Institutions, Precarious Work, and Inequality

December 21, 2016

This feature is part of an ongoing RSF blog series, Work in Progress, which highlights some of the research of our current class of Visiting Scholars.

Over the last several decades, precarious work—or temporary, contract-based employment—has grown increasingly widespread across the globe. In the U.S., recent examples of “flexible” employment include popular on-demand services like Uber and TaskRabbit. While these services have been hailed as hallmarks of a new “sharing economy,” workers employed in these jobs frequently lack benefits and traditional labor protections. What had caused growth of non-standard employment? Is precarity becoming the norm for workers?

Arne Kalleberg (University of North Carolina, Chapel Hill) is a Visiting Scholar at RSF and the author of Good Jobs, Bad Jobs. During his time at the foundation, he is researching the global expansion of precarious work and its repercussions for the labor force. In a new interview with the foundation, he discussed the forces that have enabled the rise of precarious work following the postwar era, and proposed policies that could help protect workers from some of the burdens associated with precarity.

Q. Your ongoing research looks at the rise of precarious work, both in the U.S. and globally. What kinds of macrostructural changes have enabled and accelerated the rise of temporary and contract-based employment? What does this mean for workers today?

Kalleberg: The latest transformations in employment systems and expansions of precarious work in the U.S. and other industrial societies resulted from a variety of macro-economic, political and sociological forces that challenged the postwar Keynesian institutional structure that emerged in industrial capitalist countries after World War II.  Consequently, the postwar institutional structure of the labor market was fundamentally altered and the traditional employment relations of the postwar period were transformed.

The rise of the global economy and increase in price competition put pressure on businesses, especially in the primary, core sectors of the economy.  Employers in these core sector (usually manufacturing) businesses experienced considerable uncertainty, risk and instability compared to the more stable and high growth period that preceded it.  (Periphery sector firms had always existed in highly competitive, risky economic situations.)  Indeed, it is the growing precarity of capital vis-à-vis globalization and increased price competition that fueled employers’ perceived need for greater flexibility in the employment relationship.

These competitive pressures for greater flexibility were accompanied by political forces that led to a decline or removal of statutory and regulatory protections for workers through labor market institutions such as unions, minimum wage laws and protective legislation.  These rollbacks were accompanied by declines in union strength and collective bargaining coverage.   As government regulations with regard to the labor market were reduced, the balance of power shifted to employers, who were able to restructure employment systems (depending on the strength of the state and labor and the society’s institutions) so as to evade institutional constraints and achieve greater flexibility in order to reduce costs and to enable them to adjust the sizes of the workforces to market conditions.  Corporate restructuring included: offshoring and sub-contracting production to lower-wage and less regulated areas of the world; shifting business risks by exploiting national and local differences in taxes and labor laws (such as those involving the use of temporary and contract workers) as well as opportunities for segmenting labor markets over space and national/ethnic divides; and the expansion of multi-national corporations. 

The political, economic and ideological motivations behind many of these responses to global competition can be summarized by the notion of the neoliberal revolution, a political-economic perspective that emphasized the centrality of markets and market-driven solutions, privatization of government resources, and removal of government protections.  This ideology spread throughout the world and underscored the necessity of creating and maintaining greater flexibility in labor markets.  This view was reinforced during the economic crises in the early part of the 21st century in Europe and the United States, which contributed to political demands for greater austerity and retrenchment in welfare protections and a greater reliance on “personal responsibility” rather than collective solutions, thereby eroding the solidaristic character of many labor market and welfare institutions.  

Several other key macro-structural forces fueled the most recent expansion of precarious work.  Significant advances in information and communication technologies made possible greater connectivity among people, organizations and countries which made it relatively easy to move goods, capital and people within and across borders at an ever-accelerating pace.  These technologies allowed employers to exert control over decentralized and spatially dispersed labor processes.  Moreover, the entry into the global economy of China, India and the former Soviet bloc countries in the 1990s doubled the size of the global labor pool, further shifting the balance of power from labor to employers.  In addition, the continued expansion of the service sector led to the increased need for flexible employment relations, as many such businesses (such as hospitals and restaurants) needed to be staffed 24/7, creating a demand for part-time and temporary workers.

