an
initial investigation and, if it was determined that a violation may have
occurred, the investigator would allow a claim to be filed with a panel
of administrative law judges who focus exclusively on violations
involving the law in question. The employee could retain counsel or
be represented by counsel from the government agency before the
administrative tribunal. Administrative law judges would hear and
render a decision in each individual case.
This administrative approach would be superior to the current
system because each case would be decided by a judge with significant
subject matter expertise. In addition, a decision would be rendered
within a matter of months, instead of years, and any back wages and
other damages owed by an employer would all go directly to the
employee rather than a group of plaintiffs’ lawyers, as is often the case
with class actions. To ensure consistency with the underlying law, the
decisions would ultimately be reviewable in the federal courts.
4.
The U.S. workplace regulatory scheme should be premised
on fostering the preservation and creation of jobs, targeting
limited resources available for enforcement on those who
mistreat their employees.
As long as our employment laws continue to operate on the
premise that all employers will try to take undue advantage of their
employees absent a specific prohibition in law or regulations,
employment growth will continue to be inhibited by unnecessary rules
that burden primarily the good employers. Meanwhile, a failure to
target the laws and their enforcement will enable most scofflaws to
continue to seek ways to circumvent the law, hoping they never get
caught.
A recent example involves enforcement activity by the EEOC
regarding alleged violations of the ADA. Though the ADA addresses
legitimate workplace concerns, its basic requirement that employers
make a “reasonable accommodation” for employees with disabilities is
vague at best. In fact, well-intended employers struggle with it almost
as much as any other requirement under employment law. One of the
most difficult areas of accommodation for employers is providing
leave to employees whose disability requires either brief or extended
absences from the workplace. These leaves may be more extensive
than those required under the FMLA, yet unlike that law, there are no
precise contours for the amount of leave required—it is simply
whatever is deemed a “reasonable accommodation.”146 Meanwhile, in
enforcing this aspect of the ADA, the EEOC has targeted companies
that already have the best workplace policies, such as those that
already provide up to a year of leave for any purpose. Legal experts
68
Blueprint for Jobs
may differ on what the law requires, but the real question is why is the
EEOC singling out the most generous employers for its enforcement
activities?
There will always be a small minority of employers who will try to
take advantage of their employees, just as there will always be a small
minority of employees who will try to take advantage of their
employers. It is important to recognize that the vast majority of
employers understand that running a workplace that lacks respect for
employees, that does not have fair compensation, that does not provide
essential health and safety protections, and that does not insist on
nondiscriminatory treatment ultimately becomes a self-defeating
practice that results in a loss of competitive edge.
5.
Employers should be able to maintain uniform human
resource policies in all fifty states through a broad federal
preemption of state and local employment laws.
One of the most successful federal employment policies has been
the broad preemption by the Employee Retirement Income Security
Act (ERISA) of state and local laws regulating self-insured employer
provided health insurance. This has saved employers and their
employees considerable sums by enabling large employers with multistate operations to provide uniform benefits across the country, thus
avoiding administrative costs that would be involved in seeking to
micromanage differences among thousands of jurisdictions.
Unfortunately, with the exception of the NLRA, most federal
employment laws lack such a broad preemption.
The wage and hour area provides a number of compelling
examples. On top of all the problems created by the federal wage and
hour laws described elsewhere in this paper, additional inflexibilities
and complexities are created by state laws, which are not preempted as
long as they are more “protective.”147 Thus, California has
significantly narrower criteria for determining which employees are
exempt from overtime. As a result, one employee working in
California and another working in a neighboring state for the same
company, may be subject to entirely different scheduling and
compensation schemes even though they are performing exactly the
same kind of work.148
In addition, states may provide varying definitions of the
workweek or other factors determining when overtime must be paid.
In California, most employees must be paid overtime for any hours
worked in excess of eight in a single day, regardless of how many
hours he or she works the rest of the week. In addition, an employer
must provide a 30-minute meal break during which the employee is
relieved of all duties, unless the job requires the employee to be on
duty during meals, such as a security guard at a remote location.149
69
Blueprint for Jobs
Thus, a nonexempt employee must be forced by the employer to take a
half-hour lunch break, even if the employee would prefer a working
lunch that would enable him or her to leave work a half hour earlier.
In situations where nonexempt employees work closely with exempt
employees, this is yet another situation where the wage and hour law
creates divisions in the workplace.
As has been done under ERISA and the NLRA, federal
policymakers should recognize that employment policy is a national
concern, and federal laws should serve as both a floor and a ceiling for
what is required and what is protected. Because state and local laws
have proliferated in a number of areas—most prominently wage and
hour and employment discrimination—we fully recognize the political
obstacles to dismantling these laws by applying preemption to existing
statutes. However, at a minimum, any new enactments should include
preemption as a standard feature. In addition, Congress could create a
far more competitive economic environment if multi-state employers
were only subject to federal labor, employment, and benefit laws.
70
V. Reining In U.S. Health Care Costs To
Encourage Employment Growth: A
Challenge to the Health Care Supply
Chain
The United States has among the highest labor costs in the world, a
factor that inhibits companies from expanding existing operations
inside its borders and from locating new operations here. A significant
contributor to this high-cost equation is health care benefits. Despite
myriad attempts over the years to rein in the cost of health care in the
United States and improve its efficiency, including passage of the
Patient Protection and Affordable Care Act, health care costs continue
to outpace general inflation and are having a dampening effect on job
growth in the United States. This dampening effect will continue to
worsen as long as this trend continues.
To Be Competitive, U.S. Employers Need a Healthy and
Productive Workforce Supported by a Stable Health Care
System Providing High Quality Care at Affordable Prices
Employers need our nation’s health care system to ensure:
•
A healthy and productive workforce;
•
A high quality health system that delivers affordable care;
•
Greater consumer accountability;
•
Predictable health care costs for which they can budget; and
•
Costs that do not outpace those of our global competitors.
The strength of an economy depends on the quality of its
workforce, and employers cannot be successful without having access
to a pool of healthy and productive employees. In the United States,
many employers sponsor comprehensive health benefits because they
believe it is the best way to ensure their employees and families will
receive timely access to health care. Consequently, an effective health
care system in the U.S. must incorporate the five basic characteristics
listed above.
71
Blueprint for Jobs
Reining In U.S. Health Care Costs To Encourage Employment Growth
The Health Care System in the United States Is Not Stable
Nor Does It Provide High Quality Care at Affordable Prices
It is axiomatic that in addition to ensuring the health and
productivity of their employees, employers need access to a health
care system that avoids making the costs of the goods and services
they provide consumers unaffordable. However, the high cost of
health care in the United States not only places an unsustainable strain
on employers, individuals, government, and the nation’s economy, it is
also a major barrier to job growth.
The United States spends approximately $7,681 per person on
health care, or nearly 17 percent of its GDP, more than any other
industrialized nation.150 Canada, by contrast, spends $2,998 per
person, approximately ten percent of its GDP on health; the U.K.
spends $2,317 per capita, which is about 7.5 percent of GDP; and
Germany spends $2,983, or about 11 percent of GDP.151 Moreover,
since 1980, the U.S. has had one of the highest growth rates in per
capita health spending among industrialized nations.152 Because more
Americans—160 million—are covered through employer-sponsored
benefits than any other source of coverage, employers and employees
are heavily impacted by the problems plaguing our health care system.
CHART 18
72
Blueprint for Jobs
Family premiums for employer-sponsored health insurance
increased 138 percent between 1999 and 2010, while employees’
wages increased by only 36 percent and overall inflation increased by
an even lower amount, 31 percent.153 Of particular concern, health
care premiums could rise an additional 94 percent to an average of
$23,842 per family by 2020 if health costs continue on the current
trajectory, which will further constrain take-home pay and stifle job
creation.154 Businesses, their employees and families, and state and
local governments are straining to finance health care, and they will
reach a breaking point in the near future if costs cannot be controlled.
CHART 19
Health care costs in the
United States far exceed
those of its global
competitors; therefore,
companies doing business in
America and their workers
are at a significant
competitive disadvantage in
the international
marketplace.
