Government As a Catalyst for Innovation and Flexibility

Government is sometimes viewed as a constraint on or an alternative to the market or private institutions. American political culture has always emphasized a limited role for government in private affairs, and especially, in private employment relationships. Therefore, the vision for government that grew out of the New Deal was for government to set minimum standards on a limited set of basic employment rights and then set the rules of the game for the parties' efforts to improve on these minimums and expand into new areas, as their interests and circumstances warranted.

This is a necessary, but not a sufficient, image or role for government as an actor in the labor market of the future. Instead, government and, most important, government leaders also need to have a clear vision and active strategy for building and supporting the innovative capacities of the complementary, private institutions discussed here.

The consensus starting point for government policy in working with both market forces and local institutions is to support education and training—lifelong learning opportunities for all workers.^[15] Education, skills, and human capital are essential foundations for getting ahead in the labor market today.^[16] Knowledge is both a critical asset for individual firms and for the overall economy and a source of power in the labor market. Government's unique responsibility is to provide the resources to support early childhood and basic education, and to work in tandem with other business and labor to encourage and support investment in lifelong learning for adult workers. If government leaders share the vision for the new institutional framework proposed here, they need to provide incentives and resources to workplace and labor market education and training programs, governed jointly by workers, employers, and relevant community representatives. This would ensure that scarce public resources are put to use in building general human capital, grounded in the skills needed in the local markets, while at the same time creating an incentive for these different stakeholders to work together on a collaborative basis.

A second role for government is also rather traditional, that of setting the basis for employment standards and enforcing the basic human rights that Americans expect at work. What rights to include in this list and at what level these standards should be set will continue to be key political issues, in the best sense of that term. But whatever standards are included and wherever the minimum standard is set, government must take a number of additional steps if it is to serve as a catalyst for innovation and a complement to what private actors are already doing to promote these objectives.

Government policy must be informed by what the best of private firms, unions, and other institutions are doing to address these objectives. This requires both an active research and analysis capability and active involvement of professionals, advising and consulting, to provide input to policy making and especially to its administration. This was the legacy of John R. Commons and his approach to employment policy administration.^[17] It was the right approach then, and it is the right approach today.

As suggested earlier, government should look for opportunities to provide more flexibility to those employers and workplaces that have the institutional capacity in place to achieve labor policy objectives and that have a record of responsible behavior that justifies entrusting them with self-governance/enforcement responsibilities. Now comes the tough problem: Just what institutional capacity is necessary? Does it have to be limited to where a traditional union is present? If so, we limit the potential of this approach to a fraction of the labor force and reinforce the lines of demarcation across work groups that today's organization of work has rendered anachronistic. Moreover, it would freeze the institutional relations of the past, along with the embedded adversarial culture associated with formal union-management relations. But to simply extend it to any workplace that claims to have any form of employee participation would not be responsible and would lack the legitimacy and independence workers expect and indeed require. So America needs a new institutional form that has sufficient independence and expertise and power to carry out these functions, is representative of the full range of employees covered by the regulations, and is accepted by both employees and managers as a normal part of the workplace culture and process.^[18]

Workplace safety and health provide the clearest opportunities for taking this approach, since there are established performance metrics against which workplaces can be judged, and the elements of a comprehensive system for managing and monitoring safety and health are widely known and generally accepted. A technically competent employee participation process is widely accepted as a critical element in this system. Finally, in unionized settings, the grievance procedure provides a channel for resolving disputes and claimed violations of worker rights. OSHA provides an appeal system for all workers, unionized or not. These same criteria could be used to extend self-governance systems to other employment standards' areas, wherever there are accepted verifiable performance metrics, knowledge of causeand-effect practices that contribute to high performance, an effective, established system for employee participation, and a system for resolving disputes or claims involving individual rights. Without meaning to limit the possible areas for experimentation, I would suggest family and medical leave, wage and hour (particularly overtime and compensatory time) issues, and equal employment opportunity are especially well suited to different types of experimentation with this approach.

