The Social Organization of Work (The Sociology Reference Guide Series)

SOCIOLOGY REFERENCE GUIDE THE SOCIAL ORGANIZATION OF WORK The Editors of Salem Press SALEM PRESS Pasadena, Californi...

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SOCIOLOGY REFERENCE GUIDE

THE SOCIAL ORGANIZATION OF WORK

The Editors of Salem Press

SALEM PRESS Pasadena, California • Hackensack, New Jersey

Published by Salem Press Copyright © 2011 by Salem Press

All rights in this book are reserved. No part of this work may be used or reproduced in any manner whatsoever or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission from the copyright owner except in the case of brief quotations embodied in critical articles and reviews or in the copying of images deemed to be freely licensed or in the public domain.

ISBN: 978-1-42983-462-9 Includes bibliographical references and index. Indexing Subjects 1. Sociology 2. Organizational Behavior

First Edition

Contents

Introduction

1

Taylorism, Fordism & Post-Fordism

4

Labor Theory: Division of Labor

16

Work in the Post Industrial World

27

The Rise of Multinational Corporations

38

Corporate Capitalism

46

Microfinance

56

Corporate Social Responsibility

67

The Organization-Worker Relationship

76

Labor Unions

87

Wages & Compensation

98

Diversity in the Workplace

109

Telecommuting

123

Workplace Design

132

Layoffs & Downsizing

141

Unemployment & Underemployment

151

Undocumented Workers

161

Terms & Concepts

176

Contributors

190

Index

192

The Social Organization of Work

iii

Introduction

Sociology has long examined the economic and social mechanisms that circulate the workplace. Today, the study of these fields requires an understanding of how local social dynamics intersect with economic and social conditions in transnational areas. The Sociology Reference Guide series is designed to provide a solid foundation for the research of various sociological topics. In this volume, the contemporary landscape of business labor is framed by two important developments represented by the transformation of global corporate capitalism and by the economic downturn in the first decade of the twenty-firstcentury. The developments in global markets are, of course, concomitant with a restructuring of labor in the United States. The essays in this volume discuss the general issues in today’s multinational and corporate structures, the changes encountered by workers and labor unions, and the overall stability of the American workforce. The introductory essays by PD Casteel and Sharon Link analyze the modern economy and the ideas behind popular “production” and “manufacturing” philosophies of post-industrial society. As Link observes, the most riveting aspects of the modern workforce are the “different kinds of work now available that never existed even twenty years ago.” In her essay, Francis Duffy establishes the different types of corporate entities that exist today and outlines the effects that such corporations have on the The Social Organization of Work

1

labor force and the economy at large. As corporations increasingly develop international ties, the relationships present new responsibilities and challenges that are unprecedented. The new corporate geography, according to Samantha Christiansen and Sherry Thompson, highlights the importance of microfinance and social responsibility. Thompson notes: “For the past decade, corporations have [invested] in Corporate Responsibility activities which portray them as caring and contributing members of the communities in which they are located.” The volume’s focus then turns to the localized conditions of labor. Thompson provides, appropriately, a transitional essay as she examines the relationship between corporate organizations and the workforce. As she clarifies, there are many ways to meet the challenges of today’s markets, namely with the “Leadership Theory.” Duffy then turns to the topics of labor union membership, which once represented a large percentage of the workforce. Due to “massive structural shifts in the economy,” among other changes, the efficacy and popularity of these unions are being challenged. In an essay that is tied closely to the subject of labor unions, Casteel summarizes the topics of wage and compensation and how workers understand and deal with the changing forms of remuneration. Perhaps the most significant change in the workplace is the ever-increasing prominence of telecommuting (a term that defines a new field and new language of work) and the general collaboration of work that is made possible by technological advances. In two essays, Ruth A. Wienclaw details the labor atmosphere both in and outside of the workplace as represented in the topics of telecommuting and workplace design. The final essays showcase the struggles that a typical workforce faces when dealing with economic downturns or industry revisions. As demonstrated throughout the volume, economic changes occur at every level, and they can often result in leaving large portions of the workforce displaced from their jobs. Duffy dissects the specific conditions that can lead to unemployment both in good and bad economies. The concluding essay then turns to another controversial outcome of an ever-changing economy: the mass movements of workers across the globe. Undocumented workers, explains Matt Donnelly, are quickly becoming a prominent presence in every major market, thereby raising considerable concerns regarding the economy, society, public policy, and security. 2

Sociology Reference Guide

Taken as a whole, these essays reveal how the labor force of the United States and its growing connection to transnational conditions present challenges to the very nature of a healthy workforce and economy. Complete bibliographic entries follow each essay and a list of suggested readings will locate sources for advanced research in the area of study. A selection of relevant terms and concepts and an index of common sociological themes and ideas conclude the volume.


3

Taylorism, Fordism & Post-Fordism PD Casteel

Overview In 1878, a young American engineer named Frederick Winslow Taylor (1856-1915) moved his apprenticeship to the Midvale steel works on the industrial fringes of Philadelphia. The Midvale workers were paid piecemeal. Ideally, this meant that the more a worker produced the more they got paid. In practice this meant that each time a worker earned too much, in the eyes of the employer, the piecemeal rate would be cut for all workers (Donkin, 2001). The result was that workers began to harmonize their efforts to limit production and produce only enough to prevent further cuts and stay out of ‘trouble.’ Taylor was amazed at the level of creativity, expertise, and labor that went into achieving this golden mean of unproductivity. At first he began to address the problems at Midvale in a traditional manner: he fired unproductive employees. When the new employees were equally as unproductive he cut the piecemeal rate. This only entrenched the Midvale workers deeper into the behaviors Taylor was attempting to break down. When Taylor turned to management for support he found he could not sway the “old hand” that his new ideas would work (Donkin, 2001). If Taylor was going to change the behavior of the workforce he had to better understand the work processes in order to sway management. With the approval ownership he began a series of scientific experiments of breaking 4


down the processes of the plant into smaller simple tasks and using a stopwatch (the latest technology) to record the time of performing a task in various ways. These experiments, though not the first of their kind, would become the basis of new work practices at Midvale, two books of scientific management and the beginning of modern business management. Henry Ford (1863-1947) was the founder of Ford Motor Company. His big idea was that work, previously conceived of as only a sustenance act, could be improved with technology to become the mechanism that set people free to live their own lives (Donkin, 2001; Ford & Crowther, 2005). At the core of this thinking was that manufacturing should be efficient enough and workers paid enough that a worker could afford to purchase the products they produce. Ford believed a degree of prosperity should come from a workers “honest effort” (Ford & Crowther, 2005). How Ford developed the practice of mass production did make it possible for a Ford assembly line worker to afford the purchase of a Ford automobile. It also changed how products were produced, workers were trained and worked, and how management functioned. For nearly a century Taylorism and Fordism combined to construct the predominant rules of production and manufacturing employment in America. Large companies used well paid employees performing repetitive fairly simple tasks on assembly lines to produce complex though largely standard products. This formula not only created affordable products for the American market, but also created the consumer class that these products needed to be profitable. The expansion of American prosperity, previously isolated to the industrial barons of the late nineteenth century, was shared with more people than ever before and the American middle class expanded rapidly. Unfortunately, capitalism and the Taylorism/Fordism paradigm did have its shortcomings. As Marx predicted, capitalism has its periods of crisis. One of these crises is recessions and depressions. The American depression was devastating to manufacturers and workers. It really isn’t surprising that the depression was followed by an era of regulation. American employers and workers wanted some assurance that such a total collapse wouldn’t happen again. Another crisis emerged when large manufacturing companies started to back-track on the Ford’s idea that workers The Social Organization of Work

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should be paid well. The response to this crisis was the rise of the American worker’s unions. Unions helped workers ensure a living wage and job stability. However, with the demise of unions in the late part of the twentieth century and the “interchangeability” of low paid unskilled workers the American economy faced another crisis, one of the contradictions of capitalism, of which Marx warned (Friedman, 1961). As companies cut back on workers wages in order to make greater profits, workers became less capable of purchasing the products they produced. This meant the market for goods produced would shrink. The response to this crisis has been to globalize production. In this way lower wages are moved to another consumer market in which the wages are relatively high. In turn, America and other Western post-industrial countries have developed new service industries, including the enormous financial industry, to provide new jobs and strengthen the consumer pool. In a very real sense this is just a way of deferring the contradiction of capitalism until a time that the rest of the world’s labor markets mature. Today, regulation, the rise of globalism, and the rising service sector in Western economies are all part of a prevailing economic system known as Post-Fordism.

Applications Taylorism

Taylorism, also called scientific management, was an approach to replace management-worker conflict and low worker productivity with scientific re-design of supervision and work. Taylorism was the beginning of systematic study of work in industry. Taylor championed the role of the engineer who could study processes by breaking them down into smaller tasks, observing, timing, and re-engineering work in order to create the single best way to accomplish a task. Since the process was arrived at through a scientific approach, Taylor believed this would reduce friction between management and workers (Marshall, 1998). Taylor successfully implemented scientific management in a number of places. Perhaps his most famous successes came at Bethlehem Steel where he re-engineered the process for shoveling coal and loading steel. Not only did Taylor strive for better productivity, but he also argued that workers should be given periodic rests in order to keep productivity high, and that workers should

6


be paid better (Donkin, 2001). Ultimately, Taylorism is control of labor. Through incentive pay, controlled movements, time studies, and standard setting, Taylorism is most closely associated with direct control of production labor (Krier, 2006). The basic elements of Taylorism are: • Scientifically analyzing tasks and developing a standard process, and standard level of performance for each task. • Hire and train the employee with the right abilities for the job • Enable workers to be successful by planning, training, and providing the rests and tools needed to do their jobs • Provide wage incentives for increase productivity • Put engineers in charge of the processes managers supervise and workers perform Standards

Standardization includes rules, job descriptions, chain of command, work processes, documentation of processes, and expected levels of production. Taylor believed that written documentation of each task helped created a “joint effort” between management and worker (Taylor, 1911). The written instructions also included time limits and incentive pay to be received when time goals were met. Taylor was careful to state that the time limits were not unreasonable and that the instructions were only to prepare the worker to succeed so they could enjoy a long productive and prosperous years of not being over worked. Taylor also was concerned about jobs being passed from one employee to another. He described how a “green employee” could come into a business and pick up the essentials of a new job with the guidance of management because of the history and memory that good work documentation supplied. The practice of documentation has remained in place in business. In addition to providing the standardization, productivity, and memory that Taylor envisioned, documentation also provides standards for treating employees fairly and a degree of legal protection.


7

Hiring the Right Worker for the Job

Taylor believed that scientific management provided a structure that was unequaled in training and supporting workers as well as a mechanism for recognizing the performance of top workers. Taylor believed good managers matched the employees’ abilities with the right jobs and the continual measurement of performance allowed the best workers to rise to the top faster (Taylor, 1911). The idea of getting the right worker in the right job has been revived in the immensely popular book by Jim Collins From Good to Great (2001). Collins has adapted Taylor’s idea to incorporate an element that Taylor did not practice. That is, given how difficult it is to find good employees, that management should not simply fire a struggling employee but see if moving that employee to a different job can spark a success. Support Workers with Planning & Training

Taylor saw the role of job planning and training as management’s support for the worker. Breaking down of complex jobs into simple tasks, engineering of these tasks, documenting the processes of the task, and training the employees was all a part of Taylor’s vision. This may be one of the areas where Taylor’s critics disagree with him most. It can be argued that this support has striped work of its more interesting elements and the repetitive nature of work has made it less safe. Taylor also believed in order to get more productivity managers must give workers incentives “beyond that of the average of the trade” (Taylor, 1911). Further, Taylor argued in The Principles of Scientific Management that management “is a true science, resting upon clearly defined laws, rules, and principles…and are applicable to all kinds of human activities” (1911). He considered this new science in the realm of engineers. Being a mechanical engineer himself, Taylor was painting a picture of businesses being run by engineers. Fordism

Henry Ford had a number of failures before he hit upon the right formula at Ford Motor Company. His biggest challenge at Edison, Detroit Automobile Company, and Henry Ford Motor Company was how to produce 8


an affordable automobile. It wasn’t until he tried again at the Ford Motor Company that he found the prescription for success. Ford introduced new ideas that increased productivity and lowered the costs of manufacturing an automobile. To balance the innovations, Ford paid his employees a higher rate so that they could also afford to buy a new Ford automobile. Ford would later describe the revolutionary changes in manufacturing at Ford as substantiated by something quite elemental in every person; the desire for regularity and routine (Ford, & Crowther, 2005). What Ford introduced at the Ford motor company was known as Fordism. The primary elements of Fordism are: • Division of labor or specialization • Parts standardization • Organizing the sequence of production • The moving assembly line Specialization

Fordism continued the process of breaking down complex jobs into smaller simpler tasks started by Taylorism. How Fordism differed from Taylorism was in the sequential organization of jobs and the integration of these new deskilled tasks into the moving assembly line. Fordism created highly repetitive jobs in a fast moving assembly line. Because the next job could not be performed until the previous job had been completed, the pressure on workers to keep the line moving was intense. Fordism extended the Taylorism concept of standardization to parts. By making all parts going into an automobile identical, the productivity of the assembly line remained high. Ford spun off new companies to build the standardized parts Ford Motor Company needed. Perhaps no other part of Fordism pays a higher tribute to Taylorism’s than the vertical engineering process employed by the Ford Motor Company. Sequential Production

Ford organized production in a sequential order. Machines which had previously been grouped together to take advantage central sources of electricity were moved into long assembly lines to increase productivity in the production process. With machines, parts, and workers order seThe Social Organization of Work

9

quentially in the production process the time taken to move partially constructed automobiles and parts was reduced. Fordism took the assembly line one step further. Ford utilized a linear moving assembly line. As an automobile moved through the line, workers and machines added standard parts at each station. Parts were delivered to the stations along the line where workers took their turn adding each part in order. Post-Fordism

Post-Fordism describes prevailing systems of economic production in the world today. Post-Fordism takes into consideration recent changes in the economies of Western post-industrial countries. Where Fordism assumed local manufacturing, local consumer markets, and a local economy based on manufacturing, Post-Fordism encompasses global supply chains, global markets, and Western economies based on service and financial industries. Post-Fordism also takes into consideration changes in consumerism brought on by the desire of consumers for greater product diversity and increased use of regulation by governments to protect national economies, businesses, communities, and workers. The chief elements of Post-Fordism are: • The rapid rise of information technologies • Emphasis on consumer types instead of class • Flexible manufacturing • Global supply chain • Regulation • The rise of the service and financial sectors • Feminization of the workplace • Globalization Information Technologies

The rise of information technologies has not only changed the way traditional companies do business, but has given consumers more information about products. The global connectivity of computers has connected com10


panies, workers, and consumers in new networks. Smaller companies can now compete with larger companies by reaching consumers too expensive to reach in the past. Workers can work in collaboration with workers across geographical expanses and national borders. Technology makes it possible to manage decentralized and fragmented processes and gives rise to a new class of technology workers (Monahan, 2005). This type of work was once considered too expensive and untimely for companies. Consumers can now shop for products all over the world. No longer having to settle for standard products consumers can now use technology to find products that are unique and affordable. Consumer Types

Post-Fordism moves marketing beyond class and into consumer types. Instead of simply marketing a product to an economic class of people who can afford the product, companies now focus on consumers gender, age, values, interests, and buying habits. Car makers don’t simply produce an expensive and an inexpensive model. Car makers produce cars for young consumers, environmental conscious consumers, outdoorsmen, consumers wanted to express economic status, and families with small children. The number of consumer types is limitless and constantly evolving. Changes in the economy and trends in culture create new consumer types all the time. The ability of companies to adjust to these changes is critical in their success. Flexible Manufacturing

In order to exploit the ever changing consumer types and their demands, companies must be able to be flexible. Flexible manufacturing, also called flexible specialization, is the process where companies build complex manufacturing processes that can produce diverse product lines targeted at different consumer types. The production processes must be able to change as consumer needs and desires change. Flexible manufacturing also means a flexible workforce. This may actually work better in Europe than America. In America a flexible workforce often includes the idea of a job with no access to disability and healthcare (Derber, 2000). Some scholars argue that the flexible organization model fails when applied to organizations that demand some autonomy and creativity to deliver their product or service (Brehony, & Deem, 2005).


11

Global Supply Chain

In the place of the manufacturing assembly line, more and more companies are turning to global supply chains. A global supply chain is a network of producers, manufacturers, distributors, transporters, storage facilities and suppliers that provide retailers with a product to sell. An example of the global supply chain is Dell, the world’s second largest computer maker. Dell uses 30 key parts in every computer they sell. For each key part, Dell has multiple vendors that can make the part to their exact specifications. In order to insure that local politics, economies, and natural disasters affect Dell’s ability to deliver their product, Dell requires that no vendors producing the same part can be located in the same country. Though a computer may be built at any one of Dell’s six manufacturing sites, the parts are manufactured worldwide and a single computer may contain parts from over twenty different countries (Friedman, 2006). Regulation

Regulation has in no small way saved capitalism (Agger, 2004). Regulation has corrected many of the flaws of capitalism. These corrections were not imagined by Marx, who predicted the crisis of capitalism would eventually lead Western economies to communism. Instead, regulations have kept capitalism vibrant. Government regulations are used to controlling monetary policy, banking, trade, product safety, pollutions, and fair advertising. Regulation protects companies and consumers. On occasion, the government will step in and prop up a company or industry temporarily while new regulations are put in place and the economy can recover. This was done after the 1929 Stock Market Crash, during the Great Depression, after World War II, for Chrysler in 1979, and in 2008 for a number of financial institutions. What Mark didn’t foresee was how a government could use regulation as well as welfare to contradict the contradictions of capitalism. Service & Financial Industries

Another aspect of the modern economy not imagined by classical economist like Adam Smith and Karl Marx is the rise of the service and financial sectors. Smith and Marx saw the core of a modern economy anchored in manufacturing. Globalization has allowed countries and companies to outsource manufacturing to cheaper labor markets in foreign countries. In turn, local economies in prosperous post-industrial nations develop strong 12


service sectors. In America, this includes financial institutions, healthcare, hospitality, and numerous other professional as well as unskilled service sectors. One of the fastest growing service sectors over the last fifty years have been financial industries. The industry has garnered impressive growth and profits by managing, selling, and often re-selling banking, financing, credit, derivatives, and insurance. Feminization of the Workplace

The growing number of women in the workplace has also influenced PostFordism because so many of the assumptions in Taylorism and Fordism relied on a masculine ideal type as worker and sole provider for a family. The needs of women workers differ from those of their male counterparts and the skill sets they bring to the workforce are often different. In America the busting up of unions, the de-skilling of manufacturing jobs, and the outsourcing of entire industries combined with the rise of management jobs in the service industry, which require greater communicative and social skills and less brawn, has advantage women over men in obtaining jobs that pay a working-class or lower-middle class wage. Additionally, the feminization of the human resource jobs and the hiring process has lead to more women being hired in these industries (Fernandez, & Mors, 2005). Women still earn less than men, but the types of good jobs being created in America in the new economy more often go to women than men. Globalization

Globalization is the transformation of business and culture from local communities to a multinational environment. Globalization has opened up new markets of consumers for businesses and new companies and products for consumers. Additionally, globalization has created new opportunities for companies to manufacture products in new countries that can supply high quality and relatively low wage workers. This decentralization of manufacturing, flexible specialization in manufacturing, global workforces, and global markets are all aspects of Post-Fordism globalization (Gottfried, 1995). Conclusion

Economies are constantly changing. Taylorism and Fordism were radically new ideas in their time, and elements of these ideologies remain influThe Social Organization of Work

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ential in today’s modern economies. Post-Fordism explains how modern economies have moved past rigid calculated methodologies of Taylorism and Fordism and adapted to the new global environment. These changes are not complete. What comes next will probably be something not completely imagined by today’s economists. However, it’s unlikely that it will be free from economic ideologies of the past. It’s a good bet that elements of Taylorism, Fordism, and Post-Fordism will remain.

Bibliography Agger, B. (2004). Speeding up fast capitalism: Culture jobs families schools bodies. Boulder, CO: Paradigm Publishers. Brehony, K., & Deem, R. (2005). Challenging the post-Fordist/flexible organization thesis: The case of reformed educational organizations. British Journal of Sociology of Education, 26(3), 395-414. Retrieved September 2, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=17394927&site=ehost-live. Derber, C. (2000). Corporation nation: How corporations are taking over our lives – and what we can do about it. New York: St. Martin’s Press. Donkin, R. (2001). Blood, sweat, & tears: The evolution of work. New York, TEXERE, LLC. Fernandez, R.M., & Mors, M.L. (2005). Gendering jobs: Networks and queues in the hiring process. Conference Papers: American Sociological Association; 2005 Annual Meeting, Philadelphia, p. 1-25. Retrieved September 2, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db= sih&AN=18615093&site=ehost-live Ford, H., & Crowther, S. (2005). My life and work. New York: Cosimo Books, Inc. Gottfried, H. (1995). Developing Neo-Fordism: A comparative perspective. Critical Sociology, 21(3), 39 -70. Retrieved September 2, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=s ih&AN=9732382&site=ehost-live Krier, D. (2006). Taylorism’s irrationalities: Profitability as constraint on Scientific Management. Conference Papers. American Sociological Association; 2006 Annual Meeting, Montreal, 1-22. Retrieved September 2, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=s ih&AN=26643429&site=ehost-live Marshall, G. (Ed.). (1998). A dictionary of sociology. New York: Oxford University Press. Monahan, T. (2005). The school system as a post-fordist organization: Fragmented centralization and the emergence of IT specialists. Critical Sociology, 31(4), 583-615. Retrieved September 2, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=18573345&site=eh ost-live 14


Taylor, F.W. (1911). The principles of scientific management. Norwood, MA: Plimpton Press.

Suggested Reading Amin, A. (1995). Post-Fordism: A reader. Oxford: Blackwell Publishers. Davidson, E. (2005). The assembly line. New York: Houghton Mifflin. Pruit, H. (1997). Job design and technology: Taylorism vs. Anti-Taylorism. New York: Routledge.


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Labor Theory: Division of Labor Simone I. Flynn

Overview Labor refers to physical, mental or creative efforts exerted to complete a task or project. Beginning in the 19th century, jobs and labor in factories, production facilities and households were divided into specialized job tasks. The specialization process, in which the total labor is divided among categories of people, is termed the division of labor. Sociologists study the division of labor that occurs within capitalist societies, between nations and within households. Types of division of labor include task specialization, geographic division of labor and gender division of labor. Particular areas of inquiry include the ways in which division of labor and job specialization are related to power, control and efficiency (Harvey & SaintGermain, 2001). This article explores the sociology of specialized labor practices in three parts: An overview of the main types of division of labor; a discussion of classical labor theories; and an explanation of the debate surrounding division of labor practices in modern society. The issues associated with using division of labor as a means of control and domination are also addressed. Understanding the role that the division of labor plays in social life is vital background for all those interested in the sociology of work and the economy.

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Types of Division of Labor

Sociologists recognize that labor is divided in many different settings and for many different reasons. There are three main types of division of labor including: • Task/work specialization; • Geographic division of labor; • Gender division of labor. Task/Work Specialization

Work specialization refers to the division of work-related responsibilities into wholly different, discrete and often isolated jobs. Commonly understood as the division of labor, work specialization separates the production process into discrete compartments and tasks. Work specialization produces different levels of profit and competitive trade advantage among the private, public and military sectors (Mittleman, 1995). Task specialization, which began during the industrial era, increases organizational efficiency and profitability; however, specialized jobs require highly specific training which may or may not be transferable to different professions or industries. Examples of task specialization include medical specialization and assembly line production. Factors that effect task specialization include organizational need, circumstance, gender, class, education and leadership (Spengler, 1970). Geographic Division of Labor

Geographic division of labor, also referred to as international division of labor, refers to the tendency of certain nations to be responsible for the production of specific materials. The geographic division of labor is a macro economic process that occurs worldwide and differs from regional labor patterns which refer to the concentration of economic relations into regional blocks. The geographic division of labor depends on the growing trend of economic globalization, or, the process of economic and cultural integration around the world caused by changes in technology, commerce, and politics. The global economy (an economy characterized by growth of nations, both in populations and in output and consumption per capita, interdependence of nations, and international management efforts) and global markets (economic markets of countries and regions open to foreign The Social Organization of Work

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trade and investment) affect the division of labor. The geographic division of labor has important consequences for research, politics and economics. Marxist theorists tend to be particularly interested in the geographic division of labor due to the potential for one nation or region to economically dominate, subjugate or enslave another region or group. Examples of interest to such theorists would be Brazilian women working on sugar plantations and Asian women working in manufacturing who work under difficult conditions and for extremely low wages. There are two main theories of geographic division of labor: Dependency theory and regulation theory. • Dependency theory refers to the idea that the geographic division of labor reflects past colonial links. • Regulation theory refers to the idea that the development of capitalism, and related division of labor, resulted from successive regimes including competition, international, monetary, state and wage relations (Harvey & Saint-Germain, 2001). Gender Division of Labor

Gender division of labor refers to the practice of directing men and women to certain tasks and forbidding them to perform other tasks based on their gender. A gender-based division of labor became common in the 20th century as a result of industrialization and the necessity of paid work outside the home. Factors that affect the gender division of labor include: • Organizational culture; • Individual gender; • Cultural background; • Ethnicity; • Education. The household division of labor (common across classes and cultures) is one often-studied area of gender-based division of labor. Household labor refers to unpaid work performed to support family members and the home. Emotional support and work is not generally included in conceptualizations of household labor. 18


In American society, researchers suggest that men, as a group, do between 20 and 30 percent of household labor. Industrialization and labor-saving devices such as vacuums and mass-produced cleaning products, which became common in the 20th century, changed household divisions of labor in modern societies. Researchers study household labor through the use of time diaries and direct questions. Socialist and Marxist feminists argue that the household division of labor is balanced to favor and privilege men and capitalist society and that men and capitalist society as a whole control women’s labor in the household. However, the women’s movement of the 1960s and 1970s changed the gender division of labor in Western nations (Shelton & John, 1996).

Further Insights Classical Labor Theories

The concept of work, as a practice to be manipulated for increased efficiency, was born during the industrial era in Europe. Division of labor became common in industrial settings concerned with worker efficiency (the ratio of total input to effective output). The industrial era, approximately 17501900, was a time characterized by the replacement of manual labor with industrialized and mechanized labor and the adoption of the factory system of production. During this period, industry and trade eclipsed farming and agriculture as regional sources of income and the economic system of capitalism was promoted (Ahmad, 1997). Due to an increased need for workers, this era led to the creation of a new working class, middle class, and consumer class. The factory system of production, with its separation from the domestic setting, created a divide between work and home life. In addition, the factory system of production, as seen in textile mills for example, reinforced and maintained class relations by establishing a hierarchical and supervised workforce (Mellor, 2003). During the industrial era, classical social scientists worked to understand the changes they saw happening in the relationship between the individual, government, business and society. Classical social scientists, particularly in response to the changes in labor and society, made significant contributions to labor theory, organizational theory and management theory. In particular, Frederick Taylor, Emile Durkheim, Karl Marx and Max Weber all developed classical labor theories which became the foundation for modern ideas about the division of labor and job specification. The Social Organization of Work

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Frederick Taylor

Frederick Taylor (1856-1950), an engineer, is considered to be the founder of scientific management. Scientific management, or “Taylorism,” refers to a theory that uses the scientific method to study the management and efficiency of workers. Taylor’s works “The Principles of Scientific Management” (1911) and “Lecture on Management” focus on increasing efficiency and loss control management (1907). Taylor also developed the concept of functional foremanship which refers to a system for dividing a foreman’s job duties into many specialized tasks each assigned to a different individual. Taylor’s theory of functional foremanship had significant influence on the division of labor in organizations. For instance, job duties increasingly became divided into supervisor and worker roles. Skilled craftspeople and apprentices have became scarce work roles over the past century. As a result of this organization style, Taylor believed that worker efficiency could be increased through job subdivision and specialization. Taylor based his theories of job subdivision and specialization on research conducted in active factories and manufacturing plants. For example, Taylor is well-known for his 1899 study of the pig iron loading process at the Bethlehem Iron Company. Taylor recommended that the company adopt a piecerate system to benefit the company and create more efficient workers. This study became the foundation for job observations, work standards and the concept of a day’s work. Taylor’s work on division of labor and job subdivision and specialization has significantly influenced modern organizations and professions. For instance, few modern jobs or professions require or allow a worker to engage in the development of a product or idea from start to finish. In addition, Taylor’s notion of a day’s work remains prevalent across businesses and industries (Bahnisch, 2000). Adam Smith

Adam Smith (1723-1790), who is considered to be the father of capitalism, first described the system of capitalism in his work “The Wealth of Nations” (1776). Smith’s work is considered to be the first significant effort to explain the division of labor which began to emerge during the 18th century. Smith recognized the economic advantages of work specialization. He foresaw the connection between the rise of industrialization and the productivity advantage of division of labor and believed that the “in20


visible hand of competition” was the best regulator of the economy. Industrial production replaced artisans and skilled craftsmen as the productivity of a labor force eclipsed the effort of individual workers in importance. Smith believed that the new division of labor and increased productivity would raise standards of living and compensate for any loss felt by individuals and society at large (Mittelman, 1995). Emile Durkheim

Emile Durkheim (1855-1917) was a French sociologist concerned with the problem of the individual and society as well as issues of solidarity and social cohesion. Over the course of his life, Durkheim moved from a macro focus on structural processes to a micro focus on social, psychological, and interpersonal processes such as co-presence, ritual, interaction, and emotional arousal. To learn how individuals related to society, he studied the social structure, societal norms, laws, community, groups and societal roles in French society. In his research, Durkehim looked for the causes and functions of social phenomena. Durkheim’s work “The Division of Labor in Society” (1893) established his perspective on labor specialization and summarizes Durkheim’s perspective on society and social development. Durkheim’s argument for division of labor or specialization is based on the notion that individuals have individual capacities that should be developed. According to Durkheim, specialization increases possibilities for interdependence and organic solidarity provides opportunity for development of talents and complex social interactions. Durkheim’s division of labor is based on moral rather than biological imperatives (Sirianni, 1984). The sociologist intended his theory of the division of labor to be limited to advanced societies (Perrin, 1995). Karl Marx

Karl Marx (1818-1883), a German philosopher and economist, was one of the first scholars to identify society as a system of social relationships. Marx studied processes of worker alienation and objectification. Marx’s theories of worker alienation and objectification contributed to the belief that division of labor and specialization created dissatisfied and angry workers. According to Marx, division of labor caused human workers to take on the anonymous role performed by machines. Marx believed that division of labor should only be used for limited periods of time and


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when other organizational options are not available. Marx advocated and promoted full rather than divided production as a means of created social cohesion and harmony. Marx made a distinction between technical division of labor and social division. Technical division of labor refers to the sometimes-inevitable division of labor required in the production of materials. In contrast, social division of labor refers to the choice on the part of management or owners to institute division of labor practices as a means of social, class and status control. Marx believed that all division of labor was a social construct and should be understood as such and that economics, capitalism and production were the major forces of society. Marx argued that the system of capitalism that emerged in the industrial era created societies in which the increasing value of the material world devalues people and society. Marx believed the history of human society was primarily shaped by economic conflict between owners and laborers. He worked to find how the disenfranchised could create social change to improve their social and financial situations. Social change, according to Marx, could only occur through challenges to the power of the dominant classes (Yuill, 2005). Max Weber

Max Weber (1864-1920), a German politician, historian, economist, and sociologist dedicated to the study of religion, is considered one of the founders of sociology. Weber studied the meanings people attach to their social environments and daily lives. During the 19th century, Germany, Weber’s country of birth, underwent extreme socio-political change as the country moved from separate states to a unified nation state. The political turmoil combined with the urbanization, reform and industrialization that spread across Europe made Germany rich ground for sociological investigation and analysis. Weber chose to study authority and power in German organizations as a means of understanding the social tensions he saw around him. His classical theory of organization focused on organizational bureaucracy. Weber established a set of rules that defined both how an organization should function and who should be a part of the organization. Weber’s classical theory of organization, his ideal bureaucracy, was an organization characterized by specialized division of labor, hierarchy of authority, impersonality, written rules of conduct, promotion based on achievement and efficiency. 22


Weber warned his country that the owners and bosses of bureaucratic organizations, who were largely self-appointed leaders with great social, political, and economic power, could and would control the quality of life of workers. In addition to his work on authority and power in organizations, Weber made significant contributions to the field of rural sociology. Weber studied rural populations and contemporary rural problems such as labor-landowner relations and the divide between industrial and agricultural workers, to document and understand the change brought about by industrialization and urbanization (Munters, 1972).

Issues Workers, businesses, academics and governments debate the effect and purpose of division of labor practices. Supporters of division of labor practices argue that work specialization, whether the division of labor occurs in households or internationally, is necessary for economic growth. In contrast, critics of division of labor argue that employers use division of labor practices to exert control over workers, labor processes and wages. In many instances, division of labor results in the de-skilling of workers. Business owners and managers may assign certain jobs or tasks to ethnic minorities or women knowing that these groups will accept lower wages. The division between mental and physical labor is believed to exert control over workers by keeping workers ignorant of larger work processes and flow. In addition, the division of labor reduces opportunities for collective action on the part of workers. Modern organizations are increasingly moving away from the task specialization and division of labor that characterized industrial-era society and work environments. For instance, team models of work relationships and practice became common in the 1990s. Work teams refer to groups of individuals who work cooperatively to achieve common goals through completion of job tasks that are specific to their team. Teams vary from traditional organizational structures in multiple ways. Work teams represent the organizational change from hierarchical to flat or horizontal organization. Work teams tend to be autonomous, interdisciplinary, non-hierarchical and cooperative rather than hierarchical and specialized. In modern businesses, such as information-technology firms, self-managed work teams are responsible for managing themselves, assigning jobs, scheduling work and production time and problem-solving (Kirkman et al, 2000). The Social Organization of Work

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Critics suggest that those groups, organizations and nations that continue to engage in highly divided or specialized labor practices rather than adopt new organizational models, such as work teams, may be doing so in part as an attempt to exert control over disenfranchised groups such as women and ethnic minorities. The division of labor within capitalist societies continues to be negotiated between business and government. Examples of business-government relations that facilitate continued division of labor include cartels, networks of firms and industry associations, state industrial policies, selective business taxation, state-owned industries and trade policies. Critics of division of labor practices associate division of labor with capitalist domination, political manipulation, exploitation, control, power and subjugation (Gough & Eisenschitz, 1997). Conclusion

In the final analysis, the division of labor, into specialized tasks and between different groups of people, is directly linked to the rise of industrialization and capitalism in modern societies. The division of labor into specialized tasks allows for increased efficiency and profitability. Sociologists explore the ways in which the division of labor may be used as a means of exerting power and control over disenfranchised groups. Understanding the role that the division of labor plays in social life is vital background for all those interested in the sociology of work and the economy.

