Secretary of Labor Thomas E. Perez

Remarks at the Department of Labor Future Of Work Symposium, Washington, D.C., December 10, 2015

[as prepared for delivery]

Good morning. Thank you so much, Sharon, for that kind introduction. More importantly, thank you for your incredible work — for your service to the Department, to American workers and to the nation. You're truly a force of nature, and I count on your wisdom and counsel every single day.

The truth is: looking around this room, just about everyone I see is a force of nature. And that's why I know we're going to have a dynamic conversation about the most fundamental challenges we confront in the world of work. We truly have an all-star cast of panelists, experts and thought-leaders — men and women who've engaged on these issues intellectually and many who've experienced their real-life impact. As Sharon pointed out, they bring a remarkable breadth of knowledge, experience and credentials to the table today. You'll hear from economists and philanthropists; venture capitalists and worker advocates; academics and public servants; employers and labor movement leaders; and many, many more.

The issues we're tackling today are complex, and we're not here to prescribe or endorse specific solutions. We won't conclude by unveiling a set of deliverables. We won't all walk out of here having settled on a 5-point action plan. Today is about convening thoughtful people, starting to catalyze consensus and identify greater points of harmony.

This is an ongoing conversation — it didn't start today, and it won't end today. From our perspective at the Labor Department, this conversation will continue to inform our work in the next year but also far beyond. If there are things we can do in the next 13 months, we will do them. But these issues will continue to be front and center well beyond the end of the Obama administration. That's why it was important that our sessions yesterday, today and tomorrow include robust engagement with DOL career staff. We are actively contemplating what these changes in work will mean for the programs we administer and the laws we enforce. We're figuring out how to adjust what we do, in a way that fulfills our statutory mandate without creating unnecessary impediments to innovation.

To have the most constructive conversation possible, we've got a diversity of views gathered here. That's by design. Big challenges require big tables, with all kinds of folks invited to pull up a chair. The idea here wasn't to build an echo chamber, where we just reinforce each other's opinions. If everyone here agreed with everything said by everyone else, we wouldn't have invited the right people.

We can't be afraid to shrink from difficult questions, creative tension or even a few uncomfortable moments. So I invite you today to keep an open mind, to engage in spirited dialogue, to challenge each other respectfully and also to challenge yourself too.

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Sometimes to know where you're going, it's helpful to know where you've been and how you got here. So to better understand the future of work, I think it's instructive to look back at the "past of work".

At the turn of the 20th century, a typical worker was struggling to make sense of a changing world. He likely grew up on a farm, but moved to the city where new Industrial Age factory jobs were abundant but also absolutely punishing, without any dignity or opportunity to speak of. Deadly industrial accidents were fairly commonplace in those days — they were considered little more than capitalism's collateral damage — and of course there was no OSHA to set standards or conduct inspections.

This typical worker might've worked in a bakeshop, where wages were dismal and safety regulations non-existent. For long hours each day, he toiled in a brutally hot, rat-infested cellar with dirt floors, breathing in fumes from the coal oven and coughing incessantly from the flour in his lungs. There was no real promise of upward mobility or reward for hard work. Things might've gotten better, except that in 1905 the Supreme Court ruled in Lochner v. New York that limiting bakeshop workers' hours to 10 a day was unconstitutional because it constituted an "unreasonable, unnecessary and arbitrary interference with the right and liberty of the individual to contract."

The nation struggled to come up with a social contract to fit the new Industrial Age. Eventually, the Great Depression would be the tipping point, as mass unemployment and the worst economic crisis in our nation's history led to progressive laws regulating commerce in a way that made work more tolerable and remunerative. The Lochner era would end in 1937 with the Court's ruling in West Coast Hotel v. Parrish, a case involving wage violations against a chambermaid. The National Labor Relations Act would codify collective bargaining rights in 1935. The Fair Labor Standards Act of 1938 would set a national wage floor and institute time and a half overtime pay.

And then as we moved into the middle part of the 20th century, thanks to a confluence of factors — strong unions, the cementing of the social contract, a world war requiring unprecedented economic output — we saw broad-based growth powered by a growing, thriving middle class.

