The Future of Work: Utopia or Dystopia?

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Transcript

Workers Comp Matters

The Future of Work: Utopia or Dystopia?

01/27/2021

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Intro: This is Workers Comp Matters hosted by Attorney Alan S. Pierce, the only Legal Talk Network program that focuses entirely on the people and the law in workers’ compensation cases. Nationally recognized trial attorney, expert and author, Alan S. Pierce is a leader committed to making a difference when workers’ comp matters.

Alan Pierce: Welcome once again to another edition of Workers Comp Matters. This is Alan Pierce of Pierce, Pierce, Napolitano in Salem, Massachusetts. We are a law firm specializing in the representation of injured workers in on-the-job injuries. I am delighted today to share the microphone with my co-host, Judson Pierce.

Judson Pierce: Welcome and thank you for having me be your co-host today. This is great.

Alan Pierce: And our guest today to talk about work and the future of work and those that perform the work is Darrell West. Darrell is the Vice President and Senior Fellow of Governance Studies at the Brookings Institution. He holds the Douglas Dillon Chair in government studies. He is the author of 25 books including ‘Turning Point: Policy Making in the Era of Artificial Intelligence’ along with some other books involving technology and digital technology and how it impacts social and political and economic institutions. He’s the winner of the American Political Science Association’s Don K. Price Award for best book on technology and the American Political Science Association’s Doris Graber Award.

Welcome, Darrell.

Darrell West: Alan, it’s nice to be with you.

Judson Pierce: Darrell, this is Judd, welcome to the podcast. What brought you to study Artificial Intelligence, robots and develop some information on the future of work?

Darrell West: Well, I’m old enough that I did my dissertation on a typewriter many years ago, so I basically lived through the technology revolution of first, personal computers and then, laptops and now, smartphones and Artificial Intelligence. And so, my most recent book ‘Turning Point’ looks at the impact of AI on the workforce, how it’s changing society, how it’s changing the economy. There’s clearly a lot of interest in that topic. People worry about robots taking their jobs and people are just wondering how all of this advancing technology is going to affect social insurance, workers’ compensation, health care benefits, kind of the whole panoply of social benefits that people get these days.

Alan Pierce: Great, and maybe begin right now by letting us know if you can, what percentage of the workforce or work is being done robotically as opposed to with human hands?

Darrell West: I don’t know the actual percentage because it varies quite a bit from sector to sector but we know in the manufacturing area, there are fully automated factories where basically robots are doing most of the work. I have been in Amazon warehouses and there are robots and automated conveyor belts all over the place. You can even think about sectors such as retail. We have fully automatic retail outlets that have developed now where you basically walk in, you have the app on your phone, you walk in through a turnstile, you go shopping, you leave without dealing with any cash register or any human sales clerk, they automatically charge your credit card or your mobile payment system.

So, clearly, there are lots of areas where technology is coming in starting to take jobs and certainly starting to transform jobs.

Alan Pierce: Certainly, this isn’t unique to the 21st century I think probably even going back to the assembly line back in the early stages of automobile manufacturing. We saw the beginnings of automation in replacing of the human hands and arms and backs of workers. This isn’t anything new but by the same token, the advancement of technology has certainly ramped up the speed by which jobs are being eliminated. Yes, jobs are being created but these are a much different type of work. Correct?

Darrell West: You’re exactly right. If you go back a hundred years ago when industrialization was starting to come in and factories were starting to be developed, there were similar challenges in the sense that it was very disruptive. People worried about the impact on work. There were a lot of worker harms. Factories were creating new types of challenges and risks for workers, but if you think about how society responded, we basically redid the social contract.

I mean, we developed new programs, social security, workers’ compensation, unemployment compensation like there were a wide variety of policy reforms designed to help people cope with industrialization, and so, today I argue we’re in a similar transition to the digital economy. There are new types of risks, new types of challenges for workers. We need to renegotiate our social contract to accommodate those changes and make sure that workers get protected as we are starting to digitize the economy.

(00:05:08)

Judson Pierce: Absolutely. One of the things that struck me in listening to your interviews over the years and doing some reading that you’ve done is how we could move toward an era of dystopia versus an era of utopia. In other words, how, if we don’t pay attention to these social compacts, we might leave more and more people behind. What are your thoughts on what we can do from policy perspectives to ensure that people are protected in this new era of work?

