Abstract
Approximately one-quarter of workers in the United States are employed in poorly paid jobs, earning barely enough to keep body and soul together. The share is far higher than in other developed industrialized countries. International comparisons have shown that such high shares of low-wage work are not an inevitable fate. Many European countries, notably the Scandinavian countries, show that high employment and low unemployment rates can most certainly go hand in hand with a narrow income spread. That narrower income spread must be underpinned by higher investment in education and training, particularly in the bottom quartile of the population. This investment will also make greater social equality economically feasible by raising productivity. A good deal is known today about the reasons for the varying degrees of income inequality in the industrialized countries. The decisive factor in determining the primary income distribution is the level of coverage by collective agreement, and for the secondary income distribution it is the level of redistribution via the taxation system and the welfare state. However, less research has been carried out on the particular reasons for the high concentration of bad jobs in certain industries.
In Creating Good Jobs, edited by Paul Osterman, the focus is indeed on the individual industry. He asks whether inequality can be mitigated by industry-specific strategies or by more general strategies, such as increasing the minimum wage or strengthening collective bargaining and the trade unions. Osterman sees a clear case for industry-based strategies. This approach is because it is only at industry level that win-win situations for improving work organization can be identified; career ladders for promotion can be designed; and the characteristics of a firm’s external environment, which have to be changed in order to create good working and employment conditions, can be properly understood (pp. 6–7). Nonetheless, Osterman is not quite so certain that an industry-based strategy alone would be successful. He writes, “The chapters reveal that there are policies that cut across, and it would be an error not to make note of them” (p. 20). This tension between industry-specific and cross-sectoral strategies runs through the entire book, although no conclusive answer as to the relationship between the two is given.
The empirical relevance of industry-specific strategies is examined in seven case studies by established experts on each of the industries under investigation. These seven industries (retail, residential construction, long-term care, hospitals and outpatient care, restaurants, manufacturing, and trucking) are both representative and sufficiently varied to encompass a suitably broad spectrum of specific industry conditions and strategies. They employ approximately 55% of all US civilian workers aged 25–64 who are not self-employed, work in for-profit companies, and earn less than $12 an hour (p. 7).
All seven case studies are similarly structured. They begin by analyzing the working and employment conditions, the skill requirements, the pay and social security, the competitive conditions, and the labor unions’ hitherto unsuccessful attempts to organize workers in each of the industries. On this basis, proposals for improving working and employment conditions are formulated. The case studies have many commonalities. The high share of low-wage work is in every case a consequence of the erosion of protective institutions, in particular the declining value of the minimum wage and the reduction in coverage by collective bargaining.
The many power struggles the unions have lost are described: their ability to act having been massively weakened by the fragmentation of companies through outsourcing, the growing use of lower-paid precarious workers, the well-organized anti-union strategies adopted by employers, and a lack of political support. At the same time, the importance of regulating product markets becomes apparent. If price becomes the decisive competitive factor, working and employment conditions in all industries become differentiated. In those segments offering high-quality products or high-value services to customers with deep pockets, wages are usually somewhat higher than the industry average. Skill requirements in these segments are higher and companies try to reduce labor turnover by offering better terms and conditions. Moreover, virtually all industries also have groups of “good” employers that seek to treat their employees fairly.
One of the cross-cutting questions in all the chapters is whether it is possible for employers to learn by imitating the good examples in their own industries. The answers to this key question vary. Osterman sees in long-term care the crucial starting point in the development of productive ways of working. If this also made it possible to cut costs, then the most important funding bodies, such as Medicaid agencies and managed-care insurance companies, could also be persuaded to introduce similar ways of working (p. 136). All the other authors are more than skeptical about this.
Françoise Carré and Chris Tilly doubt whether the good working and employment conditions in the higher-income consumer segment would still be profitable in the lower-income majority segment (p. 47). They see little prospect of improving working and employment conditions by publicizing examples of employers that create better jobs; for them, the only solution is to create the same competitive conditions at industry level by establishing minimum conditions binding on all employees. A similar argument is advanced by Rosemary Batt, Tashlin Lakhani, Jae Eun Lee, and Can Ouyang in the case of restaurants. Price competition in that sector is so intense, they argue, that enforcement of the existing labor standards is the fundamental precondition for all further strategies.
In contrast to other industries, Susan Helper and Raphael Martins are able in their chapter on manufacturing to draw on many studies that show that high-road business strategies are not a purely philanthropic concern but instead can improve productivity and profitability. They wonder why, despite this clear evidence, the high-road models are not more widely adopted. One important reason, they suggest, is the free rider problem. Since suppliers too would have to be offered technical assistance and training in order to upgrade, competitors would also benefit. Furthermore, the positive effects would make themselves felt only in the medium term (pp. 265–66). Individual companies could not construct the ecosystems that would be required in a tightly networked industry. In their view, the development of apprenticeship systems, for example, and of other supporting institutions is ultimately the responsibility of government. Russell Ormiston, Dale Belman, Julie Brockman, and Matt Hinkel make an argument for a strengthening of high-quality craftsmanship in residential construction through licensing as well as stringent building codes and thorough building inspections (p. 103).
Eileen Appelbaum and Rosemary Batt emphasize that advancement to good jobs in hospitals, such as those of nurses, is virtually impossible without further training that is cost- and time-intensive. That is precisely what an individual company cannot afford to do, however, which is why a national system of training and upgrading centers is indispensable (p. 181). Steve Viscelli also sees binding regulations as the only way of achieving sustainable improvements in working and employment conditions in the trucking industry. Above all, all hours worked, including waiting times, would first have to be recorded. The extension of full coverage by the Fair Labor Standards Act would make the truckers eligible for overtime pay (pp. 304–5).
Thus, the message of the industry chapters is, for the most part, very clear. In all the typical low-wage industries, price competition is so intense that sustainable improvements in working and employment conditions can be achieved only by introducing generally binding, industry-wide regulations. Such regulations could act directly on working and employment conditions, for example, by strengthening enforcement of existing labor standards and raising the minimum wage and by introducing collective agreements, statutory schedule regulations, or levy-financed training programs. They could also help to shape product markets, for example, by means of licensing or building codes or promoting innovation throughout entire supply chains. As a European reader, I am surprised that none of the authors proposed equal pay for part-timers and workers in other precarious employment forms. Given the wide pay differentials and American sensitivities around equal treatment, it would have been an obvious proposal.
The book, and in particular its informative and excellently written industry studies with their abundant insights into the often hidden world of poorly paid work, is absolutely worth reading. It is a pity that the industry analyses, including the proposals they contain, have not been systematically evaluated by the editor in order to answer his starting question. So I have to try to provide an answer myself. To cut to the chase, it is that industry-specific regulations must be embedded in a drive to raise and implement general labor standards. It is most certainly not sufficient simply “to make note of them” (p. 20).