How to Recreate America as a Service Economy

America is undergoing an interesting transition right now. We are moving from a manufacturing and industrial economy to a service and knowledge economy. Much of this transition is already complete in many areas of the country. Between outsourcing and automation, many jobs of the past simply no longer exist and this has left people in the lurch. However, this change need not mean that we have to leave people behind economically. A few economic tweaks could help people smooth the transition into this new economy.

Education

One area where we can help make this transition is in education. In my book, What the Hell is Going On? I talked about the many flaws in our education system. One of the ways we can help the next generation get ready for the jobs of tomorrow is eliminating the last 2 years of high school for anyone not pursuing and university education and encourage many students to pursue vocational training with apprenticeship programs with local businesses. This is a method that has turned Germany into an industrial powerhouse. While we might not need students to learn how to build cars, printing presses, or create the best inks in the world (like the Germans) we can help students get a head start on coding, working with automated machines in factories, and work in the trades both on the ground and in management.

America could also formalize service professions like a waiter, hospitality, sales clerk, and other services so that people can achieve training and qualifications for work in those industries. As service industries become more technical, giving students those technical skills will be vital to their career advancement over time. As Andrew Yang recently pointed out on Real Time with Bill Maher, we are a nation of high school graduates and it long past time policymakers understand that.

Changing Monthly Bills

Much of our payment economy is based on regular paychecks for regular work. This has worked well but the reality of work has changed. Many people are receiving regular paychecks in the traditional sense. They are getting paid by the contract, by the gig, or by the day. By changing services like cellphones, car payments, utilities, and even rent to pay by the week or pay-as-you-go model, this would add extra flexibility for workers.

Extended Unemployment

Unemployment insurance as it stands focuses mostly on W-2 jobs where the employer pays into the unemployment system. By making quarterly tax payments for the same purpose as a part of taxes and subsidizing it through tax dollars, we can create more security for workers who are regularly working on temporary gigs.

Creating a new tax regime that prioritizes contributions from any type of income over just employment income (and with similar tax advantages) is important to reforming a tax code that often punishes those who work for themselves or disincentivizes employers from hiring. A complete overhaul of the tax code has been necessary for decades but allowing the self-employed, gig workers, and others to plan for their tax bill throughout the year is a vital step. Also, eliminating the income tax and instituting a flat tax or national sales tax could also be important steps to making sure that everyone pays a fair share.

Universal Healthcare

Obviously, this policy would be the best policy change for many Americans. By decoupling healthcare from employment, workers would have more flexibility in jobs and be willing to take on different kinds of work. This would provide security for gig workers as well as those who work for themselves. My plan for Medicare for All would raise the money through fees, taxes, and an increase in corporate taxation as well.

Housing

Creating a variety of types of housing besides just single-family housing would unlock a great deal of economic potential and provide a greater option of housing for those who cannot or do not want to live in a single-family home. Because of the cost of construction, this will likely have to be subsidized but improved condos, duplexes, and triplexes could be a key to providing people with different types of housing at different rent prices, particularly in major cities where jobs are likely to be located.

Transportation

Creating new transportation solutions is going to be important to helping America recreate itself as a service economy. That might seem a bit counter-intuitive but the reality is that the expense and inflexibility of owning a car can be a problem for those in the service industry. Creating multiple transportation options is vital, not only for creating new jobs but also for creating flexible transit solutions for people. Transport will need to run at a variety of hours and bus and shuttle service to a variety of destinations, so people can get around to wherever they need to go, is the future of mobility. For those that still need or want personal transport, smaller cars, electric bikes, or even scooters could provide in between transportation options for many workers.

America’s Service Economy Future

Our economy has already made the transition away from industrialization and towards services. It is time that the rest of the economy catches up to the reality out in the world. By making a few cultural and policy changes, we could create an economy that works with and around the needs of workers and customers instead of forcing people to exist in an economic model that does not work with the reality of their jobs.

Retirement

Another area that desperately affects those living on gig work or working for themselves is retirement. Social Security is an imperfect retirement system. It goes a good job of keeping people out of poverty but it is not a true nationalized retirement system. For a true nationalized retirement system, retirees need to be able to live on at least 50% of their salary into their retirement and have that indexed to the cost of living and inflation so that even the poorest worker can live well into retirement without worrying about falling into poverty and despair.

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