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Chapter 9

THE IMPACT ON INDIVIDUALS AND FAMILIES

Even in the beginning stages of work's obsolescence and marginalization, millions ofpeople feel the effects. There is an unsettling uproar in lives and business activity caused bythe on-going challenge to the existence of almost all forms of economic activity. Millions livewith personal insecurity. They live with the daily prospect of being laid off, with all that thatentails by way of family financial crisis, marital stress and the individuals need to seek newemployment, retrain or perhaps pull up roots in one community and move to another. Muchof the new work being offered is temporary, contingent, part time or offers few of the fringebenefits 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 assignthem 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 bookFear of Fallingabout the

insecurity of the professional middle class. E. J. Montini put it in personal terms when hedescribed layoffs at theArizona Republic. On the day it happens, downsizing slows peopleand makes them quiet... It begins with a phone call. Men and women working here had beentold to be at their desks between 9 a.m. and 3 p.m. And to wait. And to watch. And towonder... By the end of the day, 60 reporters and photographers and editors and others weretold they no longer worked for the newspaper... You may come upon a reporter who... hasbeen laid off. He's standing in the parking garage, waiting for the security guard to escort himto 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."1A 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 yourfactory, give you a check for your remaining vacation balance, a month's severance pay and inlieu of two weeks' notice give you two weeks' pay and say, You have 30 minutes to leave thepremises.'" [The letter writer's emphasis]2

Insecurity appears in many ways. The number of bankruptcies soars. Companiescutting jobs see employee morale plummet, and the employees who remain suffer somethingcalled "lay-off survivor sickness." In Europe, a mass of marginalized youth has come intoexistence, 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 NewYork Times ran a series of articles on the effects of downsizing on individuals, the workplaceand community. The articles gave the problem a human face, and were published in bookform as aNew York Times special report, The Downsizing of America.3

Job insecurity is taking its toll in Japan, marked by a sharp increase in suicide duringthe 1990s and continuing at an even higher rate in the years since the turn of the century. Anews report says that in Japan "many men who killed themselves in the last year wereemployed but fearful of losing their jobs or overwhelmed by increased work loads that were a


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result of colleagues losing their jobs, according to experts." The same report says that "ofthose unemployed white collar workers in their fifties who have managed to find jobs afterbeing 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 commonlycited 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 theeconomy, making the two-income household the standard. Although finally in the late 1990swages rose for the bottom ten to 15 percent of the American workforce after decades ofdecline, the number of temporary workers steadily increased.

Work is changing. This is marked by non-permanence, continual retraining, increasedpersonal responsibility, self-direction, and even a lack of assigned physical location. Lars ErikAndreasen writes that "the cycles of a working life are different now; no longer can someoneassume that when they (sic) enter a craft or profession as a young person they will ply thattrade 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...."

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

Underemployment substitutes for full employment.We know from experience that it ispossible for millions of people to be unemployed. Just the same, free-market theory projectsthat that cannot be a chronic condition where the interplay of supply-and-demand is free to setwages at a level that will "clear the market" of all who want to work. More than most othersocieties, the United States has that type of market. The result of the displacement so far (atleast in the absence of economic crisis), therefore, has not been high unemployment. Theeffects 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 avalue-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 persondesires is irrelevant. This is a concept that holds sway in the United States today, but which isfallacious precisely from a classical liberal point of view. That is why I will examine it indetail in the later discussion of economic and social concepts.)

With "shamrock organizations," only the core is permanent and there are manycontingent relationships that branch out from it. What is the effect on workers? Samuel R.Sacco says in the journalManaging Office Technology that "in the era of reengineering, morecompanies are focusing on their core competencies and arranging their workforces to suit thatfocus." 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 theAmerican workforce has taken on peripheral status. It is no wonder that Ian Angell of theLondon 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 heobserved that"the worker... does not have to punch a time card, account for his every move,


