Teaching Module on Low-Wage Work in The Coming Economy

Author: Johnson, Jennifer
Source: The Aspen Institute Center for Business Education
Year: 2009
Number of pages: 7

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Abstract:

WHAT IS A TEACHING MODULE? A teaching module allows faculty to add a topic to an existing course with relative ease. Teaching modules include case studies and background readings, and may include framing questions or a teaching note for use in leading classroom discussion. ____________________________________________________________
This Teaching Module addresses key issues around low-wage work in the American economy. Its purpose is to introduce the theme of low-wage work and discuss competing sides of the issues it raises for managers, as well as provide examples of solutions businesses have used to address some of the challenges raised by low-wage work. The Module includes cases and supporting material and is organized around several crucial questions facing employers. The underlying issues cross a number of disciplinary boundaries, and can be taught using concepts from business and society, innovation, human resource management, strategy, public policy, and operations. This Module is intended for use in MBA classrooms and designed to provide faculty members with a useful collection of materials framed around the complex issues that this important topic presents to future managers.

Introduction
"... in the end... how we as a society regard the fate of the vast majority of us who work for a living, is central to what sort of society and economy we are, and what our possibilities as a society can be." -- Damon Silvers, Associate General Counsel for the AFL-CIO (http://www.irle.berkeley.edu/events/spring08/feller/)

This Teaching Module addresses the issue of low-wage work from multiple angles, and is organized around a series of cases and supplemental reading material that discuss the costs and benefits of low-wage labor for workers, employers and society. The balance of low to higher-wage workers in an employer's workforce influences several aspects of the employment relationship. Cutting costs through low wages and benefits can certainly benefit a company's balance sheet, at least in the short term. From a societal perspective, communities with a higher percentage of low-wage workers are more likely to suffer from poverty, crime, poor housing, low levels of educational attainment, and poor health care, but companies taking a "low road" wage strategy may also find that their operations suffer from lack of innovation and that negative relationships with stakeholders undermine their overall strategic goals.

Rising income inequality, the fall of the manufacturing industry and the rise of service sector employment have all placed enormous pressures on companies and workers alike. How business and society address the issues this raises on both economic and social fronts is critical to building a path to future success. Moving low-wage workers into productive positions which benefit both them and their employers may require additional support systems. Possible solutions include multiple approaches to the problem: more government support for programs like the EITC and minimum wage laws, emphasis on job creation in industries with higher-wage jobs, corporate support in providing more jobs with career ladders and benefits, worker investments in training and education, and employee ownership. One goal of this Module is to help future managers understand the role that low-wage work plays in business strategy and operations, and to weigh the costs and benefits of increased wages and other benefits that support worker productivity against a focus on wage and benefit cuts as their source of competitive advantage.

The first section in this Module discusses the experience of low-wage labor, and includes a number of supporting references which can act as more comprehensive background reading. The following sections discuss more specific questions of competitive advantage and corporate responsibility in relation to this issue, as well as dueling sides of wage-related debates. A selection of teaching cases is presented in each of these sections, along with background readings to develop and support the discussion. As management looks for ways to deal with issues related to low-wage work, they are confronted with questions over the importance of economic shifts, strategic direction, innovation and technology, corporate responsibility and the social and strategic importance of building an economy that benefits both businesses and their communities. This module includes material that presents multiple dimensions of low-wage labor while familiarizing readers with research on current practices, pitfalls, and future considerations for managing these issues.