PROBLEM STATEMENT

WORKING

DRAFT

PROBLEM STATEMENT

California Future of Work Commission

Convening 5 | January 16, 2020

The overarching goal of the California Future of Work Commission is to develop a new social compact for

California workers, based on an expansive vision of economic equity.

California boasts a strong economy by most measures of

growth and employment and has been at the center of driving

many of the world’s innovations. However, many Californians

have experienced stagnating wages, and far too many are

in working poverty, working in low-wage jobs that earn too

little to support their families. In addition, some parts of

the state have fared less well than others. As a result, most

Californians have not enjoyed the benets from the state’s

broader economic success and the extraordinary wealth it

has generated.

Technological change is an important driver of changes in

work and employment, as developments in automation,

articial intelligence (AI) and robotics create new possibilities,

while also reshaping the way we work and replacing some

jobs that exist today. Technological change, though, is only

one of several critical factors that will change the nature

of work in California in coming decades. Others include

changes in the structure of the economy, sector mix, changing

demographics and the impact of climate change, as well

as the costs of basics, including housing, healthcare and

transport, that aect where people live and work.

The Commission views these challenges as an opportunity

for California to muster its immense talent, resources, and

innovation to truly create a California For All. The eects of

economic and technological change are not predetermined

or inevitable. Policies, laws, and norms will shape how these

changes play out, who benets, and whether certain segments

are disproportionately harmed by economic and technological

disruptions. Large corporations, many of whom have beneted

from California’s growth, must play a central role in the new

compact by demonstrating a commitment to quality jobs and

recognizing workers as major stakeholders in their industries

and wider communities. Small and medium sized businesses

have a role to play as well, but many are battling low margins

and little ability to do better by their employees, let alone their

communities and the environment. Supporting the growth of

quality jobs must include support for SMBs as well.

As the economy transforms, we must also adapt, update, and

implement new policies alongside it. We can make choices

that shape how technological developments like automation

and articial intelligence can be used to improve the quality

of jobs, not simply replace them. We can responsibly harness

new technologies to promote equity, economic mobility and

inclusion rather than exacerbating inequality, and protect

both consumers and workers as unprecedented amounts of

data contribute to improved services and productivity but

also expose them to new risks. Our goal is not to preserve

the status quo but open up new opportunities for those

who’ve been left behind due to discrimination, poor economic

circumstances, or various types of disabilities.

In developing a vision for how work and jobs will benet all

Californians in the future, the Commission will chart a path

to reaching that vision. The Commission represents multiple

sectors of California and brings both depth and breadth

of perspective to this critical work. Its recommendations

will parallel that range of knowledge, understanding and

expertise and cover a range of sectors, including state

and local government, the private sector, labor and worker

organizations, philanthropy, and education, among others.

California is not just ground zero for the economic and

technological changes reshaping work, it is also home to

many leading industries from technology to agriculture to

entertainment as well as one of the best university systems—

and workforces—in the world. Those assets, coupled with the

state’s leadership in setting workplace standards, positions

California to lead the nation again on a dening challenge of

our time.

The Commission brings this spirit of possibility and promise

to shape the future of work. We are not passive bystanders

to the future. We have agency to support the Governor and

the state in building a high road economy that delivers quality

jobs for all Californians and, in doing so, promotes equity

and revives economic mobility and the California Dream for

generations to come.

Note: This is a draft working document of the Commission and does not represent nal conclusions or recommendations.

The Commission may continue to rene and iterate this document as it continues to conduct its work.

WORKING

DRAFT

PROBLEM STATEMENT

California Future of Work Commission

Convening 5 | January 16, 2020

In its discussions to date, the Commission has identied eleven initial categories of challenges to solve for,

which will help to frame the Commission’s ongoing discussions of solutions and recommendations, and will

be further described in its interim report:

Challenges of inequity, economic mobility and low-quality work

1 | Address the unequal distribution of wages, income and wealth

Over the past 40 years, the most protable corporations and the wealthiest citizens have, respectively, seen their prots and

incomes skyrocket due to a variety of factors including technological change, globalization, deregulation and tax cuts, among

others. These factors have been a driving force in the hollowing out of the middle class and rising inequality in income and wealth

among Californians. The growth of low-wage work, decline of middle-wage jobs, and wage stagnation for a large share of workers

contribute to rising inequality in the distribution of wages and income, and further concentration of wealth. Wide wealth disparities

also create signicant advantages for some and barriers for others in accessing education and other resources that lead to further

inequality in labor market outcomes. This amplies inequalities by race, gender and geographic region in California. Some example

(not comprehensive) observations:

}

35% of workers in California make less

than $15 per hour

•

There are persistent racial gaps in wages: amongst

full-time workers, 14% of white males and 18% of

white females earn less than $15 per hour, compared

to 45% of Latino males and 49% of Latino females.