Darrell West: I mean, you’re absolutely right. We are at a crucial turning point and that’s the reason we titled our recent book that way between heading either towards utopia or dystopia. And, in the book, we argue the crucial variable in determining which of those paths we take is public policy. For example, a lot of the social benefits today are tied to the job. It’s an employer-employee relationship. So, if you have a permanent job, you get health care benefits, you’re covered by disability insurance, you have contributions often with a match from your employer to your retirement account. But as we’re heading into the digital economy, we are seeing the rise of temporary workers, people who do not have a permanent job and so therefore, they’re getting paid but they’re not getting the social benefits. They don’t get health care. They don’t get retirement matches They often don’t have disability insurance.

At the same time that this technology revolution is unfolding, we’ve seen this major change in business models in which employers are depending on short-term workers, temporary workers, independent contractors, basically people who are not getting benefits.

Now, we can deal with that if we renegotiate our social contract to have universal health care so that you can qualify for health insurance and you can pay for health insurance even if you don’t have a job. I mean, that was the whole point of the Affordable Care Act to basically provide that type of mechanism and it actually has worked remarkably well in the sense that the uninsured rate dropped dramatically.

We need to think about the education component because as we move towards a digital economy, there are going to be people who lose jobs because they don’t have the right skills and so, we need to emphasize worker training redevelopment programs, upskilling programs so that people can develop new skills. So, I’m actually an optimist when we think about the future in the sense that there are some clear problems that are going to emerge. There are going to be some clear harms for workers but there are public policies that if we adopt them would make a huge difference and would actually push us much more in the direction of utopia as opposed to dystopia. And, conversely, if we don’t do these things, then the future actually could be quite grim.

Alan Pierce: Let’s shift a little bit to something I think we all can relate to and that is the type of work relationship that is embodied in the so-called gig economy. I’m not sure if that phrase is being used as much as it had been up to this point, but let’s kind of focus on the California experience regarding Uber and Lyft and that type of work platform that allows people to drive for a company such as Uber and Lyft, and as you may be aware, there has been a lot of concern about whether these workers are covered as employees for a whole variety of reasons, unemployment insurance, workers’ comp insurance, and we know the California legislature passed a bill last year, which essentially made them employees for most purposes and then this most recent election in November of 2020, Proposition 22 is on the ballot that was passed overwhelmingly. I think it was 58% to 42% by the voters of California, which basically nullified the legislation and kept these workers as independent contractors.

What does that represent in these workers in California and presumably similar workers around the country in being covered by these social programs?

Darrell West: That’s a great question and it really illustrates the fundamental problem that we face right now because in most states, a lot of the new e-commerce firms, the new digital startups are basically hiring either temporary workers who do not get benefits or they have full-time workers who they are classifying as independent contractors and often not providing full health care and disability insurance to those individuals.

What the California legislature did a year ago was to pass a law making it more difficult. Like if you work for Federal Express, you drive a Federal Express truck and Federal Express is basically helping you do your job and you are delivering packages for Federal Express. California basically said, “You are an employee of Federal Express. You’re not an independent contractor.”

(00:10:19)

So, they kind of cracked down on the worker classification to make it more difficult for these companies to basically sidestep the social insurance part of the job and to basically make it harder for them to have workers who were not getting health insurance or disability insurance. And, so, everybody kind of looked at this and thought, “Wow! That’s a great new step. That’s probably a step in the right direction for the digital economy in order to make sure that workers had adequate protections.” But as you pointed out in November, there’s this very surprising outcome, a public referendum where Uber, Lyft and other companies like that spent 200 million dollars on a referendum and ended up winning. They ended up exempting themselves from these new requirements, which basically then returns the situation to the status quo prior to that legislation.

What we don’t know is what is it that motivated 62% of Californians to support that repeal? Was it the 200 million dollars that was spent? Meaning, it was kind of a one-sided campaign and they were getting fed all these negative narratives from these companies or do they actually have a serious problem with imposing these types of new regulations on the gig economy? And, we don’t actually know the answer to that but it’s an important question because if workers are not going to get adequate protection from the companies, we are going to need a public policy response, but we have to bring the public along.

Right now, as illustrated by the California vote, a lot of people don’t think it’s a problem. They seem to be content with companies classifying these workers as independent contractors and not providing public benefits. We have an education campaign to help them understand why this is a problem and why they actually need to think about tougher rules in this area.

Alan Pierce: You mentioned the 200 or plus million dollars spent on this campaign. I’ve done a little reading on this after the election and one of the things I read and I can’t source it right now was that they polled a lot of the voters who voted in support of Prop 22, which would basically take away these protections from workers and they thought they were voting the opposite. They were voting in the affirmative to benefit these workers. It wasn’t clear messaging that they were able to ascertain the fact that they were voting against the interests of these folks. So, I think a lot of that has to do with the power of the dollar and controlling the message by heavy TV and other types of ads to shape the public perception.

At this point, we’re going to take a quick break and we’ll pick up on what the California experience has taught us and how government and public policy can react. So, we’ll be right back with Darrell West.

