Labor “Flexibility” and Repression in the USA

[The BBC World Service recently aired this commentary]

Lee Iacocca was probably the most prominent corporate executive in the United States in the 1980s. He led the Chrysler auto company back from the edge of bankruptcy, and gained widespread recognition by starring in advertisements for the company.

Iacocca came to Chrysler by way of Ford Motor Company, from which he had been unceremoniously fired.

The story goes that Iacocca, then president of Ford Motor Company, asked Henry Ford II, then the company’s chair, “Why are you firing me, Mr. Ford?”

Ford replied, “I just don’t like you!”

No one needs to shed any tears for Lee Iacocca, of course. Things worked out just fine for him.

But his firing says a lot about the state of employment relations in the United States.

Earlier this year, millions of people in France took to the streets to protest proposed laws making it easier for employers to fire young workers. Meanwhile, employers and international agencies like the International Monetary Fund are pressuring governments in Europe, Australia, Indonesia, Mexico and around the world for “enhanced 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.

The model “flexible” labor market is the United States.

And while it might look desirable from an employer point of view, it is not an example that regular people should be eager to see emulated.

For non-unionized workers – and more than 90 percent of 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.

In one notable example highlighted by the 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 that she was unable to come to work because her brother, with whom she lived, had 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.

Two million employees are fired every year in the United States.

One way to think about so-called labor flexibility is that it represents enhanced employer power over workers. Especially where trade 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 in the low-wage sector (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.

The Lee Iacocca story notwithstanding, there is no doubt that the U.S. model works for the corporate executive class. But it has been a much more dire tale for America’s working people.