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Low-Wage Work in the Wealthy World

Low-Wage Work in the Wealthy World

Jérôme Gautié
John Schmitt
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    Low-Wage Work in the Wealthy World
    Book Description:

    As global flows of goods, capital, information, and people accelerate competitive pressure on businesses throughout the industrialized world, firms have responded by reorganizing work in a variety of efforts to improve efficiency and cut costs. In the United States, where minimum wages are low, unions are weak, and immigrants are numerous, this has often lead to declining wages, increased job insecurity, and deteriorating working conditions for workers with little bargaining power in the lower tiers of the labor market. Low-Wage Work in the Wealthy World builds on an earlier Russell Sage Foundation study (Low-Wage America) to compare the plight of low-wage workers in the United States to five European countries—Denmark, France, Germany, the Netherlands, and the United Kingdom—where wage supports, worker protections, and social benefits have generally been stronger. By examining low-wage jobs in systematic case studies across five industries, this groundbreaking international study goes well beyond standard statistics to reveal national differences in the quality of low-wage work and the well being of low-wage workers. The United States has a high percentage of low-wage workers—nearly three times more than Denmark and twice more than France. Since the early 1990s, however, the United Kingdom, the Netherlands, and Germany have all seen substantial increases in low-wage jobs. While these jobs often entail much the same drudgery in Europe and the United States, quality of life for low-wage workers varies substantially across countries. The authors focus their analysis on the “inclusiveness” of each country’s industrial relations system, including national collective bargaining agreements and minimum-wage laws, and the generosity of social benefits such as health insurance, pensions, family leave, and paid vacation time—which together sustain a significantly higher quality of life for low-wage workers in some countries. Investigating conditions in retail sales, hospitals, food processing, hotels, and call centers, the book’s industry case studies shed new light on how national institutions influence the way employers organize work and shape the quality of low-wage jobs. A telling example: in the United States and several European nations, wages and working conditions of front-line workers in meat processing plants are deteriorating as large retailers put severe pressure on prices, and firms respond by employing low-wage immigrant labor. But in Denmark, where unions are strong, and, to a lesser extent, in France, where the statutory minimum wage is high, the low-wage path is blocked, and firms have opted instead to invest more heavily in automation to raise productivity, improve product quality, and sustain higher wages. However, as Low-Wage Work in the Wealthy World also shows, the European nations’ higher level of inclusiveness is increasingly at risk. “Exit options,” both formal and informal, have emerged to give employers ways around national wage supports and collectively bargained agreements. For some jobs, such as room cleaners in hotels, stronger labor relations systems in Europe have not had much impact on the quality of work. Low-Wage Work in the Wealthy World offers an analysis of low-wage work in Europe and the United States based on concrete, detailed, and systematic contrasts. Its revealing case studies not only provide a human context but also vividly remind us that the quality and incidence of low-wage work is more a matter of national choice than economic necessity and that government policies and business practices have inevitable consequences for the quality of workers’ lives.

    eISBN: 978-1-61044-630-3
    Subjects: Business, Economics

Table of Contents

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  1. Front Matter
    (pp. i-vii)
  2. Table of Contents
    (pp. viii-x)
  3. Contributors
    (pp. xi-xiv)
  4. Foreword
    (pp. xv-xx)
    Robert M. Solow and Eric Wanner

    The seal of the Russell Sage Foundation features the ambitious slogan: “For the Improvement of Social and Living Conditions.” For over a century, the research projects undertaken by the Foundation, whatever their specific aims, have also sought to serve this broader purpose. The Russell Sage–sponsored study of low-wage work, of which this volume is the culmination, is no exception. Indeed, this study returns to some of the Foundation’s earliest concerns.

    In 1907 the Russell Sage Foundation’s very first large grant financed an extensive survey of the harsh working and living conditions faced by steel workers and coal miners and...

  5. CHAPTER 1 Introduction and Overview
    (pp. 1-32)
    Eileen Appelbaum, Gerhard Bosch, Jérôme Gautié, Geoff Mason, Ken Mayhew, Wiemer Salverda, John Schmitt and Niels Westergaard-Nielsen

    This volume grows out of the research on the United States summarized inLow-Wage America: How Employers Are Reshaping Opportunity in the Workplace(Appelbaum, Bernhardt, and Murnane 2003), which sought to understand how U.S. firms were responding to economic globalization, deregulation, and technological progress and the impact of these responses on typical low-wage frontline workers.

    Two broad conclusions emerged from the array of qualitative and quantitative data presented inLow-Wage America. First, while most U.S. firms responded to the economic pressures of the last three decades by engaging in cost-cutting efforts that resulted in deteriorating pay and working conditions for...


    • CHAPTER 2 Low Pay, Working Conditions, and Living Standards
      (pp. 35-90)
      Geoff Mason and Wiemer Salverda

      As a prelude to discussion of the role of industrial relations and wage-setting institutions in chapter 3 and the impact of labor market institutions on labor supply in chapter 4, this chapter describes the importance and characteristics of low-wage work and the living standards and working conditions of low-wage workers in the six countries. The chapter first examines how each country compares in terms of the incidence of low pay, the evolution of low-wage shares of employment, the characteristics of low-wage jobs and workers, and the chances of low-wage workers eventually succeeding in moving to higher pay brackets. The chapter...

    • CHAPTER 3 Industrial Relations, Legal Regulations, and Wage Setting
      (pp. 91-146)
      Gerhard Bosch, Ken Mayhew and Jérôme Gautié

      The preceding chapter summarized the main features of low-wage work across our six countries. In this chapter and the next, we explain the main institutional determinants of the size and structure of low-wage work, focusing on the national institutions involved in setting pay.

