Laid Off, Laid Low: Political and Economic Consequences of Employment Insecurity

A Book Review by Stormy

Against the backdrop of globalization, with jobs shifting from “unionized, high-wage regions to non-union states and with “a tidal wave of jobs moving offshore, Laid Off, Laid Low, edited by Katherine S. Newman, is a series of five studies in one volume that tries to “assess employment stability on the structure of careers, on the perceptions of security, and on political preferences.”

The book is part of a series of studies, funded by the John D. and Catherine T. MacArthur Foundation, examining the “concerted effort to privatize risk, shifting the “responsibility for the management or mitigation of key risks onto private-sector organizations or individuals.”

In short, what has been the effect of globalization and privatization on employment stability? How much has the landscape of employment changed? Where are we going both economically and politically?

The organization of the book leads us through argument and counterargument, moving progressively to larger and larger considerations. The last study examines how politics in the first decade of the twenty-first century may well evolve.

Each of the five studies is a closely reasoned, statistical analysis, generally encompassing the last three decades of the 1900’s and the beginnings of the present decade. Although general readers may find some of the mathematical analyses daunting, there is more than enough meat for everyone. What is unusual about the work—and I cannot stress this more—is that the studies supplement and complement each other in unusual ways, ways that are not always apparent to the casual reader. For example, we could take the first two studies, which seem to contradict each other and place them in the context of the fourth. What then becomes immediately apparent is that suddenly there are promising avenues for further studies. Can we, for example, look more closely at different kinds of professions, breaking them into other categories—health care and manufacturing, for example?

What immediately struck me, for example, is that I could now see the connection between decreasing job tenure and increasing difficulty for those under thirty-five to enter the housing market. (See George S. Masnick, Nancy McArdle, and Eric S. Belsky, “A Critical Look At Rising Homeownership Rates in the United States Since 1994.”) Since 1985, home ownership for younger people actually declined. The Farber study lays the economic groundwork for understanding these and other events as well. The same can be said of the other studies in the book.

In short, no matter what your interest, this book provides a wealth of analysis and data that moves far beyond its mere 136 pages.

Following is a brief précis of each study and the Introduction, together with my brief response to each. The closer I read the book, the more I was impressed.

Ms Newman’s Introduction “High Anxiety” places the succeeding studies into the shifting historical context from 1948 to 2008, from the days of one primary breadwinner to the now traditional and mandatory two-income household, from the days when unemployment tended to peak near the end of a recession to now when it peaks much later, from the days when labor and capital occupied much the same geographical landscape, to now when capital is mobile and labor fixed, from days when we use to think that government should control the excesses of private enterprise, to now when we believe that private enterprise knows best, from the days when income disparity was less pronounced to now when the gap between the rich and the working class staggers the mind.

Ms. Newman covers all these issues and more in a clear, expository, forceful style. Without being pedantic, she touches on many of the important studies that have already been done, using them to place the five studies comprising the remainder of the book into an understandable context. The Introduction alone is worth the book.

Each of the studies weeds out the “noise” associated with business cycles, attempting to arrive at general trends. Each carefully provides its econometrics, along with excellent bibliographies. The studies become progressively more complex as the argument evolves.

In some respects, the first two studies seem oddly lightweight, almost out of place. The first does provide some groundwork for Ms Newman’s Introduction; the second is seems to be a weak counter to the first. Yet in the general context of the book, they are excellent introductory studies.

Henry Farber’s “Short(er) Shrift: The Decline of Worker-Firm Attachment in the United States”

Studying the data between 1973-83 and 1996-2006, Farber asserts that there is increased job “churning” for private sector males. Male job tenure in the private sector is growing shorter. Between 1973-83, the mean tenure of males age 50 was 13.5 years; between 1996-2006, it had shortened to 11.4 years. Public sector tenure has grown.

Ironically, the mean tenure of women in the private sector has not been affected. Farber is never quite clear on why this is the case. I kept hoping he would break tenure into professions. (Have women traditionally chosen occupations that are less susceptible to the perils of globalization and corporate restructuring–health care, for example?)

One of the later studies “Rising Angst” does look at different kinds of professions, although not to the degree I had hoped. Nonetheless, this kind of unstated interplay among the studies makes the book an intriguing read.

Faber concludes “that young workers today should not look forward to the same type of career with one firm experienced by their parents.”