Bibliography Ahmad, I. (1997). Emergence of sociology and its relationship with social sciences. Employment News, 22(1), 1-3. Bahnisch, M. (2000). Embodied work, divided labour: Subjectivity and the scientific management of the body in Frederick W. Taylor’s 1907 ‘Lecture on Management’. Body & Society, 6(1), 51. Retrieved October 11, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=5 434915&site=ehost-live Gough, J., & Eisenschitz, A. (1997). The division of labour, capitalism and socialism: An alternative to Sayer. International Journal of Urban & Regional Research, 21(1), 23-37. Retrieved October 11, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=9708245613&site =ehost-live Harvey, J., & Saint-Germain, M. (2001). Sporting goods trade, international division of labor, and the unequal hierarchy of nations. Sociology of Sport Journal, 18(2), 231-246.

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Retrieved October 15, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=6165474&site=eh ost-live Kirkman, B., Jones, R., & Shapiro, D. (2000). Why do employees resist teams? Examining the resistance barriers to work effectives. International Journal of Conflict Management, 11(1), 74. Retrieved October 11, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=3547794 &site=ehost-live Kirkpatrick, S. (1999). The achievements of ‘General Ludd’: A brief history of the Luddites. The Ecologist, 29(5), 310-313. Mellor, I. (2005). Space, society and the textile mill. Industrial Archaeology Review, 27(1), 49-56. Retrieved October 11, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=1833919 5&site=ehost-live Mittelman, J. (1995). Rethinking the international division of labour in the context of globalisation. Third World Quarterly, 16(2), 273-295. Retrieved October 10, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/ login.aspx?direct=true&db=aph&AN=9509085479&site=ehost-live Munters, Q. (1972). Max Weber as rural sociologist. Sociologia Ruralis, 12(2), 129-147. Retrieved October 11, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=10193035&site=e host-live Perrin, R. (1995). Emile Durkheim’s division of labor and the shodow of Herbert Soencer. Sociological Quarterly, 36(4), 791-808. Retrieved October 10, 2008, from EBSCO Online Database Academic Search Premier. Shelton, B., & John, D. (1996). The division of household labor. Annual Review of Sociology, 22(1), 299. Retrieved October 10, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=9704023 930&site=ehost-live Silver, A. (1990). Friendship in commercial society: Eighteenth-century social theory and modern sociology. American Journal of Sociology, 95(6), 1474-1505. Retrieved October 11, 2008, from EBSCO Online Database Academic Search Premier. http://search. ebscohost.com/login.aspx?direct=true&db=aph&AN=11118630&site=ehost-live Sirianni, C. (1984). Justice and the division of labour: a reconsideration of Durkheim’s Division of Labour in Society. Sociological Review, 32(3), 449-470. Retrieved October 10, 2008, from EBSCO Online Database Academic Search Premier. http://search. ebscohost.com/login.aspx?direct=true&db=aph&AN=5473181&site=ehost-live Spengler, J. (1970). Cost of specialization in a service economy. Social Science Quarterly (Southwestern Social Sciences Association), 51(2), 237-262. Yuill, C. (2005). Marx: Capitalism, alienation and health. Social Theory & Health, 3(2), 126143. The Social Organization of Work

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Suggested Reading Lavee, Y., & Katz, R. (2002). Division of labor, perceived fairness, and marital quality: The effect of gender ideology. Journal of Marriage & Family, 64(1), 27-39. Retrieved October 10, 2008, from EBSCO Online Database Academic Search Premier. http://search. ebscohost.com/login.aspx?direct=true&db=aph&AN=6218861&site=ehost-live Sorokin, P. (1929). Some contrasts of contemporary European and American sociology. Social Forces, 8(1), 57-62. Retrieved October 11, 2008, from EBSCO Online Database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=s ih&AN=13517466&site=ehost-live Swingewood, A. (1970). Origins of sociology: the case of the Scottish Enlightenment. British Journal of Sociology, 21(2), 164-180. Retrieved October 11, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct= true&db=aph&AN=24258745&site=ehost-live

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Work in the Post Industrial World Sharon Link

Overview Post Industrial Societies

Daniel Bell was the initial proponent of the idea of the post industrial society promoting the idea through his book entitled: The Coming of Post Industrial Society. After experiencing and analyzing the radical societal changes brought on by the 1960s, Bell (1973) argued that a radical transformation of economic and political structures was underway in societies like the United States. He further indicated that changes in occupational structure, demographic patterns, and government funding to science and education would precipitate a shift to a society where theoretical knowledge was central and experts would be the primary advisors to government and business (Townsley, 2000, p. 739). This theory supported an earlier notion that the importance of academics, scientists, and professional experts in government would continue to grow and this idea was echoed in a wide range of scholarly work that was written and published at the time (p. 741). Bell was the catalyst for three substantive ideas including the end of ideology, the post industrial society, and the cultural contradictions of capitalism. All three of these ideas merged into a collective notion that seems to underscore society’s present condition, not only in the United States, but in other highly developed nations, as well. Bell argued in 1955 that party politics was entering a phase in which it would no longer be The Social Organization of Work

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governed by extremist ideologies of the left and right, but would instead require a mixed economy, a welfare state, and liberal democracy. Bell’s later work proposed that the idea of the post industrial society was precipitated through socio-economic structures that were entering a major historical shift from manufacturing goods to the production of services. Bell argued that this paradigmatic shift would be accompanied by “an intellectualization of technology, the rise of a scientific knowledge class, and a renewed communalism in politics” (p. 13). Bell further contended that capitalist societies were driven by threatening and disruptive contradictions at a cultural level. He indicated that capitalism originated because of the combination of a work discipline and a Protestant culture based on “frugality and abstemiousness.” Bell flagrantly claimed that within the system of continued stress on discipline and the emphasis on gratification, an eventual deterioration of the culture would occur unless a fundamental reversal occurred (Bell, 1995, pp. 12-13). Within the post industrial societal construct, economics is one of the main factors in determining post industrial society outcomes and economic growth espouses predictable cultural and political consequences. Industrialization typically leads to occupational specialization, increased educational levels, rising income levels and eventually results in alternative gender roles, changed “attitudes toward authority and sexual norms, declining fertility rates, expansive political participation, and a changing work force” (Inglehart & Baker, 2000, p. 21). One caveat of the changing economic structure of the post industrial society is the cultural heritage of the civilization undergoing the change. Hamilton (1994) argued: “What we witness with the development of a global economy is not increasing uniformity,…but rather the continuation of civilizational diversity through the active reinvention and reincorporation of non-Western civilizational patterns” (p. 184). In other words, while the economic landscape may be shaped by specific post industrial tenets, economic outcomes are constructed and heavily dependent on historical and cultural inputs. Within the post industrial society, life is constructed around services advancing a “game between persons” in which people “live more and more outside nature and less and less with machinery and things; they live with, and encounter only, one another” (Bell, 1973, pp. 148 – 149). A more highly educated society generally allows workers to deal 28


more with people and concepts, “operating in a world in which innovation and the freedom to exercise individual judgment are essential” (Inglehart & Baker, 2000, p. 22). Rather than a strong reliance on agrarian components or manufacturing, the post industrialist workforce places an emphasis on subjective well-being and quality-of-life (Inglehart, 1977, 1997). More time in the workforce seems to be spent more on the quality and service of the work for humankind, rather than the difficulty of labor. Work in the Post Industrial World

According to researchers, work in the post industrial world has dramatically changed the face of the organized work structure and time spent occupied with work. According to Lewis (2003) “paid work is increasingly dominating people’s lives,” and that, “Far from the rise in leisure once predicted from the technological revolution, many people are now working longer and more intensively than ever.” It seems that issues influencing the integration of paid work and the workers’ life spent out of work, now often referred to as “work-life balance,” have mainstreamed into a relevant discourse between employers and unions (DfEE, 2000; DTI, 2001; Hogarth, Hasluck, Pierre, Winterbotham, & Vivian, 2001; TUC, 2001), in the media, and in our daily discussion (Lewis, 2003, p. 343). Lewis (2003) further adds, “These issues are not new. Questions such as whether it is possible to ‘succeed’ in occupational life without sacrificing personal life have grown out of a long tradition of research and discussion on the interface between work and the rest of life” (p. 343). The central problem blurring the time between work and leisure is the expanded time now in the global 24-hour marketplace. Space, time, and distance are “compressed by information and communication technology, temporal and spatial boundaries between paid work and personal life are increasingly non-existent” (p. 343). While these phenomena may create new opportunities and broaden horizons for the most educated and highly skilled knowledge workers, allowing them to work when and where they choose, new challenges also arise. Blurred Work Boundaries

Lewis (2003) argued that “many forms of post industrial work, which dominate people’s lives, are becoming the new leisure.” She described post


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industrial work as “what people choose to spend their time on and enjoy doing” (p. 344). One of the main characteristics of post industrial work is home-based “teleworking.” Home-based “teleworking” further blurs the boundaries between work and non-work and is characterized by work’s intrusion into leisure time (Sullivan & Lewis, 2001; Hill, Miller, Weiner, & Colihan, 1998). Workers struggling with blurred boundaries between work and leisure can never be completely lured away from work, which then interferes with family time, or other non-work activities at any time. Increased communication and information technology adds to blurred work and leisure boundaries and drives workers to spend increased time during the evenings and on “weekends, or on trains and planes, in hotels or at the gym spent on work related activities” (Lewis, 2003, p. 344). The consequence of blurred work boundaries is that workers may spend too much time or not enough time working. Statistically, while both genders are impacted by blurred work boundaries, women often feel bounded family commitments and less able to work long hours (Lewis, Cooper, Smithson, & Dyer, 2001; Sullivan & Lewis, 2001). Thus, “just as leisure is highly gendered, with women less able than men to preserve the boundaries between leisure and other activities (Kay, 2002) the autonomy to use flexible working arrangements to prioritize work is also gendered” (Lewis, 2003). This research suggests that gender related issues between men and women continue to influence women’s professional work lives. Arnold and Niederman (2001) stated vehemently: “The statistics are clear that women, minorities, and older workers, at least in the U.S., are not fully represented in the Information Technology work force; firms may need to take positive action to make the workplace more attractive” (p. 32). Information Systems

The development of Information Systems has had a profound effect on the rate of advance of all science. According to Wriston (1988) scientific knowledge is currently doubling about every 13 to 15 years. As the old industrial age is being replaced by a new era of the information society, this transition implies that the relative importance of intellectual capital invested in software and systems will increase in relation to the capital invested in physical plants and equipment (p. 63). Similarly, Tonn and White (1996) argued that information technology (IT), broadly defined 30


as computer and telecommunications technology is having a substantial impact on almost every community on earth. Researchers further indicate that “data bases are coming on-line, communication over the Internet is worldwide, distance learning is becoming common, wireless communication is growing, and multinational corporations already rely heavily on their satellite and internal digital information systems” (p. 103). Central to understanding the role of IT within the context of work in post industrial societies is in understanding the potential benefits of ways systems are designed to help workers achieve specific goals in the classroom, the workplace, government services, and health care. Additional research should be considered in each of these areas to determine IT impacts in each of these categories. Little (2000) argued that the role of IT in developing societies levels the playing field of commerce. He stated that this aspect of economic globalization allows “underdeveloped” and “overdeveloped” economies to directly compete. The new mobility now available to suburban and domestic labor forces “through telecommuting opens a two-way street, with electronic access to and from the home redefining a sphere of both production and consumption” (p. 1814). Little further stated that the birth and emergence of transnational corporations (TNCs) and the internationalization of financial and labor markets have “created a rapidly evolving world system currently characterized by rapid integration at a world scale” (p. 1817). Camilleri and Falk (1992) argued that “power and authority of nation states have diffused through participation in a variety of multinational arrangements, encompassing not only trade, production, and finance, but also environmental and security issues.” Little (2000) further described ways that IT and its use in the post industrial world offers an explanation of new forms of international business, which are emerging more prolifically as a result of downsizing and other organizational changes. Computer based systems facilitate or substitute for organizational structures and standards. As a result of technology driven shifts in employment, new opportunities and increased access to resources and improved employee flexibility has resulted. Another outcome of the tech nological revolution is that direct competition between cities and local states has increased (George, 1999) and the “incorporation or reincorporation” of the household into the economic sphere reflects a “two-way connection between production and consumption,” which is visible in both developed and developing nations (Little, 2000; Nelson, 1988). The Social Organization of Work

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New Skills Required

In contrast to benefits from IT growth, many firms are experiencing extreme employee shortages for technical or highly specialized jobs, because of the new skill sets required for even entry level positions. In this structure, older workers experience difficulty with retrainability and other contributory issues, because IT is developing so quickly. While additional IT training may improve the employability of employees, it also has a “shelf life.” Firms take a risk when employees receive expensive training, and employees take a risk that the expensive training will become quickly obsolete. In the new post industrial work world, “firms frequently seek as detailed a level of skills in the new technology as the individual had in a previous one – skills beyond those readily transferable” (Arnold & Niederman, 2001, p. 33). These evidences point to ways the work in the post industrial world has changed, potential inferences for ways the new work, particularly technology, drives skills and workforce training, and potential impacts for organizational restructuring as firms and other businesses include a significant technological interface in the work environment. Applications for these impacts influence how employees choose to work and manage work time commitments.

Applications Wriston stated: “The entire globe is linked electronically, with no place to hide” (1988, p. 71). Numerous applications for workforce preparation, the workplace, and government services experience specific impact theories stemming from the study of work in the post industrial world. Workforce Preparation

The purpose of education in the post industrial world encompasses the idea of building a knowledge-based economy. Rakitov (2006) stated that “knowledge is a complex relation between a knowing subject, the object of knowing, and a symbolic sign system that functions as a definite language, and a system of senses and meanings” (p. 7). Knowledge can be understood as a “special kind of intellectual reserve (and a reserve of other valuable qualities of the individual), as the potential for activity, information, skills, abilities, and other valuable qualities of the individual” (Nyiri, 2002). Lyotard (1998) wrote: “Knowledge in the form of an infor32


mational commodity indispensable to productive power is already, and will continue to be, a major, and perhaps the major stake in the worldwide competition for power” (p. 20). In the post industrial world specific implications for worker preparation and new insights into ways of teaching and learning directly result from these developing insights. As new insights are drawn regarding knowledge in the new society, sociologists should con sider investigating the most valuable, efficient, and sustainable ways of training workers to work in the modern world. The Workplace

Castells (1989) argued that physical location is still important and that a “range of contingencies” are possible with an underlying continuing demand for physical proximity in terms of necessarily specialized labor markets and other forms of communication. While large companies pursue global strategies, network organizations composed of subdivisions of larger labor markets and collaboration in teams and roles for specific purposes offers one potential for workplace infrastructure (Castells, 1996, Little, 2000, p. 1823). In addition to company restructuring, long working hours and added workloads often result from the impact of fewer workers for jobs. Dramatic organizational changes creates additional work for those who survive “downsizing” and “efficiency drives.” In response to “global competition in the private sector and the pursuit of ‘best value’ and budget cutting in the public sector, new forms of work such as call centers, the trend for escalating targets and insecure forms of employment, also create pressure and increased work demands” (Lewis, 2003, p. 351) (Burchall, Lapido, & Wilkinson, 2002; Brannen, Lewis, & Moss, 2001). Certainly, given the new structure of work in the post industrial world, sociologists are urged to study ongoing structures and impacts of the changing workplace. Government Services

Wriston (1988) indicated that as IT has changed the way workers work; the “coalescence of communication and computing technologies has transformed government attitudes to communication infrastructure” (p. 1821). The expanding range of commercial potentialities, and an equally expanding demand for capitalization to increase new and different kinds of service, has driven governments to privatize and deregulate. State power has diffused through agreement to and participation in multilaterial regulation in areas such as trade and security operating in internationalized fiThe Social Organization of Work

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nancial and labor markets. These policies not only impact state and national levels, but are increasingly determined at supranational levels. All of these effects inevitably seep down to the individual household, becoming the “end-point of transborder data flows” (p. 1821). Issues

Arlie Hochschild (1997) argued that employees in the United States are more satisfied working than they are at home. Especially for parents of young children, work has become more satisfying than staying at home. While absorbing and stimulating, paid work is often the source of recognition and status, while staying at home is hard work, especially for parents of young children. Work becomes a refuge from home, rather than home as a refuge from work (Maume & Bellas, 2001). Post industrial work is often the most stimulating and absorbing when technology enables the permeation of work and non-work boundaries (Sullivan & Lewis, 2001). One potential result of blurred boundaries between work and non-work is that workers can be more flexible and fit their work and non-work demands at their convenience. Lewis (2003) argued that “some professionals not subject to constant management surveillance have always had flexibility to integrate work and non-work. But for many of these workers, both men and women, the pull of work in the home is often strong and oppressive” (p. 348). One caution is that the new flexibility often simply extends the working day. It is possible that while a certain amount of flexibility may successfully integrate paid work with other non-work activities, too much flexibility can backfire (Prutchno, Litchfield, & Fried, 2000). As Hochschild (1997) suggested, it is not just that work and home have become joined; blurred boundaries make the two “increasingly indistinguishable.” Moreover, Lewis (2003) indicated that the central issue is that “if someone is totally absorbed in work that they enjoy, and not paid for extra hours (as is usually the case for knowledge workers), how is that different from leisure, if at all?” (p. 348). The central issue for work in the post industrial world is that boundaries may become so blurred that an overworked, over-stressed culture will inevitably be formed. Conclusion

Evidence suggests from the research presented that work in the post industrial world has changed from work in previous eras. Maas and van Leeuwen (2002) indicated that “in industrial societies, production methods 34


continuously develop, which requires employees to change jobs during their lifetimes, and children to eventually have jobs that are different from those of their parents. Instead of traditional caste, racial groups, gender, or family status, education becomes the principal means of assigning persons to occupations. Industrial society thus becomes an “open” society” (p. 179). Clearly, the advancement of technology, Information Technology, and Information Systems has changed the work and structure of work both nationally and internationally. These changes create opportunities, while demanding flexibility and an increased propensity toward blurred boundaries between work and non-work activities. As technology consumes societies and work opportunities in global markets expand, sociologists will be able to conduct further research into potential effects, benefits, and consequences of work in the post industrial world. As Lewis (2003) indicated “if work is taking over from leisure and other personal activities on a wide scale, we need to examine the broader and long-term effects on individual well-being, families, and communities. If current trends continue these may be vital research questions for the early-twenty first century” (pp. 353-354).

Bibliography Arnold, D. & Niederman, F. (2001). IT the global workforce. Communications of the ACM, 44(7), 30 – 33. Retrieved June 25, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=1193461 4&site=ehost-live Bell, D. (1973). The coming of post industrial society. New York: Basic Books. Brannen, J., Lewis, S. & Moss, P. (2001). Workplace change and family life Report on two case studies, Report to the Tedworth Foundation. London: Work Life Research Centre. Burchall, B., Lapido, D. & Wilkinson, E. (2002). Job insecurity and work intensification, London: Routledge. Camilleri, J. A. & Falk, J. (1992). The end of sovereignty? The politics of a shrinking and fragmented world. Aldershot: Edward Elgar. Castells, M. (1996). The rise of the network society. Oxford: Blackwell. Department for Education and Employment. (2000). Creating a Work-Life Balance. A Good Practice Guide for Employers. London: Department for Education and Employment. Department of Trade and Industry. (2001). Work-Life Balance. The Business Case. London: Department of Trade and Industry. George, S. (1999). The problem isn’t beef, bananas, cultural diversity or the patenting of life, the problem is the WTO. The Guardian, 24, 4 – 5. The Social Organization of Work

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Hamilton, G. G. (1994). Civilizations and organization of economies. In N. J. Smelser and R. Swedberg, eds, The Handbook of Economic Sociology, pp. 183 – 205. Princeton, NJ: Princeton University Press. Hill, E., Miller, B., Weiner, S. & Colihan, J. (1998). Influences of the virtual office on aspects of work/life balance. Personnel Psychology, 51(3), 667–683. Hochschild, A. (1997). The time bind: When work becomes home and home becomes work. New York: Henry Holt. Hogarth, T., Hasluck, C., Pierre, G., Winterbotham, M. & Vivian, D. (2000). Work-life balance 2000: Baseline study of work-life balance practices in Great Britain. London: DfEE. Inglehart, R. (1977). The silent revolution: Changing values and political styles in advanced industrial society. Princeton, NJ: Princeton University Press. Inglehart, R. (1997). Modernization and postmodernization: Cultural, economic, and political change in 43 societies. Princeton, NJ: Princeton University Press. Inglehart, R. & Baker, W. (2000). Modern, cultural change, and the persistence of traditional values. Sociological Review, 65, 19 – 51. Retrieved April 15, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login.aspx?direct=tr ue&db=aph&AN=3067483&site=ehost-live Kay, T. (2002). Leisure, gender and family: challenges for work-life integration. Paper presented at ESRC seminar on Well-Being, Manchester Metropolitan University. Lewis, S. (2003). The integration of paid work and the rest of life: Is post industrial work the new leisure? Leisure Studies, 22, 343 – 355. Retrieved July 1, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login.aspx?di rect=true&db=aph&AN=11985079&site=ehost-live Lewis, S., Cooper, C., Smithson, J. & Dyer, J. (2001) Flexible futures: flexible working and worklife integration. Report on Phase Two. London: Institute of Chartered Accountants in England and Wales. Little, S. (2000). Networks and neighborhoods: Household, community, and sovereignty in the global economy. Urban Studies, 37(10), 1813 – 1885. Retrieved July 1, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login. aspx?direct=true&db=aph&AN=3583420&site=ehost-live Lyotard, J. F. (1998). Sostoianie postmoderna. Moscow/St. Petersburg, 20. Maume, D. & Bellas, M. (2001). The overworked American or the time bind. American Behavioral Scientist, 44, 1137–1156. Maas, I., Van Leeuwen, M., & Marco, H. D. (2002). Industrialization and intergenerational mobility in Sweden. Acta Sociologica (Taylor & Fracis Ltd.) 45(3), 179 – 194. Retrieved April 15, 2008 from EBSCO online database Academic Search Premier: http://search. ebscohost.com/login.aspx?direct=true&db=aph&AN=7431170&site=ehost-live Nelson, K. (1988). Labour demand, labour supply and the suburbanization of low-wage office work. In A. J. Scott and M. Storper (Eds.), Production, Work, Territory: The Geographical Anatomy of Industrial Capitalism. Boston, MA: Unwin-Hyman. 36


Nyiri, L. (2002). Knowledge-based society and its impact on labour-market values. Society and Economy, 24(2), 203. Prutchno, R., Litchfield, I. & Fried, M. (2000). Measuring the Impact of Workplace Flexibility, Boston, MA: Boston College Center for Work and Family. Rakitov, A.I. (2006). The regulative world: Knowledge and knowledge based society. Russian Studies in Philosophy, 45(1), 6 – 24. Retrieved July 1, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login.aspx?direct=tr ue&db=aph&AN=21639317&site=ehost-live Return of a prodigal son. (1995). In, Daniel Bell. New York: Routledge Press. Retrieved April 15, 2008 from EBSCO online database SocINDEX: http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=17365300&site=ehost-live Sullivan, C. & Lewis, S. (2001). Home-based telework, gender and the synchronization of work and family: Perspectives of teleworkers and their co-residents. Gender, Work and Organization, 8, 123–145. Retrieved July 1, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=4 889871&site=ehost-live Tonn, B. & White, D. (1996). Sustainable societies in the information age. The American Sociologist, 27(1), 102 – 121. Retrieved July 1, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login.aspx?direct=true&db=a ph&AN=9607151241&site=ehost-live Townsley, E. (2000). A history of intellectuals and the demise of the new class: Academics and the U.S. government in the 1960s. Theory and Society, 29, 739 – 784. Retrieved April 15, 2008 from EBSCO online database SocINDEX: http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=10484662&site=ehost-live Trades Union Council. (2001) Changing Times. A TUC Guide to work-life balanace. London: Trades Union Council. Wriston, W. (1988). Technology and sovereignty. Foreign Affairs, 67(2), 63 – 75. Retrieved July 1, 2008 from EBSCO online database Academic Search Premier: http://search. ebscohost.com/login.aspx?direct=true&db=aph&AN=17112068&site=ehost-live

Suggested Reading Bailyn, L. (1913). Breaking the mould: Men, women and time in the new corporate world. London: Free Press. Coser, L. (1974). Greedy Institutions: Patterns of undivided commitment. New York: Free Press. Haworth, J.T. (1997). Work, leisure and well-being. London: Routledge. Toffler, A. (1970). Future shock. New York: Bantam. Webber, M. (1964). The urban place and the non-urban realm. In M. M. Webber, J. W. Dyckman, D. L. Foley et al. Explorations in Urban Structure, 79 – 153. Philadelphia, PA: University of Pennsylvania. The Social Organization of Work

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The Rise of Multinational Corporations PD Casteel

Overview Karl Marx (1818 – 1883) believed that corporate capitalism was the most dynamic force available to humanity for creating wealth. He considered America a wonder of economic efficiency and marveled at the possibilities for affluence that the American model presented. Marx saw corporate capitalism possessing two contradictory forces. The first continually created better productivity and in doing so promised to free humanity from centuries of feudal poverty and despotism. The second would give rise to international forms of capitalism that would progressively shackle the working class in a relentless cycle of oppression and poverty (Derber, 2000). Perhaps the one thing that Marx understood better than his contemporaries was that the future of corporate capitalism and the plight of the worker would be set on an international stage (Derrida, 1994). Today multinational corporations are credited for the vast wealth of post-industrial countries and the rising affluence of Third-World countries. At the same time, multinationals are the targets of rigorous critiques and protests for harming local economies, environments, and coercing and manipulating local governments. Once the term “multinational” signified a unique characteristic of a few companies. Today, virtually every large corporation provides goods or services in multiple countries or has a manufacturing supply chain involving numerous countries. In 1990 the United Nations reported that there 38


were approximately 30,000 multinational companies. That figure now exceeds 60,000 (Copeland, 2006). The growth in multinationals is being driven by technology that deems borders irrelevant to providing services and manufacturing, international acquisitions and mergers, and the relevantly new phenomenon of micro-multinationals. Like the high-tech start-ups that preceded them, successful micro-multinationals promise to be gobbled up by powerful multinational corporations who desire access to new markets and efficient low cost manufacturing and service providers. This will only accelerate the international presence and influence of multinational corporations and spurn the debate as to whether this is ultimately good or bad for local communities and the people who live and work there. Corporate Structure

The construction of the corporate structure arose over many centuries. The Latin word corpus means “body.” A corporation actually embodies a business and is able to carry on business like an individual. The Scandinavian corporation Stora Kopparberg is believed to one of, if not the, first corporations granted a charter. Stora Kopparberg was granted a charter in 1347 as a copper mining company. Stora Kopparberg still exists today as a forest-product company named Stora-Enso (Cantwell, Gambardella, & Granstrand, 2004). Stora-Enso is an example of many of the attributes identified with modern corporations. Corporations are formed as entities, or bodies, separate from people who form the corporation. They have a right to own property, make legal agreements, and set up its own rules and bylaws. Corporations have a perpetual life that allows the entity to exist beyond the lifetime of shareholders, managers, and workers. For this very reason, many early churches incorporated and played a critical role in the development of the evolution of corporations (Davis, 1961). Modern corporations can also be formed with no specific business purpose and, like Stora-Enso, completely change their line of business. In addition to these characteristics, corporations enjoy many of the same personal rights as individuals and provide shareholders limited liability for debt, losses, and corporate crimes. Rise of Corporate Personhood

Corporations did not always enjoy the status they do today. In the middle of the nineteenth century, American corporations applied to local jurisThe Social Organization of Work

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dictions for one to three year corporate charters. At the end of the term of the charter, the company had to prove that it had provided benefits to the local community and its workers in order to have another one to three year charter granted (Derber, 2000). Not only were corporations temporal bodies, but their continuation was based on providing demonstrable local benefits to the community. In 1855 the Supreme Court, in Dodge v. Woosley, stated that local people through State jurisdictions still held power of corporations. This started to change in the 1880s. In 1844, the Supreme Court ruled, in Louisville, C&C.R. Co. v. Letson, that a corporation was capable of being treated as a citizen. Though the ruling was in part to an effort to hold corporations accountable to State jurisdiction, the ruling began the process of granting corporations legal personhood and started the shift away from creating local benefits to seeking personal benefit. In 1886, the Supreme Court, in Santa Clara County v. Southern Pacific Railroad, ruled that corporations could not be deprived due process under the Fourteenth Amendment. The Fourteenth Amendment, which was created to give ex-slaves access to the Bill of Rights, was being used by corporations to gain access to the Fifth Amendment’s right to life, liberty, or property (Derber, 2000). In 1906, Hale v. Henkel granted Fourth Amendment search and seizure rights to corporations making the review of corporations’ internal records more difficult to access. In 1908, Armour Packing Co. v. U.S., the Supreme Court granted Sixth Amendment rights to corporations. Though the granting of constitutional rights to corporations continue to this day, the final step in shifting a corporation away from benefitting local communities and under control of the States that grant them the right to exist as a business entity came in 1919. The Michigan State Supreme Court case Dodge v. Ford Motor Co. stated and set the precedent that corporations are primarily organized to carry on business to benefit shareholders. From that point in time, stockholder primacy has superseded the rights of local communities and workers. After this ruling, corporations stood as independent bodies endowed with citizen rights and protected by limited liability. Corporations were now positioned to turn away from local concerns and focus on actions that would financially benefit their shareholders. The Reach Beyond Borders

One of the other early uses for creating corporations, or joint-stock companies, was for colonialism and mercantilism. As early as the 15th century 40


nations and private investors regularly organized joint-stock ventures to colonize new lands or establish new lucrative trading companies (O’Brien, 2000). The risks on these ventures were very high, but the possible financial rewards were too great to ignore. Today, companies look at foreign markets in much the same manner. With the rise of mass communication and the Internet reaching these foreign markets is becoming much easier. In addition to selling products in foreign markets, many companies now manufacture all or part of their products in foreign countries. In fact, it is not usual for a company to employ companies or employees from many countries for just one product. To do this, companies use what is a called global supply chain. Dell, the world’s second largest computer maker, uses 30 key parts in every computer they sell. For each key part, Dell has multiple vendors that can the part to their exact specifications. In order to ensure that local politics, economies, and natural disasters affect Dell’s ability to deliver their product, Dell requires that no vendors producing the same part can be located in the same country. Though a computer may be built at any one of Dell’s six manufacturing sites, the parts are manufactured worldwide, and a single computer may contain parts from over twenty different countries (Friedman, 2006). Taxes

Not only can corporations move beyond the borders of a nation to manufacture and sell products, corporations can move their corporate offices across borders to gain more favorable income tax laws. This ability to move across borders in order to gain access to more favorable tax laws while still manufacturing and selling products in the country departed is a highly controversial practice of multinational corporations. This doesn’t only happen on the national level. It is a common practice of states and cities in America to forgive real estate and franchise taxes for a number of years to draw a new company to their area. The idea is that these companies will pay it back to the community in jobs and new taxes in the future. If a corporation stays long term then both the corporation and the community benefits. If after a few years the corporation leaves, then the local economy can be harmed for a number of years. A recent example of a company moving to gain favorable income tax laws is Halliburton. In 2007, after receiving $21 billion in contracts from the American government for work related to the Iraq and Afghanistan wars, The Social Organization of Work

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Halliburton Corporation decided to move from America to Dubai in order to save millions in taxes. The moral dilemma lies in the fact that Halliburton is taking all the financial benefits from the American wars and shifting its liability to pay for the war through taxes to the American taxpayers. In a historical sense, it would be the same as General Electric, who benefitted greatly from World Wars I and II and moved to Turkey during World War II. Corporate Muscle

Perhaps the most daunting aspect of large multinational corporations is their size. Fortune’s 100 largest companies have annual revenues larger than over 100 countries’ gross domestic product. Research shows that, historically, the larger the corporation, the more likely it will be involved with political lobbying (Masters, & Keim, 1985). Their ability to use massive profits in order to lobby governments for favorable laws has been a concern of critics for decades. As an example, despite decades of expert testimony before the Congress on the issue of protecting American businesses with tariffs on foreign goods the Congress consistently moved toward lower tariffs (Lindeen, 1970). Critics fear the democratic process can be undermined by foreign companies who lobby for favorable laws that disadvantage local citizens.

