The core idea is as follows:

• Educational providers organize on-campus and distance learning programs in ways that are visible and accessible to dislocated workers and their employers (with discounts as appropriate)
• Employers and government channel an increased portion of dislocated worker placement resources into educational programs
• Instead of job hunting in an uncertain economy, workers are pursuing educational opportunities and building needed skills that will later be available to help fuel a recovery

It is perhaps clear the investments in training and development for dislocated workers is a high value add use of public resources, but why would employers devote some (and in some cases substantial) resources to employees who are about to be laid off – particularly when it is limited resources that are driving the need for layoffs in the first place? First, many employers have a sense of social responsibility and a commitment to mitigate the difficulties that their employees will face – they want to do the right thing. Second, they are sending a signal to the remaining employees that they too can expect fair treatment if things get even worse – so the motivation of the remaining employees is also a consideration. Third, in an economic upturn, they may reach out to these former employees and fair treatment during a layoff leaves the door open to rehiring people (who have valuable skills and knowledge) at a later date. Fourth, some employers have contractual commitments to provide support to displaced workers – although these benefits are generally much less generous for non-union workers.

Within the education community there are many reasons for providers to be interested. Many universities and colleges are making education more accessible via distance learning technologies; also many universities and colleges have entrepreneurship centers that can play key roles; public universities have extension programs that are oriented toward working with employers in this way; community colleges have a long history of tailoring programs to match local employer needs, and apprenticeship pipelines in many trades are under-populated.

Thus, given the potential alignment of stakeholders, why not consider a national initiative smaller in scale than the GI Bill, but comparable, that would offer employees who are about to be laid off the option to enroll in a university, college, community college or apprenticeship program? The parameters might be as follows:

• Employees would have the choice to enter an employer-sponsored educational program rather than severing their relationship with the employer.
• Larger employers may be able to contribute to college tuition and stipends, somewhat exceeding the cost of a severance package and outplacement services, but with the extra costs offset since they are spread out over 2-4 years and represent a continued connection with the workforce in the case of an upturn in the economy.
• Smaller employers and those facing catastrophic failure may not even have these resources to contribute, but might still work with regional economic development initiatives and educational providers in new ways.
• Additional contributions to educational costs would be covered through federal, state and local support out of employment training funds and other sources (combined with unemployment benefits)
• Special university, college or apprenticeship programs would be offered to employees, which might include special tuition packages, on-campus re-training centers, and other custom services. In some cases universities and community colleges might be able to cover health benefits for the displaced workers and their families while the workers are enrolled as students. Educational providers can highlight training and development in high priority fields, including energy, health care, green jobs, education, science and engineering, etc.

Currently many features of such a program exist for the workforce at UAW and Ford, for example. Dislocated employees have a choice between a one-time severance payment or a package that includes up to $15,000 toward college tuition for up to four years, with health benefits maintained by the employer and half pay provided (along with unemployment compensation). Ford retains the ability to recall these employees in an upturn of the economy and they will return as more educated and capable employees. While more dislocated UAW-Ford employees have instead selected a generous one-time severance package than this educational package, the structure of the package is illustrative on one model. Another model can be found in the programs in Europe and elsewhere that involve public-private partnerships to promote new entrepreneurial initiatives by dislocated employees – with their former employer working with local government to help fund these new business initiatives. None of these programs involve the additional link to university entrepreneurship programs, but the potential for such a link is large – with dislocated workers training in developing a business plan, presenting to funding boards and triggering the single greatest source of job creation in our economy, which are new small businesses. A model is emerging in California where government, universities, unions and employers are exploring ways to retrain workers for green jobs. Another relevant model can be found in initiatives that facilitate access to apprenticeship programs for returning military veterans. All of these programs represent improvements on what would be achieved if we only depended on individual displaced workers finding and funding education and career development options on their own. In other words, additional incentives and institutional initiatives are needed to properly connect the labor market to educational opportunities.

Cautions: Not all employers can provide for severance packages such as the UAW and Ford (and not all employees have unions advocating for such arrangements). Not all employers or communities are interested in promoting entrepreneurial initiatives by soon-to-be-dislocated employees. Not all states are highlighting green jobs or other sectors as a policy priority. Not all universities and community colleges are looking to expand enrollment to include dislocated workers. Not all apprenticeship programs are reaching out to veterans.

Given these cautions, what will it take for such an initiative to be successful? First, universities and other educational providers will need to organize their programs in ways that are visible and appealing to employers, dislocated workers and government officials. Here at the University of Illinois we are working on doing this in consultation with industry partners and we encourage others to do the same. Second, protocols would need to be established by the US Department of Labor (in consultation with state and local agencies) by which employers and educational providers might reach dislocated worker training partnerships – with the promise of government resources for dislocated workers that would supplement the industry-university partnerships. Third, there may be targeted industries or sectors highlighted in the recovery spending – such as energy, health care, and others – that might be given special priority in career development and re-training efforts. Fourth, the models for small and medium-sized employers would likely be distinct from the models for larger employers – requiring more than a “one size fits all” approach. Finally, mechanisms would need to be established to track the results generated by these initiatives – to ensure proper use of public funds and to enable continuous improvement. Overall, this represents a short-term flow of recovery dollars with a long-term pay-off to society.