Ann Huff Stevens’ “Long Term Employment in the United States 1969-2004”

Ms Stevens counters Farber with a study that focuses on the longest job ever held by workers near the end of their working lives, concluding that she finds no significant change. Frankly, I see no discrepancy between her conclusions and Farber’s. As Ms Newman points out, “the earliest cohorts had jobs interrupted by service in World War II, resulting in lower average longest tenure than subsequent cohorts.” Additionally, focusing on longest tenure may well miss the kind of churning the Farber study describes.

Benjamin J. Keys and Sheldon Danziger: “Hurt the Worst”: The Risk of Unemployment Among Disadvantaged and Advantaged Males, 1968-2003

Keys and Danziger forcefully state what we all should know: Those at greatest risk of unemployment are most disadvantaged by race and education.

High school graduates were 1.9 times more likely and those with some college 1.7 times more likely to exit from work to unemployment than college graduates. The risk of unemployment was twice as high for African Americans as whites.

Additionally, age plays a factor, a fact that begins to answer Ms Huff’s argument:

Workers between the ages of twenty and thirty were 3.2 times as likely as workers between the ages of fifty-one and sixty-two (the baseline age group) to exit from employment to unemployment. Workers between the ages of thirty-one and forty were twice as likely to exit and those between forty-one and fifty were 1.5 times as likely as older workers.

Elisabeth Jacobs and Katherine S. Newman: “Rising Angst? Change and Stability in Perceptions in Perceptions of Economic Security”

It is in this study that the book begins to enlarge its scope and its complexity. It is in this solid study that the book really begins to stride over the American economic landscape. The arguments are coherent; the data, substantive. At best, I can touch only on some of the highlights.

Are Americans more insecure about their economic futures? Which groups of Americans are most insecure? Economic insecurity may well be justified.

While certainly those at the bottom of the pile are losing ground, ironically it is those who normally were not insecure that now are feeling angst.

Surprisingly, again given human capital advantages, the change for the worse has been most pronounced for the group we might expect to be most secure: the economic winners, college-educated Americans and managers. When asked whether they are likely to lose their jobs in the next year, an increasing proportion of college graduates have answered “yes” over the last thirty years

Education matters, but occupation also matters. While the lowly clerical worker may worry more about job security, he or she can easily find a new job; not so those at the higher levels, the managers, the craftsmen, or the technical workers. Increasingly, these last are feeling the rising angst. Corporate restructuring and off shoring has moved high quality jobs overseas. Ask IBM.

Meanwhile, income inequality is “at the highest level since the Great Depression.”

Well-educated managers who are feeling the tremors of job insecurity sit well below the vaunted station of CEOs, and many of those managers have felt the fallout from outsourcing in the form of a thinning of the ranks in middle management.20 Nonetheless, they were far better protected than the blue-collar workers who, as we’ve shown, accurately recognize their persistent vulnerability.

Far from tolerating the inequality, Americans are growing increasingly frustrated with it.

Increasing levels of frustration with economic inequality track closely with increasing real inequality. This dual trend suggests that Americans’ tolerance for inequality may not have changed, but that the level of inequality the country has experienced over the last several decades has exceeded what Americans are willing to accept.

Phillipp Rehm: “Ballot Boxing: Partisan Politics and Labor Market Risks”

While this piece is not quite as well written as the others, it cogently argues that risk and income will govern the political landscape as we move forward. Yes, there are other factors—religion, race, and social mores. Poor people do vote Republican; but “You will lose money if you keep betting against someone who picks a person’s occupation to predict partisan preferences, while you pick some other objective characteristic!”

Income inequality and risk polarization should lead to an electoral advantage for the Democratic Party, simply because the decisive voter should have moved to the left. This gives the Republicans strong incentives to focus on a second, crosscutting set of issues — namely values (religion, moral issues). Third, the ever-increasing tightening of income and risk exposure may, again ironically, lead to a decline in the importance of risk exposure for partisanship.

The following conclusion I found particularly intriguing and insightful:

First, these trends suggest that the American electorate is increasingly “sorted out” into coherent ideological camps. “Cross-pressured” citizens — liberal Republicans and conservative Democrats — are likely to fade in numbers and importance, leaving only liberal Democrats and conservative Republicans.

It is difficult within the confines of a blog to do real justice to five separate studies, let alone the fact that they are presented as part of a larger argument.

In my synopsis, I have omitted the many charts and graphs that fill the book’s pages, any one of which would be an apt subject for lengthy commentary. The world is changing; this book is an ambitious attempt to give us some idea of what the changes are and where they are going. It is well worth the read.