Pervasive Insecurity

by Russ Roberts on January 10, 2006

in Work

In this earlier post, I questioned Harold Meyerson’s claim that unlike the benign or even benevolent corporate practices of the past, workers today have to cope with "pervasive insecurity." You do hear the claim all the time.  But is it true?

Meyerson’s colleague at the Post, Sebastion Mallaby, politely suggests that it is not:

When Democrats talk about a middle-class squeeze, they mean more
than wages; they mean the quality of jobs. As my colleague Harold
Meyerson put it last week
, corporations used to "impart a structure to people’s work lives." But
now workers must contend with "a brave new world of short-term
employment."

This complaint sounds plausible, but the evidence
for it is slight. In a 1998 paper for the National Bureau of Economic
Research, Ann Huff Stevens picked through two sets of data going back
to the 1970s. She concluded that job insecurity had risen temporarily
around 1990 but that old patterns of tenure had probably returned. In a
new bureau paper last month, Stevens compared men who neared retirement
in 1969 with men doing so in 2002. In both groups, just over half had
been with a single employer for at least 20 years — hardly evidence
that things are getting worse.

You can find the Stephens paper here.  Here’s a nice quote from the abstract:

The primary finding is one of stability in the prevalence of  long-term employment relationships for men in the United States.  In 1969, average  tenure in the longest job for males aged 58-62 was 21.9 years.  In 1998, the comparable  figure was 22.0 years.

Mallaby continues:

Perhaps workers face more pressure, even if they’re not being fired?
Corporations may be ever more productive, according to this theory, but
this comes at the expense of workers who are forced to sacrifice
work-life balance.

Again, this theory is plausible — and wrong.
In a paper to be released today, a trio at the London School of
Economics — Nick Bloom, Tobias Kretschmer and John Van Reenen — sort
through a hard drive’s worth of data on 732 manufacturing firms in the
United States and Europe, assessing their policies on work hours,
vacation, assistance for child care and so on. Then they test whether
the most fiercely productive companies in their sample treat workers
badly. They find no such correlation.

Imagine that—the most productive companies treat their workers well.  It’s unfortunate that we live in a time where that is considered surprising.

Be Sociable, Share!

Comments

comments

26 comments    Share Share    Print    Email

{ 13 comments }

JABBER January 10, 2006 at 11:15 am

Don, Arnold Kling (and others, I'm sure) has written about how people either view the world through "Feeling" or "Thinking" lenses. In fact, that's one of the dimensions on the Myers-Briggs personality profile. Sadly, we are in a very "Feeling" age (perhaps we've always been). If we "feel" insecure in our jobs, then it must, in fact, be true. Thus the Meyerson view of the World. Then, when a "Thinker" like Mallaby (bless him) comes by with ACTUAL facts, the Feelers get into all sorts of intellectual contortions to defend their worldview. Can't let those facts get int the way of our feelings!

The truth is that human beings have always and will always suffer from existential anxiety, whether it be the fear of a saber-tooth tiger eating us, or a mean boss firing us. Blaming our natural (if unfortunate) proclivities on the Age in which we live is intellectually lazy and, sadly, widespread.

Brandon Holmes January 10, 2006 at 11:35 am

Meyerson fails to see that both the necessity and desirability of long term employment has declined with the increasing diversity and dynamic nature of the modern economy. As a young person (25) with a family, I see a 20+ year stint at the same company as a punishment rather than a priveledge.

Increased mobility allows for far greater personal growth and development by allowing individuals to follow both the best jobs as well as build their careers around their developing personal interests and skills. Part of our ability to increase our productivity stems from our ability to change jobs quickly, easily and often.

401(k) and other DC plans have replaced traditional DB plans because they are more beneficial to both employees and employers. Why stick around ABC Co. for my pension when I could simply roll my 401(k)over to a better job at XYZ Inc.?

It seems to me that it is opportunity and not insecurity which pervades the modern economy.

save_the_rustbelt January 10, 2006 at 11:44 am

Recalculate the same average ten years from now and you will find a considerable difference.

Thre are still enough high seniority boomers that tenure numbers could suggest stability, but that stability is going fast.

Brandon, 20 years from now when you get tossed for a cheaper 25 years old with a fresher education you may want to update your post :-) . You will find your mobility greatly reduced.

save_the_rustbelt January 10, 2006 at 11:46 am

By the way, lots of companies have lots of policies, but when the sqeeuze is on the policies tend to get rewritten or ignored.

JABBER January 10, 2006 at 12:18 pm

Does longevity in a job indicate security? For many, like Rustbelt, it has come to mean that. But, really, security comes from having marketable skills.

Does the assembly line worker DESERVE lifetime employment? Why? And how can a company, ANY company, promise such a thing? The Japanese tried to, but they couldn't do it. The Big Three couldn't do it (and, for trying, they're now paying the piper, as their spoiled UAW employees refuse to accept economic reality).

Now, if the unskilled assembly line worker had taken some of that largesse in his or her paycheck and used it to fund their continuing education, they would then have more marketable skills to fall back on, should the downturn in that industry come. It's no fun to be forced to change jobs, but, notwithstanding Rustbelt's cynicism, skilled workers, of any age, will always be in demand.

I had a supervisor at one point who gave me a fine piece of advice as a young engineer. He said, "Always look to fill your toolbox with new tools and you'll never go hungry." THAT, my friends, is security.

MjrMjr January 11, 2006 at 1:50 pm

JABBER:
I'm an INTP. Here's an analysis of some of these issues that appeals to the "thinker" in me.

http://www.morganstanley.com/GEFdata/digests/20060109-mon.html#anchor0

That tenured professors at a taxpayer funded institution don't grasp the insecurity that average Americans feel is hardly surprising at all.