In addition to these demand side factors, changes in the labor forces of advanced industrial countries also contributed to the expansion of precarious work.  The continued increase in the female workforce created a pool of workers who preferred to work part-time.  The rise in low-skilled immigration from Latin America in the United States and the growth of migration within the European Union led to a greater number of vulnerable workers with relatively little labor market power that were susceptible to taking insecure and uncertain jobs.  And the expansion of educational attainment in many industrial countries led to widening divides between high- and low-skilled workers and hence opportunities for employers to exploit less educated workers.

Q. Your cross-national comparisons have shown that despite fewer labor protections, a weaker safety net, and lower union density than many other developed nations, the U.S. also has lower rates of precarious work. What accounts for this?

The U.S. is “exceptional” in its relatively weak labor market institutions (such as low safeguards against employment dismissal, lack of support for active labor market policies that help unemployed workers transition to new jobs, low union density, and weak minimum wage laws) and low welfare provisions (such as relatively meager social spending).  Nevertheless, the incidence of precarious work in the U.S., at least as judged by a common indicator—temporary work—is relatively low in the U.S.  A reason for this is that the low levels of employment protections enable employers to lay off or fire “permanent” workers relatively easily, without the need for the flexibility that comes with temporary work. 

Nevertheless, there are reasons to expect that the U.S. may have relatively higher rates of other types of precarious work, though the paucity of good cross-national data on these other kinds limits our ability to make comparisons.  In particular, workers who have “open-ended” employment relations are more likely in the U.S. to increasingly bear the risks of work (e.g., in terms of contributing to or being responsible for their health insurance and retirement benefits) than workers in such “regular” employment relations in other countries that tend to collectivize such risks to a greater extent.  In addition, the U.S. has a fairly high proportion of independent contractors, though issues of misclassification often hamper the quality of information on this category, as employers seek to label workers subject to their control as independent contractors in order to avoid various kinds of legal obligations.  Moreover, the weakness of labor laws and protections in the U.S. has led to widespread forms of precarious, uncertain and nonstandard scheduling, especially in the retail and food service industries, in which workers have little control over when (and how often) they work.

Q. What kinds of public policies and institutional changes could help reduce precarity (and its consequences) for workers?

In the new era of precarious work, nations struggle to handle the trade-offs between unemployment and equality that have become increasingly problematic.  All countries are faced with the basic problem of balancing flexibility for employers and security for workers.  Therefore, governments need to reconcile two agendas in order to obtain political legitimacy as well as economic growth: a social agenda related to social protection, employment stability, and economic security (emphasized by workers); and an economic agenda related to the requirements of competitiveness and growth (emphasized by economic elites).

In order to tackle these issues, policies in several general areas are needed that maintain flexibility for employers yet still provide individuals with reasonable amounts of security.  First, we need a safety net and various kinds of social protections to collectivize risk and help individuals cope with the uncertainty and insecurity associated with the growth of precarious work.  Such a social safety net needs to provide basic social protections to all that are not tied to employment with a particular employer but is rather constructed outside of the labor market to protect people from the negative consequences of uncertainty and insecurity that will certainly continue to characterize the world economy for the foreseeable future. 

Second, the rapidity of technological change and the increased likelihood that people will move among numerous jobs during the course of their careers points to the need for expanded system of retraining and lifelong learning.  Active labor market politics that provide resources for job search and learning new skills, for example, are essential to helping people to manage labor market transitions from one job to the next and from unemployment to employment. 

Third, the rise of precarious work has led to pressure on governments to update labor laws and welfare systems so as to extend protections to those who do not have the kind of open-ended, standard employment relations upon which existing laws were based. Thus, regulatory gaps need to be fixed so as to assure equality of treatment of people in different kinds of employment relations.  Moreover, labor laws need to be updated to counter attempts to misclassify employees as independent contractors in order to avoid the contributions to health insurance and pension plans that they are obligated to provide to employees, as well as to avoid liability for the accidents and other actions incurred while in their employ.  Further, laws governing collective bargaining need to be strengthened and adapted to the changing nature of employment relations, so as to provide unions with the ability to organize non-regular workers.

Finally, public policies need to be sensitive to the diversity of needs and goals of labor force participants, who differ in their gender, age, race and ethnicity, immigration status, education, and so on.  Some workers may prefer part-time or temporary work, for example, in order to be able to balance work and family needs.  Labor laws and social protection systems need to be flexible enough to accommodate this diversity.



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