Editorial

The Labor Flexibility Con

French student protesters commanded headlines in March of this year, when they took to the streets to challenge a law that would make it easy to fire young workers without cause.

In the United States, at least, the media mocked the students.  In a typically snarky remark, New York Times columnist John Tierney wrote, “They’re too busy burning cars to look for jobs.”

The U.S. elite commentator view is that European job protections are completely irrational, and unsupportable in a global economy.  The new rage is “labor flexibility” – a term that means diminished protections for workers.  The argument is that if it is easier to fire employees, and they are afforded fewer wage, working condition and pension protections, then employers will hire more readily, and workers will actually be better off.

As the articles in this issue discuss, employers and international agencies like the World Bank are touting these specious arguments from Europe to Indonesia, from Mexico to Australia.  The rest of the world, they say, should be more like the “flexible,” or deregulated, labor market of the United States.

There’s no good evidence to support their claims.

At the macroeconomic level, as the Washington D.C.-based Center for Economic and Policy Research (CEPR) has shown, it turns out that European countries have been growing consistently faster than the U.S. economy this decade, and employment levels are about equal.  

Proponents of labor flexibility say it is essential to creating more dynamic economies that  will incorporate disadvantaged populations. But CEPR finds that “inflexible” Europe does better on a “social exclusion” test.  Not only is the United States the most unequal of the world’s rich countries (those in the Organization for Economic Development and Cooperation, OECD), but:

• The United States has a smaller share of low-income workers that make it to higher income levels than any other OECD country
• The United States spends more than any other OECD country on Healthcare, yet has worse health outcomes.  The United States is the only industrialized country in the world that does not provide universal healthcare.
• The United States has the highest murder rate and a prison-population rate 5 to 10 times higher than Western Europe.

At the workplace, labor flexibility is an utter disaster for working people. As former U.S. Representative David Bonior says in an interview in this issue, the flexibility is all for employers, not workers.

For non-unionized workers – and more than 90 percent of U.S. workers in the private sector are not unionized – arbitrary employer behavior is completely permissible and, for many, the norm, even over hiring and firing decisions.  Absent a union contract, workers in the United States ar4e “at-will,” which effectively means they can be fired for any reason  other than race, gender or other specifically proscribed motives.

In one notable example highlighted in the Princeton, New Jersey –based National Workrights Institute, a supervisor at a Philadelphia nursing home was fired after 10 years of service because she called in two hours late to advise her employer she was unable to come to work because her brother, with whom she lived, died.

The National Workrights Institute has documented how other employees have been fired for refusing to vote as their employer wished, to avoid paying contractually earned commissions, and for refusing to falsify medical records.

Millions of workers in the Untied States are fired or laid off every year.  Data collection is poor, but New York Times reporter Louis Uchitelle says in an inte4rview in this issue that seven million workers are forced out of their jobs every two years.  The costs, Uchitelle argues, are very high, including unacknowledged psychological toll on those laid off.

One way to think about labor flexibility is as a fancy and obscure term for enhanced employer power over workers.  Especially where labor union membership is low or declining, or union power is relatively weak, labor flexibility takes away many of the key legal protections that workers have, leaving them isolated and vulnerable.

The result in the United States is  a growing low-wage sector and downward pressure on wages across the board; very high turnover among low-wage workers (in the retail sector, for example, more than two in five workers change jobs every year.); a pension system transformed in recent decades to put burdens on employees and undermine pension guarantees from employers; and a sense of unease among a broad swath of workers about their employment futures.

As always, when exported to the developing world, dangerous ideas like labor flexibility inflict even more damage than in rich nations.  The limited protections provided by governments are often all that workers can rely on, and prevailing workplace practices enable much greater levels of abuse. Thus Indonesian union leader Saepul Tavip says in an interview in this issue that labor flexibility is a kind of modern slavery – leaving workers completely at the mercy of employers.

Labor flexibility is, in short, a corporate con, with workers of the world as the mark.