CIPD Voice: Issue 15
One view of the US labour market is that it is a deregulated free for all, where red in tooth and claw capitalists are unencumbered by trade unions or employment protection legislation and insecure freelancing and the gig economy are becoming the norm.
But is this really true? In this article I want to look at the evidence, drawing from official statistics and international bodies such as the OECD, as well as opinion poll evidence from Gallup to look at how American workers view the labour market and their own job prospects.
The first thing we can dispose of is the nonsense peddled by some lobby groups that freelancing and other non-standard forms of work such as the gig economy are becoming the norm in the US. The US Bureau of Labour Statistics (BLS) recently published estimates for 2017 of all those in what the Bureau calls “alternative employment arrangements” 1. This shows no change in the share since the mid 1990s when the first survey was undertaken.
The second misconception is that the tenure of employment relationships has declined, either because ‘millennials’ have decided to job-hop or because rampant hire and fire means workers are a more disposable quantity. The median employment relationship and the share of Americans staying in their jobs for 10 years or more has if anything increased over the past 30 years, according to BLS figures 2.
There is an important caveat, however. Job stability on both measures has fallen for men – and especially older men - while it went up for women. However, the decline for men halted in the mid-1990s and since then has been rising.
The OECD has its own measure of job insecurity which looks at the financial penalty suffered by the unemployed, taking into account both the generosity of the benefit system and the likelihood of getting back to work quickly 3. This suggests that the unemployed get a harsher deal than in the UK and that deal has become harsher comparing 2007 and 2015.
So how do Americans view job insecurity (fears about their own job) or employment insecurity (fears about getting a similar job if they lose their current one)? We have polling evidence on all of these from Gallup 4. This is not ideal – for example, the sample size is relatively small – but it is available for long periods of time and is up to date. And the answers seem much the same as those given to similar questions in larger and more structured UK surveys.
All measures of job or employment insecurity go up when times are bad and down when times are good – so in this article we focus on those years for which unemployment is low 5. The data also shows that asking different questions on the same subject sometimes gets different answers. But the Gallup data is fairly consistent in showing little or no change over time.
For example, 11 per cent of Americans said they were likely to be laid off in the next 12 months in 2018 compared with 12 per cent in 1998 (and 11 per cent in 1979). Another more general question asking whether people at work were worried about being laid off saw 17 per cent say yes in 2017 compared with 20 per cent in 1997. Similarly, in 2016 some 37 per cent thought that if they lost their job it was unlikely they would get one as good compared with 31 per cent in 2001 and 36 per cent in 2007.
Some researchers have suggested that we should also look at concerns other than job security – for example, rather than cut jobs firms might be looking to cut wages, hours, or reduce benefits or move jobs overseas in the face of economic pressures or to improve profits. Gallop polls show much the same pattern, with movements due to the economic cycle but little underlying change over the past 20 years.
Some 16% of Americans in work said they were worried about hours being cut in 2017 compared with 15% in 1997, while 19% said they were worried about wage cuts in 2017 compared with 17% in 1997. A significantly larger minority were worried about benefit cuts in 2017, at 32%, but this much the same as in 1997 when 34% were worried 6. Some 9% were worried about jobs moving overseas in 2017, the same share as in 2003 when the question was first asked.
It would be ridiculous to suggest the US is a workers paradise. Wage inequality is very high (and growing) and the share of low wage jobs remains one of the highest in the OECD. Many US workers have seen little or no increase in their real hourly wage over the past 20 years. Almost alone among the OECD economies, the US has seen the employment rate (the share of people of working age in a job) go down rather than up. For some groups such as the young, ethnic minorities, and those with poor education the US labour market is a harsh place.
But it is equally preposterous to see the US labour market as a free market hell-hole. International comparisons based on perceptions are always tricky because what is seen as the workplace norm by American workers will not be the same as, say, in British, German or French workplaces. But it is not obvious that US workers are overall more discontented than their European counterparts and on some measures give more positive responses on their workplace experience 7.
The lesson in all this is to look beyond the stereotypes and the more lurid headlines and conclude that there may be more in common between the “Anglo-Saxon” economies and the rest of the OECD than we think. It also suggests that practice is just as important as policy in determining the workplace experience for many workers.
5. For example, US unemployment was between 4 and 5 per cent in 1997, 2007 and 2017.
6. BLS surveys do not suggest that participation in such benefits has fallen since 1999.
7. See for example the OECD “job strain” measure at https://stats.oecd.org/Index.aspx?DataSetCode=JOBQ#. Job strain occurs when workers report they do have the resources to do the job expected of them
Ian Brinkley, Acting Chief Economist
Ian Brinkley has been acting Chief Economist since July 2016. He was previously director of socio-economic programmes at the Work Foundation and held the positions of head of the economic and social affairs department and chief economist at the TUC between 1996 and 2006.