CHAPTER SEVENTEEN
The Fall of the Blue-Collar Worker
WHETHER HIGH-PAYING JOBS are growing or declining in the American economy is being hotly debated. But as important as the numbers is the fact that the new high-paying jobs are not where the old ones used to be.
For 30 years, from the end of World War II to the mid-1970s, high-paying jobs in all developed countries were concentrated in unskilled blue-collar work. Now a majority of the new high-paying jobs are in knowledge work: technicians, professionals, specialists of all kinds, managers. The qualification for the high-paying jobs of 20 years ago was a union card. Now it is formal schooling. The long and steep rise of the “working man”—in numbers, in social standing, in income—has turned overnight into fast decline.
There is no parallel in history to the rise of the working man in the developed countries during this century. Eighty years ago American blue-collar workers, toiling 60 hours a week, made $250 a year at most, or one-third the price of that “low-priced miracle,” Henry Ford’s Model T. And they had no “fringes,” no seniority, no unemployment insurance, no Social Security, no paid holidays, no overtime, no pension—nothing but a cash wage of less than one dollar a day. Today’s employed blue-collar worker in a unionized mass-production industry (steel, automotive, electrical machinery, paper, rubber, petroleum) working 40 hours a week earns about $50,000 a year—half in cash wages, half in benefits. Even after taxes, this equals seven or eight new small cars, such as the South Korean Excel, or 25 times the worker’s 1907 real income (if food were used as the yardstick, the increase would be even larger). And the rise in social standing, and especially in political power, has been greater still.
Society’s Stepchildren
And now it is suddenly all over.
There also is no parallel in history to the abrupt decline of the blue-collar worker during the past 15 years. As a proportion of the working population, blue-collar workers in manufacturing have already decreased to less than a fifth of the American labor force from more than a third. By the year 2010—less than 25 years away—they will constitute no larger a proportion of the labor force of every developed country than farmers do today—that is, a twentieth of the total. The decline will be greatest precisely where the highest-paid jobs are. Blue-collar automobile employment in the U.S., 15 or 20 years hence, will hardly be more than half of what it now is, even if there are no imports at all—and automobile blue-collar employment is already down 40 percent from its peak, less than 10 years ago. No wonder the unions do not regard the fast growth of high-paying knowledge jobs as a compensation for the steady decline in the numbers, power, prestige, and income of their constituents. Yesterday’s blue-collar workers in manufacturing were society’s darlings; they are fast becoming stepchildren.
This transformation was not caused by a decline in production. U.S. manufacturing output is steadily expanding, growing as fast as gross national product or a little faster. The decline of the blue-collar worker is not a matter of “competitiveness,” of “government policies,” of the “business cycle,” or even of “imports.” It is structural and irreversible.
There are two major causes. First is the steady shift from labor-intensive to knowledge-intensive industries—e.g., a drop in pouring steel and a steady rise in making pharmaceuticals. All the growth in U.S. manufacturing output in the past two decades—and it has about doubled—has been in knowledge-intensive industries. Equally important is the worldwide spread in the past 40 years of two American inventions (or discoveries), “training” and “management.” In a complete reversal of all that economic history and theory had taught, these two methods enable a country with the labor costs of an “underdeveloped” economy to attain, within a very short period, the productivity of a fully “developed” one.
The first to understand this were the Japanese after World War II. By now everybody does—the South Koreans, for instance, or the Brazilians. The most telling example are the maquiladoras, the plants on the Mexican side of the U.S.-Mexican border, where unskilled and often illiterate people produce labor-intensive parts and goods for the U.S. market. It takes three years at most for a maquiladora to attain the labor productivity of a well-run American or Japanese plant even in turning out highly sophisticated products—and it pays workers less than $2 an hour.
This means that manufacturing industry in developed countries can survive only if it shifts from being labor-intensive to being knowledge-intensive. Machine operators getting high wages for doing unskilled, repetitive work are being replaced by knowledge-workers getting high wages for designing, controlling, and servicing process and product, or for managing information. This shift also fits in with demographics. In every developed country more and more young people, and especially young males, stay in school beyond the secondary level and are no longer available for blue-collar jobs, even for well-paying ones.
