A new report details strategies and lessons from the U.K.
There is no more pressing issue facing cities and society today than how to create high-quality, family-supporting jobs. As manufacturing jobs have faded—today only 5 or 6 percent of American workers are engaged in direct factory production—the job market has cleaved into an advantaged and affluent third of high-paying knowledge, professional, and creative jobs; and a nearly 50 percent share, of low-paying, insecure, and precarious service jobs.
A recent report by researchers at the London School of Economics and Newcastle University identifies the scope of the more and better jobs problem in the U.K. The report has useful implications for American cities and urban leaders who, in the absence of federal and in many case state policies, are increasingly having to go it alone to upgrade low-paying jobs and implement more inclusive economic development strategies.
The number of urban Britons in need of jobs is striking. In the United Kingdom’s 12 largest cities, 3.5 million people either cannot find work, or cannot find as much work as they like. An additional 2.4 million people have jobs, but don’t consider those jobs high quality. This “more and better jobs gap,” as the researchers refer to it, affects a total of 5.3 million city dwellers in the U.K., comparable to the working age population of London (5.9 million). In the US, there are as many as 65 million Americans currently employed in low-paying service jobs. And that does not include the millions more that are unemployed and those trapped in extreme poverty.
As in America, Britain’s jobs problem is spatially uneven and unequal: Some places have it far worse than others, as the table below shows.
Former industrial centers in the north of England, including Newcastle, Manchester, Liverpool, and Sheffield, score high on the more and better jobs gap. In these cities, nearly 20 percent of people with jobs are not earning a living wage, and at least 7 percent are unemployed. The situation in these places mirrors that of America’s Rust Belt cities where the combination of long-running deindustrialization and the Great Recession have annihilated once-family-supporting manufacturing jobs. Also mirroring the winner-take-all pattern of superstar cities in the US and around the world, London, the U.K.’s lone superstar city, as well as knowledge hubs like Edinburgh and Bristol fair far better. Still, the fact that some 30 percent of workers in the U.K.’s most prosperous cities face such daunting economic conditions is cause for deep concern.
The report details the occupations, including many of the fastest-growing job categories, that provide low-paying, low-quality work and are most in need of upgrading. These include sales, security, childcare, housekeeping, and miscellaneous service jobs, over 50 percent of which are low quality. These are the very same service class job categories that provide low wages and low job security to countless workers in the U.S.
Traditionally, in the face of these kinds of problems, governments have focused on supply-side policies like job training, jobs fairs, or programs with universities and community colleges to try to connect workers to or make them ready for better jobs. But these efforts can easily become disconnected from the actual demand for labor, which is highly variable across time and geography. In response, the report suggests complementing supply-side policies with demand-side initiatives—that is, actually generating more good jobs that match the skills of a workforce. “Without increasing the availability of more and better jobs, raising labour skills and qualifications can mean people are over-qualified for the available jobs,” the report notes.
It’s time for the private sector and local government to take the jobs problem seriously, and begin to act strategically on the demand-side using their intimate knowledge of local conditions.
These better jobs strategies should be tied to the further devolution of economic and fiscal power from the national to local levels of government, the report rightly argues. The conditions of superstar cities and knowledge hubs are far different than those of older industrial regions or cities with largely low-end service-based economies. Local government, as Brookings’ Alice Rivlin long ago argued, is the level of government that best knows and can best deal with its own local economic circumstances. Devolution is a key factor for upgrading jobs and for inclusive growth more generally, as cities are better equipped to address their own unique needs, and experiment with programs and policies that spread prosperity more broadly. There is no single path to more and better jobs in our globalized, post-industrial economy, but cities and local governments are clearly in the best position to lead the way forward.
Cities can learn from innovative good jobs strategies taking place in the private sector and in academia. In the United States, a group of corporate executives from companies like Toyota and Thomson Reuters, as well as top management professors like my Martin Prosperity Institute colleague and former Rotman School Dean Roger Martin, and MIT’s Zeynep Ton have partnered to create a new Good Jobs Institute to do just that. The Institute is founded on the premise that just as manufacturing jobs were turned from low-paying, low-quality jobs to higher-paying, family supporting jobs during the New Deal era and the period immediately following World War II, so too can today’s service jobs. Paying workers more and tapping their capabilities and intelligence have been shown to lead to greater innovation and better customer service, resulting in higher productivity and greater profit for companies.
The jobs problem is the greatest problem facing advanced societies like the U.K. and the U.S. Little wonder there is a populist backlash when anywhere from half to two thirds of British and American workers are trapped in low-wage, insecure jobs or have no jobs at all. In the absence of federal leadership, local government and the private sector should take the lead on this pressing issue.