Uneven Outcomes in the Labor Market: Understanding Trends and Identifying Solutions: Day 2 - The Future of Work/Alternative Work Arrangements - February 2, 2021
- Conference information & agenda
- Speaker bios
- Day 1 video & transcript
- Day 3 video & transcript
- Day 4 video & transcript
Day 2: The Future of Work/Alternative Work Arrangements
The second session of the Uneven Outcomes in the Labor Market: Understanding Trends and Identifying Solutions virtual conference looks at new research on independent workers and the impact of working from home on the labor market. This session features remarks from Loretta Mester, president of the Federal Reserve Bank of Cleveland.
Kyle Fee: Good afternoon and welcome to day two of the Uneven Outcomes in the Labor Market conference. My name is Kyle Fee. I'm a senior policy analyst in the Community Development Department at the [Federal Reserve] Bank of Cleveland. I'm part of the organizing committee along with my colleagues from the Federal Reserve Banks of Atlanta, Boston, Philadelphia, and the Board [of Governors].
I also want to mention our production team from the St. Louis Fed. Thanks, Dave and Megan. None of this would be possible without your help.
This week we are bringing together researchers, policymakers and practitioners to bring in disparities in the labor market, outcomes and explore policy solutions to address these inequities. Today's topic is the future of work and alternative work arrangements. Later, we will hear research presentations focusing on the gig economy, as well as implications for remote work for telecommuting situations.
Before I get started, I have a few viewer experience things to cover. I want to draw your attention to the series of buttons at the top of your screen. These self-explanatory buttons include bios, links to the conference website, closed captioning if needed, and materials. The materials button has the slides for each of today's research presentations that you will see later.
Below that and on the right-hand side of your screen is an embedded Slido app. We will be using Slido to collect questions and comments during today's event. We will be responding to questions throughout and will get to a few of the questions during our Q&A with our upcoming panelists. You can also access Slido at Slido.com using the hashtag #UnevenOutcomes. If you go to Slido now, you will see polls for today. While you are answering those polls, I have two more things I need to mention before I get the privilege of introducing our opening speaker. If you are having trouble viewing slides during the research presentations, you can either view full screen by clicking on the icon on the lower right-hand corner of the viewer, or you can use the materials button on the top of your screen.
Lastly, the views expressed today are those of our participants and not necessarily representative of the views held by any regional Reserve Bank or the Federal Reserve board. Now that I've gotten all my odds and ends taken care of, it is my privilege to introduce our first speaker for some opening remarks.
Loretta J. Mester is the 11th president and chief executive officer for the Federal Reserve Bank of Cleveland. She was born in Baltimore and graduated with a bachelor's degree in mathematics and economics from Barnard College of Columbia University. She has her master's and PhD degrees in economics from Princeton University. President Mester is an adjunct professor of finance at the Wharton School of the University of Pennsylvania and is a fellow at the Wharton Financial Institutions Center. Among her civic appointments, President Mester is a director of the Greater Cleveland Partnership, trustee of the Cleveland Clinic, and a director of the Council for Economic Education. Loretta, thanks for joining us today.
Loretta J. Mester: Thank you so much, Kyle. I really appreciate the invitation to provide opening remarks on today's session, as part of the conference on Uneven Outcomes in the Labor Market. But more broadly, I really want to thank the staff and community development across the System, and at the board and Reserve Banks for just the enormous body of analysis and outreach that you produced and in light of the pandemic. Your efforts are really contributing mightily to the Federal Reserve's understanding of the myriad effects the pandemic is having on our communities, households, and small businesses. Your work is informing Federal Reserve policy decisions. I do expect that to continue as we work together to ensure a broad-based sustainable economic recovery. You were able to bring these essential insights to the discussion because of the work you have done over many years to understand issues affecting low- and moderate-income communities, and that work is going to yield dividends well after the pandemic is behind us, so thank you for that.
Before I continue, let me reiterate something that Kyle said, which is that my views today are my own and not necessarily those of the Federal Reserve System or my colleagues on the Federal Open Market Committee.
It's really clear that the adverse effects of the pandemic have not been evenly distributed. There are wide disparities in the recovery across business sectors, geographic areas of the country, and demographic groups. The burdens of the pandemic have been borne by many of the most vulnerable in the economy: lower-income and minority workers and communities, those who don't have the opportunity to work from home, those who don't have access to reliable telecommunications and internet services, or to adequate health care, and the smallest of the small businesses.
Since last spring, Blacks and Hispanics have been faring less well in the labor market than whites, and those with less education have made less progress than the better-educated. Rehiring by employers has been considerably slower for low-wage workers than for high-wage workers, and in fact high-wage workers' employment level has now basically returned to its pre-pandemic level.
The need to provide childcare for preschool children or those being schooled remotely is disproportionately affecting women's ability to remain in the workforce or work their usual number of hours. It's important to remember, though, that differences in economic outcomes did not start with COVID-19. Many of the economic disparities in our economy are long-standing ones, and stem from the fact that the U.S. economy doesn't offer the same opportunities to all. There's racial disparities in educational attainment, labor market outcomes, and access to credit. People born into areas of concentrated poverty or predominantly minority areas are disadvantaged over their entire lifetimes, and so are their children. These disparities have been propagated across generations, so things cannot be expected to improve on their own. Actions are going to be needed to be taken to promote an inclusive economy, one that is an economy in which people have the chance to move themselves and their families out of poverty, one in which systemic racism doesn't limit opportunities, and one in which all people can fully participate and have access to economic opportunity.
So economic inclusion opportunity intersects with the Federal Reserve System's mission to promote a healthy economy and stable financial system in the United States. Our monetary policy decisions, our actions as supervisors and regulators of banks, our role in the payments system, and our efforts to promote community development and low- and moderate-income areas all contribute to achieving a well-functioning economy and financial system in which everyone can participate.
Opportunity and inclusion are important for achieving a strong economy, one that is able to live up to its full potential. The fact that a more-inclusive economy will be a stronger economy isn't difficult to see if we take a step back and look at what determines a country's standard of living. Increases in living standards are measured by income per person or inextricably tied to a country's long-run potential growth rate, which is driven by growth and productivity. Important determinants of productivity are investment in human capital, to increase the knowledge and skills needed to productively use capital, and investment and R&D and new technologies.
If we want to have a strong economy, it is important that we ensure that everyone has the opportunity to fully participate in the labor force, and that they have the skills to create new ideas in technology, and to use that technology effectively. A top priority for increasing economic inclusion and opportunity must be increasing access to high-quality education at all levels from preschool through college. Education can be transformational. It changes the path of a person and that of future generations. Think about the G.I. Bill. It allowed many soldiers returning from World War II to become the first college graduates in their families. My father benefited from the G.I. Bill. That helped raise his living standard, my family's living standard, and then the children's on down the line.
Education is a path towards better economic outcomes, not only for individuals and households, but it's important to note that it's also important for communities. Cities with more highly educated populations experience lower unemployment rates, higher productivity growth, and higher growth and entrepreneurship than would've been protected by considering only the educational levels of individuals. Education can raise labor force participation rates, and the better educated tend to have higher wages and lower levels of unemployment. The median income for families whose head has a college degree is more than twice as high as that of a family whose head has only a high school diploma. Over the last expansion, the unemployment rate for those with a bachelor's degree or higher averaged 3.2 percent compared to 6.6 percent for those with a high school diploma and no college.