These are changes so sharp and so sudden as, for once, to deserve being called “revolutionary.” Yet their impact is different from what everyone expected, and different also from what economic and political theory had taught.
This applies particularly to U.S. unemployment. In Britain and Western Europe the decline in blue-collar jobs in manufacturing has indeed, as unions predicted, resulted in stubborn unemployment. But in the U.S. the decline has had marginal effects at most. Even the massive job losses in the steel and automotive industries have barely left a trace in national unemployment rates. To be sure, the current 6½ percent unemployment rate for both adult men and adult women is probably somewhat above the rate of “natural unemployment” (the rate needed for normal job changes)—but not by much, considering the age structure of the working population. And the 4½ percent unemployment rate for married men is, if anything, below the natural rate and constitutes virtual “full employment.” “Hidden unemployment”—that is, people who have given up looking for a job—is very big in union propaganda but probably quite scarce outside of it. A larger proportion of American adults than ever before in peacetime history—almost two-thirds—is in the labor force and working. One explanation for the low unemployment rates is surely that American workers are singularly adaptable and mobile—far more so than anyone would have thought possible. But, equally significant, blue-collar labor in manufacturing may also have already shrunk to a point where it only marginally affects total employment and unemployment rates, consumer spending, purchasing power and the economy as a whole. This would mean that we should stop looking at manufacturing employment as the economy’s bellwether and should look at manufacturing output instead; as long as its volume continues to rise, the industrial economy is healthy almost regardless of employment.
Equally novel is the behavior of wage costs in the U.S. That unions give priority to the maintenance of nominal wages rather than accept lower wage rates to gain higher employment has been one of the axioms of modern economics. It still holds in Europe. But America’s unions have shown an amazing willingness to make sizable concessions on wages—and even on work rules—to prevent plant closings and massive layoffs. In the U.S., at least, the principal cost-rigidity inhibiting the “self-correction” of a market economy surely no longer lies in wage costs (as economics has assumed since Keynes) but in the cost of government.
Every labor economist and every labor leader would have expected the decline of the blue-collar worker to lead to “labor militancy” on a grand scale. Some politicians still expect it—for instance, the Rev. Jesse Jackson in the U.S., the “Militants” in the British Labor party, and the “Radicals” among the German Social Democrats. But so far there has been labor militancy in only one developed country: Canada. Elsewhere there is much bitterness among the rank and file. But it is the bitterness of resignation, of impotence rather than of rebellion. In a way, the blue-collar worker has conceded defeat.
And this may underlie the most startling, and least expected, development: the political one. It is almost an axiom of politics that a major interest group actually increases its political clout for a long time after it has begun to lose numbers or income. Its members join ranks, learn to hang together lest they hang separately, and increasingly act and vote in concert. The way in which farmers in every developed country have maintained political power and increased their subsidies despite their rapid decline in numbers since World War II is a good example.
Political Strength Eroded
But though it is only 10 or 15 years since the decline of the blue-collar workers first began, their political strength has already been greatly eroded. In the midst of World War II, John L. Lewis of the United Mine Workers defied the country’s most popular president—and won. Thirty years later, another coal miners’ leader—this time in Britain—forced a prime minister to resign. But in 1981 President Reagan broke the powerful and deeply entrenched air traffic controllers union; and a few years later British Prime Minister Margaret Thatcher broke the union that had driven her predecessor into political exile. And both President Reagan and Prime Minister Thatcher had overwhelming popular support. The labor vote may still be needed for a “progressive” candidate to be nominated. But then, in the election, labor’s endorsement has become a near-guarantee of defeat, as shown by Walter Mondale’s debacle in the U.S. presidential election of 1986, by the German election this January, and by numerous British by-elections.
In little more than a decade before World War I, the blue-collar worker rose from impotence to become a dominant economic and social power in Western Europe, and his party the largest single political factor. The U.S. followed suit 10 years later. This transformed the economy, the society and the politics of every developed country, transcending even two world wars and tryannies beyond precedent. What then will the decline of the blue-collar worker—and its counterpoint, the rise of the knowledge-worker—mean for the rest of this century and the next one?
[1987]