There’s an old joke about an economist searching for her keys under a street lamp. She lost them somewhere up the street in the dark, but it’s easier to look where the light’s shining.1
If that still has any amusement value, it’s because there’s still some truth in it.
When searching for the keys to the future of work, the statistical streetlamp shines brightest on measures of “how much”, such as job numbers, work hours and earnings. Its rather harder to illuminate “how good” jobs are.
Jobs are central to people’s wellbeing. Policy makers are looking beyond per-capita GDP to measure and set goals for wellbeing. In the same way, we need multi-dimensional concepts and measures of job quality.
How might technological change affect the quality of New Zealanders’ jobs?
We’re not yet seeing clear effects of the current technology wave on well-lit measures such as overall employment, job tenure, and earnings. These may change slower and less than predicted by commentators at the leading-edge of the hype cycle.
But what does technology do in the shadows?2 I suspect that emergent technologies will affect some harder-to-observe aspects of job quality before they show up in the well-lit measures.
Let’s start by defining what makes a job a “good job”
Some submitters to our technological change and future of work issues paper offered their views.
For the NZ Council of Trade Unions, “jobs must be good jobs: well paid, secure, safe, satisfying and offering work-life balance….”.
Uber offered four guiding principles for making sure that all work is quality work:
- Access. Removing barriers to entry, allowing those transitioning back into the workforce, or who otherwise have difficulty finding work, to take advantage of earning opportunities.
- Flexibility. Providing genuine two-way flexibility, allowing people to manage and vary their portfolio of work to meet their particular needs.
- Protection. Ensuring workers have access to a set of benefits and entitlements to protect themselves and loved ones in times of illness, injury, or when it’s time to retire.
- Opportunity. Promoting social mobility by enabling access to lifelong learning and development opportunities.
This diagram is my take on what makes a good job. I’ve drawn on work that’s influenced the OECD’s Job Quality Framework 3
A “good job” doesn’t mean the same thing to everybody. We all value these different dimensions differently. What’s more, our preferences and priorities can change over time:
- Young me looked for career opportunities and income. I had a higher tolerance for hard physical work and for unconventional, unpredictable hours.
- Kids and mortgages focused me on security, certainty of hours, and work-life balance.
- Nowadays, I can afford to prioritise meaningful work, a positive workplace culture and the flexibility to pursue my other interests.
Economic conditions and public policy can also change the way people value different dimensions of job quality:
- High unemployment, economic uncertainty and low mobility all increase the value people place on security in their current job. This is likely to be more the case in ‘thin’ labour markets, where finding a “good” new job may take longer and involve difficult, costly choices about whether to move away from home.
- Social safety nets can reduce the extent to which people rely on the security of their current job. Unlike the USA and some other jurisdictions, access to healthcare, pensions and other benefits in New Zealand is not generally tied to jobs. This not only helps the unemployed, it can also improve the wellbeing of workers by removing a major source of insecurity. It can benefit society by creating a more flexible, mobile labour market.
What the data tells us
The top three boxes in my diagram above are fairly well illuminated in the data. Some glimmers of statistical lamplight are now filtering into the bottom three boxes too.
Stats NZ recently released data from its Survey of Working Life supplement to the December 2018 Household Labour Force Survey. This gives some good info including on perceptions of security, job satisfaction, work/life balance, autonomy, health and safety etc. I want to dive into those numbers some more soon. Hopefully there’ll be some trend analysis to come, comparing 2018 to 2012 and 2008. This may offer some hints of any effects of current technology trends on job quality.
In What makes a good job? Job quality and job satisfaction, Andrew Clark (2015) summarises international evidence on what workers say they value in a job, and how job satisfaction ratings relate to later job quits. The largest proportion of workers rate job security as Number One. This is followed in broad order by: an interesting job; autonomy and use of initiative; income; hours of work; and having work that’s meaningful. Patterns differ a little by gender and age but are fairly consistent and stable over time.
It’s not surprising that job security matters to many workers. It helps people to secure mortgages and put down roots with communities and schools. But some people are happy with less secure jobs, or to trade off job security for better pay and other conditions.
In New Zealand, Philip Morrison (2016) used data from the Survey of Working in 2012 and 2008 to show that uncertainty over job security significantly reduces workers’ job satisfaction.
