Chapter 9

 

THE IMPACT ON INDIVIDUALS AND FAMILIES

 

 

Even in the beginning stages of work's obsolescence and marginalization, millions of people feel the effects.  There is an unsettling uproar in lives and business activity caused by the on-going challenge to the existence of almost all forms of economic activity.  Millions live with personal insecurity.  They live with the daily prospect of being laid off, with all that that entails by way of family financial crisis, marital stress and the individual’s need to seek new employment, retrain or perhaps pull up roots in one community and move to another.  Much of the new work being offered is temporary, contingent, part time or offers few of the “fringe benefits” that people rely on for such things as health care and retirement.  The level of stress, on the job and in family life, is elevated to new peaks.  It is a population living with anxiety.  No doubt any economic downturn exacerbates these problems, but it is an illusion to assign them fully to the downturn.  They reflect the long-term tendency even when the economy is doing well. 

          As long ago as 1989, Barbara Ehrenreich wrote her book Fear of Falling about the insecurity of the professional middle class.  E. J. Montini put it in personal terms when he described layoffs at the Arizona Republic.  “On the day it happens, downsizing slows people and makes them quiet... It begins with a phone call.  Men and women working here had been told to be at their desks between 9 a.m. and 3 p.m.  And to wait.  And to watch.  And to wonder... By the end of the day, 60 reporters and photographers and editors and others were told they no longer worked for the newspaper... You may come upon a reporter who... has been laid off.  He's standing in the parking garage, waiting for the security guard to escort him to his car.  Already, the reporter has had his identification badge taken away from him... Before he goes, the security guard must reach into his car and scrape the parking sticker from the windshield."[1] 

          A corporate manager told of a similar experience in a letter to historian Otto Scott: "Our new owners have a quite different culture and managerial style.  They come into your factory, give you a check for your remaining vacation balance, a month's severance pay and in lieu of two weeks' notice give you two weeks' pay and say, ‘You have 30 minutes to leave the premises.'" [The letter writer's emphasis][2]

          Insecurity appears in many ways.  The number of bankruptcies soars.  Companies cutting jobs see employee morale plummet, and the employees who remain suffer something called "lay-off survivor sickness."  In Europe, a mass of “marginalized youth” has come into existence, consisting of young people who have had no meaningful or lasting employment. People who have worked hard to develop skills suddenly find them obsolete, with the result that they are cut adrift from years of experience and training.  Conscious of all this, The New York Times ran a series of articles on the effects of downsizing on individuals, the workplace and community.  The articles gave the problem a human face, and were published in book form as a New York Times special report, The Downsizing of America.[3]

          Job insecurity is taking its toll in Japan, marked by a sharp increase in suicide during the 1990s and continuing at an even higher rate in the years since the turn of the century.  A news report says that in Japan "many men who killed themselves in the last year were employed but fearful of losing their jobs or overwhelmed by increased work loads that were a result of colleagues losing their jobs, according to experts."  The same report says that "of those unemployed white collar workers in their fifties who have managed to find jobs after being laid off, the average income is just 60 percent of what they were previously making."[4]   

          It is fitting that reference is made to the impact on wages and salaries. A commonly cited fact in the literature is that wages have been stagnant in the United States since the early 1970s.  Family incomes have risen only because tens of millions of women have entered the economy, making the two-income household the standard.  Although finally in the late 1990s wages rose for the bottom ten to 15 percent of the American workforce after decades of decline, the number of temporary workers steadily increased.

 

Work is changing.  This is marked by non-permanence, continual retraining, increased personal responsibility, self-direction, and even a lack of assigned physical location.  Lars Erik Andreasen writes that "the cycles of a working life are different now; no longer can someone assume that when they (sic) enter a craft or profession as a young person they will ply that trade for life.  People will have to retrain not just once but several times during a working life.  Workers are also more often expected to take responsibility for more of their work.  A decentralization of control in work is taking place...."[5]

          Speaking of IBM's sales office in Cranford, New Jersey as long ago as 1994, Business Week reported that "the 600 representatives based here have no offices; a day each week, or less, they come in to pick up mail and see associates, and are computer-assigned a spot with little accoutrement save one chair, a telephone, and a jack for a laptop."[6]

