repairing the social contract at work steven p. vallas department of sociology and anthropology...

Repairing the Social Contract Repairing the Social Contract at Workat Work

Steven P. VallasDepartment of Sociology and

AnthropologyNortheastern University

An Overview

• Historical Background: The New Deal Social Contract at Work

• Signs of the Contract’s Demise

• The Aftermath:– Decay of Job Ladders

– Rise of Non-Standard Work Arrangements

• Some Solutions– Employee Free Choice Act?

Vallas --Repairing the Social Contract-- Open Classroom

Historical Background

• Seeds of Personnel Management after WW I • Democratic Party Mobilizes Urban Workers,

1920s• New Deal Legislation: Wagner Act, July 1935 • WW II: Labor militancy during war• Result:

– Growth of Labor Organization and Collective Bargaining;

– Inclusive, Wage-led Economic Growth, 1945-1975

Vallas --Repairing the Social Contract-- Open Classroom

Demise of the Social Contract

• Decline of Trade Unions: (See Table 1)

• Why? – Globalization

– Technology: Reduction of mass production workforce

– Growth of Labor Force in Service, White Collar Industries

• Partial truths –but some data:

Vallas --Repairing the Social Contract-- Open Classroom

Trends in Union Membership

Vallas --Repairing the Social Contract-- Open Classroom

Wage and salary earners in unions in selected countries

Vallas --Repairing the Social Contract-- Open Classroom

•General decline in union membership

•Most pronounced in USA, by far

Alternative Explanations

• US South Cordoned Off From Labor– Failure of Operation Dixie, 1946-1953

• Unfavorable Legal-Political Environment– Taft-Hartley Act of 1947

– McCarthyism Weakens Labor

• Rise of Employer Hostility, Post-1975

Vallas --Repairing the Social Contract-- Open Classroom

Consequences?

• Most obvious: Deteriorating Job Rewards– Stagnant Wages, esp. post-1975

– Rising Hours of Employment

– Erosion of Defined Pensions

• Two Points to Stress:– Decay of Internal Labor Markets (Job or

Promotion Ladders)

– Rise of “Non-Standard Work Arrangements”

Vallas --Repairing the Social Contract-- Open Classroom

Hourly Earnings of Production & Non-Supervisory Workers, 1947-2005

Vallas --Repairing the Social Contract-- Open Classroom

Decay of Internal Labor Markets

• Previously: Firms “sheltered” workers from the external labor market

• ILMs established systems that governed promotion “from within”

• Provided incentives for acquiring “asset-specific” knowledge; • Helped in motivation, retention of workforce

• Now: An “implosion” of market forces into the firm

Vallas --Repairing the Social Contract-- Open Classroom

Decay of Internal Labor Markets

• Downsizing, Outsourcing: – Dismantling of ILMs for Many Workers

• A Shift in US Labor Market Structure: For educated and professional workers:

• Attachment to the firm grows weak; attachment to the occupation grows strong

– For less educated workers:• Attachment to firm weakens, with few occupational ties to

replace it

Vallas --Repairing the Social Contract-- Open Classroom

Results?

• Declining motivation, commitment for important segments of the workforce– 1995 survey by the New York Times:

• 75 percent of respondents felt that “companies were less loyal to their workers than they used to be”;

• Similarly, 64 percent felt that “workers were less loyal to their companies” than previously

– Richard Sennett, others: Loss of meaning in one’s career

Vallas --Repairing the Social Contract-- Open Classroom

Rise of “Non-Standard” Work Arrangements

• Growth of “contingent” jobs far outstrips growth of the labor force– Temporary agency jobs grew at annual rate of

11% from 1972 to late1990s– Involuntary part-time employment too has grown

rapidly– Especially so in academia (the “last great job in

America”) –see table

• Result: growing sense of job insecurity (see table); erosion of benefits; “precarity”

Vallas --Repairing the Social Contract-- Open Classroom

Trends in Perceived Job Security, 1977-2002

Vallas --Repairing the Social Contract-- Open Classroom

Trends in Academic Employment, 1975-2005

Vallas --Repairing the Social Contract-- Open Classroom

Taking Stock

• US Employment relations system is showing stress and contradiction

• New forms of work organization: Can they suffice?– The Paradox of Team Systems:

• Higher commitment despite deteriorating job rewards and rising income inequality within the firm

– Result: • Growth of Suspicion and Distrust among workers; • Perception of Employer Hypocrisy

Vallas --Repairing the Social Contract-- Open Classroom

Economic Consequences

• Weakened Employment Relations System– reduces workers’ willingness to share their

knowledge

– undermines firms’ ability to harness tacit skills

• Lost productivity, since innovation depends on much more than R & D spending

Vallas --Repairing the Social Contract-- Open Classroom

Implications and Solutions

• Keynesian economic policy not enough– The structure of the employment relationship

needs to be addressed

• Ideas?– Revisit debate over economic democracy, e.g.,

extending equity rights to employees

– Institute incomes policy, limiting firm-level inequality (maximum wage!)

– Reform labor law: Employee Free Choice Act

Vallas --Repairing the Social Contract-- Open Classroom

Employee Free Choice Act

• Three Provisions:– Facilitates union formation, foregoing certification

elections using card check system

– Invoke arbitration where contract negotiation fails

– Put teeth into NLRB efforts to enforce labor law violations (strengthen fines, punitive damages)

Vallas --Repairing the Social Contract-- Open Classroom

Effects of EFCA?

• Much debated

• One view –It would:– Level the playing field in private sector

– Reinvigorate union formation, especially in service industries

– Raise wages –and likely, productivity

– Reaffirm worker faith in US economic institutions

Vallas --Repairing the Social Contract-- Open Classroom