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Employment Rents and the Incidence of Strikes
Abstract
A new measure of labor market tightness on workers' behavior--the employment rent--is modeled as a determinant of workplace conflict. An empirical estimate of the employment rent--workers' expected cost of job loss--is calculated. It is argued that the cost of job loss affects strike incidence. This relationship is tested by estimating an econometric model of strike incidence for the United States from 1955 to 1983. The cost of job loss is shown to explain a large percentage of the variation in strike incidence. The cost of job loss is a far superior explanatory variable than the unemployment rate, which is commonly used in strike models. Copyright 1987 by MIT Press.
... capitalist economies. In section 4, we use a cost of job loss framework (Shapiro and Stiglitz, 1984;Schor and Bowles, 1987) to analyse political aspects of buffer stock employment, and so address the question as to whether or not JG/ELR schemes provide the requisite institutional transformation to facilitate the maintenance of full employment. ...
... The major part of this discipline comes, of course, from the loss in income. Here, the cost of job loss to a worker depends both on the likelihood of getting another job and of the loss of income associated with unemployment and (potentially) with the new job (Shapiro and Stiglitz, 1984;Schor and Bowles, 1987). But a further substantial cost of unemployment is the loss of social as well as economic identity associated with joblessness. ...
... We therefore overlook, for the sake of simplicity, the possibility that such re-employment may occur at a real wage different from w, which would obviously modify the expected cost of job loss calculated in [4]. See Schor and Bowles (1987). ...
Advocates of Job Guarantee (JG) or Employer of Last Resort (ELR) schemes have suggested that if the state provides 'buffer stock' employment to workers displaced from private employment, then full employment can be maintained over the course of the business cycle. Kalecki was sceptical about the prospects for maintaining full employment in capitalist economies, without fundamental institutional change that would alleviate certain political constraints on the maintenance of full employment. We argue that in and of themselves, JG/ELR schemes do not create the fundamental institutional change required to address Kalecki's concerns and so ensure that full employment becomes achievable as a permanent state.
... Building on and Setterfield, Kim, and Rees (2016), in which rising inequality in the presence of consumption emulation effects is linked to increasing indebtedness, we postulate that, simultaneously, debt is an important potential cause of rising income inequality. Using an employment rent framework (Bowles 1985(Bowles , 2004Schor and Bowles 1987), we show how the rent workers associate with their current employment is affected by their level of indebtedness. The possibility arises that as debt increases, so, too, does the cost of job loss, reducing the willingness of workers to risk job loss in the process of negotiating for higher wages. ...
... We now turn to the question of how household indebtedness affects income distribution. Our starting point is the employment rent framework of Bowles (1985Bowles ( , 2004 and Schor and Bowles (1987). Employment rent, understood as the excess of an individual worker's current wage income over what they would otherwise earn if displaced from their current employment, can be written as: ...
The recent literature has shown that income inequality is one of the main causes of borrowing and debt accumulation by working households. This article explores the possibility that household indebtedness is an important cause of rising income inequality. If workers experience rising debt burdens, their cost of job loss may rise if they need labor-market income to continue borrowing and servicing existing debt. This, in turn, will reduce their bargaining power and increase income inequality, inducing workers to borrow more to maintain consumption standards, and so creating a vicious circle of rising inequality, job insecurity, and indebtedness. We believe that these dynamics may have contributed to observed simultaneous increases in income inequality and household debt prior to the recent financial crisis. To explore the two-way interaction between inequality and debt, we develop an employment rent framework that explicitly considers the impact of workers’ indebtedness on their perceived cost of job loss. This is embedded in a neo-Kaleckian macro model in which inequality spurs debt accumulation that contributes to household consumption spending and hence demand formation. Our analysis suggests that (a) workers’ borrowing behavior plays a crucial role in understanding the character of demand and growth regimes; (b) debt and workers’ borrowing behavior play an important role in the labor market by influencing workers’ bargaining power; and (c) through such channels, workers’ borrowing behavior can be a decisive factor in the determination of macroeconomic (in)stability.
... Other cross-national research placed an emphasis on political and economic factors and found strikes more common in countries with majoritarian electoral systems (Vernby 2007) and those experiencing high rates of inflation (Kaufman 1981). In comparison, high rates of unemployment (Kaufman 1982) have been linked to fewer strikes, and when the cost of job loss is higher, relative to other sources of income such as social welfare benefits, workers also strike less (Schor and Bowles 1987). ...
This paper examines the effect of international trade on strike activity within the United States since World War II. Globalization may influence strike activity through its effects on the bargaining position of labor. Alternatively, if labor and management take their changed bargaining positions into account, the rate of change in openness could create greater uncertainty in negotiations between them and lead to more strikes as a result. Empirical analysis of strike activity in the 50 states over this period supports the argument concerning uncertainty in the bargaining process. Import competition may also indirectly reduce strike activity by decreasing union density.
