Securing Prosperity

Securing Prosperity: The American Labor Market: How It Has Changed and What to Do about It

Paul Osterman
Copyright Date: 1999
Pages: 240
https://www.jstor.org/stable/j.ctt7rr51
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  • Book Info
    Securing Prosperity
    Book Description:

    We live in an age of economic paradox. The dynamism of America's economy is astounding--the country's industries are the most productive in the world and spin off new products and ideas at a bewildering pace. Yet Americans feel deeply uneasy about their economic future. The reason, Paul Osterman explains, is that our recent prosperity is built on the ruins of the once reassuring postwar labor market. Workers can no longer expect stable, full-time jobs and steadily rising incomes. Instead, they face stagnant wages, layoffs, rising inequality, and the increased likelihood of merely temporary work. InSecuring Prosperity, Osterman explains in clear, accessible terms why these changes have occurred and lays out an innovative plan for new economic institutions that promises a more secure future.

    Osterman begins by sketching the rise and fall of the postwar labor market, showing that firms have been the driving force behind recent change. He draws on original surveys of nearly 1,000 corporations to demonstrate that firms have reorganized and downsized not just for the obvious reasons--technological advances and shifts in capital markets--but also to take advantage of new, team-oriented ways of working. We can't turn the clock back, Osterman writes, since that would strip firms of the ability to compete. But he also argues that we should not simply give ourselves up to the mercies of the market.

    Osterman argues that new policies must engage on two fronts: addressing both higher rates of mobility in the labor market and a major shift in the balance of power against employees. To deal with greater mobility, Osterman argues for portable benefits, a stronger Unemployment Insurance system, and new labor market intermediaries to help workers navigate the labor market. To redress the imbalance of power, Osterman assesses the possibilities of reforming corporate governance but concludes the best approach is to promote "countervailing power" through innovative unions and creative strategies for organizing employee voice in communities. Osterman gives life to these arguments with numerous examples of promising institutional experiments.

    eISBN: 978-1-4008-2313-0
    Subjects: Economics, Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. List of Figures and Tables
    (pp. ix-x)
  4. Foreword
    (pp. xi-xiv)
    Richard C. Leone

    As of this writing, America seems poised to end the century on a dizzy economic high. Unemployment and inflation are lower than many economists thought possible. The stock market continues its deafening boom, demonstrating remarkable resiliency by bouncing back from occasional sharp, but short-lived, declines. And the federal budget, plague d by large deficits “as far as the eye could see” at the outset of the 1990s, is now comfortably in the black and predicted to remain so for years. In a recent poll, over 70 percent of respondents said that 1999 is the best economic time of their lives....

  5. Preface
    (pp. xv-2)
  6. ONE Introduction
    (pp. 3-19)

    We live in an era of economic paradox. The dynamism and power of the American economy are astounding. American industry remains the most productive in the world, and the economy spins off new products and industries at a pace that exceeds that of any other nation. Only imagination limits the possibilities inherent in information technology and the microelectronic revolution.

    Yet despite the good economic news on many dimensions, there remains a widespread sense that the labor market is a riskier and more dangerous place than in the past. In some measure this feeling is based on what is in the...

  7. TWO The Changing Structure of the American Labor Market
    (pp. 20-70)

    Until the last decade or so, the American labor market functioned according to a set of rules and norms put into place after World War II. These constitute what I term the institutional structure of the labor market. Although there was much to dislike about some aspects of this structure (issues of race and poverty loom large here), it was nonetheless the case that the behavior of firms was predictable and understandable and that people could make their plans—plans for their education and training and plans for their careers—with some reasonable sense of certainty about the relationship between...

  8. THREE Experiencing the New Economy
    (pp. 71-89)

    The proof of the pudding is in the eating. The destruction of the old labor market is only of academic interest unless it has real consequences for people. If all is well for labor force participants, then there is much less urgency in understanding the nature of the institutional changes over the past two decades and what might be done about them. If, on the other hand, individuals are indeed in distress, then these themes are much more salient.

    There are obviously good reasons to be skeptical about any doomsaying. The unemployment rate has fallen to the lowest levels in...

  9. FOUR Restructuring within Firms: The Shifting Employment Contract
    (pp. 90-115)

    At the heart of the transformation of the American labor market is the firm. The pressures on employers and their response shape most of the outcomes that concern us. Wages are set by firms, hiring and layoff decisions are made by firms, and most training and career development is delivered by firms. When we turn to policy, a central theme is whether and how to influence the behavior of firms and the consequences of any specific policy for the ability of employers to compete and to generate jobs. In short, understanding the behavior of firms is at the core of...

  10. FIVE Preliminaries to Policy
    (pp. 116-123)

    The previous chapters described where we have been and where we are now. This chapter and the next two are about where we should go. How best can we build labor market institutions that successfully deal with the problems laid out earlier and that are congruent with the new realities of the economy and the labor market? It is important that policies pass both these tests; it makes little sense to try to resurrect the old labor market structure. The trick is to preserve the strengths of the new labor market while tackling the outcomes that trouble us.

    Rather than...

  11. SIX Policies for a Mobile Workforce
    (pp. 124-145)

    The nature of the new labor market is that people change jobs more often, sometimes of their own volition and other times because they are fired. In these circumstances there are two important elements of policy: as a first step we need to protect people during these transitions so that the consequences of job loss and job changing are less severe than they might otherwise be. Second, we need to build local labor market institutions that make movement through the labor market easier and more successful than it has been in the past.

    I begin by discussing the safety net...

  12. SEVEN Redressing the Balance of Power
    (pp. 146-178)

    The previous chapter described how to build institutions to address the heightened mobility characteristic of the new labor market. This is important but is not enough. The second leg of policy should be to redress the substantial shift in power from employees to firms. Many of the symptoms that worry us, ranging from stagnating wages to the spread of nonstandard work, can be traced to this changing balance of power. Most Americans do not believe that the current situation is fair—witness the broad support for the United Parcel Service strike as well as polling evidence I shall provide shortly....

  13. EIGHT Conclusion
    (pp. 179-190)

    We began this book with a paradox: despite the good economic news on many dimensions, there remains a widespread sense that the labor market is a far riskier and dangerous place than in the past. In some measure this feeling is based what is in the air, as many firms continue to restructure and as rhetoric takes hold proclaiming that everyone is responsible for his or her own career and can expect little from his or her employer. However, there is also hard reality. On the one hand, it is true that many people find work to be more satisfying,...

  14. Notes
    (pp. 191-212)
  15. Index
    (pp. 213-222)