Not all groups have benefited from a college education. While our workforce as a whole has become more educated over time, educational attainment differs by race. According to the Fed's 2019 Survey of Consumer Finances, 41 percent of white heads of household had a college degree compared to 26 percent for Blacks and 16 percent for Hispanics. The likelihood of completing a degree also differs by race and by type of institution. The completion rates remain particularly low at for-profit institutions for all races. At both public and nonprofit private institutions, the graduation rates for whites, Hispanics, and Asians have all risen over time, but those of Blacks remain well below those of these other groups and have shown no progress over time.
Costs can be an important barrier to entering and staying in college, particularly for those coming from lower income-families. According to the Fed's Survey of Economic Well-Being, of those respondents who did not complete their associate's or bachelor's degree, among other reasons 56 percent said it was because it was too expensive. The average cost of tuition and fees at four-year institutions is now over $16,000 a year. Adjusted for inflation, it has more than doubled over the past three decades. As of late 2019, over 40 percent of those who went to college had taken on debt for their education, and about half of those people still owe money on that debt. Blacks tend to have higher student loan balances and higher default rates on those loans than whites. And these defaults can follow a person over time, making it harder to access credit in the future. So while on average, and for society as a whole, the return to investing in education is positive, for some individuals it's not, especially if they have to take on higher levels of debt. Making college more affordable would help align private and social incentives in the choice of education.
In addition to cost another barrier to entering and completing college is not being adequately prepared for college. According to the Fed survey, 22 percent of respondents not competing a college degree said that one of the reasons was low grades. This suggested some people aren't prepared for college when they enter. Research is increasingly pointed to the fact that the foundation has to be laid very early in life at the preschool level. When children fall behind early on, it's often difficult to catch up. We need to increase investment in early childhood, elementary, and high school education, so students are better prepared for college. This investment includes financial support to schools and the families, as well as tutoring and mentoring to support children as they learn.
Even before the pandemic, a large part of formal and informal education was being delivered digitally. So one part of the investment has to be enclosing the digital divide between low-income areas and higher-income areas. The usage of broadband at home is comparatively higher for whites, those with higher incomes, and those in urban and suburban areas. Blacks and Hispanics are less likely than whites to have a computer or broadband and at home. The situation in Cleveland is particularly bad. Among communities with a population of 100,000 people or more, the city of Cleveland has among the lowest home broadband access in the nation. Something we can't be proud of.
The need to ensure that all families have access to high-quality education as a path toward economic opportunity inclusion and a strong economy is becoming even more important over time. Technological changes transforming many aspects of the economy, including work, the topic of the secession. Technology has changed how we do our jobs, how we recruit for workers, and how we search for positions. The intersection of technology and work means that the type of skillsets and demand are going to be different than in the past, and include things like problem-solving, and how to deal with ambiguity in the face of rapidly changing environments. A worker's attachment to a particular employer or even a particular career path is likely to be different as well. Technological changes led to an increase in demand for high-skilled workers, relative to low-skilled workers. Middle-skill jobs are less in demand than they used to be because technology is able to do the routinized work of these jobs. Computers are less-suited to replacing workers and occupations that require abstract thinking, high levels of cognition and higher levels of education, or workers in more routine, more manual types of work. This shift in the distribution of jobs help to explain the wider gaps in wages for highly skilled versus low-skilled workers, and the increasing return to gaining the education required to obtain those skills. Cleveland Fed economists investigated the overall increase in U.S. wage inequality in the last 30 years, and found not only that educational attainment is a key driver of wage inequality, but that education has become fundamental to boosting worker productivity.
The positive externalities from education to the economic health of communities in the country as a whole mean we are likely under-investing in education from society's viewpoint. Indeed, the U.S. does seem to lack behind other advanced economies in terms of educational achievements and skill levels. The OECD's latest survey address assessing adult skills, the U.S. ranks 15th in terms of literacy, and 24th in terms of numeracy among 32 OECD countries and 15th out of 29 in terms of problem-solving. In a different OECD survey of the skills of 15-year-olds, the U.S. ranked ninth out of 36 in reading, 31st out of 37 in math, and 13th out of 37 in science. These results are troubling, but not insurmountable. Thoughtful and deliberate policies to make quality education the reality for all students to increase economic opportunity inclusion for people who have not had those opportunities in the past better prepare us no matter how the nature of work changes and strengthen the U.S. economy now and in the future.
Thank you, again, for participating in this conference, and I really looking forward to the presentations and discussion. Kyle?
Fee: Thank you, Loretta. I really appreciate you joining us today. I would like to cover a few quick polls that we had here today. Turns out a lot of us are representing the Federal Reserve system. Thank you, guys. It also turns out, most of us do not have multiple response abilities during the day. A little bit of a surprise, given the situation we are in, but we can hopefully learn some more about that as we go.
As we move forward, I want to introduce our next speaker, David Weil. David is a dean and professor at the Heller School of Social Policy and Management at Brandeis University. David is an internationally recognized expert in employment and labor policy along with regulation, transparency policy, and the impacts of industry restructuring on employment and work outcomes and business performances. David, thank you for joining us today.
The future of work
David Weil: Thank you, Kyle, for that introduction. And to the Federal Reserve Board, the organizers for inviting me to moderate this session on the future of work, alternative work arrangements.
I want to frame the connection of our panelists to this conference's broader theme, Uneven Outcomes in the Labor Market. And then I'm delighted to introduce the panelists in our discussion to you. In the last five years, there have been many conferences, seminars, panels, and other séances dealing with the topic of the future of work. A friend of mine has dubbed this perfusion of events the future of work industrial complex. Many of these events have focused on the rise of platform business models like Uber, Lyft, and DoorDash. The spirit of these discussions range from "Aren't these so cool?" to "Do these models foretell the end of work as we know it?" Now platform models do raise many critical issues, and their continuing expansion into new areas beyond personal transportation and home delivery, to other sectors of the economy, they're a serious consideration, and in my view, concern. But that is not the totality of the future of work by any means. Although those models are growing, they still constitute a small, much less than 5 percent, of all the jobs in the labor market. So rather than making discussion of those models synonymous with future of the work, I would argue we need to pay greater attention to related changes that have been underway for some time, that are changing the way workers relate to the place they work. These are alterations in the way that businesses and organizations undertake their work that have changed basic employment relationships and worker outcomes. These practices, like freelancing, outsourcing, subcontracting, third-party management, and franchising, are what are sometimes grouped together as alternative work arrangements. These arrangements have been with us for some time, but have expanded in their utilization and activity in a growing number of industries. A 2020 National Academies of Sciences, Engineering, and Medicine report detailed the need to improve measurement of alternative work arrangements in their many forms, as well as the difficulty of doing so, in part because they often slip under the radar of the people who work in them. But the national academy study also argued for the importance of better measurement, precisely because of their impacts on inequality and disparities in the labor market.
Rather than think of the future of work, the impacts of alternative work arrangements we'll talk about today require us to think about the presence of work and what it portends. We often think of inequality in the labor market, particularly inequality in earnings, as rising from the growing gap between compensation for those at the top of business organizations and those of median workers in those organizations. And those differences have indeed increased dramatically over recent decades.