 

Underemployment substitutes for full employment. We know from experience that it is possible for millions of people to be unemployed.  Just the same, free-market theory projects that that cannot be a chronic condition where the interplay of supply-and-demand is free to set wages at a level that will "clear the market" of all who want to work.  More than most other societies, the United States has that type of market.  The result of the displacement so far (at least in the absence of economic crisis), therefore, has not been high unemployment.  The effects appear in several surrogate forms that are best lumped under the heading "underemployment."  (In market theory, the response to such a description is that it contains a value-judgment that is out-of-place in a market setting.  The free play of the market makes an "optimum allocation of resources."  The fact that that is not exactly what any given person desires is irrelevant.  This is a concept that holds sway in the United States today, but which is fallacious precisely from a classical liberal point of view.  That is why I will examine it in detail in the later discussion of economic and social concepts.)

          With "shamrock organizations," only the core is permanent and there are many contingent relationships that branch out from it.  What is the effect on workers?  Samuel R. Sacco says in the journal Managing Office Technology that "in the era of reengineering, more companies are focusing on their core competencies and arranging their workforces to suit that focus."  The companies call in workers as needed "without the requirement that these just-in-time workers become permanently attached to the company."[7]  A growing percentage of the American workforce has taken on peripheral status.  It is no wonder that Ian Angell of the London School of Economics says "the future for us all is free-lance employment on a piece-by-piece basis."[8]

          This was presented in a favorable light by J. E. Chesher in The Freeman, where he observed that "the worker... does not have to punch a time card, account for his every move, or go through some bureaucratic ritual to take an afternoon off."  The worker's employer "enjoys the benefit of a nearly endless labor pool, does not have to provide an assembly plant, or pay workers' compensation insurance and fringe benefits."  In sum: "This is a mutually beneficial arrangement" – a conclusion that follows in every case in free-market theory about any transaction that is "voluntary."[9]  It can be seen from the worker's perspective, however, in a letter-to-the-editor that a recent college graduate wrote to the Wichita newspaper: "I graduated from Kansas State University with a bachelor's degree in fisheries biology… My job search brought about many employment opportunities, all seasonal positions, all without benefits and all with low pay.  My situation is not unique.  A vast majority of students in fisheries and wildlife don't have a quality, full-time job available upon graduation.  Some spend a few years living paycheck to paycheck trying to get in, but most give up and find another field."[10]  He puts the blame on universities that flood the job market with graduates for areas that aren't needed, but in the context of this book we see that the problem has much deeper roots.  Anthony Harrigan writes that "underemployment has risen on a colossal scale.  Millions of Americans have jobs that don't provide sufficient income to support a family – even with husband and wife working."[11]

          The literature subdivides the underemployed into part-time, temporary, mismatched and discouraged:

                  

The discussion of part-time work brings us to the sort of evaluative morass that is so typical in economic matters.  Some commentators argue that there is no problem with part-time employment. Svorny and Kaljian, writing in the Milken Institute's journal Jobs & Capital in 1996, said:  "About 16 percent of the labor force worked part-time 20 years ago, and part-time workers compose about 16 percent of the labor force today."  And they expressed the view that much of the part-time nature of the work is welcomed by the employees.[12]  But we switch back to the other side of the statistical argument when we read Business Week's report about Japan: "One of Tokyo's better two-year colleges... a few years ago boasted a 98% employment rate for its graduates.  That rate has dropped to 60%... With no social stigma attached to living off parents, many young people go home again and just work part-time."[13]  So who is right?  In light of the forces we know are at work, we are better advised to place our confidence in those who perceive a problem.

 

Temporary work is taking an ever-larger place, as we have seen, with such workers becoming what is called "the contingent workforce."  Business Week once told of one temporary-help supplier that "has doubled the number of accountants it places since 1992, to 85,000 last year."  As to the type of jobs the accountants get, the report says they "earn $35,000 to $40,000 a year, 10% to 20% less than full-timers and often get no health care or other benefits.  And most don't work year-round."[14]  Economist Steven Weber of the University of California at Berkeley explains that "the growth of temporary employment mirrors the development of spot markets and just-in-time management of other factors of production."  A National Association of Part-Time and Temporary Employees came into existence in 1994 and remains active, reflecting the rapid growth of temporary employment in all areas, including manual labor along with service, trade, professional and manufacturing work. 