Despite the high cost of medical treatment in the U.S., the quality
of care that Americans receive for many conditions does not justify the
cost. The average American life expectancy of 78 years is below that
of its major trading partners.155 For example, Canada’s life expectancy
is 81, with Germany’s and the U.K.’s life expectancy at 80.156 While
the U.S. receives high marks relative to other nations overall in certain
areas such as cancer treatment, it consistently ranks below average on
other performance measures. America has the highest infant mortality
rate when compared to Canada, Germany, and the U.K. The U.S. also
falls below average in areas amenable to prevention and treatment,
such as adult asthma care, premature mortality due to complications
from diabetes, and patient safety.157 In addition, when ranked against
Austria, Canada, Germany, the Netherlands, New Zealand, and the
U.K., the United States falls dead last when measuring access,
coordination of care, efficiency, and equity.158
73
Blueprint for Jobs
The Cost of Health Benefits in the United States Hinders the
Competitiveness of Employers Doing Business in America
Because health care costs far exceed those of the nation’s global
competitors, companies doing business in the U.S. and their workers
are at a significant competitive disadvantage in the international
marketplace. Health care is one of the most expensive benefits paid by
American employers, exceeding costs for life insurance, paid leave,
and all legally required benefits such as Social Security and
unemployment.159 In 2009, employers spent $648.3 billion on health
care, or approximately 42.4 percent of the total they spent on all
benefits.160 This situation only grows worse as costs rise at a more
rapid rate than employees’ earnings, company profits, and corporate
revenue. One RAND study found that faster growth in health care
costs has a greater adverse impact on the employment and output of
those industries with the highest percentages of employees with
employer-sponsored health benefits (e.g., manufacturing,
telecommunications, education, and finance), compared to those
industries with lower levels of employment-based coverage.161 As a
result, the burden of high health care costs is a major factor that global
employers must take into consideration when determining where to
place jobs and whether to increase or decrease employment levels.
The New Health Care Reform Law Does Not Adequately
Address Underlying Cost and Quality Issues. It Has
Increased the Cost of Health Care for Employers and
Employees
Reforming health care is not
only a moral obligation that
must address the problem of
the uninsured; it is an
economic imperative if the
U.S. is going to compete in a
global economy.
Reforming health care is not only a moral obligation that must
address the problem of the uninsured; it is an economic imperative if
America is going to compete in a global economy. Large employers
were hopeful that the most recent effort to reform America’s health
care system would move the nation in both directions, but they do not
believe the recently enacted Patient Protection and Affordable Care
Act (PPACA) provides a comprehensive enough solution. PPACA’s
primary focus was addressing the problem of the uninsured and
expanding access to care. The law puts in place strong mechanisms
aimed at ensuring all Americans have access to health insurance. It
does so through a combination of broadened government entitlement
programs such as Medicaid, requiring employers to cover certain
employees and dependents or pay fines, establishing new health
insurance exchanges, mandating that health insurers take all comers
without regard to preexisting conditions, obligating most residents to
maintain health insurance, and providing subsidies to help people
afford coverage.
74
Blueprint for Jobs
PPACA primarily broadens
access while failing to make
meaningful changes in the
way health care is delivered
by the supply chain, and then
places the primary burden for
paying for this broadened
access on employers
and employees.
Where PPACA falls significantly short is in controlling health care
costs. In fact, PPACA will actually increase costs for many large
employers because of new benefit mandates, taxes, and increased costshifting from Medicare and Medicaid. In a March 2011 survey of HR
Policy Association members, not a single company said the law would
lower its health care costs. They further said that reform will increase
costs, with 33 percent saying it will do so by six to ten percent, 12
percent saying it will increase costs by more than ten percent, and 53
percent say it will increase costs by zero to five percent. Similarly, a
Towers Watson survey found that 69 percent of large employers
believe health reform will increase the cost of their benefit
programs.162 In addition, a Commonwealth Fund survey of a diverse
group of health care experts found that only 38 percent believed
PPACA legislation will improve the affordability of health insurance
for Americans who already have coverage, and only 35 percent believe
the law will begin to control rising health care costs and not add to the
federal budget deficit.163
To be sure, PPACA does take some important steps that can begin
to make the health care marketplace more competitive and
accountable, as well as steps to improve health care quality. The law
includes pilot projects to address delivery system reforms that can
ultimately help contain costs, such as investments to strengthen
primary care, efforts to make health care pricing and quality more
transparent, and steps to begin reforming the way health care providers
are paid under public programs. For example, PPACA will require the
release of Medicare claims data, for the first time facilitating the
ability of purchasers to use that information to compare the relative
efficiency and quality of health care providers.
Also, PPACA will phase in payment reform requiring hospitals to
risk a percentage of Medicare payments if they do not meet certain
quality measures. Further, the statute provides for comparative
effectiveness research to assess the relative value of treatment
alternatives and help patients make informed decisions. And it allows
employers to increase the financial reward for employee participation
in workplace wellness programs.
Though these are important steps, the law viewed in its totality
primarily broadens access while failing to make meaningful changes in
the way health care is delivered by the supply chain, and then places
the primary burden for paying for this broadened access on employers
and employees. Even after the passage of PPACA, spending on
federal health care programs is expected to more than double between
2011 and 2021, rising by an average of about seven percent per
year.164
75
Blueprint for Jobs
According to Andrew Liveris, chairman and chief executive of
Dow Chemical, “I not only have high taxes, I have uncertain taxes…
health care and the uncertainty around the health-care bill, and what’s
going to end up happening there.”165 He continues, “Right now, I have
more regulations coming at me that are not fact-based, not sciencebased, not data-based. I actually don’t even know what my costs are
going to be in the next five years.”166
If federal health care policy fails to rein in costs, the United States
can expect health care to continue to be a drag on both job creation and
the take-home pay of American workers.
The Legal, Legislative, and Political Challenges Confronting
PPACA Leave Employers and Employees in Limbo
Regarding the Future of Health Care, Inhibiting Employers
From Implementing Long-Term Hiring and Benefits
Strategies
If PPACA fails to rein in costs,
our nation can expect health
care to continue to be a drag
on both job creation and the
take-home pay of
American workers.
Currently, a foundational element of PPACA—the individual
mandate requiring people to maintain health insurance—is being
challenged as unconstitutional in federal courts.167 Conflicting
decisions on this issue have set the stage for the U.S. Supreme Court to
settle the matter, but this resolution will very likely not occur for years.
Given that people generally wait until they are sick to buy coverage,
removing the individual mandate would likely destabilize the private
insurance market and drive up premiums for all, collapsing the entire
system created by PPACA.
At the same time, the House of Representatives has already voted
to repeal PPACA, and Congressional opponents of the law are
discussing ways to not provide funds to implement many of its key
provisions. The state exchanges are a key element of the bill, yet each
state appears to be taking a different approach regarding whether to set
up an exchange and how will it will operate the exchange, a trend that
negatively impacts large employers operating in several different
states. Other PPACA provisions, such as the controversial excise
“Cadillac” tax on high-cost plans, are not scheduled to take effect until
2018, providing ample time for the unpopular provision that provides
key financing for the program to be amended or overturned by
Congress. Further, public support for the new law is marginal, and its
approval ratings have not increased since enactment in April of 2010,
which means the political process could produce more changes to the
law following the 2012 elections.
Employers require some level of certainty not only about costs, but
also about the rules and regulations under which they will have to
operate their benefits programs. The current ambiguity regarding the
76
Blueprint for Jobs
eventual shape of the health care system created by PPACA renders it
impossible for companies to make long-term plans regarding
employer-sponsored benefits. That factor, coupled with PPACA’s
acceleration of health care cost increases for large employers, explains
why larger companies are hesitant to expand operations and increase
employment levels in the United States. Employers in the U.S. are
sitting on cash right now, and one reason is because they cannot be
sure what the bill for PPACA might be in the coming years. Also, it
should not be forgotten that PPACA, while seeking to transform health
care in the United States, was not enacted with a broad mandate.
Rather, it was a bitterly partisan piece of legislation which cleared
Congress by the thinnest of margins. For many employers, that means
it could be pulled back by Congress in the coming years by equally
thin margins.
Fueling Uncertainty for Large Multi-State Employers Is the
Drift Towards Shifting the Responsibility for Health Care
Reform from a Uniform Federal Approach to 50 States
Going in Different Directions
All HR Policy Association members operate in several states
across America, and a large number operate in all 50 states. That
means these employers provide health care to their employees in
multiple states. The ability of large multi-state employers who provide
health care on a self-insured basis to administer their programs
uniformly across America has been a relative success in the otherwise
flawed health care system in the United States. Their ability to do so
is the result of the strong preemption provision under ERISA.