Applications Globalization

Those who favor the strength and influence of multinational corporations point to the many advantages gained by globalization. Companies gain access to new markets, great productivity, and broaden their capability for innovation. Countries participating in globalization tend to move away from deposited rule or nationalism, draw more foreign investment, experience growth in jobs, and begin to harmonize with other countries and cultures (Wishard, 1999). Some have argued that world-wide supply chains and investment from multinational companies make national governments think twice before engaging in military actions in fear of losing the investment and jobs that are spurring growth in their developing countries (Friedman, 2006). The critics of globalization believe that multinationals undermine democracy and the rule of law. Because multinationals can move assets and resources all over the world, they either can avoid environmental or other laws by moving manufacturing to countries with 42


lax laws, abusing local laws, exploiting legal ambiguities or threatening market withdrawal. For multinationals, if laws cannot be avoided they can be exploited due to the porous open-ended nature of these laws toward companies so capable of amassing huge profits and working on a global stage (Scheuerman, 1999). Corporate Responsibility

Large corporations understand the economic value of appearing socially responsible. Multinationals attempt to tailor their marketing campaigns based on the values of the local community (Nakata, & Pokay, 2004). Multinationals spend millions of dollars reaching out to local communities investing in education, welfare, and the arts. However, multinationals are not always socially responsible or moral. Scholars debate whether multinational corporations have a moral obligation to the nations and communities in which they operate (Koehn, 1993). The argument ultimately goes back to whether a multinational has a social responsibility to the countries it operates in, its employees, or its shareholders. The American courts have made it clear that in the United States corporations are primarily responsible to its shareholders. National Borders & Immigration

Multinational corporations not only have personhood rights, but rights that many individuals do not. Corporations can work in a country and pay income taxes in another. Through technology, companies can have employees far away from America. India provides services such as accounting, customer service, high tech support, and even taking fast food orders from drivers at a burger drive-thru (Friedman, 2006). The same borders that cause great concerns for immigrants do not hinder multinationals and their employees. Worries about immigrants crossing the border of the United States and taking American jobs seems shortsighted when multinational corporations employ people in India that already work in the American marketplace and take away American jobs, though they sit at a desk thousands of miles away. With the rapid advancements of Internet and telecommunications-based technologies since the mid 1990s, multinationals do not necessarily need employees to be physically located in a country in order for those employees to serve the consumers of that country. In many industries the immigrant worker can cross the border and work in a country without ever physically leaving their own. The Social Organization of Work

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Conclusion

Multinational corporations are much loved and much hated. They are the vanguards of the liberal marketplace, economic opportunities for historically poor nations, and a catalyst for cultural understanding and peace. They are also polluters, tax evaders, callous task masters, and the champion of broken promises. Whether multinationals are ultimately seen as doing more good than ill is usually relative to an individual’s experiences and personal biases. Marx’s concern was that capitalism would eventually go global, and unless worker unions went global their ability to organize and negotiate on their own behalf would be undermined by a company’s ability to move production elsewhere. As it turns out, Marx understood well the future international stage that business would operate on. Today, whether you like multinational corporations or not, one thing is certain. They are too big and too powerful to be going away anytime soon.

Bibliography Cantwell, J., Gambardella, A, & Granstrand, O. (2004). The economics and management of technological diversification. London: Routledge. Copeland, M.V. (2006). The mighty micro-multinational: The garage goes global as a new breed of startup operates worldwide in the battle for technology, talent, and customers. Business 2.0 Magazine, July 28. Retrieved August 15, 2008. http://money.cnn.com/ magazines/business2/business2_archive/2006/07/01/8380230/index.htm Davis, J.P. (1961). Corporations: A study of the origin and development of great business combinations and of their relation to the authority of the state. New York: Capricorn Books. Derrida, J., (1994). Specters of Marx: The state of the debt, the work of mourning, and the new international: Trans. P. Kamuf. New York: Routledge. Friedman, T.L. (2006). The world is flat: A brief history of the twenty-first century. New York: Farrar, Straus & Giroux. Koehn, D. (1993). Rethinking the responsibilty of international corporations response to Donaldson. Business Ethics Quarterly, 3(2), 177-183. Retrieved August 15, 2008 from EBSCO Online Database SocINDEX with Full Text: http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=6645073&site=ehost-live Lindeen, W. (1970). Interest-group attitudes toward reciprocal trade legislation. Public Opinion Quarterly, 34(1), 108-112. Retrieved August 15, 2008, from EBSCO Online Database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct= true&db=sih&AN=5415697&site=ehost-live

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Masters, M.F., & Keim, G.D. (1985). Determinants of PAC participation among large corporations. Journal of Politics, 47(4), 1158 – 1173. Retrieved August 15, 2008, from EBSCO Online Database SocINDEX with Full Text: http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=4814052&site=ehost-live Nakata, C., & Pokay, Y.H. (2004). Culture studies in the global marketing literature: Current state and future. Journal of International Marketing & Marketing Research, 29(3), 111-130. Retrieved August 15, 2008 from EBSCO Online Database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=14 351025&site=ehost-live O’Brien, P. (2000). Mercantilism and imperialism in the rise and decline of the Dutch and British economies 1585-1815. De Economist, 148(4). Retrieved August 15, 2008, from EBSCO Online Database SocINDEX with Full Text: http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=3797365&site=ehost-live Scheuerman , W.E. (1999). Economic globalization and the rule of law. Constellations: An International Journal of Critical & Democratic Theory, 6(1), 3-25. Retrieved August 15, 2008 from EBSCO Online Database SocINDEX with Full Text: http://search.ebscohost. com/login.aspx?direct=true&db=sih&AN=3253175&site=ehost-live Wishard, V. (1999). Globalization: Humanity’s great experiment. Futurist 33(8), 60 – 61. Retrieved August 15, 2008, from EBSCO Online Database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=2302386&site=eho st-live

Suggested Reading Drutman, L. & Charlie Cray, C. (2004). The people’s business: Controlling corporations and restoring democracy. San Francisco: Berrett-Koehler Publishers. Robins, N. (2006). The corporation that changed the world: How the East India company shaped the modern multinational. London: Pluto Press. Zerk, J.A. (2007). Multinationals and corporate social responsibility. CambridgeUniversity Press.


Cambridge:

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Corporate Capitalism Francis Duffy

Overview Imagine for a moment the marketplace as a giant wheel, its hub the center of all economic production, its rim the sum total of the needs and wants we individually signal, the spokes that connect the two is the for-profit firm. Now watch the wheel turn: that’s capitalism in action. Dent or break enough ‘spokes’ and the wheel will collapse or fly apart: livelihoods are lost, good and services go unsold, firms go bankrupt, orderly markets breakdown. And that’s why, to paraphrase the great sociologist Max Weber, control over the means of production – land, labor, machinery, and materials – must be exercised by a common management, for this arrangement alone assures the most efficient use of each. As does a distinct form of private ownership: the joint-stock company whose shares can be bought and sold on the open market (Collins, 1980). For this to work, however, ownership rights, privileges and obligations had to have the force of law. But for such de jure protections to be extended, the enterprise had to be a legal entity in its own right, i.e. be incorporated. Otherwise, shareholders were required to pay any and all of the venture’s debts whether or not they actually had a hand in running them up. So either the individual shareholders actively participated in day-to-day affairs of the business, a managerial non-starter, or else trust that company officers are not spendthrifts or incompetents. 46


Understandably, the risks outweighed the potential rewards for many prospective investors. Vast amounts of capital were withheld consequently until the individual shareholders’ liability was somehow limited by law. The first viable work-around, the commenda, enriched the Italian merchants of the fourteenth through sixteenth centuries whose patronage of the arts fueled the Renaissance. It restricted the liability of non-managing partners but not, significantly, of managing partners. They too were exempted eventually as the commenda morphed into the modern-day corporation (Gillman & Eade, 1995).

Further Insights Capitalism is by its very nature ecumenical. Scale, however, greatly affects organizational structure: the manner in which operations are monitored and supervised, decisions are made and communicated. How authority is exercised is not as important as who exercises it; the owner or the manager and at whose behest? In search of an answer, corporations have reinvented themselves four times so far, progressing in organizational forms from family to managerial, to institutional and welfare capitalism. Family Capitalism

The family as corporate entity is actually a very old legal principle. Aristotle commented in the fourth century BCE on how the family had to honor any commercial obligation entered into by any of its members. Back then, of course, the small farms, artisan’s workshops and trader’s market-stalls economic life revolved around were family owned and run. Yet the industrialized European Community (EC) of today bears a striking resemblance to the Greek city-states of antiquity: over seventy-five percent of businesses in the EC circa 2000 A.D. were family-owned. These going concerns accounted for 65 percent of all the goods and services produced there (Jones & Rose, 1993, p. 1). Nowhere is the latent appeal of family capitalism more evident today than in China’s surging economy. Between 1989, the first year they were counted, and 2002 private enterprises, most of which were family owned, grew in number over 25-fold to top the two million mark (Zhang & Yu, 2005, p. 4). Why family capitalism? Well, first of all, members of extended families know and trust each other. They willingly float short term loans to tide The Social Organization of Work

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over financially-strapped relations and frequently pool resources to mutual advantage. As such they’re far more approachable than a bank or venture capitalist when the time comes to raise seed money. As employees, secondly, they will work long hours for little pay and require less supervision. All of which an owner can put to good advantage in keeping overhead costs low, provided that he or she remains a hands-on manager. The more separated an owner grows from day-to-day operations, the more extended the lines of intra-company communications and control and the more problems this creates. That’s why most family-run businesses remain ‘mom and pop’ operations. But family capitalism is entrepreneurially friendly only to a point. Successfully starting a business and expanding one are two very different undertakings. Each additional market entered, new product-line launched or production-technology installed increases a firm’s scale and scope. Confronted daily with too many decisions and too many problems to solve, many of a technical nature, the hands-on, informal management style that was once such a strategic asset becomes a liability. A more hierarchical management structure that cedes operational control to specialists and business professionals is required. Without it, as many a family-owned and -run blast-furnace, shipyard and textiles-mill in nineteenth century Britain discovered too late, a firm cannot leverage the economies-of-scale or more efficient production technologies as well or as quickly as their better organized competitors and profits turn into losses, success into failure. To accommodate this necessary growth, a family-owned firm had to recast itself as a bureaucracy. Now, families have successfully made this transition yet maintained overall control by reserving very senior management positions for themselves. France’s Michelin is one, South Korea’s Chaebol conglomerates are another. Their success rests as much on what they didn’t do as what they did, though, for the owners of family businesses are just as prone to human temptation as the rest of us. And there are many pitfalls unique to their station in life just waiting to ensnare them: nepotism, the siphoning off of capital to finance opulent lifestyles, management decisions inspired by family feuding instead of sound business sense, succession struggles, etc. Avoid these and the successive generations of the family can and do provide their firms continuity, a strong corporate culture and an emphasis on the company’s long-term as opposed to its short-term financial performance. 48


Managerial Capitalism

In capital- and technology-intensive industries like oil, steel, car manufacturing, etc., economies-of-scale matter: the more production capacity at a firm’s disposal, the lower its unit-costs vis-à-vis its competitors’. Coordinating the inputs to and outputs from such a complex techno-structure was virtually impossible without the attendant bureaucracy. With its centralized decision-making, standardized production, and uniform administrative procedure, this nineteenth century innovation perfectly suited mass industrialization. It imposed a machine-like precision and orderliness on day-to-day operations that allowed the firm to undertake and coordinate on a very large scale a host of highly specialized, often technical functions. At first, the ‘managers’ that held this bureaucratic structure together were largely first-line production supervisors or technical experts. They held their positions by virtue of their functional knowledge and expertise. As their number grew within the firm, however, so did the need to monitor, coordinate and direct their efforts and, by extension, the efforts of those below them. This responsibility increasingly fell to a new class of professional manager versed in more generic business principles and practices. And with them came a top-down, pyramidal management-structure that could easily accommodate growth widely adopted by corporations adopted in the first half of the twentieth century. (Wilson & Thomson, 2006). And they had to grow to earn the profits to constantly re-invest in increasingly expensive production technologies. At stake was their continued ability to manufacture the high-tech items consumers and businesses wanted at the lowest possible cost. They could of course turn to the financial markets to raise the enormous sums required but would then be saddled with heavy debt burden for years to come. Or, profits permitting, they could finance these capital projects themselves out of their retained earnings. So grow they did in sales, personnel, plant size and number, geographic reach, and, more problematically perhaps, so too did the range of products they manufactured. Diversification acted as a hedge against cyclical downturns in particular industries. Corporations keen to maintain their profitability year-in, year-out expanded far a field from their traditional markets, acquiring established business in different industries if necessary, to broaden the scope of their product portfolios (Fusfeld, 2000). The Social Organization of Work

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But no two (much less three or four) industries are exactly alike. An organization whose underlying dynamic is to search out and exploit commonalities does not deal well with diversity. Institutionally-speaking, decision-making here is simply too far removed from actual market events to be timely or necessarily well-informed; a new, more decentralized type of organizational structure was needed. And so the hierarchically based, or “U-firm,” became the multiple profit-center or “M-firm.” Here, divisional managers with knowledge of and experience in a particular industry oversaw manufacturing and marketing of particular product lines. Upper echelon management, however, retained overall control thanks in large part to advances in managerial accounting and financial-statement analysis. Anyone who had mastered both could turn raw bookkeeping entries into a revealing set of very specific performance metrics applicable to any type of business imaginable. With them, a conglomerate could also measure the extent of each division’s contribution to its overall strategic agenda (Petit, 2005). Crucially, the agenda did not always place a premium on maximizing divisional profits in the 1950s, 60s and 70s. Indeed, losses from newer ventures might well be countenanced as a necessary investment; the reliable if unspectacular profit margins of maturer ventures welcomed for the cash they generate. The quarterly and yearly financial statement the conglomerate issued to stock-holders mattered, of course, but they were not the be all and end all they are today. For this was the era of the small investor whose smattering of stocks meant that too many people in too many places owning a corporation could not be much of a force. And even if they did succeed in banding together, shareholders back then (as now) could only vote up or down nominees to the board of directors hand-picked by the very same senior executives they would subsequently oversee. Most of these appointees were themselves executives at other corporations and major institutions, i.e. professional managers who shared the same values, outlook and concerns. For all intents and purposes, control now rested squarely in the hands of professional managers. As stewards of a very large firm competing against other very large firms, they could focus all their attention on what concerned them the most: protect and further the corporation’s influence in the marketplace and, by extension, their own standing in the corporation.

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Often that marketplace behaved like an oligopoly where very large firms vie with each other for a larger share of industry’s sales but remain leery of price wars, or for that matter any other destabilizing moves. Better there be cooperation and good-will among industry stakeholders and fellowtravelers on matters of mutual interest. In effect, as custodians of their firm’s elaborate techno-structure, they feared the unpredictable more than any competitor. In their eyes, any interruption of the flow of operating capital slated for reinvestment in plant and equipment threatened the firm’s long-term survival and, as such, represented an unacceptable risk to the shareholder’s interest. Institutional Capitalism

Something happened in the 1980s that stood this staid world of corporate management on its head. That something was the institutional investor: the pension funds, investment trusts, insurances companies, banks, non-financial companies and wealthy families sharing constellations of interests (“Organization, management, and control”, 2003). These loose groupings accumulated enough stock to vote themselves onto the boards of major corporations and impose a radically different management philosophy neatly summarized in the phrase ‘shareholder value’. One metric of management performance and one alone mattered here: the price of the corporation’s stock. For, after all, isn’t the amount one’s prepared to pay for something the acid test of its perceived worth? A rising share-price represents a vote of confidence on the part of millions of investors large and small in a company’s performance, a declining one the opposite. More to the point, a rising share-price means each and every shareholder is financially better off; which is the whole point of investing in the first place. Management’s principal objective accordingly should always be to maximize corporate profits in the short-term. Anything less would be tantamount to failing in its fiduciary responsibility to shareholders, a traditional concept subject to periodic re-interpretation. To meet this responsibility, the agency role of management must be to doggedly pursue shareholders’ interests to the exclusion of all else. What exactly these interests are depends on who’s using the term. So, for example, even though they pursued a diametrically opposed strategy, M-firm corporate managers can be said to have lived up to their fiduciary responsibility just as managers of today’s ‘lean and mean’ firm (Osigweh, 1994). The Social Organization of Work

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What’s changed in the interim is the working definition of shareholder interests. Now, interpreting the meaning of galvanizing words and slogans is one of the prerogatives of power. As the institutional investor increasingly claimed this right, shareholder value became synonymous with the financialization of the firm’s priorities. The net result has been no less than a complete overhaul of the corporate business model. Less profitable product-lines are now quickly divested, any and all non-mission critical functions are outsourced to cut costs; multiple layers of middle management meanwhile have been shed in favor of a flatter organizational structure, whole operations sent ‘off-shore’ to take advantage of lower labor costs and looser regulatory regimes. For their troubles, senior executives were rewarded with very lucrative stock options in lieu of cash bonuses. That made them owners once again and the retreat from Managerial Capitalism even more of a forgone conclusion. Welfare Capitalism

Altruism is not a virtue one normally associates with capitalism. Yet at their height the very generous employee health-insurance policies, pension funds, tuition-rebate and other fringe benefits subsidized by the likes of Kodak, Sears and IBM far surpassed anything the government provided. But these were not selfless acts; major corporations only stood to gain financially from having a loyal, motivated workforce (“Welfare Capitalism,” 2001). Lower turnover reduced transaction costs; retention of skilled hourly- and salaried knowledge-workers fostered innovation and improved efficiency, and high quality prospective employers were more likely to seek them out. Corporations got value for their money. But they were even more enamored with what they didn’t get: union organizing. Intent on not ceding any control of their operations to outside unions, large industrial corporations resolved to undercut their appeal by voluntarily providing workers amenities they might or might not get in a union contract. And corporations were prepared to go to considerable lengths to ensure this stratagem’s success. Among plants of 250 or more workers surveyed in New York State back in 1928, 46.9 percent offered employees group life insurance, 26.7 percent a pension plan, 25.5 percent a paid vacation, and 17.1 percent a stock-purchase program (Gitelman, 1992, p. 28). During the Depression that followed, many were eliminated, only to be revived and greatly expanded immediately after World War Two. By 52


then, big business wanted not only to blunt the spread of unions but also to offer a private-sector alternative to the government-funded social-welfare programs of the New Deal (Stoesz & Sunders, 1999). By the 1960s, workers were convinced enough of the merits of these alternatives to make them a precondition of employment; unions’ absolute musts in new contract negotiations. By the mid-1980s Welfare Capitalism directly funded 25 percent of all the social welfare payments made in the U.S. (Brown, 2001, p. 645). Within a decade, though, the realities of global competition on the one hand, and the demands of the institutional investor on the other, forced many of the very same companies to reverse course. And Welfare Capitalism’s fortunes have been in decline ever since. Conclusion

Markets organize supply and demand but it is the corporation that is the true cornerstone of Capitalism. Within its four walls materials, technology and labor physically come together to produce the goods sold in these markets. Corporations create value. But to do this they must have sufficient capital, be well-run and, most importantly of all, accommodate change. Simply put, corporate capitalism does this better than any other type of organization yet invented by man. Be it ever increasing scale and complexity, technological progress, a tilt in the balance of power within the organization in favor of its owners or its managers, the corporation adapts. And therein lies the reason for its success.

Bibliography Brown, M. (1997). Bargaining for social rights: Unions and the reemergence of welfare capitalism, 1945-1952. Political Science Quarterly, 112(4), 645. Retrieved June 28, 2008, from EBSCO online database, Academic Search Complete.http://search.ebscohost. com/login.aspx?direct=true&db=a9h&AN=198116&site=ehost-live Coleman, J. (1984). Introducing social structure into economic analysis. American Economic Review, 74(2), 84-88. Retrieved July 22, 2008, from EBSCO online database, Business Source Premier.http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=4 511027&site=ehost-live Collins, R. (1980). Weber’s last theory of capitalism: A systematization. American Sociological Review, 45(6), 925-942. Retrieved July 18, 2008, from EBSCO online database, Business Source Premier. http://search.ebscohost.com/login.aspx?direct=tr ue&db=buh&AN=14773577&site=ehost-live Dore, R., Jackson, G., Kosai, Y., & Waldenberger, F. (2002). Stock Market Capitalism vs. Welfare Capitalism. New Political Economy, 7(1), 115-127. Retrieved June 28, 2008, The Social Organization of Work

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from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=6222490&site=ehost-live Fusfeld, D. (2000). A Manifesto for Institutional Economics. Journal of Economic Issues, 34(2), 257. Retrieved June 28, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=3256726&site =ehost-live Gillman, M., & Eade, T. (1995). The development of the corporation in England, with emphasis on limited liability. International Journal of Social Economics, 22(4), 20. Gitelman, H. (1992). Welfare capitalism reconsidered. Labor History, 33 (1), 5-31. Retrieved June 28, 2008, from EBSCO online database, SocINDEX with Full Text.http://search. ebscohost.com/login.aspx?direct=true&db=sih&AN=9303260283&site=ehost-live Jones, G., & Rose, M. (1993). Family capitalism. Business History, 35(4), 1-16. Retrieved June 28, 2008, from EBSCO online database, SocINDEX with Full Text.http://search. ebscohost.com/login.aspx?direct=true&db=sih&AN=9408030214&site=ehost-live Osigweh, C. (1994). A stakeholder perspective of employee responsibilities and rights. Employee Responsibilities & Rights Journal, 7(4), 279-296. Retrieved July 17, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login. aspx?direct=true&db=sih&AN=9501173534&site=ehost-live Petit, P. (2005). Managerial capitalism by any other name. Challenge (05775132), 48(5), 62-78. Retrieved July 17, 2008, from EBSCO online database, Business Source Complete.http:// search.ebscohost.com/login.aspx?direct=true&db=bth&AN=18314465&site=ehost-live Stoesz, D., & Saunders, D. (1999). Welfare capitalism: A new approach to poverty policy? Social Service Review, 73(3), 380-400. Retrieved June 28, 2008, from EBSCO online database, Academic Search Complete.http://search.ebscohost.com/login.aspx?direct= true&db=a9h&AN=2250206&site=ehost-live Welfare capitalism. (2001). Dictionary of Human Resource Management. Retrieved July 19, 2008, from EBSCO online database, Business Source Premier.http://search.ebscohost. com/login.aspx?direct=true&db=buh&AN=25506499&site=ehost-live Wilson, J., & Thomson, A. (2006). Management in historical perspective: Stages and paradigms. Competition & Change, 10(4), 357-374. Retrieved July 17, 2008, EBSCO online database, Business Source Complete.http://search.ebscohost.com/login.aspx?d irect=true&db=bth&AN=23616710&site=ehost-live Zhang, J., & Yu, D. (2005). Forces, constraints, and professionalization of Chinese family business: A theoretical model. Conference Papers -- American Sociological Association, 2005 Annual Meeting, Philadelphia, 1-31. Retrieved July 17, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login.aspx?direct=tr ue&db=sih&AN=18615013&site=ehost-live

Suggested Reading Crouch, C. (2005). Models of capitalism. New Political Economy, 10(4), 439-456. Retrieved July 18, 2008, from EBSCO online database, Business Source Premier.http://search. ebscohost.com/login.aspx?direct=true&db=buh&AN=18969894&site=ehost-live 54


Ebbinghaus, B., & Manow, P. (2001). Chapter 1: Introduction. In, Comparing Welfare Capitalism. 1-24. Abingdon: Routledge. Retrieved June 28, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login.aspx?direct=tr ue&db=sih&AN=17147785&site=ehost-live Elliott, J. (1980). Social and institutional dimensions of the theory of capitalism in classical political economy. Journal of Economic Issues, 14(2), 473. Retrieved June 28, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login. aspx?direct=true&db=sih&AN=4684710&site=ehost-live Elliott, J. (1984). Karl Marx’s theory of socio-institutional transformation in latestage capitalism. Journal of Economic Issues, 18(2), 383. Retrieved June 28, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=4678722&site=ehost-live Hannah, L. (2007). The ‘Divorce’ of ownership from control from 1900 onwards: Recalibrating imagined global trends. Business History, 49(4), 404-438. Retrieved July 17, 2008, EBSCO online database, Business Source Complete.http://search.ebscohost. com/login.aspx?direct=true&db=bth&AN=25902084&site=ehost-live


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Microfinance Samantha Christiansen

Overview The distribution of the world’s wealth and resources has been a topic of interest to sociologists since the field was first imagined. Indeed, for many sociologists, access to resources is a fundamental aspect of how society functions. As the world has become more economically intertwined, sociologists now examine issues of global economic interaction between the developed and developing world as well as the relationship between local economic conditions and sociological changes. The subject of microfinance has particularly illustrated both the connections between developed and developing nations and the impact of economic policy and action on social orders and structures within a community.

What is Microfinance? Microfinance generally refers to a variety of banking and lending activities geared toward very low-income clients, typically in developing nations. Rajdeep Sengupta and Craig P. Aubuchon (2008) have explained: Although the terms microcredit and microfinance are often used interchangeably, it is important to recognize the distinction between the two … microcredit refers to the act of providing the loan. Microfinance, on the other hand, is the act of providing these same borrowers with financial services, such as savings in56


stitutions and insurance policies. In short, microfinance encompasses the field of microcredit (p. 9). Thus, microfinance can consist of micro-credit, micro-loans, micro-insurance, and micro-savings accounts, among other applications. Ideologically, microfinance advocates often identify themselves as part of a sociological process, as well as an economic scheme, describing microfinance as: . . . a movement that envisions a world in which low-income households have permanent access to a range of high quality financial services to finance their income-producing activities, build assets, stabilize consumption, and protect against risks (“What is Microfinance?” 2009). Microfinance rests on the idea that stratified societies have excluded certain portions of society from economic access, which has also led to greater social marginalization. Microfinance Institutions (MFIs), which refers to any organization (non-profit or commercially oriented) that provides financial services for the poor, administer microfinance through various projects that often incorporate specific social goals with the economic goals, for example, women’s empowerment is a common aspect of microfinance projects (Consultative Group to Assist the Poor, 2009). According to Sengupta and Aubuchon, in 2008, “it is estimated that anywhere from 1,000 to 2,500 microfinance institutions (MFIs) serve some 67.6 million clients in over 100 different countries” (2008, p. 9). The Emergence of Microfinance

Microfinance developed differently in various parts of the world. Almost everywhere, however, it emerged from a similar social problem: lack of financial access by the poor to traditional financial services. The traditional, commercial banking sector is built on a system of credit and collateral, neither of which the poorest sections of society can provide. Low-income communities were viewed as too high-risk for banks to offer loans, and the savings and investment products at commercial banks charged fees that were prohibitive to the poor with only a small amount of money to begin with. Many of the poorest clients operated within budgets that were far The Social Organization of Work

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lower than any traditional banking system was designed to handle; poor clients that lived on a few dollars a day needed loans of amounts smaller than the banks offered. Leading further to this exclusion was a physical lack of bank branches in the poorest, most rural communities of the world. The net result of the system was that a large portion of the world’s poor were virtually excluded from the commercial banking sectors (Sengupta & Aubuchon, 2008; Yunus, 1999). This exclusion is further compounded when comparing developed and developing nations. Access, or lack of access, to traditional financial products can be seen when comparing loan availability in the developed vs. developing world. The Consultative Group to Assist the Poor has reported that in developed nations 82% of adult individuals have received some sort of loan, while in developing nations only 22% of adult individuals have received loans (Consultative Group to Assist the Poor, 2009). The Informal Economy

Prior to the intervention of microfinance, low-income communities operated largely within the informal economy. The ‘informal economy’ refers to unofficial economic activity; it is unregulated, unofficial, and untaxed. It can operate as a discrete entity from the formal economy, although frequently the two overlap and exist side by side. While some government lending schemes have been successful in providing small-scale financial services to farmers and rural poor, more frequently, low-income communities developed systems of finance based on kinship, neighbors, or cooperative agreements. The most informal of the scenarios was to borrow money from family or neighbors when needed. This led to social strains when loans were not repaid and in very poor communities or times of economic downturn, there was often no option for borrowing from family as everyone was struggling. Since the loans were unregulated and often given under quite desperate situations, the lender held a high degree of power in the relationship, and the loan recipient was often forced to accept exorbitant interest or conditions on the loan. Cooperative Credit Societies

Cooperative credit societies are the most structured of these options, and may be seen as precursors to microfinance. In a cooperative credit society, several members of a village or town would contribute a small amount of

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money to a mutual savings account, and when needed, would have the right to borrow from the account. While cooperative credit societies were successful in many regards, there were also problems with local power dynamics affecting the ability of some members to access the funds when needed. In addition, in cases of severe famine or crop failure, the collective pot was not big enough to cover the needs of all members at once. Even more problematic was the scenario in which the money was not repaid – not only was the entire community unable to replace the fund, the loan defaulters would be socially excluded, even physically banished or harmed, leaving their situation more desperate than prior to the loan (Collins, Murdoch, Rutherford & Ruthven, 2009; World Bank, 2006). In Latin America, microfinance developed in the latter 20th century with the vision that it would serve as a bridge to the traditional banking sector. Much like previous “targeted lending” schematics, clients were sought from the “economically active poor,” meaning poor people that already held a small amount of assets (usually an existing business) that just needed a small loan to help transition to an economic position compatible with traditional banking. From its very beginning in Latin America, microfinance was seen more as a business than a social movement (World Bank, 2006). In Asia, Africa, and more recently Europe, microfinance has instead developed around the rhetoric of poverty alleviation, rather than business. Muhammad Yunus, founder of one of the first MFIs in South Asia, Grameen Bank of Bangladesh, describes microfinance as a social revolution, and has argued that, Poverty is not created by the poor. It is created by the structures of society and the policies pursued by society. Change the structure as we are doing in Bangladesh, and you will see that the poor change their own lives. Grameen’s experience demonstrates that, given the support of financial capital, however small, the poor are fully capable of improving their lives (Yunus, 1999, p. 205). Thus, while two major styles of microfinance continue to function (social and business), in most of the developing world microfinance has become more popularly associated with the social project of poverty alleviation. Microfinance can be seen as a tool toward social change through the method of economic change.


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Applications Microfinance Models

While the goals of microfinance are broadly the same from institution to institution and location to location, the methods by which microfinance is accomplished vary greatly. Different MFIs have widely variant modes of delivery, but the major models that have evolved are the Cooperative model, the Grameen Model and the Mixed Model. As a result of increasing internet technology, a new method of person to person lending has become popular. This internet model is in many ways a Mixed Model, but given the unique role of technology, it warrants separate consideration as an Internet Model of microfinance. Cooperative & Grameen Models

The Cooperative Model is an outgrowth of the old cooperative credit societies, but takes steps to avoid some of the previous pitfalls. Like the cooperative credit societies, many members in a community combine their savings into a single account that serves as collateral for loans. Unlike previous schemes however, the Cooperative Model involves an MFI that maintains varying levels of control over the funds and offers more stability and recovery options for the community in the case of a loan default (World Bank, 2006). The Grameen Model is similar to the Cooperative model in that it requires members of a community to work together to maintain access to credit. In this method, low-income clients organize into groups of five and enter into an agreement with the bank. The first two members of the group are given a loan first, and in four to six weeks if the loan is repaid, two more are allowed to take a loan. In four to six weeks when that loan is repaid, the final member is allowed to access a loan. Each loan group is also part of a larger unit called a center, and the units meet and monitor each other within the community (Sengupta & Aubuchon, 2008). The Grameen model differs from the Cooperative model in that it is based solely on credit, and the groups do not contribute to a mutual savings or require collateral. The Mixed Model

The Mixed model combines aspects of the Grameen and Cooperative models, and can take various forms. Within the Mixed model, a type of 60


delivery commonly known as person to person lending, has emerged with increasing popularity. Person to person lending still uses MFIs to distribute funds, but also presents an opportunity via internet websites for individuals in the developed world to make loans to specific individuals though websites or other non-profit organizations. The loans are monitored and distributed by MFIs, but the money comes from lenders facilitated by another entity, usually an NGO. Organizations such as the NGO Kiva have been largely successful in funding many small projects. The basic strategy in the Kiva approach is that local MFIs serve as field partners and gather information and make small loans to individuals. The information is then used to create a profile, including photos and personal information, which is uploaded to the website. Potential lenders can view individual profiles and make a loan of any amount to that individual. The NGO then combines the money and disburses it to the MFI. The funds may be used for either that specific loan or other loans – a common misperception in the process is that the lending is actually linking the individual making the loan with an individual receiving it. The individual that gives the loan via the website receives updates on the repayment by the loan recipient. When the loan has been repaid to MFI in full, the individual that made the loan via the website receives his or her money back (“About Microfinance,” 2009). Essentially, since the loans are usually already made by the MFIs before the profiles are loaded, individuals via the website are providing more of an assurance on the loan than an actual loan. The person to person lending trend has contributed to a wider popular interest in microfinance in the developed world. The popularity of the idea was seen when, after a September 2007 episode of the television show The Oprah Winfrey Show that featured the idea and the Kiva website, Kiva received funding within hours for every loan listed on the site (Holahan, 2007).