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Judson Pierce: Welcome back. We are here today with Darrell West. We left off with the California experiment and the kind of vote that sort of was a little bit disconcerting to those of us who protect workers’ interests and advocate for the injured workers. I wanted to dovetail that into something you’ve said about individualism versus doing this as a group, doing this together, and I think we’ve seen that in the most recent presidential election, the idea of the Biden campaign sort of overtaking the populist sentiments of Trumpism and whether or not this idea of American individualism can be looked at a little differently in terms of, “Well, if he or she doesn’t succeed, then that bears solid consequences on what I can do.”

What do you see rising out of the California experience for the country as a whole?

Darrell West: I mean the most important thing is we can’t end up in a situation where a lot of people are being left behind. That’s destructive for the entire society and it creates a lot of social problems that everybody else then ends up having to deal with. So, I think one of the big divides in America now is based on American individualism as your question points out. People basically think they’re responsible for themselves and if they’re doing well, it’s because they’re working hard and they’re smart and they’ve invested in education and if they’re not doing well, it’s your fault because you haven’t worked hard, you haven’t invested in education and that you’re responsible for your own situation.

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As we’re moving to a digital economy, we actually are seeing a lot of people who are working very hard who are still being left behind because they’re in minimum wage jobs or they don’t have the skills to get a higher level job and what we need to think about is the dangers of having a lot of people left behind. I mean, we’ve seen it in recent elections, we see it in the sense of the debates we’ve had over healthcare, we’re now in the middle of COVID and people have defined not wearing a mask as individual freedom and, therefore, they should have the right not to wear a mask. We see the consequences for society that the pandemic gets worse and more people end up dying from that.

I’ve argued in several publications that Americans pride ourselves on individualism, but we need to have a sense of social responsibility that we’re all in it together. It’s kind of the old line that a chain is only as strong as the weakest link like if there are weak links in society, economically or otherwise, that creates problems for the rest of us and we have a responsibility to help those people and that can be through job retraining programs, educational initiatives or in the past, we developed unemployment compensation to help people who were between jobs. We just need to think about what are the new challenges being raised by the digital economy and what are the appropriate policy responses to deal with particular challenges.

Alan Pierce: Do you see the end of the traditional tests of determining who is or who is not an employee? They basically have been around the country no matter what jurisdiction you go to, either of common law test of exercise of control, method and manner of payment or statutory encapsulations where by statute, you define an independent contractor. I know we’re finding here in Massachusetts that we have an independent contractor statute but the workers’ compensation determinations of employment status does not necessarily have to follow the statutory construct of defining who an employee, an employer is or are.

So, I guess in order to change or have the public contract embody the ability to change the digital economy, do we have to begin by redefining the employer-employee relationship as it has always existed for the past several hundred years? Do we have to redefine the descriptive working relationship between the producer of the labor and the beneficiary of the labor?

Darrell West: I mean the short answer to your question is yes. We do need to redefine the terms and the conditions that govern the relationship between employees and employers. I mean, most of these rules are now set at the state level, so a lot of these issues are going to be fought out state by state and I do think we’re going to see a situation of tougher regulation about independent contractors, meaning making it more difficult for companies to define somebody who works for them as an independent contractor so that they don’t have to pay the benefits. A lot of people can clearly see that that’s not fair and that creates an undue burden on those people who are working very hard delivering packages and driving the Uber cars and so on. So, we do need to figure out a way to address that.

I also believe that the new Biden Administration is likely to work through executive orders and through Department of Labor rules to encourage a movement in this direction. Trump has not really done anything constructive in this area and he’s been very pro-employer. Biden will be more pro-employee and so, I would expect the federal government to start to encourage states and localities to move more in this direction as well.

Judson Pierce: I’m delighted in hearing about the pick for health and human services being the attorney general from California, it seems to me that that would be good for injured workers and our community of who we advocate for. What I wanted to ask you was whether or not workers’ comp has a place in the future of society? We saw it clearly have a place in the early 20th century and each of the states have adopted their own methodology about how to accomplish it, but shouldn’t there be some sort of national oversight or new national review to make sure that workers’ compensation endures and actually succeeds?

(00:20:07)

Darrell West: Workers’ comp absolutely does have to endure because workers get injured on the job. Even as we move towards a digital economy, people forget, we think everything is being done online and so, there might be fewer risks and that actually is not the case because when you order something through an e-commerce site, there is a person who shows up at your doorstep carrying a heavy package and sometimes those heavy packages do create injuries. So, the digital economy is still going to need workers’ comp. We need to figure out how to provide that, how to provide disability insurance, people are going to suffer permanent disabilities as well after they’ve worked 10, 20, or 30 years doing these types of jobs. I absolutely do think workers’ comp will continue to be very relevant but the government will have to play a role in making sure that employers are respecting the law and that states have appropriate means of worker classifications.

