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The Jobs Summit: Opportunity To Forge A New Social Contract

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This week, President Obama will convene a Jobs Summit to build support for new initiatives aimed at ensuring workers are not left out of the economic recovery. This could be a historic event, but only if it is more than a one-time meeting and serves as the starting point for getting business, labor, and government leaders to work together to create well paying jobs.

Current data on jobs and wages show why workers rightly feel they are being left out of the economic recovery. Unemployment is at a quarter century high and the Congressional Budget Office predicts that unless stronger actions are taken, unemployment will remain above 10% in 2010, 9% in 2011, and 7% in 2012. This means that between 15 to 20% of the nation's human capital will remain unemployed, underemployed, or out of the labor force for the next three years -- clearly an unacceptable outcome that will further delay and weaken economic recovery. The wage data are equally unacceptable. Average worker incomes have been flat or fell during the recession. Nor did they grow over the seven years of the past economic recovery. Indeed, workers have been getting a declining share of the productivity they helped create (most of it went to those in the top one percent of the income distribution) for the past three decades. Unless more direct action is taken, the earning power of existing and new jobs will remain stuck at the same levels they have been at for many years. Given that consumption accounts for 70% of the economy, a wage-less recovery translates to a weak and unsustainable recovery.

A number of ideas for job creation have been proposed. Among them are a work sharing proposal that would provide unemployment benefits for reduced hours of work, an employer tax credit for creating new jobs, use of TARP funds to provide credit for small business, additional stimulus funds for local and state governments, and expanded investments in infrastructure and construction. All these proposals are worth considering. No one solution alone is a silver bullet. The mix of options chosen will have to produce nearly 8 million jobs just to make up for those lost since the beginning of the recession.

Getting wages moving again will require a new social contract between labor and business to replace the one that has been broken since the 1980s. The president should call on workers and their unions and associations to work in partnership with employers receiving taxpayer funds to build the high performance workplaces and work processes needed to generate high productivity and high service quality. Evidence from manufacturing, health care, and other industries shows that major financial and/or technological investments only pay off in high productivity when matched with state of the art workplace practices and cooperative labor management relationships. In return, employers receiving funds should be expected to follow compensation principles that share equitably the gains generated from productivity and economic growth.

Implementing this new social contract will require business and labor to work together in ways they have been unwilling to do for many years. The sad reality is that they have been locked in an ideological stalemate over the legitimacy of unions and over how to fix and modernize a failed and outdated labor law. The president needs to use this historic opportunity to break this impasse and launch an era of productive and innovative labor management relations needed to foster and sustain the new pact.

To do so, the president should announce his intention to work for speedy passage of a reframed and expanded Employee Free Choice Act, a labor law reform bill currently stalled in Congress. The reframing would state the objectives of the Act are both to restore workers' ability to join a union and gain access to collective bargaining and to transform labor management relations in ways that get wages once again growing in tandem with productivity and economic growth. Provisions should be added to the bill to create an on-going national labor management advisory council to oversee implementation of the new law and provide advice on how to promote and diffuse productive, innovative, and cooperative labor management relations.

This national body should be supplemented by industry-specific councils where taxpayer dollars are being invested such as health care, infrastructure, aviation, and renewable energy. Industry management and labor experts should be held accountable for making sure the right mix of high performance and compensation practices get implemented.

Likewise, local level labor, business, community, and government leaders need to work together to translate stimulus funds for infrastructure repair, weatherization, and green jobs into projects that are completed on time, on budget, safely and that generate new job and career building opportunities for women and underrepresented minorities. There is much talk about creating broad-based green jobs coalitions at the local level but to date they have been slow in materializing and, as a result, job creation has been equally slow. Active facilitation of multi-stakeholder negotiations will be needed to accelerate the pace of job creation.

If it is a first step rather than a one-time event, the Jobs Summit will be recorded as a historic achievement -- the day a new social contract was put in place for workers and families to share in the economic recovery they help produce and the day the foundation was laid for creating good sustainable jobs and 21st century labor management relationships.