Issues Microfinance & Women

Since the 1970s, microfinance has developed a great deal and gained wider popularity and usage. Indeed, the pace at which microfinance has expanded in the developing world has drastically changed the economic conditions of millions. Sociologists have studied many aspects of these The Social Organization of Work

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changes, but more than any other issue, they have examined the relationship between microfinance and gender. Since many MFIs have social goals of empowerment of marginalized communities, and since in many patriarchal societies women represent an acutely marginalized aspect of the community as a result of social mores, a large number of microfinance projects throughout the world have targeted women as clients. In addition to the social empowerment rationale, many MFIs have argued that women make better clients in general. The data suggests that women may be more riskaverse in making investment decisions, may be more likely than men to invest the money back into the household, and have higher repayment rates (Sengupta & Aubuchon, 2008; Yunus, 1999). In addition, less positive issues affect women’s likelihood to repay as well. MFIs have acknowledged that women tend to be more vulnerable and accountable to social norms, making the model of group repayment pressure more effective on women, and women tend to have less physical mobility in communities, which gives them fewer options to leave and makes them easier to monitor (Sengupta & Aubuchon, 2008). The relationship between microfinance and women has led to both criticism and praise. Some microfinance projects have focused on empowering women by increasing economic independence. Some studies suggest that this first step of microfinance access can lead to greater collective behavior in women, and that the increased visibility and economic stability enables women to focus more on personal rights issues (Sanyal, 2009; McCarter, 2006). Other studies have suggested that helping women become more economically active members of the community can result in increased involvement in community decision making and may even lead to increased voice within individual households (Holvoet, 2005). Questions regarding the benefit of microfinance’s emphasis on women remain, however. Studies have also suggested that despite the high ratio of women borrowers, men predominantly control the usage of the loans once the loan is acquired. Many husbands maintain sole discretion over the funds and the women have little say in the usage once it is disbursed (Goetz & Gupta, 1996; Sengupta & Aubuchon, 2008). Critics of microfinance also argue that since microfinance is not addressing the larger social structures affecting women such as power and status within the household or occupational options for women outside of the home, it is in fact ben62


efitting more from women’s oppression than it is alleviating it. The higher repayment rate of loans by women is a great benefit to MFIs, but ultimately relies on the very social inequalities the loans claim to be addressing (i.e., lack of options for women). Microfinance & Capitalism

Microfinance has also been critiqued with regard to other sociological concerns. Many have argued that microfinance merely extends the same neoliberal ideology that promotes the reduction in state aid for the poor in lieu of free market, profit-driven options. Microfinance can be seen to fill in the gaps at the levels of state failure to provide for all citizens, subverting a natural process of change and mobilization that could lead to greater state effectiveness. This perspective also suggests that it is ultimately the job of the state, not individual organizations, to address issues of poverty and distribution, because private organizations are not democratically governed and communities have little power to change the policies or exert any control over the direction of private companies. Furthermore, microfinance’s emphasis on entrepreneurship further entrenches the capitalist, free market ideology into the development process, and could lead to a weakened state, or create tensions within state identity. Effectively, microfinance can be seen as incorporating the poor into the capitalist system without addressing the inherent exploitation of capitalist ideology. The injection of capital at the individual level may alleviate individual poorness, but does little to affect the larger social problem of poverty (Fernando, 2006). Regulation of MFIs

Critics of microfinance have also pointed to the unclear regulation standards of MFIs. The degree of government reporting requirements and regulations for MFIs varies highly from country to country, with some having virtually no governmental control over the actions of private lenders (World Bank, 2006). This has led to a wide range of interest rates and fees, some of which critics claim are exorbitant. Interest rates for microloans can reach as high as 40% (compared to traditional products which peak below 20%), making critics claim the MFIs are preying on the poor rather than aiding them. In response, many microfinance organizations and advocates cite the higher costs of microfinance; making many small loans, they argue, requires more manpower and upkeep than one or two large ones, and the nature of the microfinance system of highly involved lenders also requires The Social Organization of Work

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greater manpower and infrastructure (Consultative Group to Assist the Poor, 2009). Concerns over the costs involved with microfinance have also led to concerns over the sustainability of the trend in the long term and its ability to create sustainable economic progress within a community or the world (Reno-Weber, 2008). The financial dependence of some communities on financially instable MFIs has led to critiques that microfinance must address the systemic issues of profit and sustainability for MFIs as well as for communities. Ideology & Culture

The global dimension of microfinance also presents some concerns for sociologists. While many MFIs are locally operated, many are international NGOs based in the developed world. Concerns in the developing world over the types of societal changes foreign NGOs envision can lead to tensions. On one hand, the foreign NGOs offer access to economic resources, but on the other hand, the cultural divide may present problems regarding western-centric visions of modernity and a definition of development that is insensitive to local culture and tradition. The relationship between foreign investors and local loan recipients is not based on an equal power dynamic, and some communities may feel pressured to make social changes they fundamentally dislike in order to gain the microfinance products. Critics of microfinance projects argue that the money of microfinance is being used to export the cultures and norms of the developed world into the developing world. This importation of western ideology and culture is particularly problematic in societies that have violent and tragic histories of exploitation by means of foreign interventions and colonialism (Fernando, 2006). All in all, microfinance has drastically changed the way that the world interacts economically and it has made visible changes in thousands of communities across the globe. As the trend has really only emerged in full force in the latter 20th century, sociologists are still exploring the vast arena of topics microfinance raises. The ever changing global economic climate has required microfinance advocates to continually adapt and change the models of funding and delivery, and will no doubt continue to present new challenges and opportunities in the future. 64


Bibliography About Microfinance. (2009). Retrieved December 1, 2009 from Kiva website. http://www. kiva.org/about/microfinance Collins, D., Morduch, J., Rutherford S., & Ruthven, O. (2009). Portfolios of the poor: How the world’s poor live on $2 a day. Princeton, NJ: Princeton University Press. Consultative Group to Assist the Poor. (2009). About microfinance. Retrieved November 29, 2009 from CGAP http://www.cgap.org/p/site/c/about/ Fernando, J. (2006). Microfinance: Perils and prospects. New York, NY: Routledge. Goetz, A. & Gupta. R. (1996). Who takes the credit? Gender, power, and control over loan use in rural credit programs in Bangladesh. World Development 24 (1), 45-63. Holahan, C. (2007). EBay: The place for microfinance. BusinessWeek Online, 24. Retrieved November 31, 2009 from EBSCO Online Database Academic Search Complete. http:// search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=27264691&site=ehost-live Holvoet, N. (2005). The impact of microfinance on decision-making agency: Evidence from South India. Development & Change, 36(1), 75-102. Retrieved November 31, 2009 from EBSCO Online Database Academic Search Complete. http://search.ebscohost.com/ login.aspx?direct=true&db=a9h&AN=16567550&site=ehost-live McCarter, E. (2006). Women and microfinance: Why we should do more. University of Maryland Law Journal of Race, Religion, Gender & Class, 6(2), 353-366. Retrieved November 31, 2009 from EBSCO Online Database Academic Search Complete. http:// search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=28531898&site=ehost-live Reno-Weber, B. (2008). Microfinance goes mainstream. Kennedy School Review, 8, 123128. Retrieved November 29, 2009 from EBSCO Online Database Academic Search Complete http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=329975 44&site=ehost-live Sanyal, P. (2009). From credit to collective action: The role of microfinance in promoting women’s social capital and normative influence. American Sociological Review, 74(4), 529-550. Available at EBSCO Online Database SocINDEX with Full Text http://search. ebscohost.com/login.aspx?direct=true&db=sih&AN=43540283&site=ehost-live Sengupta, R., & Aubuchon, C. (2008). The microfinance revolution: An overview. Review (00149187), 90(1), 9-30. Retrieved November 29, 2009 from EBSCO Online Database Academic Search Complete. http://search.ebscohost.com/login.aspx?direct=true&db =a9h&AN=28513880&site=ehost-live What is microfinance? (2009). Microfinance Gateway. Retrieved November 29, 2009 from http://www.microfinancegateway.org/p/site/m/template.rc/1.26.12263/ World Bank. (2006) Microfinance in South Asia: Toward financial inclusion for the poor. Washington DC: World Bank. Yunus, M. (1999). Banker to poor: Micro-lending and the battle against world poverty. New York, NY: Public Affairs.


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Suggested Reading Chemin, M. (2008). The benefits and costs of microfinance: Evidence from Bangladesh. Journal of Development Studies, 44(4), 463-484. Retrieved November 31, 2009 from EBSCO Online Database Academic Search Complete http://search.ebscohost.com/ login.aspx?direct=true&db=a9h&AN=31808472&site=ehost-live Mosley, P., & Steel, L. (2004). Microfinance, the labour market and social inclusion: A tale of three cities. Social Policy & Administration, 38(7), 721-743. Retrieved Dec 1, 2009 from EBSCO Online Database Academic Search Complete http://search.ebscohost. com/login.aspx?direct=true&db=a9h&AN=15181647&site=ehost-live Swain, R., Van Sanh, N., & Van Tuan, V. (2008). Microfinance and poverty reduction in the Mekong Delta in Vietnam. African & Asian Studies, 7(2/3), 191-215. Retrieved Dec 1, 2009 from EBSCO Online Database Academic Search Complete http://search. ebscohost.com/login.aspx?direct=true&db=a9h&AN=33164255&site=ehost-live Versluysen, E. (1999). Defying the odds: Banking for the poor. West Hartford, CT: Kumarian Press.

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Corporate Social Responsibility Sherry Thompson

Overview Today, corporations around America are heavily involved in activities promoting Corporate Social Responsibility. Corporate Social Responsibility is a relatively new concept which means the corporation is striving to be fair and responsible to all of its stakeholders. The identified stakeholders typically include shareholders, employees, and the communities in which physical facilities are located (European Commission for Sustainable Development, 2008). Corporate Social Responsibility is now included as a section in almost every American corporation’s annual report to shareholders and espouses the ability of the company to create and maintain sustainable development. Corporations are spending time and money to create Codes of Conduct which are used to guide them toward fulfilling their identified social responsibilities (Mehta, 2002). The public breathes a collective sigh of relief that corporations are now expressing an interest in being accountable to all of their stakeholders. Perhaps they think about the end to atrocities committed to immigrant employees as documented in the novel, The Jungle (Sinclair, 1906) or employees in foreign sweat shops. Or maybe they think about how their own community was devastated when the local auto industry closed down shop and abandoned their town (Burden, 2008). Possibly they are thinking about how a large corporation is now partnered with their local school; The Social Organization of Work

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providing funding to help local children receive a better education (“Connecting EDS volunteers,” 1997). For the past decade, corporations have been attracting media attention by engaging in activities which portray them as caring and contributing members of the communities in which they are located. They have conscientiously strived to live down their reputations as greedy and uncaring conglomerates while presenting themselves as good citizens and neighbors. To understand why they would be interested in taking such actions, and why the public appears a bit skeptical, one needs to have some understanding of how corporations have evolved in American society.

History The Corporation

Early corporations were very different from the corporations of today. They were small companies chartered by the English crown to accomplish specific activities meant to serve the public good. The first acknowledged corporation, the East India Trading Company, was chartered to allow participation in the East Indian spice trade as a capital venture. Incorporating and funding innovative companies became a favored activity of royalty. They were able to dabble in many activities and explorations by chartering new corporations and retaining governance over them (Robins, 2006). If a company displeased their king or queen, their charter would simply be revoked, meaning the entrepreneurs no longer had permission to engage in business. In America, states retained the right to charter and govern similar corporations. These corporations were explicitly designed to serve the public in instances when a smaller business would lack the resources to meet public demand. Banks were often created under a corporate charter in order to establish adequate funding. Most Americans were still living in agrarian communities and all corporations were explicitly required to serve the community. Corporations at this time (early 1700s to mid 1800s) were limited in their activities and dealings: they were not allowed to own stock in other corporations; they were limited in the amount of time they could exist; they were not allowed to make political contributions; and their owners were held responsible for criminal acts committed by the corpora68


tion (Drutman & Cray, 2004). Governments provided oversight for corporations and did not hesitate to revoke the charter if the corporation failed to serve the public interest. Also, unique to the early corporations, the owner actually ran the corporation and maintained responsiblity for the day-today happenings. Corporations quickly altered the way people worked and were instrumental in leading America into the Industrial Revolution. Americans began to discover personal independence as they migrated toward factory jobs and, in altering their agrarian lifestyles, began to purchase goods and services instead of growing or making them. Corporations also began to discover independence despite attempts by government to control them. In 1819, the Supreme Court decided the case of Dartmouth College v. Woodward; providing corporations protections against government take-overs. In the late 1800s, New Jersey was the first state to enact the General Revision Act; removing time limits on corporate charters as well as requirements which limited a coroporation’s size and market share. Other states quickly followed suit, including the state of Delaware. Delaware went one step further and allowed the corporations to draft their own governance rules. This enabled corporations to create cultures in which they could amass wealth and power. More than 60% of all Fortune 500 companies are incorporated in Delaware today. A lot of their success can still be attributed to their ability to craft their own rules (Drutman & Cray, 2004). Corporations quickly became dominant American institutions and the Roosevelt and Wilson administrations, recognizing the potential power of the corporations, enacted Anti-trust laws and initiated regulations to control the industry. Presidents succeeding T. Roosevelt and Wilson loosened up on corporate controls and encouraged the businesses to grow in size and power; further enriching America. In 1886, corporations won a landmark case, Santa Clara v. Sourthern Pacific Railroad. This ruling allowed corporations to be viewed as actual individuals under the law; providing them all the protections listed in the Bill of Rights as though each corporation was a real person. In 1919, Dodge v. Ford Motor Company ruled that the unequivocal purpose of the corporation is to serve stockholders. Hence the generation of profits for stockholders became the primary goal and sole purpose of the corporations (Kelly, 2001).


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Capitalism

During this same time many of the corporations began merging. Corporations were no longer small, simple entities; they had quickly grown into very private, very large entites with very little legislated responsibility or accountability. Their primary mission was to engage in self-interest and accumulate resources that could be utilized to enhance profit-making activities (Green, 2002). It was believed that capitalism would provide essential controls and the free market would curb corporate greed. Corporations were successful in their mission; however, the free market was not allowed to work due to the policy changes promoted and attained by the wealthy corporate owners and shareholders (Bakan, 2004; Kelly, 2001). Up to that point in time, the owners ran their corporations and invested in the communities in which they were headquartered. But as the corporations grew, gained their own rights to personhood, and amassed greater wealth and power the owners began to hire managers so they would have time to pursue personal interests and to influence policymaking in ways that would allow their corporations to grow even more (Drutman & Cray, 2004). Managers were not vested in the corporation nor the community and corporations began to take on the reputation of being cold-hearted and corrupt. No one really gave a thought to how to socialize these new, powerful entities which had been granted personhood. No one could conceptualize how these new institutions would amass wealth and power greater than small nations. No one seemed concerned that the only goal these corporations had was to continue to acquire more and more profits for their shareholders. And corporations continued to enrich their shareholders at the expense of their employees and the communities in which they located their factories. Minus socialization efforts, corporations were akin to spoiled children unfettered by self-discipline or notions of ethical behavior and unaccoutable to the society in which they existed. The Great Depression brought some new checks and balances to corporate systems as government created their own national work programs, began to exert limited control over corporations and supported the unprecedented growth of labor unions. However, no one really understood or appeared to recognize the need to socialize corporations to meet the needs 70


of anyone except their shareholders. Profit maximization continued to be the standard and the goal and all else was considered secondary to that goal or was not considered at all. When a new employee begins a job, companies take great pains to ensure the employee is properly socialized to the organization. They work to align the interests and activities of the new employee with those of the existing environment (i.e., the workplace) in the hopes that each employee will make decisions and take actions that are in the interests of the group at large (Van Manaan & Schein, 1979). When a child is being socialized, the parents and community work to teach the child self-restraint, values shared within the community, and how to align or subsume their personal desires in ways that do not destroy or usurp the interests of the common good (Anyon, 1980; Harrah & Friedman, 1990). But no one had thought of a corporation as a person in need of socialization (despite their hard-won rights to personhood). Indeed, corporations grew in power and monetary value so quickly that no one really recognized the control they would potentially exert over workers, governments, cultures, and the environment. Corporations came to be exposed as greedy, unethical oppressors in life as well as in literature such as The Jungle (Sinclair, 1906) and The Octopus (Norris, 1901). They were held in both awe and contempt as they enriched and empowered individual shareholders and yoked the common worker.

Applications Trickle-Down Theory

During the 1980s, President Ronald Reagan promoted his Trickle Down Theory to justify his decisions to favor corporations and the wealthy (Frank, 2007). President Reagan effected rules and laws supporting deregulation, cutting taxes for corporations and the wealthy, and eliminated key public controls over corporations. Additionally, he weakened the countervailing forces created by labor unions when he chose to fire the stiking members of the Professional Air Traffic Controllers Organization (Drutman & Cray, 2004). Outsourcing became yet another corporate activity that increased shareholder profits and served to weaken existing checks and balances on corporations. Contemporary corporations are complex, powerful, and supported by wealthy shareholders who exercise enormous influence over our president and congressmen. The Social Organization of Work

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Corporations are generally held in distrust by the public whose competing interests are often ignored because they cannot weild the influence that tends to come with wealth (Green, 2002). A recent poll indicates fewer than 25% of people have faith in the integrity of big business (Flynn, 2007). And yet, the public is dependent on corporations to supply them with critical goods and services including food, communication, education, and health care (Drutman & Cray, 2004). Contemporary corporations and the people whom they enrich have not been socialized to align their values and activities with their employees, their communities, or the world in general. Many economists have predicted America’s corporate structure cannot be sustained in the long term. The wealthy are increasingly the only candidates elected into Congressional seats; rendering the citizens’ needs (e.g., reasonable wages, affordable health care, public services, etc.) virtually invisible (Green, 2002). The median wage in America is lower now than in 1980 for middle-class families. But the income of the top tenth of 1% of earners today is four times higher than it was in 1980 (Frank, 2007). Corporations have been socialized to cater to the needs of the very wealthy. Political money has been used to further enrich corporations as they attain loophole tax exemptions, lax regulatory and law enforcement, and tax breaks. And yet, the corporate system continues to insist on more and greater profits; allowing corporations to breed corruption such as that seen in Enron, Adelphia, WorldCom, etc. A corruption which has resulted in monetary losses and economic hardships to the general public and an ensuing lack of accountability for corporate leaders. Corporations are now encouraging the Federal government to create a buy-out plan to bail out companies who are failing due to sub-prime mortgage schemes: a buy-out plan that will leave the taxpayers further in debt without imposing any substantive sanctions on the corporate executives who chose to participate in such reckless behavior or, predictably, the stockholders (Appel, 2008). Yet in the past decade, corporations have been espousing their interest in assuming Corporate Social Responsibility. Corporate Social Responsibility

Corporate Social Responsibility has been presented as the preferred method of socializing corporations in response to the public outcry against the corporate arrogance and corruption exposed in the early 2000s. Corporate Social Responsibility appears to to be simply the newest national and international trend. The programs are designed to aid corporations in iden72


tifying stakeholder interests and aligning themselves with the values held in their communities. Corporations now report annually on their efforts to effect social responsibility. For example, Starbucks’ website boasts a section titled, “Corporate Social Responsibility” which describes how they . . . work together on a daily basis with partners (employees), suppliers, farmers and others to help create a more sustainable approach . . . to help build stronger local communities, to minimize their environmental footprint, to create a great workplace, to promote diversity, and to be responsive to their customers’ health and wellness needs (www.starbucks.com). Companies voice their commitment not only to ensuring returns to stakeholders but to consider the wages of employees, the quality of products and services to customers, and the sustainability of activities impacting society and the environment (OECD, 2001). Each corporation appears to utilize a similar blueprint onto which they superimpose their individual goals in relation to the above activities. However, the primary questions remain. Is it realistic to believe corporations will use Corporate Social Responsibility programs to properly socialize themselves? Is Corporate Social Responsibility the appropriate way to socialize corporations? Can corporations truly strive to meet the needs of their various stakeholders while continuing to hold profit maximization for shareholders as their primary goal?

Viewpoints Some corporate watchdogs dismiss Corporate Social Responsibility activities as a superficial attempt to polish the corporate image. They believe corporations have initiated these programs as a public relations spin in an effort to keep outsiders from controlling their personal agendas and regulating their behaviors. Skeptics of Corporate Social Responsibility raise concerns about corporations, using Fannie Mae as an example. Fannie Mae was ranked first on Business Ethics 2004 list of the 100 Best Corporate Citizens due to its Corporate Social Responsibility activities. However, that same year an audit report noted that Fannie Mae purposely deferred $200 million of estimated expenses in order to allow six corporate officers to receive full bonuses totaling more than 5.9 million. In other words, Fannie Mae created a smoke screen using Corporate Social Responsibility activities to divert attention away from unethical and dishonest business practices (“Fannie Mae’s Problems,” 2004). The Social Organization of Work

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Some organizations applaud the efforts of Corporate Social Responsibility. They believe corporations can actually increase their profits by becoming socially responsible. They believe that incorporating the precepts of Corporate Social Responsibility will not only embed integrity into corporations but will attract investors who will choose to invest with socially responsible corporations. It is important to note that most of the sources indicating fully positive regard for Corporate Social Responsibility were consulting business that may have a vested interest in its success (Flynn, 2007). Some entities believe it is easy to create CSRs and very difficult to evaluate the effectiveness and efficacy of a corporation’s actual practices to ensure stakeholder issues are addressed. They do not think CSR activities are valid unless some type of social audit has also been put into place to ensure compliance and, so far, social audits are not being conducted in most companies (Mehta, 2002). Other critics of Corporate Social Responsibility programs believe corporations are delving into territories in which they have no business, under the name of philanthropy. Corporations tell the public they are giving back to the community when, in truth, they are often trying to affect social outcomes and ensure their own moral vision is enforced in society (Bianco & Zellner, 2003).

Bibliography Anyon, J. (1980). Social class and the hidden curriculum of work. Journal of Education, 162 (1). Retrieved September 20, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=5702077 &site=ehost-live Appel, A. (2008, September 27). Bailouts for Who? Inter-Press Service. Retrieved September 20, 2008 from Countercurrents.org http://www.countercurrents.org/appel270908.htm Bakan, J. (2004). The Corporation: The pathological pursuit of profit and power. New York, NY: Simon & Schuster. Bianco, A., & Zellner, W. (2003, October 6). Is Wal-Mart too powerful? Business Week (3852), 100-110. Retrieved September 20, 2008 from EBSCO online database Business Source Premier http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=1 0935351&site=ehost-live Brundtland, G. (1987). Our common future: The world commission on environment and development. Oxford: Oxford University Press.

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Burden, M. (2008, May 7). A double whammy at GM Flint truck assembly: Medium-duty line temporary expansion sidelined, heavy-duty line may lose a shift earlier. The Flint Journal. Connecting EDS volunteers with community partners. (1997, January 13). Fortune, 135 (1), pp. S3-S3. Drutman, L., & Cray, C. (2004). The People’s Business: Controlling Corporations and Restoring Democracy. San Francisco, CA: Berrett-Koehler Publishers, Inc. European Commission for Sustainable Development. (2008, April 24). Sustainable Development: Together for Tomorrow. Retrieved September 11, 2007 from EUROPA: http://ec.europa.eu/sustainable/welcome/index_en.htm Fannie Mae’s problems expose ‘Corporate Social Responsibility’ as a smokescreen. (2004, October 5). Business Wire. Retrieved September 23, 2008 from BNET.com: http:// findarticles.com/p/articles/mi_m0EIN/is_2004_Oct_5/ai_n6222737 Flynn, S. (2007). Winning with integrity: The business case for corporate social responsibility. Tidewatch Consulting. Frank, R. H. (2007, April 12). In the real world of work and wages, Trickle-Down Theories don’t hold up. New York Times. Green, M. (2002). Selling out: How big corporate money buys elections, rams through legislation, and betrays our democracy. New York: Regan Books. Harrah, J., & Friedman, M. (1990). Economic socialization in children in a midwestern american community. Journal of Economic Psychology, 11(4), 495-509. Kelly, M. (2001). The divine right of capital: Dethroning the corporate aristocracy. San Francisco, CA: Berret-Koehler. Mehta, P. (2002, January 30). Corporate Social Responsibility. Retrieved September 20, 2008, from: www.mehtaconsulting.net/user/Corporate_social_responsibility.doc Norris, F. (1901). The octopus: A story of California. New York, NY: Doubleday, Page & Co. OECD. (2001). Corporate social responsibility: Partners for progress. OECD Centre for Entrepreneurship, SMEs and Local Development. Robins, N. (2006). The corporation that changed the world: How the East India Company shaped the modern multinational. Ann Arbor, MI: Pluto Press. Sinclair, U. (1906). The jungle. New York, NY: Doubleday, Page & Co. Van Maanen, J. & Schein, E. H. (1979). Toward a theory of organizational socialization. Research in Organizational Behavior, 1, 209-264.

Suggested Reading Aldous, R. (2007). The lion and the unicorn. London, UK: Pimlico. Friedman, T. L. (1999). The lexus and the olive tree. New York, NY: Farrar, Straus, Giroux. Webley, S. & Werner, A. (2008, Oct.). Corporate codes of ethics: Necessary but not sufficient. Business Ethics: A European Review, 17(4). 405-415. The Social Organization of Work

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The Organization-Worker Relationship Sherry Thompson

Overview The success of an organization can be measured in its ability to get those things done that cannot be accomplished by one individual (Scott, 1987). Each organization is composed of groups of individuals who possess the ability to support the organization, change the organization and its stated goals, and/or leave the organization. Most people work in formal organizations but are also members of informal workgroup organizations that can impact how jobs get done within the workplace. How does an organization establish a culture for its employees that creates and maintains support for its own goals and aspirations? Two major components contribute greatly to organizational success. They are hiring practices and workplace satisfaction. Both of these components are largely driven by the leadership style adopted by management. Hiring Practices

The first task at hand is always to hire the right people for the right job. This seems like an easy task; however, it is more complex than it seems. To keep an organization healthy, employers need to hire people who are homogeneous enough to support organizational goals and yet diverse enough to force people to continue to critically analyze what everyone is doing and why. Critical analysis by employees is what aids an organization in remaining responsive to its environment and able to meet its cus76


tomers’ needs (Hanges, Aiken, & Chen, 2007). Employers recruiting new employees hire the candidates they view as the best fit for the position. Who is seen as the best fit? It is most often it the candidate who looks, dresses, and speaks just like all of the other employees who are currently succeeding within the organization. And who is succeeding in the organization? The people who look, dress, and speak just like the boss! As long as the external organizational needs (i.e., what the customer wants and needs) remain stable, this strategy works well for the organization and its employees (Yukl, 2002). However, the world is quickly changing and the needs of the organizational customers are following suit. For example, companies supporting the use of land-line telephones needed to respond to a public that increasingly chose to use cellular phones. Companies producing cassette players (and cd players) needed to respond to a public that preferred to save and maintain its music on an Ipod®, and newspaper agencies are currently losing their readership to a public that prefers to listen to the news or read it on-line. Without a diverse workforce, no one notices when change begins to occur and no one is ready to create ideas and products tailored to meet the changing needs of the customers. When the needs of the customers are no longer met, the company is doomed to fail. Hiring and maintaining a diverse workforce is tricky. People who differ in their beliefs and values will experience a higher degree of conflict as the status quo is challenged and people compete for positions within the organizational structure. In hiring a diverse workforce, management must learn to identify the knowledge, skills, and abilities they are seeking in ways that differ from their current practice. They often have to learn to phrase questions differently, ask different questions, and really understand what skills they need for a particular position. Once the workforce has been diversified, management must learn to manage conflict while maintaining a respectful climate and to value and provide due consideration to the people who question current philosophies and practices. Again, a homogeneous group is easier to manage but may, in the long term, cause the demise of the organization if it fails to identify changes to the external environment. Employers need to remember that a key factor in organizational success is grounded in the satisfaction of individual staff members. The Social Organization of Work

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Workplace Satisfaction & Turnover

Employees have individual needs that must be met if the organization is to keep them. These people share their knowledge, skills, and abilities with the organization for which they work. However, they expect to get something back for this effort (Graen & Cashman, 1975). It is difficult to know exactly what each person wants to attain from their work experience. Yet, individuals need to find satisfaction in the workplace if they are to be successfully retained as productive, long term employees (Matier, 1990). Employees who do not find satisfaction will eventually leave or, if unable to relocate, may disassociate themselves from the workplace community. While some amount of turnover is inevitable (and considered healthy), too much turnover becomes an expensive use of limited time and financial resources. New employees must be recruited, hired, socialized to the organizational norms, and encouraged to maintain the extant organizational culture (Bluedorn, 1982). When management tries to decrease turnover, they often assume they are not paying their employees enough money and give all of the employees a raise. However, they will seldom realize the hoped-for reduction in turnover as a result. Although it is important to pay employees adequately, there are other factors making contributions to workplace satisfaction and rates of turnover. But it gets complicated. First, employees may experience workplace satisfactions simply because of the economy. When the economy is good, an employee may perceive better opportunities outside the organization, develop dissatisfaction with the current job, and leave the company to explore the perceived opportunities. However, when the economy is bad, an employee who is feeling job dissatisfaction may take note of the lack of available job opportunities, quickly shift perceptions to a higher level of satisfaction (i.e., it’s not really that bad here) and decide to stay (Salancik & Pfeffer, 1978). Second, different workers have different needs and it is difficult to consider and evaluate the weight of each need. For example, a student working in the bowling alley will have different needs and job expectations than a college professor. Internal & External Workplace Factors

Researchers have spent decades trying to identify (and agree on) which satisfaction variables really matter and to whom they matter. They have gen78


erally agreed there are two types; internal workplace factors and external workplace factors. Internal factors are generally within the control of management while external factors cannot be controlled by management, but might be mitigated by increasing the internal workplace factors (Matier, 1990). For example, mail carriers are subjected to rain and biting dogs (i.e., negative external workplace factors) but have made friends along their mail routes (i.e., positive external workplace factors). Management cannot control the weather, dogs, or established friendships on an assigned route. However, they can manipulate internal workplace factors by providing a mail truck, good insurance, pepper spray, shorter routes, etc. to try to make the mail carriers’ job more satisfying. Some of the workplace factors are tangible, while others are intangible. In the above example, all of the internal and external workplace factors mentioned are tangible. What is present can be measured, touched, and seen. Intangible factors are more difficult to measure. They include friendships, high morale, a sense of belonging, pride in one’s work, etc. When problems with satisfaction are noted, management often works to increase tangible benefits in an effort to keep employees happy. Surprisingly, research suggests that for most jobs the intangible factors are the ones most likely to increase workplace satisfaction. Although an exiting employee may cite more pay or better opportunities as the primary reason for leaving, deeper questions often reveal what the employee is reluctant to express. Researchers found that, when employees were probed regarding which types of dissatisfaction lead to their voluntarily leaving a job, the tangible factor of wages was listed lower than all of the intangible factors. However the variable, wage inequities (e.g., people doing the same job but getting paid less), was high on the list of dissatisfaction variables (Matier, 1990; Morrell, Loan-Clark, & Wilkinson, 2001; Telly, French, & Scott, 1971). Usually people leaving their jobs are experiencing a variety of pushes away from their current employment while feeling a simultaneous pull toward another organization (Herzberg, 1965). In most cases, employees who are satisfied with intangible benefits such as collegiality, sense of belonging, and equitable treatment are not feeling a push away from their current employer. Therefore, when a job offer of more money is made it is often not enough of a pull to change that employee’s loyalty; the employee will likely stay with the original employer. However dissatisfaction arising The Social Organization of Work

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from inequities, a sense of not belonging, a lack of autonomy, a feeling that there are no opportunities for personal growth/promotion, etc. are often the very pushes that motivate an employee to seek new employment. Many of these intangible satisfaction factors are influenced by the leadership style adopted by management.

Further Insights Leadership Theories

Every organization is composed of leaders and followers, and the lines are often blurred between the two. Leaders can be formal leaders: those appointed as the leader and appear on the organizational chart as such. Or they can be informal leaders: those who lead based on the social power they have attained (French & Raven, 1960). Both kinds of leaders have an impact on workplace satisfaction. Formal leadership has been studied extensively over the past few decades. Many theoretical bases have been formulated; however, researchers have not been able to verify the utility of most of these. The following is a brief review of the more prevalent theoretical bases for leadership: Great Man Theory - This early theory was based on early research which focused on the aristocracy and rested on the assumption that leaders are born and not made. The belief was that great men would arise to the occasion as necessary (e.g., Eisenhower, Churchill, Jesus, Moses, Buddha, etc.). Subsequent studies have failed to find any lineage that guarantees good leadership success (Yukl, 2002). Trait Theory (1930s and 1940s) – Later research led to studies on psychological traits that signified good leaders. Researchers studied good leaders and identified the signifier traits; theorizing that good leaders have the right (or sufficient) combination of traits. Hundreds of studies have failed to find specific traits that guarantee leadership success using this theory (Stogdill, 1974; Yukl, 2002). Behavioral Theory (1950s) – These theories were the first to assume leadership behaviors could be taught. They were predicated on theories of Behaviorism from the school of psychology. These theorists studied the be80


haviors of both successful and unsuccessful leaders in an effort to identify describable actions which could then be taught to others. The actions were placed into two defined categories: Initiating Structures (i.e., concern with task objectives); and Considerations (i.e., concern with interpersonal relationships) as researchers worked to show turnover decreases as Consideration increases. Role Theory and the Managerial Grid were both developed using this theoretical base. The only consistent research finding was a positive correlation between Consideration and employee satisfaction – otherwise there were no studies guaranteeing leadership success using this theory (Judge & Piccolo, 2004; Fleishman & Harris, 1962; Yukl, 2002). Participative Leadership – These theories were the first to acknowledge the social process of decision making (e.g., Leader-Member Exchange Theory, Management by Objective, etc.). A Participative leader would engage the employees, peers, superiors, and stakeholders in the decision process. This is where notions of employee empowerment and power sharing were introduced into leadership theory. There has been a lack of strong, consistent results in research on Participative Leadership (Coch & French, 1948; Tannenbaum & Schmitt, 1958; Yukl, 2002). Situational Leadership – These theories emphasize the importance of contextual factors influencing the leadership process. These variables include the characteristics of the follower, nature of the work performed by the leader’s unit, the type of organization, and the nature of the external environment. Some of the prevalent models are the Least Preferred Co-Worker Theory, the Path-Goal Theory of Leadership, and the Strategic Contingencies Theory. They all posit that a leadership style needed for a particular decision-making problem will depend on how the leader perceives the followers and the situation. Leaders focus on such factors as external relationships, acquisition of resources, managing demands on the group and managing the structures and culture of the group. Most researchers have taken a narrow methodological approach and, while providing useful insights, have not been able to statistically validate these theories (Tannenbaum & Schmitt, 1958; Yukl, 2002) Transformational Leadership

In short, it has been very difficult to statistically validate the success of any of the theoretical leadership bases discussed above. The only theory The Social Organization of Work

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which has been statistically validated is the Integrative theory of Transformational Leadership (Yukl, 2002). Transformational Leadership introduces a holistic (and somewhat eclectic) approach to managing the workplace. Bernard Bass (1999) identifies four dimensions which can be used to determine whether one is acting as a Transformational leader. It is the one leadership theory that has taken a large step away from situational ethics in an effort to incorporate a broader ethic into the workplace. In considering the management and treatment of employees, Transformational Leadership theory applies a holistic approach. Leaders must consider the overall development and well-being of each employee, as well as aiding each employee in discovering personal strengths and how those strengths fit into the organizational setting. The assumption is that followers will be better motivated to capably accomplish organizational goals and objectives if their personal needs have been met, they are comfortably positioned in the organization, and the employee and organization are grounded in ethical values. When first formulating this theory, three distinct categories were used to describe Transformational Leadership characteristics. However, the groups were quickly expanded to include a very important fourth dimension. The four categories are: • Idealized Influence—the leader must be socially charismatic (although the attribution of charisma is reduced as the followers are empowered); • Inspirational Motivation—the leader utilizes classical ethical values, unity, and enthusiasm to inspire followers; • Intellectual Stimulation—the followers are taught to think critically and reframe situations to solve problems; and • Individual Consideration—each follower is personally developed (toward self-actualization), treated with dignity, and empowered in the workplace (Bass & Steidlmeier, 1999; Yukl, 2002). A more specific list of leader characteristics helps one to better visualize how a transformational leader can encourage and support workplace di-

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versity and contribute to workplace satisfaction, thereby keeping and cultivating good employees for the organization while ensuring the organization remains dynamic and responsive to the needs of its customers. Idealized Influence

Idealized Influence is similar to positive social charisma. A good leader will: • Create and effectively communicate a compelling and shared vision; • Allow opportunities for questions from followers; • Persuade others on the merits of issues (using no deception or coercion although “timing” information disbursement appears to be okay in limited situations); • Express confidence and conviction regarding potential success; • Model personal virtue and moral wisdom; and • Set high ethical standards for emulation. Bass quoted Socrates regarding this issue when stating the moral person does not “...put money or anything else before virtue” (Bass & Steidlmeier, 1999). Inspirational Motivation

Inspirational Motivation is where the heart of classical ethics beats in Transformational Leadership theory. A Good leader will: • Grant followers the same challenges and liberties kept for oneself; • Uplift followers to a more mature moral foundation; • Exhibit personal excitement, enthusiasm, and optimism regarding the organizational vision; • Use stories and symbols liberally; and • Emphasize shared goals in undertakings by eliminating any “us/them” dialogue.