Alan Pierce: One of the things I’ve noticed, Darrell, and perhaps you’ve been acquainted with it also is as these types of sort of novel or alternative employment relationships have begun to exist, I’ve always likened it to trying to fit it into the workers’ comp system as trying to put a round peg into an oval hole. It almost seems to fit but it doesn’t quite and what I’ve seen and starting to pop up are insurance policies that are being provided that pay much more limited benefits than workers’ comp benefits which are obviously a creation of statute and legislation. But there are like occupational injury policies for Uber drivers or other types of these workers which might provide sort of a skeleton of what basic workers’ comp — workers’ comp by itself doesn’t really provide a whole lot. I mean it’s a percentage of your gross pay and your medical bills and maybe some vocational retraining benefits, but some of these occupational policies might pay for up to two years uh wage replacement and maybe put a medical component with a cap on medical, but something far less than workers’ comp.

One of my concerns is we’re going to start to see a lot of these workers covered but under policies that are so much more restrictive than workers’ comp. Have you looked into any of this phenomenon of other types of insurance products being marketed?

Darrell West: This is a growing trend as the digital economy expands. There are a variety of different types of cyber insurance policies designed to protect companies from the risk that they all face as we’re moving into a digital economy and some of it involves workers, some of it involves businesses, through their online platforms are actually getting into new areas that they don’t know as well and so, therefore, there are greater risks, there are risks in terms of data breaches or cyber incursions and so, your private information may get stolen and become public.

This trend towards cyber insurance is definitely coming as part of the digital economy just because it is a traditional way to deal with risk but the key thing as you point out is how those policies are structured, like what kind of deductibles they have, what types of caps they have, what types of medical evidence you need to provide in order to qualify for the insurance. I mean, the same way that sometimes, I have home insurance and there’s a problem and I contact the insurance company and it turns out, there are all these exclusions, things that I thought were included as part of my policy that actually are not.

And, so, those are the things that we have to worry about to make sure that the policies are not one-sided, that they don’t completely favor the companies over the workers.

Alan Pierce: All right. Before we wrap up, any final words, Darrell, as what you see in the near term with a change of administrations? I know, we’re expecting it obviously to be more pro-employee than employer but it looks like we need to get the population of this country, a very divided country, to begin to act in a more cohesive fashion in terms of the shaping of policy and direction. Any hopeful words in the short term?

Darrell West: I actually am optimistic that there are going to be some changes. I mean, I think the key thing with the digital economy is there’s likely to be more job churn. People moving from company to company and sector to sector like in my adult life, I basically have worked for two organizations. So, I taught at Brown University and Providence Rhode Island for a number of years and then moved to Brookings in D.C. When I talk to young people today, I tell them, that’s not going to be your life. Like you’re going to have six, seven, eight or nine different employers during the course of your lifetime and so, we need to make sure that benefits are portable as people are moving from job to job and company to company.

Right now, there are a lot of problems associated with that like maintaining your health benefits, you move to a different company, they may have a different kind of health insurance, you have different medical networks and so, you may no longer be able to go to the doctor you’ve been going to for the last 10 years. So, there’s just a lot of logistical issues in terms of benefits that we need to work out as we’re heading into this new digital economy.

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Judson Pierce: Well, I’d like to wrap up and thank my co-host, Alan Pierce and our special guest today, Darrell West. It was a real pleasure to talk to you. Living so close to Harvard University though, I sort of have a little bit of a favorite Ivy League Institution but definitely would love to have you on any day of the week from Brown University. You taught there for over 24 years, correct?

Darrell West: I did teach there for a number of years but I’ve been down in D.C. for a little bit more than a decade.

Judson Pierce: And, how do you like D.C.?

Darrell West: I love it. It’s been a chaotic decade, so many different things going on but it’s fun to be somebody who studies political science to be in D.C. and kind of be in the belly of the beast, so to speak.

Judson Pierce: Absolutely. Well, thank you again for appearing with us today. Special word from our sponsor, PInow.com. For qualified specialized private investigator anywhere in your area, please go to PInow.com and for Workers Comp Matters, I’m Judd Pierce. Thank you and make it a day that matters.

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Outro: Thanks for listening to Workers Comp Matters today on the Legal Talk Network hosted by Attorney Alan S. Pierce where we try to make a difference in workers’ comp legal cases for people injured at work. Be sure to listen to other Workers Comp Matters shows on the Legal Talk Network, your only choice for legal talk.

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