Our challenge is to improve the quality of service workers, says Richard Florida. Only then will we elevate jobs and create livelihoods for people.
Question: What becomes of the displaced manufacturing worker in this new world you describe?
Richard Florida: Well, if you’re one of those folks, it’s terrifying, you know. I lived in Pittsburgh for nearly 20 years. If you are a person who had a great job in a steel mill, and then you get displaced when you’re 35 or 40, or 50 – my wife, Ronna, who is here just in the other room folks, she’s from greater Detroit. And we went back there for Thanksgiving; we’ll go back there for the Christmas holiday. I mean, the devastation that has happened to people who grew up thinking they had fabulous, stable jobs with the big three is truly horrific.
But I think as a society, we’ve got to understand this shift. You know, a hundred years ago, if we were sitting here, we wouldn’t be in a television studio, but if we were sitting around talking, we would have been terrified that agriculture jobs were going away. And if you were faced with the prospect of losing your farm, or being forced off the farm and having to move to one of these growing, industrial cities, people were terrified. And the debate was, where are these people going to work? If there’s no jobs on the farm anymore, and these automated factories are so productive, but we invented. And I guess I’m an optimist in a sense, throughout human history, we’ve always invented new ways of working, new divisions of labor. So, my hope is that we can do it again.
What I worry about though, what I really worry about, like thinking about the Obama Job Summit and the conversation about employment, most of that conversation is either about government created employment, which is a good stop gap, it can work for awhile; the WPA and all that in the Depression created jobs for a while, or it’s about how do we protect these manufacturing jobs, which are good jobs.
My dad worked in a factory all of his life. And I talk about him in my books and maybe people watching here. But my dad got a job when he was 13 and he actually had to leave school in the 7th grade in Newark because he had to go to work, his brothers and sisters had to go to work, my grandpa had to work, and my grandma worked in a bakery. It took nine people to make a family wage. And my dad worked in an eye glass factory in the down neck section of Newark, the iron bound section. It’s called the Victory Optical; this giant brick building. And I remember my dad telling me when I was a little boy, he said, “Rich, when I started working in that factory in 1934, 1935, I had a really crappy job. I mean, I made low wage, I had virtually no benefits, and we worked long shifts.” And remember, people used to bemoan manufacturing work as a terrible, dirty, dangerous – William Blake called factories “satanic mills.” My dad said, “But when I came back,” he enlisted in World War II and he was an infantry soldier in the great battles, D-Day and all of that, storming the beaches. “When I came back from World War II, something happened to my job. It became a good job.” Now, obviously there were unions that helped to do this, and collective bargaining and government – The Wagner Act that Roosevelt passed, and Occupational Health and Safety. But my dad said, “My bad job became a good job.”
And so what we’ve been working on actually in our institute – and so glad you can come up to Toronto where we live now. What the city of Toronto has been pioneering, and I think we’re going to help define this turf, we sort of mentioned that a third of the jobs is in the creative class, about 20% of the jobs is in blue collar, 45% of jobs – 45% of all jobs are in the service jobs, the retail jobs, the shop jobs, the restaurant jobs, the manicurist, the hair cutters, the makeup people. Those jobs pay the least; they have the most tenuous circumstance. So, one of the things we’re trying to do here in Toronto with the city, and city workers and city government and folks here, but also I think that needs to be talked about more is, how do we make that group of service jobs good high paying jobs equivalent to the fact, you know, lower skilled, like the factory job was, but how do we make those jobs more innovative, how do we get people involved like they were in the factories, improving quality? And how do we raise pay? That’s one of the key things we’re working on. And that’s the kind of jobs, somebody worked in an auto plant, if it was high paying and it was a good job. Not if it’s a 10 buck an hour job, but if it was a good job with a career position, that’s the kind of job they could naturally slip over to.
Question: What can be done to make service workers more valuable and productive relative to their input?
Richard Florida: Well, it means one thing, that we’re going to have to pay more for our burgers. And you know, at the end of the day, it’s worth it. We spend a lot of money for a car. We spend a lot of money even for a television set, or a computer. Now, they’ve come down in price. We spend a lot of money for the clothes we wear. And then, you know, we don’t want to spend a lot of money for the food that we put into our body or what about the person who takes care of your ailing parent? Or your kid? I mean, it means we’re going to have to pay more for that. So, as a society, we’re going to have to pay more. Okay. Well, people might not like that, but if we want to elevate jobs and create livelihoods for people.