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Intellectual Stimulation

Intellectual Stimulation is necessary to keep followers interested and to help add value to the workplace by augmenting employee skills. A good leader will: • Teach followers to question assumptions and reframe situations; • Liberally share resources and information (including sensitive information); and • Encourage and reward creative problem solving. Individualized Consideration

Individualized Consideration is necessary to promote the dignity and potential self-actualization of each follower. It is an integral ingredient in the success of Transformational Leadership. A good leader will: • Ensure the dignity of and express confidence in each follower; • Encourage high moral standing for each follower; • Eliminate all unnecessary controls and barriers; • Provide constructive feedback; • Provide lots of growth opportunities for followers; • Develop followers into leaders by delegating significant authority with appropriate supports; • Make sufficient resources available to allow followers to meet goals; • Build a strong culture of empowerment; • Promote harmony, charity, and good work in the organization; and • Help followers attain self-actualization (a la Maslow). Conclusion

A leader does not need to possess all of the qualities in each of the dimensions at all times. However, the four point infrastructure must be present for true Transformational Leadership. If any of the four are absent, the leader is branded a “pseudo-transformational” leader. First, the intent 84


of the leader is extremely important. As soon as the leader changes focus to self-interest or self-promotion, Transformational Leadership cannot occur. Second, the Individualized Consideration dimension must be present. This is the single most important dimension. Without this point, one simply has created some form of Charismatic or pseudo-transformational leadership. Third, universal core values (i.e., friendship, fairness in exchange, ownership, work, and love) must be satisfied in the workplace. The ordering and relative valuation of each core value must be determined by each organizational culture. Although the core values are set, how they are attained in the workplace is not. Fourth, Transformational Leadership must be grounded in a high moral foundation. Ethics must be considered in each of the four dimensions in order to attain and maintain this form of leadership. The leader must weave ethics and opportunities for self-actualization into the organizational culture. For a transformational leader to succeed, the ethical model to be emulated and encouraged must be that of a classical type (most usually attributed to Aristotelian Ethics, as opposed to Situational Ethics) (Bass & Steidlmeier, 1999).

Bibliography Bass, B. M., & Steidlmeier, P. (1999). Ethics, character, and authentic transformational leadership. Leadership Quarterly , 10 (2), 181-218. Retrieved on July 18, 2003 from EBSCO online database, Business Source Premier: http://search.ebscohost.com/login. aspx?direct=true&db=buh&AN=2406536&site=ehost-live Bluedorn, A. C. (1982). The theories of turnover: Causes, effects, and meaning. Research In the Sociology of Organziations, 1, 75-128. Coch, L., & French, J. R. (1948). Overcoming resistance to change. Human Relations, 1, 512532. Fleishman, E. A., & Harris, E. F. (1962). Patterns of leadership behavior related to employee grievances and turnover. Personnel Psychology, 15, 43-56. French, J. P., & Raven, B. (1960). The bases of social power. In D. Cartwright, & A. Zander (Eds.), Group Dynamics (pp. 607-623). New York, NY: Harper & Row. Graen, G. B., & Cashman, J. F. (1975). A role making model of leadership in formal organizations: A developmental approach. In J. G. Hunt, & L. L. Larson (Eds.), Leadership Frontiers (pp. 143-165). Kent, OH: Kent State University Press. Hanges, P. J., Aiken, J., & Chen, X. (2007). Diversity, organizational climate, and organizational cutlure: The role they play in influencing organizational effectiveness. Proceedings of the Library Assessment Conference, (pp. 359-368). Charlottesville, VA. Herzberg, F. (1965). The new industrial psychology. Industrial and Labor Relations Review, 18 (3), 364-376. Retrieved on July 18, 2003 from EBSCO online database, SocINDEX


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with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=44 68837&site=ehost-live Judge, T. A., & Piccolo, R. F. (2004). The forgotten ones? Validity of Consideration and and Initiating Structure in leadership research. Journal of Applied Psychology , 89 (1), 36-51. Matier, M. W. (1990). Retaining faculty: A tale of two campuses. Research in Higher Education, 31 (1), 39-60. Morrell, K., Loan-Clark, J., & Wilkinson, A. (2001). Unweaving Leaving: The Use of Models in Management of Employee Turnover. Loughborough University. Salancik, G. R., & Pfeffer, J. (1978). A social information processing approach to job attitudes and task design. Administrative Science Quarterly , 23 (2), 224-253. Retrieved on July 18, 2003 from EBSCO online database, SocINDEX with Full Text: http://search. ebscohost.com/login.aspx?direct=true&db=sih&AN=4021462&site=ehost-live Scott, R. W. (1987). Organizations (2nd Edition ed.). Hempstead: Prentice Hall. Stogdill, R. M. (1974). Handbook of leadership: A survey of theory and research. New York, NY: Free Press. Tannenbaum, A. S., & Schmitt, W. H. (1958). How to choose a leadership pattern. Harvard Business Review (36), 95-101. Telly, C. S., French, W. L., & Scott, W. G. (1971). The relationship of inequity to turnover among hourly workers. Administrative Science Quarterly , 16 (2), 164-172. Retrieved on July 18, 2003 from EBSCO online database, SocINDEX with Full Text: http://search. ebscohost.com/login.aspx?direct=true&db=sih&AN=4014343&site=ehost-live Yukl, G. (2002). Leadership in organziations (5th Edition ed.). Upper Saddle River, NJ: Preentice-Hall.

Suggested Reading Bok, S. (1999). Lying. New York, NY: Vintage Books. Jackson, D. (2008). Collegial trust: Crucial to safe and harmonious workplaces. Journal of Clinical Nursing, 17(12), 1541-1542. Retrieved on June 23, 2008 from EBSCO online database, Academic Search Premier: http://search.ebscohost.com/login.aspx?direct=t rue&db=aph&AN=32000587&site=ehost-live. Norton, D. (1988).“Character ethics” and organizational life. Papers on the Ethics of Administration, 47-65. Posner, B. Z. & Kouzes, J. M. (2003). The Leadership Challenge (3rd ed.). Hoboken, NJ: Wiley, John & Sons. Sias, P. M. (2005). Workplace relationship quality and employee information experiences. Communication Studies, 56(4), 375-395. Stuart, J. M. (2005). Increasing the visibility, voice, and clout of medical laboratory scientists. Clinical Leadership Management Review, 19(4), E3.

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Labor Unions Francis Duffy

Overview In 1945, slightly more than one in three U.S. private-sector employees belonged to a union. By 1995, this ratio stood at slightly more than one in ten (Strauss, 1995, p. 330). This is not just an American phenomenon: between 1970 and 2003 the union share of the British workforce dipped from 44.8 percent to 29.3 percent, the French from 21.7 to 8.3 percent, and the Japanese from 35.1 to 19.7 percent. By comparison, 23.5 percent of the U.S. workforce was unionized in 1970; in 2003 this figure stood at just 12.4 percent (Viser, 2006, p. 45). In a span of just ten years, from 1985 to 1995, union membership in the United States declined 21 percent. And this was not a uniquely American trend: union membership in 72 of 92 countries surveyed in 1995 by the International Labor Office had declined in the previous ten year period (Epstein, 1998, p. 13). All told 15.7 million Americans belonged to a union in 2007. 35.9 percent of the public sector was organized; fully 41.8 percent of these were local government employees, most notably teachers, police officers and fire fighters. Just 7.5 percent of the private sector workforce was unionized. The highest participation rates here came in the transportation and utilities industry, telecommunications and construction industries at 22.1 percent, 19.7 percent and 13.7 of wage-earners respectively. At 2.0 percent and 1.5 percent, the lowest came in the financial services industry and agriculture. The Social Organization of Work

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Age mattered across industries. 15.4 percent of wage and salaried workers aged 45-54 and 16.1 aged 55-64 were union members compared to only 4.8 percent of 16-24 year olds (Bureau of Labor Statistics, 2008). Given all these statistics, one cannot help but ask: why do workers still join a union? What larger economic and political purpose do unions continue to serve, if any? What precipitated such a dramatic decline, and is it irreversible? To a sociologist, a union is one way people band together for protection and mutual succor. It imposes order, imparts values and ensures its and therefore its members’ survival like other institutions. A union deliberately sets about creating a monopoly in the supply of labor in order to set prices (i.e. wages) and other conditions of exchange. It behaves exactly like a business would. In the jargon of industrial relations, labor and manage ment each seek to strengthen its bargaining power at the other’s expense. The political scientist will explain how the union, over time, became an influential constituency in its own right. In the larger context, the labor movement counters capitalism’s worst excesses, preventing them from destabilizing the social order and thus the state’s claim to legitimacy (Sullivan, 2006). Theories on Union Participation

The decision to join a union, social psychologists tell us, is a rational choice best explained by expectancy-value theory. Here, the worker assesses the perceived benefits and attendant costs, paying particular attention to • The likelihood the union can achieve its stated goals, • The reaction of significant others and • The prospective rewards and/or penalties of joining. At some point in the process the prospective member must reconcile the certainty of the individual risk with the uncertainty of the collective action 1) succeeding and 2) everyone involved sharing equally in that success. Social psychologists call this the dilemma of collective behavior and the likelihood of non-joiners benefiting from the group’s actions the free-rider problem. These very real drawbacks are overcome psychologically only when someone is convinced that: 88


• Success depends on his or her participation, • Others will participate in sufficiently large numbers, and • Collective action will achieve the desired goal (Klandermans, 1984). Other theories emphasize the emotional or social component. Unaddressed dissatisfaction with wages, working conditions, treatment by supervisors and management, even the work itself breeds worker resentment and an ‘us-versus-them’ mentality. This is the core-proposition of frustrationaggression theory. Successful union organizing signals the incomplete integration of the worker into the company, a system in disequilibrium attempting to right itself. A willingness to strike grows as individual and collective workers’ frustration levels increase. Typically, however, a strike occurs only when workers consider their goals and the union’s in close alignment. Worker non-participation and membership defections suggest that these interests can and do diverge. Frustration-aggression theory thus also explains dysfunctional unions. Research suggests that most workers consider the cost and benefits of acting out their frustration. Alternatively, interactionist theory looks beyond the workplace for explanations of union participation and finds it in primary social groups – family, friends, and neighbors. They after all, are most intimately involved in shaping our values and beliefs; no other organization or institution -- state, church, union -- exerts as much direct influence. Successful unions aspire to assume such a role in their members’ lives. i.e., become one of their primary groups. The era of the company town is largely gone; most workers no longer live together in tight-knit communities (Klandermans, 1986).

Further Insights The Historical Context

The first to organize were the highly skilled workmen in craft unions. Ironworkers belonged to one, machinists to another, bricklayers to yet another and so on each according to his trade. Each craft union represented the interests of all its members working in different industries and regions. And because it deliberately limited membership by licensing only graduates of its own apprentice programs, each craft union exerted monopoly-like powers in its dealings with employers. The same principle underlay the The Social Organization of Work

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success of the artisan guild of medieval times. Here, all the local craftsmen in a given trade -- weaving, masonry, metal-working, baking, soap-making, etc. – agreed upon the prices they’d charge, admonished colleagues producing inferior goods, accredited the apprentices and journeymen who would one day join their ranks, and spoke as one voice on the municipal affairs. Guild members differed from 19th century union-craftsmen in one crucial respect: they owned the ateliers in which they worked. Industrialization turned the workshop into the factory floor and the proprietor-craftsman into a wage-earning employee. The investor who financed the increasingly mechanized equipment these modern-day artisans used valued cost-cutting over a generous wage. Nor could they, in all fairness, realistically do otherwise given the ruthless competition of the laissez-faire capitalism of the day. Business believed it had to answer for its actions to no one but itself. Surveying the dismal living conditions the early industrial worker endured as a result, social reformers and labor activists believed otherwise, but theirs was very much a minority view. The machines that powered the industrial revolution had to be built and maintained by skilled workers. They too were in the minority but, unlike others, literally held the power to slow or shut down the production line (Haydu, 1989). Their influence waned in the 20th century as mass industrialization gathered pace. Complex production processes increasingly were broken down into a series of simple tasks more readily done by machines that almost anyone with a modicum of training could attend to. And so the era of the assembly line and the consequent ‘deskilling’ of the workforce in the late 19th century undercut the craft unions’ strongest bargaining chip. A ready supply of untrained workers meant employers could hire and fire virtually at will; a surplus meant they could keep wages low and factory conditions uncongenial (“Work, Employment, and Leisure,” 2003). To wrest back some measure of bargaining power from large industrialists would take nothing short of a mass movement, and a militant one at that. Workers could only turn to each other for aid and comfort; prevailing government policy and court rulings stood squarely in the capitalist’s corner. Realizing this, unions became inclusive rather than exclusive in their outlook. If they could amass enough support to shut down production, they reasoned, employers would have to make concessions. The dense 90


concentrations of unskilled labor immediately surrounding industrial sites proved a boon in this respect. If companies could successfully recruit there, so too could unions. In the era of vertically-integrated monopolies, a single company extracted and shipped its raw materials to waiting processing and production plants and then delivered the finished goods to customers. To wield any influence unions had to enlist national support across industries and, if necessary, be willing to go out on strike -- i.e., withhold its labor en masse -- until its demands were met. Strikes & Lockouts

At the time, strikes were illegal. Employers could (and did) hire anyone willing to cross a union picket-line. Those who manned the picket line were paid a fraction of their former salaries out of a union strike fund financed by membership dues. There was not always safety in numbers, as violence instigated by striking workers or factory guards was not uncommon in the more fractious and protracted of these disputes, sometimes with tragic consequences. Employers also shut down production entirely, temporarily laying-off non-union workers out to pressure would be strikers to settle. A lockout was perfectly legal. To a large extent, a strike was a contest of wills; whoever could afford to hold out the longest won. Everyone involved paid a price either in lost wages, civil fines and criminal penalties, or lost revenues, defecting customers, property damage, and a tarnished public image. Collective Bargaining

Sitting across a negotiating table engaging in collective bargaining, union representatives and company management try to iron out a compromise instead. Sometimes a settlement is reached before a strike deadline; sometime it’s not. But to sit at that table, a union first has to be elected by a majority of the workers as its official representative in contract talk. This is not always a forgone conclusion. Union and management fiercely compete for each worker’s vote. To ensure fairness, both the campaign and the election are overseen in the U.S. by an agency of the Federal government: the National Labor Relations Board created by Congress in 1935 (Lawler, 1986). In the final analysis, it was what industrial unions did out of the limelight and day to day in recruiting and organizing new members that ensured The Social Organization of Work

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their survival and longer-term successes. Part fraternal order, part benevolent society, a union spends most of its money providing for the welfare of its members. As far back as 1908, 70 percent of the expenditures of one hundred British trade unions financed sick pay, funeral, accident, superannuation expenses or unemployment compensation for its rank-and-file and just 8.2 percent for strike and lockout pay. Indeed, between 1899 and 1909, strike funds collectively made up no more than 20 percent of these one hundred unions’ budgets. During the same period, 87 of these same unions paid out death benefits, 77 accident and illness, while 82 gave out modest unemployment stipends (Whiteside, 1986, p. 22). National Alliances

Unions also believed they could gain from membership in umbrella labor organizations. National alliances promised very tangible benefits: mutual aid and assistance, the potential to mobilize millions of workers in support of union causes, the political clout comes with being an organized constituency speaking with one voice on legislative and policy matters. The first of these in America, the National Labor Union (NLU), and in Britain, the Trades Union Congress (TUC), were formed by craft unions in the 1860s. The NLU soon faltered to be replaced by The Knights of Labor; the TUC is Britain’s leading labor organization to this day. Perhaps symptomatic of the times, the Knights of Labor publicly disavowed strikes and walk-outs, a position that historians believe led to its demise by the 1890s. The mantle of craft unionism was quickly picked up by its rival, the American Federation of Labor (AFL). The AFL’s leaders were realists in the sense that they did not think it possible or prudent to overthrow the Capitalist system. Instead they sought tangible concessions at the bargaining table, resorting to strikes, boycotts and walkouts for purely tactical ends (Kimeldorf & Stepan-Norris, 1992). However, the AFL was adamantly opposed to opening to ranks to unskilled workers. They were too diverse in background and interests to readily coalesce around a common agenda; too voluble and confrontational by nature not to be easily baited by enemies of the union movement. Such was the fate of the Industrial Workers of the World (IWW) which attempted to organize unskilled labor on a national scale. It championed such radical causes and socialist principles that authorities suppressed it soon after World War I. Attempts to bring unskilled labor unions together languished 92


until the formation of the Congress of Industrial Organizations (CIO) in the 1930s. The CIO’s founding members – the United Mine Workers, the Amalgamated Clothing Workers, and the International Ladies Garment Workers Union – were powerful industrial unions in their own right and secured its future. Craft and industrial unions, AFL and CIO, coexisted uneasily for the next decades, though often at loggerheads over questions of strategy and tactics. Given the different constituencies and negotiating strengths of each, conflict was perhaps inevitable. But after the passage of the TaftHartley Act in 1947, both realized the labor movement could simply no longer afford such divisiveness. The law restricted the rights of unions to call secondary work ‘boycotts’ in support of a strike and forbade picketing by unions other than the one engaged in collective bargaining. It heralded a hardening of attitudes against labor’s expanding power. Unions had to speak with one voice and, as of 1955, did so through an amalgamated AFL-CIO (Nelson, 1999). Welfare Capitalism

Business-promoted welfare-capitalism made unions increasingly irrelevant. Companies voluntarily offered better wages, more generous benefits, and guarantees of greater job security. Task-related decisionmaking devolved to work groups on the factory floor. Corporate America succeeded in its campaign to win over ‘the hearts and minds’ of its workers over the course of the next two decades: union membership fell (Strauss, 1995). Structural factors would soon cut deeply into the unions’ heartland – the manufacturing sector – and the blue collar workers who made up its membership. Within a generation, the goods-producing industrial economy, essentially, gave way to the service-providing post-industrial one. Manufacturers began turning to automation and/or to relocating production offshore as cost-saving measures. Free-trade agreements put an end to tariffs protecting labor-intensive industries like steel and textiles. Deregulation of the airline, railroad and trucking industries in the late 1970s made it harder for companies with a union workforce to compete domestically. The labor force itself was also changing. White collar workers and women coming into it were less disposed to joining a union. Either they saw no The Social Organization of Work

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tangible benefit in doing so, found the traditional union-milieu off-putting or else put greater store in that quintessential American virtue, individualism. In stressing its role by as the defender of the ‘working class’ the AFL-CIO may also have touched too sensitive a nerve in the American body politic with its overtly ideological message. Finally, of course, the business community’s long-standing antipathy to the union movement found a new rationale in neoliberal economic doctrine and considerable support in the conservative Reagan-Bush and Thatcher governments of the 1980s and early 1990 in the U.S. and U.K. (Cornfield, 1991). Open & Closed Shops

A central point of contention was the union practice of running a closed shop. Here, joining a union is a precondition of employment, thus guaranteeing its monopoly over the labor supplied to a firm. Needless to say, many a strike had to be called before Union wrung this concession from employers. Short of no union at all, businesses prefer an open shop where workers have a choice to belong or not. Employers championed this alternative as far back as 1900 as a solution to the growing resistance by craft unions to modern production techniques. Restrictive work rules imposed by these unions, management feared, would make them less and less competitive. The larger issue, of course, was who controlled the workplace – management or workers? An answer came in 1947 in a provision of the Taft-Hartley Act that sanctions individual state bans on closed or so called ‘union’ shops. Such right-to-work laws have been subsequently upheld by the courts. Another watershed event was the firing of striking air traffic controllers by Ronald Reagan in 1981. His consistently pro-business stance on labor matters encouraged some companies to consider eliminating unions all together. This occasioned very protracted, bitter strikes at Phelps-Dodge in southern Arizona in 1983-84, Hormel in Minnesota, in 1985-86, and Caterpillar in several Midwestern states communities in 1991-95 (Nelson, 1999). In each case management prevailed; the unions were broken.

Viewpoints Today, one in six working Americans belongs to a union. A shadow of its former self, organized labor struggles on, actively recruiting among women and immigrant workers in hopes of filling its depleted ranks. Behavioral 94


research suggests that unions have a better chance of success if they put expectancy-value, aggression-frustration and interactionist theory into practice. Even this may not retain a hemorrhaging membership. Structural changes in the economy and pro-business government policies certainly have not helped the union cause. But neither has the unions themselves. People don’t see them as relevant to their daily lives, but rather as just another cumbersome layer of unresponsive bureaucracy to dispense with. Much would be lost with their demise. The union movement has a rich tradition and espouses universal values: a living wage, work with dignity, mutual caring, and achievement through collective action. Unions have conducted themselves democratically for over a century; everyone from the union president to the shop steward is elected. Few of our other institutions can say as much. Employers might even rue the day the last union folds, for with it will go a vital buffer protecting them from the conflicts that arise naturally between worker and owner. Who will diffuse this pent-up aggression and peaceably keep the rank-and-file from turning into a mob? Who will see to it that workers have adequate pensions and health care benefits? Who will speak forcibly enough on behalf of the worker to be heard in the halls of corporate headquarters and the halls of government?

Bibliography Bureau of Labor Statistics. (2008). Union Members Summary. Retrieved July 13, 2008, from http://www.bls.gov/news.release/union2.nr0.htm Cornfield, D. (1991). The US labor movement: Its development and impact on social inequality and politics. Annual Review of Sociology, 17(1), 27-49. Retrieved August 19, 2008, from EBSCO online database, Academic Search Complete.http://search. ebscohost.com/login.aspx?direct=true&db=a9h&AN=9110071897&site=ehost-live Epstein, J. (1998). Reinventing labor unions. Futurist, 32(6), 13. Retrieved July 13, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=886635&site=ehost-live Haydu, J. (1989). Trade agreement vs. open shop. Industrial Relations, 28(2), 159. Retrieved August 19, 2008, from EBSCO online database, SocINDEX with Full Text.http://search. ebscohost.com/login.aspx?direct=true&db=sih&AN=4551421&site=ehost-live Kimeldorf, H., & Stepan-Norris, J. (1992). Historical studies of labor movements in the United States. Annual Review of Sociology, 18(1), 495-517. Retrieved August 19, 2008, from EBSCO online database, Academic Search Complete.http://search.ebscohost. com/login.aspx?direct=true&db=a9h&AN=9301100499&site=ehost-live


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Klandermans, P. (1984). Mobilization and participation in trade union action: An expectancy-value approach. Journal of Occupational Psychology, 57(2), 107-120. Retrieved July 13, 2008, from EBSCO online database, SocINDEX with Full Text.http:// search.ebscohost.com/login.aspx?direct=true&db=sih&AN=4617806&site=ehost-live Klandermans, B. (1986). Psychology and trade union participation: Joining, acting, quitting. Journal of Occupational Psychology, 59(3), 189-204. Retrieved July 13, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=4618058&site=ehost-live Lawler, J. (1986). Union growth and decline: The impact of employer and union tactics. Journal of Occupational Psychology, 59(3), 217-230. Retrieved July 13, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login. aspx?direct=true&db=sih&AN=4618088&site=ehost-live Nelson, D. (1999). What happened to organized labor? American Heritage, 50 (4), 81-89. Retrieved August 19, 2008, from EBSCO online database, Academic Search Complete. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=1980022&site=eh ost-live Strauss, G. (1995). Is the new deal system collapsing? With what might it be replaced? Industrial Relations, 34(3), 329. Retrieved June 28, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login.aspx?direct=true&db=si h&AN=9509100222&site=ehost-live Sullivan, R. (2006). Density matters: Implications of union density for the sociology of labor revitalization. Conference Papers -- American Sociological Association, 2006 Annual Meeting, Montreal. Retrieved August 19, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login.aspx?direct=true&db=si h&AN=26642031&site=ehost-live Visser, J. (2006). Union membership statistics in 24 countries. Monthly Labor Review, 129(1), 38-49. Retrieved Agust 10, 2008 from EBSCO online database, Business Source Complete,http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=212948 76&site=ehost-live Whiteside, N. (1986). Wages and welfare: Trade union benefits and industrial bargaining before the first World War. Bulletin -- Society for the Study of Labour History, 51(3), 21-33. Retrieved August 20, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=5775006&site =ehost-live Work, employment, and leisure: The transformation of work, employment, and leisure. (2003). In, Fulcher, J., Sociology. 612-637. Oxford: Oxford University Press.

Suggested Reading Fullagar, C., & Barling, J. (1991). Predictors and outcomes of different patterns of organizational and union loyalty. Journal of Occupational Psychology, 64(2), 129-143. Retrieved July 13, 2008, from EBSCO online database, SocINDEX with Full Text.http:// search.ebscohost.com/login.aspx?direct=true&db=sih&AN=5628636&site=ehost-live 96


Hirsh, B., & Schumacher, E. (1998). Unions, wages, and skills. Journal of Human Resources, 33(1), 201-219. Retrieved July 13, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=349826& site=ehost-live Leigh, D. (1985). The determinants of workers’ union status: Evidence from the national longitudinal surveys. Journal of Human Resources, 20(4), 555-566. Retrieved July 13, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost. com/login.aspx?direct=true&db=sih&AN=5086411&site=ehost-live Maranto, C. (1985). Union effects on human capital investment and returns. Journal of Human Resources, 20(3), 453-462. Retrieved July 13, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login.aspx?direct=true&db=si h&AN=5080224&site=ehost-live McIlroy, J., & Campbell, A. (1999). Still setting the pace? Labour history, industrial relations and the history of post-war trade unionism. Labour History Review, 64(2), 179-198. Retrieved June 28, 2008, from EBSCO online database, Academic Search Complete. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=4055366&site=eh ost-live McShane, S. (1986). The multidimensionality of union participation. Journal of Occupational Psychology, 59(3), 177-187. Retrieved July 13, 2008, from EBSCO online database, SocINDEX with Full Text.http://search.ebscohost.com/login.aspx?direct=tr ue&db=sih&AN=4618049&site=ehost-live


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Wages & Compensation PD Casteel

Overview The two primary factors sociologists use in measuring economic well-being are income and wealth. Traditionally income, payments an individual receives from a job or transfer program during a calendar year, is the primary tool utilized. This is because the information routinely gathered by the US Census and data tables are readily available for researchers. Some have argued that this approach is too narrow and does not take into consideration the ability of an individual or household to withstand economic hardships such as loss of a job, prolonged illness, or death of a family member. To this end some sociologists also take into account wealth. Wealth, the value of everything an individual owns less what the individual owes, allows individuals and households to withstand periods of economic hardship until they can reestablish a level of income or adjust their standard of living to current income levels. The level of wealth needed to withstand a prolonged period of hardship is outside of the reach of most Americans. For most people the ability to build wealth is greatly determined by wages and compensation. Unfortunately, most Americans do not earn enough to create significant wealth outside of the equity in their homes. What an individual can afford and how much an individual can save from their income often have a great deal to do with other forms of compensation. Health insurance, short term disability, and long term disability are forms of compensation that can help an employee withstand the economic hardship of prolonged illness. Without these forms of com98


pensation (usually not measured in income or wealth) an individual can quickly lose savings, home, and other assets. Analyzing wage and compensation to understand how most individuals build wealth and secure economic well-being isn’t as straightforward as measuring income. Elements of compensation such as medical benefits, memberships, stipends, meals and lodging, stock options, and deferred compensation are often not reported as income. These fringe benefits can significantly improve an individual’s wealth and economic well-being. Finally, when considering wage and compensation it is important to look at the roles race and gender play in individual earnings and economic wellbeing. This paper outlines various forms of wages and compensation that must be taken into consideration when attempting to understand issues around economic well-being.

