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

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.


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