Low-Wage America

Low-Wage America: How Employers Are Reshaping Opportunity in the Workplace

Eileen Appelbaum
Annette Bernhardt
Richard J. Murnane
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  • Book Info
    Low-Wage America
    Book Description:

    About 27.5 million Americans—nearly 24 percent of the labor force—earn less than $8.70 an hour, not enough to keep a family of four out of poverty, even working full-time year-round. Job ladders for these workers have been dismantled, limiting their ability to get ahead in today’s labor market. Low-Wage America is the most extensive study to date of how the choices employers make in response to economic globalization, industry deregulation, and advances in information technology affect the lives of tens of millions of workers at the bottom of the wage distribution. Based on data from hundreds of establishments in twenty-five industries—including manufacturing, telecommunications, hospitality, and health care—the case studies document how firms’ responses to economic restructuring often results in harsh working conditions, reduced benefits, and fewer opportunities for advancement. For instance, increased pressure for profits in newly consolidated hotel chains has led to cost-cutting strategies such as requiring maids to increase the number of rooms they clean by 50 percent. Technological changes in the organization of call centers—the ultimate “disposable workplace”—have led to monitoring of operators’ work performance, and eroded job ladders. Other chapters show how the temporary staffing industry has provided paths to better work for some, but to dead end jobs for many others; how new technology has reorganized work in the back offices of banks, raising skill requirements for workers; and how increased competition from abroad has forced U.S. manufacturers to cut costs by reducing wages and speeding production. Although employers’ responses to economic pressures have had a generally negative effect on frontline workers, some employers manage to resist this trend and still compete successfully. The benefits to workers of multi-employer training consortia and the continuing relevance of unions offer important clues about what public policy can do to support the job prospects of this vast, but largely overlooked segment of the American workforce. Low-Wage America challenges us to a national self-examination about the nature of low-wage work in this country and asks whether we are willing to tolerate the profound social and economic consequences entailed by these jobs.

    eISBN: 978-1-61044-014-1
    Subjects: Business, Sociology

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-viii)
  3. Contributors
    (pp. ix-xii)
  4. Acknowledgments
    (pp. xiii-xiv)
  5. CHAPTER 1 Low-Wage America: An Overview
    (pp. 1-30)
    Eileen Appelbaum, Annette Bernhardt and Richard J. Murnane

    This volume describes changes in the workplace for Americans who do not earn enough to support themselves and their families. The number of such workers is substantial. In 2001 about 27.5 million Americans, 23.9 percent of the labor force, earned less than $8.70 an hour (Mishel, Bernstein, and Boushey 2003, table 2.9). Working full-time for the entire year at this wage produces annual earnings of just $17,400—about equal to the poverty line for a family of four, and not nearly enough to sustain most working families. For example, a family with two parents and two children requires between $27,000...

    • CHAPTER 2 The Coffee Pot Wars: Unions and Firm Restructuring in the Hotel Industry
      (pp. 33-76)
      Annette Bernhardt, Laura Dresser and Erin Hatton

      After considerable debate about recent labor market trends in the United States, something of a consensus may finally be emerging on the major forces at work. Debate will undoubtedly continue over the relative weight of different factors, but it is clear that changes in markets, technologies, and institutions have all contributed to the sharp rise in inequality and the stagnation of real wages for many workers.¹

      Because less-educated workers have been hurt the most, policymakers have largely focused on education and training as remedies. But the translation of changes in trade and technology into greater inequality has been driven in...

    • CHAPTER 3 The Effects of Work Restructuring on Low-Wage, Low-Skilled Workers in U.S. Hospitals
      (pp. 77-118)
      Eileen Appelbaum, Peter Berg, Ann Frost and Gil Preuss

      Although commonly thought of as an employer of highly educated and technically skilled medical staff, the U.S. hospital industry also provides large numbers of low-skill, low-wage jobs. Food service, housekeeping, and nursing assistant jobs make up the largely invisible backbone of any U.S. hospital. These jobs have traditionally provided employment with benefits to some of the most economically disadvantaged participants in the U.S. labor force, including recent immigrants and residents of the inner city.

