At first glance, Rick Hill and Lauren Dragon seem to have little in common. Hill, 60, has worked for the past decade as a high-paid software engineer, much of the time for Fidelity Investments. He and his wife, who works in marketing and communications, are empty-nesters who own a condo in Boston’s trendy South End, where they enjoy the bustling restaurant scene when not indulging their taste for travel. Dragon, who lives in Haverhill, spends her days assembling circuit boards for $10.45 per hour at Celestica, a multinational contract manufacturer that operates a plant just over the border in Salem, NH. The 48-year-old single mother struggles to cover the rent on the house she shares with two of her four children and worries about getting sick, having been without health insurance coverage for four years.
As much as their lives are worlds apart, Hill and Dragon are linked by a common thread. They are both part of a growing sector of the workforce that operates outside the world of permanent employment. Though he does most of his work for Fidelity, Hill is paid by Veritude, a temporary staffing firm owned by Fidelity, which the mutual funds company uses to fill its own in-house needs for temporary workers as well those of other firms. Meanwhile, the circuit boards Dragon assembles at Celestica are bound for Cisco Systems and other firms that contract with Celestica for production. That already puts workers like Dragon one step removed from the company actually using the fruits of their labor. But Dragon, who had a permanent, full-time job at Andover-based Lucent Technologies until layoffs cast her out during the telecom industry implosion in 2001, doesn’t even draw her paycheck from Celestica. Instead, she’s employed by Adecco, an international temporary-help conglomerate that places and pays workers for Celestica out of a hiring office located right inside the Salem factory.
Dragon of Haverhill have little
leverage with which to barter with
Over the past generation, the employer-employee bond has weakened even for those in standard employment settings, where downsizing has become commonplace and no job, from the shop floor to the management suite, comes with a lifetime guarantee. For others, like Hill and Dragon, it’s a new game entirely, with millions of Americans turned loose and now fending for themselves. Those in this category go by different names – consultants and contractors, temps and contingent workers – that conjure up very different images: They are either masters of their own universe or interchangeable inputs in a brutal new economic order. What they have in common is that, to a far greater degree than for those in the standard world of work, they are on their own.
“Insecurity and flexibility are two sides of the same coin,” says Brad Harrington, executive director of the Center for Work & Family at Boston College’s Carroll School of Management.
This flexibility is welcomed by many workers who seek more control over their lives – a quest that has dovetailed with changes in telecommunications that have made it easier for high-skilled workers to find work arrangements that suit them. Daniel Pink, author of Free Agent Nation, the 2001 bible of the New Economy careerist, calls these changes a liberating force, freeing workers from lives as wage slaves at faceless corporations so they can instead find their inner career selves. He describes a decentralized 21st-century workforce in which it will increasingly be possible to sell one’s services in a vast marketplace that pays well for valuable talent, and to exert control over how and where one works.
But the same change in employer-employee relationships is playing itself out very differently at the lower rungs of the skill ladder, where people like Lauren Dragon have little leverage with which to barter with employers. Meanwhile, the free-agent economy can be tough going even for those with college degrees, marketable skills, and a penchant for working on their own, as they struggle to provide for themselves the same safety-net scaffolding – health insurance, retirement savings – that is eroding in the corporate world as well.
With Americans forced to come to grips with the instability brought on by an increasingly global economy and a corporate culture looking for new ways to boost the bottom line, contract workers represent the “vanguard of insecurity,” says Dallas Salisbury, president of the Employee Benefit Research Institute, a nonprofit Washington, DC-based policy center. He and many others are dubious that the relatively small ranks of “contractor nation” will explode in coming years, as Pink and others have predicted. But nearly everyone agrees they represent the forward battalion of the changing world of work, the shock troops on the new employment terrain where it is growing harder for everyone to find safe cover. “Their experience is an extreme form of what many more Americans are experiencing,” says Yale political scientist Jacob Hacker.