In the post-war years, greater numbers of working families enjoyed rising wages and job security; a 40-hour work week and paid vacation for quality of life; worker's compensation if they became injured on the job; a pension for a secure retirement; and more. And the prosperity and economic stability of the era were directly tied to a national consensus about the dignity of work, to a belief in the development of human capital, a commitment to the idea that our workers are our most precious economic asset.

But around 1980, things began to change. That's when productivity and wages ceased rising in tandem. People worked harder and smarter, producing more in less time... but without getting ahead, without getting a fair share of the value they helped create. Union density, which had already been on the decline, began to fall further. The security of a defined benefit pension gradually became a thing of the past.

Women continued to enter the workforce in droves, an enormously positive development of course, but our laws never really came out of the Ozzie and Harriet era when the society and the culture did. Two-income families became the norm rather than the exception — in part out of economic necessity — with huge implications for the American economy and the American family. In the three decades leading up to the Great Recession, the amount of time middle-class, married mothers spent working for pay increased by nearly 60 percent. That means families are now contributing much more time to the paid labor force, without crucial release valves that smart policies around work and family would provide.

Work arrangements also began undergoing a profound change. In the 1950s, 60s and 70s, so many American workers had only one employer for their entire careers. And within the four walls of a given factory, for example, everyone from the executives in the boardroom to the guy who cleaned the bathrooms worked for the same single entity. That created stability, as well as two-way loyalty and unity of purpose that worked to everyone's benefit.

As the 20th century approached its final years, however, that model began to break apart, especially in industries like hospitality and janitorial services. As our Wage and Hour Administrator David Weil has so ably documented, companies began to shed activities that didn't relate directly to their core competencies. Instead they began to rely on a proliferation of subcontracting, temp agencies, labor brokers, franchising and third party management.

Workers could be paid by one entity, while their supervisor works for another, while neither has a direct relationship to the name on the building out front. To use a telling example cited by David, when you check into a hotel chain these days, the people who clean the rooms, cook the food and carry the bags are likely not employees of the mother ship — be it Marriott, Sheraton or some other.

Traditional employer-employee relationships are breaking apart — the workplace, as David puts it in the title of this book, has become "fissured". And as his subtitle indicates, it's "why work became so bad for so many". The new, less stable, arms-length relationships too often undermine labor standards, leaving workers exposed and vulnerable.

And now in the 21st century, we're encountering a new change phenomenon — the emergence of the gig or on-demand economy. On the one hand, there's plenty to be bullish about. It's an exciting, tech-driven entrepreneurial development that's clearly tapped into powerful consumer demand. From workers' perspective, it enables people to monetize existing assets, to turn their car or the extra room in their house into additional income, while giving them far more flexibility than their grandfather, the 1950s company man.

But the on-demand economy also brings old questions about labor standards and protections into sharper focus. What happens if you get hurt driving for a rideshare service or assembling furniture for a customer identified by a digital platform? Are you an employee, with all the rights and benefits that come with that designation? Or are you simply an independent contractor, who's supposed to have the power to look out for yourself?

These are important questions that we're committed to addressing in partnership with creators, innovators and workers in the on-demand economy. I've heard great things about the conversation during the "Positive Choices in the Digital Sector" session late yesterday afternoon. And early in the new year, I'll be heading back to Silicon Valley for listening sessions and further engagement with high-tech industry leaders and workers.

But I think it's important that we maintain some important perspective here. The challenges associated with the on-demand economy in many ways aren't really new ones, and they're not unique to app-driven digital platforms. We've been dealing with them for decades, before a phone could fit in your pocket, well before you could order groceries by touching an icon on a hand-held device.

So the on-demand economy will certainly be a focal point of our discussions today, but not the only focal point. I think it's important to have a more holistic conversation than that. We need to take a broader look at the ways work is evolving and its implications for the future. We need to grapple with change in low-tech as well as high-tech sectors.

For all the buzz surrounding these new platforms, the available data suggests that the on-demand economy still represents a pretty narrow slice of workers, earnings and economic activity. But the growth of — and the sensation surrounding — the on-demand economy can help shine a light on some trends that have been developing for several decades now, in sectors across the economy.