... Our analytic approach bears a family resemblance to economic models of efficiency wages(Bowles 1985;Schor and Bowles 1987;Shapiro and Stiglitz 1984), which focus on the economic rent available in the current job in comparison to the next best alternative, however the efficiency wage model does not take into account the adequacy of wages to finance living expenses. ...
The rapid growth of Uber and analogous platform companies has led to considerable scholarly interest in the phenomenon of platform labor. Scholars have taken two main approaches to explaining outcomes for platform work—precarity, which focuses on employment classification and insecure labor, and technological control via algorithms. Both predict that workers will have relatively common experiences. On the basis of 112 in-depth interviews with workers on seven platforms (Airbnb, TaskRabbit, Turo, Uber, Lyft, Postmates, and Favor) we find heterogeneity of experiences across and within platforms. We argue that because platform labor is weakly institutionalized, worker satisfaction, autonomy, and earnings vary significantly across and within platforms, suggesting dominant interpretations are insufficient. We find that the extent to which workers are dependent on platform income to pay basic expenses rather than working for supplemental income explains the variation in outcomes, with supplemental earners being more satisfied and higher-earning. This suggests platforms are free-riding on conventional employers. We also find that platforms are hierarchically ordered, in terms of what providers can earn, conditions of work, and their ability to produce satisfied workers. Our findings suggest the need for a new analytic approach to platforms, which emphasizes labor force diversity, connections to conventional labor markets, and worker dependence.
... From this perspective, labour supply and demand do not directly determine wages and profits; instead, they affect them through power relations on the shop floor. Since the 1980s, the labour extraction model has applied Marx's theory to empirical research (Weisskopf et al., 1983, Schor and Bowles, 1987, Bowles, 1985. The underlying logic of the model is: In capitalist production, wages play a disciplinary role for workers because workers suffer from an income loss after being fired. ...
The labour share of income in China substantially declined from the mid-1990s to the late 2000s. We analyse the effect of power relations among the state, workers, and managers on the labour share, during China’s economic transition from a state–socialist economy to a market economy. We take a Marxian approach in variable selection to reflect power relations over the two stages of China’s reform era. The econometric analysis shows that two major changes in power relations—the social contract between the state and workers disappeared and workers’ power relative to management declined—have a significant effect on the labour share. Furthermore, sectoral changes have no significant effect on the labour share between 1999 and 2010.
... Bien que les résultats des recherches menées à cet égard ne soient pas univoques (Gramm, 1986 ;Paldam et Pedersen, 1982), leur hypothèse principale veut que l'activité de grève tende à croître en période de croissance économique et, à l'inverse, à s'atténuer en contexte de récession. Ces tendances seraient liées aux incidences de la conjoncture économique sur les rapports de force en relations de travail, les travailleurs étant moins enclins à déclencher une grève lorsque l'économie montre des signes d'essoufflement ou que leur situation financière se précarise (Schor et Bowles, 1987 ;Kaufman, 1982). ...
Dans le contexte du déclin tendanciel du nombre de grèves au Québec et dans une vaste majorité de pays industrialisés, cet article s’intéresse à la décision syndicale de faire grève. Partant de ses principaux déterminants théoriques, les auteurs confrontent ces derniers aux perceptions entretenues à l’égard de la grève par des représentants syndicaux actifs dans les processus de négociation collective du secteur privé québécois. L’analyse des entretiens réalisés dans le cadre de cette étude témoigne tout d’abord d’une forte intégration par les représentants syndicaux des contraintes qui pèsent aujourd’hui sur la pratique de la grève, que celles-ci soient de nature économique, institutionnelle, organisationnelle ou, encore, qu’elles soient relatives aux dynamiques de mobilisation que la grève implique. Si les représentants syndicaux rencontrés ne représentent pas un bloc homogène, cette étude souligne néanmoins la nature plus ambiguë du rapport qu’ils entretiennent désormais à son égard. De manière générale, ce rapport se caractérise par une plus grande prudence qui commande une analyse plus serrée des risques et des avantages associés au déclenchement d’une grève. Les propos de nos répondants permettent toutefois de conclure que la prudence affichée n’est pas une abdication et que la grève constitue toujours un outil important du répertoire de l’action syndicale.
... The first figured prominently in the discussion regarding the causes of seriously diminished profitability of capital in the 1970s which ended the post-war boom of rapid capital accumulation and strong growth (Bowles andGintis 1982a, 1982b;Glyn 1975;O' Connor 1984;Shaikh and Tonak 1987;Tonak 1987). The second measure, the 'cost of job loss', defined as the percentage of current income or standard of living lost in the case of losing or quitting one's job was supposed to play a major yet indirect role in affecting capital profitability and accumulation of capital by influencing directly labour intensity and productivity growth, strike activity, wage flexibility and ultimately output growth, distribution and crisis Naples 1986;Schor and Bowles 1987;Weisskopf et al. 1983). Here, we take into account both theoretical traditions mentioned above (radical and Marxist political economy and political sociology) and estimate the first distributional measure, that is, the net social wage for labour for a number of countries which may belong to possibly different welfare regimes. ...