Applications Salaries & Wages

The primary difference between a salary and a wage in the United States economy is that salary is paid for a period of time without regard to the number of hours worked and a wage is calculated based on an hourly rate or in a piecemeal manner. The Fair Labor Standards Act exempts salaried employees from minimum wages and overtime guidelines. To be classified as an exempt employee, that employee must be an executive, professional, outside sales person, commissioned sales person, computer professional, driver, loader, mechanic, farmer on a small farm, or a seasonal worker working at a seasonal or recreational business opened less than 7 months a year (US Department of Labor, 2008). Because of the number of executives, professionals, and sales people among salaried employees the difference in income between salaried and waged employees is substantial. Additionally, salaried employees are more likely to receive other forms of compensation. One of the primary concerns of the Department of Labor is to make sure that low compensated employees are not treated like exempt employees by companies. A non-exempt employee is protected by regulations that require a minimum wage be paid and that overtime is paid. Abuse of the exempt/non-exempt status of employees carries a hefty fine from the Department of Labor. The Social Organization of Work

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Overtime & Minimum Wage

Overtime is for many employees a two-edged sword. On one hand overtime wages are one of the few areas wage earners are compensated for their extra efforts and many employees come to depend on the extra pay in paychecks. On the other hand, overtime can be abused by employers. Research shows that too much overtime can lead to stress, poor health, obesity (Lallukka, Lahelma, Rahkonen, et al., 2008), and poor well-being at home (Golden, & Wiens-Tuers, 2008). The guidelines for overtime were laid out in the Fair Labor Standards Act of 1938. In the United States each state has the option to set it’s minimum wage at or above the federally required minimum wage. Research shows that immigrant workers tend to avoid states with low minimum wages and native workers who do not complete high school tend to suffer more adverse employment effects in these states (Zavodny, 2008). Other issues concerning overtime include employers’ attempts to work wage employees more than a 40 week and not pay the overtime premium. In response to this practice the Department of Labor fines employers $1,100 for each incident of not properly paying employee overtime. Stock Options & Restricted Options

Stock options and restricted cash are two other forms of compensation usually associated with executive compensation. Though some companies do offer Employee Stock Option (ESO) plans, stock options are more closely associated with executives. Restricted stock is almost exclusively offered to executives. A stock option is a contract offered to an employee that grants the employee the right to purchase company stock at a fixed price. The stock price offered is called the strike price and is usually the current price. The holder of the stock option is usually given a period of time (duration), usually ten years, in which to exercise the option. The idea is to align the efforts of the employee with the performance of the company. The option is exercised a few years later when the stock price has increased. The employee is able to buy the much more expensive stock at strike price in their stock option contract. The gains on the stock purchased are taxed at a much lower capital gains rate then income tax rate. If the stock drops then the option is never exercised. 100


Restricted stock is granted with conditions to an employee as part of his or her compensation. The stock cannot be sold until a certain period of time elapse and specific performance levels are attained. When the conditions are met the stock is granted to the employee. Unlike stock options, the employee receives the full value of the stock. The value of the stock when granted is treated as income and taxed accordingly. Any future gains on the restricted stock are treated as capital gains for tax purposes. Fringe Benefits

Fringe benefits are a significant part of an individual’s compensation, often about 40% of an individual’s salary or wages, and play a significant role in improving one’s economic well-being (Graves, Sexton, & Arthur, 1999). Fringe benefits include both legally required employer paid benefits and discretionary employer paid benefits. Legally required benefits paid by an employer matching the amount deducted from an employee’s pay includes Worker’s Compensation, state unemployment programs, Social Security, Medicare, and Medicaid. Legally required benefits have been put in place to create a social safety net for those who encounter economic hardship. Discretionary fringe benefits include health insurance, short and long term disability, life insurance, retirement plans, paid leave, day care, and perquisites. Worker Compensation provides income and medical assistance to workers injured on the job. Unemployment payments are made solely by employers. Unemployment payments are based on the employer’s history of having ex-employees file unemployment claims. Social Security provides retirement income, disability benefits including income and medical care through Medicaid, and widow/widower benefits. Social Security contributions by employee and employer are capped annually. Contributions by the employer and employee cease for the year once an employee exceeds $90,000 in income. Medicare provides medical assistance for elderly. Discretionary fringe benefits, unlike required fringe benefits, have a significant impact on economic well-being. 47 million Americans do not have health insurance (DeNavas-Walt, Proctor, & Smith 2007). The costs of a reasonably comprehensive health insurance plan purchased for a family can cost between $400 and $1,000 per month. 62% of all households without insurance earn less than $50,000 annually. This means that after The Social Organization of Work

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taxes a family would have to pay up to 1 in 3 dollars of income for health insurance. This is a figure that most families cannot afford. Studies have shown that lapses in insurance correlate with poor health and long-term habits of putting off preventative care, physician visits and follow-up or needed recommended care for chronic conditions and has in term effects on well-being (Bednarek, & Schone, 2003, Sudano, & Baker, 2003, Sudano, Baker, & Albert, 2002). Short term disability, long term disability, and life insurance are both offered at an employer’s expense and at an employee’s expense based on employer’s choice. The advantage of having an employer offer the benefit is that an employee can benefit from the buying power of the employer and not have to take a physical to qualify for plans they otherwise might not be able to acquire on their own. Retirement plans include pensions, 401(k) plans, and profit sharing plans. Most of these plans include an employer contribution. Also, in response to a growing female workforce a few employers offer paid leave and day care. Paid leave is a particularly unique benefit. It is a benefit greatly desired by female employees and disregarded by male employees, but seen by some researchers as a significant issue in creating well-being (Figart, & Marangos, 2008). Finally, there are perquisites or perks. These include supplemental income, stipends, cars, meals, lodging, cell phones, memberships, and contract severance packages. These perks are usually reserved for executives though some managers may enjoy use of company cars and cell phones in their work. Supplemental pay can be in the form of a Supplemental Executive Retirement Plans (SERP). SERPs provide retired executives a lifetime payment, usually 50% to 80% of their average annual income. SERPs, like the executives’ employment contracts, are binding and unlike an employee offer letter give executives the type of security and economic-well being most workers cannot imagine. A stipend is a fixed amount given to employees to cover certain expenses related to their job with the company. In return, the employee will track their own expenses on these specific business related items, such as mileage and membership fees to organizations that can benefit the company, and net expenses against the stipend on their tax return. For some executives and many university presidents, stipends far exceed expenses and serve as just another way to increase income without increasing salary. 102


Severance is another discretionary benefit. Many companies offer employees severance based on tenure, but since severance is not contracted it can be offered or not based on the employers willingness to pay given the company’s current financial condition. Severance is also used to mitigate the risk of a terminated employee taking legal actions against an employer. Many executives have contracted severance packages know as “golden parachutes.” These packages ensure relief from the economic hardship of losing a job. Some researchers suggest that severance is often over-compensation for employees who will soon find a new job (Grund, 2006). Some researchers believe that fringe benefits enhance compensation for highly paid employees, but actually create a salary sacrifice for lower paid employees. The idea is that wages may be cut or future raises limited if an employer is required to offer employees more benefits. Bonuses, Incentives, Commissions, & Profit Sharing

In addition to salary and wages some employees receive bonuses, incentives, commissions, and profit sharing. How these additions to income are paid is significant. Sales people working with low base salaries must earn commissions and incentives in order to receive adequate pay for the time and effort they put into their work. Incentives and commissions in this manner are part of an employee’s monthly income and usually included in the individuals budget for paying her monthly bills. It is much different when bonuses, incentives, and profit sharing are paid on an annual basis. In these instances an employee’s standard of living is in line with their monthly compensation and the annual payments come as a windfall allowing the employees to pay down bills and save. Additionally, bonuses have been shown to improve employee retention and improve company morale and quality of service (Nisar, 2006). Tips

Tips are one of the most under reported income sources. They are also one of the most difficult for sociologists and economists to account for in their research. Since many tips are paid in cash there is no way for the employers to track all tips collected by employees. Additionally, since reported tips are taxed employees are economically motivated to under report their cash tips. The effect of this is substantial for the tipped employee. As an


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example a hotel doorman who pays 25% federal tax on each additional dollar earned receives over 90% of their income through cash tips. If the doorman only reported half their tips then every dollar pocketed that is not report saves the employee nearly 33 cents on the dollar (the tax rate plus their FICA contribution). For each $1,000 not reported, the bellman will have over $300 in additional cash to spend. Granted, most employees that receive tips do not receive such a large portion of their income from cash tips. But the same benefits are proportionally accrued for the cash tips they do not report. Transfer Programs

Also included in income are transfer payments. This includes transfers from other individuals and the government. Forms of transfer payments include spousal support, child support, unemployment payments, farm transfer payments, disability payments, and welfare programs such as Supplemental Security Income (SSI), Aid to Families with Dependent Children, energy assistance and earned income tax credits. Government transfer programs are not reported in the earnings of the Current Population Survey. Government transfer payments are at the center of a debate amongst researchers about poverty. The debate focuses on two issues. The first is whether transfer payments entrench the recipients in poverty. Some researchers believe the data says yes (Defina, 2008) and others believe the data says no (Englander, & Jane, 1992). The second issue is whether these payments slow the United States economy. Wealth

Wealth, the value of everything an individual owns less what the individual owes, is not easily understood when attempting to evaluate the dispersion of income in an economic system. The reason is that wealth can build while not generating income. For the masses this might be seen in the equity of their home and the compounding of returns on their 401(k) plans. The wealthiest 1% in America only earn 20% of annual income, but own 40% of all wealth. The top 20% of wealthy Americans earn 59% of annual income, but control 91% of the wealth (Wolff, & Leone, 2002). The very wealthy top 10% of Americans own 86% of investment wealth (business equity, stocks, security, investment real estate etc…). These 104


assets ensure income and at the very least access to cash during the most difficult economic times. Wealth, unlike most forms of income, can be inherited and keep intact across generations. The gap between the share of income and share of wealth shows some of the shortcomings in only measuring income when considering wages, compensation, and economic well-being.

Viewpoints Race

In considering wage and compensation a researcher cannot avoid the issue of race. Racial minorities in America are more likely to earn less and have access to fewer other forms of compensation. According to the US Census, African Americans and Latinos can expect to only earn a potion of what Whites earn, to be less likely to obtain health insurance, and more likely to be poor (DeNavas-Walt, Proctor, & Smith 2007). In fact African Americans’ median income is only 58% of Whites and Latinos median income is only 50% of Whites. Additionally, African Americans and Latinos are less likely to obtain high paying occupations that extend a wide array of fringe benefits (Fronczek & Johnson, 2003). Any analysis on American wages and compensation is incomplete without some recognition that racial inequality is still a significant factor in understanding the issue. Gender

Women face some unique forms of discrimination related to wages and compensation. They, like racial minorities, also experience a significant wage gap earning only 76% of what men earn (DeNavas-Walt, Proctor, & Smith 2007). They also are less likely to obtain high paying positions that extend a wide array of fringe benefits (Fronczek & Johnson, 2003). Women in America have it tough. 60% of all people living in poverty in American are female. 54% of all households in poverty are headed by a woman (DeNavas-Walt, Proctor, & Smith 2007). When working women were surveyed about what is some of the things they would do if they had more time 50% answered that they would work a second job (AFL-CIO, 2008). When surveyed about what are the most important changes they would like to see at work, answers included a safe workplace, a workplace free of violence, paid leave, and an end to sexual harassment (LSPA, 2002). These are changes that don’t make the list for men. This is the unique chalThe Social Organization of Work

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lenge that women face. Not only do they face a wage gap and glass ceiling, but the workplace norms and values are masculine and do not reflect their needs and desires. Additionally, many of the fringe benefits extended to highly compensated employees reflect masculine values. Tickets to sporting events, country club memberships, and stipends for having a few beers with the clients are just a few. Wages and compensation contribute to a greater sense of well-being when the workplace and the fringe benefits better reflect the values of the employee. Conclusion

The study of wage and compensation and ultimately, economic well-being goes far beyond the measure of reported income. This paper outlines the many forms of compensation and some of the factors sociologists need to consider when attempting to analyze inequality in wage and compensation. In addition to the federally mandated benefits that form a safety net for disabled and elderly Americans, many companies offer health insurance, disability, and life insurance to its employees. The biggest difference in compensation comes in the number of fringe benefits and the very high level of the compensation associated with these benefits extended to executives. Bonuses, stock options, restricted cash, SERPS, and severance packages can represent millions of dollars. The roles of unions, non-profit organizations, and the government as employer of civilian and non-civilian Americans also has substantial influence on the understanding of wages, compensation, and economic wellbeing. Additionally, changing tax law and corporate America’s responses to these changes by creating new benefits for its most highly compensated employees continues to evolve. What is clear is that the social researcher still has many fertile areas to work in to increase our understanding of wage, compensation, and economic well-being.

Bibliography American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). (2008). Ask a working woman: 2008. American Federation of Labor and Congress of Industrial Organizations: Washington, D.C. Retrieved July 13, 2008 from: http://www.aflcio. org/issues/politics/labor2006/upload/AWWsurvey.pdf Bednarek, H.L., & Schone, B.S. (2003). Variation in preventative service use among the insured and uninsured: Does length of time without coverage matter? Journal of Health Care for the Poor and Underserved, 143, 403-419. 106


DeFina, R. (2008). A comparison of poverty trends and policy impacts for working families using different poverty indexes. Journal of Economic & Social Measurement, 32(2/3), 129-147. Retrieved June 27, 2008 from EBSCO Online Database Academic Search Complete: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=279712 91&site=ehost-live DeNavas-Walt, C., Proctor, B.D., & Smith, J. (2007). Income, poverty, and health insurance in the United States: 2006. In Current Population Reports, 60-233. U.S. Government Printing Office: Washington D.C. Englander, F., & Kane, J. (1992.) Reagan’s welfare reforms: Were the program savings realized? Policy Studies Review, 11(2), 3-23. Retrieved June 27, 2008 from EBSCO Online Database Academic Search Complete:http://search.ebscohost.com/login.aspx ?direct=true&db=sih&AN=11446023&site=ehost-live Figart, D.M., & Marangos, J. (2008). Introduction to living standards and social well-being. Review of Social Economy, 66 (1), 1-5. Retrieved June 27, 2008 from EBSCO Online Database Academic Search Complete: http://search.ebscohost.com/login.aspx?direct =true&db=sih&AN=31730336&site=ehost-live Fronczek, P., & Johnson, P. (2003). Occupations 2000: Census 2000 Brief. U.S. Department of Commerce: Economics and Statistics Administration. Washington D.C. Retrieved July 12, 2008 from: http://www.census.gov/prod/2003pubs/c2kbr-25.pdf Golden, L., & Wiens-Tuers, B. (2008). Overtime work and wellbeing at home. Review of Social Economy, 66(1), 25-49. Retrieved June 27, 2008 from EBSCO Online Database Academic Search Complete: http://search.ebscohost.com/login.aspx?direct=true&db =sih&AN=31730334&site=ehost-live Graves, P.E., Sexton, R.L., & Arthur, M.M. (1999). Amenities and fringe benefits: Omitted variable bias. American Journal of Economics and Sociology, 58(3), 339-404. Grund, C. (2006). Overcompensation by severance payments. Applied Economics, 38(8), 925-930. Retrieved June 27, 2008 from EBSCO Online Database Academic Search Complete: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=208551 78&site=ehost-live Lake Snell Perry & Associates (LSPA). (2002). Ask a Working Woman: 2002. American Federation of Labor and Congress of Industrial Organizations: Washington, D.C. Lallukka, T., Lahelma, E., Rahkonen, O., et al. (2008). Associations of job strain and working overtime with adverse health behaviors and obesity: Evidence from the Whitehall II Study, Helsinki Health Study, and the Japanese Civil Servants Study. Social Science & Medicine, 66(8), 1681-1698. Retrieved July 12, 2008 from EBSCO Online Database Academic Search Complete: http://search.ebscohost.com/login.aspx?direct=true&db =sih&AN=31377690&site=ehost-live Nathan, F. (1987) Analyzing employers’ costs for wages, salaries, and benefits. Monthly Labor Review, 110(10) 3-11. Nisar, T. (2006) Bonuses and investment in intangibles. Journal of Labor Research, 27(3), 381-395. Retrieved July 12, 2008 from EBSCO Online Database Academic Search The Social Organization of Work

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Complete:http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=2180849 4&site=ehost-live Sudano, J. J., Baker, D.W., & Albert, J.M. (2002). Loss of health insurance and the risk for a decline in self-reported health and physical functioning. Medical Care, 4011, 1126 – 1131. Sudano, J. J., & Baker, D.W. (2003). Intermittent lack of health insurance coverage and use of preventative services. American Journal of Public Health, 931, 130 – 137. Retrieved July 12, 2008 from EBSCO Online Database Academic Search Complete: http://search. ebscohost.com/login.aspx?direct=true&db=sih&AN=8859794&site=ehost-live U.S. Department of Labor. (2008) Fair Labor Standards Act Advisor: Exemptions. Retrieved July 12, 2008: http://www.dol.gov/elaws/esa/flsa/screen75.asp Wolff, E.N., & Leone, R.C. (2002). Top heavy: The increasing inequality of wealth in America and what can be done about it. New Press; New York. Zavodny, M. (2008). The effect of minimum wage on immigrants’ employment and earnings. Industrial & labor Relations Review, 61(4), 544-563.

Suggested Reading Butler, R.J. (1999). The economics of social insurance and employee benefits. Springer: New York. Hays, S. (2004). Flat broke with children: Women in the age of welfare reform. Oxford University Press: Oxford. Kay, I., & Van Putten, S. (2007). University Press: Cambridge.

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Myths and realities of executive pay.

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Diversity in the Workplace PD Casteel

Overview The idea of diversity in the workplace has become a priority for human resource managers and public relations managers in large corporations. A link to a corporation’s diversity program or mission statement can be found on virtually every Fortune 500 company website. Since the early 1990s, companies have aggressively positioned themselves in the marketplace as an employer championing workplace diversity and a partner supporting local diverse communities. This drive towards diversity has been spurned by dramatic shifts in manufacturing jobs away from advance capitalism economies, a rise in service sector jobs, company branding, investor relations, and in some cases a sincere business ethic. Despite the new public narrative on diversity presented by companies, growing diversity, and even hiring trends now favoring women in America’s service intense workforce (Green, 2003), the fact is that many of the problems related to diversity don’t seem to be going away. White men still dominate high status jobs and substantial pay gaps persist between men and women, Whites and minorities, and upper and lower classes. Diverse teams in organizations routinely encounter communication obstacles and in many instances are less productive than their homogeneous counterparts. Many of the challenges of diversity remain beyond the reach of large companies. Historical systems of racism, chauvinism, and classism along with The Social Organization of Work

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their inherent rationality have lost favor with the rise of new cosmopolitan social graces. Yet these systems of historical bias remain intact and interconnect with networks of enculturation, education, healthcare, and economy constructing a faceless systemic bias that constrains the rise of a highly skilled diverse workforce. The well-intentioned corporation may find that once it has addressed internal issues of hiring, training, and promotion bias that the diverse workforce they want to hire simply isn’t available. To better understand many of the issues surrounding the diversity in the workplace discourse, it is necessary to be familiar with some of the basic concepts and dichotomies leveraged in the diversity debate. The primary categories utilized in research are race, class, and gender. These categories can be, and are often, extended. Other categories can include age, physical abilities (ableism), religion, and sexual orientation. Within companies and labor markets diversity is studied in proportional analysis of minority and majority group members and in integrative approaches that examines faultlines determined by reoccurring majority-minority splits across many categories (Kravitz, 2005). Thus, diversity can be measured separately at many levels in the workplace hierarchy including the field, shop floor, project team, management team, and board room. Disparities in fairness can be studied through phenomena such as wage gaps, job segregation, marginalized work, and glass ceilings. Finally, workplace culture and its relationship to proportional representation, pay structure, and authority allow researchers to analyze the ability of certain types of workers to have a voice in the workplace. With these approaches, the sociologist is able to go beyond just measuring the count of majority and minority employees in a workplace. The sociologist can measure upward mobility, fairness in pay, status in like jobs, the effectiveness of teams, and cultural changes. Diversity is a social benefit only if it encompasses fairness in opportunity, rewards, and proportional representation. Race & Ethnicity

Race is a social construct that identifies groups of people by certain shared characteristics. More often than not these characteristics are phenotypical, that is differences in color of skin, facial features, and hair texture. Race as a category does not reflect actual genotypical differences (gene differences). For this reason race may actually hide or obscure discrete ethnic groups with common historical origins (Marshall, 1998). This does not prevent so110


ciologists from using race in their analysis of diversity. However, within modern sociology race is not viewed as reflective of a genetically like group. Rather it is assumed to be a category shaped by larger social values. Gender & Sex

In her 1972 book, Sex, Gender, and Society, Ann Oakley introduced the concept of gender to sociology. She defined ‘sex’ as the the biological difference between male and female and ‘gender’ as the parallel and unequal division between masculinity and femininity in society. Since Oakley’s definition the concept of gender has been extended to the division of labor in companies (Marshall, 1998). Sociologists use ‘gender’ instead of ‘sex’ because it is believed that difference in status and pay are attributable to socially constructed divisions (Smith, 1987). Gendering is socialization and one of the ways humans organize their lives. Researchers utilized gender to explain job segregation, job marginalization, and the effect of proportionality and workplace culture. Class

When sociologists work with the category of social class they are working with a slippery concept. Unlike race or gender, people are able to change class. Class refers to a group of people who share common economic positions and opportunities in an economy. Given the relatively similar economic status, they are afforded like opportunities for education, healthcare, jobs, and other economic benefits. Generally speaking there is an upper, middle, and lower class. Within each of these levels there can be additional sub-classes. For example in upper class there can be the wealthy and the middle upper class. In the lower class there can be the working class, poor, and underclass. Where the economic line lies between classes in terms of wages is debated. What is not debated is that most people are unaware of their class. Despite what research data tells us well over 90% of people consider themselves middle or working class (Heaton, 1987). Sexual Orientation, Physical Ability, Age & Religion

Other categories are often considered when looking at workplace diversity. Among these are sexual orientation, physical ability, age, and religion. Sexual orientation may be towards the opposite sex (heterosexuality), same sex (homosexuality), both sexes (bisexuality), and neither (asexualThe Social Organization of Work

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ity). Some sociologists believe sexuality to be genetic, while others label all types of sexual orientation, including heterosexuality, as socially constructed. Physical ability is also a category to be considered in diversity. Traditionally, disabilities have been used to discriminate against certain types of workers. Impairment is a socially constructed concept that extends beyond the actual limitations of the individual. Ableism is a bias against people with disabilities. These four categories appear less often in corporate diversity mission statements. The Workplace: Corporations, Non-profits & the Government

To understand the dynamics of workplace diversity it is necessary to understand the U.S. workforce. Corporations and small businesses still provide the lion’s share of jobs in the U.S. economy. However, non-profits now employ over 10% of the workforce and growths in jobs in the non-profit sector are outstripping that in Corporate America. Non-profit entities account for 60% of the hospital jobs in America and nearly 40% of all home care jobs (Salamon & Sokolowski, 2006). This is an important issue when considering diversity in the workplace. Though non-profit organizations do tout their diversity programs, the truth is that many non-profits and most non-profit hospitals have religious affiliations. These affiliations contribute to workplace cultures that constrain upward mobility for people who do not share religious affiliations or perspectives on sexuality with their employer. The government is another fast growing sector of the workforce. According to a U.S. Census (2003) press release on government workers, over 15% of the civilian workforce works for federal, state, or local governments. The government as an employer is much more diverse than the corporations and non-profits. An ironic example of this can be found in the construction industry. Construction upper tier jobs (construction manager, estimators, and managers/supervisors of trades) are comprised of only 4% African Americans while 12% of city building inspectors, the individuals who inspect the work of construction management, are African American (U.S. Department of Labor, 2006). When considering diversity in the workplace, companies often find themselves between two strong growing sectors of the workforce with very different approaches to diversity.

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Further Insights Fairness & Diversity

It is not enough simply to have proportional representation in the workplace. A poultry business can claim to be diverse because a majority of its workforce is Latino and half its workforce is female. But if all the managers and executives of the company are white men, then it would appear that the company is just taking advantage of inexpensive, unskilled labor concentrated in a local community. A hospital may claim to be diverse because of the international background of its physicians. However, if the cleaning staff is overwhelmingly African-American women and the nurses and administrators are predominantly white then it would not appear to provide a diverse workplace, despite the backgrounds of the resident physicians. A large law firm employing more female lawyers then males may claim to be diverse. Yet, if women attorneys at the firm only earn 70% of their male counterparts’ wages then the fairness of the firm’s approach to diversity must be questioned. Job segregation, wage gaps, and job marginalization, not just personnel counts, tell the real story about diversity for sociologists. Job Segregation

Job segregation exists when a category of jobs is filled primarily by workers of a certain type. Additionally, segregation exists when companies have a two-tiered system wherein jobs are divided up into levels that offer unequal pay, responsibility, security, training, and mobility (Doeringer & Piore, 1971). Job segregation makes it very difficult to show discrimination when the types of work women or minorities do is so different from the types of work White men do. American courts only recognize discrimination for doing the same work and usually only for doing it at the same company. Since the late 1960’s this type of discrimination within “job-cells” has been largely a non-factor in the gender wage gap (Blau, 1977; Groshen, 1991; McNulty, 1967) because the courts are unable to address issues such as why computer programmers, a job three times more likely to be filled by a man, get paid over 50% more than elementary school teachers, an occupation mostly filled by women, and in which workers are twice as likely to have a Bachelor’s degree. Some researchers believe that job segregation may be the largest remaining part of the gender wage gap (Groshen, 1991). The Social Organization of Work

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Wage Gaps

A wage gap is a term that signifies differences in pay for like work based on race and gender. Despite claims that over the last 30 years the overall wage gap has closed between men and women, many argue that the wage gap has only improved for white women. Table 1 shows the change in wage gaps from 1975 and 2006 representing 30 years of improvement for white women. Today, the combination of being the “wrong” gender and the “wrong” race appear to have a double penalty (Greenman, & Xie, 2008). Blacks and Hispanics have lost ground to white women over the last 30 years. The wage gap between Hispanic women and white women is greater than the wage gap between white men and white women. The rise of service industries and the demise of manufacturing have benefited White women but not all women. Though a wage gap for like work does exist between men and women as well as Whites and minorities in America, the primary reason for the overall wage gap lies in job segregation and job marginalization. Table 1: Wage Information by Gender & Race, 1975-2006. Year

White Men

Black Men

Hispanic Men

White Women

Black Women

Hispanic Women

1975

100%

74.30%

72.10%

57.50%

55.40%

49.30%

2006

100%

72.10%

57.50%

73.50%

63.60%

51.70%

Year

White Women

Black Men

Hispanic Men

Black Hispanic Women Women

1975

100%

129.22% 125.39% 96.35%

85.74%

2006

100%

98.10%

70.34%

78.23%

86.53%

Source: U.S. Current Population Survey and the National Committee on Pay Equity. Re-Segregation & Job Marginalization

In 1977 Rosabeth Moss Kantor’s book, Men and Women of the Corporation, presented the argument that a positive swing in the proportional representation of female employees can change the prestige and pay of a job and the culture of a workplace. Since that time researchers have shown how the proportional change in the number of women in a job-cell or even occupation (that being a shift from a minority to majority of workers in a 114


group) can trigger what Skuratowicz and Hunter (2004) call re-segregation. Re-segregation occurs when a large number of women move into an occupation. Men begin to flee the occupation, prestige drops, wages drop, and the gender wage gap is perpetuated (Killingsworth, 1990; Reskin & Roos, 1990). The jobs become marginalized. The same is true of manufacturing jobs and food processing jobs that have seen White men replaced with women and minorities. Oddly, research shows that the White men who remain in the newly feminized occupation remain advantaged (Budig, 2002; Kantor, 1977) and are more likely to be promoted (Williams, 1992). Glass Ceilings

Within the hierarchies of companies a glass ceiling is a situation wherein an otherwise qualified candidate is denied the opportunity for advancement based on race, gender, or some other socially constructed characteristic. It is called a glass ceiling because the discrimination or bias that creates the barrier is not visible. Glass ceilings traditionally refer to constraints placed on women, but can also refer to limitations placed on homosexuals (Frank, 2006) or other minorities (Lee, 2002; Sherman, 2002). Children, Leave & the Double-Day

When addressing diversity at the highest levels of a company, researchers must take into consideration one of the more hotly debated issues: leave. When children arrive into the lives of workers women are more likely to leave the workforce, if even for a brief period of time. Although the process of enculturation and the subsequent values and expectations play a primary role in deciding which parent will stay home with a child, research shows that company culture is also a significant factor. Men who work for large companies are less likely to take a paid leave to be with a new born child (Hass, & Hwang 1995). Additionally, employers punish men, as measured by reduction in wages, more than women for taking leave (Spivey 2005). Thus women take career breaks. When they return to work they pay the price in reduced wages, reduced responsibilities, and increased obstacles to upward mobility. When women return to work, the effect of children on their role in the workplace is immense. They begin to work what Arai (2000) calls the “double-day.” The “double-day” includes two full-time jobs; a job at home


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and a job at work. Research has shown that having younger children increases the amount of housework for women while leaving the amount done by men largely unchanged (South, & Spitze, 1994). Additionally, women manage nearly all medical care – making the care decisions, appointments, taking the child to a physician, obtaining prescriptions, and caring for the sick child (Arai 2000, Blan 1993). The double-day leaves little time for obtaining a mentor, networking, and training (Goffee, & Scase 1983, Munch, McPherson, & Smith Lovin 1997, Noonan, & Corcoran 2004, Stevenson 1986). To overcome this, many women use leave to focus their energy on a single role. Research shows that many women change their orientation from work to mothering and then back to work at different stages in their lives. This allows them to fully commit to each endeavor. Perhaps women are penalized for leave because men do not experience similar types of changes (Hock, Gnezda, & McBride 1984, Poloma, 1972). Waldfogel (1997) estimated that for women, having children created a 4% to 12% earnings penalty compared to women without children. Ironically, new fathers are viewed as more responsible and reliable and are advantaged in the labor market by having children (Noonan, & Corcoran 2004). The arrival of children correlates at the same time to the acceleration of men’s careers and deceleration of women’s careers.

Viewpoints According to population forecasts by the US Census Bureau (2004) the next fifty years will see the percent of white men in the America workforce between the ages of 15 and 44 drop from approximately 40% to 25%. The core workforce filling high status and high paying jobs in America is shrinking. Companies who want to compete must diversify at the highest levels of the company in order to fill the void being left by this huge demographic shift. This problem is exacerbated by the dramatic drop of available workers due to the approximately 30 million fewer Generation X Americans (born 1965 -1979) than Baby Boomers (born 1946 - 1964). Diversity Programs

Companies are beginning to grasp the systemic nature of racism and chauvinism. Going beyond just hiring practices, large companies are focusing on mentoring and training to retain diverse employees. Additionally, companies are looking at their local communities and customer base. Compa116


nies located in diverse communities and selling their products to diverse consumers are beginning to resolve the ethical concerns of profiting from a diverse consumer base, but not doing anything to sustain the very communities from which they reap profits. Also, companies understand that based on pure demographics alone, future leadership in business will be more diverse. This means schools that primarily serve minority children must be improved. This also means that access to healthcare for these children must improve. Without these changes the future workplace these companies need to create may be out of their reach. Education is often cited as the solution to diversity in the workplace. However, local school districts are funded by real estate taxes. That means poor children living in real estate depressed communities may only get one dollar of public school financing for every four to eight dollars in wealthy communities. This “savage inequality” (Kozal, 1992) ensures that these children will be far less likely to receive an adequate primary education and go onto college. Healthcare is critical. In the latest Current Population Survey, the U.S. Census Bureau (2004) reported that from 2002 to 2003 one in every four persons living in the State of Texas did not have health insurance. Access to healthcare is a key to developing a diversified workforce that can fill jobs at every level of the diversified workplace. One of the biggest problems related to lack of access to healthcare is low birth weight. Studies have shown low birth weight to contribute to problems with language comprehension, visual recognition, psychological and intellectual development, classroom behavior problems, and future increased risk of cardiovascular disease (Maher, 1999; Conley, 2001). Studies also show that lapse in access to healthcare correlates with long term poor health and chronic conditions (Bednarek & Steinberg Schone, 2003; Sudano & Baker, 2003; Sudano, Baker & Albert, 2002). Lack of access to healthcare diminishes a future workforce’s physical skills, social skills, education, and emotional well being. In looking at the websites of the top Fortune 500 companies, one only needs to click through a link titled “corporate responsibility,” “community and society,” or “company facts” to see the education and healthcare programs these companies are supporting as part of their diversity programs. At the center of these initiatives are education and healthcare programs for poor The Social Organization of Work

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communities. Among the many questions sociologists will study around the issue of diversity in the workplace is the question of whether these programs are successful. Diverse Teams & Workgroups

One of the primary areas sociologists concentrate on in the workplace is the performance of teams or workgroups. This is essentially the study of the end results of socialization, education, hiring, and training. Teams operationalize the diversity dynamic and allow sociologists to measure conflict and productivity. Teams also allow for social researchers to identify other categories of diversity. These other categories may include functional background and personality. Research shows that diverse teams are more likely to encounter conflict and often are less productive than homogeneous teams. However, diverse teams are shown to be better for problem solving and exploring new opportunities (Kravitz, 2005; Lepadatu, 2005). Recent research has shown that disclosure of background information (information that may reveal a like experience between two members otherwise perceived to different) can enhance the function of the group and reduce conflict (Homan, van Knippenberg, van Kleef, & de Dreu, 2007). This type of information provided to business by social researchers can allow managers to develop within organizations communicative practices that accelerate workgroup productivity and mitigate conflict. Conclusion

Sociologists will continue to study workplace diversity and its related issues from the cradle to the boardroom. Diversity in the workplace is a very contentious issue. One only needs to look at the top companies in Fortune’s 500 and consider their diversity programs in light of the multimillion dollar law suits for discrimination brought against some of these companies. Perhaps no other company has been more at the center of the diversity, healthcare, and local community debate than Walmart. Walmart employees represent a very large block of patients receiving indigent care because they either can’t afford the insurance offered or the upfront $1,000 deductable (Meyerson, 2005). Yet Walmart prides itself on the number of employees who have worked their way up from the bottom of the company

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into management and no other company offers more affordable health insurance plans to individuals and families in the local community than Walmart. The effects of Walmart’s programs will continue to be studied by social researchers and the results of these studies will shed light on the effectiveness of Walmart’s programs and either validate the Walmart approach or give rise to a social critique of these practices. It is this dynamic interchange between business practice and social research that is ever evolving and shaping our understanding of diversity in the workplace.