However, a growing empirical literature has revealed that the predominant source of growing earnings inequality is driven not by gaps in earnings within companies, but in fact, by differences in earnings between firms. That is, some workers find themselves in businesses that are moving rapidly upward, in terms of compensation for all on board those companies. But many other workers are attached to firms whose compensations have stagnated or in fact declined in real terms. They have been left behind as these two types of organizations move away from one another in the compensation space.
The growth of alternative work arrangements can help us understand that source of earnings inequality, and link the conference theme of Uneven Outcomes in the Labor Market to this session's focus on alternative work arrangements. The pandemic has brought a second set of links between uneven outcomes and alternative work arrangements. It has revealed who can do their work from the safety of their home, and who must, by necessity, risk exposure in order to earn a living. For those workers on the front line, the past year has brightly illuminated the pre-existing lack of protections, whether it's in health and safety, earnings, dissemination protections, or access to social benefits, that many workers face. It has also revealed how many of those workers lack basic protections because of being classified as independent
contractors, outside of the protections of our workplace laws that arise from old and new business models. The pandemic has also revealed a disproportionate share of workers on the front line are Black and Latinx, therefore computing to the disproportionate share of exposures, illnesses, and death borne by workers of color. The pandemic has revealed that those who work from home can also be impacted, both positively and negatively, by new forms of organizing work that in some cases can help freelancers, and in other cases harm them. Pandemic-induced remote work eliminates some jobs, including those higher skills and those with education requirements, once thought of as relatively immune from outsourcing and offshoring, might now become candidates for that, even after the pandemic.
Remote work has also made clear differential gender impacts of balancing work and non-work activities in the home, such as childcare and education, and how those differential impacts by gender play out in terms of changing labor force attachment of men and women. The three papers in today's panel provide research on how the pandemic has impacted workers given the presence. They made clear we need deeper understanding of how the unfolding nature of work and the policy choices that bound the decisions of businesses and organization on how work is organized, lead to uneven outcomes in the labor market.
It's now my pleasure to introduce the panelists, and the discussion will provide insight into these issues. Full bios are available on the conference website, and there is a button on your screen that will take you there. First, Diana Enriquez is a doctoral candidate from Princeton's sociology department. She will be presenting her research on the freelance penalty. Lawrence Schmidt is assistant professor of finance at MIT's Sloan School of Management. He will present his research on working remotely and COVID-19. Thomas Lyttelton is a doctoral candidate in Yale's sociology department and will be presenting research on gender differences and telecommuting. Finally, Palak Shah, social innovations director of the National Domestic Workers Alliance will be our discussant. She will reflect on how the research in the session can be used in policy and practice. Let me turn this over now to our three research presentations.
Understanding trends and identifying solutions
Diana Enriquez: Hello. Thanks for having me. My name is Diana Enriquez. I'm a sociology PhD candidate at Princeton. Today I would like to talk to you about my paper that I'm calling Who are the Freelancers?, who competes in the freelance labor market, and what are the consequences of that kind of work.
To start, I would also like to mention that I am in a rural part of Maine, so our broadband is sometimes a little off. If it is choppy, that is why. For context on this paper, I am building on some of the research that Katz and Krueger began in 2015. One of the most important findings they presented in 2016 was that a major part of our recovery post-2008 may have occurred in alternative work arrangements. What I mean by that are the jobs were workers are completing gigs for platforms, or they are doing freelance work as a sort of small business. These are also workers who are listed as independent contractors, even if they are going to the office every day, but it's an effort legally to separate them from the full-time employees or even the part-time employees who registered inside the firm. A second finding that Katz and Krueger presented in 2019 was that a lot of workers turned to these work arrangements because they cannot find full-time or part-time jobs inside of companies that meet their need. Essentially, these workers are making the most of a bad situation. We've come to see and a lot of other research, that low-income workers typically have to hold more than one job to try to make ends meet. Even then, their schedules are very unstable, and their incomes are often unpredictable. There are health consequences to that kind of employment, and it damages the quality of family life, as we see in a couple of other places.
Today, I want to talk about high-skilled freelancers, because we think about many of the jobs they hold as routes to the middle class. What I'm starting to see here is rather that these jobs, specifically as freelance roles, are eroding some of the income that used to be possible through these roles, and that has an impact on our middle class. The data I'm presenting today is mixed method. I have 10 years explains myself as a freelancer. I've also completed 1 35 interviews with high skilled freelancers in the U.S. These freelancers hold jobs in marketing, they're technologists, they're designers, they do some of the technical work inside of theater, and there are a whole bunch who work in media. I'm also completing some quantitative work through the RAND America life panel survey. Specifically, I'm using the data from the workforce survey that Katz and Krueger designed in 2015.
The first finding that I would like to share with you comes predominantly from my qualitative work. Typically, when we talk about alternative work, we still sort of ask these workers about their employment, as though they have one full-time job. Even among the freelancers who do freelance work full-time, I would argue that they have several jobs. It may be that the service they're selling for 40 hours a week is what we think their job is, because that is how they earn money, but on top of that service, they are completing many hours unpaid overhead work that looks like administrative work or legal work. Normally, those projects inside a firm are handed to the company's lawyer, or they are handed to the company's accountant, but these workers are responsible for that on their own.
We can also think about different types of freelancers, based on how much time they commit to their freelance job. So beyond the people who do freelance work for all of their income, there are freelancers to do it part-time. My part-time freelancers are a couple of different types of jobs. We see these folks doing a significant number of part-time projects, because even though they are employed inside of a firm full-time or part-time, this specific type of freelancer takes on additional work as a freelancer to make ends meet. The second type of part-time freelancer are folks who believe that their part-time freelance job is there, quote unquote, real job, while the work that they do inside of the company full-time or part-time is what they have to do as a necessity to cover their expenses, because they do not have enough freelance work.
Finally, the third type of part-time freelance workers are people who have part-time or full-time jobs inside a company, but use their part-time freelancing as an opportunity to build a portfolio. They do that because they would like to switch jobs, or even industries. It's increasingly difficult to get a job inside of a different industry or different career path unless you can prove that you can already do the work. Some people are able to pay for graduate school and other professional training programs as a route into those. Many of the part-time freelancers I've interviewed have a lot of student debt or other expenses that prevent them from pursuing that route. Instead, they make expert time at night or on the weekend to try to train themselves into something else much to prove they can do the work. A lot of the part-time freelancers I've talked to are also people trying to enter middle-class jobs for the first time, so maybe they have a couple low-income roles and they use the part-time jobs to try to find enough of a portfolio to make them competitive in jobs that frequently have extremely high expectations for how much experience or what kinds of connections you arrive with the first day. The third type of freelancers are occasional freelancers. And what's interesting about them is that they either charge astronomical rates for their hours, or they charge very little and to complete these freelance jobs as a sort of passion project. Some examples of this include software developers who take maybe one or two projects a year, but charge $100,000 on each of those. Or they are people who say, I have a very specific skillset and I'm in a very specific labor market where someone is asking me to donate time to a cause they care about, so I will do it by that basis and I will charge very little.