The rise of contractors underlines “how our economy is changing toward more individual risk and reliance,” says Hacker, author of The Great Risk Shift, a forthcoming book that examines the offloading of economic responsibility and risk from employers onto individual workers. “But it’s not the sum of the transformation by any means.” Indeed, it is only part of broader changes that are fundamentally reshaping the way most Americans work.
The period from the Great Depression through the 1960s was marked by the rise of a remarkable set of social and financial institutions that stabilized American life. Social Security provided a base of retirement income for all workers, and the advent of Medicare meant health needs in old age were also taken care of. Employers set up comprehensive health insurance plans for their workers and offered generous pensions, which provided monthly retirement payments for life. Big firms like IBM established a paternalistic culture of employment security, with “no layoff” provisions embedded in corporate policy.
Over the past 25 years, all that has changed. Talk of privatizing some portion of Social Security is center stage in Washington, while so-called “defined benefit” pension plans have been replaced by “defined contribution” plans – essentially tax-deferred savings which are, at best, partially matched by companies and left to employees to invest as they wish. In the decade from 1992 to 2001, the percentage of US households with defined benefit pensions fell by half, from 40 percent to 20 percent.
But perhaps the biggest change of all is the recognition that virtually no job is secure. “To some extent, every job has become more temporary,” says Chris Tilly, an economist at the University of Massachusetts-Lowell. Or, as former US labor secretary Robert Reich says, “Increasingly, what we earn depends on a spot auction for our services.”
In The New Deal at Work, published in 1999, University of Pennsylvania economist Peter Cappelli described the change this way: “If the traditional, lifetime employment relationship was like a marriage, then the new employment relationship is like a lifetime of divorces and remarriages.”
“What’s driving it is the employers’ reluctance to engage in anything that looks long-term or looks like a fixed cost,” says Cappelli, in an interview. “Employers broke the old deal because they didn’t want long-term commitments. But increasingly they don’t want employees at all,” preferring to use temporary-help firms and independent contractors to carry out tasks formerly handled by employees.
Americans working in these increasingly arm’s-length employment situations remain a relatively small proportion of the workforce, though there is disagreement over their true numbers and their rate of their growth. Approximately one-third of US workers are considered to be in some type of “nontraditional” work setting, but most are part-timers. About 10 percent of all workers are categorized as “independent contractors” by the Bureau of Labor Statistics, and another 2 percent to 4 percent are considered “fixed-term workers,” because their jobs have definite termination dates.
These figures have their limitations, and Pink says they greatly undercount the free agent economy. He claims that some people working as contractors report being employees of a firm they are working for, while others who have incorporated in order to limit certain legal liabilities are counted as wage and salary workers, even if they work for a company of one. Moreover, there is plenty of other evidence to suggest that more people are working either full- or part-time under nontraditional terms. The number of tax returns reporting self-employed income doubled from 1970 to 1993, according to Pink. Meanwhile, the temporary-staffing industry accounted for 10 percent of the country’s job growth in the 1990s, despite accounting for only about 2 percent of total jobs, according to MIT economist David Autor.
Though the use of independent contractors is growing, there may be built-in limits. “You get flexibility, but you lose predictability,” says Cappelli. You also lose the accumulated knowledge of systems and procedures in complex corporations – the very reason fixed employment arose in the first place, he says.
Autor is a skeptic of the free agent economy, at least Pink’s futuristic projection of it as a high-tech, project-based bazaar in which the Internet helps buyers and sellers of labor match up and negotiate deals. “I don’t think there’s really an eBay for labor, and I don’t think there’s going to be one,” says Autor. (“Matching buyers and sellers in the labor market is obviously much more difficult than in other less, er, human markets,” Pink admits, in an e-mail.) But Autor does see as significant the growth of labor-market intermediaries, such as temporary staffing firms, that give companies the flexibility of non-employee help. Such firms serve as the employer of record, carrying out screening and human resource functions for their corporate clientele. The share of the workforce in the temporary-help sector increased fivefold from 1983 to 2000, though it still only accounts for 2.6 percent of all workers.