There is little precedent in this country and no real prospect for direct government restrictions on downsizing in response to reduced demand. Indeed, in the long run market forces are needed to align labor supply with product and service demand. In the short run, however, there are significant choices to be made in how we adjust to the present financial crisis. In the 1990’s, layoffs shifted in many cases from a last resort in a downturn to a strategic choice aimed at increasing the value of a company’s stock.1/ Given this recent history, there is a real risk of massive layoffs happening today without careful consideration of the alternatives or options.

However, a close look at the ways in which companies and governments adjust here and abroad reveals important institutional options. For example, the UAW and Ford have agreed to provide displaced workers with either a separation payment or a combination of half pay, full benefits and four years of college tuition. During the 1980’s recession, the entire auto industry forged partnerships with public unemployment offices, community colleges and others to achieve nearly a 90% placement rate for over 200,000 displaced auto workers.2/ There is a long history of state and federal initiatives illustrating how public programs can retrain and/or place displaced workers.3/ There may also be very personal, heroic responses. For example, when Motorola closed down a major facility in Ireland, the HR manager personally indicated that he would not look for a job for himself until he had done all he could do to place all the workers in the facility. Particularly inventive responses include both public and private programs where employees about to be laid off are given opportunities to launch new entrepreneurial businesses – what are termed in Europe “self-employment” programs.4/ Perhaps even more noteworthy are firms such as Southwest Airlines that have avoided layoffs completely during downturns and ended up better able to expand during the subsequent recovery.5/ We also know that there are substantial hidden costs among “survivors” in the workplace after a layoff.6/

As these examples suggest, there are many options that might mitigate a catastrophe and enhance subsequent recovery. A partial list includes:
• Redeploying or retraining workers as an alternative to layoffs
• Reduced working hours, job sharing and cross-training arrangements as an alternative to layoffs
• Separation payments
• Continued health care benefits for displaced workers
• Outplacement support services
• Placement in re-training programs
• Public identification of sectors that are growing
• Private employer coordination with unemployment agencies
• Private employer coordination with public service initiatives
• Extended unemployment benefits with links to retraining programs
• Expanded retraining programs — public and private
• Accelerating experiments with portable benefits
• Training and placement programs for returning veterans
• Investment in new business/self-employment proposals from employees about to be laid off

We can’ t assume that private employers, unions or public agencies will maximize the utilization of these and other such options if each acts on their own. Individually, they will sub-optimize. There is a need to provide tools and methods for employers, unions, government and others to select from among these options and coordinate efforts. Guiding principles in such a process might include:

1) Dignity and respect for workers and employers – reflected in programs that are procedurally, substantively and interactively fair and effective. 7/
2) Guidelines outlined (minimum critical specifications) for implementing the above programs and other options.
3) Coordination mechanisms across stakeholders and programs supported on a regional or industry basis.

This is just a beginning outline of a response — reflecting inputs from various members of the faculty at the School of Labor and Employment Relations at the University of Illinois. Underlying all of these options is a value placed on knowledge and skills, rather than a sole focus on cutting costs. Industry centers (as established by the Sloan Foundation), tri-partite industry committees (as supported by the Labor and Employment Relations Association), area labor-management committees, regional economic development organizations and other institutional bodies can play key roles. Many employers have received public support for training and location decisions, so attention to these matters also reflects a reciprocal form of responsibility to local communities and society. Larger systems issues – such as shifting from an employer-based health care system to a national single payer system – would address portability of health benefits for displaced workers, but that is not likely in the short run.

The reality is that, in the short run, absent some coordinated action, we will all be worse off. With coordinated effort, the landing can be softened for many people. This would not only help to decelerate the slide, but it could help to accelerate the rebound following the downturn. What could be more worthy as a goal?

References:
1. Uchitelley, Louis. (2006). The Disposable American: Layoffs and Their Consequences, New York: Knopf.
2. Ferman, Louis, Michele Hoyman, Joel Cutcher-Gershenfeld and Ernest Savoie, eds. (1991). Joint Training Programs: Union-Management Approach to Preparing Workers for the Future, Ithaca: Cornell ILR Press (1-275).
3. Kodrzycki, Yolanda K. 1997. Training programs for displaced workers: what do they accomplish? New England Economic Review, May-June.
4. Benus, J. M. (1994). Self-employment programs: A new reemployment tool. Entrepreneurship Theory & Practice, 19(2): 73-85; and Caliendo, M. 2008. Start-up subsidies in East Germany: Finally, a policy that works? , Discussion Paper No. 3360, Institute for the Study of Labor Bonn, Germany.
5. Hoffer Gittell, Jody. (2005). The Southwest Airlines Way, New York: McGraw Hill
6. Konovsky, M. A., & Brockner, J. (1993). Managing victim and survivor layoff reactions: A procedural justice perspective. In R. Cropanzano (Ed.), Justice in the workplace: Approaching fairness in human resource management. (pp. 133-153). Hillsdale, NJ, England: Lawrence Erlbaum Associates, Inc.
7. Adams, J. S. (1965). Inequity in social exchange. In: L. Berkowitz (Ed.), Advances in Experimental Social Psychology (Vol. 2, pp. 267-299). New York: Academic Press; Bies, R. J., & Moag, J. S. (1986). Interactional justice: Communication criteria for fairness. In: B. Sheppard (Ed.), Research on Negotiation in Organizations (Vol. I, pp. 43-55). Greenwich, CT: JAI Press; Leventhal, G. S. (1976). The distribution of rewards and resources in groups and organizations. In: L Berkowitz & E. Walster (Eds), Advances in Experimental Social Psychology (Vol. 9, pp. 91-131). New York: Academic Press

