Tuesday, August 23, 2011

They have a foot, they'll take a mile

...he might lower your wages.
Photo credit: preschooleducation.com
I was reading an economist the other day talking about the labor market and I saw this interesting summary of the situation by Robert Gordon, a Northwestern University economist:
When the economy begins to sink – like the Titanic after the iceberg struck – firms begin to cut costs any way they can; tossing employees overboard is the most direct way. For every worker tossed overboard in a sinking economy prior to 1986, about 1.5 are now tossed overboard. Why are firms so much more aggressive in cutting employment costs? My “disposable worker hypothesis” (Gordon, 2010) attributes this shift of behaviour to a complementary set of factors that amount to “workers are weak and management is strong.” The weakened bargaining position of workers is explained by the same set of four factors that underlie higher inequality among the bottom 90% of the American income distribution since the 1970s – weaker unions, a lower real minimum wage, competition from imports, and competition from low-skilled immigrants.
While I might quibble with some of Professor Gordon's analysis, I can't help but agree that "workers are weak and management is strong."  For the vast majority of employers, this shifting of power simply means lower wages and fewer benefits industry-wide. At the margins, however, there are a certain percentage of employers that will take advantage of their employees unfairly. Presumably, there's an even smaller percentage of even-more-marginal employers that will involve their employees in unethical activities and take advantage of their unwillingness to 'vote with their feet.'

I suspect that the only thing that workers can do is to inform themselves accordingly and be aware of the abuses that can take place when the labor market is weak. While "workers are aware" just doesn't have the same ring, it seems like the best tool at hand. 

1 comment:

  1. “workers are weak and management is strong.”

    Without a doubt this is the prevailing attitude with regards to the layoffs I've been involved with. The bulk of the cuts are bench-level folks. Hit a certain management level and they shuffle you around to a new assignment regardless of your impact.

    It's as if the desk jockeys were the ones doing the science to get things into the clinic. They do don lab-coats for in-house global presentation pics or promo shots with the local papers when necessary, though.

    A fairly successful project team, with multiple compounds currently in the clinic had well over half of their bench scientists let go earlier in the year. Not one person in management. If this is rewarding success and hard-work, I can't wait until they start punishing folks for 'lack of innovation'. That should be fun.

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