To make this approach work, significant expansions of the use of high-quality alternative dispute resolution systems will be needed. There is already significant experimentation under way in the use of alternative dispute resolution (ADR) (essentially mediation and arbitration) in resolving equal employment opportunity cases. Our field pioneered the development of these techniques in labormanagement relations. But the stature enjoyed by mediation and arbitration in this domain did not occur overnight. Instead, mediators and arbitrators earned the respect of the parties and the courts the hard way—they learned how to make these processes work in different settings. We need to now do the same with respect to the use of ADR techniques in the broader area of employment rights' disputes. This might best proceed slowly and carefully, because there is tremendous potential for poorly designed systems or poorly trained neutrals to discredit ADR; to wit, the totally and unacceptable arbitration "system" used in the securities industry that gave rise to the Gilmer decision. In that model, neutrals are not mutually selected or chosen, and employees do not voluntarily choose to use arbitration. Instead, they must accept this proviso as a condition of employment. In short, the system is designed and controlled by the industry. We can do better and have, in the best traditions of our field, articulated a set of "due process protocols" that set minimum standards for these systems.^[19] At least one state agency, the Massachusetts Commission Against Discrimination, has now gained nearly three years' experience using the principles embedded in the protocol, and the Equal Employment Opportunity Commission (EEOC) has likewise nearly a year of experience with a mediation program.^[20] We need further experimentation with different approaches, and, most importantly, we need to monitor and evaluate these programs rigorously.

Finally, no updating of national labor and employment policies will be complete, and the new institutional structure and strategy outlined here will not be possible, unless we restore the right for workers to choose whether or not to be represented by a union or some other organization. American labor law and our inability to update it are nothing short of a national disgrace. Study after study has documented the failure of labor law to provide workers with the means to implement what the international community has (correctly) described as a fundamental human right, the right to join a union.^[21] The issues that need to be addressed to fix the documented flaws are likewise clear. Delays in processing elections must be reduced; strong measures are needed to eliminate discharges for union organizing, and those that occur should be dealt with expeditiously and severely; and the ability to get a first contract, when a majority votes for union representation, must be ensured by arbitration if necessary. While I, along with many others, have specific views on how to address these and other problems with the law,^[22] the specifics are clearly legitimate topics of debate. What should be unassailable is the need to address them.

Fixing the recognition process is only the beginning of comprehensive updating of our national labor relations policy. If we are to encourage and build on the new forms of employee voice and next generation unions suggested here, American labor law needs to support these alternative forms of participation and representation. If this is done on a contingent basis—i.e., new forms of participation would only be allowed in settings in which the employer fully respects workers' freedom of association rights (to be specific, where the firm does not have a past record of, or is not guilty of, unfair labor practices when workers attempt to organize)—we would create further incentives for employers to comply with this principle.^[23]

While these are new and, I recognize, controversial ideas, I believe they can work and fit into the American traditions of decentralized, flexible, and ultimately pragmatic workplace cultures and institutions. Like the changes in the representation process called for previously, the specifics should be open to debate, but there should be no serious debate about the need to update this part of national labor policy. Workers want to participate in decisions affecting their work; employers depend on significant worker input to improve quality, productivity, and customer satisfaction. These issues cannot be separated from working conditions or other issues the law reserves for collective bargaining, and changes in the law are needed for public agencies to implement self-governance systems.

The final plank in a new role for government would be to promote building institutional capacity. The full arsenal of approaches needs to be employed, including grants to local committees and organizations to develop their infrastructures and professional skills, similar to the "New Directions" program used during the Carter administration, to support training of a cadre of industrial hygienists, tax incentives for joint training funds, and presidential leadership aimed at building a new culture of legitimacy and collaboration among employer, labor, and community group leaders.

^[15]See the emphasis placed on education and training in the Secretary of Labor's 1999 Labor Day report, Futurework, available at http://www.dol.gov/asp/programs/history/herman/reports/futurework/report.htm

^[16]For a recent review of the evidence showing increased returns to human capital, see Levy (1998).

^[17]Commons 1923.

^[18]For various proposals for how to implement this approach to monitoring and enforcing workplace regulations, see Levine (1997), Marshall (1997), Schneider (1997). For my own suggestions on how to do this, see Kochan (1998).

^[19]See Zack (1996).

^[20]For an evaluation of the Massachusetts experiment, see Kochan, Lautsch, and Bendersky (1999).

^[21]For a review of the evidence, see U.S. Departments of Commerce and Labor (1994).

^[22]These are laid out in more detail in Kochan (1998).

^[23]See Kochan (1998).