Want a healthy middle class? Bring back the long-term career.

January 28, 2015
Job seekers wait to meet with employers at a career fair in New York City

Job seekers wait to meet with employers at a career fair in New York City, October 24, 2012. REUTERS/Mike Segar

It’s time to start thinking about revitalizing the long-term career if we don’t want its partner, the middle class, to vanish into thin air.

In an age of galloping inequality, it’s worth remembering that middle-class people, rather than the rich, lead the way to growth and prosperity. They do this through their consumer spending, which drives productive investment; their skills and knowledge, which make innovation possible, and their strong rootedness in communities, which promotes cohesion and stability.

To achieve this, people need stable sources of income and a hope for the future. They require a sense of trust that smooths the transactions in both business and life. They must have an understanding that when they invest their hard-won skills and knowledge, there is a long-term payoff. Unfortunately, the trend toward insecure, disposable jobs is undercutting these necessities.

Job seekers stand in line to meet prospective employers at a career fair in New York City

Job seekers stand in line to meet with prospective employers at a career fair in New York City, October 24, 2012. REUTERS/Mike Segar

Sometime around the 1980s, proponents of a Darwinian style of U.S. corporate management threw out the compact between employers and workers that had existed for decades. They cast aside America’s postwar social consensus that employers should invest in workers, who reciprocated with their performance and dedication. Consider that in 1983, Eli Lilly had not laid off a worker in its 107-year history.

As a cutthroat brand of capitalism swept the nation, Eli Lilly’s strategy quickly became a relic. Long-term career expectations, the norm since the 1940s, were replaced by “flexibility” and short-termism.

Blue-collar workers were hit first with mass layoffs, as plants closed and management practices no longer focused on retaining employees. Before long, college-educated white-collar workers found that their jobs, too, were increasingly unstable and insecure.

Contributing to the sea change were off-shoring, globalization, weaker unions, automation and deregulation. Driving it all was the new corporate emphasis on maximizing shareholder value above all else. Executives concentrated on short-term stock-price manipulation rather than building value for the future.

The loyal employee was replaced by a new type of worker whose only sense of permanence was a pervasive feeling of insecurity. American workers were advised to become “entrepreneurial” through self-branding, networking and various kinds of maneuvering now viewed as essential to survival in the labor force. Work life was do-it-yourself.

People wait in line to enter a job fair in New York

People wait in line to enter a job fair in New York August 15, 2011. REUTERS/Shannon Stapleton

By the early 21st century, “You’re fired!” was a catchphrase for U.S. work life, courtesy of real estate mogul Donald Trump.

Corporate America usually celebrates these changes. In an extensive sponsored- content piece in the New Republic, Credit Suisse claimed that millennials don’t want a traditional career path. Instead, a bank executive insisted, young people prefer a “winding, unpredictable progression of jobs in a variety of separate fields.”

Flexibility and mobility are preferred over stability. Young people desire their work life to bring “a steady stream of new challenges.” The bank cited a study indicating that more than 90 percent of millennials in “America’s lower occupational ranks expect to leave their jobs within three years.”

There’s no discussion in the piece of whether or not this “leaving” is voluntary. But the bank assures that the “benefit of all this increased mobility can be detected in workers’ higher sense of fulfillment and fresh perspective.”

Many others aren’t so sure. Economist William Lazonick discusses the demise of the long-term stable career and what it means for the future in a paper written for the Institute for New Economic Thinking’s project on the Political Economy of Distribution. He argues that the lack of career opportunities creates widespread negative effects that are bad for both businesses and people.

On the business side, getting rid of long-term careers may squelch innovation and productivity. Using high tech as an example, Lazonick describes the importance of cumulative and collective learning within an organization, which hinges on having experienced employees who are secure in long-term careers.

He emphasizes that skills are not just based on education — they also come from what you learn on the job, a point that seems to have been lost in corporate America, where employers increasingly throw responsibility for skill development to public-sector education facilities. Workers are expected to toil in unpaid or low-paid internships to acquire “skills” that often have little relation to what they would actually do on the job.

People wait in line to enter a job fair in New York

People wait in line to enter a job fair in New York April 18, 2012. REUTERS/Shannon Stapleton

As Silicon Valley was abandoning the long-term career, with companies like Microsoft luring employees with stable jobs away from monoliths like IBM with offers of stock options, Japan’s economic development was taking off on a model based on having permanent salaried workers, both blue collar and white collar, who collaborated in organizational learning.