24% of Black males / 27% of Black females, 21%

of Asian and Pacic Island (AAPI) males / 24% of

AAPI females, and 24% of Native American males /

32% of Native American females earn less than

$15 per hour

•

Low-wage jobs are also unequally distributed across

the state: 45% of workers in Fresno and 37% of

workers in Los Angeles Metro earn less than $15 per

hour, compared to 21% in SF-Oakland metro and

San Jose

•

While educational attainment makes a dierence,

many with higher education still earn below a living

wage: of workers earning less than $15 per hour in

California, 21% have less than a high school degree,

29% have a high-school diploma, 29% have some

college education, 7% have an Associate’s degree,

and 14% have a Bachelor’s degree or higher

•

The majority (69%) of low-wage workers are working

full-time

}

Low wage work is concentrated in several sectors,

which are expected to fuel much of California’s job

growth over the next decade

•

The largest share of low-wage workers in California

work for employers in retail (16%), food services /

restaurants (13%), and healthcare / social services

(12%)

•

Occupations in which the greatest share of workers

earn less than $15/hour include: agricultural workers

(82%), food preparation workers (82%), personal

care aides (77%), cashiers (77%), and childcare

workers (74%)

•

In 2018, the median annual wage in California for

home health aides was $27,947 and for maids and

housekeeping cleaners was $26,363. Over 2 million

workers are currently employed in care work in

California, up from ~500,000 in 1990

•

Projected growth from 2016-2026 of 248,000

personal care aides ($11.74 median hourly wage),

81,100 food preparation and serving workers

($11.63), 50,300 laborers and freight movers

($13.66), waiters and waitresses ($12.42)

WORKING

DRAFT

PROBLEM STATEMENT

California Future of Work Commission

Convening 5 | January 16, 2020

}

Gainsfromproductivity,whilebenetingcorporations

and capital holders, haven’t been shared with workers

•

Average worker productivity in California rose

by 89.1% between 1979 and 2013, yet median

compensation to workers increased by only 2.9%

in that same time period

}

Income inequality in California continues to grow…

•

Between 1994 and 2013, the average adjusted gross

income for the top 1% rose by more than

80% while for the bottom fth it fell by around 8%

•

By the early 2010s, the average family in the

top 1% of California’s income distribution

made in 1 week what the average Californian

family made in 1 year

}

…andwealthinequalityisevenmoresignicant

•

In the United States, median net-worth of white-

headed households was $171,000, nearly 10 times

median net worth of Black-headed households

and 8 times median net worth of Latino-headed

households

•

In Los Angeles, white households have a median

net worth of $355,000, compared to $4,000 for

African Americans, and $3,500 for individuals of

Mexican heritage

1 | Address the unequal distribution of wages, income and wealth (continued)

WORKING

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PROBLEM STATEMENT

California Future of Work Commission

Convening 5 | January 16, 2020

2 | Tackle workforce inequalities across race and gender

Wage gaps, employment gaps, occupational access, segregation and disproportionate employment in low-quality jobs create

unequal outcomes for dierent people in California. Such inequalities aect dierent groups of people by gender, race, age,

education level, sexual orientation, disability status, military service history, housing status, citizenship status, criminal record, and

other vulnerable populations. The Commission is deeply committed to addressing inequalities of race, gender, and generational

inequality in California’s workforce. Some example (not comprehensive) observations:

}

California’s workforce faces inequalities in employment

and wages, across race and gender

•

In 2018, 4.4% of white workers in California were

unemployed, versus 6.6% of Black workers and 5.3%

of Latino workers

•

Median hourly wages for full-time, year-round workers

in California are: Native American ($20.31), Asian/

Pacic Islander ($27.52), Latino ($16.10), African

American ($22.45), Non-Hispanic White ($29.52)