Without question, the on-demand economy represents profound change in the way we work in America. But the truth is that our economy has been dynamic for hundreds of years. Change is indeed the only constant throughout our history. But we've always found a way to manage change, to pivot and adapt, to change our laws in a way that continues to protect, train, and empower workers.

We eliminated child labor. We overturned Lochner and created minimum wage and overtime protections. We amended our laws to provide collective bargaining rights in construction — the original "gig" workers. We established OSHA. We passed the Equal Pay Act, though we've certainly got some unfinished business to close the gap between women's earnings and men's.

Fast forward to very recent history and we passed the Affordable Care Act, which was designed expressly to relieve the "job lock" that our health insurance system had created for too many in our more transient, fluid economy where people jump from employer to employer over the course of their careers. Even more recently than that, we came to the understanding that home health workers aren't "companions"; they're professionals doing increasingly important work that's never been in higher demand. So we changed our regulations so they could get the basic labor protections they deserve.

The point is that a nation that successfully moved from farm to factory to mainframe can certainly find a way to harness new digital technologies in a way that ensures workers are fairly treated and prosperity is broadly shared.

We can't fall into the trap of believing that the latest innovation is so different and so transformational that we simply can't accommodate and acclimate. One of my least favorite arguments is that "structural change" — having to do, for example, with globalization and technology — means we have to accept inequality and vast opportunity gaps. Imagine if we had said that in the early 20th century — we might still be living in the Gilded Age.

I refuse to shrug my shoulders, throw my hands in the air, and say that the degradation of work is the price we pay for smartphones; or that the cost of receiving same-day on-line purchases is denying someone their basic employment protections. And at the same time, we can't be afraid of technological change. I just as emphatically reject the notion that we have to put the brakes on innovation in order to preserve or advance the dignity of work. We need to facilitate innovation, keeping in mind that previous generations of automation did not cause the sky to fall and did not portend the end of work, as some alarmists predicted.

The Labor Department's mission is to champion the rights of workers, and we will do so no matter what form their work takes. It doesn't matter whether the workplace is virtual or brick-and-mortar — whether the work is associated with a mile-long manufacturing facility or a website — we will continue to enforce labor standards and advocate for the men and women doing that work.

To navigate this change we're experiencing — to make sure the future of work is one of dignity, security and upward mobility — what we need to do is summon our values. We need to return to first principles, following the North Stars that have always guided us toward greater progress. We need to remember that the Gilded Age was not a golden age and that we all succeed only when we all succeed. We need to recognize that America is strongest when more people have more... when the economy works for everyone and not just a privileged few... when we create shared prosperity. We need to come up with a Social Compact 2.0 based on enduring values but relevant in a modern world... recognizing that change is a constant, adjustments may be necessary, and certain values are timeless.

Some of you were at the White House Summit on Worker Voice two months ago, where President Obama laid out a few principles that should guide us going forward. I've also been doing some thinking about them, and here are a few ideas:

