Technologies younger than some pop stars are dramatically reshaping the modern economy and leaving many workers without the societal protections enjoyed by their parents and grandparents. The 18th Century philosophers who first imagined a “social contract” between government and the governed had no way to predict 21st Century concerns, like a shift from employment to contract work or the looming cloud of automation.
That’s why Democrats from the public and private sector called for an update to the social contract at a Seattle gathering of elected officials and business leaders from around the country Tuesday. The Seattle Metropolitan Chamber of Commerce hosted NewDEAL, a coalition of “pro-growth progressive” Democrats for a discussion on the future of work.
A common theme emerged among the speakers, which included Sen. Mark Warner (D-VA), Seattle venture capitalist Nick Hanauer, Washington state Lt. Gov. Cyrus Habib, Seattle Chamber CEO Marilyn Strickland, and Rep. Suzan DelBene (D-WA). Several of them cautioned that the eroding agreement between Americans and their government poses a grave threat to the Republic.
Studies show that nearly one-third of the American labor force does “contingent” work. That designation includes part-time employees, gig economy workers, and contractors who may work for companies like Uber and Postmates. Despite this growing contingent workforce, the social safety net is designed to protect full-time employees.
“We have a social contract that says, ‘we’re only going to take care of people who are full-time, traditional, W2 employees,’ Warner said during his keynote speech. “That worked for 80 years. It’s not working today.”
Hanauer, the founder of Second Avenue Partners and an early Amazon investor, believes our current political climate is a symptom of that failing system.
“I acknowledge that President Trump is probably the worst person in history to be president of the United States but he is a symptom of the problem, not the cause,” Hanauer said at the event Tuesday. “The real threat to our republic is an alarming breakdown in social cohesion and the cause of this breakdown is unambiguous. It is rising, radical economic inequality and the anger and anxiety it engenders.”
Hanauer blames a combination of deregulation of business, policies that suppress wages, and “a tiny minority of urban elites, mostly, people like me” for driving this growing income inequality.
The wealth gap isn’t a huge problem for workers in high-demand fields like technology. But Hanauer is concerned about the working-class Americans who have been left behind by the modern economy, like voters who were drawn to Trump’s populist messaging.
“People do not earn what they’re worth,” he said. “They earn what they negotiate. That’s it. The challenge in our society today is most people don’t have the power to negotiate fair wages. If you don’t write code, if you’re not in one of these very, very few industries where there’s tremendous demand for your services, you are essentially underpaid.”
When it comes to raising the minimum wage, Hanauer has a history of putting his money where his mouth is. He helped set the campaign to raise Seattle’s minimum wage in motion and has been donating to progressive politicians and ballot initiatives for years.
But raising wages was just one idea bounced around at the NewDEAL event Tuesday. Warner also suggested designing a better benefits system for the modern worker, one that isn’t tied to a full-time employer. The idea of portable benefits has been picking up steam in Washington state and in the tech industry.
“We ought to be talking about a portable benefits system … the payer and the employer both ought to be jointly contributing to some account that travels with you from that first job at 16 and throughout your life,” he said. Warner later added, “Why couldn’t we rethink the notion that in a 21st Century economy, not only do we need a new social contract, we need to revalue our asset base in a way that recognizes investment in human beings?”
Warner, Hanauer, and Strickland (the Seattle Chamber CEO) agreed that raising wages and adapting benefits to meet the needs of the modern economy were pro-growth policy ideas.
As Hanauer put it, “a thriving middle class isn’t the consequence of economic growth. A thriving middle class is the source and cause of economic growth in market economies.”
Strickland echoed that sentiment. “We can be pro-business because the best social service program is a well-paying job,” she said.