July 2003, Vol. 126, No.7
Book reviews from past issues
Transatlantic Sport: The Comparative Economics of North American and European Sports. By Carlos Pestana Barros, Muradali Ibrahimo, and Stefan Szymanski, eds. Northampton, MA, Edward Elgar Publishing, Inc., 2002, 240 pp. $85/hardback.
On the field, sports may be competitive games, but as is the case wherever very large sums of money change hands, the laws of economics, labor relations, and competition policy also come into play. Transatlantic Sport takes comparative looks at the way sports leagues and their teams are organized, financed, and staffed in European and North American contexts.
The competitive conundrum of professional grade sports springs from the facts that it takes the joint effort of two teams ("firms") to produce the product; that there has to be some uncertainty of result to make that product interesting; that results are more uncertain if economic resources are more equally distributed among teams; but that good teams in rich markets will gather in often massively disproportionate shares of athletic and economic resources.
In the American model, this conundrum has been solved, with varying degrees of success across the major professional sports, by some combination of labor market restraints and revenue sharing within closed professional leagues. In Europe, a system of promoting top teams from lower rungs of the sporting ladder and relegation of the bottom teams from the higher rungs is seen to provide sufficient spectator interest as new competitors arrive and others leave the league.
The book’s paper by Stefan Szymanski and Ron Smith investigates which model works best. On one hand, as we so often say in economics, static measures such as the standard deviations of winning percentages are similar for European soccer leagues and the football, baseball, and hockey leagues of North America. On the other hand, a dynamic model can explain more of the variation in Europe, implying a greater predictability of results. As Szymanski and Smith characterize their findings, "In short, North American leagues create equality of outcome for the select incumbents, while European leagues display equality of opportunity without equality of outcome."
The papers on the regulation and financing of sports by Peter J. Sloane and H.F. Moorhouse give some insight into the domination of European soccer by a very few large clubs. Sloane focuses on regulatory decisions that have imposed a fairly extreme form of free agency on European sport (the Bosman case), and sometimes awkwardly applied anti-trust or competition law to professional sport (the U.K. Monopoly and Mergers Commission investigation of a proposed acquisition of Manchester United by broadcaster BSkyB and the U.K. Restrictive Practices Court investigation of the collective sale of television rights by the English Premier Soccer League). Moor-house examines the difficulties faced by very good small-market teams competing with the financial resources of mediocre teams in bigger markets. His major concern is that "gold-rush" soccer economics enable those currently in better markets to corner the broader market.
Where there was thus a range of opinions on the economics and regulation of sport competitions, there was near unanimity of opinion on the economics of hosting major sports events. Robert A. Baade and Victor Matheson found that, with the exception of the Los Angeles Games of 1984, cities often are forced to settle for negative economic returns on their substantial investments in hosting such a mega-event. As one example, they cite their calculation that under the best assumptions, Atlanta spent about $63,000 per permanent job—full- or part-time—created. In previous public works programs, a similar expenditure would have been associated with actual full-time (or at least full-time equivalent) jobs. J. J. Gouguet suggests not only that the economic impacts of sporting events are hard to measure and that they may often be ephemeral, they may not even be the right thing to measure: "[Economic impact] only tells us that the project in question generates a given volume of economic activity, of employment. And that is all. It does not teach us whether this project really deserves to be conducted or not."
As the sport market globalizes, and the discussion by Wladimir Andreff and Paul D. Staudohar of European and North American sports business models leaves little doubt that such globalization is already here, Transatlantic Sport and the research agenda underlying it will become more and more widely read and recognized.
—Richard M. Devens
Office of Publications,
Bureau of Labor Statistics
Laboring Below the Line: A New Ethnography of Poverty, Low-Wage Work, and Survival in the Global Economy. Edited by Frank Munger. New York, Russell Sage Foundation, 2001, 319 pp. $42.50/cloth.
"Let me tell you about the poor. They are not very different from you and me" (with apologies to F. Scott Fitzgerald), appears to be the consensus among the academics represented in Laboring Below the Line. And Frank Munger, professor of law and adjunct professor of sociology at the State University of New York, Buffalo, and editor of this book, concludes that "...the most effective social policy for ending poverty begins with the transformation of the social environment in which the poor live" in his final chapter to a compilation of studies by 14 faculty members in the United States and one in Canada. The social environment, of course, includes low-wage work.
Producer and headquarter sectors of firms are increasingly expanding, consolidating, and locating into the economic core of major cities in highly developed countries. As these companies turn to telephones and computers as a cheap and efficient means of servicing customers and marketing products, their low-wage work that employs these technologies—telemarketing, teleservice, data entry, and rate or credit checking, for example—may be located in remote or offshore areas, where rents, labor, and other costs are generally lower, and the workforce comparatively stable, Saskia Sassen, Ralph Lewis Professor of Sociology at the University of Chicago, points out.
In this kind of work, it is possible to monitor every minute of the employees’ work day and implement productivity quotas so that poor performers are weeded out. This work is generally not unionized, so the worker has little recourse under adverse circumstances. And a remote or offshore location may prevent him or her from either moving up in the organization or moving on. Not only teleservicing, but fast-food work, has become routinized, scripted, and monitored. Although these fast-food jobs are not generally located in remote or offshore locations, management also benefits from—but ignores—the invisible skills and competencies workers develop as they work, even though those accomplishments could be transferred if more widely recognized, observes Carol Stack, Professor of Social and Cultural Studies in Education at the University of California, Berkeley.
To complicate things still further, restructuring in many firms brings about a demand for highly specialized and educated workers—notably in high tech—alongside a demand for unskilled workers, whether for clerical work, services, or production jobs. The shrinking demand for intermediate levels of skill and training has reduced the need firms have for internal labor markets with long promotion lines that function as on-the-job training mechanisms.
