Will The U.S. Economy Survive Hybrid Work?

Will The U.S. Economy Survive Hybrid Work?

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00:03
Unknown: Today I'm speaking with former labor secretary and UC Berkeley professor Robert Reich. Hi, Professor, thank you so much for taking the time to talk to me. Hi Lindsey, good to see you again! Yeah, you too. So specifically, which job categories do you think will have the most flexibility and which will have the least going forward? Well, going forward, we know, it's not going to be hugely different. Retail, restaurant, hotel, hospital, you know, the, the hospitality industry, all of those that have been battered down by the pandemic, they're all going to come back. They don't require huge amounts of education, most of those jobs, they don't pay very much low productivity jobs. And hospital jobs and health care jobs are going to be going up particularly high. Because let's face it, you've got baby boomers like me, who are going to need more and more care and more and more help over the next 10 or 20 years. So the contours of those job categories are not going to change very much. But how people do those jobs
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will change. The other jobs, the higher paying jobs in high tech and finance in parts of the economy that are most more innovative, and very often require some sort of advanced education, those are going to continue to generate more and more income and more and more wealth. I do hope, Lindsey, that finance is not going to absorb as much of our talent in this country, as it has over the last 20 or 30 years. But it may, because the big banks are just about to come out with their big, big bonuses. Yes. So you talk about the talent being gobbled up by just the finance industry or, you know, specific industries. What can we do to address the talent shortage, or the alleged labor shortage that companies are seeing today? Well, it's a little bit of an alleged labor shortage. And you're right, I don't think it's a labor shortage. So much, it's a shortage of the things that workers need, like good pay, and
02:12
childcare and health insurance and family leave. I mean, those are the things that are in short supply. And a lot of workers are saying to themselves, look, I'm working too hard, I'm working to the bone, I'm working 40, 50, 60, 70 hours a week, I'm not getting ahead. And I've had it, basically, I either quit, and I'm looking for another job, or, you know, my employer, if my employer is not going to give me more respect and more security, and the kind of treatment that I think I deserve. Well, that employer can shove it. And, and that, you know, a lot of workers really are beginning to say that. You look at the quit rate. That's the percentage of people who are actually voluntarily leaving their jobs. You look at the labor participation rate, the total, you know, the people of working age who are in the labor force, look at the number of strikes. Now, all of those indicate that something very profound is happening in terms of people saying, "I'm not
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going to take it anymore". I'm glad you brought this up, because I was thinking specifically about you, when the great resignation came out. Do you think that the great resignation is a sort of modern day workers strike? I do. I think it's a kind of general strike. Now the big question, of course, is it going to continue? Will people continue to make these kinds of demands, right now workers have a lot of bargaining power, because there's a lot of pent up demand for all kinds of goods and services coming out of the pandemic. And assuming we don't go too far back into the pandemic, there will continue to be a lot of demand. People have not spent as much as they were spending before the pandemic. But you see, that puts employers in a hotspot, employers need to hire a lot of workers to respond to all of that demand. And workers now are sitting pretty in the sense that they don't have to take the same jobs and the same pay and the same working conditions they had before. Great. So that brings me right back. So is the
04:20
"nine to five" over or "five days a week" is that over? I think that a lot of workers having worked either remotely or seen other workers who work remotely, are saying themselves, well, if it's possible to work remotely, I'm going to do it I'm going to make- if my employer now doesn't allow me to work remotely. I'm going to look for employer who will allow me to work remotely. I want more flexible hours, because I have kids or I have other things I want to do with my life. I don't want mandatory overtime. I'm sorry, I just don't want it. If my employer is demanding mandatory overtime. Well, the hell with that employer. I'm going someplace else. And it's a remarkable groundswell, Lindsey. I also see, my young students and all their friends, the Gen z's, they feel even more this way. They say they look at their older brothers and sisters are sometimes their parents, and they say, I'm not going to live like that. I'm not
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going to give up my life for my work. I don't live to work I work in order to live. And that's a different set of values. Sure, but can our economy support that? Will the US economy fundamentally change if the majority of workers are remote? Well, let's put it this way. Most companies want workers and most companies want reliable workers, most company wants talented workers. Another words, companies really know, if they don't know they're going to find out very shortly that they have got to do whatever they can to get the workers they need. Now, it is true if you're an hourly worker, if you are not paid very much right now, if you are kind of in one of the low productivity sectors of the economy, you don't have huge bargaining leverage when the economy returns to the way it was before. But if enough workers, even low wage workers, basically have the attitude, "I am not going to work as hard as