Bibliography Arai, A. B. (2000). Self-employment as a response to the double day for women and men in Canada. The Canadian Review of Sociology and Anthropology, 37 (2), 125-142. Retrieved May 28, 2008, from EBSCO Online Database Academic SocINDEX. http:// search.ebscohost.com/login.aspx?direct=true&db=sih&AN=3170465&site=ehost-live Bednarek, H. L., & Steinberg Schone, B. (2003). Variation in preventative service use among the insured and uninsured: Does length of time without coverage matter? Journal of Health Care for the Poor and Underserved, 143, 403-419. Blain, J. (1993). I can’t come in today, the baby has the chicken pox! Gender and class possesses in how parents in the labour force deal with the problem of sick children. Canadian Journal of Sociology, 18 (4), 405-430. Retrieved May 28, 2008, from EBSCO Online Database Academic SocINDEX. http://search.ebscohost.com/login.aspx?direct =true&db=sih&AN=10086366&site=ehost-live Blau, F. 1977. Equal pay in the office. Lexington, MA: D.C. Heath. Budig, M. J. (2002). Male advantage and the gender composition of jobs: Who rides the glass escalator? Social Problems, 49 (2), 258-277. Burke, R. J. (1984). Mentors in organizations. Group and Organization Studies, 9, 353- 372. Conley, D. & Bennett, N.G. (2001). Birth weight and income: Interactions across generations. Journal of Health and Social Behavior, 42 (4). 450-465. Retrieved May 28, 2008, from EBSCO Online Database Academic SocINDEX. http://search.ebscohost.com/login.asp x?direct=true&db=sih&AN=6255298&site=ehost-live Doeringer, P. B. & Piore, M. (1971) Internal Labor Markets and Manpower Analysis. Lexington: D.C. Heath. Frank, J. (2006). Gay glass ceilings. Economica, 73 (291), 485- 508. Retrieved May 28, 2008, from EBSCO Online Database Academic SocINDEX.http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=21625381&site=ehost-live Goffee, R. & Scase, R. (1983). Business ownership and women subordination: A preliminary study of female proprietors. Sociological Review, 31 (4), 625-648. Retrieved May 28, 2008, from EBSCO Online Database Academic SocINDEX. http://search.ebscohost. com/login.aspx?direct=true&db=sih&AN=5480537&site=ehost-live


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Green, A. E. (2003). Labour market trends, skills needs and the ageing of the workforce: A challenge for employability? Local Economy 18 (4), 306-321. Greenman, E., & Xie, Y. (2008). Double jeopardy? The interaction of gender and race on earnings in the United States. Social Forces, 86 (3), 1217-1244. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost.com/login.aspx?dir ect=true&db=sih&AN=31673144&site=ehost-live Groshen, E. L. (1991). The structure of female/male wage differential: Is it who you are, what you do, or where you work? The Journal of Human Resources, 26 (3), 457-472. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search. ebscohost.com/login.aspx?direct=true&db=sih&AN=4856296&site=ehost-live Hass, L. & Hwang, P. (1995). Company culture and men’s usage of family leave benefits in Sweden. Family Relations, 44 (1), 28-36. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost.com/login.aspx?direct=true&db=sih&A N=9502214289&site=ehost-live Heaton, T. B. (1987). Objective status and class consciousness. Social Science Quarterly, 68 (3), 611-620. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http:// search.ebscohost.com/login.aspx?direct=true&db=sih&AN=16552738&site=ehost-live Hock, E., Gnezda, M.T., & McBride, S. L. (1984). Mothers of infants: Attitudes toward employment and motherhood following birth of the first child. Journal of Marriage and Family, 46 (2), 425-431. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=52754 53&site=ehost-live Homan, A., van Knippenberg, D., van Kleef, G.A., & de Dreu, C.K.W. (2007). Interacting dimensions of diversity: Cross-categorization and the functioning of diverse work groups. Group Dynamics, 11 (2), 79-94. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost.com/login.aspx?direct=true&db=sih& AN=25487881&site=ehost-live Kanter, R.M. (1977). Men and Women of the Corporation. New York: Basic Books. Killingsworth, M.R. (1990). The economics of comparable worth. Lalamazoo, MI: Upjohn Institute for Employment Research. Kozol, J. (1992). Savage inequalities: Children in America’s schools. New York: Harper Perennial. Kravitz, D.A. (2005). Diversity in teams: A two-edge sword requires careful handling. Psychological Science in the Public Interest, 6 (2), i-ii. Retrieved May 28, 2008, from EBSCO online database SocINDEX http://search.ebscohost.com/login.aspx?direct=tr ue&db=sih&AN=19185512&site=ehost-live Lee, S.M. (2002). Do Asian American faculty face a glass ceiling in higher education? American Educational Research Journal, 39 (3), 695-724. Retrieved May 28, 2008, from EBSCO online database SocINDEX http://search.ebscohost.com/login.aspx?direct=tru e&db=sih&AN=18697179&site=ehost-live

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Lepadatu, D. (2005). Dilemmas of diversity: New theories and directions on the performance of diverse work teams. Conference Papers - American Sociological Association; 2005 Annual Meeting, Philadelphia. 1-21. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost.com/login.aspx?direct=t rue&db=sih&AN=18614780&site=ehost-live Mahler, K. (1999). Elevated risk of low birth weight among black parents’ infants is not directly attributable to race. Family Planning Perspectives, 31 (3). 150-51. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=1954039&site=ehost-live Marshall, G. (Ed.). (1998). A Dictionary of Sociology. New York: Oxford University Press. McNulty, D. (1967). Differences in pay between men and women workers. Monthly Labor Review, 90(12). 40-43. Meyerson, H. (2005, Oct. 26). Trouble in Wal-Mart’s America. Washington Post. 19. Munch, A., McPherson, M. J., & Smith-Lovin, L. (1997). Gender, children, and social contact: The effects of childbearing for men and women. American Sociological Review, 62 (4), 509-520. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search. ebscohost.com/login.aspx?direct=true&db=sih&AN=9709050405&site=ehost-live Noonan, M.C., & Corcoran, M.E. (2004). The mommy track and partnership: Temporary delay or dead end? The Annals of the American Academy of Political and Social Science, 596, 130-150. Reskin, B.F., & Roos, P.A. (1990). Job queues, gender queues: Explaining women’s inroads into male occupations. Philadelphia: Temple University Press. Salamon, L.M., & Sokolowski, S.W. (2006). Employment in America’s charities: A profile. Non Profit Employment Bulletin 26. Johns Hopkins University. Retrieved May 28, 2008. http://www.jhu.edu/ccss/research/pdf/Employment%20in%20Americas%20 Charities.pdf Sherman, R. (2002). The subjective experience of race and gender in qualitative research. American Behavioral Scientist, 45 (8). Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost.com/login.aspx?direct=true&db=sih& AN=6491674&site=ehost-live Skuratowicz, E. & Hunter, L.W. (2004). Where do women’s jobs come from? Job segregation in an American bank. Work and Occupations, 31, (1), 73-110. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost. com/login.aspx?direct=true&db=sih&AN=12216915&site=ehost-live Smith, D.E. (1987). The Everyday as Problematic: A Feminist Sociology. Northwestern University Press.

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South, S., & Spitze, G. (1994). Housework in marital and non-marital households. American Sociological Review, 59 (3), 327-347. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost.com/login.aspx?direct=true&d b=sih&AN=9408150436&site=ehost-live


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Spivey, C. (2005). Time off at what price? The effects of career interruptions on earnings. Industrial and Labor Relations Review, 59 (1), 119-140. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost.com/login.aspx?direct= true&db=sih&AN=18378908&site=ehost-live Stevenson, L. (1986). Against all odds: The entrepreneurship of women. Journal of Small Business Management, 24 (4), 30-36. Sudano, J. J., Baker, D.W., & Albert, J.M. (2002). Loss of health insurance and the risk for a decline in self-reported health and physical functioning. Medical Care, 4011, 1126 – 1131. Sudano, J. J., & Baker, D.W. (2003). Intermittent lack of health insurance coverage and use of preventative services. American Journal of Public Health 93(1). 130 – 137. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost.com/ login.aspx?direct=true&db=sih&AN=8859794&site=ehost-live Williams, C. (1992). The glass escalator – Hidden advantages for men in female professions. Social Problems, 39, 253-267. Waldfogel, J. (1997). The effect of children on women’s wages. American Sociological Review, 62 (2), 209-217. Retrieved May 28, 2008, from EBSCO Online Database SocINDEX. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=12349 4&site=ehost-live U.S. Census Bureau. (2003). Income, Poverty, and Health Insurance Coverage in the United States: 2003. Washington, DC. U.S. Census Bureau (2000). Labor Force, Employment and Earnings: 2000. 2000. Washington, DC. U.S. Census Bureau. (2004). Current Population Survey: 2002 to 2004 Annual Social and Economic Supplements. Washington, DC. U.S. Census Bureau News. State and Local Government Workers Exceed 15 Million, Census Bureau Reports Press release November 12, 2003. Washington, DC. Retrieved May 28, 2008. http://www.census.gov/Press-Release/www/releases/archives/ economic_surveys/002977.html U.S. Department of Labor. (2004). Washington, DC. Consumer Expenditures in 2002. U.S. Department of Labor (2006). Occupations Database 2006. Washington, DC. Retrieved April 24, 2007. http://stats.bls.gov/oes/current/oes470000.htm

Suggested Reading Adams, M., Blumenfeld, W.J., Castaneda, R., Hackman, H.W., Peters, M.L., & Zuniga, X. (Eds.) (2004). Readings for Diversity and Social Justice: An Anthology on Racism, Sexism, Anti-Semitism, Heterosexism, Classism, and Ableism. New York: Routledge. Rosenberg, P.S. (Ed.) (2004). Race, Class, and gender in the United States, Sixth Edition. New York: Worth Publishers. Thomas, R.R. (2006). Building on the Promise of Diversity: How We Can Move to the Next Level in Our Workplaces, Our Communities, and Our Society. New York: AMACON Books. 122


Telecommuting Ruth A. Wienclaw

Overview In today’s postindustrial societies, the economy is no longer dependent on the manufacture of goods (i.e., industrial), but is increasingly based on the processing and control of information and the provision of services. Particularly in those organizations that specialize in information services, many workers no longer need to be physically present with customers, clients, or vendors in order to conduct business. In fact, most office employees today use a personal computer to input data and information, create and manipulate documents, or perform other tasks. Further, the advanced technologies that ushered in the era of postindustrialization also ushered in the era of globalization. This means not only are one’s customers and vendors across the city or even the nation, but may literally be located on the other side of the globe. Although an occasional international trip may be appropriate, globalization means that most businesses that operate in the global marketplace need to rethink their communication strategies. Because of the dual factors of technology and globalization, dealings with clients often occur either over the phone, by e-mail, or in face-to-face contact outside the company’s offices. Fortunately, part of the array of advanced technologies available today includes communications technologies. The location where many tasks of postindustrial organizations are accomplished is transparent to the The Social Organization of Work

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person on the other end of the communication. Therefore, these tasks can frequently be done just as well from a home office as from a centralized office workplace. This is true not only for personal communication, but for larger meetings as well. The Internet can be used to send voice mail messages not only to individuals, but also to large groups of people. In addition, audio and videoconferencing capabilities combined with electronic document exchange capabilities often can obviate the need for local or long-distance travel to meetings. Similarly, video teleconferencing capabilities can allow all participants to be both heard and seen at remote locations. When combined with electronic bulletin boards that allow users to post documents electronically, off-site or remote group members tend to participate fully, sharing not only audio and visual communications in real time, but documents as well. With little more than a computer and Internet access, workers in one country can communicate nearly instantaneously with workers in another country. Orders can be placed, documents can be shared, and questions can be answered easily without face to face interactions. In fact, many employees can literally phone in their jobs – and many do. Although there are certainly still organizations that require their employees to come into a centralized office and do their phoning (or e-mailing, etc.) from a common venue, others have realized that many employees can actually do the same work from home, thereby saving the organization the expense of rent, utilities, and other expenses associated with a large physical building. Work performed in this way is often referred to as telecommuting (or teleworking): a situation in which an employee works outside the traditional office or workplace – typically at home or on travel. Telecommuters have little face-to-face contact with coworkers. Most communications take place electronically through e-mail, telephone, teleconferencing, or other communication media. Transmission of data, documents, and communication occurs via telecommunications or network technology. Most telecommuting situations require a personal computer and modem by which the telecommuter can connect to the company’s network or via the Internet. Telecommuting is readily adaptable both for full time and part time employees. Benefits

There are a number of potential benefits of telecommuting that are often touted in the popular literature. First, telecommuting is seen as a way to increase one’s scheduling flexibility. Telecommuters are often free to sleep 124


in and work late, start and end early, work 40 hours in four days, or use whatever schedule allows them to meet their personal responsibilities while still getting their work done in a timely manner. For example, by working from home, telecommuters also do not have to take a day off from work in order to sit home and wait for the plumber or other repair or delivery person. Similarly, personal appointments (e.g., physician, dentist, hairdresser) can be scheduled during the day and work completed later in the evening without having to worry about using precious personal or vacation days. Second, telecommuters are able to save both time and money by dispensing with the commute to the office. This allows one to have more free time, spend more time with family, or pursue other interests. Third, parents with younger children can also save money by not having to pay for afterschool programs. Similarly, organizations do not have to be concerned about setting up in-house day care for the children of their workers if the workers work from home. Further, telecommuters can more easily care for sick children or dealing elders without having to take time off from work. This is also advantageous to the employer because the telecommuter can still put in a full day’s work on his or her schedule. Telecommuting may also have a positive impact on the individual’s or family’s budget. Costs for parking, gas, or other transportation; meals; expensive professional wardrobes can also be significantly reduced. In addition, many telecommuters are also able to take a deduction on their income tax for their home office. Exposing children to their parents’ working can not only help children better understand what their parent does all day as well as help build a better parent/child relationship, but also help them to get better understanding about what it means to be a responsible, professional, working adult. Telecommuting is gaining popularity as the number of knowledge workers continues to rise. For example, research has found that two out of every three Fortune 500 companies have some workers who telecommute. World-wide, it is estimated that 40 million workers telecommute (Cascio, 2000). Telecommuting is attractive to many employees, particularly with traffic congestion and increasing commute times in many metropolitan areas. Further, telecommuting can decrease the number of distractions faced by the employee in a common office setting. For example, when working from a remote home office, there are fewer distractions such as a coworker dropping by to chat, unnecessary meetings, etc. The Social Organization of Work

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Hoteling & Hot Desking

Telecommuting is not limited to a single employee working from a home office. “Hoteling” is the use of workstations and meeting rooms in nearby hotels. This arrangement – which has successfully been used by Ernst & Young in Washington, DC – allows employees to focus less on the needs of the office and more on the needs of the customer. “Hot desking” is another form of telecommuting. In this approach, the employer provides a permanent work place such as a desk or workstation that is available to multiple workers if and when it is needed. This approach is successfully used by thousands of IBM employees, each of whom – along with three fellow workers – has access to a work space when it is needed. Another organization that successfully uses hot desking is Cisco Systems, which uses this approach to telecommuting to allow several thousand people to share a variety of work spaces around the world. Another paradigm for telecommuting is through telecommuting centers, miniature corporate office environments frequently located in residential neighborhoods, and which have more technology available than in the typical home office. The centers are located more conveniently to where employees live than the main office. Employees can then make a short physical commute to where the necessary equipment is for their job and then telecommute to work. This approach has been successfully implemented by Ontario Telebusiness Work Center outside Los Angeles, California. This company offers electronically equipped suites in suburban locations that help companies minimize the time wasted in long Los Angeles rush hours so that workers can be more productive. Teleworking can be so effective in particular situations that some companies operate as completely virtual organizations where all employees work remotely from each other and their manager. Virtual organizations may also be a group of businesses, consultants, and contractors that join forces to bring complementary skills to bear on a task or project.

Applications In theory, telecommuting sounds like a good idea. It can save the organization money on overhead and travel expenses. It can save the employee the time and money associated with commuting and purchasing an extensive

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wardrobe. In addition, it can give the employee more time with his or her family due to the time saved not having to commute or travel for work. Further, advocates typically say that telecommuting can improve employee productivity and efficiency. However, not everyone is convinced, and telecommuting is still relatively uncommon despite its obvious advantages. Theory X managers, for example, are loath to give up the perceived control that they have when they are physically collocated with their employees and fear the latter will take advantage of the situation and not work as hard if they work from home. Frankly, in some situations their fears are well-founded. Anecdotal evidence abounds about workers who decided to telecommute or strike out on their own and work from home only to find that they did not have the discipline necessary to make telecommuting productive. From a management point-of-view, there are a number of other challenges to telecommuting and virtual work environments. Telecommuting requires that both managers and employees learn new approaches to communication for situations where one cannot “drop in” to ask a question or check on how work is progressing. Further, although e-mail is invaluable for keeping lines of communication open, working at a distance can make employees feel isolated and not part of the team. Another major challenge to effective distance working is performance management. In telecommuting situations it is particularly important in these environments to set performance goals and criteria for employees. Managers also need to encourage the telecommuters in their jobs, and not let them become isolated from the social and professional infrastructure of the company. As attractive as telecommuting may sound in theory, however, it is not appropriate for every job. Sales, marketing, project engineering, consulting, and other service and knowledge positions are most suited for telecommuting. Such employees typically are already working with customers through communications technology, so the shift in venue to the home office from the corporate office makes little difference to the customer. However, it is important that employees who are considering (and being considered for) telecommuting are experienced in the requirements of the job. New employees often require a period of orientation and adjustment during which they learn the corporate culture (the set of basic shared assumptions, values, and beliefs that affect the way employees act within an The Social Organization of Work

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organization), the requirements of the job, and how to establish relationships with their managers and coworkers. There are two conflicting pictures of telecommuters from the popular literature: the happy worker who has the best of both worlds and has fully integrated work and family versus the overworked individual who experiences both home and work as sources of stress. Although the ability to be home with the children or do home-related chores is one of the frequently touted advantages of telecommuting, virtually everyone who successfully telecommutes stresses the importance of separating one’s work and non-work lives. If telecommuting is to be successful, many people recommend that one should create a barrier between work and home. This can be physical, such as having a separate room or area of a room that is a devoted “office space” or it can be more psychological in nature. One successful telecommuter recommends getting dressed every day as if one were going into the office. He finds this helps him remember that he is supposed to be working much more than if he wanders into his office space in his robe and slippers. Another woman similarly dresses for work, takes her briefcase in hand, and goes into the spare bedroom that she has turned into an office. Rituals such as these help one psychologically prepare for work and better focus on the things that need to be done for the job. Creating this kind of barrier is important not only for the success of the work life, but for the family life as well. When one’s office is at home, it can be tempting to go back to work “just for a little while” to complete a project or task. When this happens too frequently, telecommuting actually hinders the possibility of the individual to have a personal or family life rather than facilitating it. To signify that work is over for the day, one can close the door to the office (not to be reopened until the next day), change clothes, or engage in similar rituals to signal to oneself and one’s family that work is over for the day. Psychological Barriers

The literature offers a number of reasons why telecommuters should separate their home lives and their work activities (Mirchandani, 2000). Many theorists note that the physical proximity of the office to the home can increase the permeability between professional lives, thereby increasing stress rather than relieving it. If psychological barriers (and physical ones where necessary) are not put between the office and home, the tele128


commuter may find her/himself in a situation of constantly having to choose between the two conflicting demands. Further, a number of theorists note that permeability between the office and home environments can lead to workaholism. Research has found that telecommuters who work from home often spend a greater percentage of their lives on activities related to work than do employees who do not work from home. In fact, research shows that far from helping telecommuters have more time for family or personal lives, it often does just the opposite. Private Home Office

A second recommendation for successful telecommuting is to make one’s home office off limits to others during working hours. If the children come home from school, for example, they should stay out of the office area and not disturb the telecommuter until after work is over except for emergencies just as if the telecommuter were working in a distant office. The physical cues discussed above can also signal to anyone else living in the home that the telecommuter is officially “at work” and should not be disturbed. Similarly, it should be remembered that although telecommuting allows one to throw a load of laundry in the wash (or other household chore), the purpose of telecommuting is to work. For the most part, household chores need to be ignored until one goes “home” for the evening just as if one were physically away from home at another location. Although one of the benefits of telecommuting can be that it offers the worker fewer distractions than a busy office, the telecommuter must be self-disciplined in order for this approach to work to be successful: Home, too, has distractions: the contents of the refrigerator, the afternoon soap operas on television, or that “pressing” home repair that suddenly sounds so much better than working. Lunch Break

Third, just as in an outside office, it is important whenever possible to take a complete break at lunch time. There may, of course, be times when one has to eat lunch at one’s desk. However, the habit of continuing to work with a sandwich in hand will add to one’s stress rather than relieve it. Lunch should not be considered a mere refueling activity, but a time when one can clear one’s head and take a well-earned break so that one can return to work better prepared to continue.


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Child Care

Another recommendation that is often made for successful telecommuting is for the individual to make arrangements for child or elder care if needed. The popular picture of the telecommuting mom or dad happily working away with a baby in one arm while banging out a well-reasoned white paper is merely a popular fiction. If one is being paid for a full day’s work, one needs to ethically do a full day’s work, not divide one’s attention between work and caring for others. From time to time, a child, elder, or other person will get sick and require extra care, but for the most part, working hours need to be devoted to work. Otherwise, both the parentchild and the work relationship suffer. Conclusion

Telecommuting has many advantages both to the employees who telecommute and to the organizations that employ them. The former can save the time, money, and stress associated with a long commute, be more productive at work as well as have more time for a personal or family life. Similarly, the organizations that use telecommuters can save money on overhead and have employees who are more effective and efficient in their work because of the freedom from distractions. However, there are disadvantages to telecommuting as well. Home can offer just as many if not more distractions to the telecommuter and managers may lose some measure of control over their employees. There are, however, ways in which the disadvantages can be minimized and the advantages leveraged to be advantageous to both parties.

Bibliography Cascio, W. F. (2000). Managing a virtual workplace. Academy of Management Executive, 14 (3), 81-90. Retrieved August 31, 2007 from EBSCO online database Business Source Complete: http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=44680 68&site=ehost-live Lucas, H. C. Jr. (2005). Information technology: Strategic decision making for managers. New York: John Wiley and Sons. Mirchandani, K. (2000). “The best of both worlds” and “cutting my own throat”: Contradictory images of home-based work. Qualitative Sociology, 23 (2), 159-182. Retrieved September 23, 2008 from EBSCO online database Academic Search Complete: http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=11302688&site=e host-live. 130


Senn, J. A. (2004). Information technology: Principles, practices, opportunities (3rd ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.

Suggested Reading Ammons, S. K. & Markham, W. T. (2004). Working at home: Experiences of skilled white collar workers. Sociological Spectrum, 24 (2), 191-283. Retrieved September 23, 2008 from EBSCO online database Academic Search Complete: http://search.ebscohost. com/login.aspx?direct=true&db=aph&AN=12556826&site=ehost-live. Dikkers, J. S. E., Geurts, S. A. E., den Dulk, L., Peper, B., Taris, T. W., & Kompier, M. A. J. (2007). Dimensions of work-home culture and their relations with the use of work-home arrangements and work-home interaction. Work and Stress, 21 (2), 155-172. Retrieved September 23, 2008 from EBSCO online database Academic Search Complete: http:// search.ebscohost.com/login.aspx?direct=true&db=aph&AN=25728447&site=ehostlive. Mirchandani, K. (1999). Legitimizing work: Telework and the gendered reification of the work-nonwork dichotomy. Canadian Review of Sociology and Anthropology, 36 (1), 87-107. Retrieved September 23, 2008 from EBSCO online database Academic Search Complete: http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=171214 9&site=ehost-live. Sullivan, C. & Lewis, S. (2001). Home-based telework, gender, and the synchronization of work and family: Perspectives of teleworkers and their co-residents. Gender, Work and Organization, 8 (2), 123-145. Retrieved September 23, 2008 from EBSCO online database Academic Search Complete: http://search.ebscohost.com/login.aspx?direct=true&db =aph&AN=4889871&site=ehost-live. Wellman, B., Salaff, J., Dimitrova, D., Garton, L., Gulia, M., & Haythornthwaite, C. (1996). Computer networks as social networks: Collaborative work, telework, and virtual community. Annual Review of Sociology, 22 (1), 213-238. Retrieved September 23, 2008 from EBSCO online database Academic Search Complete: http://search.ebscohost. com/login.aspx?direct=true&db=aph&AN=9704023917&site=ehost-live.


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Workplace Design Ruth A. Wienclaw

Overview When setting up a new workspace, there are always a lot of things to be done before the space is designed for optimal productivity. However, once the layout of a desk is set, it usually requires little additional thought. For example, I know the best placement for my coffee mug so that I can easily keep my caffeine level up without spilling the contents across the documents on my desk. My chair is positioned so that I am 24 to 28 inches from my monitor, just the right distance for tired eyes to read e-mail. The speaker phone is conveniently located close enough so that I do not have to shout, yet far enough from the wireless headset that I use for dictation so that there is no electronic interference that will make it difficult for the person on the other end of the line to understand me. Task lighting illuminates the places where I write and general lighting keeps me from feeling like I work in a cave – they also both help to reduce eye strain. Writing instruments, pads of paper, reference books, and thumb drives are all within easy reach to keep my flow of thoughts going. These are all aspects of design, as are the arrangement of multiple offices to encourage or inhibit the flow of communication between workers. Historically, workplace design has been little more than this. Traditionally, many organizations designed their facilities according to standard layouts: corner offices with windows for executives or upper level managers, 132


offices with doors for other managers, cubicles or bullpens in the middle of the floor for lower level workers, and a few strategically placed conference rooms that were designed to impress visiting clients or dignitaries. Although many organizations still design their workspaces in this manner today, some observers believe that this inappropriately spends money (e.g., for the big offices for upper level managers) while making communication between employees – particularly those who need to work closely together – difficult. Therefore, many businesses are becoming increasingly concerned with the design of a workplace that will help them attract and retain the best workers. Many workplace designers today, therefore, place emphasis on the interrelatedness of social, organizational, financial, design, and technological aspects of workplace design with the goal of designing workplaces that will support the new ways in which employees must work in the postindustrial age (Magnum, 1999). Contemporary Workplace Design

Contemporary workplace design philosophy stems from the assumption that an appropriately designed workspace can help enhance an organization’s competitive advantage by giving it an aura of innovation, intimacy, and operational excellence. Contemporary workplace design seeks to do this by arranging the workplace in a way to help employees be more productive and be better able to take advantage of the synergy that can occur when people are allowed to interact during creative endeavors. Groat and Stern (2000) suggest several ways that these goals can be accomplished. First, workplace design needs to be the outgrowth of a comprehensive business process rather than a narrowly focused facility design process. This means in part that workplace design needs to consider not only the efficiency of a layout or design, but also its effectiveness in supporting workers to getting their jobs done and increasing their productivity. In addition, workplace design should take into account not only the physical architecture of the workplace, but the social architecture as well. In the past, it was frequently assumed that it was necessary to reduce the “nonessential” interaction of workers for fear of losing productivity to social intercourse. However, today’s organizations increasingly rely on teamwork to produce synergy that results in innovation, particularly when dealing with technology. In such cases, it can actually be an advantage for team members to be able to easily interact with each other rather than being


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isolated in a cubicle where each person works on his or her own piece of the process. To design such workspaces, many theorists recommend that workspace design decisions not be made in isolation by individuals not directly affected by the design, but be made by teams that represent all affected parties (Groat & Stern, 2000). Scientific & Aesthetic Trends

There are a number of trends that are included in the new approach to workplace design (Richter, 2001). Some of these are aesthetic in nature and are meant to express associated aspects of the organizational culture (e.g., the use of unconventional color palettes to express an innovative or creative organization; open floor plan to express free thinking). However, others are more scientifically based. For example, many workplaces today use open workspaces to encourage collaborative teamwork with fellow employees and boost creativity and innovation. This is often done through such things as the use of open floor plans to encourage collaboration and the design of offices without doors for managers to make the managers appear more welcoming to subordinates. Further, individual workspaces are often designed with low cubicle partitions in order to encourage interactions between coworkers and to help employees feel more comfortable. For similar reasons, desks are often placed facing each other within multiple-person cubicles. As appealing as such ideas may sound on a superficial level, little scientific research has been done to back these claims. Further, it is important to realize that such open designs will not foster productivity in every type of organization or work situation. For example, doors are frequently put on the doors to managers’ offices not so much to keep others out, but in order to afford managers the privacy they need to do confidential work such as writing performance appraisals, counseling employees, and talking to clients. Further, in offices that require the use of classified material, it is frequently important that the doors can be locked to keep out others without a proper clearance level. In addition, not everyone works well in an open floor plan situation that encourages interruptions from coworkers and exposes one to numerous other distractions. Fortunately, it is not always necessary to go into a centralized location with multiple offices in order to be a productive and 134


effective worker. Most employees who work in office workplaces use a personal computer to input data and information, create and manipulate documents, or perform other tasks. Many times, their interactions with clients or customers (and often even with fellow employees) are over the phone, by e-mail, or in face-to-face contact outside the company’s offices. In many cases, therefore, there is no reason for these tasks to be done from a centralized organizational office. With a personal computer and access to modern information technology, it is not even necessary in many instances to have face-to-face meetings. Audio and videoconferencing capabilities and electronic document exchange capabilities can often obviate the need for local or long-distance travel to meetings, thereby reducing or eliminating not only the expenses related to out-of-town travel, but also the need for an artistically designed workplace and high-end conference rooms to entertain clients. Other technology such as video teleconferencing and electronic bulletin boards allow group members to participate fully in meetings, sharing not only audio and visual communications in real time, but sharing documents as well. Further, advances in computer and telecommunications technology along with the realities of globalization mean that employees working together as a team may not be collocated within the same building, the same company, or even within the same country. In fact, many organizations have found that the creation of virtual teams can be advantageous, particularly when dealing with a specific project on which they can bring complementary skills. Such situations in which team members are geographically or organizationally dispersed are referred to as a virtual team. Members of virtual teams interact primarily through communication technology and may never meet face-to-face. Virtual team situations are very conducive to teleworking environments. Teleworking

An increasing number of organizations are allowing their employees various options for teleworking so that they do not even have to come in to an office in order to do their work. For many people, being able to work at home or other venue that is more quiet and has less interruptions is more conducive to productivity and creativity than is working in a workplace with an open floor plan. Communications and information technology today have advanced to the point where one can easily communicate with others when it is convenient or necessary, but not be exposed to unwelcome


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interruptions that derail one’s train of thought. In telework (also known as telecommuting), employees are physically dispersed and most communications occur using communications technology (e.g., phone, Internet, videoconferencing) rather than face to face. Similarly, data and documents are also transmitted and exchanged between employees via telecommunications or network technology, including the Internet. For most situations, telework requires little more than a personal computer and modem by which the teleworker can connect to the company’s network or via the Internet. However, the principles of workplace design to enhance productivity still apply even in a home office. Telework requires more than a corner of the kitchen table or a workstation in the living room, and the home workspace needs to be arranged to enhance productivity and reduce distractions (e.g., the pile of laundry that needs to be done, the beckoning refrigerator, or even the afternoon soap operas as a “break”). Therefore, teleworkers need to set up a dedicated space that will both supply them with the technology and support they need to do their work as well as a place that will minimize the distractions of the home. Most home offices or virtual workplaces typically require a personal computer with modem with concomitant application software, and printer; a telephone line; Internet access; paper, toner, and other office supplies; and in many cases a fax machine, scanner, and other office equipment. All these things need to be arranged in such a way that will support efficient work habits (e.g., not require one to run upstairs to the kitchen to receive a fax).

Applications Systems Approach

As discussed above, there is more than one approach to designing the contemporary workplace. At this time, however, there is little scientific research available to back the various views. Holtshouse (2006) recommends taking a systems approach to workplace design to help ensure that a balanced and optimized approach is taken to designing a workplace based on the needs of the organization and its workers rather than on current design trends. Specifically, Holtshouse recommends ways that the four types of space should be considered in workplace design. The first of these is the physical space and layout of the workplace. A good workplace 136


design needs to facilitate workers in performing their tasks. Although it is important to design a workplace in such a way as to support teamwork, collaboration, and synergy, it is equally important to design a workplace that is free of distractions. A good workplace design will take these factors into consideration. The second type of space that needs to be considered is information space. This comprises the tools, systems, and information technology that are necessary to support workers in their tasks. Too often, organizations have a generic approach to information space that does not take into account the needs of individual workers. Information technology continues to rapidly develop, and new tools are constantly being designed to maximize the effectiveness of individuals and teams in the workplace. Appropriate information technology needs to be given to workers based on the needs of their jobs and the way in which they best work rather than as a reward for being in a particular place in the organizational hierarchy. The third type of space that needs to be considered in the design of a workplace is organizational space. This comprises concerns over such issues as governance, hierarchy, projects, teams, and social networks. An organization needs to be concerned for not only the formal organization (i.e., the goals, structure, skills, technology, and other resources of the organization that are readily observable to others), but the informal organization as well (i.e., the attitudes, values, feelings, interactions, and group norms that affect organizational functioning and effectiveness). For example, a workplace design that isolates workers is unlikely to foster cooperation just as a workplace design that marginalizes lower level workers is unlikely to foster teamwork. Finally, workspace design needs to take into account cognitive space by including features that support the individuality of each worker, including consideration of those things that will best support the individual in maximizing his or her creativity and productivity in the organization. Although these four “spaces” express some of the current thinking about workplace design, much more research is needed before these factors and their interaction and their influence to the effectiveness and efficiency of the organization are well understood (Holtshouse, 2006).


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The design of a workplace that not only creates an environment that is conducive to productivity and creativity but also represents and reinforces the organization’s goals is much more than a matter of aesthetics and popular trends. There are a number of areas of social science research that would be of help in the design of workplaces that better meet the evolving needs of postindustrial organizations. Physical, informational, organizational, and cognitive spaces do not occur in isolation. Particularly from a systems point of view, it is important to better understand not only the contribution of these factors to the effectiveness of a workplace design, but also to understand how they are interrelated. The complexity of the interrelationship between these factors and the requirements of the real world situation might best be served through the development of a model that can help workplace designers base their designs on needs rather than on trends. Finally, there will never be one best approach to workplace design: while one organization may need an open floor plan that allows coworkers to freely share ideas and collaborate, in another organization this could be seen as facilitiating untimely and unwelcome interruptions that detract from productivity and effectiveness. More research is needed to help social scientists and designers alike better understand the principles underlying sound workplace design so that the needs of the organization can be taken into account and a design that best supports all the workers in their tasks be developed. Conclusion

Through a combination of rapidly advancing technology and globalization, the traditional workplace is changing in many ways. Technology allows organizations to store, access, and process vast amounts of data in ways that were not possible even a generation ago. To remain competitive in a global marketplace, many organizations find that they need to use these capabilities in order to manage dispersed staffs or respond to the needs of global clients. Technology enables workers to communicate not merely across the building or across the city at near instantaneous speeds, but to also do so around the globe. Globalization requires that organizations do so in order to keep in touch with both suppliers and customers. Technology enables organizations to reinvent its business processes so that employees no longer need to be collocated in order to work effectively. Globalization requires that organizations do so in order to provide around

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the clock responsive customer service to customers around the world and manage dispersed supply chains that supply needed parts and materials just in time for other processes. Contemporary workplace design seeks ways in which to foster creativity, innovation, and synergy. In some situations, this means the creation of a workplace in which employees can physically work together as teams. In other cases, however, this means the design of a virtual workplace that leverages the latest technology to enable employees to have both the privacy and isolation they need to translate thoughts into innovation and the communication systems to be able to work with coworkers when this supports the process better. Most observers today realize that the nature of the organization and how people work together and communicate with one another in the organization is changing. This has led to a proliferation of ideas about how workplaces can be better designed to meet these changing needs. However, the nature and needs of the postindustrial workplace are still evolving. Unsubstantiated theories are not sufficient to meet these needs. More empirical research is needed to better understand contemporary workplaces and how they can be designed in order to best support today’s organizations and their employees in gaining and maintaining a competitive edge in today’s global marketplace.

Bibliography Cascio, W. F. (2000). Managing a virtual workplace. Academy of Management Executive, 14 (3), 81-90. Retrieved August 31, 2008 from EBSCO online database Business Source Premier: http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=4468068 &site=ehost-live Groat, L. & Stern, L. (2000). Cultivating organizational values: A new model for workplace planning. The Journal for Quality and Participation, 23 (5), 17-19. Retrieved September 22, 2008 from EBSCO online database Academic Search Premier: http://search. ebscohost.com/login.aspx?direct=true&db=aph&AN=4343098&site=ehost-live. Holtshouse, D. (2006). The future workplace. KM World, 15 (6), 19. Retrieved September 22, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost. com/login.aspx?direct=true&db=aph&AN=21101151&site=ehost-live. Magnum, C. (1999). An ecological and global view of workplace design. Human Ecology, 27 (3), 4-6. Retrieved September 22, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=2360083 &site=ehost-live. The Social Organization of Work

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Senn, J. A. (2004). Information technology: Principles, practices, opportunities (3rd ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.