But low-wage work also exists in small firms. High-income gentrification generates a demand for goods and services that, often, are not mass produced nor sold through mass outlets. Then too, expansion in the low-income population also contributes to the proliferation of small operations to serve them, and low-income customers move away from large-scale standardized factories and chain stores with low-priced goods to these small businesses. No matter which market they serve, these small operations often rely on family and low-wage labor, and working conditions may fall below minimum safety and health standards. They are generally nonunion.
Who are the low-wage workers? They generally have less than a high school education. About 25 percent are immigrants. This leaves natives in 75 percent of the other low-skill jobs. Because of the nature of the migration process, immigrants generally have far stronger networks than similarly disadvantaged native workers. For this reason, once a few immigrants enter a labor market they can more easily "colonize" it than their native counterparts, Sassen contends.
Some characteristics of low-wage work gleaned from Laboring Below the Line include the following:
1. In the United States, a growing share of service workers are in part-time jobs, and twice as often as the average worker. Involuntary part-time work has grown significantly over the past decade.
2. Workers in low-wage jobs disproportionately face nontraditional work schedules that may include early-morning, evening, and weekend hours; split shifts; and frequently changing schedules—particularly difficult for a single mother.
3. Low-wage work is often plagued by insecurity. The average unemployment rates for persons with less than 4 years of high school—those most likely to work at low wages—are more than four times as high as corresponding rates for persons with 4 or more years of college.
Philip Harvey, associate professor of law and economics at Rutgers School of Law, points to the outlooks that have led to three public policies, and how those policies approach joblessness:
1. Joblessness is attributed to the failure of the jobless to seek and accept work on available terms. Public assistance is provided, but should be minimal and temporary so as not to discourage job search activity. The assumption is: jobs are available.
2. Joblessness is caused by failure on the part of the economy to generate enough jobs to employ everyone who wants to work. This view dominated public policy response to joblessness during the New Deal era in the 1930s, and it continues to influence public policy responses to it during recessions.
3. Access to work is a problem only for certain population groups. Job shortages are not a problem in general, but barriers to equal employment opportunities limit the ability of certain groups to compete for available jobs. These include employment discrimination, unequal access to job training and educational opportunities, and the geographic mismatch between available jobs and the communities where the unemployed live. This view inspired major reforms in American employment and social welfare law during the 1960s and early 1970s, and it has dominated liberal policy positions since.
Surprisingly little data are available concerning the number and characteristics of vacant jobs, contends Harvey in this book published in 2002 (but presumably researched earlier). In the meantime, the Bureau of Labor Statistics has created a Job Openings and Labor Turnover survey, which provides job opening rates nationally and regionally by major industry. This may, in part, fill that void. Job applicants already working are probably the most attractive to new employers, Harvey asserts. During a 3-month period in the winter of 1994–95, a total of 5.6 percent of all wage-and-salary workers actively looked for a new job while still employed, he says, citing Bureau of Labor Statistics data.
Low-wage workers are likely to find government-mandated subsidies vital to daily survival.
Child support, for example, has become an important supplement to the income of most single mothers. In 1975, the Federal Government amended the Social Security Act and mandated that child support be established and enforced through thousands of new State child support enforcement agencies. In crafting the Family Support Act of 1988, Federal legislators tried to address the ineffectiveness of child support among the welfare poor. An analysis of the Current Population Survey shows that the percent of single mothers receiving at least some child support increased to 34.5 percent in 1996 from 27.6 percent in 1980, which would seem, to a large degree, to be an indication of this legislation’s effectiveness.
For low-income single mothers to get off and stay off welfare, they must spend no more than a third of their income on housing. The role of the single provider and caregiver often means that poor single mothers with young children must carefully weigh the gain in income from a paid job, versus the expense of childcare that can amount to 25 percent or more of their earnings. These women must also secure housing adequate for a family. To do all of this, they must not earn too much to disqualify them for subsidies, but enough not to have housing expenses eat up 50 percent or more of their income.
The median earnings for women have risen fairly steadily in the past 20 years, writes Sanders Korenman, professor in the School of Public Affairs at Baruch College, City University of New York and a former member of the President’s Council of Economic Advisors. Evidence also shows that wages at the bottom end of the wage distribution began to rise in the early 1990s. The reversal of the decline coincides with the modest increase in the minimum wage in the mid-1990s. In addition to rising wages, the Federal Earned Income Tax Credit (EITC) was expanded markedly in the 1990s, boosting the earnings of low-wage workers with children by as much as 40 percent (or by as much as $3,500 annually).
Those who leave welfare and find jobs are likely to earn more than they would receive in welfare benefits—even if they are able to find only minimum-wage jobs—if they receive the EITC, says Korenman. Moreover, studies find that mean hourly wages exceed the current minimum wage by $1 to $3 an hour. In addition, after adjusting for inflation, both earnings and family income of welfare leavers increased appreciably over time, whereas benefits fell, in real terms, 30 to 40 percent between the early 1970s and the mid-1990s.
Stereotypes of the poor serve a variety of political purposes, at least one of the authors contends. Much of the rhetoric of welfare reform can be said to have served the purpose of reinforcing the work ethic of the working class itself. Welfare reform reminds the working class of its entitlement to respect for being employed. And although some of the chapters in this Russell Sage Foundation book represent old wine in new bottles, and some are repetitive, the book on the whole provides a variety of perceptive insights—such as that one—collected in a single volume.
—Mary Ellen Ayres
Office of Publications,
Bureau of Labor Statistics
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