In the early 21st century, many U.S. workers occupy two unwelcome worlds. Millions are unemployed, fighting for a job and suffering personal and financial agony. Among those still employed, many live in a state of constant anxiety as they desperately try to hang on to jobs. These people are "working scared" because, to them, it seems that virtually every job is temporary, threatened directly or indirectly by technological change or global competition.
With no certain routes to stable employment, U.S. workers scramble for the education they need to remain employable and provide for their families. A college degree no longer brings automatic success. In Working Scared (Or Not at All): The Lost Decade, Great Recession, and Restoring the Shattered American Dream (Rowman & Littlefield, 2013), I present findings based on more than 15 years of research that will help citizens, policymakers and educators, as well as business, union and community leaders, reach sounder business and policy decisions.
Working Scared draws on nearly 25,000 random interviews with employed, unemployed and underemployed U.S. citizens between 1998 and 2012—one of the most volatile periods in U.S. economic history. People from all regions, ages and occupations were interviewed. The book examines the transformation of the U.S. labor market in the first decade of the 21st century—a time when the experiences, beliefs, aspirations and concerns of working men and women were buffeted by the changing nature of work in a volatile, global, knowledge-driven economy.
A Lost Decade
During the height of the 1990s boom, well before the 2007-09 Great Recession ravaged the economy, millions of job seekers were already anxious about their futures and experiencing the harsh shocks of a rapidly churning labor market. Even before the collapse of the stock market and housing prices, the volatile economy was transforming work as seismic changes in technology and finance swept aside small and giant corporations and upended industries. Workers at all educational and skill levels experienced job losses through downsizing, mergers and acquisitions.
Thirty or 40 years ago, most jobs were stable or even permanent; now, most jobs are temporary or contingent. Workers in the mid- to late-20th century most likely could remain with a company and ride the seniority escalator to better jobs and higher pay. Today’s workers no longer have that expectation. Back then, most employees felt loyalty to the companies where they worked. Now, workers are more likely to distrust employers and look out for themselves.
During the past decade, people and institutions that could not afford to do so invested billions of dollars in financial products that were anything but transparent and in industries that lacked sustainable markets. These actions created jobs that vanished and reappeared with the next infusion of cheap capital. The result can be measured in what we did not achieve—a national strategy for steady and sustained growth focused on investment, education and workforce training. U.S. policymakers did not have the vision to plan for a tech decade, a green decade or a smart decade dedicated to reforming education. Instead, U.S. workers experienced a lost decade marked by:
The longest recession on record.
The highest unemployment rates in 30 years.
The unemployment rate for black individuals reaching 16.7 percent, the highest since 1984.
More than 20 million people in 2010 being unemployed, working less than desired or dropping out of the workforce.
Long-term unemployment of six or more months—the highest level in more than 60 years.
More private-sector jobs lost—nearly 9 million—than in the previous four economic recessions combined.
A drop in median family income from $49,600 in 2007 to $45,800 in 2010.
A decline in family net worth from $126,400 in 2007 to $77,300 in 2010, largely due to the collapse of the real estate market.
The Work Trends surveys conducted by the Heldrich Center for Workforce Development at Rutgers University document the scope of the personal, financial and psychological impacts of this upheaval. The results revealed just how severe the problems were in society and put a human face on poverty, income and health data.
A Frayed Employment Contract
Working Scared details how global, competitive forces and business and public policy decisions made once-secure jobs vulnerable. Competitive pressures of the global economy frayed the implicit mutually beneficial contract between workers and employers.
The four broad forces driving labor-market transformations are:
Globalization and offshoring.
Mergers, acquisitions and restructuring.
Transition from industrialization to a knowledge- and service-based economy.
Offshoring. In The World Is Flat (Farrar, Straus and Giroux, 2005), Thomas Friedman pointed out that the forces brought about by the free flow of capital, the Internet and workflow software have doubled the potential global workforce and created a global field for collaboration and competition.