Brandon Holmes January 11, 2006 at 3:49 pm

The reason that there is a sense of "widespread insecurity" is because people have forgotten an important life lesson: no one is going to look out for you but you. Those who feel insecure have made themselves so by believing that someone else-the company, the union, the government, etc.-was looking out for their security. In the process they have failed to look after themselves and investing in themselves in the manner indicated by JABBER.

Some people, like tenured professors, CHOOSE to go into fields with a high degree of long term "job security." Others CHOOSE to go into fields which do not. Isn't it funny how we take credit for our choices which benefit us but pass on the blame for the ones which go wrong?

The younger are usually cheaper, Rustbelt, but that they are more freshly educated is not necessarily so.

MjrMjr January 12, 2006 at 4:21 am

Brandon-
So statistics that show us that median compensation is decreasing, time spent unemployed is increasing, jobs going overseas, the fact that defined benefit pension schemes are being dissolved, etc, these are all irrelevant? It's the fact that people somehow forgot to look out for their own best interests that accounts for insecurity? What made people forget?

You talk about investing in yourself. Look at college enrollment. It's at an all time high. More people are pursuing more education(and taking more debt to do so; even risk doesn't deter people) than ever. This nation currently has the most educated, skilled workforce in its history. To say that people aren't making an investment in skills and training just doesn't jive with the facts.

Who can predict what the stable industries will be even five to ten years from now? In 1995 it was widely predicted that travel agents would be hugely in demand for the next decade. Some people may make unwise job choices but it's not always for lack of effort, desire, motivation, research, etc. With the fast pace of change in today's world it's harder than ever to predict the future.

Instead of "blaming the victim", I wonder why there's such a reluctance to acknowledge that even though comparative advantage, global labor arbitrage, and other factors which are chaning the labor market may bring about a net gain for the economy that there may be some people who lose out in the process?

JABBER January 12, 2006 at 2:38 pm

MjrMjr, this is pretty much a dead thread, so this is probably a waste of electronic ink, but here goes….

Brandon isn't "blaming the victim." He's just stating the simple fact of existence. Either you trust The Company or The State for your well being, or you trust yourself. Who has your best interest at heart?

It will always be so. That's why they call it "survival."

And think about the moral ramifications of your argument. Effectively, you're arguing that it's a terrible thing for Americans to lose their jobs…but it wouldn't be a terrible thing if they kept their jobs at the expense of a poor Third Worlder.

Brandon Holmes January 12, 2006 at 7:26 pm

MjrMjr-

I did not intend to imply that people aren't investing in themselves, I am simply saying that if they fail to do so they have only themselves to blame. The investment which you are talking about in your second paragraph is, I would hold, being caused by the phenomena which you cite in your first paragraph. People are coming to realize that they must look out for themselves; to this end they are seeking to develope their skills. Furthermore, I believe that it you look more closely at your data you will find that the negative phenomena which you make reference to in your first paragraph occur more often and have a greater efect on less skilled workers.

I also don't deny that many people fail to make it despite effort, desire, motivation and the like. No one can predict the future, thus is the nature of man as a contingent entity.

I don't think that anyone has denied that some people get hurt (at least temporarily) in the process of economic growth. Economic change is inevitable in the partially free economy which we presently have; transition doesn't always come easy. "Blaming the system" isn't going to help matters. Increases in general well being can come only through actual net economic growth, the best way to bring about this growth is through economic freedom. Faster growth means less time unemployed, more domestic opprotunity, and more secure retirement.

John Pertz January 12, 2006 at 9:10 pm

Total median compensation is not decling. Median wage compensation is but total median compensation is not. I dont know where you are getting your numbers from. Just from a public choice perspective I would love to know what any of these socialists would like the government to do which will help make the lives of workers in this country better. Also, please consider oppurtunity costs and misallocated resources when you are busy making your proposals.

MjrMjr January 13, 2006 at 1:55 am

JABBER-
I agree, one should always realize that they can always put their best interests first while at best the state will only do so some of the time. re:Jobs here vs the third world… that sounds kind of like a zero sum argument. If the U.S. had 2 million more manufacturing jobs than it did now would that directly mean 2 million less jobs in the third world? Is the only way the economies of China, India, etc can grow is to export to the U.S.? What role does or should domestic demand in those countries play in increasing employment for citizens of those countries?

Brandon-
I agree, the ones getting hurt are less skilled workers.

In theory I also agree that higher living standards should come about from economic growth. We'll just have to keep watching the numbers. Median compensation has fallen over the last five years, there are more people living in poverty, and less people with health insurance. If advocates of free trade and the like are claiming that this is just a temporary transition I can accept that. Relatively speaking, the median here is still pretty damn good. But if the same trends continue for another five to ten years, I wonder if there will be a reassesment.

JABBER January 13, 2006 at 9:32 am

MjrMjr, first off, what the media likes to bandy about is that median incomes (as measured by wages) is stagnant or falling. That's bull. TOTAL compensation is rising, largely due to increases in benefit costs, esp. medical. Since that's money that doesn't come out of the worker's pocket, it should count just as much.

You're right. My earlier comment does strike of a zero-sum game, and, IN THE LONG RUN, free market economics make all of us winners ("a rising tide raises all boats" as it were). In the SHORT RUN, however, the zero-sum argument holds some water. Left alone (one wishes), the labor markets will equilibrate wages across the world. For the US, that probably will mean some serious downward pressure on wages, counteracted in full or in part by the "rising tide theorem."

Previous post:

Next post: