Understanding Job Quality in an Era of Structural Change: What Can Economics Learn from Industrial Relations?

Article excerpt

Several decades of economic restructuring have produced fundamental changes in the way work is organized in the United States and other industrialized countries. Dramatic changes have occurred in almost every facet of the work experience including hiring and firing policies, promotion, training, and labor-management relations. The notion that many labor markets bear little resemblance to those of the early postwar period comes as no surprise to many workers. New entrants to the labor force are routinely warned to prepare themselves for not just one, but a sequence of careers. A steady job with good pay, regular promotions, and extensive benefits is increasingly seen as a relic of the past. Corporate managers and business consultants herald a "work revolution" that involves, among other things, more temporary, part-time, or subcontracted work. The message that labor markets are changing has also reached Washington, where there is renewed interest in active labor market policies to deal with the effects of restructuring. For example, the premise of the Reemployment Act of 1994 is that work has changed so radically in recent years that the entire employment system in the United States must be overhauled.

Policymakers, managers, and workers are faced with two problems: understanding the nature of current changes and developing strategies to deal with them. What assistance can economics offer with either problem? Unfortunately, very little. The most important labor market phenomenon of the 1980s and 1990s is the changing quality of many jobs, a fact recognized by many in the economics profession [Mishel 1988; Bluestone and Harrison 1988; Burtless 1990]. Despite increased awareness of the problem, however, economists are hard pressed to offer any concrete guidance, for job quality is a phenomenon with no theoretical foundation in economics. It is effectively invisible within the framework of mainstream theory and consequently invisible to policymakers who are guided by this theory. Policies are targeted toward phenomena that are not invisible such as unemployment, poor quality labor supply, and poverty.

A framework that includes the overall structure of jobs is required for contribution to policy debates on job quality. Such a framework was available in labor economics before its transformation into a branch of applied micro. The institutionalist labor economics tradition, now evident only in industrial relations, was built on the concept of the structured labor market. Jobs and workers are best understood as part of a coherent system that organizes work according to certain rules. Recent work in industrial relations on employment models continues in this institutionalist tradition.(1) Employment models are especially relevant for studying job quality because they make visible the key issue of job opportunity. This is at the heart of the current concern over job quality.

The purpose of this paper is to argue that the view of job quality available within the framework of economic theory is of limited use for understanding current trends. The first part of the paper describes the economist's view of job quality and its limitations. The remainder of the paper explores the recent work of industrial relations scholars on employment models. The central thesis is that the employment model framework is especially relevant to the current problem of job quality. The paper concludes with comments on future trends in job quality for the U.S. economy.

Job Quality in Economics

The most common measure of job quality in economics is the wage level. Indeed, a debate during the 1980s between two Washington, D.C. think tanks over job quality focused entirely on the relative growth of low-wage and high-wage employment.(2) The intent of this paper is not to suggest that the growth in low-wage jobs is unimportant, but to argue that the fundamental problem is opportunity. Growing numbers of low-wage jobs are only a problem if workers are unable to move on to higher paying jobs. …