By Bill Kohlhaase
Like you, I’m a working stiff. I’ve held any number of jobs, under good management and bad, and I’ve been self-employed. Currently, I have an important day job that pays poorly and is badly managed. To get by, I supplement the income with a second job. Sound familiar?
It’s no surprise to us working stiffs that things today aren’t that great for the average American worker. Statistics released last month showed that real wages now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947. Meanwhile, corporate profits are at their highest levels in over 40 years. Working stiffs aren’t surprised that the average hourly wage has fallen against inflation in the last three years, or that health and other benefits are harder to find and continually shrinking in value. Working stiffs are largely responsible for the gains in American productivity, even as their rewards in the American workplace are downsized. “The most important contributor to higher [corporate] profit margins over the past five years,” says a blunt report from investment house Goldman Sachs, “has been a decline in labor’s share of national income.” In other words, they’re making it off our backs.
Thirty years ago, James O’Toole and Edward E. Lawler were involved in a study on the American workplace commissioned by President Nixon’s secretary of health, education and welfare. The resulting book, Work In America, was an unlikely bestseller that fueled discussion about work conditions in America. In the end, its recommendations were largely ignored. Some 30 years later, O’Toole and Lawler are back with a follow-up titled The New American Workplace. It’s a frustrating, often infuriating look at employment in America that, like the workplace itself, also holds some reward.
The book often reads like an apology for bad employment practices. It excuses low wages, long hours and shrinking benefits by concluding that these practices are required for American business to compete in a global economy. On the other hand, O’Toole and Lawler find CEOs, MBA-heavy management and politicians at fault in the working stiff’s plight. “In far too may instances,” they state in their “general conclusion,” “the United States is attempting to implement tomorrow’s competitive strategies with yesterday’s managerial ideas and public policy infrastructure.” Translation: your boss is a butt.
The authors break big American business into three categories. There are the “global organizations” like Coca-Cola, Citibank and IBM, which recently sold off its laptop division to Chinese manufacturer Lenovo. High or low tech, most of the design, marketing and management for global organizations is based in the U.S. The labor is often done overseas. “High involvement organizations,” like WL Gore, UPS, Trek Bicycles and Costco pay their employees better than their competitors, offer better and more inclusive benefits, sponsor social events for employees and often involve them in management decisions. Not surprisingly, they often sell better products and services. By far the largest groups are the “low-cost operators”—the big grocery chains, discount and fast food outlets (think Wal-Mart) that prefer minimum wage, minimum training and minimum benefits.
While the authors clearly side with the high-involvement organizations they excuse the practices of low-cost operators as necessary to following “the business model.” They let business practices that exploit the workforce off the hook too often. “Workers have greater opportunity [today] to contribute to their own retirement accounts,” they write. What that means, as any working stiff knows, is that business is cutting its contributions and letting employees fend for themselves. “Many corporations are trying to control the runaway costs of health insurance” they claim, when in fact most corporations aren’t trying to control anything, choosing instead to saddle their employees with the cost. Sometimes O’Toole and Lawler ignore their own statistics, as when they claim that an “increasing number of Fortune 1000 firms have adopted . . . profit sharing” to reward performance. The chart at the bottom of the same page shows a decline in profit sharing between 1987 and 2005.
Still, the emphasis O’Toole and Lawler put on education, the involvement of workers in management decisions as a means of cutting management bureaucracy, and the benefits of hiring managers out of the ranks rather than MBAs must be admired. And the anecdotes they provide regarding the rewards reaped by companies such as Costco and UPS, as opposed to their low-cost competitors Sam’s Club and FedEx, show that paying a decent wage and treating employees as humans with real economic needs can pay off. But as long as business emphasizes profits at the expense of their employees, as long as elected officials remain stooges of such businesses and some unions remain weak-willed and self-interested, we have to wonder: who will stand up for the working stiff?
THE NEW AMERICAN WORKPLACE BY JAMES O’TOOLE AND EDWARD E. LAWLER III; PALGRAVE MACMILLAN, 260 PAGES, $27.95.