“You Get the Economy You Choose”

I began writing this review over the Labor Day (2011) holiday weekend. For organized labor and working people in general, there was little to celebrate and it was as if the national conversation about why that is so was drawing directly on Failure by Design, Where Are All the Good Jobs Going? and A Company of One.1 In blogs and op-ed pages, leading labor and political economists Paul Osterman, Robert Reich, Lawrence Katz, and Barry Bluestone delivered hard-hitting criticisms of income inequality, class polarization, the lack of good jobs, and employment insecurity in America. One of the nation’s most important think tanks—the Washington DC-based Economic Policy Institute (EPI)—launched a major blog (http://www.epi.org/blog/), making their sobering analysis of wage trends and labor market dynamics even more accessible to the general public. Regional and national newspapers highlighted painful trends: alarming lack of job growth, “food insecurity” (a growing percentage of Americans who lack sufficient income to regularly feed themselves and their families), uptick in the percentage of Americans who were raised middle class but whose class status has slipped in adulthood, high and persistent long-term unemployment, and an increase in the percentage of working age adults who are poor. Celebrating labor seemed unbefitting; mourning was more like it.

President Obama made clear to the nation, shortly after the Labor Day weekend, that he fully understood the magnitude of these problems, proposing mechanisms (several of which come right out of the pages of the books reviewed here) that might fuel job growth and improve Americans’ standard of living. Although Obama may never garner the political support to correct the jobs situation specifically and the economy more broadly, there is no doubt that he grasps the central problems analyzed by these authors: the disappearance of some and changing skill requirements for other good jobs, stagnation of household incomes, the disappearing middle class, slow economic growth, devastation of our economy as a result of deregulation of the financial sector (which secured hefty profits for the economic elite but impoverished the majority of those who work for wages), and job insecurity, real and perceived.

Failure by Design, Where Are All the Good Jobs Going? and A Company of One each addresses a different part of this economic story. Written by an anthropologically grounded American Studies scholar (A Company of One) and five economists, these books complement one another, creating a well-rounded understanding of our economic dilemmas. Indeed, one can’t really appreciate the current situation without seeing it from all three angles.

Failure by Design grapples with the big picture, broadly sketching out how policy makers have created the current crisis, analyzing some key indicators of the crisis, and outlining the policy reorientation necessary to improve the living standards of American workers. Where Are All the Good Jobs Going? makes clear that more is needed than one broadly painted understanding of the economy. Its fine-grained statistical analysis of changes in the quality and security of jobs, the consequences of layoffs and displacement for long-term earnings, and regional differences in job quality and job growth, reveals the need for multilayered policy responses. A Company of One hints at the obstacles to implementing progressive policies. Examining the narratives of high-tech professionals who were routinely displaced and experienced bouts of long-term unemployment, it illuminates how people subjectively experience and embrace the economic, institutional, and political trends highlighted by the other books.

Each book emphasizes (in its own way) how governmental-, firm- and individual-level choices have profoundly shaped jobs, labor markets, and everyday life. Understanding choice, as it has been historically and institutionally constructed, is important because it raises the possibility for alternative economic scenarios. Political and economic leaders can choose to adopt different fiscal, industrial, and labor market policies, whereas individuals on the ground can choose to demand change from the institutions that have constrained their opportunities and resources. Whether they will or not is another story, which I’ll address later in this review.

Failure by Design is a product of the EPI’s novel approach to distributing the data it has published biennially (since 1988) in the volume, The State of Working America (SWA). According to EPI President Lawrence Mishel, who wrote the Forward to this new book, EPI decided to disaggregate SWA into several products. One is this slender volume, a clear, to-the-point narrative analysis (supported by 46 supporting tables) of the economy. Failure by Design should be used to accompany the voluminous data on employment, income, wealth, and labor market trends which, this year, can be found on the EPI website (http://www.stateofworkingamerica.org/pages/about). EPI’s intention by publishing Failure by Design is to explain and critique (rather than simply describe) our economic problems and to identify mechanisms for solving them. In other words, EPI is taking a forceful stand on the meaning of its economic data: the problematic implications of economic trends for working Americans, how these trends have been consciously engineered by political and economic actors, and what is required to halt and reverse them. A significant strength of this volume is that it is able to evaluate policies of the previous three decades as they played out, devastatingly so, in the so-called Great Recession that began in 2008.

Bivens, an EPI economist, argues, “You get the economy you choose” (p. 64), the title of this article. He notes that our political leaders have made monetary, fiscal, and political choices that have enriched the privileged few at the top of our society while systematically weakening the standard of living of the majority. The choices? They allowed the economic elite to globalize and send jobs overseas without restraint and tolerated, even encouraged the corporate assault on unions. They were willing to let U.S. unemployment soar and the real value of hourly wages and the minimum wage decline, let the financial sector ruthlessly and destructively pursue profits, and allowed CEO compensation to explode to indefensible levels.