While people’s idea of a “good job” will vary, there appears to be solid evidence on what most people value most. This gives us a good steer on where to look for the keys to quality jobs in future.
Government and job quality
Labour laws and employment relations policies can set minimum standards, preventing exploitation and controlling market power (eg, policies such as minimum wages, health and safety rules, due process and fair notice periods etc).
But policies that specifically aim to improve job security can involve trade-offs between other aspects of job quality and with other objectives too. For example, protection of an industry or an occupation can improve job security in the short term but come at the expense of achieving economic dynamism, the reallocation of resources and productivity growth. A dynamic economy needs flexible labour markets where people can move to jobs that create more value from their skills and talents.
Policies that create security and high incomes for “insiders” – those currently holding a job in a particular occupation – can be a cost to “outsiders”. Those costs are in the form of barriers to employment, inflated prices, and poor-quality products and services. We can see the social harms of labour markets set to favour “insiders” in some European economies where high incomes and job security for some combine with intergenerational unemployment and social exclusion for immigrant communities and others on the “outside”.
Some people see a role for government in encouraging employers and workers to search for win-win opportunities, solve coordination failures and overcome free-rider problems.
Improving job quality is not just in the interests of workers and government. For employers, it can make business sense to increase the quality of jobs they offer. This could be by improving a single quality dimension, eg, wages, or by offering flexibility to better match worker preferences. Improved job satisfaction can boost effort, reduce turnover, encourage workers to invest in job-specific skills, and enhance the firm’s brand.
What make a job a “good job”? I’ll give the (dreaded) economist’s answer. It depends. Because of that, we can’t necessarily spot good jobs in the data. Though we can and should collect better data on job characteristics, dimensions of job quality and emerging trends to improve our illumination.
Cazes S, Hijzen A, & Saint-Martin A. (2015). Measuring and Assessing Job Quality: The OECD Job Quality Framework OECD Social, Employment and Migration Working Papers no. 174. Paris, France: OECD https://doi.org/10.1787/5jrp02kjw1mr-en
Clark, Andrew E. (2015). What makes a good job? Job quality and job satisfaction. IZA World of Labor 2015: 215. IZA Institute of Labor Economics https://wol.iza.org/uploads/articles/215/pdfs/what-makes-good-job-job-quality-and-job-satisfaction.pdf
Gallup podcast 8 May 2018. Billions of People Globally Are Looking for Good Jobs https://news.gallup.com/podcast/233912/billions-people-globally-looking-good-jobs.aspx
Morrison, Phillip (2016). The effect of job (in)security on job satisfaction. In Pacheco G., Morrison P., Cochrane B., Blumfield S., & Rosenberg B., Understanding Insecure Work. Auckland. New Zealand Work Research Institute @AUT https://workresearch.aut.ac.nz/__data/assets/pdf_file/0019/56224/Understanding-Insecure-Work-brochure.pdf
OECD. (2019). OECD Employment Outlook 2019: The Future of Work, OECD Publishing, Paris. https://doi.org/10.1787/9ee00155-en
Statistics New Zealand. (2019). Survey of Working Life:2018 https://www.stats.govt.nz/reports/survey-of-working-life-2018
- Or a drunk – take your pick. This is a variant of “the principle of the drunkard’s search” or the “streetlight effect”. While often attributed to Abraham Kaplan in his 1964 book The Conduct of Inquiry: Methodology for Behavioral Science, it seems he repurposed an old joke dating back at least as far as a Boston Herald column from 1924.
- The OECD’s 2019 Employment Outlook report, trendily titled The Future of Work, has a good discussion in chapter 3 of the evidence on job stability, under-employment and access to good jobs. Sadly, New Zealand data is missing from most of the chapter due to lighting deficiencies on workforce street.
- The OECD’s Job Quality Framework is, IMHO, the best effort to date to describe and measure the various dimensions of job quality. It draws together earlier research and measurement efforts and links to the OECD’s wider wellbeing measurement work. It looks at job quality in three domains: earnings quality, labour market security, and quality of the working environment. The first two cover the “material benefits” and “security” boxes in my diagram. “Quality of the working environment” seeks to cover off all the rest in a way I think is too narrow. In seeking consistent international measures, I think the OECD framework ends up hanging out under the existing street lamps when some further groping along in the dark is required.
John MacCormick is a principal advisor with the Productivity Commission.
This post was originally published on the Productivity Commission's website.