There is also signicant diversity within these racial

and ethnic groups. Aggregate data can obscure

the challenges faced by particular groups, such as

Southeast Asians, and the Commission recognizes

the need to further understand the range of

outcomes facing our diverse workforce

•

Women employed full-time earn 88% of the $925

median weekly earnings of men

}

Asignicantbarriertoeconomicmobilityisthefact

thatbenetsfromeducationareunequalacrossraces,

ethnicities, and generations

•

A college degree provides a large boost in earnings

for White and Other Races, and only a small boost for

Black and Hispanics; the overall boost provided by

a college degree—both to income and especially to

wealth—is declining across generations

•

Even with higher education, median wages are inequal

by race:

For workers with a HS diploma, median wages in

California in 2016 were White ($21), Black ($17),

Latino ($15), Asian or Pacic Islander ($15)

For workers with a BA degree or higher: White

($38), Black ($30), Latino ($28), Asian or Pacic

Islander ($38)

}

Other vulnerable populations face workforce inequalities

and are important to consider in California, including

undocumented immigrants and those that have gone

through the justice system

•

28% of Californians are immigrants, including 2.7

million undocumented Californians—two-thirds of

whom have lived in the US for longer than a decade

Immigrant households have a median household

income of about $53,374, signicantly below

the $68,006 for US-born households, and only

$37,006 for households headed by undocumented

Californians

•

California had a prison population of ~130,000 in

2016, the largest in the country

WORKING

DRAFT

PROBLEM STATEMENT

California Future of Work Commission

Convening 5 | January 16, 2020

3 | Tackle workforce inequalities across geography

Economic conditions and a growing divide between counties and regions, and between rural and urban communities have also led

to inequality between dierent geographic regions in California, as some regions have fallen behind. Inland California generally lags

behind the coast and disparities have widened, with Fresno, Bakerseld, and the Inland Empire metro regions slipping behind as

the Bay Area surged and Orange County and San Diego have improved. In particular, while logistics and warehousing in the Inland

Empire, and agriculture in Central Valley, have contributed to employment growth, these sectors are not known for providing quality

jobs. Some example (not comprehensive) observations:

}

Income inequality exists between geographic regions

in California

•

Median household incomes in 2016 range from

$110,000 in San Mateo and San Clara counties,

to $104,000 in San Francisco and Marin counties,

less than half of that in Fresno and Kern Counties,

$61,000 in Los Angeles county, and $82,000 in

Orange County

•

Poverty rates are 6.8% in San Jose Area but 30.8%

in San Joaquin Valley

}

Lagging regions are poorly positioned for future growth,

with a lower share of GDP in high-growth industries and

lower educational attainment

•

“Trailing” cities, like Madera, have <25% of GDP in

high-growth industries such as nance, technology

and healthcare, compared to over 50% of GDP in

high-growth, urban areas like Santa Clara County,

Los Angeles, and San Francisco

•

These same trailing cities also have less than

15% of the population with a BA degree or higher,

compared to 50% in Santa Clara County and ~35%

in San Francisco and Los Angeles

4 | Ensure that more workers have quality jobs

Not all jobs are equal or of sucient job quality. Despite historically low unemployment in this state and country, we are still seeing

not only stagnant wages and staggering high levels of income and wealth inequality, but also dierent levels of job quality and

benets. That divide requires the government to develop better metrics to track the health of the economy for workers and it

requires all sectors to partner in dening and creating quality jobs that support economic mobility and provide adequate benets.

At a high level, quality jobs provide a living wage, stable and predictable pay, control over scheduling, access to benets, a

safe and dignied work environment, and opportunities for training, professional development and career advancement. A clear

denition of what makes a quality job will be important to align understanding amongst stakeholders and improve incentives

to oer such jobs, and the Commission will seek to further dene these characteristics, as they uniquely apply to California,

as part of its work.

The rise of contracting, misclassication of workers, new employment models (including growth in the use of temp agencies and

gig work), concentration of corporate power and monopsonies, and violations of employment law and workers’ rights, could

contribute to the continued growth of low-quality jobs, disproportionately impacting vulnerable workers. Anticipated growth in

industries such as care work, restaurant and janitorial work—where low wages are rampant—threaten to exacerbate poverty.