Thousands of companies and millions of U.S. workers once sheltered from global competition were suddenly thrust into a different economic environment. Taking work that was once conducted in the United States and distributing it around the globe—a practice unimaginable in the late 1980s—was now possible and often desirable.
While researchers vary in their estimates of the impact of offshoring U.S. jobs, there is no doubt that competition and resulting offshoring had substantial impacts on major industries and occupations, especially low-wage jobs. Alan Blinder of Princeton University and other economists argue that offshoring could have even greater impact in coming decades. In his view, the only jobs not vulnerable are those that depend on direct contact with the purchaser, leaving 40 million jobs (in 2006) subject to moving to other countries.
Restructuring. Frequent ownership changes and reorganizations through mergers and acquisitions further dislocated millions of U.S. workers. From 2001 to 2006, changes in business ownership on average led to a 6 percent workforce reduction, according to Bureau of Labor Statistics economist Dina Itkin, writing in Monthly Labor Review.
But mergers and acquisitions are far from a sure bet to increase return on investment. After examining 80 acquisitions made during 2002-05, Accenture researchers concluded that about six in 10 acquirers were unable to generate increased revenue growth in the second year after the deal closed compared with growth before merging.
Through automated phone and Internet-enabled customer service systems, human resource functions, data analysis, and information dissemination, employers are finding technology solutions that further shrink workforces.
Deindustrialization. In 1980, about a third of the U.S. workforce was in manufacturing; by 2009, that sector accounted for only a tenth of the workforce. Since 1997, a third of manufacturing jobs disappeared—jobs that historically provided good wages and abundant opportunities for less-educated workers.
The concurrent growth in knowledge- and service-based companies affords those organizations more flexibility to move operations to other cities or countries. Capital is more mobile than workers. Most households cannot easily relocate without incurring significant financial and personal costs, especially after the collapse of property values that occurred in conjunction with the Great Recession.
Deunionization. Previously, unions and their political clout were essential for bringing about many workplace and legal changes that benefited millions—the 40-hour workweek, paid vacations, health care and retirement benefits, family and medical leave, workplace safety, equal employment opportunity, even major social programs such as Medicare and Social Security. The precedents set by union contracts also affected wages, benefits and policies in nonunion workplaces, especially for low- and middle-income workers without college educations.
But unions may have been victims of their own success. Unionization has declined faster and in more industries in the United States than in other advanced, industrialized nations. The decline in unions, especially in the private sector, weakened their bargaining power and influence considerably in the 21st century.
Declining Satisfaction at Work
Given the fundamental transformations under way in the economy, it is perhaps not surprising that U.S. citizens are much less content with their work lives. Through our 25,000 survey responses and hundreds of interviews with workers, we identified four dramatic shifts in behavior and attitudes: U.S. workers are losing faith that their children and grandchildren will have better lives, losing hope that government and policymakers can fix the economy, losing trust in their employers, and becoming deeply frustrated about inadequate training and educational programs for unemployed workers.
Traditionally, U.S. workers expected their jobs to produce a paycheck, health and retirement benefits, and opportunities for promotion. Now, U.S. workers have been forced to take greater responsibility for managing and paying for their health care, continuing education and retirement savings. As the work-based safety net weakened during the past decade, workers’ job satisfaction, measured in our surveys, followed a downward arc. Workers who said they were very satisfied with their jobs dropped from 59 percent to 49 percent. For those with a college degree, job satisfaction declined from 62 percent in 1999 to 49 percent in 2009.
Workers were also less pleased with health and medical coverage: Satisfaction dropped from 43 percent in 1999 to 31 percent in 2009.
Satisfaction with opportunities for education and training at work declined from 40 percent in 1999 to 28 percent in 2009. College-educated workers younger than 40 were even less satisfied with those opportunities.
Workers who were very satisfied with their ability to balance work and family fell from 51 percent to 40 percent during that decade.