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I worked before, and I'm certainly not going to spend an hour or two hours commuting to work. I want something different from my life", then employers are just going to have no choice, they're going to have to adjust. And that's a lot of adjustment. You know, it kind of came out of nowhere. So will that hurt the US economy? I mean, we've been talking about this for years that China is going to become a lot- maybe you already think that China has a bigger economy than the US. It certainly has a huge consumer power. So will all these changes in work, workplace relations, lead to a decline in the US economy? I don't think so. Number one, if workers are more satisfied, if they are working from home, if they have more flexibility, if they're not suffering in ways that they feel they're demeaning, if they're not doing mandatory overtime, actually, there'll be more productive. A lot of studies show that the more satisfied workers are, the more they produce, and the better they produce, and the more innovative they are. So I think an argument can be made that the
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economy is going to do better overall. But even more fundamentally, you have to ask yourself, What's more, more important, our workforce and our people in terms of their morale and their ability to have good lives, or something called the GDP, the, you know, the gross domestic product, the economy as a whole? Well, we don't work for the economy, the economy is supposed to work for us. So I think that we are possibly on the verge of a slightly- a change in the questions we ask, instead of asking, "Is this good for the economy?" We ought to be asking, "Is this good for people who are working people?" We had a series about like, who's the happiest country in the world. And this really makes me think about but Finland and Denmark are the happiest countries in the world, the US doesn't even come close on the list. So do you think that we could be a happier country? If we stopped focusing on GDP and competing with China? I think we probably could be if we paid more attention to our workforces. I mean, it's interesting, Finland and Denmark, for example.
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They have very strong social safety nets. They make it easy for people to get the health care, they need the child care they need. People don't have the anxieties that a lot of Americans have. I mean, we are all capitalist nations. You know, there's there's every- even China practices a form of capitalism. But there is soft capitalism and very brutal capitalism and the United States, really, among all of the advanced nations has the most brutal form of capitalism, particularly if you are an hourly wage earner. But you know, even if you're on a salary, it's pretty brutal. Switching gears a little bit. So what has the latest Omicron surge taught us about the US economy? Well, it's taught us a bunch of stuff, I mean, simmering underneath the surface, were a lot of problems already. I mean, problems of discrimination, racial discrimination, inequality, widening inequality. We've talked about this a little bit- problems of workers who were not respected in this perspective. But
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what the surge has done, in fact, the pandemic did generally, but this last surge particularly, is showing- is making all of these worse and broader and more visible. And I think a lot of people are getting to the end of their patience. Now, what does that mean? You know, I've never seen people so sour, as I've seen over really the last month. That's understandable, Lindsey, because obviously people have been through two years of this, and a lot of people are saying, well, "when is this gonna end?" But I think that out of kind of sourness and frustration and anger could come some good things. We've been talking about people reconsidering their jobs reconsidering their lives, asking themselves a very basic questions. I don't think that's bad. I think that it would be bad if somebody worked their tail off for 40 years, never asked themselves anything about their lives, and then woke up one day when they
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were just about to retire and said, "Wait a minute, I've lost my entire life." Yeah, I hear that. So we've had a lot of women fall out of the workforce, maybe they're asking those kind of questions, or maybe just childcare is just too expensive. And it's just too difficult in the pandemic, um, what should the government be doing to help alleviate some of the expenses of childcare? And what can we do to keep women in the workforce? Well, childcare is a huge issue. And unfortunately, it doesn't look like it's going to get through the Senate, that bill that had childcare in it, but I don't think it's going to die because every politician who wants to be elected or reelected needs to listen to their constituents. This is not a Republican or a Democratic problem. It's not a partisan issue. I think also the same goes for universal pre K. We're gonna see also more demands to decouple health insurance from Work and Pensions from work, because people want
11:42
more flexibility, they want more autonomy, they want to start their own businesses. And those pressures are going to mount on politicians, and finally paid leave. This is not going away. I mean, paid leave is a huge issue, not just a woman's issue. It's a huge issue for men as well. And, you know, I was part of an administration years ago, that came up with unpaid leave 12 weeks of unpaid leave the Family Medical Leave Act, everybody at the time thought, wow, fabulous, 12 weeks of unpaid leave? Well, it's not so fabulous. Most other countries provide many more weeks of paid leave. And it seems to me that a lot of Americans are going to need that. I hope they make the demands of their politicians. Yeah, um, you talked about health care as well, we're looking into right now, can Obama care, as we're calling it or the Affordable Care Act- Can that handle the great resignation? All these people leaving their jobs? And maybe they don't have another job lined up? How are those people going to be insured?