      Over the past fifteen years the U.S. hospital industry has come under considerable pressure to reduce costs and streamline services while continuing to provide high-quality medical...

    • CHAPTER 4 Computer-Based Technological Change and Skill Demands: Reconciling the Perspectives of Economists and Sociologists
      (pp. 121-154)
      David H. Autor, Frank Levy and Richard J. Murnane

      Two recent trends have rekindled interest in questions about the impact of technological change on the skills that workers use at their jobs and the wages these skills command. The first is the increase in education-related earnings inequality. Between 1980 and 1998 the college–high school wage differential rose from 48 to 75 percentage points, a 56 percent gain. The second trend is the remarkable proliferation of computers and information technology. After the spread of mainframe applications during the 1970s, the use of personal computers increased dramatically in the 1980s, followed by enormous growth in applications of networked computers in...

    • CHAPTER 5 “New Technology” and Its Impact on the Jobs of High School Educated Workers: A Look Deep Inside Three Manufacturing Industries
      (pp. 155-194)
      Ann P. Bartel, Casey Ichniowski and Kathryn Shaw

      The deterioration of the economic position of less-educated men is part of a well-documented increase in income inequality in the U.S. labor market between the late 1970s and early 1990s. During this time period the income gap between high school educated and college-educated men rose substantially (see Autor, Levy, and Murnane, this volume). Many analysts have advanced the idea of “skill-biased technical change” to help explain the declining position of high school educated workers (see, for example, Autor, Katz, and Krueger 1998; Bartel and Sicherman 1999; Berman, Bound, and Griliches 1994; Caroli and Van Reenen 2001; Greenan and Mairesse 1996;...

    • CHAPTER 6 Plastic Manufacturers: How Competitive Strategies and Technology Decisions Transformed Jobs and Increased Pay Disparity Among Rank-and-File Workers
      (pp. 195-226)
      John W. Ballantine Jr. and Ronald F. Ferguson

      It is well known that earnings disparity increased among U.S. workers during the last quarter of the twentieth century. Less well known is that disparity grew even among workers who wereequalin their years of schooling and employedwithin narrowly defined industrial sectors(see, for example, Levy and Murnane 1992; Murphy and Welch 1993; Federal Reserve Bank of New York 1995; Federal Reserve Bank of Boston 1996; McFate, Lawson, and Wilson 1995; Mishel, Bernstein, and Schmidt 1998; Dunne et al. 1999; Bradbury 2002). Economists’ leading hypothesis for growing disparity is that expanded use of computer-based technologies increased the importance...

    • CHAPTER 7 Too Many Cooks? Tracking Internal Labor Market Dynamics in Food Service with Case Studies and Quantitative Data
      (pp. 229-269)
      Julia Lane, Philip Moss, Harold Salzman and Chris Tilly

      Core firms in the U.S. economy have traditionally had strong internal labor markets that provided opportunities for skill development and advancement. Through training or prospects for long-term employment that allowed for on-the-job training and returns to investment in education, workers starting out with low skill levels had opportunities to be hired for “good” jobs. Firms were able to provide these opportunities in part because vertical integration and the expansion of various support functions brought together a large and varied set of jobs under a single roof. It is widely perceived that these arrangements have largely been scrapped over the last...

    • CHAPTER 8 How and When Does Management Matter? Job Quality and Career Opportunities for Call Center Workers
      (pp. 270-314)
      Rosemary Batt, Larry W. Hunter and Steffanie Wilk

      The dramatic growth of call centers in the last two decades is an important labor market phenomenon for low-wage service workers. Whereas historically service provision was personalized and service labor markets were local, advances in information technologies and new business strategies have made possible the emergence of call centers in which service and sales transactions are mediated through telephone and computer technologies. Firms in manufacturing and service industries alike increasingly view call centers as their primary vehicle for interacting with customers. The phenomenal growth of call centers has created an industry comprising thousands of technology vendors, information technology specialists, industrial...