Some key outcomes of these policies include sluggish economic growth; an insufficient number of new, good jobs and unacceptably high unemployment, as well as alarming underemployment; an historically high ratio of workers to jobs, with five unemployed workers available for every job opening (by contrast, a decade ago about one unemployed worker stood poised for each opening); declining median household incomes, along with a decline in household wealth; and a shrinking number of Americans covered by retirement plans or employee-sponsored health care. (Bivens could have added the historically high and persistent rates of long-term unemployment, or the growth of the contingent workforce over the last several decades, trends that confound his picture of jobs and employment. His point is clear, nevertheless.) Furthermore, there were significant racial disparities, with these outcomes nearly always worse for Blacks and for Hispanics. The strategies that Americans adopted to cope with these trends—working longer hours, going into debt, and drawing on equity created by the disastrous housing bubble—were unsustainable, with the whole house of cards, as we know now, collapsing in 2008.

Only different policy choices, Bivens vigorously warns, will build a “durable foundation for growth” and enable Americans to recover decent standards of living, greater leverage vis-a-vis corporations, and optimism about security and prosperity. These include reining in the financial sector, halting the decline of the real value of the minimum wage and otherwise improving wages, committing the nation to full employment, investing in truly productive industries and infrastructure (but going far beyond the spending level mandated in the 2009 American Recovery and Investment Act), and strengthening workers’ bargaining power.

Holzer, Lane, Rosenblum, and Andersson share Bivens’ assessment of labor market policies and institutions. Addressing debates over whether good jobs are disappearing in America, whether American workers lack the skills necessary to fill good jobs, or whether job-changing rates are increasing, the authors analyze Census Bureau Longitudinal Employer-Household Dynamics data (encompassing 1992-2003) which match firms to workers. In an effort to capture a range of industrial and economic phenomena, the authors selected local labor markets in 12 states, then analyzed shifts in the availability of good jobs and demand for good workers. Where Are All the Good Jobs Going? contributes a number of crucial points to debates about transformations in employment.

Their most powerful finding, in my view, is about the availability of good jobs, as measured by compensation. Holzer et al. argue that good jobs didn’t disappear but that the extent to which the manufacturing sector provided good jobs fell by one half between 1992 and 2003. Most good jobs were generated in professional, information, and financial services. Although the finding that good jobs in the aggregate did not disappear might reassure some, Holzer et al. also found that good jobs for workers who were less skilled or educated shrank. In other words, it appears that good jobs had become less accessible to those from more disadvantaged labor market positions. The highest earnings growth in this period went to the most highly skilled workers. Holzer et al. did find evidence of a modest increase in job-changing and job-displacement rates over the 1990s, supporting the claim of many that employment has become more precarious (a trend which presumably continued into the 21st century).

Older workers, who possessed fewer skills and had lower educational attainment but worked in good jobs, were at greater risk of earnings decline if they were displaced (laid off involuntarily), since increasingly, the jobs with comparable (high) compensation were closed to them.

With respect to the significance of place, the authors find that the size and the history of regional labor markets and firms shaped the availability of good jobs. Larger metropolitan areas tended to generate greater numbers of good jobs, as did larger firms (which also showed better retention rates), whereas medium-sized areas and firms tended to generate more negative outcomes for displaced workers. Shockingly, they found a “virtual collapse” (p. 107) in manufacturing employment for less skilled workers in the smaller metropolitan areas. Finally, their data suggest that firms that choose the high road of employment relationships (offering better wages and job security) rather than the low road (lower wages, jobs with lower quality) have higher survival and retention rates.

Their analysis has three limitations, which the authors openly consider. Their measures of quality include compensation (wages and salaries, stock options, bonuses, tips) but not fringe benefits (health insurance, retirement and pension plans, etc.). Thus, it is unclear whether many workers with good jobs had fringe benefits or not. Their data did not allow them to precisely measure job displacements, making their conclusions about displacement trends somewhat tentative. Finally, their data only extends through 2003. The authors do an admirable job of speculating about the years that followed, but the lack of data about what happened to job quality and security throughout and subsequent to the recession limits the power of the analysis. This is a story that begs to be extended.

These limitations notwithstanding, Holzer et al. (like Bivens) identify macro- and meso-level policies that might strengthen economic opportunity today, such as job development strategies, worker training and development, taxation incentives to encourage large firms to add good jobs, increasing the real value of the minimum wage, and various types of financial support for workers who have been displaced and disadvantaged by the shifting terrain of the economy. The authors suggest that workers in smaller metropolitan areas might move to larger areas to improve their employment opportunities (p. 121), a problematic (if minor) suggestion that neglects the importance of the personal circumstances tying people to the places they live.

Enter Lane who, in A Company of One, has much to say about people’s subjective interests, their interpretations of local and national labor markets, and the insecurities and precariousness analyzed by Bivens and Holzer et al. Lane argues that ironically, high-tech workers have chosen to forgive employers and corporations for their decisions to routinely lay off and otherwise displace workers, send jobs overseas, and deploy a game-changing set of rules about recruitment, hiring, promotions, retention, and job tenure. Poignantly, these professionals embrace the market and corporate logic shown by Bivens and Holzer et al. to have systematically and even aggressively eroded workers’ standard of living.