I'm now going to compare these three structures of freelance jobs to full-time employees in similar industries to talk about how much they earn per year. This is using the RAND American life panel data. Specifically what's interesting here is that the occasional freelancers earn more than the full-time employees in the industry. The group that earns the least are the full-time freelancers. As a second experiment, I try matching each case of the full-time freelancer to similar cases of full-time employees. For each full-time freelancer, I looked at full-time employees based on age, gender, race, and industry. If the full-time employees were earning the same amount of money as the full-time freelancers, we would expect this curve to be centered at zero. What we see instead is that full-time employees typically earn more than full-time freelancers. This is before we think about the tax burden that is placed on full-time freelancers because they are in this ambiguous position as a small business and of an employee. As a final experiment, I wanted to see how similar the cases were of different types of freelancers. So I built this clustering program as a cadence cluster. What we see here is what I have also seen reflected in my interview data. Specifically, there are two stories we tell about freelancers. One is that freelancing is an opportunity to be a CEO where you control what kinds of projects you take, your schedule, and your general career path. The people who tend to control this narrative in media and really presented as a great opportunity tend to be freelancers like those reflected in group 2. That is 70 percent male, 93 percent white, and 93 percent full-time freelancers. They are also the highest earning income group at $120,000 a year.
Groups 1 and 3 look more like the second narrative, which is the much larger group of freelancers I talked about. The second narrative specifically says that freelancing, like alternative work, is presenting a challenge to full-time employment inside of firms, and therefore, increasing instability both in schedule and financial earnings for a lot of these workers. Groups 1 and 3 are majority female, they are more diverse and include Hispanic and Black workers. They're also a mix of full-time freelancers and part-time freelancers. One of the major differences between groups 1 and 3 is that group 1 is lowest earning group at $20,000 a year, and group 3 is sort of in between at $75,000 a year.
When I talk to many of these freelancers, they tell me about how freelancing is helping them survive or it's giving them an opportunity, but it's not the one that they would choose; it's something that out of necessity. They tell me about everything that they are trying to do to make themselves more visible in their labor markets, and often those are attempts to copy what group 2 is doing, because group number two is very well-situated and much more visible. The reality is that your network as a freelancer matters a lot and some of the things that impact the labor market broadly continue to be visible in this part of the freelance labor force.
When I think about the freelance labor force, even one that's as high skilled as the one I'm looking at here, what I've started to find is that these are a lot of small businesses that are slipping through the cracks. Under COVID specifically, when I reconnected with the subjects, many of these freelancers tell me about how their status as not quite a small business and not quite an employee means there wasn't any support for them. They were denied the loans that help small businesses stay afloat. They were also often denied unemployment insurance unless the state actively decided to include them. New York State, for example, decided to include freelancers, but many of these workers told me about the hours they spent on the phone, where they were eventually denied any sort of benefit. For firms, freelancing is great. It's an opportunity to offload some of their overhead costs, but then that burden is carried by the freelancers themselves. And it's expensive. In addition to having unstable hours, they are pouring a lot of time into unpaid work. This is an interstitial workforce, and what I mean by that is frequently these workers are the first to be fired when there is a budget issue, and the first to be hired back when companies are trying to recover. The damage starts to show up when these freelancers then replace full-time workers, and they are never offered any sort of stable financial role as a full-time worker inside the company. I'm worried that even in these high skilled jobs that used to be routes to the middle class, we see on erosion that's going to continue as work becomes more unstable. Thank you. Now I'm excited to present Lawrence Schmidt from MIT.
Working remotely and the supply-side impact of Covid-19
Lawrence Schmidt: Thank you for providing me the opportunity to present. The title is Working remotely and the supply-side impact of Covid-19, a joint work with Dimitris Papanikolaou at Northwestern University. My motivation for this paper is quite simple. When you think about the 2020 pandemic, it's rather distinct from past recessions in the sense that this is very largely a supply-side shop. What do I mean by that? Many sectors of the economy have effectively been shut down. This is either due to the inability to make their product, because workers aren't allowed into the factory due to social distancing constraints, or because they are not allowed to, for example, sell their product. Some of this has to do with regulation, some of this has to do with kind of voluntary changes in consumer behavior. At the same time, this was a very substantial and deep recession, many people lost their jobs, many people's spending power dramatically declined. So we can certainly believe, just like any recession, there would be large demand-side disruptions as well. Households change their consumption and spending patterns, they can potentially tilt their consumption basket away from certain types of industries. This also could be a financial shock because some households likely experienced distress and may default on their various obligations.
Our objective in this paper is to try to take a step towards isolating the supply-side forces specifically. Our approach to this is very simple. It's going to be to say that much of the supply-side disruption is going to relate specifically to the inability of workers to perform their tasks remotely. The idea is if you can't make your product or your workers aren't allowed in to sell your products, this is likely going to cause substantial disruptions to your operations, and bad outcomes for the workers and the firms they work for. In this paper, we ask a very simple question: Does an ex-ante, pre-pandemic, measure the ability of workers to do their tasks from home, and does this explain differences in outcomes across industries? What we are going to show is that the effects are quite heterogeneous across industries. Some industries that workers basically have no leeway to work from home, like travel and entertainment services, were hit very hard, and contrast the tech sector and other industries where workers can fairly easily transition to working from home, were barely affected. What we see is, there's actually substantial heterogeneity across occupations and across industries, and the ability of different workers to work from home. What we are going to do in this paper is we are going to construct a measure of exposure, a work from home measure, and we are going to relate this to differences that we see in outcomes.
How is this measure going to be constructed? It's very simple. We are using data from the American Time Use Survey, from 2017 and 2018. Our exposure measure is going to be one minus the percentage of workers who say they are able to work from home. The definition is going to be pretty simple. The survey asks first, are you able to do your job from home; and second, are there days when you worked only from home? Which is a little bit stronger than just saying you could answer a work phone call from home; rather, these are people who have at least spent a whole day working from home. The mean value of our exposure measure is 85 percent, which means that only 15 percent of workers prior to the pandemic had experience working from home. We make some manual adjustments for some industries that kind of specific to the pandemic, are really not able to do their jobs, whereas they probably could've done some work from home in the past. We are also going to exclude critical industries for the bulk of the analysis. If you think about food production, grocery stores, industries like that where people really can't work from home, those industries' work is designated as critical, so they can stay open throughout the pandemic.
Here is the headline result we are going to get from our paper. We're relating employment growth from April 2019 to April 2020. This is basically the first month of the pandemic, where we are looking at various industries, and relating our measure of exposure, which is on the X axis, to this change in employment. Red industries are these clinical industries, like grocery stores, which were allowed to stay open during the pandemic. What you see is a sharp negative relationship between work from home exposure and employment growth, and in particular, if we look at the bottom right quadrant of this graph, it's basically only high exposure industries that show up there. In terms of numbers, one standard deviation change in work from home exposure is associated with a 10 percent decline in employment in the subset of these non-critical industries. We look at a bunch of other outcomes we can construct at the firm or the industry level, and what we see, again, the left panel is implement growth, at kind of a more aggregated sectoral level. Again, you see a very strong, negative pattern between exposure and subsequent outcomes. You can also do the same with stock returns for the subset of publicly traded firms. In the paper, we look at other measures we can extract from financial markets, forward-looking estimates of default probabilities, and we can also see how equity analysts change their forecast of revenue, going into the future, and a rather depressing side effect of this is that analysts expect these results and these differences across sectors to persist even into 2022. Likewise, we use a survey of small business owners, and we see very large disruptions and financial distress among these business owners.