This allowed Japanese companies to out-compete U.S. firms across a wide range of industries in the 1980s and 1990s, Lazonick argues, such as consumer electronics. (Japan’s subsequent economic trouble, which began with a bursting asset bubble in the 1990s, was unrelated to worker productivity and innovation.) The Japanese rejected the theory that job insecurity was the best way to stimulate excellent work. Today, according to the Global Technology Index, created by economic and urban studies theorist Richard Florida and colleagues to measure the technological and innovative capabilities of the world’s leading nations, the United States ranks third, behind Japan and Finland.

On the people side, there are signs that the middle class is being decimated by the lack of long-term stable-career opportunities. More than one-third of U.S. jobs are now part time, short term or on call. Wages in the middle-income level are stagnant or declining.

Attitudes toward careers may have changed, but you’ve still got to support yourself and your family over the course of your life. The frenzy of job hopping, however, makes it hard to do that.
Retirement also becomes dicey because changing jobs means you can’t take full advantage of defined-benefit pensions based on tenure and average salary, and you end up with lower Social Security payments if you have periods of unemployment.

Health may even take a hit. Dealing with chronic job insecurity, which studies show can even affect coronary heart disease and cancer rates, may be even worse for you than unemployment. Emotional problems emerge as well. A recent survey by the American Psychological Association showed that 45 percent of workers say job insecurity has a significant impact on their stress levels, while authors of a Michigan study found that insecure workers are significantly more likely to meet criteria for major or minor depression and to report a recent anxiety attack.

People wait in line to enter the CUNY Big Apple job fair in New York

People wait in line to enter the City University of New York Big Apple job fair in New York, April 23, 2010. REUTERS/Shannon Stapleton

Young people are getting stalled and can take decades to make up for lost wages — if they ever do. Some end up with “wage scars” that dog them forever and leave them earning 10 percent to 15 percent less over the course of their lifetime than those who had stable early employment.

The researchers describe a “lost decade” of work life among young people who could not secure stable, full-time jobs in the wake of the Great Recession. And when you feel insecure economically, committing to getting married, having kids or buying a home become worrisome propositions. When they get off to such a bad start, a study released by the Proceedings of the National Academy of Science showed, young people wait longer to have children. Some get so delayed they never have kids — even if their job prospects improve down the line.

U.S. graduates of 2012 were more concerned with job security, one study found, than any other employment issue, including salary and benefits.

If you look around the world, you see that it doesn’t have to be this way. In Denmark, where unions are strong, even serving burgers at McDonald’s can be a secure career that offers a living wage and full benefits.

In the United States, however, jobs at nearly every level have become dine and dash.

As a recent article in Fast Company points out, the median number of years a U.S. worker has been on the current job is just 4.4 years, down sharply since the 1970s. Of course, it’s not just the length of the job, but quality also matters, and that’s on a downward trend, too.

Some claim the answer is more education and more skills. This theory, however, has been widely debunked, especially in the wake of the Great Recession, which pummeled the well-educated and the highly trained.

Reforming corporate governance by banning stock buybacks, limiting stratospheric chief executive pay and putting workers on corporate boards (the norm in Germany) could help companies focus on long-term prosperity instead of short-term profits.

Strong labor unions would also allow employees to improve their contracts through collective bargaining. Regulating businesses that prey on workers with such practices as unpredictable scheduling and avoiding the rules by improperly classifying them as part time could help restore stability and security.

A prosperous economy and a healthy middle class are not short-term propositions. They require long-term thinking and investment, and stable, high-quality careers that bring value to employers, workers — and society as a whole.

A dine-and-dash job market in which more people tumble down the economic ladder is a recipe for disaster — not just for the middle class, but the entire economy.

26 comments

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A great article, I’m a little surprised to see it in Reuters, because it is a stinging indictment of America’s business class and corporate employers, who, according to this article, should be charged with treason.
They have destroyed the economic well being of the USA with their greed and treason. The Constitution say we are to “support the general welfare”, yet these traitors have gamed the system, bought the Congress and stabbed the American people in the back… that’s treason.

Posted by Zlatko | Report as abusive

Spot on!

It is the consumer that is the job creator.

Without a strong middle class, consumerism and therefore capicalism is dead.

In the meantime we have debased our tax base in the promise of increased job growth that has not occurred.

Now we have both a financial and infrastructure deficit.

Posted by Flash1022 | Report as abusive

“In Denmark, where unions are strong, even serving burgers at McDonald’s can be a secure career that offers a living wage and full benefits.”

Denmark’s choice to do that has consequences. A quarter-pounder value meal in Copenhagen costs $20 in U.S. Dollar equivalent (vs. $7 in the U.S.); apparently the Danes are OK with fast food being a special, rare treat ala going to a fine restaurant. Whether that’s good or bad depends on what you’re used to.

Posted by Randy549 | Report as abusive

Makes perfectly good sense! Which is why American managers will kill the idea before it has a chance.