ERISA preemption prohibits state and local governments from
imposing requirements on self-insured, employer-sponsored plans that
would interfere with the ability of multi-state employers to design and
maintain health care plans that meet their unique needs. Nationwide
uniformity in benefit design and administration is extremely important
because it promotes substantial efficiencies and significantly reduces
costs to employers, employees, and dependents. It streamlines
communications and promotes better understanding of coverage
options by allowing employers to offer a standard set of benefits
across the country. Further, it allows employers to obtain better
pricing with national or regional health care providers by allowing
them to negotiate contracts on a national basis. Finally, uniformity
permits companies to provide similar benefits to their workers
(regardless of where they reside), which promotes equity and the
ability of employees and retirees to freely move from state to state and
city to city without concern for benefit changes.
77
Blueprint for Jobs
Of great concern is the steady drift in public policy towards
allowing each state to go in its own direction on health care. One of
the chief concerns of multi-state employers is that the states, in
establishing the health insurance exchanges under PPACA, may
undermine the ability of multi-state employers to uniformly design and
administer health benefits. This would result in subjecting multi-state
employers to numerous sets of operating requirements, a change that
would be administratively burdensome and costly for them, and may
make it unworkable for these employers to continue providing
employer-sponsored benefits. The Association is hopeful that no
attempts are made to weaken ERISA preemption in connection with
the creation of health insurance exchanges or in any other aspect.
The Cost of Undercompensated Care in the United States Is
Unfairly Shifted by Health Care Providers To Employers
and Employees Who Purchase Care, Driving Up the Cost of
Labor
Employers, who are the primary source of private health insurance
coverage in the United States, must also contend with cost shifting—
the practice of health care providers charging private payers higher
rates to compensate for the cost of care that is unpaid or only partially
paid by uninsured patients and government programs such as Medicare
and Medicaid. In 2006, for example, physicians made an average of
20 percent less from Medicare than private payments, and Medicare
paid hospitals up to 30 percent less. 168 Similarly, Medicaid typically
pays physicians and hospitals about 30 to 40 percent less, respectively,
than private rates.169 Unlike the federal and state governments, which
legislate reimbursement levels for entitlement programs, employers
must negotiate with doctors and hospitals for their services, and they
cannot force them to accept unilaterally imposed payment rates as the
federal and state governments are able to do. As a result, efforts to
arbitrarily cut reimbursement rates for public programs to control
government costs will very likely result in higher costs for
private payers.
Although PPACA will reduce cost shifting to private payers from
uncompensated care as the number of uninsured individuals is
reduced, it is very likely to increase cost shifting from Medicare and
Medicaid. For example, PPACA calls for significant reductions in
hospital payments under Medicare. Unless this can be achieved
through the more efficient delivery of hospital services, those
reductions are likely to lead hospitals to make up some or all of the
cuts through higher fees for private payers.
78
Blueprint for Jobs
In addition, the law expands Medicaid eligibility to cover all adults
whose family income is below 133 percent of the federal poverty level,
adding an additional 16 million Americans to the program. Given the
gap between Medicaid reimbursement rates and private insurance
rates, it can be expected that providers will charge employers higher
fees to make up for the Medicaid expansion. One study estimates that
PPACA will increase cost shifting to private-sector payers by an
average $20.7 billion per year if the law is fully implemented.170
Attempts by Employers As Well As Federal and State
Governments to Rein In Health Care Costs Have Largely
Failed to Achieve Their Objectives
During the past three decades, there have been numerous attempts
to control health care costs by private sector employers as well as state
and local governments, yet they continue to face unsustainable cost
increases. For example, private payers and governments tried
managed care and HMOs in the 1990s, but it resulted in severe
consumer backlash with only limited and temporary success at holding
down costs. Similarly, employers have worked collectively with
insurers through regional initiatives to increase transparency by trying
to push for public reporting of cost and quality information by health
care providers. These efforts have met with mixed success, but here
again, those initiatives that are considered successful have not been
able to bring costs anywhere close to general inflation trends.
Consumer-directed health plans are now being tried to determine
whether they can check costs. While these plans are showing signs of
lowering costs relative to other benefit designs, it is still unclear
whether they will yield significant long-term improvements. A key
element needed for these programs is transparency in cost, price, and
quality, something that the health care supply chain has been unwilling
to provide.
The federal and state governments have not had any better success.
Although fees paid for services within Medicare and Medicaid are
lower because the government can dictate reimbursement rates, these
programs will be a growing strain on federal and state budgets as the
baby-boomers retire and PPACA significantly increases the number of
Medicaid beneficiaries. Even with the passage of PPACA, spending
for health programs will more than double between 2011 and 2021,
rising by an average of about seven percent per year according to the
CBO.171 Of that growth, higher spending for Medicare will account
for about 30 percent, higher spending for Medicaid accounts for
roughly 40 percent, and the remainder will stem primarily from the
new subsidies provided through health insurance exchanges beginning
in 2014.172
79
Blueprint for Jobs
Moreover, the current formula that governs fees for physician
services under Medicare has called for significant reductions in those
fees for the last several years. However, every year since 2003
Congress has blocked those politically unpopular cuts to physician
fees with so-called “Doc Fix” bills that either freeze current rates for a
year or two or provide slight increases for Medicare fees. Assuming
this pattern holds and future legislation overrides the current Medicare
reimbursement formula, spending on Medicare will be $250 billion
higher than the CBO projected when PPACA was analyzed. Medicaid
spending is projected by CBO to grow at an average of more than nine
percent per year, primarily because of the substantial jump in the
number of beneficiaries under PPACA and the increase in the federal
share of spending for certain groups of new enrollees.
Significantly, these problems are not limited to private employers
and the U.S. federal government. The health care costs of state
employees and the retirees of state governments have risen at a similar
rate to those of private employers, creating serious budgetary problems
in many states and localities. For example, in 1994, the State of
Tennessee enacted a Medicaid waiver program to expand access to
Medicaid coverage and control rising state health care expenditures.
The program led to massive increases in the state’s health funding
obligations. Ultimately, state lawmakers had to slash enrollment and
reduce benefits.
More recently, Massachusetts put in place a health reform law that
is similar to PPACA with its reliance on health insurance exchanges,
means-tested premiums subsidies, benefit mandates, and an individual
mandate. Several years after enactment, however, the state is facing
significant funding challenges in spite of a large infusion of federal
funding to keep the program solvent in its early years. Costs are
increasing, and initial estimates about the number of people who
would receive subsidized coverage proved to be below actual
enrollment. Massachusetts will soon have to face the prospect of
scaling back benefits, increasing penalties and mandates, or reducing
enrollment.
Two Elements That Drive Healthy Markets—Transparency
and Choice—Are Woefully Lacking in the U.S. Health Care
System
Most economic markets are driven by consumers who have at their
fingertips information on the cost, price, and quality of the goods and
services available in those markets. Over time, markets with such
transparency trend towards lower costs and higher quality. The health
care market place, however, is not one of those markets. Instead, the
price and quality of health care is one of the best kept secrets in
80
Blueprint for Jobs
America. At the same time, many consumers have no knowledge of
the cost of their health care services because they receive coverage
through a third party that pays for their health insurance.
We want consumers to take greater responsibility for their health
and have readily available information and strong incentives to
motivate them to select the most cost-effective providers and
treatments. To that end, consumers should pay more when they use
low-quality services and providers. In addition, it is essential that
Americans take personal responsibility for their health. Whether
managing chronic conditions or paying more for health insurance for
avoidable high-cost behaviors such as smoking, consumers must be
more engaged in the effort to contain health care costs.
The Prevailing Reimbursement System in Health Care
Encourages Higher Volume and Intensity of Services
Instead of Providing the Most Effective Treatments As
Efficiently As Possible
Health care providers, including doctors, hospitals, and medical
device and drug manufacturers, have contributed impressive advances
in technology and practices that have improved health, safety, and
longevity. Unfortunately, these same advancements in health care
have also been accompanied by skyrocketing costs. In other fields
such as the automotive industry, transportation, consumer appliances,
and personal technology, advances in products and systems design
yield consumer enhancements that improve the consumer experience
while also lowering costs overall for new services and products. Just
the opposite is too often the case in health care.