Moreover, there are also employers who are becoming ever more aggressive in providing minimum wages, benefits and training as part of what some have termed a global “race to the bottom.” These cases represent a very different set of employment models that is competing with the distributed, knowledge-driven model (read “high road”) for preeminence in this era.

As well, there are many small and medium-sized organizations that do not fit either the “high road” model or the “race to the bottom” model. Whether they are long-standing family businesses, non-profits, new technology start-ups, or other forms – the employment relations in these settings vary considerably.

My aim here is to outline broad categories for work in today’s economy and offer preliminary baseline estimates of their scale and scope. It is my hope that this on-line format will be appropriate for others to expand on or challenge what is here — offering up alternative ways to get at these matters.

So, I am attempting to use this blog format to generate estimates of the numbers of US employers and employees (ideally over time) associated with different bundles of work practices.

We begin knowing that there are approximately 138 million non-agricultural jobs in the United States, with people working for a total of approximately 5.7 million employers. The key question concerns how this work is divided among distinct models of employment relations. Here is a high level overview:

Small Business Model (approx. 55-60 million people employed under this model)

Independent Contractors (approx. 10-15 million people employed as independent contractors)

Non-Union, Traditional Personnel Model (approx. 30-40 million people employed under this model)

Non-Union HR/High Performance Model (approx. 10-25 million people employed under this model)

Unionized Traditional “New Deal” Model (approx. 13-15 million people employed under this model)

Unionized HPWO Model (approx. 2-4 million people employed under this model)

Here is further detail on each:

Small Businesses and Independent Contractors

Small Businesses: Let’s begin with the largest number of employers, which are small businesses. There is no single employment model that characterizes work in a small business. In fact, it is an idiosyncratic array of practices driven by the founder or owner that is, perhaps, the defining feature of this part of the economy.

Estimated total number of small business employers (500 or fewer employees): 5.6 million

Estimated total number of employees working in small businesses: 57 million people (49.9% of US workforce)

Key question: What is the range of employment practices and what are the dominant models in this sector?

Source: Small Business Profile, US Small Business Administration, Office of Advocacy, 2004, http://www.sba.gov/advo/stats/profiles/04us.pdf

Independent Contractors: The employment models for independent contractors vary substantially, as is reflected in the book title: “Gurus, Hired Guns, and Warm Bodies: Itinerant Experts in a Knowledge Economy” by Stephen R. Barley & Gideon Kunda (Princeton University Press, 2004).

Estimated total number of self-employed workers: 10.2 million people

Key question: What are the range of employment models for these independent contractors? How do we take into account the hidden economy, which includes many independent contractors?

Source: U.S. Department of Labor, Bureau of Labor Statistics

Non-Union Workplaces

Personnel Model: Decentralized, employer-driven, traditional non-union practices (including low wage, low benefit settings) – public and private sectors

Estimated total number of traditional “personnel” model employers (Over 500 employees): TBD

Estimated total number of employees working in traditional “personnel” model settings (Over 500 employees): approximately 30-50 million employees

Key question: How many employees and employers are operating with this general model and what is the range of practices associated across these employers and employees?

HR/High Performance Model: Non-union high involvement, high investment in human capital (≈10-25M)

Estimated total number of “non-union high performance” model employers (Over 500 employees): TBD

Estimated total number of employees working in “non-union high performance” workplaces (Over 500 employees): approximately 3-5 million employees (based on estimates of 5-10% of unionized workplaces having high performance work systems)

Key question: How many employees and employers are operating with this general model and what is the range of practices associated across these employers and employees?

Unionized Workplaces

Traditional “New Deal” Model: Decentralized traditional collective bargaining and contract administration – public and private sectors

Estimated total number of traditional “New Deal” model employers (Over 500 employees): TBD

Estimated total number of employees working in traditional “new deal” model settings (Over 500 employees): approximately 13-15 million

Key question: How many employees and employers are operating with this general model and what is the range of practices associated across these employers and employees?

Unionized HPWO Model: Unionized, knowledge-driven work and supporting socio-technical systems (≈2-4M)

Estimated total number of “unionized high performance” model employers (Over 500 employees): TBD

Estimated total number of employees working in “unionize high performance” workplaces (Over 500 employees): 0.5-1 million (based on estimates of 5-10% of unionized workplaces having high performance work systems)

Key question: How many employees and employers are operating with this general model and what is the range of practices associated across these employers and employees?

Your comments, data, and other inputs are most welcome