Posted by Francophile | Report as abusive

A quick Google search reveals menu prices at McDonalds in Copenhagen between $2 and $15. So, Randy, perhaps you want to rethink your comment?

Posted by Francophile | Report as abusive

Retirement for the career-switcher isn’t just dicey. It’s terrifying. Illegal age discrimination is rampant; the older job-hunter has no recourse. It’s beyond scary to watch resumes repeatedly disappear into the void, to know that Social Security won’t cover a tenth of your expenses, to empty your 401(k) plan to pay health premiums and grocery bills.

Posted by LTK | Report as abusive

The key to bringing back the middle class is quite simple. A broad understanding that the “American Dream” is not owning your own home, but owning your own business.

If we spent as much political capital in ensuring people could start a business as we do making sure people could get artificially low interest rates on homes they can’t afford, we’d be much better off.

Posted by EndlessIke | Report as abusive

Bring back, or demand? I think what happened is that business leaders realized that the followers were so brainwashed that they would put themselves in debt just to consume frivolously. So pay could go down and consumption wouldn’t. The business world got all the benefit and the workers got the shaft and the workers did it almost voluntarily.

Francophile, So? Cheap unhealthy food is stupid anyway. One should only eat it rarely if at all and $2-15 vs. $1-5 is trivial unless you are a moron that eats it more than once a month. So you promote high consumption of bad product which destroys people and leaves them a useless loads on the whole of America and the corporations get the cash, while the taxpayer cleans up the unhealthy mess. Great! Your system of trickle down feels like a golden shower.

Posted by brotherkenny4 | Report as abusive

All this started Nov 1980, Lee Atwater’s Southern Strategy, Supply-Side (Vodoo/Reaganomics) all were designed to destroy unions, hence the middle class. Supporting more H-1B visas by Sil Valley is a perfect example of this short-sighted view. Replace or do not hire in the first place, US engineers in favor of foreign national engineers working for much less and more controllable.
Then re-write the tax-code to favor off-shoring, then block any remediation to this in both chambers. Obstructing this president is not by accident.
Solution? Expect Republicans to act like Americans, fair tax treatment, favored tax treatment of US corporations, etc. We really are looking at the end of post-war American culture, Facebook’s Zuckerberg and the “Lean In” goof, are banner carriers for this. Maybe stop all FB activity to show “Lean In” girl where they are wrong. Or not and see a very dark and destructive future.

Posted by ac789962 | Report as abusive

Also need to return to a 20% tariff on imported goods. Creates direct revenue for Treasury, and creates incentive for domestic production. America was built on a 20-30% import tariff (since 1790).

It’s currently 1.3%. And how has that flood of foreign goods been working out for our economy and jobs here?

Posted by AlkalineState | Report as abusive

Francophile attempts to lay the burn: “A quick Google search reveals menu prices at McDonalds in Copenhagen between $2 and $15. So, Randy, perhaps you want to rethink your comment.”

Why would he? His point is made. He said “a special, rare treat.” We have our own version of that here. An MRI in America (technology older than Windows 95) costs $1,700 per visit. Doctor-insurance cartels here have made it a special rare treat to get imaged in 30-year-old technology. Yay.

Posted by AlkalineState | Report as abusive

There is no such thing as building an economy from the middle class out. It’s fable (a nice but deceptive lie)

Posted by S.Nebb | Report as abusive

The problem here is the 1%

Posted by Macedonian | Report as abusive

You can thank the new world economy, thank Congress for revising the laws set in place by prior Presidents and law makers. Today the rich one percent, run the country and the chances of the middle class going back to the way it was years ago is slim to none. Companies only care about profits and that’s the way it is. Get used to the new low class America.

Posted by cheeze | Report as abusive

Indeed, the bogus concept of U.S. “trickle down” economics. What trickles down from the elite wealth mongering club to the middle and lower class? Urine.

Posted by protrails | Report as abusive

Danish government is doing right coxing people that any job is good. Almost all job niches are taken, and big part of population get long-term unemployment fee of minimum 1200 euro. But near a half of Danish budget is from oil. If oil prices remain the same or drop further for long time, the socialistic paradise can be over.

Posted by bogdan99 | Report as abusive

Hyperactive and well organised 1% and Inactive disorganized 99%

Posted by Macedonian | Report as abusive

Good article…

Corporations, their executives and their boards have destroyed America. The 1970’s were the last decade where any sort of national loyalty existed. After that – they take any advantage from the global labor pool and will continue that trend.