Turning to individual data, we can look at worker heterogeneity, so what we are doing is regressing the probability zone has lost their job in the month of April, on our work from home exposure measure, and we are looking at how these coefficients differ across groups. In general, what we see is that low-skilled workers are more affected. It's also the case that women seem to have had larger, their coefficients are larger, relative to men, and this does seem to be related to childcare in the sense that if we zoom in on the subset of women who don't have college degrees and have young children at home, their coefficient is more than three times larger than any other group. This suggests that the loss of childcare in conjunction with being unable to do your job from home was really kind of the perfect storm for many households. Our conjecture going forward is that the loss of childcare, likely due to remote schooling and needing to supervise children, is likely to further exacerbate these differences going forward.
As I mentioned, trading stock market, what we see is that more exposed industries had much worse stock market outcomes, so this is sort of sorting stocks based on exposure, and we see that the highest exposure stocks did the worst. We actually use this information to construct a daily, even an intra-day, measure of news about the pandemic. This blue line is basically an index that goes up when we get good news about the virus, and it goes down when we get bad news about the virus. This allows us basically in real-time to learn about the situation.
The next thing we do is, we turn to policy. What we see is, the PPP program, which was one of the largest interventions we introduced to try to help firms respond to the pandemic, had an unfortunate side effect. In particular, what we see is that the amounts that a firm was eligible to borrow was tied to its prior payroll. What this means is that if you had higher average wages that you paid in the past, you are actually eligible for more aid. This had the unfortunate side effect of meaning that the largest checks were actually sent to the lowest exposures sectors. This seems to me like an unintended consequence, because usually we would think that a good insurance program would send the largest checks to the places that experience the largest disruptions, but we see exactly the opposite of that as the case.
The last thing we show on the paper is, we look at the disconnect between the stock market and the real economy. One of the most surprising outcomes has been that the stock market has actually had a fantastic year in 2020, despite it being terrible for the rest of the world. There are numbers of explanations out there, one is low interest rates, but our take is to think about a very simple explanation, which is that the stock market is actually fairly under-representative of the real economy, especially when it comes to exposure of the pandemic. In particular, if you think about tech stocks, which are very large in the index, 24 percent of the index and only 3.5 percent of total employment. The last thing we do is we compute measures of stock market indices that are constructed, weighting by employment versus market cap, which is the normal thing you would see in the newspaper, weighted by evaluations of firms. We see that there is a 10 percent spread between an employment weighted index and a market cap weighted index. And likewise, if we look at revenue forecast productions, we see exactly the same thing.
To wrap up, we see a very strong correlation between a measure of supply-side exposure and subsequent outcomes. It's not very difficult to predict which workers and which firms were hardest hit, and yet a lot of the policy responses we've talked about involve uniform policies, such as sending stimulus checks all households. We would argue, based on this evidence, a more targeted approach might be more appropriate. And now, I will turn it over to Thomas Lyttelton from Yale University.
Gender differences in telecommuting and implications for inequality at home and at work
Hello, thank you for attending this session. My name is Tom Lyttelton. I'm a PhD candidate in the sociology department at Yale University. Today, I'm going to be talking to you about the implications of telecommuting for gender inequalities and childcare and housework, as well as work environments, both prior and during the pandemic.
As I'm sure all of us are aware, the COVID-19 pandemic has changed work, more than any single event since World War II, with an unprecedented number of workers now working from home. In May, 35 percent of fathers and 44 percent of mothers who had not previously telecommuted were telecommuting in response to the pandemic. That figure has fallen since as workers have returned to offices and workplaces, but telecommuting has remained far higher than it was. I think it's likely that even after the pandemic, telecommuting will remain substantially more popular than it was before COVID-19.
Telecommuting has real benefits for employers and employees. It saves on office space and eliminates commutes, for example. Organizations are often averse to change and many employees were reluctant to adopt the new technologies and work practices telecommuting entails. Research by Adam Ozimek suggests that having been forced to adopt to remote work by the pandemic, employers reported to be going further than expected, with over 60 percent expecting their workforces to be more remote going forward.
Now, the implications of a broad shift to remote work for gender inequality is not obvious. For better or worse, working from home makes parents far more available to family. And prior research suggests, particularly for mothers, that telecommuting is often a strategy for working with family conflict, given the generally limited provision of subsidized childcare in the United States, and this is particularly so during the pandemic with widespread school closures. At the same time, we know that mothers tend to be more responsive to family demands, so when parents are working from home, mothers more than fathers may end up substituting paid work for domestic labor, such as housework or childcare, or combining the two. On the other hand, fathers report wanting to do more childcare than they do and telecommuting may enable this.
Now, today I'm going to try to answer three questions. First, how do gender inequalities and child and healthcare work differ when they terrible commute. Second, do telecommuting mothers' and fathers' work environments differ? And third, how has the pandemic changed the gender dynamics of telecommuting?
To do this, I'm going to draw on three sources of data. First, the American Time Use Survey is a national time diary. Every year, it polls a sample of Americans who record what they did for a single day. With this, we'll examine if gender gaps in childcare, housework, and the amount of paid work time parents report having a child present are higher for telecommuters. Now, this data was from before the pandemic. It therefore obviously has limitations to the extent in which it applies to the present situation, but more closely resembles what we assume will be the dynamics of telecommuting after the pandemic once schools and childcare facilities have reopened.
For these analyses, I will show you three sets of estimates. First, the unadjusted gender gaps in time spent on these activities. Second, I will show you gaps that compare workers within the same occupations and also control for family dynamics. And third, using a module of the American Time Use Survey that asked respondents if they ever telecommute, I will show you gender gaps that compare the behavior of regular telecommuters on days they work from home and days in the office. The second and third estimates help ameliorate the problem that prior to the pandemic the occupational choices, family structure, and demographics of telecommuters differs systematically from non-telecommuters. Then, I'm going to show you analyses of telecommuting during the pandemic that draw on the COVID impact survey, which records the subjective well-being of workers. And the Current Population Survey, which allows us to examine which workers are going part-time during the pandemic due to family or childcare demands.
First, let's look at childcare and housework, for which we see quite different patterns. For housework, gender gaps, which are already large, are even larger for telecommuters. Telecommuting mothers and fathers spend on average 102 and 50 minutes on housework daily, respectively. This gap is 17 minutes larger for telecommuters than non-telecommuters, and this larger gap for telecommuters is apparent in the unadjusted comparisons, comparing within occupations, and comparing telecommuters working from the home and from the office. For childcare, there is little apparent difference in the gender gap between telecommuters and non-telecommuters in the raw data. But comparing parents within occupations, or telecommuters on telecommuting and non-telecommuting days, suggests that telecommuting may in fact reduce gender gaps in childcare once job choice and family dynamics are accounted for.
Turning now to work environments, we see substantially larger gender gaps in how much former worktime parents report having a child present for when working from home. Mothers report having a child present for 32 minutes per day, and this is 11 minutes more than fathers. This, to me, shows even prior to the pandemic, mothers in particular were using telecommuting to juggle the competing demands of family and work, and that this is a strategy with real downsides. We know from prior research, for example, both interruptions and dividing attention are bad for well-being and productivity.