A major factor driving this trend is that the prevailing
reimbursement system in health care provides the wrong incentives.
Most health care in the United States is paid on a fee-for-service basis,
which encourages providers to deliver a higher volume and higher
intensity of services, instead of providing the most effective treatments
as efficiently as possible.173 In other words, the prevailing incentives
in the U.S. health care system have been aligned to maximize the
volume of health care transactions, not wellness and efficiency, and
those incentives have been remarkably successful in making health
care in the United States more expensive than in any other country in
the world. In addition, new procedures and treatments along with
broader application of existing treatments often add to health care
spending without yielding improved outcomes to justify the
added cost.
81
Blueprint for Jobs
1.
The executive, legislative, and judicial branches of the federal
government, as well as state governments, need to move as
quickly as possible to resolve the uncertainties over the
future of the health care system in America.
The debate over the Patient Protection and Affordable Care Act
needs to be brought to an end and a stable system put in place so that
employers understand their obligations under the law for providing
health care to employees, their dependents, and retirees. If the court
challenges drag on for years, if the law remains in place while key
elements of the PPACA program are defunded by Congress, and if
states cannot figure out amongst themselves the most efficient way to
operate exchanges, it will be very difficult for employers to make
long-term business and staff plans in the United States other than by
minimizing the number of new people they employ while the politics
of the issue plays out. Business thrives in the soil of a certain and
predictable regulatory environment. For the foreseeable future,
American employers have little idea of what they will be required to
provide in health care coverage for their employees over the long term.
2.
The health care supply chain must accept responsibility for
reengineering itself to improve quality and reduce the cost of
health care in the United States for both employers and
employees in order to make American products and services
more competitive.
As documented in detail above, the cost of health care in the
United States is already far too high. Allowing those costs to rise
higher will have an even more negative impact on job growth in the
United States. In this paper, we are not making a series of specific
recommendations regarding how the health care supply chain should
reengineer itself to reduce costs and improve quality. Employers have
been trying to do that for years with little, if anything, to show for their
efforts. Hundreds of thousands of papers have been written on the
subject. University chairs have been endowed to study the issue.
Hundreds of think tanks have been working on the challenge. Entire
careers of some of the smartest people in the country have been
devoted to trying to find the cure. But in the end, to borrow a phrase,
only the physician can heal himself or herself. The health care supply
chain has within itself all the solutions to achieving greater quality at a
lower cost. The nation is waiting for the person or organization from
this sector with the courage and vision to step forward and make the
necessary changes.
82
Blueprint for Jobs
Moreover, most members of the HR Policy Association do
business globally, and they have great familiarity with systems in other
countries that work far more efficiently than the system currently in
place in the United States. They know that America can come up with
an efficient health care system if it chooses to do so.
For years employers have studied all the various factors that
influence cost and quality in the American health care system. They
know that providers operate under perverse incentives that reward the
volume of services delivered, rather than the quality and efficiency of
the care provided. Those who pay for health care services have tried
to inject market-based principles that foster competition among health
care providers and choice among consumers to help lower overall
costs and increase value within our health care system. Yet it is
indisputable that those who pay for health care have been unable to
obtain greater efficiency and lower costs, no matter what changes they
have suggested. Perhaps employers and individual consumers do not
have the adequate leverage to force change in certain geographic
markets. Perhaps it is the lack of transparency regarding the pricing of
services and treatments. Regardless of the cause, the health care
supply chain must stop resisting these forces and accept the task of
reengineering itself to lower costs. If it does not do so, then it needs to
prepare itself for the eventual political pressures that will result in
greater government intervention to regulate the market.
What employers find particularly surprising is the lack of
breakthrough thinking by the health care system to drive rapid
innovation and improvement. Virtually every other economic sector
of the United States has met the challenge of global competition and
the opportunities created by the information age to keep costs in check
and quality high. But not health care.
The health care organization that figures out a way to reengineer
the existing dysfunctional system successfully, that comes up with a
system that provides employers certainty by having an affordable,
fixed, per-employee cost that emphasizes high-quality care, and that
focuses on keeping people healthy instead of maximizing health care
transactions, will find both employers and employees lined up outside
its door. Yes, governments may not have the political will to move
away from the fee-for-service payment systems, but providers still
have it in their power to take control of their own destiny and promote
new approaches to health care delivery and financing.
83
Blueprint for Jobs
3.
The cost, price, and quality of health care in the United
States must be far more transparent.
For consumers to drive the health care market, it is imperative that
the cost, price, and quality of health care be completely transparent.
Purchasers and consumers of health care need national standards that
require comprehensive disclosure and public reporting of cost and
quality information for health care providers, insurers, and treatment
options to make informed decisions for themselves and their families
when choosing care and care givers. This includes providing access to
Medicare claims data to facilitate health care payers’ and consumers’
efforts to assess the relative effectiveness and efficiency of health care
providers.
4.
The ability of multi-state employers to design and maintain
health care plans that meet their unique needs must be
maintained.
As discussed above, one aspect of the otherwise flawed health care
system in the United States that has actually worked well has been the
ability of large multi-state employers who provide health care on a
self-insured basis to administer their programs uniformly across states.
ERISA preemption protects an employer’s ability to maintain national
uniformity in benefit design and administration. This is extremely
important because it promotes substantial efficiencies and significantly
reduces the complexities and costs to employers, employees, and
dependents. Attempts to weaken or infringe on employers’ ability to
uniformly administer their health plans across state lines should be
rejected. Such measures would increase administrative burdens and
costs and seriously undermine multi-state employers’ ability to
continue providing employer-sponsored benefits.
84
VI. Conclusion
In this report the members of HR Policy Association have
presented a detailed description of the perspectives of chief human
resource officers from America’s largest employers regarding the
changes needed to stimulate greater job growth in the private sector in
the United States. To be effective, these changes will require a
significantly different approach to educational achievement,
government policymaking, and employment practices in America by
government, educators, students, jobseekers, employees, and
employers. Distilled to the key point, there must be a recognition of
the significance of the new global economy coupled with a will to
work collaboratively to overcome the challenges and take advantage of
the opportunities it brings.
We hope that the reader comes away from reading Blueprint for
Jobs in the 21st Century with a realization that the approaches used to
educate, regulate, and protect the workforce in the last century need to
be modernized if American competitiveness is to be restored.
American employment policy in the 20th century was based on
balancing competing blocks of economic, regulatory, and legal power
located inside the borders of the United States. Employment policy
during the past 100 years, for example, has been characterized by
union versus management interests, trial lawyers against employers,
and regulatory policy pitting worker rights against corporate power. In
the new global economy, there are significantly different forces
competing with one another. The economic borders of nations have
disappeared, and the new competition is between the quality of the
American workforce against that of the many nations now contending
for the resources, investment, and economic opportunities that
Americans have long enjoyed.
Therefore, for quality jobs to be located in the United States, all
Americans and all of America’s institutions should neither be
operating in conflict with one another nor failing to support each other
as happens too often today. The fundamental protections characteristic
of the American commitment to fairness and justice must be part of the
fabric of the employment relationship. But in the new century so too
should be a close collaboration by all Americans and America’s
institutions to develop the skills, human resource policies, and
regulatory systems necessary for quality employment opportunities in
the United States.
85
VII. Appendix
Alan J. Auerbach, Center for American Progress and The Hamilton Project, A Modern
Corporate Tax, December 2010.
Business Roundtable, Roadmap for Growth, December 2010.
Business Roundtable, Taxing American Corporations in the Global Market Place, April 2011.
Business Roundtable, Understanding Trade, January 2007.
Chuck Marr and Brian Highsmith, Center on Budget and Policy Priorities Six Tests for
Corporate Tax Reform, February 28, 2011.
Institute for 21st Century Energy and U.S. Chamber of Commerce, A Transition Plan for
Securing America’s Energy Future, November 2008.
Patrick Fleenor and Jonathan Williams, Tax Foundation, Options for Reforming the U.S.
Corporate Income Tax, May 8, 2006.
The National Commission on Fiscal Responsibility and Reform, The Moment of Truth,
December 2010.
The President’s Economic Recovery Advisory Board, The Report on Tax Reform Options:
Simplification, Compliance, and Corporate Taxation, August 2010.