It would be nice to have…

1. Rank and file workers that receive annual bonuses that are equal in percentage to what the executives receive.
2. Reasonable value ratios between what an executive gets compared to the rank and file worker is paid. In 1983 the ratio was 50.. today the ratio is over 300. Here’s one of the main drivers of the wealth gap.
3. Fair taxation when comparing executives and the rank and file. (Payroll tax should be on all income not just the first 108,000. Capital gains over 500,000 should be taxed as regular income.)
4. Employers that truly care about the employee and don’t put limiting wage growth as their primary concern. How many times have the rank and file been told that the cap on raises is 3% while the executive pay goes up 50%??

Pretty soon the population will rise up against the one percent.

Posted by michaelryan | Report as abusive

Low Tax = Haiti.

High Tax = Sweden.

Which one would you rather live in?

Posted by AlkalineState | Report as abusive

@AlkalineState I would prefer to live in Sweden over Haiti. However, most CEOs would close a U.S. plant, move the jobs to Haiti, give themselves an incredible but barely taxed bonus instead of paying dividends to the shareholders, put half their cash in the Cayman Islands and then fly to Switzerland in the company jet with the other half.

Posted by QuietThinker | Report as abusive

the USA middle class has been outsourced…and the few responsible for this are now quite wealthy.

Posted by rikfre | Report as abusive

A nation that ignores its youth and the middle class is destined to face a revolution. Yet, the state of the poor/marginalized is saddening ( their being) and their ‘becoming’ is depressing; sickening too. Hence doomed to fail, as history of early civilizations . their rise, stagnation and degeneration resulting in decay, teaches us. Is USA taking that path. The sole motto of unfettered capitalism, profit maximisation, will land the nation in quicksands.
The US used to be, as understood by many who knew well, a knowledge society. There weredays when Americans would respond instantly to research findings. Today guidelines are obtained from bosses of multinational corporations as models.
The most unfortunate trend is ignoring reeducation, making it inaccessible and forcing the poor and the middle class struggle to cope with the demands of the economic situation and fail, only to slide down.
Countries like India are on the launching pad to take off the same greedy capitalism that refuses to take a gestalt view of society. The strength of the chain lies in its weakest link, so the poor do matter. The global analysis of immigration and the role of ARRIVAL CITY by Dou Saunders exemplifies their importance.
Let not AMERICA, THE LAND OF OPPORTUNITIES try with the elements of a failing society.
urk

Posted by urk | Report as abusive

Francophile…sigh. Yes, the website you looked at has $2-$15 on its header summary, but if you’d scrolled down hardly at all and looked at what actual diners have posted, you would have seen:

” “Prices Compared the the U.S. = Ouch”
3 of 5 stars Reviewed July 28, 2013

I try a Big Mac in every country I go to, so I had to, but… I think my Big Mac meal was the equivalent of like $20!!”

I’ve been to Copenhagen myself and eaten there, so I didn’t need to google it. And of course, whether it’s $15 or $20, the point is the same: government intervention in free markets has consequences.

BTW I did enjoy the article and it had many good points; I just disagreed with the McDonald’s situation as an example of something that’s automatically “good.”

Posted by Randy549 | Report as abusive

The traditional American Union contributed. A reorganization of Unions along the European model would help. Unions need to own a greater responsibility for quality of work force and on going training. That would provide a value proposition to hire Union workers. Right to work and card check combined would make it easy to join as well as leave unions.

Posted by njmarti | Report as abusive

Yep, they nailed it…

Everything the article says is consistent with the longer term trend in corporate America: it’s focus on short term, quarterly profit over the long term stability and survival of the corporation.

Posted by GeorgeBMac | Report as abusive

Some of the issues highlighted here have been exemplified on the basis of personal and others’ experiences, by Linda in her book HAND TO MOUTH. It is horrifying to waste days to get tylenol tablets when a person wants to avail benefit from medicaids. When she narrates dropping leftovers near trash..to collect later..shockingly resembles beggary in India. Retaniing even patr time involves a struggle. Always on toes to report for work ‘on call’ On the whole the poor often are reduced to live a subhuman life. Tragically the rich are so physically, mentally and emotionally removed and segregated from the reality that they refuse to know the poor and poverty.
Solutions are not to be easily found easily. Globalization has brought the 1% rich from around the world integrate, monopolise and control societal resources, as they function as a syndicate –an exclusive network. The political rich act as a lobby for the corporates. It does not exclude the ’16Tprospective candidates. The former Secretary of State dashed to India for a day at the behest of a retail corporation. Their FDI proposal was approved the very next day.
The unions have been marginalised, the consumer movement seems weak. Who is the savior of the poor and the middle class? The media is the mouthpiece championing the vested interests of the rich–CRONY. A long struggle lies ahead before reincarnation of the American Dreams.

Posted by urk | Report as abusive