Rick Wartzman discusses his new book: The End of Loyalty, The Rise and Fall of Good Jobs in America.
The previous generation of American workers had a different relationship with their employers than the workers today. Many skilled-labor employees stayed with one company for the long haul, earning solid wages, good benefits and a pension in exchange for loyalty and hard work. But those days are long gone, notes Rick Wartzman. The reduction in salaries, retirement, health care and other perks has prompted a breakdown in the relationship between employee and employer, a problem that Wartzman focuses on in his book, The End of Loyalty: The Rise and Fall of Good Jobs in America. Wartzman, a Pultizer Prize-winning former journalist who is a senior adviser at the Drucker Institute, joined [email protected] to talk about the new state of the American worker on the [email protected] show, which airs on SiriusXM channel 111.
The End of Loyalty: The Rise and Fall of Good Jobs in America by Rick Wartzman
An edited transcript of the conversation follows.
[email protected]: Do you expect that this relationship between employee and employer is going to continue to have this divide?
Rick Wartzman: There are a lot of pressures that we’ve seen building over the last 30, 40 years, and I don’t see them abating anytime soon. Everything from the pressures of automation and technology, globalization and the decline of unions. We now have less than 7% of the private-sector workforce in America that is part of organized labor, which served as a great counterbalance to corporate power through the 1940s, 1950s and 1960s. That’s no longer there. Also, there’s this incredible pressure to maximize shareholder value, pressure from Wall Street that has explicitly put stockholders above all other stakeholders, including workers. I don’t see any of that changing anytime soon, unfortunately.
[email protected]: When did this shift kick into gear?
Wartzman: You can see it really kick into gear in the early to mid-’70s. There were some big shocks to the U.S. economy that exposed a lot of fundamental weakness that had built up in previous decades. That left a lot of companies scrambling and their workers in a much worse-off place. A lot of the downsizing that followed those things never reversed. So, that was the big shock.
What surprised me in doing the research in my book — and my narrative arc goes from the end of World War II up until today — was how these pressures actually started building much earlier than I imagined. The social contract, as I describe it — job security, pay, health care benefits provided by companies, good pensions — those things were still sort of improving and on the upswing through the 1950s and 1960s. But by the late 1950s, the early seeds of the unraveling of the social contact were already being planted.
“Corporate culture is a kind of reflection of our national culture and societal norms.”
[email protected]: Is it partly that as the generations have changed, so have the expectations?
Wartzman: I think very much. One of the other things that really jumped out at me in doing the research was how much cultural norms have shifted in America, and in turn how much corporate cultural norms have shifted. Corporate culture is a kind of reflection of our national culture and societal norms. You had a generation that came through the Great Depression and World War II and there was definitely much more of a “we” mindset, we’re all in this together. I think there’s much more of an individualistic, “I” mindset that began to set in by the 1970s, 1980s and prevails today. That’s certainly part of what’s going on here.
[email protected]: What impact did the recent recession play on the narrative that you’re bringing forward in the book?
Wartzman: Again, it sort of exacerbated a lot of the anxiety that workers had. One of the phenomenon that we have seen is that for the last three recessions, you’ve had this so-called jobless recovery. What used to happen is that there would economic ups and downs, normal fluctuations in the business cycle. When businesses would lay people off, they would typically bring them back to their factory jobs when business recovered. In fact, it wasn’t until the mid 1980s that the Department of Labor began to even track what it called displaced workers.
Beginning in the 1980s you began to see massive downsizing that really picked up in the 1990s. And then each recession becomes something where employers are not looking to bring folks back after the economy recovers. They restructure in the interim and realize, we can do more with fewer hands. And those jobs often never come back.
[email protected]: Then is the goal now of both business and government to try to avoid recession?
Wartzman: Maybe. I’m not an economist. I’d leave that to brighter minds at Wharton and elsewhere. What I can tell you as a historian is there have been times where people in Washington, particularly, think that they’ve licked the business cycle. They’ve figured out how to conquer recession and through the levers of fiscal and monetary policy make it so that recession won’t ever come again. And it always comes again, or at least it always has come again. I’m skeptical that we’ll ever be able to reverse that. History just suggests otherwise.
[email protected]: In the book, you look at these issues surrounding the labor force and jobs through the eyes of four well-known legacy brands over the last 70 years: General Motors, General Electric, Kodak and Coca-Cola. Why those four?
Wartzman: I picked those four companies for a couple of reasons. One is my book starts in 1943, shortly after the founding of an organization called the Committee for Economic Development. The CED is still around today. It’s part of The Conference Board now. But it was a leading business voice, along with the National Association of Manufacturers and the U.S Chamber of Commerce, back in the 1940s. But it was a much more moderate voice in terms of its politics and ideological orientation than some of the other more hard-line business groups. At the end of World War II, the leaders of the CED set out a vision for what America should look like in the post-war economy and society.
“We have moved from a blue-collar society to a knowledge society, a knowledge economy.”
Those four companies were all instrumental in the founding of the CED. Just as a narrative device, it was a great place to begin with these titans of industry who led the companies back then. I have them begin the book and lay out their vision for what America should look like.
[email protected]: Let’s start with Kodak. If you go back 40, 50 years, it was as powerful and strong a company as there was in the United States. Their attempt to transition to the digital economy failed. Is that the biggest element that really impacted Kodak?
Wartzman: It was, ultimately. Kodak is credited with inventing the digital camera but could never quite wean itself off film. I talked to a number of former executives there who said that the fat profit margin of film was like a narcotic.