School at Cornell University.

ILR, advancing the world of work.

LOUIS HYMAN: Income inequality is

one of the most pressing questions of our age.

And yet the institutions we have to fight that inequality

are failing all around us.

So says Andy Stern, author of Raising the Floor

and former president of the SEIU.

Having spent a lifetime in the union movement,

he came to believe that in fact unions could not provide

the middle-class life that they had in the postwar and that we

needed to move in the direction of a new policy--

the idea of the basic income.

Tonight, Andy will be talking with Steven Berkenfeld,

chairman of the Sierra Club and a managing

director of Barclays, about what kinds of opportunities

there are to reconfigure the rules of the game

to create a new kind of welfare state

for the 21st century that supports entrepreneurs

as much as anyone else.

This is the first in a series of talks

here at the Institute for Workplace Studies in New York

City, where we are researching the future of work,

understanding how new technologies and new business

models are transforming the economy around us today.

And now, Andy Stern and Steven Berkenfeld.

ANDY STERN: --the private sector,

when I was born, to 1 in 16 today,

I could not watch American workers keep working harder

and harder and not get a raise.

And my job as the leader of the nation's largest union

was to do something about it.

And it just didn't seem like working harder

was actually going to solve the problem.

And so I left to try to figure out,

you know, what does someone like me

who's committed his life to changing other people's life

do when everything you knew and everything you tried

was becoming more marginal, in terms of its impact?

And I began this journey.

And I spoke to lots of different people.

My most interesting discussion, other than Steven,

that really got me thinking-- because my original purpose

of talking to everybody was that only in Columbia University--

maybe Cornell, they can say this, too-- but all

the professorships in the business school

that are endowed, and they had a vacancy,

and they wanted to know how to fill it.

And the idea was, there must be something

around labor-market policy that we

could do that no other university was doing.

And they sent me out on this journey.

And I started by visiting a guy named Andy Grove.

Many of you know Andy Grove was the founder of Intel,

the creator of the chip.

And I met him, interestingly enough,

in this office that probably looked

like it had a single real-estate agent or accountant.

You know, I expect to see Andy Grove surrounded

by all his little minions, in a beautiful office,

in an executive suite in Intel.

And here he was in his little office.

And the name in the office was SARUS--

S-A-R-U-S. And my first question was, you know, Mr. Grove,

what is SARUS, thinking it must be some huge think tank or new

secret project.

And he said, oh--

Strategic Advisors R Us.

So I had to give myself a name, so I called it SARUS.

And we spent the time talking about his view of the future.

And he wrote this book called Only the Paranoid Survive.

And it basically was, what do you

do when you hit what he called a "strategic inflection point"?

And he wrote about a strategic inflexion point.

It's basically a turning point, a dramatic turning point,

for whether a company or a country.

He talked about how they appear slowly.

They only sometimes are viewed clearly in retrospect,

and denial is the first reaction.

And I would argue that's where we

are in America about the future of work, which I'll talk about

in a second.

And Andy Grove talked about how, when

he was the founder of Intel, he was with Gordon Moore.

The two of them were really the people that built the company.

And they were sitting around, because all

of a sudden the business they had built

was not working, because the Japanese were developing

a very different kind of chip.

And they didn't have the courage--

they thought they didn't have the courage-- to really go back

to the board of directors and say,

we really are not in the right business.

We really have to change things.

And so they were sitting around.

And Gordon says to Andy, well, what

do you think the-- they're going to fire us.

I mean, they should fire us.

We're about to lose money.

We don't have a new product.

What are new guys going to do?

They said, they're going to scrap everything we're doing,

and they're going to put all their money into the new chip

that they knew had a huge potential.

And Andy Grove said, well, why don't we just do that?

And they did, and they rebuilt the country,

and he wrote a book, Only the Paranoid Survive.

And, somewhat, that should be the wish of America,

that maybe we could be a little more paranoid.

We might do a little better surviving.

But, along the way, I learned a lot of things

about today's job market, which is where I want to start.

So, if you ask most Americans economically

what they think about the economy

and what they would name the country, the USA,

they would say it's the United States of Anxiety.

Because people are extraordinarily anxious

and scared about the future.

Our election, I think, has indications

that reinforce that.

