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1. How the Disappearance of Unionized Jobs Obliterated an Emergent Black Middle Class

Author:
William Lazonick, Philip Moss, and Joshua Weitz
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
During the 1960s and 1970s, blacks with no more than high-school educations gained significant access to well-paid unionized employment opportunities, epitomized by semi-skilled operative jobs in the automobile industry, to which they previously had limited access. Anti-discrimination laws under Title VII of the 1964 Civil Rights Act with oversight by the Equal Employment Opportunity Commission supported this upward mobility for blacks in the context of a growing demand for blue-collar labor. From the late 1970s, however, the impact of global competition and the offshoring of manufacturing combined with the financialization of the corporation to decimate these stable and well-paid blue-collar jobs. Under the seniority provisions of the now beleaguered industrial unions, blacks tended to be last hired and first fired. As U.S.-based blue-collar jobs were permanently lost, U.S. business corporations and government agencies failed to make sufficient investments in the education and skills of the U.S. labor force to usher in a new era of upward socioeconomic mobility. This organizational failure left blacks most vulnerable to downward mobility. Instead of retaining corporate profits and reinvesting in the productive capabilities of employees, major business corporations became increasingly focused on downsizing their labor forces and distributing profits to shareholders in the form of cash dividends and stock buybacks. Legitimizing massive distributions to shareholders was the flawed and pernicious ideology that a company should be run to “maximize shareholder value.” As the U.S. economy transitioned from the Old Economy business model, characterized by a career with one company, to the New Economy business model, characterized by interfirm labor mobility, advanced education and social networks became increasingly important for building careers in well-paid white-collar occupations. Along with non-white Hispanics, blacks found themselves at a distinct disadvantage relative to whites and Asians in accessing these New Economy middle-class employment opportunities. Eventually, the downward socioeconomic mobility experienced by blacks would also extend to devastating loss of well-paid and stable employment for whites who lacked the higher education now needed to enter the American middle class. By the twenty-first century, general downward mobility had become a defining characteristic of American society, irrespective of race, ethnicity, or gender. Since the 1980s, the enemy of equal employment opportunity through upward socioeconomic mobility has been the pervasive and entrenched corporate-governance ideology and practice of maximizing shareholder value (MSV). For most Americans, of whatever race, ethnicity, and gender, MSV is the not-so-invisible hand that has a chokehold on the emergence of the stable and well-paid employment opportunities that are essential for sustainable prosperity.
Topic:
Labor Issues, Civil Rights, Unions, Black Politics, African American Studies, and Workforce
Political Geography:
United States

2. How and Why Government, Universities, and Industry Create Domestic Labor Shortages of Scientists and High-Tech Workers

Author:
William Lazonick, Philip Moss, and Joshua Weitz
Publication Date:
12-2016
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
On June 2, 1965, under a mandate established by Title VII of the Civil Rights Act of 1964, the U.S. Congress created the Equal Employment Opportunity Commission (EEOC) to enforce federal anti-discrimination laws related to employment. The expectation was that African Americans would be prime beneficiaries of the EEOC. There was no assumption that the EEOC, on its own, could reverse deep-rooted employment discrimination against blacks. But in the late 1960s there was optimism that, in combination with equal educational opportunity and the strong demand for unionized workers in the well-paid manufacturing jobs that marked the post-World War II decades, the EEOC could help to ensure that an ever-increasing number of blacks would ascend to the American middle class. African Americans as a group are better educated than they were in the 1960s, and, as discriminatory norms and practices have lessened, large numbers of college-educated blacks have experienced upward employment mobility into professional, technical, and administrative occupations. But the promise of a large-scale ascendancy of blacks to middle-class status, characterized by secure and well-paid employment, has not been fulfilled. Our basic thesis is that, in combination with the institutions of racism which remain widespread in American society, the erosion of secure and well-paid employment opportunities is a major reason for the persistence since the 1980s of African Americans as disproportionately disadvantaged. Our contribution to the larger debate on the economics of race is to focus on the role of corporate resource allocation as the prime determinant of the quantity and quality of employment opportunities in the economy. The decline of middle-class employment opportunities has adversely affected the majority of the U.S. labor force of all races, ethnicities, and genders. African Americans, however, have been more vulnerable than other demographic groups to this decline. U.S. institutions of corporate governance vest power over major resource-allocation decisions in the hands of senior executives, supported by their hand-picked corporate boards. Given the enormous size of the major business corporations and their centrality to economic activity, the resource-allocation decisions made by senior executives of major U.S. corporations profoundly influence the operation and performance of the economy as a whole—including the availability, or not, of secure and well-paid employment opportunities. The failure to include an analysis of corporate resource allocation and how it has changed over the past half century in the policy debate on income inequality is what we call the “equal employment opportunity omission.”
Topic:
Race, Employment, Inequality, Civil Rights, Legislation, and Equality
Political Geography:
North America and United States of America