Now, the pandemic radically changed the work environment for telecommuting parents as schools and childcare facilities have been closed or remote for the last 12 months. Here, too, we see that telecommuting is a strategy for managing work-family conflicts, but one with gender downsides. For part-time workers, the Current Population Survey asks if they are working part-time for family or childcare reasons, and we can see that even during the pandemic, very few fathers are doing so, and gaps between telecommuters and non-telecommuting fathers are nonexistent or small. For mothers, it's a different story, with a share of non-telecommuting mothers working part-time for family reasons—over 10 percent for every single month since May. For telecommuting mothers, the share is lower, though still substantial at around 7.5 percent. This indicates then that the burden of childcare is falling disproportionately on mothers during the pandemic. And unsurprisingly, being able to work in the same location as one's children makes it easier for parents to work full-time. This may in turn be exacting a toll on mothers' well-being that is not equally felt by fathers.
Here, I'm plotting gender gaps in subjective well-being for mothers and fathers in the early months of the pandemic. What we see is among telecommuters, mothers are more likely than fathers to report feeling depressed, lonely, or anxious. While this is less often the case when parents still go to work. In summary, prior to the pandemic telecommuting leads to a larger gender gap in housework, but may reduce childcare disparities. Telecommuting particularly worsens mothers' work environments, with telecommuting mothers reporting more often working with a child present than fathers do. And during the pandemic, telecommuting mothers are less likely to reduce work hours because of family when telecommuting, but well-being gender gaps are large among telecommuters. While telecommuting has real benefits for both workers and employers, because parenting practices are highly gendered and unequal, a post-pandemic permanent shift to increase telecommuting has the potential to place particular burdens on working mothers.
Thank you so much for listening to this talk. Now I would like to pass it over to Palak Shah for the next presentation.
Discussant and Q&A
Palak Shah: Thank you to all of the participants for those wonderful papers. These papers have really demonstrated some incredible work. My name is Palak Shah and I am the social innovations director at the National Domestic Workers Alliance. All of the issues that have been examined today intersect deeply with the work of our alliance. The questions of who benefits the most from freelancing, who bears the cost, how are some sectors more greatly affected by the pandemic than others? Who is bearing the burden of the new ways of work? And what are the true costs of that burden?
My comments and responses to these questions are rooted in the experience of the millions of domestic workers in this country. Our organization, the National Domestic Workers Alliance, is the national voice for the respect, dignity, and professionalism of domestic workers. Who are the domestic workers? They are the nearly 2.5 million, mostly women, who work in the United States, and what unites this workforce is that they work in the privacy of other people's homes. They are housecleaners, nannies, caregivers for those who are aging and those with disabilities. The vast majority of this workforce, as I said, is 90 percent women, more than half of them, of the domestic workers, are Black, Hispanic, or Asian-American or Pacific Islander women—women of color. The work is low-wage work; the median annual earnings hovers around $15,000 a year, and a quarter of this workforce earns less than minimum wage. Of course, there is an intersection with the immigration status in this country, complicating the way the labor markets function and increasing the informality.
Yet the domestic workers of this country, they do the work that makes other work possible. They provide the care that is needed in our homes. They take care of our most sacred spaces inside our homes so that many others, like maybe many of the people watching this livestream, can continue to work, whether they work outside of the home, or right now, as some of the papers study, telecommuting. If we look though at the experiences of domestic workers, and apply the lens of this research, I would ask all of you to consider that the view from the bottom up can be really, really helpful in complementing a macro view or a view from the top.
There seems to be some significant differences of the workforces, of our workforces from the workforce examined in the data of this research. Domestic work by definition occurs behind the closed doors of someone else's home. The working from home telecommuting, phoning it in, is not possible for this workforce. And in many ways, domestic workers have always been the original lower-income version of the freelancers. We often call them the original gig workers. For generations, this workforce has worked behind closed doors in the cash economy. And the work has not even been considered real work. It's often not considered skilled or professional. And yet, the pandemic reveals just how essential domestic workers are to our society and our economy. As we have been working on improving the rights respect and dignity of this workforce, we have come to assert quite forcefully, from our movement, that women's work is both "invisiblized" and undervalued when in fact it is the glue that holds families together, and is holding the economy together as well.
In response to what we saw with the pandemic, the total lack of support and relief for domestic workers in terms of the government response to the pandemic, our movement stepped in to construct a cash relief fund for domestic workers, raising $30 million for workers who didn't benefit from the PPP [Paycheck Protection Program] or who were really just off the grid but still had lost work. Domestic workers didn't have access to the safety net, which is why there's so much interest from cities all around the country in piloting Alia, the first portable benefits platform that we launched from within our innovation lab. We also began serving at the start of the pandemic domestic workers weekly with Alianza, our chat that communicates with over 250,000 Spanish-speaking domestic workers online. And I truly believe what we are beginning to see with this data set is that to construct essentially alternative economic indicators, economic indicators for the informally labor markets. We recently published a report with six months of our data, which we would be happy to share with this community.
Of course, we are a social movement, made up of domestic workers who are seeking to create structural and institutional change, to change labor laws and protections, to change the safety net. To change the way that COVID relief is operating and who benefits. And of course, we are at the forefront of lobbying for that short-term recovery and long-term reform. As we shift into the question-and-answer session, I would love to take the moderator's privilege here, and begin to kick off the conversation here by speaking basically on behalf of all women across this country, which is, what's the economic answer to the severe undervaluing of women's work? Why is it so difficult for economic and policy frameworks, to accurately capture the value of women's labor? Obviously social movements like ours have a big role to play in changing what we value as a society. But what would each of you say is your call to action to the research community? How do you think about this larger issue?
I would invite the panelists to come onto the screen and kick off the conversation, with something that has been bugging me for many, many, many years. Does somebody want to start among the panelists? Why is it so hard to value women's labor?
Lawrence Schmidt: I'm happy to jump in. One thing that makes this so challenging is that a lot of women's labor is quite literally a labor of love, you know? People are, for example, staying home, taking care of family members, taking care of their children. It's often a form of investment if you think about the decision to step back from the labor market to look after your children, or to take care of someone else's child, that's a form of investment but we don't always pick that up and we don't do a very good job as a society of subsidizing this investment. If you compare kind of the expenditures that we have here in the U.S. versus many other developed countries we're very low along those measures in terms of how much support we provide, and that's become really painfully apparent to essentially everyone when we look at this current episode.
Something we saw in our work on the pandemic, for example—if you looked at women, especially women with less than a high school education, and you are in a job like caring professions where you basically cannot do these things, if you do work outside the home you cannot—you are either somewhere else or you are not working. Those women were three times more likely than anyone else in the sample to have lost their job if they were less likely to be able to work from home. We really never supported this sector very much historically and it's very clear that there's this externality that comes from these professions. They are enabling others to... They're keeping our children safe. They're investing in them. And those are critical roles, but it's not always so easy to measure that based on what people are paid because many people, for example, are doing this labor for free. If you think about kind of the valuation metrics we have, they are not well-suited to capture the value of this critical input.
Shah: Before I allow for others to jump in, one of the things that we really grapple with in the domestic worker movement is the racial and historical kind of contributions to why at least in our view, why we think this work is, piggybacking off what you are saying, is so undervalued. And that the roots of this industry, you know, a large part of the roots of the domestic work industry is in slavery and the legacy of slavery, where this work is quite literally performed for free, in terms of domestic labor, caring for children, cleaning our homes and all the other domestic tasks that come about.
Of course, over the years, women have also performed and, have always performed some of that work for free as you are pointing out, right? I think in the United States we have a particular kind of recurring shameful legacy that continues to pop up around the impact on wages and everything else in terms of its correlation with race and particularly the status of women of color in the economy and in the political democracy as well.