About 41% of workers in California are at rms with fewer than 50 employees, while 15% are employed by rms with more than

1,000 employees. Providing quality jobs is a particular challenge for California’s small and medium size businesses grappling with

a multitude of hurdles, including low margins as they compete against bigger companies in increasingly consolidated industries.

WORKING

DRAFT

PROBLEM STATEMENT

California Future of Work Commission

Convening 5 | January 16, 2020

}

ThereisagapbetweenwhatCaliforniaworkersnd

importantforagoodjobandhowsatisedtheyarewith

those dimensions

•

10 dimensions of job quality were considered: level of

pay, stable and predictable pay, stable and predictable

hours, control over hours and/or location, job security,

employee benets, career advancement opportunities,

enjoying your day to day work, having a sense of

purpose and dignity in your work, having the power

to change things about your job that you’re not

satised with

•

While all factors are important to workers in California,

the most important are enjoying your day-to-day work

(93% of workers), job security (93%), having a sense

of purpose (92%), and stable and predictable pay

(90%)

•

However, workers aren’t satised across many

dimensions, in particular: having the power to change

things (only 47% satised, with 42% of the bottom

40% of workers and 46% of the top 20%); career

advancement opportunities (45% satised, with 31%

of low-income workers); employee benets (59%

satised, with 44% of low-income workers satised)

}

Less than half of California workers are in good jobs

•

19% of CA workers surveyed are in “bad jobs”,

40% in “mediocre jobs”, and 41% in “good jobs”

•

For the bottom 40% of income, this rises to 34% in

bad jobs and 36% in mediocre jobs

•

Geography: Bad jobs are more prominent in other

counties (26%) outside Southern California (19%) and

the San Francisco Bay Area (9%)

•

Gender: Female workers are in good jobs (47%) at a

higher rate than men (35%)

•

Age: Good jobs are lowest for young workers 18-34

(34%) and older workers 60-85 (38%), while 48% for

workers aged 35-49 and 45% for workers aged 50-59

•

Education: Those with a Bachelor’s degree have

a lower rate of bad jobs (9%) than those without a

Bachelor’s degree (25%)

•

Immigrants: Non foreign-born workers (21% in

bad jobs, 39% in good jobs) have lower job quality

than foreign-born workers (6% in bad jobs, 51% in

good jobs)

}

AccesstobenetshasdeclinedinCalifornia

•

Healthcare: 56% of Californians ages 18-63 have

employer-sponsored insurance in 2016, versus

61% in 2002

•

Retirement: 37% of California private sector

employees age 25-64 have access to a workplace

retirement plan in 2018, versus 53% in 2000

}

Independent work is growing

•

9% of California’s workforce does independent

contracting as their primary job, higher than the

national rate

5 | Empower worker voice and organization

Shrinking worker power and organization, including a decline in unionization rates, is connected to inequality, declining job quality,

and violation of workers’ rights. Current labor laws do not provide adequate paths for unionization, making it more dicult for

these civil institutions to help counter-balance the economic power of corporations and act collectively to enforce existing labor

laws. Labor market concentration and the rise of ssured workplaces present new imbalances and obstacles to worker power and

inuence. Strong unions, in their current forms and in new forms, are essential to the future of workers.

}

Union coverage: 15.8% of California workers are covered

by a union contract in 2017, versus 25.9% in 1983; in the

private sector, this fell from 19.7% to 9.2%

}

UnioneectonwagesandbenetsinCalifornia:Workers

who are represented by a union in California experience

a 12.9% premium in hourly wage; 37.2% premium

in likelihood of health insurance; 51.5% increase in

likelihood of retirement plan or pension; 30.6% decrease

in use of at least one safety net program; and 37.1%

decrease in the likelihood that the family is low income

4 | Ensure that more workers have quality jobs (continued)

WORKING

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PROBLEM STATEMENT

California Future of Work Commission

Convening 5 | January 16, 2020

Challenges of work-adjacent issues and broader quality of life

6 | Address work-adjacent issues that create barriers to employment and job quality

Rising costs of housing, transportation, childcare and early childhood education, healthcare and other essential goods limit the

ability to access employment for some individuals, and place a substantial burden on low-wage and even middle-wage workers.