The overall size of staffing agency employment “doesn’t blow anyone out of the water,” says Matt Carlin, the owner of a Needham staffing firm and president of the Massachusetts chapter of the American Staffing Association, a national trade organization. “But when you see it’s 100 percent higher than it was 10 years ago, now you’re talking about a trend.”
Carlin, whose Resource Options Inc. specializes in civil engineering and construction placements, says that companies are reluctant to add permanent positions after the recent recession and they are turning instead to staffing companies for temporary help. “Flexible work staff” is becoming “a real buzzword,” he says.
In another trend, often referred to as “try-buy,” staffing firms are increasingly used not only by companies unsure of their long-range workforce needs, but also by businesses wanting a no-risk peek at a worker’s performance before offering a permanent job. “It’s on the job, real time, [showing] their work ethic and reliability,” says Carlin, whose firm has grown at an annual rate of 125 percent since it was founded in 1999.
Even if the overall numbers remain small, the temp-and-staffing agency approach to employment has penetrated nearly every sector of the economy and every rung of the occupational ladder, from the manual labor jobs and clerical help for which the industry was once mainly known to CFOs, attorneys, and accountants. That has contributed to workers’ sense of insecurity, says Paul Osterman, of MIT’s Sloan School of Management.
“The psychological impact has spread beyond the numbers,” he says.
But for Rick Hill, life as a contract worker has become something to be favored, not feared. When Hill gave up a secure university position in financial administration 10 years ago to pursue a new a career in computers, he took temporary programming assignments through a staffing company while looking for a position in his newly chosen field. A decade later, Hill has yet to land a traditional job, but he’s hardly complaining.
“The more I did it, the more comfortable I became,” he says of the project-based computer work he has done, primarily for Fidelity Investments. With an itch for travel and an aversion to “office politics, the annual review, and the ‘what do you want to be when you grow up’” discussions that come with traditional jobs, Hill and his wife, who is also self-employed, have carved out a comfortable life that suits them well.
“I’ve always been able to hop from one lily pad to the next,” Hill says. “As conscious a decision as there ever is in life, it just felt like a way to lead my life.” Leading his life that way means that he has to be more self-reliant in planning his financial future, Hill says. “You try to build your own little safety net, financial and emotional. Basically, it’s on me.” But he’s not so sure that’s much different than what’s happening in many traditional jobs.
“I’m glad I don’t work for United Airlines,” he says, referring to news this spring that the struggling air carrier was dumping $10 billion of pension obligations. “Those lines, they’re moving closer together,” he says of standard and free-agent employment tracks.
For Jim Howard, the contracting life is “almost turning into a career,” though not of his own choosing. Two years ago, after leaving an engineering position with a Fortune 50 company, the 30-year-old Weymouth resident says he got “tons of calls” from recruiters. “But they weren’t direct hire positions; they were for contractors.”
He’s now on his second such job. Howard says he gets paid very well, loves the work, and has “earned a tremendous amount of professional capital.” Still, he wouldn’t mind the stability of a permanent position. He’s getting health insurance coverage through his wife’s employer, but he would like her to be able to stay home for a while when they start a family.
Companies want a “flexible” workforce.
Managers at his current placement say they would like to hire him, says Howard, but they can’t get approval from their superiors. Meanwhile, Howard keeps running into people who are now working as contractors for firms they were once employees of, sometimes for decades. It’s a common phenomenon, according to labor researchers, who say that, particularly for public companies sensitive to stock-price dynamics, there is pressure to move labor from fixed costs to variable costs, even if the workload hasn’t changed. “They can’t afford to lose the manpower, but they have to clean up the books,” says Howard.