      The overall incidence of low pay in the six countries and the results of the case studies suggest that pay-setting institutions play a central role in explaining international differences in low-wage work. By “pay-setting institutions” we mean the formal and sometimes informal mechanisms used to determine the wages (and benefits) received by workers in different industries and...

    • CHAPTER 4 The Impact of Institutions on the Supply Side of the Low-Wage Labor Market
      (pp. 147-182)
      Jérôme Gautié, Niels Westergaard-Nielsen, John Schmitt and Ken Mayhew

      The previous chapter focused on the impact of institutions on wage setting across firms and sectors, with an eye toward the impact of these factors on the industry- and economy-wide share of low-wage work. That chapter identified the degree of inclusiveness or exclusiveness of the national pay-setting institutions and the possibility for firms to opt out of these institutions as the key factors driving cross-national differences in the share of low-wage work.

      In this chapter, we turn our attention to the supply side of the low-wage labor market. In crude terms, if the bargaining and regulatory structures analyzed in the...


    • CHAPTER 5 Institutions, Firms, and the Quality of Jobs in Low-Wage Labor Markets
      (pp. 185-210)
      Eileen Appelbaum

      The case studies in this volume suggest that European employment models are under considerable pressure. Efforts to reduce wages have led some employers to take advantage of various loopholes that can enable them to escape the institutions and social norms that govern the employment relationship in their countries, leading to what one observer has come to call “varieties of institutional avoidance”—in a play on the term “varieties of capitalism.” The United Kingdom, for example, moved some considerable distance toward the United States during the Thatcher years. More recently, the national employment models in the Netherlands and Germany have also...

    • CHAPTER 6 Retail Jobs in Comparative Perspective
      (pp. 211-268)
      Françoise Carré, Chris Tilly, Maarten van Klaveren and Dorothea Voss-Dahm

      Retail businesses and retail jobs have much in common in the United States and western Europe in terms of core tasks, workforce, and competitive trends.¹ Yet, despite all these common features, we see significant variation in job quality as we look across the United States and the five European countries studied here. Retail workers toil at varied levels of pay, and with varying employment status and conditions. Table 6.1 charts three of these variations. Retail’s low-wage share—the percentage of retail workers falling below the low-wage threshold of two-thirds of the national median—ranges widely, from less than one in...

    • CHAPTER 7 Working at the Wage Floor: Hotel Room Attendants and Labor Market Institutions in Europe and the United States
      (pp. 269-318)
      Achim Vanselow, Chris Warhurst, Annette Bernhardt and Laura Dresser

      In the face of global competition and continued pressure on wages from less-developed countries, a popular prescription for industrialized nations is to differentiate themselves by pursuing a knowledge-based, high-skill economy (see, for example, Reich 1991; Florida 2002; EC 2004a). But it is instructive to remember that in both Europe and the United States many labor-intensive service jobs remain firmly rooted in place. Whether cleaning hotel rooms, caring for the elderly, or washing hospital linen, millions of workers are effectively sheltered from the threats of offshoring and automation because the work they do must be performed on-site, by human beings.


    • CHAPTER 8 Cleaning and Nursing in Hospitals: Institutional Variety and the Reshaping of Low-Wage Jobs
      (pp. 319-366)
      Philippe Méhaut, Peter Berg, Damian Grimshaw, Karen Jaehrling, Marc van der Meer and Jacob Eskildsen

      In their research on low-wage and low-skill work in U.S. hospitals, Eileen Appelbaum and her colleagues (2003) found a high incidence of low-wage work among cleaners and nursing assistants. At the time of their study, U.S. hospitals were struggling with high turnover and difficulties in recruiting low-skilled workers. Rather than raise wages, hospitals, responding in some cases to trade union pressure, experimented with increased training and alternative forms of work organization that broadened job tasks. One of the key assumptions behind these experiments was that creating more interesting jobs and improving job satisfaction would increase the ability of hospitals to...

    • CHAPTER 9 Tough Meat, Hard Candy: Implications for Low-Wage Work in the Food-Processing Industry
      (pp. 367-420)
      Klaus G. Grunert, Susan James and Philip Moss

      Food processing is traditionally a low-wage area. It is also usually one of the biggest manufacturing sectors of a national economy, it is heavily tied to national culture, and it is at the same time strongly affected by reduced trade barriers and increased globalization. The food manufacturing industry is highly competitive (Wilson and Hogarth 2003), and companies have been faced with many challenges arising from changing economic conditions. In each of the countries in this study, the food-processing sector plays a prominent role and is often regarded as one of the more successful manufacturing areas. Furthermore, the food-processing industries in...

    • CHAPTER 10 Restructuring Customer Service: Labor Market Institutions and Call Center Workers in Europe and the United States
      (pp. 421-466)
      Caroline Lloyd, Claudia Weinkopf and Rosemary Batt

      Call centers emerged as an important source of employment in advanced economies in the 1990s. Made possible by advances in digital technologies and the declining costs of transmission, these technology-mediated centers were viewed by firms as a cost-effective service and sales channel for their customers, and a number of governments viewed them as a solution to unemployment. At the same time, these developments made it possible to relocate, outsource, or offshore call center work to low-wage regions and countries. Thus, there were substantial incentives for employers to treat call center work as an opportunity to reduce costs and realize economies...

  8. Index
    (pp. 467-488)