U.S. Chamber of Commerce, Opening Markets, Creating Jobs: Estimated U.S. Employment
Effects of Trade with FTA Partners, May 2010.
U.S. Chamber of Commerce, The State of World Trade, May 2010.
U.S. Department of the Treasury, Treasury Conference on Business Taxation and Global
Competitiveness, Background Paper, July 23, 2007.
87
VIII. Endnotes
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
President Barack Obama, State of the Union Address (Jan. 25, 2011), available at
http://www.whitehouse.gov/the-press-office/2011/01/25/remarks-president-state-union-address.
See generally NAT’L ACAD. OF SCI., NAT’L ACAD. OF ENGINEERING & INST. OF MED., RISING ABOVE THE
GATHERING STORM, REVISITED: RAPIDLY APPROACHING CATEGORY 5 (The National Academies Press 2010).
Interview with Former Prime Minister Gordon Brown and Jim Cramer, Host of Mad Money on Morning Joe,
World facing epidemic of youth unemployment (Apr. 11, 2011), available at
http://www.msnbc.msn.com/id/3036789/vp/42531432#42531432.
Peter Ha, Amazon Announces New $139 Kindle, TIME MAGAZINE, July 28, 2010,
http://techland.time.com/2010/07/28/amazon-announces-new-139-kindle/.
Thomas Jefferson: Jefferson’s Library, LIBRARY OF CONGRESS,
http://www.loc.gov/exhibits/jefferson/jefflib.html.
Alan Fram, One in Four Read No Books Last Year, WASH. POST, Aug. 21, 2007, available at
http://www.washingtonpost.com/wp-dyn/content/article/2007/08/21/AR2007082101045.html.
Julianne Pepitone, Amazon sales pop as Kindle books overtake paperbacks, CNNMONEY (Jan. 27, 2011),
http://money.cnn.com/2011/01/27/technology/amazon_earnings/index.htm.
Inc. (UPS) United Parcel Service – Early History, FREE ENCYCLOPEDIA OF ECOMMERCE, INC.,
http://ecommerce.hostip.info/pages/1025/United-Parcel-Service-Inc-UPS-EARLY-HISTORY.html.
ABOUT UPS: 1981-1990, http://www.ups.com/content/corp/about/history/1990.html (last visited Mar. 30, 2011).
Inc. (UPS) United Parcel Service - Early Information Technology Efforts, FREE ENCYCLOPEDIA OF ECOMMERCE,
INC., http://ecommerce.hostip.info/pages/1026/United-Parcel-Service-Inc-UPS-EARLY-INFORMATIONTECHNOLOGY-EFFORTS.html.
ABOUT UPS, supra note 9.
Inc. (UPS) United Parcel Service, supra note 10.
Walter Williams, True or False: Global Warming, Manufacturing Decline, NEW AMERICAN (Jan. 5, 2011),
available at http://www.thenewamerican.com/index.php/opinion/walter-williams/5764-true-or-false-globalwarming-manufacturing-decline.
BUREAU OF LABOR STATISTICS, U.S. DEP’T OF LABOR, DATA RETRIEVAL: LABOR FORCE STATISTICS (CPS),
HOUSEHOLD DATA, TABLE A-8, EMPLOYED PERSONS BY CLASS OF WORKER AND PART-TIME STATUS (Feb. 4,
2011), http://www.bls.gov/webapps/legacy/cpsatab8.htm.
BUREAU OF LABOR STATISTICS, U.S. DEP’T OF LABOR, DATA RETRIEVAL: EMPLOYMENT, HOURS, AND EARNINGS
(CES), ESTABLISHMENT DATA, TABLE B-1, EMPLOYEES ON NONFARM PAYROLLS BY INDUSTRY SECTOR AND
SELECTED INDUSTRY DETAIL (Feb. 5, 2010), http://www.bls.gov/webapps/legacy/cesbtab1.htm (last visited Mar.
30, 2011).
Stephen Manning, Is Anything Made in the U.S.A. Anymore? You'd Be Surprised, N.Y. TIMES, February 20,
2009, available at http://www.nytimes.com/2009/02/20/business/worldbusiness/20iht-wbmake.1.20332814.html.
Amazon.com, Inc., Annual Report (Form 10-K) (Dec. 31, 2010).
BUREAU OF LABOR STATISTICS, U.S. DEP’T OF LABOR, OCCUPATIONAL EMPLOYMENT STATISTICS, MAY 2009
NATIONAL INDUSTRY-SPECIFIC OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES , NAICS 517200 –
WIRELESS TELECOMMUNICATIONS CARRIERS (EXCEPT SATELLITE) (May 14, 2010),
http://www.bls.gov/oes/current/naics4_517200.htm.
JEREMY RIFKIN, THE END OF WORK: THE DECLINE OF THE GLOBAL LABOR FORCE AND THE DAWN OF THE POSTMARKET ERA 144 (Jeremy P. Tarcher/Penguin 1995).
U.S. CENSUS BUREAU, STATISTICAL ABSTRACT OF THE UNITED STATES: 2001 380 (121st ed. 2004) (referring to
Table No. 593, calculated as the number of executive, administrative, and managerial employees divided by the
number of secretaries, stenographers, and typists).
Press Release, United Nations Econ. Comm’n for Europe, World Robotics 2004 (Oct. 20, 2004) (see Table 1);
Press Release, United Nations Econ. Comm’n for Europe, World Robotics 2002 (Oct. 1, 2002) (see Figure 1).
OLIVER WYMAN, THE HARBOUR REPORT 2005 (2005) (using weighted average based on North American
production volume).
INT’L MONETARY FUND, WORLD ECONOMIC OUTLOOK UPDATE: GLOBAL RECOVERY ADVANCES BUT REMAINS
UNEVEN (Jan. 25, 2011) (see Table 1), http://www.imf.org/external/pubs/ft/weo/2011/update/01/index.htm.
89
Blueprint for Jobs
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
Endnotes
CENT. INTELLIGENCE AGENCY, THE WORLD FACTBOOK, Country Comparison: Population,
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2119rank.html (last viewed Mar. 30,
2011).
CENT. INTELLIGENCE AGENCY, THE WORLD FACTBOOK, Country Comparison: GDP (Purchasing Power Parity),
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html (last viewed April 12,
2011).
Beth Day Romulo, Asia’s Rising Middle Class, THE MANILA BULLETIN, Sept. 29, 2010, available at
http://www.mb.com.ph/node/279682/a.
Id.
John Reed, U.S. car sales below 10m despite discounts, FIN. TIMES, Feb. 4, 2009, available at
http://www.ft.com/cms/s/0/e99e8514-f234-11dd-9678-0000779fd2ac.html#axzz1Ias1qCn2.
Tania Branigan, State owned China Mobile is world's biggest mobile phone operator, THE GUARDIAN, Jan. 11,
2010, available at http://www.guardian.co.uk/business/2010/jan/11/china-mobile-telecomms.
Id.
Economic Report of the President 2009 139 (Jan. 2009), available at
http://www.gpoaccess.gov/eop/2009/2009_erp.pdf.
JAMES K. JACKSON, CONG. RESEARCH SERV., RS 21857, FOREIGN DIRECT INVESTMENT IN THE UNITED STATES:
AN ECONOMIC ANALYSIS 5 (2009), available at http://assets.opencrs.com/rpts/RS21857_20091105.pdf.
THOMAS ANDERSON & WILLIAM J. ZEILE, BUREAU OF ECON. ANALYSIS, Operations of U.S. Affiliates of Foreign
Companies: Preliminary Results From the 2007 Benchmark Survey, SURVEY OF CURRENT BUSINESS 44 (Nov.
2009) (see Table 2), available at http://www.bea.gov/scb/pdf/2009/11%20November/1109_foreign.pdf; News
Release, Bureau of Econ. Analysis, Summary Estimates for Multinational Companies: Employment, Sales, and
Capital Expenditures for 2009 (Apr. 18, 2011) (see Table 3), available at
http://www.bea.gov/newsreleases/international/mnc/2011/pdf/mnc2009.pdf (both sources used to produce cited
data).
JAMES K. JACKSON, supra note 32, at 5.
Economic Report of the President 2009, supra note 31, at 137.
News Release, Bureau of Labor Statistics, U.S. Dep’t of Labor, International Comparisons of Hourly
Compensation Costs in Manufacturing, 2009 (Mar. 8, 2011), available at
http://www.bls.gov/news.release/pdf/ichcc.pdf.