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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 mutuallybeneficial arrangement" a conclusion that follows in every case in free-market theory aboutany 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: "Igraduated from Kansas State University with a bachelor's degree in fisheries biology Myjob search brought about many employment opportunities, all seasonal positions, all withoutbenefits and all with low pay. My situation is not unique. A vast majority of students infisheries and wildlife don't have a quality, full-time job available upon graduation. Somespend a few years living paycheck to paycheck trying to get in, but most give up and findanother field."10 He puts the blame on universities that flood the job market with graduates forareas that aren't needed, but in the context of this book we see that the problem has muchdeeper 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, mismatchedand discouraged:

The discussion ofpart-time workbrings us to the sort of evaluative morass that is so typicalin economic matters. Some commentators argue that there is no problem with part-timeemployment. Svorny and Kaljian, writing in the Milken Institute's journal Jobs & Capitalin1996, said: "About 16 percent of the labor force worked part-time 20 years ago, and part-timeworkers compose about 16 percent of the labor force today." And they expressed the viewthat much of the part-time nature of the work is welcomed by the employees. 12 But we switchback to the other side of the statistical argument when we read Business Week's report aboutJapan: "One of Tokyo's better two-year colleges... a few years ago boasted a 98% employmentrate for its graduates. That rate has dropped to 60%... With no social stigma attached to livingoff 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 inthose who perceive a problem.

Temporary work is taking an ever-larger place, as we have seen, with such workersbecoming what is called "the contingent workforce." Business Weekonce told of onetemporary-help supplier that "has doubled the number of accountants it places since 1992, to85,000 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 orother benefits. And most don't work year-round."14 Economist Steven Weber of theUniversity of California at Berkeley explains that "the growth of temporary employmentmirrors 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 intoexistence in 1994 and remains active, reflecting the rapid growth of temporary employment inall areas, including manual labor along with service, trade, professional and manufacturingwork.

As with all these developments, some commentators offer explanations that deny themassive underlying trends. Thus, The Economist's "Survey of the World Economy" in 1996


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could observe about both part-time and temporary work that: "True, the share of part-timejobs has increased in most industrial countries, but... the main driving force has been women'soften-expressed preference for working part-time, not some sinister breakdown in the labourmarket. The OECD's latestEmployment Outlookalso produced figures to show, contrary toconventional 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 asthe one from San Francisco about a Pacific Bell supervisor, Linda Corbett, who was "severedinvoluntarily" and then called back six months later as a "contract worker."16 A Wall StreetJournalarticle 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 ABusiness Weekeditorial tells of "hundreds of thousands of corporate refugees [who] arebecoming 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 theend of a middle-class way of life."18 Clearly the phenomenon amounts to more than just apreference by many working-women for part-time or temporary work.

Mismatched workers make upanother part of underemployment. This is the problem ofworkers 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 thesecontradicts the notion that more education and training will provide each person a solutionto his job problem.

Discouraged workers are those who have given up looking for work and aren't counted inunemployment statistics. We were told by Otto Scott in late 1996 that "theNew York Timesearlier this year reported an estimated 7 million men have permanently left the labor force andrely upon their wives' earnings."19 These include a great many who have been forced intoearly retirement. The retirees are often not thought to be among the discouragedworkers. Many of them may in fact be pleased to be into the sunset years while they are stillyoung enough to enjoy them. But many of them are people who would be working if forcesbeyond 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 toreduce a workforce. Individuals and society as a whole will think the pinch considerablymore painful when there are no longer older employees to take early retirement; then morepeople will be cut loose during their prime earning years.

ENDNOTES


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1. E. J. Montini, Cute word, a cruel reality, The Wichita Eagle, January 21, 1997.2. Otto Scotts 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.

. Business Week, October 17, 1994, p. 76.

. Samuel R. Sacco, "Temporary Help and Staffing Services: Wave of the Future,"Managing

Office Technology, December 1996, p. 24.. "High tech will destroy job security," The Sunday Times, May 12, 1996.

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

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

. Anthony Harrigan, "The Economic Crisis of the First World," Vital Speeches, July 1, 1995,

p. 553.. Svorny and Kaljian,Jobs & Capital, Spring 1996, p. 35.

. Business Week, August 7, 1995, p. 38.

. Business Week, July 17, 1995, p. 60.

. The Economist, September 28, 1996, p. 23.

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

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

. Business Week, October 17, 1994.19. Otto Scott's Compass, October 1, 1996, p. 11.

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