Lane adds to the substantial literature (in sociology) on the changing nature of careers (less security, extended periods of unemployment, often contract based, nonlinear) that analyzes how working people think about flexibility and insecurity in the new economy and how they strive to maintain their employability. Drawing on in-depth interviews with 75 unemployed high-tech professionals in Dallas (conducted in 2001-2004), Lane explores their understandings of precariousness. Lane’s professionals resolutely embraced the corporate rationale for restructuring, downsizing, and lack of commitment to workers. They viewed the market processes which victimized them as natural and inevitable, something to which any reasonable and successful professional must adapt. Even though her interviewees appear to have internalized the notion that corporations should be free to pursue their profits as they saw fit, they nevertheless painfully struggled to adapt, remain employable, network even when they hate it, fight depression, keep their marriages intact, and buoy their self-esteem.

Her tech professionals felt beholden to no one and believed it was inappropriate for companies to have to take care of them. Accordingly, they engaged in what Lane calls “career management,” an individualistic strategy to find and keep jobs. Using market language, the unemployed created “commercials” for themselves (scripted, personal introductions), “marketed” themselves with their resumes and business cards, “customized” their product (themselves), “branded” themselves by figuring out what niche they filled that others couldn’t, and, in other ways, strived to act like a sole proprietor of a company, ME Inc. Lane’s metaphor for these imagined careers is “a company of one.”

It’s easy to mentally insert Lane’s interviewees into Where Are All the Good Jobs Going? They could be the professionals (in information services) who have benefited from the last several decades of economic policy. Lane’s findings nicely reveal the downside to the new economy, even for the skilled, educated, and privileged. Virtually no one is untouched by labor market volatility, regardless of one’s class position, training, and experiences.

Lane suggests that ideologies about career management and quests to establish companies of one are not gender-specific and that men’s and women’s professional identities have been similarly affected and shaped by labor market changes in the new economy. Yet A Company of One overwhelmingly tells men’s side of the story. The chapters addressing the ideology of career management and the meaning of A Company of One (chaps. 2, 3, and 4) rely on numerous thoughtful and substantial interview quotes but, although 30% of Lane’s interviewees were women, no substantial quote in these chapters comes from an interview with one of them. Similarly, in the final chapter (chap. 6), which analyzes nine follow-up interviews she conducted in 2009, all the lengthy quotes are from interviews with men, save one modest quote from the wife (also a tech professional) of one of the men. Only in “Man enough to let my wife support me” (chap. 5), which analyzes how labor market turbulence affects marriage and family, does Lane specify that she’s discussing a dilemma experienced by working male professionals.

It would be fascinating to have a fuller sense of whether women were as individualistic as men and how they struggled with sustained unemployment. Would women use the same kind of marketized language, or has Lane tapped a uniquely masculine presentation of self in the new economy (“marketized masculinity” perhaps?). Would women embrace contemporary corporate practices as passionately and as seemingly counter-productively as men? Is it as important to their identity (as it seemed to be for men) to stoically accept uncertainty, to view the sacrifices they made, for themselves and for their families, as admirable moral achievements?

Considering these books side by side leaves us with a conundrum. Bivens’ and Holzer et al.’s strategies for correcting the ills of the American economy rely heavily on political interventions into the market. Increasing public spending to create economic and job growth, investing in infrastructure, and other mechanisms for boosting the job market (Bivens); investing in workforce development, mandating higher wages, financially rewarding employers to create good jobs, and providing supports and services (Holzer, Lane, Rosenblum, & Andersson)—all require considerable collective, political will. Yet Lane’s high-tech professionals vehemently rejected such government intrusion. These (mostly male) workers valorized self-reliance and individual responsibility for one’s economic and occupational fate. They put their faith in the “efficacy and justice of the free market” (p. 5).

We are forced to consider the possibility that many American workers would eschew the idea that political solutions will solve market processes (again, keeping in mind the possibility that women might view these issues quite differently and welcome social support for individuals and for families) and are willing to put up with the damaging corporate practices of the 21st century. Indeed, they might view these practices as a necessary evil. The vibrancy of the Tea Party movement suggests that this view is widespread. Bivens’admonition, then, “You get the economy you choose,” is a double-edged sword. Although Bivens criticizes political leaders for making choices that hurt American workers, Lane’s findings lead us to question the choices of workers themselves. It’s hard to avoid interpreting her interviewees as consenting to, and thus reproducing, the deleterious institutional transformations identified by Bivens and Holzer et al.

Future research should examine and compare how diverse actors frame these issues, specifically, how occupation, industrial sector, age, class, race, gender, and marital and parental status shape perspectives on corporate behavior and responsibility and solutions to America’s economic and labor market ills. We might figure out how to avoid the path to becoming a nation of atomized “companies of one” (as well as the problems that surely would result when people accept or are forced to shoulder the risks that would be transferred to them). Along these lines, sociologists of work, employment, and inequality will find much food for thought in these books.