You know, I would love to hear from others around why is it so hard to correct for this beyond the obvious racism and sexism? What can be done? What can be studied? What can be put forth? You know, and what is the call to action, at least to the research community? I think like an organizer, which is why I asked.
Thomas Lyttleton: Well, thank you, Paulette, for your really, really fascinating comments. I particularly like how you drew parallels between domestic work and unpaid care work, both as these hugely undervalued and female-dominated kinds of work. To Lawrence's point about us not being very good as a society at figuring out how to put value on things that we can't put a price on, and also back to your point about what should we do about it? I do think one approach that is really useful here is to focus more just on the time people are spending on things. Obviously, that's the approach that I and my cohort have taken in our paper, and there's a fantastic kind of history of really excellent work looking at tying inequalities and housework and care work. Showing exactly the extent to which women's work in these sectors is disproportionate and undervalued.
Diana Enriquez: My population is different in terms of the folks I'm studying, so I can answer what I would like to see happen in more of these kinds of jobs that we assume are more educated, more technical. It shouldn't be an issue, but as I showed, women don't earn the same rate, even when they are negotiating for themselves, which we argue in a lot of neoliberal spaces is the route to earning what you would like to have.
What I've seen a lot in my interviews was that women who do well and earn what men earn have male colleagues who share their salaries, and we have draped pricing and we've draped salaries in this veil of secrecy for all these different reasons. We've made it embarrassing to talk about salaries—all of this, the people who are able to ask for what they should earn have people who tell them what the market rate is, and they are not trying to guess. There are examples in other industries where women have really organized and been able to actually advocate for themselves and start earning more than their male colleagues, but they tend to be kind of unusual industries, like the champagne industry in France. In the U.S., women are organizing, they're sharing information, but what I've seen in especially freelance communities is that women still earn less than their male colleagues because this feeling that they assume is they're set by what their peers have been able to earn and there's still a lot of secrecy among the male colleagues who earn more than them.
On one hand, we need to talk about it and make money less embarrassing to talk about. The other thing I worry about is, the way antitrust laws have been enforced in the last couple of years, tend to go after freelance organizations. So even when freelancers try to organize and create some kind of industry standard, create some pricing transparency... There's a couple of cases that are going to courts, that instead of going after some of the huge monopolies earning a lot of money right now, go after these organizations where freelancers are really trying to advocate, because they are all floating in space with small businesses, and that really frightens me. That has a serious impact on the workers who are not really well-placed in their labor market to command whatever they want. I think allowing people to organize and share information, but also encouraging transparency around pricing, is really important.
Shah: The standard perspective from the labor movement, which we... You know, our organization considers ourselves a part of the labor union, though I think many people in this call will know, we, as domestic workers, do not have the right to formally unionize and we are excluded from many of the foundational labor law protections in this country. How should we make inroads? What are you all seeing as promising areas? Both in terms of arguments, right, to make towards policymakers, and those who are in positions of power, those who have at least some leverage over the way that things work, right? What have you found to be effective around the things the concerns that you're raising, the disparities that you are finding? What is an effective line of argument?
I will say from my perspective, I have found that there is a certain place for a moral and an ethical argument, but it doesn't take me all the way there. It's been a real challenge, I think, from the labor movement in articulating the case, essentially for doing what you are saying, which is to protect every hour of work. From our perspective, protect every hour of work, regardless of who you work for, where you were, how many employers you have. That is kind of the rhetoric and the ambition, the vision coming from our movement to, in some ways, prevent gaming of the roles that we have and just create a single set of rules. I don't know if that is an effective argument in the circles you're in, and I would love to hear from you all, what works in terms of changing actually the way that people think about the dilemmas you are raising?
Schmidt: Just to jump in and wave my finance professor hat for a second—we often talk about systemically important organizations and parts of the economy. I've heard many sectors that have been thrown out there as being systemically important. I think something that this particular episode has made crystal clear to everyone is how systemically important these caring professions are in terms of enabling everything else that takes place. One example we have this debate where both sides of the aisle, as far as I can tell, were very supportive in providing funding for schools, yet because that was a bipartisan issue it got held up for months and months and months. And if you thought about the aid that could've been provided by the federal government to assist these caring occupations which had to make investments in physical, you know, PPE, things like that, possibly hiring additional workers to help absorb the many new challenges that came with low-density spaces and things like that—instead of doing that, we just waited six months for reasons I don't understand.
Nonetheless, if you thought about the cost that we impose on society, even just by a very simple metric, which would be the loss of tax revenue, income tax revenue, from all of the parents who stepped down in order to take care of their children. I don't know the exact number; I'm kind of interested in cultivating this based on some follow-up work. I don't know this number, but I'm very confident it's an order of magnitude, possibly more, larger than what we ended up sending to schools. Just one of many examples here. And so thinking about the systemic importance of these types of jobs, and if this part of our society breaks down, everything else breaks down, too—that is something we really learned from studying the data on the pandemic, and something I hope we don't forget.
Shah: Diana or Thomas, anything you would like to add?
Enriquez: One thing I want to bring up again that I mentioned in my presentation was that a lot of the reasons people become part-time freelancers is they cannot afford to go to graduate school. Often, they're carrying a lot of student debt already and they're pretty young. Also, just getting an entry-level job and sometimes even switching to a mid-level job, if one reads all the descriptions on what it takes to be hired into a firm these days, the expectations are so astronomically high that you would need to be almost a senior-level person to get a mid-level job, and you need to be a mid-level person to get an entry-level job.
Shah: I don't think I would even get into college these days.
Enriquez: Yeah, don't know how anyone doesn't look at that and think something isn't desperately broken. On top of that, what it also poses a number of times, especially the male freelancers I talked to, talk about how they're hired on to projects they hadn't had any experience on, but the person said I really believe your potential. That doesn't happen for women in my studies very often, and it really doesn't happen for women of color. They often have to go really far out of their way to take unpaid work and do all these extra projects, and show "I can do this backwards in high heels anytime you want because I've already done it and I really did that at a cost myself," where their colleagues are getting hired on potential in an economy that looks... It's just crazy what you are supposed to have accomplished to get a mid-level or entry-level job. You have these part-time freelancers doing extra work on top of everything else. I look at that and say, something is really not working. And that is my empirical evidence for showing how much it's not working.
Shah: Thomas, do you have something to add? Otherwise, I can go to questions from the audience as well.
Lyttleton: Yeah, a couple of things to add, trying to hit a slightly more optimistic note, though I'm not sure optimism is quite the right word. As Lawrence slightly hit on, one effect of the pandemic means that we have had a conversation about care work that has been unlike any we have had before in its prominence and kind of media and newspapers and everything like that. I think there is potentially an opportunity to turn that into real social change, particularly because I think that it's always been the case for low-income Americans that America does not subsidize childcare to the extent that many of the countries do. It's incredibly expensive, and so low-income Americans have always had to scramble to find childcare solutions for their kids. That was something that high-income Americans really, really experienced during the pandemic. You couldn't send your kids to childcare for much of the last 12 months. The second thing I would say is, I got into doing this work because I care about equality, but there's also an extremely hard-headed, product, set of reasons to do productivity, that the government should be funding the stuff? We show in our work on telecommuting that telecommuting really, really worsens parents' work environments, even prior to the pandemic, when schools were open. So it should be in the interests of employers to push for subsidized childcare for parents if they are going to be working from home.