This pressure to outsource work, rather than hire in staff, creates opportunities for independent operators with savvy and entrepreneurial spirit, however. Lyn Murphy, a Norwell training and human resources manager, left her position with Fleet Bank in 2001 to set up her own consulting business. A year and a half ago, she and five other women who knew each other through the banking industry started meeting informally to share tips, referrals, and other wisdom. Since they all have different areas of expertise, the group serves as a something of a clearinghouse for potential jobs, and it can sometimes help a bank find the help it needs on a specific project. “The idea was that we could leverage one another’s lines of business if a client wanted one-stop shopping,” says Murphy. “We didn’t have to be siloed in our business.”
Amy Zuckerman has taken the idea of networking among contractors a step further. In 1990, the former Worcester newspaper reporter decided to trade the rat race of the news business for a go at life as a soloist, focusing on research and writing on global economic issues and strategic marketing services. In the past, that might have meant making a move east to Boston or south to New York, but Zuckerman, who was always drawn to rural living, went west instead, settling first in Belchertown, then in neighboring Amherst. Although long a mecca for college students and twenty-somethings just out of school, the Pioneer Valley had previously not offered a lot of employment options for college-educated professionals.
“Academics and acupuncturists,” says Zuckerman, describing the range of viable professions in the area.
But innovations in technology have changed that. “I moved out here with a PC and a fax,” says Zuckerman, 51. Today, she coordinates marketing reports and other economic forecasting projects via e-mail with a far-flung cast of other consultants. “I’m working with five people as we speak, but I’m alone in my [home] office in Amherst.”
Affordable housing and a comfortable quality of life have drawn hundreds of others to the Pioneer Valley, where a bustling industry of wired workers has quietly taken root, largely in home offices. In 2002, Zuckerman founded Hidden-Tech, a business networking organization geared toward the area’s home-based businesses, which range from marketing, public relations, and editing to software and telecommunications development. In April, Zuckerman was named the US Small Business Administration’s 2005 New England Home-Based Business Champion for her work in forming the group, which now claims some 800 members.
While others fret about the decentralization of work and contracting out of projects, Zuckerman says, “The more the trend is to subcontract, the happier we are, because we’re the ones already doing it.”
While Zuckerman and others have seized on the changes in technology and in the global economy to chart their own course in a more freewheeling world of work, the flip side has been increased efforts by some businesses to shirk employer responsibilities by calling those who do work for them independent contractors, even if they aren’t.
In a study issued last December, researchers from the University of Massachusetts-Boston and the Center for Construction Policy Research at Harvard Law School and Harvard School of Public Health estimated that, from 2001 to 2003, at least one out of every seven construction industry employers in Massachusetts had misclassified workers as “independent contractors” who should properly have been treated as employees. Those firms engaging in the practice had misclassified four out of every 10 workers, the researchers estimated, while at least one of every 20 construction workers overall was improperly treated as an independent contractor.
“It is very hard to argue that someone who operates a large piece of equipment that belongs to a general contractor should be identified as an independent contractor,” says Francoise Carre, of the Center for Social Policy at UMass-Boston, a co-author of the study.
her own course in the Pioneer Valley.
The prevalence of misclassification among Massachusetts construction employers increased nearly 50 percent from the period 1995-97 to 1998-2000, according to the report. Because firms do not pay unemployment insurance and worker’s compensation insurance for independent contractors, this increase has significant implications for those funds, with the UMass-Boston report estimating that the state loses $12.6 million to $35 million annually in unemployment insurance taxes. And because independent contractors tend to underreport their income, the researchers contend both the state and federal governments also lose income tax revenue.
The misclassification problem in the construction industry is far worse in Southern and Western states, says Mark Erlich, business representative for Carpenters Local 40. Nevertheless, he points to a broader pattern marked by the increased use of undocumented immigrants and the flowering of an underground economy. “These employment trends are all melding into one employment perspective, which is simply, ‘We’re going to operate outside the realm of traditional employment relations,’” says Erlich. Employment-avoiding practices in construction, he says, range from “guys who pay in $20 bills from paper bags” to more sophisticated operators who are “all lawyered up” and get workers to sign detailed agreements intended to insulate firms from their obligations as employers.
