Biographies of wealth or struggle are irrefutable signposts in the national economy. As particularity gives them vividness, though, it makes them less plausible as grounds for economic policy. Single measures - GDP, unemployment, 10-year Treasury returns - are vivid to few of us and anyway are each explained in contradictory fashions.
Divergent Paths has grasped two masses of employment history data and statistically compared them. They don't intersperse quoted or composite biographies. The measure they seek, of economic mobility through U.S. employment, doesn't lend itself to a single number. But the results are vivid anyway and are worse than I had feared. This book argues strongly that most (white, male) U.S. workers are worse off in absolute and relative mobility than their peers were twenty years ago; and that the changes are due to systemic habits in business practice that will not reverse without organization, and even trust, between competing firms and interests.
Fortunately they cite a few regions in which these reverses might be happening. Otherwise I would be too dispirited to summaraize the book at all.
The method is clear: they compare two nationally representative samples of white young men, starting between the ages of fourteen and twenty-one. Each cohort was interviewed annually (almost) about their education and employment for fifteen years. This should give an outline of how these men settled into their life careers, if any. One survey started in 1966, the other in 1979.
The bulk of the book is analysis of the two masses of data. As a non-statistician, I found the frequent graphs and tables effective summaries. The prose was rarely jargonful; it more often laid a path of common terms to the streambank of technicalities.¹¹ One can leap over the flood to the path on the other side.
To summarize the results even more than the authors do: Jobs, especially low-wage jobs, have become less stable; and each interruption in employment is now more damaging to future wages than it was for the first cohort. This makes a vicious circle. Education doesn't improve a worker's chances much until it's a full four-year degree, and even then a surprising proportion of graduates are stuck.¹ A few occupations - "finance, insurance, and real estate", and some "professional services" - made gains; the top decile held steady, although it's more white-collar than it used to be; the rest of the distribution is lumping towards the bottom.
Some of the usual explanations for this split and slump are described as not consonant with the data. Lack of technical skill isn't it, as the best-rewarded occupations aren't technical, and engineering wages went down by 1.5%, CS graduates' wages up by 3% (p. 183). [T]he number of contingent workers is nowhere near large enough to produce the trends that we have documented in this book... Temporary work, then, is best considered as the tip of the iceberg, just one symptom of a wide variety of restructured work and production arrangements.
(p. 188) I can't find a summary reference to shifts in employment between nations; they do mention that population shift within the States led to higher rates of job instability, perhaps reflecting the lower rates of unionization in the South.
(p. 86)
One obvious explanation is the increase in service sector jobs instead of mass-production jobs, partly because the latter were unionized. (In 1981, 21.8% of the top final wage decile was blue-collar; now, 8.8% is (p. 145). Some of this is expectable because the total proportion of blue-collar jobs is lower.) However, deindustrialization has not been the main force driving the stagnation and growing inequality in wages, though it has played a role... industrial shifts have played virtually no part in the doubling of workers in the bottom decile of the old wage distribution. It is not so much compositional shifts that are at work here as changes in the pay structure within industries.
(p. 158)
The other explanation, obvious in hindsight, is that firms are much more segmented internally than they used to be. The worst jobs are often intentionally deskilled, and then subcontracted. Unfortunately these used to be entry-level jobs that had natural learning curves, so firm and employee benefited by stable employment, and natural meritocratic paths for advancement. But one cannot work one's way up from a call center in Kansas to a headquarters in New York the way one could work one's way up from the mailroom in a single building. Less so, when the call center is run by a separate business whose sole profit model is providing cheap generic phone service. (Does the Zuboff federation have a career path?)
This kind of deskilling and segmentation is a "low road" response to risk and complexity. Some industries - banks are mentioned - have apparently had both "low road" and "high road" approaches; the latter increases all employees' skills, opportunity, responsibility and pay and has been competitive with the low road (p. 182). This takes, I interpolate, more trust between the different parts of the company, and I suspect it requires different management skills - different philosophy, even. Another difficulty with reduced internal promotion is that employers do less training, but return to individual education is riskier, plausibly leading to less total investment in worker training than the whole economy (let alone individual workers) needs.²
What to Do about this is the eighth chapter; something I hadn't heard of, which combines many sensible-seeming approaches, is the Wisconsin Regional Training Partnership, which involves unions, plants and colleges to provide good employees and provide them with good jobs. The unionization of Las Vegas hotels is also promising. They point out that benefits - unemployment, health insurance, pensions - are usually tied to the old model of stable employment; if the country is going to be fluid and competitive, the benefits need to be portable.
One nagging possible partial explanation hasn't left me. The cohorts being compared are white men because the data on everyone else's work was bad or ignored, in 1966. Besides, the social changes allowing others into better jobs should be enormous, very hard to distinguish from labor-market changes in their opportunities. All right so far; but of course nonwhite men, and many women, started work in 1966, and were shunted to the jobs that were unreliable, and poorly paid, and didn't become careers. If the country actually has about the same job distribution now that it did then (maybe the service jobs are more often paid than they were, and less often allotted to women), but the competition for the good jobs is no longer reserved for white men (p. 57), then white men as a class should fairly be worse off. Their experiences will have been shuffled all the way through the deck of possibilities, not cushioned from the bottom by the unsurveyed unfortunates. The few much-better-off white men in the recent cohort might be floating on a 'glass ceiling' supported by a more meritocratic, and therefore more profitable, hiring regime lower down. --Even if true, this wouldn't be admirable: better to improve all work to the old standards of decency. And the supposition might not be tractable at all without data we never gathered, and even if it were tractable, it might be another book of as much length. I'd like a rough guess as to how big such an effect ought to be, given what we do know.
The only other complaint I have is that the index isn't very full; it doesn't have more heads than would be secondary heads in a good table of contents.
¹¹ Of which my favorite is the phrase, robust to this, and other, specifications of unobserved heterogeneity.
(p. 73)
¹ And "the fraction of college graduates has declined" (p. 140), which surprises me.
²Dsquared, now at Crooked Timber, has said some interesting things about changes in money action representing shifts of risk from one group to another, but I can't find those things or his search function.
The best steel jobs of a few decades ago seem to have shoved off their risk of paying pensions to the state.
ISBN: 0-87154-150-5
So wrote clew in History (20th c.). | TrackBack