But 21% of Americans-- only 21%, at a time when the unemployment

rate is close to lower than 5%, lower than 4%, where the stock

market is up-- only 21% of Americans

say the economy is either excellent or very good.

47% of Americans, think about this,

don't have $400 in case of an emergency.

So that's, one out of two people in America don't have $400.

If they have an insurance bill, they get hurt,

their heater breaks down, they don't have the money

to fix their own house.

We now know that 50%, 7%, of Americans

don't think the American dream, which is, their children will

do better than they do.

So you can understand why people are anxious.

23% of low-skilled men in this country

have been unemployed for 12 months.

We have the lowest labor-force participation

in American history.

There are more men on disability than working

in manufacturing, today.

And Larry Summers will tell you that, one generation from now,

one quarter of all men 25 to 54 will

be unemployed at any one time.

So, if you have no hope for the future,

if you haven't gotten a raise for 20 years,

if all of a sudden you're seeing a world around you

completely change, it's no wonder that people are anxious.

And the way that it sort of plays out economically--

for the economists, like the dean, in the room,

we've got to throw in some facts, here--

is, if you look at the 20th-century economy,

the market economy, people talked about four things

and used one word.

They talked about productivity increase,

wage increase, job increase, and they called it "growth."

So when a politician said "The economy is growing,"

what they really meant is the economy is being more

productive, the economy is creating jobs,

and the economy is creating wages.

And it was great, because all politicians had to say was,

let's just grow the economy and life will be good.

And it was.

And then, all of a sudden, things changed.

And you can see the blue and that light silver line

are GDP growth and productivity growth.

So they-- I don't think I have a laser pointer, here.

But the two top lines, they keep growing.

But all of a sudden, wages--

which we now know, after 20 years,

only looking back because of denial,

that American workers haven't gotten a raise, now,

for 20 years--

we admit to that fact very late but acknowledge that it's true.

We won't admit yet to the fact that job growth

has fallen off the growth and productivity train.

So now in America you can have economic growth, GDP growth,

you can have productivity growth,

and no job growth or no wage growth.

That is the 21st-century economy.

Every single new job created since 2007

has been in what we would call "alternative employment."

The 40 hour a week employer-managed job of myself,

my father, my grandfather, the people in our union,

is not way the future of work is going.

And here's the other sad fact of what's happened since 2009.

So the red lines, the middle line is middle-class jobs,

midwage occupations.

And on the left-hand side of the chart are the jobs

we lost when the crash occurred.

So we lost a lot of jobs in the recession, in the middle class,

a certain amount in the lower, and a certain amount

in the higher.

But look what happens after the recovery occurred.

The economy stops really producing or replacing

the middle-class jobs it was losing

and now begins to start the process of replacing

middle- and high-wage jobs with low-wage jobs.

That trend has now continued.

80% of all the new jobs created are low-wage jobs, in America.

Middle class is being hollowed out.

Lots of people are now writing about it.

Another kind of fact that we want to believe

is just a moment in history.

But, as those charts before said, it's true.

The second thing we now know-- and you're

going to speak about it next week,

and I won't talk about it too much, because Sarah

and the Upwork people know a lot more than I do.

But the point is, the jobs that are being created

are in alternative employment, contingent,

part-time-gig economy, staffing companies, et cetera.

Average worker's tenure in job is 4.4 years.

My son's going to have 9 to 12 jobs, like most kids his age,

by the time he's 35.

I had one by the time I was 35.

I had one, basically, by the time I retired.

And now we see 10 to 42 percent of million people

work outside the traditional 9-to-5 model.

30% of the people in the workforce

work in some kind of freelance, independent contractor.

And Carl Camden, the CEO of Kelly, says it'll go to 50%.

So that's a really a different economy

than my father, my grandfather, and my economy.

And that's the economy of our kids and our grandkids.

So, when we begin to think about the future,

we have to take into account, what is the current event

and not have a mythology that we're still

living in the 1950s and 1960s, when

a rising tide of economic growth raised all boats, as opposed

to now where it's only raising the luxury liner

and the rest of the boats are either sinking

or in pretty rocky waters, as far as that's concerned.

So that would be an interesting observation

about where we are today.

And lots of people have different ideas

of what we want to do.

We heard the debate last night.

People have their own ideas.

Here's the thing that kind of drove me

into my thought process--

generated a lot by Steven's conversation, which