“It’s not just the ma-and-pa store that’s breaking the law,” says UMass researcher Carre.
Indeed, the most well-known battle over the improper classification of workers took place at software giant Microsoft, where a group of long-term technical workers filed suit in 1992, alleging they were improperly being treated as independent contractors despite meeting the legal tests for what constitutes an employee. The case dragged on for years, but in 2000 the company agreed to settle the case by paying $97 million to the Microsoft “permatemps” who argued, among other things, that they had been improperly denied access to stock options and other benefits accorded to company employees.
A more recent legal fight involves workers who thought they were heading into the entrepreneurial world of independent contractors. Instead, they say, they got the headaches and worries of a small-business owner without the control and freedom that is supposed to be part of the bargain.
After moving from Virginia to Cape Cod three years ago, Randy Azzato donned the uniform of a FedEx delivery driver and steered a truck bearing the company’s familiar logo along a route through the towns of Middleborough, Carver, and West Bridgewater. But he was not a FedEx employee. For $30,000, Azzato purchased the truck and the right to handle package deliveries in southeastern Massachusetts as an independent contractor for FedEx Ground, the parcel post unit of the giant express delivery company. Azzato and other FedEx Ground drivers are now contending that the company directs everything from the precise timing of their deliveries to the maintenance schedule of their trucks – a degree of control that should make them employees, not independent agents.
FedEx has “treated their delivery drivers as independent contractors despite the fact that they are employees under a multitude of legal tests,” says Shannon Liss-Riordan, a Boston attorney who filed a class-action suit in federal court in May on behalf of Azzato and the 17,000 FedEx Ground drivers in the US and Canada.
“They tell you when the truck needs painting, they tell you where the decals go, they tell you when to wash it,” says Azzato, one of four current or former drivers who are acting as plaintiffs in the suit. According to The Wall Street Journal, a state court in California ruled last year that FedEx Ground drivers there were, in fact, employees, and state officials have made similar determinations in Montana and New Jersey.
FedEx Ground spokesman David Westrick insists that the drivers “are not employees” and have “independence to serve their customers in the manner and means that they choose.” He says FedEx plans to appeal the California ruling and will vigorously defend its position in the federal suit filed in Boston.
Meanwhile, Liss-Riordan, an employment law specialist who has zeroed in on the worker classification issue, has sent notice to a Florida-based company that sells office-cleaning accounts to janitorial workers that she intends to file a similar suit on behalf of 13 of its “franchisees.” For franchise fees ranging from $6,000 to $32,000, Coverall Cleaning Concepts promises to set up janitors with accounts that will generate a specified monthly income, depending on the franchise fee paid.
Sandra Vaz Lisboa, a Brazilian immigrant who lives in Everett, was supposed to get accounts grossing $2,000 a month, but she says the most she ever earned in any month was $1,230. Liss-Riordan says her clients allege the company took away accounts from workers for no reason, often shortly after they had finished paying their franchise fees, which Coverall offers financing for. In one case, Liss-Riordan says, the company passed the same account, for the cleaning of two medical clinics, through three different workers, collecting their franchise fees but then declaring the work done by each of them to be unsatisfactory and subsequently taking away the account.
Jacqueline Vlaming, vice president and general counsel of Coverall, says the company does not shortchange franchisees on accounts or take away jobs without cause. “You only lose an account if you do poor service,” says Vlaming, who says such a move is made only if a customer lodges a complaint. “We don’t take accounts away for the fun of it, and we do not churn accounts.” Lisboa, who Vlaming says was offered but refused accounts “well in excess of her package,” is “a very articulate woman. She’s also a very unreasonable woman.”
