June, 2000, Vol. 123, No. 6
A more secure future
Book reviews from past issues
A more secure future
Securing Prosperity: The American Labor Market: How It Has Changed and What to Do About It. By Paul Osterman. Princeton University Press, 1999, 222 pp. $24.95.
As the longest peacetime economic expansion continues, economists generally concede that all workers are not sharing equally in this new prosperity. Certain participants in the "new economy" seem to be benefiting, while others find their incomes stagnating. Record stock prices have not been matched by increases in wage rates and higher company earnings have not automatically translated into higher workers’ salaries. These discrepancies are the subject of Paul Osterman’s book, Securing Prosperity.
The role of institutions plays a major component in the book. His analysis and problem resolutions are tinted by his faith in the importance and predominance of institutions as a major player in labor markets, including big business, big government, and big labor. Both problems and solutions are defined within the context of institutions. In Osterman’s view, each of these institutions is partially responsible for problems in the current labor market and each have a role in the solution to those problems. Institutions become the counterweight to the vagaries of the marketplace.
In general, Osterman defines three main problems in today’s labor market: increasing income discrepancies between economic "winners" and "losers", greater job insecurity among workers, and a deficit of quality jobs. The book begins by discussing how the American economy has changed since World War II. While acknowledging that not all firms approached labor in the same manner, he feels that business and labor had a web of mutual obligations that defined the job market of the 1950s through the 1970s. The collapse of this web then becomes the fundamental cause of current problems. While the web collapsed for several reasons, the result was a loosening of the tie that bound workers to their employers. Companies gained new advantages over workers as power shifted from the worker to their employer.
Demonstrating the results of this collapse by citing a variety of statistical evidence, including several BLS surveys, Osterman argues that many workers are suffering from these looser attachments between employees and their employers. While acknowledging that changes in the workplace have benefited some workers, he rejects the notion that the changes have resulted in a "win-win" proposition for employees and firms. In general, he feels that new intermediaries must be created to replace the collapsed web of obligations shared between firms and their workers.
Having defined deteriorating labor market conditions for workers, he then devoted the rest of the book to discussing needed changes in labor policy. These new policies would be designed to build what he describes as "stronger labor market institutions." Osterman admits that past institutions such as Federal job training and the U.S. Employment Service have had a mixed record of results, yet he continues to have faith that institutional reform is the cornerstone to redressing shortcomings in the present labor market.
The new intermediaries would support a more mobile workforce and redress the balance of power between firms and their employees. Both government and non-government bodies may potentially house these new intermediaries. For example, he envisions a new type of worker association. The hybrid associations would more closely resemble current professional associations than current labor unions but would include representing workers with employers, and would include a broad range of professional and craft employees.
Osterman’s faith in institutions is impressive, but it is unclear whether the majority of American workers share this belief. Declining union membership and general sentiment against "big government" begs the question whether workers see government and labor institutions as the solution to their problems. Osterman himself admits that the current political climate precludes the opportunity for direct action at the national level, and it is doubtful if the constituency exists to form new labor policies. Thus, his call to action may go unheeded for the present.
In fact, only one institution, the courts, seems to be the present solution of choice for workers’ grievances against their employers. The loosening of ties between workers and their employers outlined in the book may have inadvertently given workers a greater propensity to seek redress through the administrative law and court system, rather than depend on changes in national policies. Ironically, in the end, business itself may turn to the political system for institutional relief, much as they did when the workers’ compensation system was instituted to offset numerous legal actions from individual employees. In this context, the book may serve as a better guide to future corporate action than for the workers it seeks to serve.
Atlanta Regional Office
Bureau of Labor Statistics
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