    • CHAPTER 9 A Temporary Route to Advancement? The Career Opportunities for Low-Skilled Workers in Temporary Employment
      (pp. 317-367)
      David Finegold, Alec Levenson and Mark Van Buren

      The rapid growth of the temporary staffing industry in the 1990s has posed a paradox to understanding the labor market for low-skilled workers. During this period, with the U.S. economy operating for several years at greater than what had been considered the rate of “full employment,” employee bargaining power and job options increased. Even the lowest-skilled indviduals were able to find jobs, and millions were able to move from welfare into work. During this period one of the most rapidly expanding sectors of employment was temporary staffing. Conventional wisdom views temps as “contingent” workers, implying that the jobs are insecure...

    • CHAPTER 10 The Effects of Temporary Services and Contracting Out on Low-Skilled Workers: Evidence from Auto Suppliers, Hospitals, and Public Schools
      (pp. 368-404)
      George A. Erickcek, Susan N. Houseman and Arne L. Kalleberg

      Temporary help employment grew dramatically over the last decade, accounting for 10 percent of net employment growth in the United States during the 1990s. Although government statistics on contracting out are not maintained, evidence from case studies and business surveys suggests that there has been dramatic growth in the outsourcing of functions to outside companies as well (Abraham and Taylor 1996; Houseman 2001b; Kalleberg, Reynolds, and Marsden forthcoming). In both cases, the workers providing services to the client firm are not the client’s employees but rather the legal employees of the temporary help agency or the contract company. Through intensive...

    • CHAPTER 11 The Future of Jobs in the Hosiery Industry
      (pp. 407-445)
      Rachel A. Willis, Rachel Connelly and Deborah S. DeGraff

      This case study examines the industry of circular knitting for legwear. The industry is generally classified as hosiery manufacturing but can include products ranging from expensive, FDA-regulated medical compression garments to six-packs of socks for children sold at wholesale prices of less than twenty-five cents per garment. With manufacturing generally located in the southeastern United States for the last century, the concentration of firms in North Carolina, Alabama, and Tennessee over the last twenty years has led to unusual industrial cooperation strategies among firms that have helped the industry to survive.

      Perhaps the most central of these strategies has been...

    • CHAPTER 12 When Management Strategies Change: Employee Well-Being at an Auto Supplier
      (pp. 446-478)
      Susan Helper and Morris M. Kleiner

      As a result of increased international competition, over the last decade or two U.S. manufacturing firms have made major changes in both their product strategies and their human resource policies. Many firms have chosen one of two strategies: the “high road” of innovative products and skilled, highly paid workers, or the “low road” of commodity products and low-paid, unskilled workers (Appelbaum and Batt 1994). In this chapter, we examine the case of a firm that manages to combine elements of both “roads” in a profitable way: it makes innovative products with moderately skilled, low-paid workers. We think that this firm...

    • CHAPTER 13 Managerial Discretion, Business Strategy, and the Quality of Jobs: Evidence from Medium-Sized Manufacturing Establishments in Central New York
      (pp. 479-526)
      Derek C. Jones, Takao Kato and Adam Weinberg

      This chapter draws on ten case studies of manufacturing establishments in central New York to examine two key questions. First, are managers in medium-sized establishments that are located in an economically depressed geographic region and that employ workers with limited formal education able to exercise discretion with respect to the business strategy they adopt? And second, do the strategies that managers implement matter greatly for worker outcomes?

      Some economic theorists argue that firms that operate in competitive labor and product markets, especially those subject to global competition, have very little discretion in setting wage, employment, and human resource management practices....

  11. Index
    (pp. 527-538)