HIRING WITHOUT RISK
For contractors with skills to offer, like software engineer Rick Hill, banking consultant Lyn Murphy, or Hidden-Tech networker Amy Zuckerman, work untethered from a standard job offers rewards along with risks. There are risks as well for those firms who hire them, since contract workers owe their putative employers nothing, including (perhaps especially) loyalty.
Mark DiSalvo, CEO of Semaphore, a Methuen-based venture capital and management consulting firm, says that businesses must weigh the advantages of hiring a contractor for a discrete period of time against the risk that they could suddenly make their “high intellectual capacity and skill available to other people,” including business competitors.
But for companies hiring temporary workers at the bottom end of the skill ladder, the equation is very different. “There’s no risk,” says DiSalvo.
As Lauren Dragon well knows. After earning $13 to $14 a hour as a union worker at Lucent, where she received company-paid health coverage, vacation, and sick days, she does the same work for $10.45 an hour at Celestica, with no benefits or job security.
“I haven’t had medical insurance since Lucent,” says Dragon, who has let a knee injury she suffered in February go untreated. “I probably should have gone to the doctor and probably should have surgery.”
The job at Celestica was better than nothing, however – that is, until the company announced this spring that it was closing the Salem facility because of cost pressures from overseas manufacturing. (At that time, Dragon was told her last day would be September 30, but then one Friday in June she was told, with no warning, that it was her last day.)
construction workers are
misclassified as independent.
“It just seems like I’m always looking for work,” she says. “I really don’t see how I’m ever going to find a job with medical benefits and anything like that. The days like that are gone.”
That she has little leverage in today’s “spot auction” for labor, as Robert Reich describes it, has become clear to Dragon, even if it pains her to say so. “They can get anybody off the street to come in and do what I do,” she says. “I don’t like to think of it that way, because I try to do a good job.”
Gary Nilsson, president of the Communications Workers of America Local 1365, which today represents less than 200 workers at the Lucent plant that once employed more than 10,000 (see “Out of Order,” CW, Winter, ’02), has watched the brutal efficiencies of a globalized labor market wreak havoc on families in the Merrimack Valley. “The change isn’t good for anybody, unless you’re the CEO,” says Nilsson (though Lucent itself has not fared so well). For companies like Celestica, using a temp firm to staff the production line means “you don’t have to absorb all the so-called headaches that permanent employees bring with them – like benefits, health care, vacation, sick time.”
It’s much the same story for workers at the industrial park on the site of the former Fort Devens military base in Ayer who spend their days packaging Gillette razors and other personal care products. The largely Hispanic workforce doesn’t toil directly for Gillette, but rather for two packaging firms, South Carolina-based Sonoco and New Jersey-based Markson Rosenthal, which operate on the site. And, like Lauren Dragon and other workers at Celestica, many at Devens don’t actually work for Sonoco or Markson Rosenthal, but are hired by temp firms.
Gillette’s “just-in-time” fulfillment system for shipping products to retailers, which it calls “postponement packaging,” earned the company a Supplier of the Year award in 2002 from Wal-Mart, which is famous for the efficiency demands it puts on suppliers. But all that efficiency means that working as a packager of Gillette razors is not nearly as smooth as using them.
“[It] enables [Gillette] to only pay for employees for the demand there is for that week,” says Loren McArthur, an organizer with the Merrimack Valley Project, a community organization leading a campaign for better conditions, including more permanent positions with benefits, for workers in the Gillette supply chain. “Some of the folks don’t know…if they’re going to work the next day,” he says. “That’s not flexibility for the worker, that’s flexibility for the company.”
NEW NEW DEAL?
Whether for good or ill, employment relations have changed – at the margins, perhaps, but working toward the middle. If those on the front line of the free agent economy – some enjoying life there, others not – have found themselves without a safety net, the rest of us are not far behind.
“We’ve got to update our institutions to account for this new reality,” says MIT economist Thomas Kochan. For decades, we relied on employers to provide a range of benefits that help make up the social safety net. “Today we’ve said, ‘Well, the employer may not necessarily have to do this.’ But we haven’t substituted any other institutions.”