Additional barriers including incarceration, disability, immigration status, and homelessness prevent individuals from accessing

work. Some example (not comprehensive) observations:

}

Many Californian workers earn wages below what would

berequiredtoaordminimumstandardsofliving

•

If cost of living is based on typical expenses (including

food, childcare, medical, housing, and transportation),

a family with two parents (both working) and two

children, it is estimated that each parent would need

to learn $16.39/hour in California to aord minimum

standards of living

•

Estimated living wage varies across major regions

within the state, from $17.19/hour in Fresno to $22.76/

hour in San Francisco/Oakland

}

California is the second most householder and renter

burdened state

•

35% of home-owning households spend more than

30% of their household income on housing costs

•

63% of Black households and 61% of Latino

householders are rent-burdened (>30% of income on

rent) versus 52% of white households and 50% of

Asian-American households

•

Home ownership is generally lower in California

than the US, and the gaps between race are more

pronounced: home ownership rates are 62% for

whites, 58% for Asian Pacic Islands, 42% for

Latinos, and 33% for African Americans

}

Californians struggle to access childcare

•

Only 23% of working parents with children up to age

12 in California had a licensed childcare slot available

for their child in 2017

}

California’s workers also face growing commute times

•

Average commute times are shortest for white

Californians (27.1 minutes in 2015) and longest for

Black Californians (31.0 minutes in 2015)

•

70% of California’s public transit users are people

of color

7 | Modernize and strengthen the social safety net

The current social safety net has not yet adapted to the realities of the labor market of today and in the future, including increased

income volatility, less ‘traditional’ employment relationships, and more contingent work, especially for people newly entering the

workforce. It will need to adjust for anticipated demands, including that of an aging population, growing numbers of working

parents and to accommodate greater need for care. Here, there are opportunities to learn from other regions around the world.

}

Socialsecurityburdenisampliedbytheprevalenceof

low-wage work

•

Half of California state expenditures on Medicaid/

CHIP and Temporary Assistance for Needy Families

(TANF) goes to recipients in working families

}

An aging population will place further burdens on the

social safety net

•

There are currently 28 Californian seniors (65+) for

every 100 Californians of prime working-age (25-64);

that ratio will rise to 56 seniors for every 100 working-

age adults by 2060

}

The current system faces challenges with eligibility

and usage

•

Only ~44% of recently unemployed Californians

receive UI benets

WORKING

DRAFT

PROBLEM STATEMENT

California Future of Work Commission

Convening 5 | January 16, 2020

New opportunities and challenges in the future of work

In preparing for its interim report, the Commission seeks to further build its understanding of how work in California will change and

evolve over the next four decades, in an era of constant change and disruption, including understanding the impacts of technological

change and increasing use of data, climate change and the transition to a carbon-neutral economy, growth in new jobs and required

skills, and anticipated shifts in California’s economy.

8 | Support workers in transition

While fears of signicant job loss as a result of technological change are overblown, displacement due to automation, as well as

impacts from climate change, will require many workers in California to change occupations, build new skills, or relocate. California

is ground-zero for many of the technologies that complement work, displace workers, or change the nature of work. The state has

also committed to becoming a carbon-neutral economy by 2045; both these realities will result in transitions for the workforce, that

will take time and can be disruptive and challenging for displaced workers, who will need support and access to stable safety net

programs. Given the ever-changing nature of work in the digital age, it is important to consider that disruption will be a constant for

workers and our economy, and will require more agile systems and support for employees and employers alike.

}

Projected job growth varies across the state

•

Considering a mid-point automation scenario,

projected net job growth from 2017-2030 is estimated

to be: San Francisco (12%), San Jose (17%), Los

Angeles (7%), San Diego (9%), Sacramento (11%),

Susanville (-16%)

}

Occupation displacement is expected to be concentrated

in certain sectors and demographic groups

•

From 2017-2030, expected employment growth in

midpoint automation scenario: Highest displacement

is in Oce support (-13%), Food service (-8%),

Production work and machine operations (-5%),

mechanical installation and repair (-5%)

•

Occupations with highest displacement include oce

clerks (126K, primarily female and African American),

retail salespersons (122K, primarily young people),

stock clerks and order llers (119K, primarily young

people, African American and Hispanic), farmworkers

and laborers (117K, Hispanic and less than high

school education), and bookkeeping and accounting

clerks (114K, primarily female)

9 | Safely enable technology and protect workers in a data-driven future

Adoption of new technologies in the workplace will create new opportunities and challenges for workers and employers.