The other thing that we see happening, and we’re trying to organize this. Some of these companies to come and boy oh boy, I wish Obama would do this. This would be the job summit. I actually looked, because I’m a geek, I looked at the best places to work – an institute, their research on the best places to work in the U.S. economy, and folks can go to it. They’ll says that I have the wrong names, but you know, you get all kinds of interesting tech companies on that list. The SAS Institute, which I actually did a case study in North Carolina. Genentech, all of these cool names that you know, Apple, and some consulting firms. The other companies on that list are like Zappos, Wegman’s, Whole Foods, Container Store. What those companies are doing is actually viewing their workers as a source of creativity, innovation. And they’re taking a page from a company like Toyota which said, “We’re going to view our workers not so much as a liability, we’re going to organize them in teams, we’re going to tap into their brain power. And the guy who really challenged me on this, when he was the CEO of Best Buy, was Brad Anderson.
I remember he came, and we had this roundtable discussion in Washington D.C., at the Gallop Organization, and Brad was saying, “In my Best Buy store, there’s not much I can do to improve performance, I mean, we sell the same TV’s, we sell the same stereo sets, we sell the same appliances. And we have a kind of standard process.” He said, “The only way I can make my stores better is by getting the intelligence of my employees.” So, he started to actually do what Toyota does; challenged the workers to actually come up with suggestions and continuous improvement. And it would be simple, they would like figure out a way to move a display to get more sales.
I remember one, which just blew me away. They were trying to figure out why they weren’t selling in ethnic neighborhoods in LA. And the one kid on the floor said, “Well, you’re not having ads in not only Spanish, but Vietnamese.” So, he started to write the ads. Now, it’s simple stuff like that, but that increases value. And what we’ve been unpacking in our work is the skill sets that really increased value in the workplace. And there’s three kinds of skills in the workplace, really. There’s physical skills, we actually pay a lot for physical skill in the United States or Canada. And it doesn’t generate that much return. There’s two other kinds of skills that really matter in the workplace. One is the obvious one in a knowledge economy, cognitive skill. So, the more brain power you are of the team and the more you engage the better. But the other one that actually pays more is what we call social skills. And by social skills, I don’t mean just being friendly and extroverted and a good bartender. It’s actually, and you’ll know this in the stuff you discuss on this program. It’s the ability to build teams, to motivate people, to get other people to be part of your cause or your mission.
So I think if we could start to upgrade service with more cognitive skill, but no just more cognitive skills, more of this social skill. And I actually think, from a business point of view, this is the great low hanging fruit. The creative economy is coming together, art factories are optimized. Now we can do better and yeah, you know, more robots, but the low hanging fruit in our economy is really bringing the services, the low-end services into the 21st century. And so that’s what I’d like to see happen, and I think in terms of job creation, it’s millions upon millions of Americans work in that sector. It’s highly insecure, it’s low paying, it the sector if we want to build the backbone again of a lot of jobs, it’s the only place we have to look, unless we just say, we’re going to have a crappy split unequal economy and I am not willing to relent to that right yet.
Question: Have you developed models to assess the value of service workers?
Richard Florida: It’s very casual and haphazard. We’ve been looking at the Four Seasons. It was started here in Toronto. It’s obviously a luxury brand. But it’s the kind of brand that depends on the allegiance of its customer and it really has worked hard to – and the other thing is promotion within. I mean, that’s a key thing. You might start as a low-level person, but the ones that work always – just like Toyota, it’s promotion from within. So, you may start at the lowest occupation, but you can work your way up.