What workers want—and expect—from employers remained stable throughout Heldrich’s Work Trends studies. From 1999 to 2011, the vast majority of workers said that while their total annual income was very or extremely important, they wanted more from employers. Workers valued balancing work and family, learning new job skills, having health and retirement benefits, and feeling a sense of job security. Ratings for these varied by just a few points in 12 years:
In 1999, 88 percent of respondents said work and family balance was extremely or very important. In 2009, 86 percent said this.
In 1999, 71 percent of respondents regarded learning new skills at work as extremely or very important. By 2010, 69 percent gave education and training at work a high rating.
85 percent of respondents rated employer-provided health insurance as extremely or very important in 1999. In 2009, 79 percent of the sample still said it was essential.
Retirement and pensions supported by employers were judged to be extremely or very important to 77 percent of respondents in 1999 and 64 percent of respondents in 2009.
Let’s look at just one benefit—training. In recent years, employers substantially reduced in-house education and training budgets as well as financial support for workers who want to acquire education and training outside of work hours.
Examinations of training executives and budgets in 2009 and 2010 by a range of organizations found that the private sector made major budget cuts as the recession deepened.
Most companies spend only modest amounts on educating their workers. Eighty-four percent of employees in organizations with 50 or more employees receive at least some formal training at work, according to the U.S. Department of Labor. However, more than 94 percent of the U.S. workforce is employed by companies with fewer than 50 employees, where formal training is much less likely to occur.
Restoring Shattered Dreams
Addressing this altered economic landscape requires a new paradigm for workforce development policy animated by new ways of thinking and acting. At the core of this paradigm is the challenge of how to educate, train and retrain people so that they can achieve their full potential and offer employers valued skills.
The entire society—workers as well as political, business and educational leaders—must rally around central goals. We must strive for greater equity and opportunity by developing a better-educated and more competitive workforce. A society where only the top 1 percent—or only the 30 percent that have college educations—succeeds will not be sustainable. The U.S. is growing apart as those with the most valued skills and those employed in growth industries prosper while others fall further behind. Such deep disparities in income cannot be solved solely by raising taxes on the rich or by cutting the taxes of low-income workers. While redistribution of the tax burden may be desirable, it will not be sufficient to lift low-income workers into the middle class. Rather, greater equity will be achieved by helping workers get the high-quality education and training they need to be competitive in the labor market.
The United States faces stiff competition from developed and developing nations for economic growth. Advanced developed nations such as those in Europe, Japan and South Korea are investing more per capita than the U.S. in the preparation and continued education of their workforce. Developing countries such as Brazil, India and China are making huge investments in educating and training their citizens, including sending them to U.S. colleges. The United States must develop more aggressive pro-growth policies and devote greater effort to enlarging the nation’s economic pie rather than fighting over the best way to divide it.
The U.S. economy is still struggling to recover from the worst recession in 70 years. But even when (or if) unemployment returns to pre-recession levels, U.S. workers, business leaders and policymakers must still respond to broad demographic and social trends that will continue to transform the U.S. workplace.
How can the U.S., through its laws and its private and public institutions, build a productive and competitive workforce and restore the promise of upward mobility? How can we achieve a productive balance of power among workers, employers and capital so that those who work hard can get ahead and can believe that they and their children will be better off?
U.S. citizens and political, business and education leaders face fundamentally new challenges in a global, competitive, technology-driven environment where economies, entire industries and companies are transformed with lightning speed. Tectonic shifts of this magnitude require responses for which policymakers, businesses and citizens are truly "all in."
View charts on:
Declining Job Satisfaction of U.S. Workers
Workers Doubt That Their Loyalty to Employers Is Reciprocated
Percentage of respondents who agreed with the following statements.
Percentage of respondents who were satisfied with the following workplace factors.
Carl E. Van Horn is professor of public policy and founding director of the John J. Heldrich Center for Workforce Development at Rutgers University. This article is adapted from Working Scared (Or Not at All): The Lost Decade, Great Recession, and Restoring the Shattered American Dream (Rowman & Littlefield Publishers Inc., 2013).