News Release, Bureau of Labor Statistics, U.S. Dep’t of Labor, Employer Costs for Employee Compensation –
December 2010 (Mar. 9, 2011), available at http://www.bls.gov/news.release/pdf/ecec.pdf.
Neeraj Sood & Arkadipta Ghosh, Employer-sponsored Insurance, Health Care Cost Growth, and the Economic
Performance of U.S. Industries, HEALTH SERV. RES. 44 (Oct. 2009).
NICOLE V. CRAIN & W. MARK CRAIN, OFF. OF ADVOC., U.S. SMALL BUS. ADMIN., THE IMPACT OF REGULATORY
COSTS ON SMALL FIRMS 48 (Sept. 2010).
Id.
Sanjay B. Varshney, Ph.D. & Dennis H. Tootelian, Ph.D., Cost of State Regulations on California Small
Business Study 14 (Sept. 2009), http://www.sba.ca.gov/Cost%20of%20Regulation%20Study%20-%20Final.pdf.
NICOLE V. CRAIN & W. MARK CRAIN, supra note 39, at 7.
Id.
NICOLE V. CRAIN & W. MARK CRAIN, supra note 39, at 7.
Barack Obama, Op-Ed., Toward a 21st-Century Regulatory System, WALL ST. J., Jan. 18, 2011.
Id.
TERRY MILLER & KIM R. HOLMES, WALL ST. J. & HERITAGE FOUND., 2011 INDEX OF ECONOMIC FREEDOM,
http://www.heritage.org/index/explore (viewer must click “labor freedom” heading twice to arrive at cited data).
Id.
Thomas Friedman, Op-Ed., A Word from the Wise, N.Y. TIMES (Mar. 2, 2010), available at
http://www.nytimes.com/2010/03/03/opinion/03friedman.html?_r=1&ref=paulsotellini.
See ORG. FOR ECON. CO-OPERATION & DEV., Economic Policy Reforms: Going for Growth 2010, Chapter 2,
http://www.oecd.org/dataoecd/37/20/44691523.pdf.
BUREAU OF LABOR STATISTICS, supra note 15.
Id.
The Economic Outlook & Monetary & Fiscal Policy: Hearing Before the Comm. on the Budget, U.S. Senate,
112th Cong. (Jan. 7, 2011) (testimony of Ben Bernanke, Chairman of the Board of Governors of the Federal
90
Blueprint for Jobs
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
Endnotes
Reserve) (emphasis added), available at
http://www.federalreserve.gov/newsevents/testimony/bernanke20110107a.htm.
BUREAU OF LABOR STATISTICS, supra note 15.
HOUSEHOLD DATA – TABLE A-12, UNEMPLOYED PERSONS BY DURATION OF UNEMPLOYMENT (Feb. 4, 2011),
http://www.bls.gov/webapps/legacy/cpsatab12.htm (last visited April 12, 2011).
HOUSEHOLD DATA – TABLE A-1, EMPLOYMENT STATUS OF THE CIVILIAN POPULATION BY SEX AND AGE (Feb.
5, 2010), http://www.bls.gov/webapps/legacy/cpsatab1.htm (last visited Mar. 30, 2011).
The Economic Outlook & Monetary & Fiscal Policy: Hearing, supra note 53.
News Release, Bureau of Labor Statistics, U.S. Dep’t of Labor, Employment Projections: 2008–18 1 (Dec. 10,
2009), available at http://www.bls.gov/news.release/archives/ecopro_12102009.pdf (The BLS produces
employment projections every two years. The next projections will be available in December 2011).
Id.at App. Table 9.
Id. at 2-3.
Id at 4.
Id at 4.
Id. at 3.
Id. at 4.
U.S. DEP’T OF LABOR, AMERICA’S DYNAMIC WORKFORCE: 2008 37 (Aug. 2008), available at
http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1545&context=key_workplace&seiredir=1#search="america's+dynamic+workforce+2008.
Id.
David Autor, Frank Levy & Richard J. Murnane, The Skill Content of Recent Technological Change: An
Empirical Exploration, Q. J. OF ECON. 118(4) 16 (Nov. 2003), available at
http://www.frbsf.org/economics/conferences/0311/alm-skillcontent-qje.pdf.
MITRA TOOSSI, BUREAU OF LABOR STATISTICS, U.S. DEP’T OF LABOR, Labor force projections to 2018: older
workers staying more active, MONTHLY LABOR REVIEW, Nov. 2009, at 30,
http://www.bls.gov/opub/mlr/2009/11/art3full.pdf.
JESSICA R. SINCAVAGE, BUREAU OF LABOR STATISTICS, U.S. DEP’T OF LABOR, Labor force and unemployment:
three generations of change, MONTHLY LABOR REVIEW, June 2004, at 34, available at
http://www.bls.gov/opub/mlr/2004/06/art2full.pdf.
CARRIE WERNER, U.S. CENSUS BUREAU, SELECTED CHARACTERISTICS OF BABY BOOMERS 42 TO 60 YEARS OLD
IN 2006 (2006) (see slides 9 and 20), available at
http://www.census.gov/population/www/socdemo/age/2006%20Baby%20Boomers.pdf.
Carole Rickard Hedden, Demand For Talent Grows Despite Shrinking Economy, AVIATION WK., Aug. 13, 2010,
available at
http://www.aviationweek.com/aw/generic/story_channel.jsp?channel=defense&id=news/talgrow_wkf10.xml.
MITRA TOOSSI, supra note 68, at 31.
Id.
Id.
Id.
DAVID AUTOR, CTR. FOR AM. PROGRESS, THE POLARIZATION OF JOB OPPORTUNITIES IN THE U.S. LABOR
MARKET: IMPLICATIONS FOR EMPLOYMENT AND EARNINGS 8 (2010).
Id.
Id. at 9.
Id.
JODIE T. ALLEN & MICHAEL DIMOCK, PEW RES. CTR. FOR THE PEOPLE & THE PRESS, A NATION OF "HAVES" AND
"HAVE-NOTS"? (Sept. 13, 2007), available at http://pewresearch.org/pubs/593/haves-have-nots.
CONG. BUDGET OFF., CHANGES IN THE DISTRIBUTION OF WORKERS’ HOURLY WAGES BETWEEN 1979 TO 2009,
Feb. 2011, available at http://www.cbo.gov/ftpdocs/120xx/doc12051/02-16-WageDispersion.pdf.
Id.
BUREAU OF LABOR STATISTICS, U.S. DEP’T OF LABOR, TABLE 1.6 OCCUPATIONAL EMPLOYMENT AND JOB
OPENINGS DATA, 2008—18, AND WORKER CHARACTERISTICS, 2008 (Dec. 9, 2010), available at
http://www.bls.gov/emp/ep_table_106.htm.
91
Blueprint for Jobs
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
Endnotes
Id.
Id.
Id.
CENT. INTELLIGENCE AGENCY, THE WORLD FACTBOOK 2009 (2009).
President Barack Obama, supra note 1.
NAT’L ACAD. OF SCI., NAT’L ACAD. OF ENGINEERING & INST. OF MED., supra note 2, at 43.
Id. at 4.
KELLY S. MIKELSON & DEMETRA SMITH NIGHTINGALE, EMP. & TRAINING ADMIN., U.S. DEP’T OF LABOR,
ESTIMATING PUBLIC AND PRIVATE EXPENDITURES ON OCCUPATIONAL TRAINING IN THE UNITED STATES 23 (Dec.
2004), available at
http://wdr.doleta.gov/research/FullText_Documents/Estimating%20Public%20and%20Private%20Expenditures
%20on%20Occupational%20Training%20in%20the%20United%20States.pdf.
Secretary Arne Duncan, U.S. Dep’t of Educ., Remarks at OECD’s Release of the Program for International
Student Assessment (PISA) 2009 Results (Dec. 7, 2010), http://www.ed.gov/news/speeches/secretary-arneduncans-remarks-oecds-release-program-international-student-assessment-.
THE CONF. BD. ET AL., ARE THEY REALLY READY TO WORK? 13 (2006), available at
http://www.p21.org/documents/FINAL_REPORT_PDF09-29-06.pdf.
Id.