Workers will require adequate protections and transparency around collection of data in the workplace, benets from the data

they generate, and mitigation of algorithmic bias in areas such as hiring and worker assessment. Employers and workers should

both play a role in creating and directing new technologies that will directly impact their activities and the ways they interact.

At the same time, the public is not getting a fair return on public investment into foundational and enabling technologies, which

are increasingly concentrated rather than being distributed within and across the state. California could lead the nation by

experimenting with dierent approaches to protect and value worker’s data. The Commission may consider both compensation

(including questions of data ownership, access, and dividends), control, and equity (including connectivity and access to

broadband internet, as it relates to work).

WORKING

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California Future of Work Commission

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10 | Build skills to prepare for the jobs of the future

The skills of the current workforce may not satisfy the future demand by employers for specic skills in the shifting labor market,

including critical thinking, collaboration, and creativity, in sectors from care work to climate mitigation to digital technology. Despite

a need for workforce development, training, education, and apprenticeship programs, investment in these areas has declined.

Education, life-long learning programs, and re-skilling eorts will be increasingly important to help employers bridge the skills gap

as work and occupations evolve quickly.

}

Job growth is anticipated in a variety of sectors,

whichwillrequiredierenttypesoftraining,education,

and skills

•

By 2026, expected growth in California in specialized

roles including software developers (53,800),

registered nurses (45,800), carpenters (24,900),

medical assistants (24,800)

•

From 2017-2030, expected employment growth in

midpoint automation scenario is highest for Health

professionals (44%), STEM professionals (36%),

Health aides, technicians and wellness (29%),

business/legal professionals (19%)

•

Educational demands are high, but may not necessarily

reecttheskillsrequiredforemergingjobs

•

Projections indicate that 44% of jobs in California

will require at least an A.A. or B.A. degree in 2020

}

There is growing demand and a skills gap in the

energy-eciencysector

•

Over 40% of employers in the energy-eciency

sector report that it is very dicult to nd employees

11 | Make the most of California’s position as a global leader in innovation, to make California the

place where workers thrive

California is a leader in innovation and development of technology that has been an engine of economic growth. California has a

diverse set of assets: the diversity of its people, strength in agricultural production, a world-class university system, and technology

innovation in Silicon Valley, to name a few. The recommendations of this Commission should enable workers, employers, and

communities to thrive in the future economy, and support and incentivize growth and high-quality jobs in sustainable sectors of

the state’s vibrant economy. The aspiration of this Commission is to make the Golden state gold for everyone.

Note: All facts cited in this document are from materials shared publicly and with the Commission, and can be found at:

https://www.labor.ca.gov/labor-and-workforce-development-agency/fowc/meetings/

WORKING

DRAFT

PROBLEM STATEMENT

California Future of Work Commission

Convening 5 | January 16, 2020

Portfolio of recommendations: Dimensions

The Commission’s portfolio should include a balanced set of solutions and recommendations that aim to set the basis for a shared

prosperity in a healthy and economically vibrant California for years to come by ensuring we…

Address a range of problem categories

As described above

Enable results across various time horizons

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Short-term: Tackling challenges experienced today and ongoing

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Medium-term: Tackling challenges we anticipate facing in the near-term

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Long-term: Tackling challenges we may not even be aware of yet

Involve a number of actors

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State government (as a legislator, regulator, employer and investor)

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Local government

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Employers and industry

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Investors

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Workers and unions

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Non-prot organizations

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Philanthropy

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Community organizations

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Academic and educators

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Coalitions, including tripartite agreements of employers, government and workers

Create diversity of impact across people and places

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People impacted: race, gender, age, education level, military history, citizenship status, disability,

housing status, criminal history, etc.

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Places impacted: urban / rural communities, across cities and counties

Test approaches of varying scale to inform further action

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Experiment: Innovative ideas run as an experiment and can be tested and iterated on at a small scale

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Scalable: Solution that has been tested and proven elsewhere, and is ready to be scaled

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Moonshot: Ambitious, exploratory and ground-breaking idea that tackles a very dicult problem

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DRAFT

PROBLEM STATEMENT

California Future of Work Commission

Convening 5 | January 16, 2020

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