The Agenda

Virginia Postrel Makes the Case Against Job Security

The Pew Research Center has a longstanding interest in the idea of the middle class and how it has evolved over time. In late August, Pew released a survey which found that a large majority (86%) of Americans believe that job security is a crucial part of belonging to middle class:

Nearly nine-in-ten adults (86%) say a person needs a secure job to be considered part of the middle class, while just 45% say the same about owning a home, 37% about a college education and 28% about financial investments.

Of the five items tested in the survey question, the only other one seen as essential to a middle-class lifestyle by a majority of the public is health insurance—which for many Americans comes through one’s job. Two-thirds of adults say it’s an essential ticket to a middle-class life. 

Virginia Postrel’s latest column for Bloomberg View reflects on what this might mean for American society:

Working for a living has long defined the middle class, as opposed to rentier aristocrats or the dole-dependent or profoundly insecure poor. But a lot of other assumptions are baked into the term “secure job.” It seems to exclude from the middle class everyone who doesn’t draw a regular paycheck from a single organization — the self-employed (about 11 percent of the workforce), the retired, housewives, students — as well as employees on limited-term contracts. As a self-employed writer who doesn’t have “a job,” let alone a secure one, I found the word choice striking.

Postrel draws on Chicago Booth economist Steven Davis’s finding that the job security that many Americans see as central to a middle-class lifestyle has only became fairly common fairly recently:

Contrary to many news-media claims, U.S. employees had enjoyed several decades of rising job security before the 2008 crisis. In a 2008 American Economic Review article, economist Steven J. Davis of the University of Chicago’s Booth School of Business examined many different data sources and found the same pattern in all of them: “American workers face lower risks of job loss in recent years than 10, 20, or 30 years earlier.” That security has now disappeared, and people are anxious.

And so Postrel anticipates that political entrepreneurs will soon seek to capitalize on the public’s longing for job security by imposing new labor market regulations designed to protect incumbent workers. The end result, she suggests, would be something like the labor market for professors, in which a two-tiered system has emerged with relatively well-compensated tenured and tenure-track faculty on one side and a vast reserve army of contingent faculty on the other.

South Korea is an example of a society in which job security for some has exacerbated job insecurity for others, as a dispatch from The Economist reported last December:


Among the young, the proportion of jobs that are part-time has exploded from 8% in 2000 to 23% in 2010; the proportion of workers under 25 on temporary contracts has leapt from zero to 28%. This is partly because cash-strapped companies are backing away from the old tradition of lifetime employment, but also because many young people do not want to be chained to the same desk for 30 years.

According to TNS, a market-research firm, Koreans are markedly more fed up with the companies they work for than people in other countries. Only half would recommend them as a good place to work, compared to three-quarters of TNS’s global sample. Only 48% think they receive suitable recognition, as individuals, for their work, compared with 68% of workers in supposedly collectivist China. Only Japanese workers are more disgruntled.

Despite these gripes, 79% of Korean workers expect still to be working for the same employer in a year’s time. TNS speculates that this attitude reflects the difficulty of switching employers rather than genuine loyalty; it talks of “captive” employees.

Such averages mask wide variation, of course. Some highflying Korean salarymen feel intensely loyal to their employers and are prepared to slave long hours to help them conquer new markets. But this inner circle is quite small: the chaebol employ only 10% of the workforce.

One alternative to pursuing the chimera that is job security for all is working towards a new “flexicurity” model — not the Danish model, but rather a model in which workers own and control their own benefits, are engaged in lifelong learning, and have multiple revenue streams, not just wage income from a single employer.


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