Heather Wilson, Editorial, Our Stunted Scholars, WASH. POST, Jan. 23, 2011, available at
http://www.washingtonpost.com/wp-dyn/content/article/2011/01/21/AR2011012106906.html.
U.S. CENSUS BUREAU, HISTORICAL TIME SERIES, LIVING ARRANGEMENTS OF CHILDREN - TABLE CH-1: LIVING
ARRANGEMENTS OF CHILDREN UNDER 18 YEARS OLD: 1960 TO PRESENT (Nov. 2010), available at
http://www.census.gov/population/www/socdemo/hh-fam.html#ht.
JAY SMINK & FRANKLIN P. SCHARGEL, HELPING STUDENTS GRADUATE: A STRATEGIC APPROACH TO DROPOUT
PREVENTION 42 (2004).
Id.
SARA MCLANAHAN & GARY SANDEFUR, GROWING UP WITH A SINGLE PARENT: WHAT HURTS, WHAT HELPS 41
(1994).
Andrew L. Yarrow, State of Mind, EDUCATION WEEK, Oct. 21, 2009.
METRO. LIFE INS. CO., M ET L IFE S URVEY OF THE A MERICAN T EACHER : P AST , P RESENT AND F UTURE 130
(Oct. 2008), http://www.eric.ed.gov/PDFS/ED504457.pdf.
IES NAT’L CTR. FOR EDUC. STATISTICS, U.S. DEP’T OF EDUC., Table 232 - Enrollment in postsecondary
education, by student level, type of institution, age, and major field of study: 2003-04, DIGEST OF EDUCATION
STATISTICS (Sept. 2005), available at http://nces.ed.gov/programs/digest/d09/tables/dt09_232.asp.
Id.
Id.
Michelle Nealy, NACME: Growing ‘Opportunity Gap’ Exists in the Number of Minority Students Pursuing
STEM Degrees, DIVERSE, May 2, 2008, available at http://diverseeducation.com/article/11106/.
U.S. DEP’T OF EDUC., COLLEGE COMPLETION TOOLKIT 8 (Mar. 2011), available at
http://www.whitehouse.gov/sites/default/files/college_completion_tool_kit.pdf.
Aaron Benavot, The Rise and Decline of Vocational Education, 56 SOC. OF EDUC. 63, 73 (Apr. 1983).
R. NATA, VOCATIONAL EDUCATION: CURRENT ISSUES AND PROSPECTS 180 (Nova Science Publishers 2003).
Sherry Posnick-Goodwin, Vocational ed gets a new lease on life, 11 CALIFORNIA EDUCATOR (Apr. 2007).
BUREAU OF LABOR STATISTICS, U.S. DEP’T OF LABOR, EMPLOYMENT PROJECTIONS 2008-18 (on file with
Applied Economic Strategies).
Id.
Id.
Senator Tom Coburn, Help Wanted: How Federal Job Training Programs are Failing Workers 16 (Feb.2011),
http://coburn.senate.gov/public/index.cfm?a=Files.Serve&File_id=9f1e1249-a5cd-42aa-9f84-269463c51a7d.
Under Secretary Dr. Martha Kanter, U.S. Dep’t of Educ., Remarks at the Council of Scientific Society
Presidents: Meeting Our 21st Century STEM Education Challenges (Dec. 3, 2010).
WORLD ECON. F., STIMULATING ECONOMIES THROUGH FOSTERING TALENT MOBILITY 7-8 (2010), available at
http://www3.weforum.org/docs/WEF_PS_TalentMobility_report_2010.pdf.
92
Blueprint for Jobs
Endnotes
117
Stopping Trained in America Ph.D.s From Leaving the Economy Act of 2011, H.R. 399, 112th Cong. (2011)
(proposed to amend the Immigration and Nationality Act to authorize certain aliens who have earned a Ph.D.
from a U.S. institution of higher education in science, technology, engineering or mathematics to be admitted for
permanent residence and to be exempted from the numerical limitations on H-1B non-immigrants).
118
Senator Mark R. Warner, Op-Ed., To revive the economy, pull back the red tape, WASH. POST, Dec.13, 2010,
available at http://www.washingtonpost.com/wp-dyn/content/article/2010/12/12/AR2010121202639.html.
119
Law Offices of Snider & Associates, LLC, Department of Labor FLSA Overtime Grievance,
http://www.sniderlaw.com/pages/FLSADOL.html.
120
NAT’L ACAD. OF SCI., NAT’L ACAD. OF ENGINEERING & INST. OF MED., supra note 2, at 56.
121
Barack Obama, supra note 45; see also Exec. Order No. 13563, 76 Fed. Reg. 3,821 (Jan. 21, 2011), available at
http://www.gpo.gov/fdsys/pkg/FR-2011-01-21/pdf/2011-1385.pdf.
122
Administrative Procedures Act, 5 U.S.C. §§ 500-596 (2006).
123
1 INTERNATIONAL LABOR AND EMPLOYMENT LAWS, 39-41 (William L. Keller & Timothy J. Darby eds., 2003).
124
Pub. L. No. 101-336, 104 Stat. 328 (2008).
125
See 147 Cong. Rec. S8840-41 (Sept. 16, 2008) (Senate Manager’s statement); 106 Cong. Rec. H6067 (June 25,
2008) (joint statement of Reps. Hoyer and Sensenbrenner).
126
29 U.S.C. § 207 (2006).
127
Family and Medical Leave Act of 1993, 29 U.S.C. §§ 2601-54 (2006).
128
WAGE & HOUR DIV., U.S. DEP’T OF LABOR, FAMILY AND MEDICAL LEAVE ACT REGULATIONS: A REPORT ON
THE REQUEST FOR INFORMATION 16 (2007).
129
Id.
130
Id.
131
Id. at 42-45.
132
Law Offices of Snider & Associates, LLC, Department of Labor FLSA Overtime Grievance,
http://www.sniderlaw.com/pages/FLSADOL.html.
133
Exec. Order No. 11246, as amended, available at http://www.dol.gov/ofccp/regs/statutes/eo11246.htm.
134
OFF. OF INFO. & REG. AFFAIRS, OFF. OF MGMT. & BUDGET, INFORMATION COLLECTION BUDGET, OMB CONTROL
NUMBERS 1250-0001 AND 1250-0003, available at http://www.reginfo.gov/public/do/PRAMain (to see cited
data, go to “Current Inventory” section; click on “Department of Labor”; click “Submit”; OFCCP Recordkeeping
and Reporting Requirements--Supply and Service, OMB Control Number 1250-00003, 10.046 million hours;
plus OFCCP Construction Recordkeeping and Reporting, OMB Control Number 1250-0001, 2.491 million
hours; equals 12.537 million hours).
135
136
NAT’L ACAD. OF SCI., NAT’L ACAD. OF ENGINEERING & INST. OF MED., supra note 2, at 56.]
137
STATISTICS DIV., OFF. OF JUDGES PROGRAMS, ADMIN. OFF. OF THE U.S. COURTS, JUDICIAL BUSINESS OF THE
UNITED STATES COURTS- 2009 ANNUAL REPORT OF THE DIRECTOR 146 (2009).
138
Samuel Estreicher & Kristina Yost, Measuring the Value of Class and Collective Action Employment
Settlements: A Preliminary Assessment 8 (N.Y.U. School of Law, Working Paper No. 08-03 2008).
139
Seyfarth Shaw LLP, Annual Workplace Class Action Litigation Report 9 (7th ed. 2011).
140
Mark C. Miller, Lawyers as Politicians, Encyclopedia of Law and Society 1143 (David S. Clark ed., 2006).
141
Lilly Ledbetter Fair Pay Act of 2009, Pub. L. 111-2, 123 Stat. 5 (2009).
142
Brian Levine, Helping Middle-Class Families Pursue Justice, MIDDLE CLASS TASK FORCE, WHITE HOUSE BLOG
(Nov. 19, 2010, 4:31PM), http://www.whitehouse.gov/blog/2010/11/19/helping-middle-class-families-pursuejustice.
143
Paula L. Hannaford-Agor, Some Differences Between States, 14 EJOURNAL USA 36 (July 2009) (noting that a
unique characteristic of American law is the availability of jury trials in civil disputes whereas most other
countries reserve jury trials “for their most serious criminal cases”), available at
http://photos.state.gov/libraries/korea/49271/dwoa_122709/ewoa_0709.pdf; see also Baker & McKenzie,
Worldwide Guide to Termination, Employment Discrimination and Workplace Harassment Laws 401-08
(discussing remedies for discrimination and sexual harassment in the U.S.).