Shah: We've got a bunch of really good questions coming in from the audience, and I will throw one of them out there to the three of you. Could employer flexibility around working from home during the pandemic lead to greater flexibility in the workplace, generally for low-wage workers? In other words, could there be a trickle-down effect for low-wage workers? What do you guys know about that? Is that possible?
And to be honest, just as a low-wage worker advocate, low-wage workers definitely do need flexibility, but they also need stability. They actually need enough money to pay their rent and so it's kind of balancing both the flexibility, precisely because of the childcare family and other issues of just being a human, and then also because stability is basically just a math problem. You know? You need to earn enough money to be able to feed your family and put a roof over your head. So the flexibility—in my perspective, we're over-indexed right now to low-wage-worker flexibility. We do need that and workers do want that. There is no question about it. But they also need a baseline level of stability in order to be able to survive in what is a pretty brutal economy right now. So, yeah, what would you think about the relationship between the two?
Enriquez: I look at Danny Schneider's work at Harvard and the shift lab, and I'm worried. It seems like it's a deliberate choice to make scheduling really unstable. It prevents people from having other jobs, creates a lot of control by the employer. I also look at the surveillance technologies that are rolling out to try to control even more workplace things, and I think it would be important to have that, but it seems like that's not something they are willing to do as employers.
Lyttleton: Yeah, to jump off on that, I sort of worry about the opposite coming to pass, where if there's a long-term shift to remote work, and I think there is good reason to think there might be, that this is going to lead to an even more bifurcated labor market. It's overwhelmingly professional jobs that are able to go remote, and those tend to be the workers with the most bargaining power. And if you remove them from the concerns of workplaces, I think it could be leading to a situation in which workplaces are even worse working environments than they typically are for low-wage workers at the moment.
Shah: Because their interests are bound up together?
Schmidt: Yeah, from our look at the data, what you see there is a very strong correlation between income and the ability to work remotely. And if you look at a lot of the types of occupations that are even within industries, that are kind of supporting, that cannot work remotely, they're the ones supporting kind of the office infrastructure, or the various kinds of in-person facilities for workers that some of which actually can do their jobs remotely. So I would be, unfortunately, more worried about how this is going to weaken these opportunities, not strengthen them going forward because a lot of the support-type roles seem like they are potentially in jeopardy, when we moved to these strange new ways of getting things done.
Shah: Other questions are coming in around what policies does the panel believe should be enacted in the new administration to support the kinds of challenges, and we've already touched a bit on subsidies, potentially, for unpaid caregiving but also childcare as well. Are there other kind of common—I mean, I feel like social movements have probably been articulating for a really long time, but you know, do we have a moment? I think, you know, coming from the perspective of social movements, there is a real opportunity right now to do what was being suggested earlier, which was to not unsee what we have seen, and to actually use the pandemic as an opportunity to push through a new set of protections and scaffolding for working people in this country. What's on the agenda? What should be on the agenda based on what you are seeing, what you are learning?
Enriquez: I'm personally really nervous about the Prop 22 results in California this past election. There are a lot of people from Uber who are on the administration. That makes me really nervous, because I can see them spending money trying to erode other types of work and create this really unstable gig story about how we are all entrepreneurs and it's going to be amazing.
I separate gig and freelance work specifically because gig workers on platforms have one employer in control of their salary. They cannot negotiate any of their rates. They really have very little power. They have sort of a one-way structure. Freelancers are in a different category, and I think we don't really know how to talk about different types of alternative work. There needs to be a difference in the way that we treat gig workers and the way we treat freelance workers as categories. As I described it, I really do think a lot of freelance workers look more like small businesses and they deserve that kind of support. We need to look into that a little bit more closely. I think there's a lot of nuance there that we don't totally understand. But Prop 22 makes me nervous and I think also AB5, which was the law that rolled out in California that was supposed to support gig workers earlier had a negative effect on the freelancers that were there. Again, having clear language about who is participating in the alternative workforce is important. I really, really hope that Uber is not about to design how we treat all of our alternative workers because that scares me.
Schmidt: As with many recessions, do you find that actually can be a great opportunity for people to retool and rescale? It's a thing that you can be investing in, especially while remote technology, remote learning has sort of become the standard at all levels of education, principal delivery of that content would be much more doable now than it would've been a year ago. Normally you would see that more people are leaving and going and getting educated in bad times and that is not happening this year. That seems like another place where we could, to the extent that we do think they are going to be long-term or at least medium-term reallocations of labor that will have to take place, just as we can to deal with the aftereffects of this in the next few years, trying to support workers by helping them to acquire new skills to replace the ones that may have been displaced, would of course be an excellent way to channel resources right now.
Shah: Any other ideas? Oh, gosh, guys, we are going to have a Zoom bombing. I'm sorry. I'm also a working mother from home, taking care of my child. Any other thoughts about what should the Biden administration do? We've got training, childcare.
Schmidt: I said it before, I will say it again: schools. In my mind, that's the number one thing we need to sort out. We need kids in school, safely. We need to spend the money. We need to spend to make that possible, so that people can get back to work; they can have that reliable opportunity back. To me, the return on that investment is just massive, relative to almost anything else. We don't need to... We sent the same amount of money to every firm and something our research showed, we sent more money per worker to those that were less exposed. We keep talking about these uniform type policies—$2,000 checks, when we know that this is a situation where some workers have been blown up and other workers are completely fine, and that kind of necessitates a very different type of response.
Now, politically, that is more challenging, admittedly, to do targeted responses. So if we want to spend money across the board, we should spend money on unblocking, making sure the infrastructure that supports our labor market is working. And that's not what I'm hearing in the discussion and it's really troublesome to me. It's not that I'm opposed to sending checks to people, it's just there are many people whose paychecks stayed exactly the same. If we send bigger checks or send them for longer periods of time to the people who have been really displaced by this, again through no fault of their own, that would be a much more effective way to spend our resources, especially with the types of dollar amount that we are talking about with the current policies.
Shah: Anybody have a one-minute last answer? [...] Otherwise, we are going to let that be the last word and turn it back over to the conference planners. Thank you.
Lyttleton: One thing, just very quickly. There are various ways in which we currently set up economic policy that make it hard for parents to work part-time, and it should be okay for parents of either gender to work part-time so that they can look after their children. I think that is a really valid choice for people to make. If you're getting health insurance through an employer for example, you often don't get that if you are part-time. And I think that is something that the federal government should think about ways to change.
Shah: We agree from the domestic worker movement about that, and we look forward to continuing to work with all of you on these issues and especially on this targeted policy around care workers. We are going to take our shot right now, in terms of pushing through that change, at least from the perspective of our department. Thank you to all three of you. I will turn it back to the organizers.
Fee: Thank you for everyone who has participated in today's session. On behalf of the organizing committee, I want to acknowledge all of our participants for their time and insight shared during today's informative discussion. I also want to thank our audience for joining, and remind everyone that this conference will continue at the same time tomorrow, with the conversation focus on education and credentials. The day will mirror today's setup and will open with remarks from President Harker of the Federal Reserve Bank of Philadelphia, followed by panelist research presentations and discussions. As a reminder, registration links and the full agenda are available on the conference website, as well as on the button above. In a moment, you will see a link to our daily survey. We would really appreciate any feedback you have for us, as we continue to organize this event in the future. Once again, thanks for joining us and have a great day.