The dramatic rise in inequality and the equally dramatic decline of the middle class are two of the most resonant themes in American political life. They reverberate through the competition for the Democratic presidential nomination and will directly affect the 2020 election.
American politicians typically offer two distinct strategies for creating good jobs and rebuilding the middle class. The first is to bring back once high-paying, family-supporting blue-collar jobs to the U.S. But the fact is that less than one-fifth of Americans do blue-collar work now, down from roughly 50 percent in the 1950s and 1960s. And just 6 percent of workers are employed in production occupations in actual factories.
The other strategy is to educate people out of low-wage work and into knowledge jobs. There is no doubt that knowledge jobs pay much better. But just one-third of Americans are actually employed in knowledge, professional, and creative work. Only six in 10 of those workers hold a college degree.
Doing both of these things, while useful and important, will be insufficient to move the needle on inequality and help rebuild the middle class.
That’s because many more Americans continue to be employed in low-wage service jobs. Today, jobs in food preparation and service, office and clerical work, and retail and personal services employ more than 70 million people: nearly half of our whole employed workforce. These workers make less than $35,000 a year on average, and many do far worse than that. By comparison, the average wage for all workers is above $50,000, and more than $80,000 for knowledge, professional, and creative workers.
After paying for their housing, America’s service workers end up living on less than $25,000 a year ($22,715), whereas knowledge, professional, and creative workers have roughly $70,000. In expensive metros like San Jose, Washington, D.C., and Los Angeles, service workers are left with $20,000 or less to pay for life’s necessities.
Even the best-paid service workers fare worse than the average American worker. The wages of the top quartile of workers in many of the largest and faster-growing service occupations are less than half the average wage, according to research I conducted with Karen King and Charlotta Mellander. The top quartile of workers in food preparation and food service makes half the average wage; the top quartile of those in personal care and service makes roughly 60 percent of the national average; and the top quartiles of people working in health-care support and in building and grounds cleaning and maintenance make roughly 70 percent of the average U.S. wage. Together, these four occupational groups employ 24 million workers, nearly 20 percent of the labor force.
Service workers in the lowest quartile of jobs do far worse. They make just $13 per hour—significantly below the $15-an-hour threshold held up by many as living wage. Only half of them have benefits. These workers are far more likely to lose their jobs or exit the workforce entirely in any given year, according to research I conducted with economist Todd Gabe and Jason Abel.
But these jobs can, and must, be upgraded. As I’ve noted here previously, we did just this with manufacturing work. Under the leadership of Franklin Roosevelt, this nation advanced sweeping labor legislation, giving factory workers the right to organize and bargain collectively, and underpinning a new economic compact that helped turned low-paying, insecure manufacturing jobs into high-paying, family-supporting jobs.
We can do the same for service work today. A higher wage floor or minimum wage is part of this, and the good news is that cities and states across the nation have taken the lead here. The minimum wage should be tied to geographic differences in living costs—pegged at about 50 to 60 percent of the prevailing median wage— and in some cases it should be more than $15 an hour.
Currently, the vast majority of service workers are trapped in these precarious jobs. Just 5 percent of these workers are able to upgrade to a better, higher-quality job in a given year, according to my research with Gabe and Abel. Part of the reason for this likely stems from the fact that low-wage service jobs are disproportionately held by women and minorities. Women hold more than six in 10 service-type jobs. Fifty-eight percent of women do service-class work, compared to just 37 percent of men. More than half of black (56 percent) and Hispanic (50.3 percent) workers hold service jobs, compared to 45 percent of whites.
Yet it can be done. When service workers are paid more, they also contribute more. I recently met with the CEO of the Tulsa-based gas station and fast-food chain, QuikTrip, and he told me about the financial gains his company has realized from implementing what MIT’s Zeynep Ton calls a “good jobs strategy,” which involves not just paying workers more, but also developing their skills and promoting from within. This has greatly helped to reduce turnover, increase shop-floor innovation, and boost the company’s overall productivity and profit. In a word, it is key to the company’s competitive edge.
Such an approach can scale across the service sector broadly, from food service and personal care to hospitality and tourism, which are some of the fastest-growing occupations in the U.S.
With President Trump in office and Republicans in control of the U.S. Senate, it is hard to see how upgrading service jobs can be high on the national agenda, at least for now. But Democrats in the U.S. House of Representatives can start to advance it as an issue for 2020 and beyond. Mayors can also begin to move on it, as well, linking it to their advocacy of a higher living wage. Upgrading service work should be a central plank of the Democratic campaign. It may galvanize the votes of 70 million workers, who could form a key pillar of a revitalized Democratic electoral coalition.
If we truly wish to address inequality and rebuild our middle class, we must upgrade service work.