The Changing WorkplaceThe Changing Workplace

This chapter takes a systematic look at the external and governmental forces changing the workplace.

ChapterChapter 17

Ford Motor CompanyOpening Case

1908 to 1926 – millions of Model T’s sold. 1927 – Failure to observe market trends forced

the plant to close for 7 months while the Model A was designed.

1941 – Henry Ford’s treatment of his employees led to unionization.

Early 1980s – disastrous losses due to heightened international competition.

1985 to 1995 – Taurus rejuvenates profits. 1994 – Alexander Trotman starts Ford 2000.

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Ford Motor CompanyOpening Case (continued)

Although profit performance was strong, Ford 2000 failed to make Ford a more dominant competitor.

1999 – Jacques Nasser attempts to diversify Ford’s workforce.

2000 – Ford Explorer tire failures cause disaster.

2001 – Henry Clay Ford, Jr. restructures. 2002 to present – thousands of layoffs,

outsourced work to Mexico, China, and India.

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This short history of Ford Motor Company illustrates how forces in the business environment have shaped the work lives of Ford employees.

External Forces Changing the Workplace

Demographic change Technological change Structural change Competitive pressures Reorganization of work Government intervention

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Demographic Change Population dynamics slowly but

continuously alter labor forces. The number of workers in some demographic

categories is growing faster than in others, producing incremental but significant changes. Hispanics and Asians are increasing their

numbers faster than whites and blacks are. Since the 1970s women have increased their

participation more rapidly than men. The workforce is aging.

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Technological Change

Technical change has many impacts on work. It affects the number and type of jobs

available.

Automation has a turbulent impact on employment. Automation causes significant job loss in

less-skilled manufacturing and service occupations.

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Structural Change Structural change is caused by processes of job

creation and job destruction that continuously alter the mix of productive work in every economy.

Three long-term structural trends: The agricultural sector has declined from

predominance to near insignificance as an occupation. The percentage of workers employed in the goods-

producing sector is now in long-term decline. There is explosive growth in the service sector.

Structural change is a critical factor in the decline of labor unions.

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Historical Trend Lines for Employment by Major Industry Sector, 1800 to 2012

(Projection)

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Competitive Pressures Recent trends have intensified competition for

American companies. Customer demand Deregulation of large industries Foreign competition

By global standards, American workers are extremely expensive. Companies in some industries now contract to

have manufacturing done in a foreign country.

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Reorganization of Work Corporations alter business processes as they

adjust to environmental changes, primarily competition.

As transport costs have fallen, manufacturers more often separate production from consumption by sending their manufacturing to low-cost countries, then shipping products back to customers.

Because of communication technology, service work can now be sent to low-cost locations.

Trade in services between nations is growing, creating fears about job loss from outsourcing.

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Reorganization of Work (continued)

Only in 2004 did the Bureau of Labor Statistics begin to measure outsourcing. Its initial calculation was that in the first quarter

of 2004, out of 239,000 workers who lost their jobs in mass layoffs, only 4,600 were unemployed because their work left the country.

This is a small fraction of job loss and affects a microscopic element of the labor force.

For corporations, outsourcing cuts costs, raises margins, and promotes growth.

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Development of Labor Regulation in the United States

Historically, a strong laissez-faire current in American economic philosophy made governments at all levels reluctant to interfere with the employment contract.

Today, government intervention is extensive and growing, but this is a twentieth-century trend.

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Liberty of Contract Before the 1930s, government intervention on

behalf of workers was very limited. In the late 1800s and early 1900s, strong

majorities on the Supreme Court upheld the liberty of contract doctrine. The great flaw in the liberty of contract doctrine

was that it assumed equal bargaining power for all parties, whereas employers unquestionably predominated.

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Waves of Regulation First wave – federal workplace regulation in the

1930s, which established union rights. Second wave – between 1963 and 1974, moved

federal law into new areas, protecting civil rights, worker health and safety, and pension rights.

Third wave – between 1986 and 1996, again broadened the scope of federal law to address additional, and somewhat narrower, employment issues.

State courts and legislatures have created additional rules.

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Erosion of the Employment-at-Will Doctrine

Employment-at-will was traditionally defined as an employment contract that could be ended by either party without notice and for any reason – or for no reason.

Federal and state laws take away the right to fire employees for many reasons, including union activity, pregnancy, physical disability, race, sex, national origin, and religious belief.

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Erosion of the Employment-at-Will Doctrine (continued)

In addition, state courts have introduced three common-law exceptions to firing at will: Employees cannot be fired for complying with

public policy. Employees cannot be fired where an implied

contract exists. Courts in 11 states limit the employer’s ability to

fire when an implied covenant of good faith is breached.

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Work and Worker Protection in Japan

Elsewhere in the developed world, workers benefit from similar and even greater welfare guarantees than in the U.S.

Japanese males, called salarymen, enjoy virtual lifetime employment in major firms. Japanese workers are very committed and

sometimes work themselves to illness or death. In Japan, the centuries-old Confucian tradition

of harmony in relationships prevents a labor-management fissure, therefore unions never grew strong and unified.

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Work and Worker Protection in Europe

In the aftermath of World War II, many countries adopted a social welfare model of industrial relations to protect their populations against the ravages of depression and unemployment.

Forces of global competition now strain this social welfare model.European workers are so expensive to employ that job-creating investments go elsewhere.

In much of Europe, the results of lavish social safety nets and protections are persistent, high unemployment and slowed economic growth.

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The Trade-off in Labor Regulation

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Observations about Labor Regulation

The bare minimum for labor market regulation is compliance with four core labor standards set forth in international labor conventions. Eliminate all types of forced labor. Abolish child labor. Ensure equal opportunity and nondiscrimination. Guarantee collective bargaining.

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Concluding Observations The combined impact of the six forces

changing the workplace creates both uncertainty and opportunity.

Perhaps the most critical factor in determining both the experience of workers and the success of economies is the balance a government strikes between protecting labor and allowing adjustment to competitive forces.

In many nations there is pressure to revise labor laws, weakening protections and social welfare for workers.

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