Don’t Blame Econ 101 for the Plight of Essential Workers
They’ve been systematically devalued for years. But they don’t have to be.
The workers who restock grocery shelves. The workers who aid the dying in hospice-care centers. The workers who pick strawberries and butcher chickens and cows. Who transport vital goods from port to store, and spirit away trash and recycling from homes and businesses. Who change the linens in hospitals, deliver food, watch babies, and help people with disabilities. Along with doctors and nurses, these are the heroes of today’s crisis. They are the people putting themselves at risk to keep others alive and society functioning through the country’s shelter-in-place orders. They are the essential.
So why are so many of these workers making poverty wages? How can work worth so much be worth so little? Over the past few weeks, I asked economists and labor experts that question. The answer was discomfiting: These essential jobs are bad jobs not because of ironclad economic laws, but because of the kinds of people who hold them and the kinds of labor laws we have chosen. They are bad jobs because we have not cared to make them good jobs. But there’s some comfort in that: We can choose to care.
The need for change has long been apparent. Before the pandemic, many essential workers were just getting by. Now their jobs are more dangerous than before, and many cannot afford to quit, not with the unemployment rate at nearly 15 percent. One in seven essential workers lacks health insurance, and one in three lives in a household that makes less than $40,000 a year. Millions of grocery-store workers and slaughterhouse employees and home health aides rely on food stamps. Our most essential, most useful, and most needed people are our most economically fragile.
Simple economic concepts, such as supply and demand, certainly help explain these dynamics. These positions tend to require relatively few educational credentials or certifications. The skills necessary to work at a checkout counter or change sheets in a hospital tend to be easy to pick up and nontechnical. This means that the pool of eligible workers is large, and it’s easy for employers to hire and fire. You don’t face a high barrier to entry if you’re looking for a job as a line cook or a nanny. And replacing you is not hard, if you quit or get laid off.
Still, this fact does not in and of itself consign essential jobs to being bad jobs, labor experts stressed. No fundamental principle of economics requires burger flippers to make $7.25 an hour. “The Econ 101 argument is that workers are paid on the marginal productivity of their labor,” Darrick Hamilton, an economist and the executive director of the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University, said. But that is too simplistic.
American labor structures and workplace demographics also contribute to this phenomenon. Millions of essential employees, including many warehouse personnel, food-delivery drivers, and child-care workers, do not belong to unions. In fact, the country’s private-sector unionization rate is just 6.2 percent, down from roughly 30 percent in the late 1970s. According to data from the Organization for Economic Cooperation and Development, 98 percent of Austrians, 92 percent of Icelanders, and 56 percent of Germans have the right to bargain collectively, compared with just over 10 percent of American workers. This means lower wages, fewer benefits, and weaker on-the-job protections for all American workers—given that unions raise the earnings of nonunion workers too—as well as higher profits for American firms.
The concentration of American business, as fewer and fewer, bigger and bigger companies eat up more revenue, has also made it harder for workers to wrest more money from their employers: Economists estimate that the country’s high levels of industry concentration account for something like 30 percent of the past 50 years of wage stagnation. Sandwich-making jobs come with non-compete clauses. Big-box stores dominate small-town commerce. That contributes to a “general imbalance of power between employer and employee,” Jed Kolko, the chief economist for the job-search site Indeed, said.
The American government itself does little to mediate the imbalance between employer and employee. It sets a low national minimum wage. It does not mandate that private firms offer employees paid sick leave, parental leave, or retirement-savings initiatives. It also gives employers significant leeway to quash unionization efforts. The country’s labor system is designed to allow low-wage, low-benefit jobs to proliferate.
Who holds these kinds of jobs matters too: Low-wage jobs are more likely to be held by women, people of color, and immigrants, all of whom have less political capital than their paler male peers. “Economic power is saying, if I’ve got wealth, ‘Hell no, I’m not coming into work in a pandemic,’” Hamilton of Ohio State said. “Political power is saying, ‘We won’t tolerate certain people in certain sectors having to put themselves at risk. We just won’t tolerate it.’ The combination of political and economic insecurity makes certain people more vulnerable than others.”
Women are disproportionate holders of both minimum-wage and essential jobs. Many of these roles are poorly compensated because women hold them, economists think. The force of discrimination has tended to make obtaining high-wage, white-collar jobs more difficult for women; high-wage, white-collar jobs have not tended to offer the flexible work that many women want. Plus, care work is undervalued, given the societal expectation that women provide it for free. “It’s not an accident that two-thirds of all minimum-wage workers are women,” Ai-jen Poo, a co-founder of the National Domestic Workers Alliance, told me. “Women are disproportionately concentrated in positions of vulnerability within our economy.”
Similarly, black and Latino workers get shunted into risky, low-wage professions, through educational discrimination, occupational segregation, and hiring prejudice. “We don’t dignify these jobs, but there’s an irony in that,” Hamilton said. “When we don’t have a pandemic, we look down on them; we stick our nose up at those types of jobs and don’t recognize the value that they generate.”
A third demographic group that tends to hold bad-but-essential jobs, immigrants, has fewer labor protections than native-born workers. Many are in the country on exploitative visas or do not have a documented status, which makes it difficult for them to protest dangerous working conditions.
How can America make these essential jobs good jobs? Any number of straightforward, tried and tested policy measures would better align workers’ social value with their economic value. Higher minimum wages and federal mandates for sick leave and family leave would drive billions of dollars into lower-wage workers’ pockets, and would help close the gap between the poor and the middle class. Expanding labor regulations to cover the informal, contingent, and gig workforce would ensure that nannies and Uber drivers have the same protections as office employees and construction workers. Encouraging unionization and allowing bargaining by sector would boost the power of the essential workforce too.
We made these essential jobs bad jobs. The burden is on us to make them good ones.