Vaulting Workers Into the Middle Class With High Pay


Eduardo Porter has a thoughtful article in The New York Times on the “contractor parity” policy Harvard implemented during my Presidency. I thought at the time, and think now, that it was a good and important step for Harvard. The policy also serves as a valuable example for others, even if it’s not a panacea.

Harvard was at the time and still is proud of its record as a “good employer”. So it seemed to me highly disingenuous for us to claim that we treat our employees right while also exposing them to competition from contractors who lacked our scruples about wage minimums, benefits, or working conditions.

I think what Larry Katz and his colleagues recommended and we put in place at Harvard is a good example that should be emulated by large and successful employers. These big companies that hold themselves out as “good employers” should not achieve that status by farming out tasks like custodial work, food service, and benefits administration to contractors who do not meet these employer standards. Outsourcing decisions should be based on who can do tasks better rather than who is more hard-nosed.

Of course there are limits. What about contractors’ subcontractors’ subcontractors? Not every input that a firm purchases can be fully scrutinized. But if all big firms adopted the Harvard policy the world would be a better place, which makes this a good area for socially-minded shareholders to explore.

One domain that the Harvard policies I put in place did not cover was the division of full-time jobs into multiple part time-jobs so that health benefit costs could be offloaded onto the state. I wonder how pervasive a practice like this is at self-styled “good employers”. Although this issue was not to my recollection surfaced years ago, it is certainly worth consideration today.

There is a broad point here that I think progressives should consider. The premise of the Harvard policy was not opposition to outsourcing or nonunion employment. It was the idea of a level playing field.

The right case for family leave, or decent working conditions, or fair nondeceptive advertising is not that business is greedy and evil and needs to be regulated. Rather, it is that most business people want to do the right thing but market competition will make them lose out to the ruthless few who cut corners. So proper regulation is in the interest not only of workers and consumers, but also businesses who want to do the right thing.

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