That void is what Sara Horowitz is hoping to fill. Ten years ago, the Brooklyn-born lawyer founded Working Today, a New York-based organization promoting the interests of independent workers. Horowitz comes from a long line of labor union leaders – her grandfather was a vice president in the garment workers’ unions, her father a labor lawyer – and she worked as a labor lawyer and organizer for the Service Employees International Union. But as she saw more and more people working without formal ties to large employers, Horowitz recognized a need to think differently about the challenges facing less job-bound workers.
“I really wanted to figure out what would be the next form of unionism beyond craft and industrial models,” says Horowitz. “Just as the nature of employment changed, from craft to industrial to computer-based, workforce organizations have to change.”
Unlike some members of the union movement, she’s not trying to hold back the tide of change in the structure of work; she’s trying to recreate the safety net to take account of that change. Horowitz wants to force onto the public agenda a wholesale reexamination of how to offer protections to workers while allowing for the flexibility and nimble movement that global competition demands of business – and that some workers are embracing.
Working Today has helped to develop health insurance for independent workers. About 6,500 New Yorkers are now covered through health plans offered through the organization, with single people able to obtain coverage for less than $200 per month – a benefit that seems to loom above everything else in the minds of independent workers.
“It’s huge,” says Lyn Murphy, the bank training manager who started her own consulting business in 2001. She says many people – including herself – are able to work independently only because they have coverage through the health plan of a spouse with employment-based insurance.
Hidden-Tech founder Amy Zuckerman says the $400 per month she pays in health insurance premiums is part of why she’s tightening her belt and trading her Amherst house for a condo. “Just to carry me is $5,000 a year. That takes a toll,” she says.
“Welcome to middle-class poverty,” says Horowitz, reprising the line used by her group in New York City subway ads designed to call attention to the plight of professionals working outside the structure of standard employment. “So many people, if formally educated, feel they are middle class, but their economic life isn’t,” says Horowitz. “Health insurance makes no sense. That private employers deliver it – it’s ludicrous. The way we set up pensions is crazy, that you can’t lump people together for pensions unless [through] an employer.”
There is “no vision of how to have a competitive economy that protects its workers from the unilateral restructuring that management claims is necessary. I think that’s the dilemma,” says Cappelli, the University of Pennyslvania economist.
For a time in the late 1990s, says carpenters’ union official Erlich, people saw the trend toward contract work as an “opportunity to write their own ticket, drink Starbucks in their bathrobe” while working from home. “You didn’t worry about benefits because you were going to make so much money.” With an economy that has soured, health care costs that have soared, and companies offloading more and more economic risk onto workers, “the chickens have come to roost,” says Erlich.
Take the Business Week headline of May 16: SAFETY NET NATION: WHY SO MANY AMERICANS AREN’T BUYING INTO BUSH’S OWNERSHIP SOCIETY. So much for the go-it-alone ethos driving the policy mill in Washington.
The tension underneath the debate over our economic angst, says Reich, is between the flexible workforce that has driven the productivity advances of recent years and the economic backstop that would provide assurance to workers and their families. “In the trade-off between dynamism and security, we still opt for dynamism more than, say, Europe or Japan,” Reich says of Americans. “But we want more security than we have now.”Nationally, neither the Republicans nor the Democrats seem to have it right, says Horowitz. She bemoans the Democratic inclination to reach back to the traditional structure of work-based benefits that is increasingly a poor fit for the economy – and the workers – of today. Meanwhile, she thinks the Republicans have it right in embracing a more portable, individual-based system of health care and retirement provision, but wrong in their reluctance to provide reasonable safeguards for all. For Horowitz, the more things change, the more there will be a need for a new kind of safety-net structure – though what it will be is still unclear.
“The New Deal didn’t come out of a vacuum,” she says, “and neither will this.”