          As with all these developments, some commentators offer explanations that deny the massive underlying trends.  Thus, The Economist's "Survey of the World Economy" in 1996 could observe about both part-time and temporary work that: "True, the share of part-time jobs has increased in most industrial countries, but... the main driving force has been women's often-expressed preference for working part-time, not some sinister breakdown in the labour market.  The OECD's latest Employment Outlook also produced figures to show, contrary to conventional wisdom, that in most countries there has been no significant increase in temporary jobs."[15]  The problem is how to reconcile these points with a news report such as the one from San Francisco about a Pacific Bell supervisor, Linda Corbett, who was "severed involuntarily" and then called back six months later as a "contract worker."[16]  A Wall Street Journal article quotes the executive vice-president of a national temporary-help firm who says "the business that's really growing is downsized workers who are hired back through us."[17]  A Business Week editorial tells of "hundreds of thousands of corporate refugees [who] are becoming entrepreneurs, selling their services back to the corporate world that exiled them," and adds that "millions more edge toward the slippery slope of downward mobility and the end of a middle-class way of life."[18] Clearly the phenomenon amounts to more than just a preference by many working-women for part-time or temporary work.

 

Mismatched workers make up another part of underemployment.  This is the problem of workers’ not having jobs based on their education and skills.  They are, in effect, “over-qualified” for the jobs they have been able to get.  The presence of a large number of these contradicts the notion that “more education and training” will provide each person a solution to his job problem. 

 

Discouraged workers are those who have given up looking for work and aren't counted in unemployment statistics.  We were told by Otto Scott in late 1996 that "the New York Times earlier this year reported an estimated 7 million men have permanently left the labor force and rely upon their wives' earnings."[19]  These include a great many who have been forced into early retirement.   The retirees are often not thought to be among the discouraged workers.  Many of them may in fact be pleased to be into the sunset years while they are still young enough to enjoy them.  But many of them are people who would be working if forces beyond their control had not "put them out to pasture."  In the early stages of downsizing, which mostly we are still in, "early retirement" is the easiest and perhaps most humane way to reduce a workforce.  Individuals and society as a whole will think the pinch considerably more painful when there are no longer older employees to take early retirement; then more people will be cut loose during their prime earning years.

 

ENDNOTES

 



[1].   E. J. Montini, “Cute word, a cruel reality,” The Wichita Eagle, January 21, 1997.

[2].   Otto Scott’s Compass, October 1, 1996, p. 8.

[3].   The Downsizing of America (New York: Times Books, 1996).

[4].   The Wichita Eagle, July 18, 1999, news report by the New York Times News Service.

[5].  Lars Erik Andreasen, "Foreword," in Ken Ducatel, ed., Employment and Technical Change in Europe (Brookfield, VT: Edward Elgar Publishing Company, 1994), p. xi.

                   [6].  Business Week, October 17, 1994, p. 76.

                   [7].  Samuel R. Sacco, "Temporary Help and Staffing Services: Wave of the Future," Managing Office Technology, December 1996, p. 24.

                   [8].  "High tech will destroy job security," The Sunday Times, May 12, 1996.

                   [9].  J. E. Chesher, "The Worker in Contemporary Society," The Freeman, July 1994, p. 349.

                   [10].  The Wichita Eagle, May 29, 1997, editorial page; letter from Nate Davis.

                   [11].  Anthony Harrigan, "The Economic Crisis of the First World," Vital Speeches, July 1, 1995, p. 553.

                   [12].  Svorny and Kaljian, Jobs & Capital, Spring 1996, p. 35.

                   [13].  Business Week, August 7, 1995, p. 38.

                   [14].  Business Week, July 17, 1995, p. 60.

                   [15].  The Economist, September 28, 1996, p. 23.

                   [16].  The Wichita Eagle, December 12, 1996, report by New York Times News Service.

                   [17]. Wall Street Journal, January 22, 1997, story by Fred R. Bleakley.

                   [18].  Business Week, October 17, 1994.

[19].  Otto Scott's Compass, October 1, 1996, p. 11.