Saturday, 20 June 2015

Work and Justice: The Quality of Work

This week I attended a very interesting conference at Manchester entitled “Work and Justice” organised by my good friend Liam Shields.

The speakers considered several different issues under this umbrella, such as justice in hiring decisions, the just response to occupational inequalities, gender issues relating to caring and career decisions, and class interests.

One important thread between several of the papers was about questions of the quality of work. The reward for any given job can be seen as a bundle of goods encompassing the pay and the quality of the work. It is important to note that pay is not the only indicator of the quality of a job or career – some people would much prefer to do a less-paid job which they found enjoyable or rewarding.

Indeed, some of the speakers and attendees were interested in the way that some jobs help us to realise and develop ourselves through our work. I refer to this here as the quality of work, and I unpack this notion in another blog.

The basic thought is that some jobs are of higher quality because they would encourage us to use our higher powers such as problem solving through complex work and decision-making. Another aspect is whether the job people do reflects their values and affords them self-respect.

On the other hand, many existing jobs actually do the opposite by discouraging active decision making, utilising simple processes and requiring people to perform work which does not reflect their values.

Jobs are packages of benefits and burdens. What most of the attendees agreed on is that work creates issues of distribution that do not necessarily perfectly track economic distribution. It therefore deserves special attention as an issue.

For example, some people with low incomes are not disadvantaged because they have actively chosen less well paid work that is more rewarding in other ways. Meanwhile the overall package for some highly paid people may not be as great as the pay implies—they may have to work long hours at boring and/or stress-inducing work.

Low Quality
High Quality
Low Paid
Repetitive, low skilled work, e.g. manual labourer, cleaner, catering assistant
Low-paid work with degree of self-direction, e.g. self-employed tradesperson
Rewarding work, e.g. charity worker, poet, artisanal craftsperson
Reasonably Well Paid
Jobs not requiring specific qualifications but some skills e.g. lower management, car factory worker
Jobs requiring qualifications and accreditation e.g. school teacher, social worker, nurse
Professional work, e.g. Some medical doctors, academics
High Paid
Difficult work requiring unusual skills or tolerance to difficult situations, e.g. Some forms of finance work, deep sea diver
Professional work, e.g. Some medical doctors, solicitors
Highly Sought work using rare skills, e.g. People at the top of their field (e.g. sports, law, surgeons).
Table: Job quality and pay. Shading indicates how common such work is.

There are many more jobs of the top-left kind and very few jobs of the bottom right kind. Good and bad fortune will have a major role in who gets the few jobs that are higher paid or higher quality (or both). This fortune comes in at least two forms, family endowment and talent endowment.

People with wealthy are parents will have advantages in the early part of their lives that mean that they can have access to the skills and experience required for these. Many highly sought positions effectively require low-paid internships and these are only open to those with family support. People with more talent will be able to out-compete others for these jobs where they are initially available to all. 

In the worst cases people will be excluded from the high quality jobs on the basis of irrelevant factors, for example where their society is institutionally racist, sexist or religiously discriminatory.

Acknowledging these inequalities is easy, while doing something about these inequalities can be very difficult. Interfering in the hiring processes of employers is difficult at best and in some cases can have significant unintended consequences.

The case for interfering in hiring decisions is much stronger where these relate to discriminatory practices than in the distribution of high-quality work. For one thing it is easier to measure and assess inequalities in people from different groups entering particular jobs and careers than it is to change the nature of the work available to people.

Changing the job market

One approach is to look at the micro-level of hiring decisions by employers. However, interfering in these processes on a significant scale could have serious repercussions on employers and encourage all sorts of inefficient responses to the regulations.

I doubt that state agencies would be able to do a very good job of equalising access to the most highly regarded positions, but let us consider what would happen if they did. Where such jobs are the minority it would simply replace one form of luck with another one: the lottery of talent and family support would be replaced with the lottery of state interference in your favour or against you.

Instead of seeing the problem as a micro-level one of hiring-decisions we can see it as a macro-level one of the jobs and work that is available.

As I have mentioned, there are many more low-quality and/or low-paid jobs. I would suggest that a free-market libertarian-style economy is likely to reduce the amount of high-quality work available as people will be less likely to take the risk on investing to obtain high quality work if there is less of a safety-net.

What about economic systems that would change the distribution of high and low-quality work?

Some forms of socialist economy might provide more of the high-quality work but not necessarily. Socialist-type economies generally suffer from inefficiencies which would reduce what people get from the economy—after all people are all consumers as well as producers and some left-wingers place far too much emphasis on the latter.

Advocates of a Universal Basic Income might argue that this would enable many more people to pursue high-quality work. Employers offering low-quality menial work would have to compete with a life of leisure and this should push up the pay for such work. People could also pursue the high-quality work they would enjoy as they would not need to worry if it did not pay very well.

I will not rehearse my concerns about Basic Income proposals, except to say that it is unlikely to be able to provide a generous level of income without producing economically harmful disincentives to work.

There is something to be said for creating a situation in which there are more opportunities to pursue high-quality work. However, it would be necessary to do this in a way that maintains incentives to work; otherwise we place too much emphasis on the nature of work people do  and not enough on the goods and services that are produced by these processes. After all, workers are consumers as well.

I think my CLIPH-rate tax proposals, described in my book Rethinking Taxation, would create a radically better job market while maintaining strong incentives for people to produce goods and services that people want to consume and enjoy. It would not remove the work I refer to as low-quality in cases where this work produced useful or desirable goods and services.

The main mechanisms within my proposals that would shift the job market towards higher quality work are the guaranteed work programme and the negative-hourly-tax-rate for low earners.

A guaranteed work programme would give the low-skilled a better bargaining position for what I have referred to as “low quality” work (as the Basic Income would). This would provide employers with an incentive to make productivity improvements which would reduce the amount of this work required for their processes, and to provide higher pay in the cases where this work is necessary.

The negative-hourly-income-tax-rate would enable some people to perform high quality work that they would not in a free market environment. For example, people could set themselves up as self-employed and as long as they earned a sufficient income from the work it would be topped-up by their hour-credits. Employers which produce goods or services which workers prefer to produce will also be more viable than they would be under other capitalist systems. This is because they can attract subsidies for low-paid workers who are happy to work in high quality work for a reasonable wage.

These employers and workers would have to find buyers for their products (unlike the Basic Income Proposal), but these firms would be much more able to compete than they would be without the hour-credit system and its subsidies.

Essentially, it would shift the numbers of jobs provided to the right of the table, with fewer low-quality.

Remembering the table from my previous blog, the CLIPH-rate tax would:
1.      Enable people to pursue high-quality work by setting up their own companies with earning subsidies for their activities.
2.      Provide more support to employers which people want to work for.
3.      Encourage employers to pay more for low-quality work, or to alter their processes to make this work less onerous on its staff. This applies to the high-paid-low-quality work as well as low-paid.

As well as improving the quality of work in society, the CLIPH-rate tax would also reduce the pay differentials that flow to people towards the bottom right of the table, for the following reasons:

1.      Greatly reduce the income differentials between many people, meaning that gross income differentials this will be a less serious cause of inequality.
2.      Family luck will play a much smaller role in the distribution of the highly-sought jobs as transfers between generations would be taxed and people would have a strong incentive to seek work to obtain hour credits.

In conclusion, the CLIPH-rate tax would vastly reduce the inequalities in the job packages available, both in terms of pay and quality. Furthermore, it can do so without interfering in the productive processes in ways that would be highly costly to consumers (who are themselves workers). 

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