12:44
Well, a lot of people do have Cobra from their companies. That is it tied them over for a time. But you're pointing out something that is very, very important. And that is that individual health insurance plans are extraordinarily expensive. You need to be in a group, in order to have really the benefits of group insurance. That is some people in a group, we're going to be very expensive, some people are going to be very cheap. And the ones that are cheaper are going to be subsidizing the more expensive. But if you're not in a group, you're going to have very high CO payments and deductibles and high insurance costs. That has got to be addressed. And I think, again, politicians want to be elected and reelected. So they're going to listen, I hope, what's the biggest threat to the US dollar? The biggest threat to the United States dollar is not inflation, because inflation really, really I think, is temporary. And most of the global investors understand that the biggest threat to the United States dollar is instability, global
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instability. And instability is a threat to really everything. Now, some economists and some political scientists, they look at history over the last 30 or 40 years. And they say, well, periods and global instability, actually, there's a lot of flight to safety, and one of the safest currencies you can possibly put your money in around the globe is the dollar. So it may be that global instability is actually good for the dollar. Okay, so taking that a step further, if instability could be good for the dollar, but it's bad for economies globally, and we're in a flexible, uncertain time for remote work and what back to the work- back to the office going to look like. So, could maintaining a remote work economy be bad for stability? No, I think it's like a shock absorber actually, I think that a remote economy in which people have more flexibility gives employers and
14:52
workers more opportunity to basically save for a rainy day for developing all sorts of personal and corporate means of maintaining a maximum of flexibility in a time of uncertainty. Which industries do you expect to grow in the next 10 years? Well, the biggest growth industries are quite obviously going to be high tech, the biggest question to my mind is, "how are we going to handle high tech?" If we break it up, it may be good for the economy, actually, because right now, there really over the last 20 years, remarkable decline in the number of new high tech startups. Because there are a lot of startups are intimidated by the biggest high tech firms. But at the same time, you don't want to kill the goose that's laying the golden egg. And that's, that's going to be a big, big issue, because there's bipartisan interest right now in
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breaking up big tech or doing something that is quite substantial to big tech. The other industries that are kind of the mainstays of the American economy are obviously finance. I said earlier, I will say again, I hope that finance shrinks as a proportion of the national economy. In the 1950s 1960s, it was about 15%, of the national economy. By the 1980s, it became 30%. By the 1990s, finance became 40% of the entire national economy. It's not producing things, it's the innovation that occurs in finance is innovation around financial instruments and speculation that is not productive, as we understand productivity. So I'm not a big fan of a large financial sector, entertainment is going to continue to grow as a proportion of our national product and as a proportion of our exports. Everything from
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music to film. And that's to me, great. I think that's part of a creative economy of many young people want to go into the creative arts, and I say, more power to you. That's really interesting about the finance being too big in the economy, when it doesn't produce anything, especially at CNBC business news. So that's a lot of our focus. Right? Um, I think my question there is just what do you think then of cryptocurrency, which sort of has come out of this complex monetary policy that we have? Is that the next phase? And does that actually help the economy grow? No, cryptocurrency is basically a Ponzi scheme. I mean, you know, it's the Dutch tulip mania. You're not creating anything, you're not investing in any thing. And it takes up huge amounts of energy at a time when the globe needs to worry about pollution and climate change, to utilize so much energy to produce nothing, I mean,
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just speculative instruments, is absurd, quite frankly. So if there's one policy that the Biden administration could get through the House and the Senate and make, you know, law, what would it be that would be most successful to helping the US economy? Well, I've got a lot of to narrow it down. I think the child tax credit is probably the most important because, you know, when the when we did have briefly last year or under the American rescue plan, the child tax credit, it reduced child poverty by half. I mean, talk about an amazing I mean, eye popping results, one of the great shames of America, the richest country in the world, is that one out of six of our children is in poverty. If you can do something that reduces that poverty dramatically, and quite suddenly keep it in place. Don't let it don't don't remove the funding in order that you can what reduce the taxes of some billionaire That's absurd.

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