144
Seyfarth Shaw LLP, supra note 137, at Introducyory Letter by J. Stephen Poor.
145
Department of Defense Appropriations Act, 2010, Pub. L. No. 111-118, 123 Stat. 3409 (2010). This bill
included a rider prohibiting DOD contractors from having pre-dispute arbitration agreements with employees
working under the contracts. In addition, legislation has been introduced in each of the past several Congresses
93
Blueprint for Jobs
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
Endnotes
imposing such restrictions on all employers. See, e.g., the Arbitration Fairness Act of 2009, H.R. 1020, S. 931,
111th Cong. (2009).
Americans with Disabilities Act of 1990, 42 U.S.C. § 12112 (2010); EQUAL EMP’T OPPORTUNITY COMM’N,
ENFORCEMENT GUIDANCE: REASONABLE ACCOMMODATION AND UNDUE HARDSHIP UNDER THE AMERICANS
WITH DISABILITIES ACT, NO. 915.002, Question 17 (Oct. 17, 2002),
http://www.eeoc.gov/policy/docs/accommodation.html.
Fair Labor Standards Act, 29 U.S.C. § 218 (2006).
For example, in order to be considered an exempt computer employee in California, an individual must perform
duties involving the exercise of discretion more than 50 percent of the time in each work week and earn at least
$79,050 annually. See CAL. LAB. CODE § 515.5. Under federal law, there is no discretion requirement. The
exemption is measured over a longer period of time and is not based on a hard-and-fast percentage test, and the
employee needs to earn $23,660 annually.
Even in those instances, there must be a written agreement for an on-the-job paid meal period that is revocable
by the employee at any time. Cal. Code Regs. tit. 8, §11040 (2008).
Micah Hartman et al., Health Spending Growth At A Historic Low In 2008, 29 HEALTH AFF. 147 (Jan. 2010),
available at http://content.healthaffairs.org/content/29/1/147.full.pdf+html.
KAISER FAMILY FOUND., SNAPSHOTS: HEALTH CARE COSTS. HEALTH CARE SPENDING IN THE UNITED STATES
AND OECD COUNTRIES (Jan. 2007), http://www.kff.org/insurance/snapshot/chcm010307oth.cfm.
Id.
KAISER FAMILY FOUND., EMPLOYER HEALTH BENEFITS - 2010 ANNUAL SURVEY 84 (2010), available at
http://ehbs.kff.org/pdf/2010/8085.pdf; BUREAU OF LABOR STATISTICS, U.S. DEP’T OF LABOR, USUAL WEEKLY
EARNINGS OF WAGE AND SALARY WORKERS, Table 1, available at
http://www.bls.gov/webapps/legacy/cpswktab1.htm; BUREAU OF LABOR STATISTICS, U.S. DEP’T OF LABOR,
CONSUMER PRICE INDEX (Mar. 17, 2011), available at ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt.
C. SCHOEN, J. L. NICHOLSON, & S. D. RUSTGI, THE COMMONWEALTH FUND, PAYING THE PRICE: HOW HEALTH
INSURANCE PREMIUMS ARE EATING UP MIDDLE-CLASS INCOMES—STATE HEALTH INSURANCE PREMIUM
TRENDS AND THE POTENTIAL OF NATIONAL REFORM 4 (Aug. 2009), available at
http://www.commonwealthfund.org/~/media/Files/Publications/Data%20Brief/2009/Aug/1313_Schoen_paying_t
he_price_db_v3_resorted_tables.pdf.
WORLD HEALTH ORG., WORLD HEALTH STATISTICS 2010 54 (2010), available at
http://www.who.int/whosis/whostat/EN_WHS10_Full.pdf.
Id.
ELIZABETH DOCTEUR & ROBERT A. BERENSON, THE ROBERT WOOD JOHNSON FOUND. & THE URBAN INST., HOW
DOES THE QUALITY OF U.S. HEALTH CARE COMPARE INTERNATIONALLY? 5 (Aug. 2009), available at
http://www.urban.org/uploadedpdf/411947_ushealthcare_quality.pdf.
KAREN DAVIS. CATHY SCHOEN & KRISTOF STREMIKIS , THE COMMONWEALTH FUND, MIRROR, MIRROR ON THE
WALL: HOW THE PERFORMANCE OF THE U.S. HEALTH CARE SYSTEM COMPARES INTERNATIONALLY v (June 23,
2010), available at
http://www.commonwealthfund.org/~/media/Files/Publications/Fund%20Report/2010/Jun/1400_Davis_Mirror_
Mirror_on_the_wall_2010.pdf.
News Release, Bureau of Labor Statistics, U.S. Dep’t of Labor, Employer Costs for Employee Compensation September 2010 6 (Dec. 8, 2010) (see Table 1), available at
http://www.bls.gov/news.release/archives/ecec_12082010.pdf.
EMP. BENEFITS RES. INST., DATABOOK ON EMPLOYEE BENEFITS, Chapter 2 (Nov. 2010) (see Table 2.2),
http://www.ebri.org/pdf/publications/books/databook/DB.Chapter%2002.pdf.
Neeraj Sood & Arkadipta Ghosh, supra note 38, at 6.
Press Release, Towers Watson, Health Care Reform Will Increase Costs, Reduce Benefits, Towers Watson
Surveys Find (Jan. 27, 2010), http://www.towerswatson.com/press/958.
KRISTOF STREMIKIS, KAREN DAVIS, & RACHEL NUZUM, THE COMMONWEALTH FUND COMM’N ON A HIGH
PERFORMANCE HEALTH SYS., HEALTH CARE OPINION LEADERS’ VIEWS ON HEALTH REFORM, IMPLEMENTATION,
AND POST-REFORM PRIORITIES 3 (Apr. 2010),
http://www.commonwealthfund.org/~/media/Files/Publications/Data%20Brief/2010/Apr/1387_Stremikis_HCOL
_postreform_priorities_data_briefrev.pdf.
CONG. BUDGET OFF., THE BUDGET AND ECONOMIC OUTLOOK: FISCAL YEARS 2011 TO 2021 61 (Jan. 2011),
http://www.cbo.gov/ftpdocs/120xx/doc12039/01-26_FY2011Outlook.pdf.
94
Blueprint for Jobs
165
166
167
168
169
170
171
172
173
Endnotes
Interview with Andrew Liveris, National Public Radio, Manufacturing Is Vital Component to U.S. Economy,
(Jan. 25, 2011), available at http://www.npr.org/2011/01/25/133201751/Manufacturing-Is-Vital-Component-ToU-S-Economy.
Id.
N.C. Aizenman & Amy Goldstein, Judge strikes down entire new health-care law, WASH. POST, Feb. 1, 2011,
available at http://www.washingtonpost.com/national/us-judgein-floridarejects-healthlaw/2011/01/31/ABhhBbE_story.html.
CONG. BUDGET OFF., KEY ISSUES IN ANALYZING MAJOR HEALTH INSURANCE PROPOSALS XIX (Dec. 2008),
available at http://www.cbo.gov/ftpdocs/99xx/doc9924/12-18-KeyIssues.pdf.
Id.
D. Mark Wilson, Applied Economic Strategies, LLC, Employer Costs for Health Care Reform, Economic
Analysis No. 2010-1 2 (Mar. 25, 2010), http://www.hrpolicy.org/downloads/2010/3-2510%20AES%20Employer%20Costs%20for%20Health%20Care%20Reform.pdf.
CONG. BUDGET OFF., supra note 162, at 61.
Id.
GEORGE HALVORSON, HEALTHCARE REFORM NOW!: A PRESCRIPTION FOR CHANGE 157-8 (John Wiley & Sons,
Inc. 2007).
95

Blueprint for Jobs in the 21st Century

Transcription

Similar documents

APPLICATION FOR EMPLOYMENT

Benefits one pager - Private Fleet Info

Conducting a Job Search

Social Marketing Case Study

March 2014

Doing Business in Europe

WORKING COPYX Page 1 - Carl B Klean Gift Shoppe

SIHO Insurance Services

Balancing Technical and Non-technical Skill Development