This article investigates empirically the net fiscal position of the working class in nine European countries for the 1995–2015 period. This is done through the estimation of the net social wage for wage and salary earners in those countries, characterized by different types of welfare states. The negative net social wage ratio in eight out of nine countries indicates that in advanced capitalism, the state budget redistributes income in such a way that the post-fiscal or true rate of exploitation is higher than the pre-fiscal or apparent one. Adverse economic conditions and ageing of the population have made the net social wage ratio less negative recently, while the accumulation of public debt and the increased obligations for interest payments on this public debt have acted in the opposite direction.
Most explanations for the declining labor share focus on structural changes such as deindustrialization, globalization, financialization, market concentration, and technological change. We argue that these forces operate through a bargaining power channel and that the reduction in the labor share has been driven by lower bargaining power for workers. We first estimate the relationship between the bargaining power and labor's share of income using a bounds-testing approach and find a significant negative relationship. We then create novel indices of structural change and estimate regressions of the cost of job loss, generally finding that increases in structural change have both increased the cost of job loss and amplified its volatility over the business cycle. Our analysis therefore supports the hypothesis that the decline in the labor share is driven by decreased labor bargaining power and suggests that structural economic changes and weak economic performance in the U.S. have increased inequality.
Since the end of the Great Recession in June 2009, and despite the current low unemployment rate, wage growth in the United States has been substantially slower than in previous recoveries. This paper argues that the cost of job loss—the one year income loss associated with job loss—and the long-term share of unemployment can account for slow wage growth relative to other labor market variables. Using a wage-Phillips curve for three sample periods, empirical evidence suggests that the cost of job loss and the long-term share of unemployment better explain and forecast wage growth in the United States, particularly during the recovery from the Great Recession relative to conventional measures. This finding better highlights and captures deeper trends in the U.S. labor market, specifically the declining bargaining power of labor.
The development of the wage-profit-distribution in post-war Germany is analyzed, applying the»cost-of-job-loss«-concept which has been elaborated in the social-structure-of-accumulation framework by radical US-economists. Statistical estimates show that the costs of job loss (as adeterminant of work and conflict behavior of workers) exercise a significant influence on the development of income distribution in (West) Germany.
Outbursts of strike activity in many industrial societies during the late 1960s and early 1970s focused considerable attention on relations between labour, capital and the state in advanced capitalist systems and led to many inquiries into the sources of the ‘new’ labour militancy. The events of May–June 1968 in France, the ‘hot autumn’ of 1969 in Italy, and the nation-wide strikes of the coal miners in 1972 and 1974 in the United Kingdom (the first since the great General Strike of 1926) are the most dramatic examples, but sharp upturns in strike activity in Canada (1969, 1972), Finland (1971), the United States (1970) and smaller strike waves in other nations also contributed to the surge of interest in labour discontent.
This paper seeks to explain trends in United States corporate profitability since World War II through an analysis of the rise and subsequent demise of a postwar social structure of accumulation (SSA). Building from a formal model of the determinants of profitability, we provide econometric support for the hypothesis that variations in profitability can be explained to a large extent by variations in quantitative indicators of capitalist power in the postwar SSA. Peer Reviewed http://deepblue.lib.umich.edu/bitstream/2027.42/68506/2/10.1177_048661348601800107.pdf
In October 1979, the U.S. Federal Reserve initiated a program of severe monetary restraint. The federal funds rate soared 2.3 points, and the rates of growth of the major monetary aggregates fell dramatically. This policy was presumably caused by a variety of factors: inflation was at double-digit rates, unit labor costs were rising at an annual rate of 13 percent, and real unit labor costs were increasing rapidly as well. On the international side, the value of the dollar was steadily deteriorating, and the current account was strongly in deficit. Given these developments it is not surprising that the Federal Reserve chose this time to undertake a program of restraint. What is surprising, however, is that nearly four years later the economy was still in the recession, or by that time depression, which had been triggered by the Fed.1
This article examines the fate of industrial conflict during the current economic crisis, using data on strikes and unemployment in 18 OECD nations from 1960-1982. Theoretically-based hypotheses are sought both in the notion of a 'disciplinary' political business cycle, and in the longstanding body of economic research on the relationship between strike fluctuations and labor market conditions. The empirical findings indicate that the impact of unemployment on industrial conflict varies markedly across countries and subperiods. Overall, strike activity has been dampened by mass unemployment, yet it frequently remains at a higher level than in the full-employment years of the 1960s.
Typescript (photocopy). Thesis (Ph. D.)--Cornell University, January, 1981. Bibliography: leaves 137-143.