I think now we’re in the same situation as kind of Fredrick Taylor, sitting there in the 1880’s and ‘90’s. And a few manufacturing companies were experimenting with time in motion studies and scientific management, we’re certainly not where Henry Ford was when Henry Ford said, we can add the assembly line and have an organized production system. So, we’re very early into this. And I think the key right now, and what we’re trying to do at our institute, is really an array of best set of practices. And we had a meeting last week and we said, “We’ve got to go at this just the way people studied high-performance or quality manufacturing.” We’ve got to figure out what those best practices are in the workforce with regard to paying benefits. And then we have to see to what degree they’re diffusing and how they work together. But I think we’re extremely early on the companies I would look at again, Whole Foods engaging its workers to a certain degree, Starbucks, which is a pretty big company. The Container Stores, another one that’s done a lot of this. And we’re going to have to figure out models – Zappos online – figure out models that go beyond that and push it.
I don’t think it’s an academic who’s going to lead this. I think this is a very much an in action strategy project where. You know, and maybe the better example is agricultural extension. How they began in the farm to move new technology onto the farm. And then what we used to call manufacturing extension back in the ‘80’s. When they said, oh my god, manufacturing is become leaner and more quality. As we identify those practices in an effort to diffuse them and to make people understand, you don’t have to treat workers – you shouldn’t ethically treat workers like crap. But in your grocery store, or in your mom and pop shop, or in your hotel operation, if you stop treating workers like a cost or liability and you start treating workers as an asset, you invest in them; you upgrade their capabilities. You get more productivity and innovation. And that’s where I think we have to go.
Question: How will the economy both contract and prompt better pay and treatment for employees?
Richard Florida: Well, isn’t this the great problem in every crisis? Isn’t this what Keynes wrote about? I mean, the nature of a crisis is a big race to the lotum. Right? That’s what a crisis is about. Everybody says, “Oh my god. I’ve got to cut costs. I’ve got to get my balance sheet in order.” And so Keynes and others, others in the United States, businessmen, were worried about, Oh my God! How are we going to create demand? This ephemeral thing called demand. And what they quickly figured out is the only way you’re going to create demand is by raising the incomes of workers. If you kept the worker’s incomes low and you paid them like crap and you gave them minimum wage or below sustenance wage in the factories, how do you create that demand that we’re going to buy the cars and the houses with? So, they put a lot of effort into that. And actually, in the United States, not only the Keynesian thing, but the United States, moved pretty close – we actually had a full employment bill in the House and the Senate in the late 1940’s. And then fortunately, the machine kicked into action. That got tabled. And then in other countries, in Scandinavia and in Europe and Japan, that became a reality, but here it got scuttled. In the United States it got scuttled. And the idea was that we could create demand. And one of the things we create that demand by building roads, by building houses, by building appliances. It became a cycle.
When I was a younger person, we used to talk about Fordism. A fancy concept for not only Fordist mass production, right? What the theorists at the time were arguing, not only do you have this mass production system with assembly lines and steel mills and car factories pumping this stuff out, you had to not only build a Fordist economy, you had to build a Fordist society. Well, the Fordist society required higher wages. Henry Ford’s great idea, “Oh my god, these workers need to make 5 bucks a day so they can buy a car.” And you need to have institutions, right? Governmental institutions, a social welfare state, infrastructure investment, mortgage banking that could make it affordable to buy a house. We don’t even have that conversation now. All we’re thinking about is how do we cut the cost, how do we get the economy back on track, and then the silliness of like trying to re-flate the old Fordist thing. I slam my head against my desk. We’re going to the Cash for Clunkers, we’re going to do a Cash for Appliances. We’re going to have everybody redo their mortgage so they can buy another house they can’t afford, or walk away from this house and buy another house.
One of the things that we’re going to have to figure out is – and this is a big task, this is a task like we faced in the 19th Century. What kind of society do we have to build if we’re going to uncork this tremendous creative and productive potential? This is not just a task of Keynesian demand management and fixing the economy and making sure the bubble doesn’t blow up. This is a task of building a whole new social order. And I like that we’re having this conversation, but what I’m scared about is in the corridors of power, as far as I can see around the world, this conversation isn’t going on. And that conversation did go on in the United States and in England and in other places in the 1880’s, it did go on in the 1930’s and ‘40’s. And maybe it’s because we’re so early, this thing just happened a year ago, maybe it’s because it’s so early and we think we can just brush it aside, but sooner or later, I hope that conversation emerges. How do we build a society which values the creativity of everyone, creates markets for that creativity, creates good jobs for people and is functional?
Recorded on December 14, 2009