  • If you work full-time in America, you shouldn't have to live in poverty. You shouldn't have to rely on food stamps to put a meal on the table. You shouldn't have to get your dinner at the neighborhood food pantry — whether you are working, injured on the job or you've lost your job. And you should have access to the education and training you need to work your way up the ladder of middle class success and stability.
  • You should be able to have a job and look after your family. We hear a lot of lip service paid to "family first" and "family values". Let's have public policies, and corporate human resources policies, that actually back up those words with action. We're one of the few countries on earth that forces people into impossible choices between the job they need and the family they love. It's time for us to lead on leave — paid family leave and paid sick days, as well as affordable child care and reasonable scheduling practices.
  • Everyone should have a safe workplace, because no one should have to trade their lives for their paycheck. 
  • Worker voice is an essential ingredient of business competitiveness, a vibrant middle class and broad-based economic growth. There are many different ways to amplify that voice. Unionization is an important one. The German co-determination model is another. Pick some vehicle or strategy that gives workers some say on the job.
  • Diversity is one of America's most powerful competitive advantages, and our most forward-looking businesses know it — it's a guiding principle for them because it's smart and pragmatic, not because it's politically correct. I have to confess: I don't really care for the word "tolerance", as in racial "tolerance" or "tolerance" of diversity. We tolerate Brussels sprouts; we embrace diversity. Diversity and success go hand-in-hand, they're not either-or.
  • Think long-term. The best investments we make — as a federal government or an employer — may take time to reap dividends. The main return on pre-k programs, for example, comes decades down the road, in the form of a skilled and educated workforce. When Henry Ford raised the wages of his assembly line workers a century ago, it was less money in his pocket initially, but a stronger Ford Motor company and mightier U.S. economy eventually. For a publicly-traded corporation, the thing that juices the stock price tomorrow might undermine the foundational strength of the company. Several months ago, a Fortune 100 CEO told me that too many businesses and stakeholders too often get sucked into what he called "the quarter-by-quarter results vortex."
  • Rejecting false choices: Government can and must create a strong climate for business, at the same time that it invests in a strong workforce. Those two things go entirely hand-in-hand. Likewise, it's simply not true that employers need to pick between return for their shareholders, a good product for their customers, and fair treatment of their workers. They can and must do all three. It's a not a zero-sum game. I've met so many employers nationwide who get this, who are embracing so-called conscious capitalism, who believe in measuring success by stakeholder value as well as shareholder value. We'll hear today from Andrew Kassoy of the B-Corp movement who's one of the most eloquent advocates for this approach.
  • And one of the false choices we need to reject — especially in light of the emergence of the on-demand economy — is the one between innovation and regulation. Inclusive innovation is one of the values with which we must keep faith. Business innovation can never be an excuse to compromise labor standards or leave people behind. Innovation and regulation have comfortably co-existed in the past, not as contradictory but as complementary forces, in a way that leads to long-term growth and shared prosperity.

Worker protections are not a quaint or musty notion, a square peg to a modern economy's round hole. They represent timeless values, not to mention the law of the land. Being creative and entrepreneurial does not give you a free pass here. We can embrace cutting-edge business models without sacrificing workers' rights. We should celebrate and encourage innovation, while understanding that there's nothing about it that requires a wild-west approach or race-to-the-bottom on labor standards. In fact, innovation that exposes workers to unnecessary and unlawful risk isn't true innovation at all.

There are a lot of smart people thinking about these issues and looking for a way to avoid these false choices. There's the proposal to create a third classification, something between employee and independent contractor. There's the portability model, decoupling benefits from your job much the ACA does. These and other ideas will be discussed today. And again, I hope we'll all listen to each other's proposals, with an open mind about the benefits they provide to workers, as well as the challenges they present.

But whatever the specifics, I think the Future of Work should meet certain basic tests.

The Future of Work can't be one where an airport baggage handler — a job that used to provide a middle-class living — now can't afford to buy birthday or holiday gifts for his children.

The Future of Work can't be one where a fast food worker is spending the night in her car with her kids, or is threatened with his job for calling in sick.

The Future of Work can't be one where workers have no certainty or predictability, where they're at the mercy of just-in-time scheduling.

The Future of Work can't be one where a school bus driver has to take her baby on her route with her because she can't afford child care and doesn't have paid leave.

The Future of Work can't be one of diminished clout for the labor movement, where collective bargaining rights are whittled away, where worker voice is crushed, where companies can get away with paying so-called "PermaTemps" a fraction of a full-time employee's salary for doing the same work.

These aren't hypotheticals. These are the stories of people I've actually met over the last few years, hard-working people who want nothing more than a fair shake but are getting a raw deal. For their sake, in their honor, we need to build a Future of Work where hard work is rewarded with a fair wage, where your zip code does not determine your destiny, where a growing economy works for everyone, where the wind at our back propels everyone forward, where the rising tide lifts all of the boats in the water.

I believe the Future of Work is ours to shape, consistent with the best American traditions of forward progress and fundamental fairness. The challenges are formidable, without question. But this isn't the first time that we've had to manage change or call an audible, to restructure old ways of doing business in order to align with a new economic order. We can do it in a way that rejects those false choices and creates shared prosperity. We can do it, by thinking long-term, by prioritizing the next generation over the next budget cycle or quarterly earnings report. We can do it, in a way that holds fast to our values.

Thank you for coming today, for your participation and contribution to this important event. I look forward to a productive day, and to continued dialogue down the road.