Working Under Different Rules

Working Under Different Rules

Edited by Richard B. Freeman
Copyright Date: May 1994
Published by: Russell Sage Foundation
Pages: 280
https://www.jstor.org/stable/10.7758/9781610447706
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    Working Under Different Rules
    Book Description:

    For much of the 20th century, American workers were the world's leaders in productivity, wages, and positive workplace conditions. American unions championed free enterprise and high labor standards, and American businesses dominated the world market. But, as editor Richard B. Freeman cautions in Working Under Different Rules, despite our relatively high standard of living we have fallen behind our major trading partners and competitors in providing good jobs at good pay—what was once considered "the American dream." Working Under Different Rules assesses the decline in the well-being of American workers—evidenced by spiraling income inequality and stagnant real earnings—and compares our employment and labor conditions with those of Western Europe, Canada, Japan, and Australia. As these original essays demonstrate, the modern U.S. labor market is characterized by a high degree of flexibility, with rapid employee turnover, ongoing creation of new jobs, and decentralized wage setting practices. But closer inspection reveals a troubling flip side to this adaptability in the form of inadequate job training, more frequent layoffs, and increased numbers of workers pushed to the very bottom of the income scale, into the low wage occupations where much of the recent job growth has occurred. While the variety of works councils prevalent throughout the developed world have done much to foster democratic rights and economic protection for employees, the virtually union-free environment emerging in many areas of the private U.S. economy has stripped workers of a strong collective voice. German apprenticeship programs and the Japanese system of "job rotation" represent more effective approaches to preparing workers for the changing demands of lifetime employment. In addition, workers in European advanced economies and in Canada have greater social protection than Americans. But while this has some cost in unemployment and higher taxes, carefully designed social safety nets do not seriously jeopardize economic efficiency. Working Under Different Rules is an illuminating analysis of the often complex interaction of market institutions, social policy, and economic results. The authors' up-to-date international assessment of unions, wage setting, apprenticeship programs, welfare support, and works councils suggests alternate ways of training, paying, and empowering workers that, if effectively adapted, could facilitate the growth of a healthier American economy and better prospects for American workers.

    eISBN: 978-1-61044-770-6
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. CONTRIBUTORS
    (pp. ix-x)
  4. PREFACE
    (pp. xi-xii)
    Richard B. Freeman
  5. 1 HOW LABOR FARES IN ADVANCED ECONOMIES
    (pp. 1-28)
    Richard B. Freeman

    In 1909 Samuel Gompers, a founder of the American labor movement and president of the American Federation of Labor, visited Europe to examine “from an American viewpoint … life and conditions of working men in Great Britain, France, Holland, Germany, Italy, etc.” Gompers was struck by the poor living standard of Europeans compared with Americans: “Poverty such as exists in Belgium and Holland can hardly be conceived by the average dweller in an American city.” Gomperas noted many ways in which Europe could learn from the United States, ranging from provision of running water to efficient operation of railroads, areas...

  6. 2 RISING WAGE INEQUALITY: THE UNITED STATES VS. OTHER ADVANCED COUNTRIES
    (pp. 29-62)
    Richard B. Freeman and Lawrence F. Katz

    One of the “big stories” in American economic life in the 1980s was the large increase in income inequality. Inequality grew as the economic expansion of the latter half of the 1980s failed to benefit the majority of American families enough to offset the losses they had incurred during the recession of the early 1980s. In the early 1980s it was possible to make a plausible case for trickledown economics, but by the end of the decade it was clear that policies to increase the income of the wealthy had not generated propserity for the majority of the population. Many...

  7. 3 PAYOFFS TO ALTERNATIVE TRAINING STRATEGIES AT WORK
    (pp. 63-96)
    Lisa M. Lynch

    In the 1970s labor market analysts and policymakers were concerned about absorbing into the labor market an “overeducated American”—the cohort of young, baby-boom college graduates who flooded the labor market and experienced reduced earnings and employment opportunities (Freeman, 1976). In the 1980s and 1990s discussion has focused on a very different issue: how to stimulate the skill development of an “undertrained America.” In 1983, the National Commission on Excellence in Education, and later in 1989, the Secretary of Labor’s Commission on Workforce Quality and Labor Market Efficiency, both concluded that for U.S. firms to complete internationally immediate reforms were...

  8. 4 WORKPLACE REPRESETATION OVERSEAS: THE WORKS COUNCILS STORY
    (pp. 97-156)
    Joel Rogers and Wolfgang Streeck

    In the labor relations systems of most advanced countries, unions or other mechanisms of wage regulation and collective bargaining are supplemented by a “second channel” of industrial relations. This second channel consists of workplace-based institutions for worker representation and labor-management communication that have status and functions distinct from, though not necessarily in competition with, those of unions. Typically, second channel institutions benefit from statutory supports that define their rights and obligations and, not incidentally, extend their reach beyond the unionized sector.

    The purpose of second channel institutions is to give workers a voice in the governance of the shop floor...

  9. 5 DOES A LARGER SOCIAL SAFETY NET MEAN LESS ECONOMIC FLEXIBILITY?
    (pp. 157-188)
    Rebecca Blank

    Higher employment growth and lower unemployment in the United States than in Western Europe in the 1980s generated widespread discussion of the employment problems potentially caused by government social protection programs. The U.S. economy has long been characterized by limited state welfare programs and a relatively unregulated labor market, while Western European countries have had extensive social protection programs for workers and a highly regulated labor market. Following the recession in 1981 and 1982, the United States experienced strong job growth, while Western Europe’s record of job growth was poor (see Chapter 1, this volume). Many analysts and policymakers interpreted...

  10. 6 SMALL DIFFERENCES THAT MATTER: CANADA VS. THE UNITED STATES
    (pp. 189-222)
    David Card and Richard B. Freeman

    To outsiders Canada and the United States often look like two sides of the same coin. The two countries have a closely intertwined history; they share similar cultures, similar economic institutions, and similar standards of living. The U.S. and Canadian economies are linked by massive trade flows, by the interlocking ownership of multinational firms, and by a steady stream of crossborder migration. Canada and the United States are each others’ largest trading partners. Americans control 30 percent of business assets in Canada; Canadians are the fourth largest group of foreign investors in the United States. Eight percent of immigrants in...

  11. 7 LESSONS FOR THE UNITED STATES
    (pp. 223-240)
    Richard B. Freeman

    Unlike many investigations of foreign economic systems, the Working under Different Rules project was motivated not by intrinsic interest in Europe or Japan (fascinating thought they may be) but by concern about the specific problems that plague the United States as we prepare to enter the twenty-first century: rising wage and income inequality, low and falling real earnings for less skilled workers, sluggish growth of productivity, loss of employee representation, and so on. The goals of the project were threefold: first, to determine whether other advanced countries have managed to avoid some of the problems that face workers in the...

  12. APPENDIX: Books in the NBER Series on Comparative Labor Markets
    (pp. 241-244)
  13. INDEX
    (pp. 245-262)