Suggested Reading Bernsten, H. Ø. & Seim, R. (2007, May). Design research through the lens of sociology of technology. Retrieved September 22, 2008 from SeFun Project Website: http://www2. uiah.fi/sefun/DSIU_papers/DSIU%20_%20Berntsen&Seim%20_%20Design%20 research.pdf. Ertel, M., Pech, E., Ullsperger, P., von dem Knesebeck, O., & Siegrist, J. (2005). Adverse psychosocial working conditions and subjective health in freelance media workers. Work and Stress, 19 (3), 293-299. Retrieved September 22, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login.aspx?direct=t rue&db=aph&AN=18909024&site=ehost-live. Halford, S. (2004). Towards a sociology of organizational space. Retrieved September 22, 2008 from Sociological Research Online Website: www.socresonline.org.uk/9/1/ halford.html Lallukka, T., Laaksonene, M., Martikainen, P., Sarlio-Lähteenkorva, S., & Lahelma, E. (2005). Psychosocial working conditions and weight gain among employees. International Journal of Obesity, 29 (8), 909-915. Retrieved September 22, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login. aspx?direct=true&db=aph&AN=17566466&site=ehost-live. Richter, C. (2001). Workplace design: A laboratory for inventiveness. Journal for Quality and Participation, 24 (2), 52-55. Retrieved September 22, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login.aspx?direct=t rue&db=aph&AN=5190523&site=ehost-live. Savlendy, G. (Ed.) (1987). Handbook of human factors. New York: John Wiley and Sons. Wickens, C. D., Lee, J. D., Liu, Y., & Becker, S. E. G. (2004). An introduction to human factors engineering (2nd ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.

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Layoffs & Downsizing Francis Duffy

Overview Among the rumors that circulate in the workplace, none probably cause as much anxiety as word of impending lay-offs. To quit a job is one thing: you choose to leave for personal reasons. To be laid off is quite another: your employer simply declares you redundant and hands you a pink slip. The reason may be a souring economy, a reversal of the company’s fortunes in the marketplace, a merger, or change in corporate strategy. Whatever it is, in the final analysis a company’s performance as a business matters much more than an individual worker’s performance. But no matter how well run a business is, its sales slump whenever the economy stalls. Bottom-line considerations dictate that production be scaled down at such times, and therein lies the cause of many lay-offs. A mass lay-off involves a large number of job separations over a concentrated period of time. Sometimes, as often happens in declining industries, the company has little choice: it must shrink, diversify, or go under. At other times, the distress is self-inflicted: a company lacks market focus, adequate cash flow, competent leadership, or other elements crucial to success. More and more, though, prosperous companies hedge their future profitability by going “offshore” in search of the lowest possible unit-costs, relocating entire operations to developing countries. Then there’s down-


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sizing, a form of organizational restructuring. Here, the staffs of whole departments considered cost as opposed to profit centers are let go and their work transferred or “outsourced” to third-parties. These mass lay-offs may also include employees in more mission critical functions in which undue organizational slack is suspected to impede efficiency. Mass lay-offs occurred in the U.S. no less than 14,207 times in 2004 alone, putting 1,464,164 people out of work, a full 18% of all the 8,149,000 people who received unemployment insurance that year. This was the official count of the U.S. Bureau of Labor Statistics (BLS), which identifies a mass layoff whenever 50 or more of a company’s employees file an unemployment insurance claim over a period of five consecutive weeks. If these exemployees remain out of work for a minimum of 30 consecutive days, the BLS further classifies said terminations as extended mass layoffs. In 2004, 902,365 unemployment insurance claimants, over one third of all mass lay-offs, fell into the extended category. Still, these figures were an improvement over 2001’s when the trend among U.S. companies to move operations offshore peaked; during that year 2,346,584 American workers lost their jobs in 19,449 mass lay-offs, 1,457,512, or 60%, of whom went on to endure more than 30 consecutive days of unemployment. (Brown & Slegel, 2005). Here, though, seasonal and vacation-replacement workers were the first to be culled. Of the 902,365 workers on extended lay-offs in 2004, 351,992, or 36%, fell in this category. Only 159,856 or 15% of extended mass lay-offs were the result of permanent plant closures. Food processors and manufacturers of transportation equipment, computers, electronics, and furniture account for most of these lay-offs. On a brighter note, 51% of all employers initiating lay-offs that year expected to recall furloughed workers at a later date. In all, 20% of mass lay-offs in 2004 were the result of “internal restructurings” brought on by bankruptcy, financial difficulty, a change in ownership, or reorganization (Brown & Slegel, 2005). It’s here, among the 2,841 mass lay-offs affecting some 292,800 workers in a single year, that “downsizing” comes into play the most (Brown & Slegel, 2005). Not as severe sounding, perhaps, as company-wide job-cuts or plant closings, the word first entered the business lexicon some thirty odd years

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ago. It refers to the deliberate policy of permanently reducing personnel to improve a company’s efficiency and effectiveness. As an organizational strategy, it’s very different from the long-standing practice of temporarily laying workers off during economic hard times and pursued for different reasons. For, if downsizing and the allied practice of outsourcing are the means, the end is not survival but - in the words of another, more jarring bit of corporate-speak - a “lean and mean” company. Though loosely used as a synonym for “mass lay-off,” downsizing is really much more of a corporate make-over with the subsequent culling of employees as its by-product. Technically-speaking, you can lay-off employees and not downsize, but you can’t downsize and not permanently lay-off employees. But is downsizing per se as simple and neat a strategy as its advocates suggest? For that matter, does it produce the desired outcomes? And if, as the evidence indicates, it often does not, why, sociologically speaking, is it still widely considered a corporate cure-all?

Further Insights During the early 1990s, an extended mass lay-off destined former employees to an average of 17.94 weeks of unemployment, the more run-of-themill variety to just 7.24 weeks on average. Incidences of extended lay-offs reported among educated and white collar workers, what’s more, were higher than in previous decades. But the hardest hit demographic was still blue-collar workers with a high school education or less who worked in the manufacturing sector (Kletzer, 1998). That at least is what researchers surveying the non-agricultural private sector found. Ninety-seven percent of the 78,115,000 employable Americans in their sample had jobs. Some 2%, or 1,192,000, of these workers were displaced, (i.e. had lost their jobs due to a recent plant closing and had not found alternative employment for three or more months). Another 766,000 were laid off for a shorter period of time, and an additional 652,000 had left their jobs voluntarily (Kletzer, 1998). Women on the whole made up 46.4% of the workforce but only 33.7% of extended and 18.8% of all temporary lay-offs. Blacks and Hispanics did not


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fare as well. The proportion of Blacks in the workforce, 9.9%, mirrored their representation in the pool of temporary lay-offs (9.8%) but paled in comparison to their proportional representation in the extended lay-off pool, which was 17.2%. Hispanics made up another 7.6% of the labor pool sampled, and 8.9% of temporary and 13.1% of extended lay-offs (Kletzer, 1998). Surprisingly, a college degree was not necessarily the secure rung up the corporate ladder it once was. Fourteen and a half percent of displaced workers were university graduates compared to 21.3% of total workers. By comparison, just 4.5% of those laid off for a shorter spell had a bachelor’s degree. As might be expected, though, workers with a high school diploma or less had much dimmer prospects. Making up 50.1% of the workforce, they nonetheless accounted for 80.4% of short-term and 64.7% of longterm lay-offs. Workers with even a few college credits had much less of a problem: at 28.2% of the labor force, they suffered 15.3% of all temporary and 20.7% of all extended lay-offs (Kletzer, 1998). Socio-economic status, moreover, was no longer as strong a guarantee of steady employment as it once was. White collar workers were far more likely to be displaced than just laid-off: 15.6% of all displaced workers had held managerial or professional positions compared to just 3.2% of laid-off employees. Other office workers were almost as vulnerable: 15.2% of displaced and 4.1% of laid-off workers had held administrative support positions. Still, composing 26.5% of displacements and 49.2% of lay-offs, laborers bore most of the brunt, followed closely by semi-skilled production workers at 22.5% and 32.1% respectively (Kletzer, 1998). Slightly more displaced workers, 19%, had had jobs with retailers than with durable goods manufacturers (18.5%) or construction firms (15.4%). Meanwhile, 14.2% had worked for financial services firms and 12.5% for nondurable goods manufacturers. The mining industry contributed the fewest: a bare 1.1%. A whopping 41.6% of temporary lay-offs, on the other hand, came from the construction industry; durable goods manufacturers ran a distant second with 22.6% (Kletzer, 1998). Impact on Remaining Employees

Being laid-off is certainly a traumatic experience for those forced to leave a company. Unquestionably more fortunate are the co-workers they leave 144


behind who nonetheless go through a period of uncertainty and sometimes painful readjustment. For, first and foremost, lay-offs demoralize the remaining employees. They can feel guilt over friends’ suffering, loss at their leave-taking, and have lingering doubts about the fairness of the company’s treatment of them. Remaining workers, consequently, can feel isolated, dissatisfied with their jobs or employers, and less confident about and committed to the organization’s future. Their performance may suffer, too, from the consequent disruption of the organization’s internal social network in general and in particular of its “instrumental network,” or the informal channels of communication through which workers exchange information, resources, expertise, advice and political access. This network is so important that in the immediate aftermath of a mass lay-off, the remaining employees devote much of their time and energy toward reconstituting it. As gaps are filled in, some employees find that their centrality and power has increased while others find that their importance and influence has decreased. Employees also spend time assessing their own near-term prospects given the dismissal of so many people occupying similar positions in the organization. Pessimists may see the organization’s treatment of these employees, or structurally equivalent referents, as a sign of their own impending lay-offs and begin considering opportunities elsewhere. Optimists, on the other hand, may view the slimmed down field of competitors and see opportunities for their own advancement (Shah, 2000). Impact on Organizations

Whether lay-offs and downsizings live up to organizations’ expectations has been debated for decades. Some studies have shown that there is little if any long-term net effect in regard to efficiency or effectiveness, while other studies show declines and still others improvements (Love & Nohria, 2005). Companies benefit from them by saving money in the short term, but for those companies struggling with declining demand, layoffs and downsizings are only a temporary solution. Additionally, businesses may find that cuts in personnel may also inadvertently cut into their ability to deliver added value to customers, meet unforeseen challenges, and develop innovative new processes and products. The retained workforce’s skills and knowledge may simply not be up to the task, or, on the other hand, the true The Social Organization of Work

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value of a laid-off employee’s expertise and work experience may not be realized until months or years after the layoff. The employees who remain, moreover, may find themselves overworked or more risk-adverse vis-àvis their job-performance and decision-making. Similarly, the remaining employees may become more outwardly political in their interactions with co-workers (Love & Nohria, 2005). One mediating factor in all this may well be the amount of a company’s organizational slack, or the internal resources above and beyond the minimum necessary for the company to function. However, a company may find that having some “available slack” - reserves of personnel, capital, etc. - serves it well since this slack can be readily deployed to counter some new external threat. “Absorbed slack,” on the other hand, cannot. The step child of custom, organizational inertia, and bureaucratic “empire-building,” absorbed slack is simply too entrenched in the organization’s daily, often inefficient work routines and administrative processes to be easily retrieved much less redirected. The trick to successful downsizing lies in peeling away this fat of absorbed slack while preserving the muscle of available slack, something easier said than done, for as long as these non-productive routines and processes are countenanced by the organization, some one will do them - workforce reductions alone do not address the problem. It takes a thorough overhaul the organization’s structure and business processes to weed out absorbed slack. Information Technology’s Role in Organizational Restructuring

Information Technology (IT) is proving to be a great leveler in downsizing. First of all, IT rationalizes and streamlines processes and procedures, wringing any absorbed slack out of them. IT allows each and every step of a business process or work routine slated for computerization to be examined and, when necessary, revamped for the sake of greater efficiency. Critically, though, IT also puts additional, hitherto unrealizable available slack at an organization’s disposal, so adaptable is the software and so scalable is the hardware. These two benefits combined execute routine tasks more quickly and repetitive ones more accurately than any employee could. Employees, what’s more, are freed to give greater attention to mission-critical matters, and organizations are freed to redistribute their workforces toward more pro146


ductive ends or reduce it outright and cut costs. Spans of control naturally expand when information flows directly between concerned parties in real time instead of slowly making its way up multiple layers of now extraneous middle management (Pinsonneault & Kraemer, 2002). The Decision to Downsize

The decision to downsize is a premeditated one premised on either rational or irrational organizational theory. Proponents of the former consider organizational efficiency paramount. The survival, much less the success, of an organization ultimately rests, they contend, on how well that organization internally coordinates and controls its response to changing competitive conditions, be they economic or technological. Doing so allows the organization to drive down costs (and thus prices) to become lower than those of its rivals’, a strategy many industrial firms unflinchingly pursue. A very different tact is taken by proponents of latter. They see an organization principally as a social institution whose survival is dependent upon the cooperation and good-will of stakeholders, regulatory agencies, industry fellow-travelers, and the public–at-large (Budros, 2000). Reality is rarely as clear cut, and the logic behind many downsizing decisions can at one and the same time be rational and irrational. An organization presumably downsizes to improve its efficiency. However, this often happens in response to shareholder dissatisfaction with financial returns, an imminently rational concern on the part of a key constituency. But at the same time the decision is also a by-product of irrational organizational behavior. Other institutional constituencies, most notably those in charge of actual operations, can object on equally rational grounds, arguing that the called-for cuts or restructuring will only introduce greater inefficiency in the long run. In the more than 30 years since it first surface, the downsizing paradigm has collected a legion of followers. Some of its popularity may be attributable to what scholars call normative and mimetic normative isomorphism - in which companies adopt the practices of other companies either to conform to a professional standard to reduce uncertainty about their own practices - but it may also be true that downsizing can indeed enhance efficiency. However, executives should also bear in mind that the benefits of downsizing are still debated and probably at least partially contingent upon the company’s unique circumstances (McKinley, Zhao & Rust, 2000). The Social Organization of Work

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Viewpoints Given the choice, very few of us would want to be laid off or downsized. And considering the rather public admission of failure layoffs and downsizing imply, few organizations want to engage in the practices either. But economies expand and contract, superior new production technologies come along once popular product-lines fall out-of-favor, and the insistence on greater shareholder value grows too hard to ignore. Businesses also fail because they’re poorly run, and whole industries may become obsolete and just wither away. Lay-offs, therefore, have and will always occur in self-correcting, free-market economies, prodding workers and companies to be ever more productive. This is not, however, to say that alternatives have not been sought, just that they’ve been seen to come at too high a price. A guaranteed job for life was the cornerstone of the communist system, but the command economy that artificially propped up full employment proved to be grossly inefficient and its productive output paltry in comparison to capitalist economies. Everyone had a job to go to, but no goods to buy. But the underlying idea that a social contract exists between employees and employers did not disappear with these command economies. The idea that men voluntarily enter reciprocal arrangements to further their collective interests was a part of the western tradition long before communism came along. Applied initially by Hobbes and Locke to the political domain and subsequently by Rousseau to the social in the 18th century, it has since migrated into the economic realm. We see its influence today in such things as unemployment benefits, government sponsored job retraining programs, welfare capitalism, etc. This is not, however, to say the arguments have been settled - far from it: individualists believe that individuals, not a company or the state, are responsible for their life-choices, of which their jobs are one. Individuals, they believe, are thus responsible for the outcomes of these choices. We would only end up sacrificing our personal freedoms if we were to abrogate this responsibility. Communitarians, on the other hand, believe that we’re born into and subsequently shaped by society. Its institutions, therefore, have a vested interest in providing us with sustenance, if not an outright moral obligation to do so. 148


Having a secure job these days may well incline us to favor the individualist view. Understandably, though, the very prospect of being laid-off might well cause us to reconsider the communitarian view. And therein lies an often overlooked fact: that beyond economic rationales and the dynamics of organizational decision-making, there’s an acutely personal dimension to lay-offs and downsizing.

Bibliography Brown, S., & Slegel, L. (2005). Mass layoff data indicate outsourcing and offshoring work. Monthly Labor Review, 128(8), 3-10. Retrieved June 26, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=t rue&db=sih&AN=19849935&site=ehost-live Budros, A. (1999). A conceptual framework for analyzing why organizations downsize. Organization Science, 10(1), 69-82. Retrieved June 3, 2008 from EBSCO online database Business Source Premier: http://search.ebscohost.com/login.aspx?direct=true&db=bu h&AN=2251836&site=ehost-live Budros, A. (2000). Organizational types and organizational innovation: downsizing among industrial, financial, and utility firms. Sociological Forum, 15(2), 273-306. Retrieved June 3, 2008 from EBSCO online database Academic Search Premier: http://search. ebscohost.com/login.aspx?direct=true&db=aph&AN=11302509&site=ehost-live Budros, A. (2002). The mean and lean firm and downsizing: causes of involuntary and voluntary downsizing strategies. Sociological Forum, 17(2), 307-344. Retrieved June 3, 2008 from EBSCO online database Academic Search Complete: http://search. ebscohost.com/login.aspx?direct=true&db=ioh&AN=2401806&site=ehost-live Kletzer, L. (1998). Job displacement. Journal of Economic Perspectives, 12(1), 115-136. Love, E., & Nohria, N. (2005). Reducing slack: The performance consequences of downsizing by large industrial firms, 1977-93. Strategic Management Journal, 26(12), 1087-1108. Retrieved June 3, 2008 from EBSCO online database Business Source Complete: http://search.ebscohost.com/login.aspx?direct=true&db=ioh&AN=327101 8&site=ehost-live McKinley, W., Zhao, J., & Rust, K. (2000). A sociocognitive interpretation of organizational downsizing. Academy of Management Review, 25(1), 227-243. Retrieved June 3, 2008 from EBSCO online database Business Source Complete: http://search.ebscohost. com/login.aspx?direct=true&db=ioh&AN=1906877&site=ehost-live Pinsonneault, A., & Kraemer, K. (2002). Exploring the role of information technology in organizational downsizing: a tale of two American cities. Organization Science, 13(2), 191-208. Retrieved June 3, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=6532499&site=eho st-live


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Shah, P. (2000). Network destruction: the structural implications of downsizing. Academy of Management Journal, 43(1), 101-112. Retrieved June 3, 2008 from EBSCO online database Business Source Complete: http://search.ebscohost.com/login.aspx?direct= true&db=ioh&AN=1915426&site=ehost-live Watson, G., Shepard, J., Stephens, C., & Christman, J. (1999). Ideology and the economic social contract in a downsizing environment. Business Ethics Quarterly, 9(4), 659-672. Retrieved June 3, 2008 from EBSCO online database SocINDEX with Full Text: http:// search.ebscohost.com/login.aspx?direct=true&db=sih&AN=2532542&site=ehost-live

Suggested Reading Armstrong-Stassen, M. (2002). Designated redundant but escaping lay-off: A special group of lay-off survivors. Journal of Occupational and Organizational Psychology, 75(1), 1-13. Retrieved June 3, 2008 from EBSCO online database Academic Search Complete: http://search.ebscohost.com/login.aspx?direct=true&db=ioh&AN=2335786&site=eho st-live Boone, J. (2000). Technological progress, downsizing and unemployment. Economic Journal, 110(465), 581-600. Retrieved June 3, 2008 from EBSCO online database Business Source Complete: http://search.ebscohost.com/login.aspx?direct=true&db=ioh&AN= 1948362&site=ehost-live Budros, A. (1997). The new capitalism and organizational rationality: The adoption of downsizing programs, 1979-1994. Social Forces, 76(1), 229-249. Retrieved June 3, 2008 from EBSCO online database Academic Search Complete. http://search.ebscohost. com/login.aspx?direct=true&db=a9h&AN=9711022942&site=ehost-live Espahbodi, R., John, T., & Vasudevan, G. (2000). The effects of downsizing on operating performance. Review of Quantitative Finance and Accounting, 15(2), 107-126. Retrieved June 3, 2008 from EBSCO online database Business Source Complete: http://search. ebscohost.com/login.aspx?direct=true&db=ioh&AN=1966649&site=ehost-live Gandolfi, F. (2006). Personal development and growth in a downsized banking organization: Summary of methodology and findings. Human Resource Development International, 9(2), 207-226. Retrieved June 3, 2008 from EBSCO online database Business Source Complete: http://search.ebscohost.com/login.aspx?direct=true&db =ioh&AN=3350381&site=ehost-live Gilson, C., Hurd, F., & Wagar, T. (2004). Creating a concession climate: The case of the serial downsizers. International Journal of Human Resource Management, 15(6), 10561068. Retrieved June 3, 2008 from EBSCO online database Business Source Complete: http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=13802049&site=eh ost-live Papalexandris, N. (1996). Downsizing and outplacement: the role of human resource management. International Journal of Human Resource Management, 7(3), 605-617. Retrieved June 3, 2008 from EBSCO online database Business Source Complete: http:// search.ebscohost.com/login.aspx?direct=true&db=ioh&AN=1518557&site=ehost-live

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Unemployment & Underemployment Francis Duffy

Overview Demand-deficient, Structural & Frictional Unemployment

Very few of us can afford to be unemployed for very long. The unpaid bills keep mounting; the depression, stress and social isolation grow ever more wearing. The economy as a whole cannot remain stable if large numbers of jobless workers are unable to purchase the consumer goods and services that account for two-thirds of U.S. economic output. Unsold inventories pile up, profit-driven businesses cut back on production and more people lose their jobs or find themselves with reduced hours. Economists call this chain of events demand-deficient unemployment and, because its roots lie in the natural expansion and contraction of the business cycle, it is expected to happen periodically. Sometimes, though, it’s precipitated by a major economic shock: a credit crunch or sudden steep rise in oil prices, etc. Then, the downturns are more severe, and the accompanying unemployment more extensive and drawn out. As bad as this can get, it’s not nearly as pernicious as what’s known as structural unemployment. Here, goods and services simply fall out of favor and are replaced by product substitutes; or, thanks to automation, they are made faster and cheaper by fewer workers. Whole industries disappear, are utterly transformed or else moved offshore never to return. The prospects for those summarily cast aside are far from promising. Unless they The Social Organization of Work

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have skills other industries need or are willing to retrain, these displaced workers will earn a fraction of what they once did. The lucky ones will be hired full time as unskilled labor; the rest will collect government benefits, and will perhaps supplement these with off-the-books work or else join the ranks of the underemployed who make ends meet working only part-time. Even at the very best of times, the economy never quite attains the full employment to which it aspires. In theory, every available worker can hold a permanent, well-paying job suited to his or her capabilities and skills level. Subject to millions upon millions of individual decisions each day, however, the real world economy is actually too dynamic for this to happen. There is always somebody between jobs: young adults and women entering the workforce for the first time, experienced workers re-entering it after retraining, or raising a family, and those eager to secure a better position. Information about job openings must be ferreted out, application forms filled in and processed, interviews conducted - all of which takes time. So, even in economic boom times, there’s going to be some amount of what economists call frictional unemployment. Underemployment

There will likely also be what economists refer to as underemployment. Here it’s not a question of not having a job, but rather of having a job for which one is overqualified. Experts estimate that as much as 25% of the workforce may fall into this category. Fully two-thirds of all temporary workers and one-third of all part-time ones have no other recourses because they cannot find more substantial employment. At least one-fifth of all graduating college students find themselves in similar straits. If you only work intermittently for twenty hours a week or less and get at best only 80% of the wages from your previous job, you too may be “underemployed” (Feldman, 1996). Unemployment is not nearly as straight-forward as the single monthly jobless-rate reported by the government might suggest. As a telling economic indicator, it nonetheless only counts those out of work actively seeking employment; it excludes those who’ve given up looking all together or who are underemployed. Still, the official number covers the job losses amongst the nation’s more productive workers, the ones who earned and presumably spent the most in wages. This involuntary unemployment 152


is thus the most problematic. Between the years 1972 and 1992, between 4.6% and 9.1% of the U.S. labor force found themselves in precisely this predicament. But their plight was probably not as bad as between 3.8% and 5.8% of American workers so disheartened by their prospects that they had stopped looking all together. More fortunate perhaps, were the estimated 10.8% to 15.4% of American “underemployed” workers who could only work part-time or at low pay, unskilled full-time work (Sheak, 1995). Nor is unemployment an equally shared burden. How much rates vary by age, gender, race and educational attainment is clearly documented in data gathered by the U.S. Bureau of Labor Statistics. In 2003, for example, the unemployment rate for 20- to 24-year-olds ran to 10%, twice as much as the rate of 5.0% for 24- to 55-year-olds. An even lower rate of 4.1% was reported among workers over 55. The aggregate unemployment rate for the year was 6.0%. At 6.3%, the unemployment rate for men overall was higher than the 5.7% rate for women overall. Rates varied even more by race. Among whites, the rate ran to 5.2%; among Afro-Americans it ran to 10.8%, over twice as high. At 7.9%, the rate for Latino/as, meanwhile, fell in between. Education-wise, 8.8% of high school dropouts seeking work were unemployed as opposed to 5.5% of high school graduates. A rate of 4.8% amongst college attendees suggests they had an easier time finding work, though not as easy a time as college graduates whose rate of unemployment ran to only 3.1% (U.S. Bureau of Labor Statistics, 2004).

Further Insights In all, anywhere between 20.2% and 30.1% of the U.S. labor force between 1972 and 1992 had first hand experience of under- or unemployment, a set of aggregate numbers so high as to raise a disturbing question: why can’t society as it’s presently constituted do more to bring about “full employment”? Perhaps this a question better left to economics, not sociology. However, although the more germane discipline from a technical standpoint, the focal point of economics is the efficient allocation of resources. Unemployment in this respect is just one of several by-products of this constant process of adjustment economists theorize about. Its impact on individuals, communities, and society in general matter less than its impact The Social Organization of Work

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on markets. The so-called immutable laws of economics are no more than conceptual models of imponderably complex real-world events we choose to believe in. As a socially mediated set of mental constructs, economic theory is amenable to sociological analysis. Keynesianism: The Macroeconomics of Unemployment

People have gone without adequate work for many centuries, but the economic theory explaining unemployment didn’t really come into its own until the twentieth century, upon the publication of John Maynard Keynes’s “The General Theory and Employment, Interest and Money” in 1936. Keynes broadened the scope of orthodox economic analysis by framing the problem of production and employment in the larger context of national economies. Myopically examining the behavior of households, firms and markets in isolation, he argued, ignored the much greater influence exerted by aggregate supply and aggregate demand. Of the two, he argued, aggregate demand was the more crucial. If supply did create demand as was widely supposed, no one would be jobless when, in fact, many were at the time. In Keynesian economics, aggregate supply is the sum of all the goods and services businesses bring to the marketplace with the expectation that the proceeds will more than justify hiring the required labor. Aggregate demand, conversely, is the level of output of goods and services consumers purchase with the wages earned producing them. Aggregate demand matters more, since we typically must first earn (or borrow) the money to purchase what businesses sell. It is not only a question of how much we earn today but tomorrow as well. If consumers and businesses expect harder economic times ahead, Keynes warned, they take the precaution of cutting back spending. The mere prospect of an economic downturn, higher inflation or rising unemployment, in other words, can turn our worst fears into a reality (Edwards, 1959). Economically speaking, labor is just another commodity; that is, something bought and sold in an open, competitive marketplace. Like any market, the demand for and supply of labor is either in equilibrium or disequilibrium. The former “market-clearing” state exists when supply exactly equals demand, the latter whenever supply and demand fall out of kilter. Importantly, whenever external circumstances permit, internal forces impel 154


a market in disequilibrium toward equilibrium. Technically, whenever the equilibrium point falls short of the full-employment mark, a certain amount of what Keynes called “involuntary” unemployment is inevitable. Even Keynesianism’s arch critic, the monetarist Milton Friedman, believed there was a “natural rate” of unemployment (Hall, 1995). The question facing Keynes, Friedman and today’s economists is perplexingly simple: what if anything can be done to keep the real rate of unemployment at or near its “natural” rate? Examining 96 years of data ending in 1957, economist A.E. Phillips hypothesized the existence of an inverse relationship between changes in the wage and unemployment rates captured graphically by a downward sloping, inwardly shaped curve that to this day is known as the Phillips Curve. When the inflation rate quickened, the unemployment rate dropped; when the inflation rate slowed, the unemployment rate rose. Keynesian economics holds that in the short run a higher level of inflation is preferable to an unacceptably high rate of unemployment. Central banks should thus expand the amount of money in circulation, and governments should increase their spending to increase output. This would in turn put money back into workers’ pockets; they can then spend, stimulating further economic growth. Monetarism rejects this prescription on the grounds that markets behave more or less autonomously and will eventually return to equilibrium. In the interim, prices must be allowed to rise or fall freely even at the expense of higher unemployment in the short term. Both courses of action, however, discounted the possibility of simultaneously high inflation and high unemployment. Stagflation

“Stagflation,” as it was called, confounded Keynesians and monetarists alike, because neither theory satisfactorily explained it. In all fairness, neither school had occasion to until the price of oil rose four-fold in 1973. An economic shock, America at the time was ill-prepared to absorb such a sharp cost-increase in so basic a commodity. Inflation was already on the rise thanks to a “guns-and-butter” fiscal policy, the economy close to full production. Costs skyrocketed and attempts to pass along the increases to consumers triggered double-digit inflation. With earnings plummeting, businesses had no choice but to lay off workers. The Social Organization of Work

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Still, no one thought a state of high unemployment and high inflation could last for very long. They were wrong; by 1980, the inflation rate was 20%, the unemployment rate above 7.5%. Central banks finally intervened and raised interest rates sharply; the economy contracted as expected and inflation slowed dramatically. But these monetarist-inspired counter-measures led to such a severe recession that they were soon abandoned. Since then, central banks’ chief concern has been keeping inflation in check. Whenever it starts to rise above a natural rate of 2% to 3%, they incrementally raise interest rates to prevent the economy from overheating. Interestingly, rather than use stagflation to discredit the Phillips Curve much favored by Keynesians, monetarists fine-tuned the model, adding expectations of future inflation to the analytic mix in an attempt to explain stagflation. To do so, however, they first had to posit the existence of a nonaccelerating inflation rate of unemployment or NAIRU. Actually, a much simpler concept than its name suggests, NAIRU is the lowest rate of unemployment possible while maintaining acceptably low inflation rates. As the economy moves toward full employment, and the supply of surplus labor dwindles, in effect, the point will come when the addition of one more hire will trigger accelerated inflation. In its current incarnation, the Phillips Curve is not one but two curves - one short-term, the other long term. The first charts the inflation-unemployment trade-off, the Phillips curve of old. In the second, the unemployment rate achieved leveraging this trade-off falls below NAIRU, triggering higher inflation (Parkin, 1998). The Individual’s Experience of Unemployment

Much more is lost than a steady paycheck when one becomes unemployed. Work, after all, is a social experience; it defines us in important ways and gives our day-to-day lives context. A regular job structures large blocks of time for us, while the workplace gives us an opportunity to engage others socially free from the pressures of family life. The work itself focuses our minds, furnishes us a sense of purpose and accomplishment and the social status that goes with it. There are exceptions, of course. Some may welcome their first few days of unemployment. Inevitably, though, they succumb to the stress brought on by shrinking finances and, especially among working-class males, the stigma felt by no longer being their families’ principal breadwinner. Then, 156


there’s the sheer uncertainty of it all: where will I find work? How much longer before I find a job? Who will lend me the money to pay next month’s rent? (Watson, 1995). 14 of 16 major longitudinal research studies found higher levels of psychological distress among the unemployed than the employed (Murphy & Athanasou, 1999). Anxiety, depression and low self-esteem were among the symptoms experienced more intensely among unemployed subjects. Aimlessness, boredom, and loneliness were also more of a problem than for those who still had access to a workplace social network. The emotional support, practical help, information, referrals and sense of “belonging” can be sorely missed. Otherwise, why else would research show unemployed workers who have access to alternative social networks tend to cope better than those who don’t? Or why those with “satisfying” personal relationships reportedly cope the best? Continually adjusting the way we think and act when confronted with day-to-day demands and stressors confronting us to realize some longerterm goal is utility-maximizing behavior of a high order. A supportive social milieu is helpful in this respect. Even at the best of times, being the target of socially mediated value-judgments and prejudices is a trying experience. At the worst of times, it can be devastating for anyone already struggling with low self-esteem. Anyone unemployed for any length of time already wonders if strangers and casual acquaintances think it’s their fault, that they’re a bad worker, lazy, immature, etc. Even among one’s friends and relatives, encouragement and ambivalence sometimes go hand in hand, and frustration with the problems the predicament creates for them occasionally flairs up as scornful rebuke (Creed & Moore, 1996).

Viewpoints Markets

Almost everyone fears being unemployed, not only for the hardship and uncertainty it brings, but for its stark reminder that we are largely powerless in the face of impersonal forces of vast proportion. Markets, paradoxically, are social structures where individuals, organized groups, and institutions freely interact with each other out for mutual gain, a kind of collective behavior on a grand scale. Persistent unemployment implies The Social Organization of Work

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that, in practice, the gains are not mutual and the markets not always efficient. If they truly were, demand-deficient and structural unemployment, much less underemployment, would not be the problem they clearly are. Yet, frictional unemployment points to a countervailing dynamism, the hallmark of an efficient market. Economists fear the former, praise the latter, concede that full employment is at best highly unlikely, and disagree on how best to control it. As a discipline, economics is both descriptive and prescriptive. We study economics in order to maximize x then shape our norms and values and organize our social and political life around what we discover. Any unemployment above the so-called natural rate forces us to ask ourselves some rather uncomfortable questions. How much of what economists tell us, for example, is ideologically based; how much verifiability true? More importantly, can unwanted unemployment be eliminated, or is it an intractable given of economic life? There have been times during very low unemployment when businesses have to raise wages to attract needed workers. They typically pass the increase along to customers in the form of higher prices, triggering rising inflation. The economy is said to be “overheating”; central banks raise interest rates to “cool” it off. Higher borrowing costs dampen business investment and consumer spending, forcing firms to lay off recently hired workers. Demand-deficient unemployment will thus be with us as long as there’s a business cycle; and structural unemployment will be with us as long as new technologies come to make current ones obsolete. Sociologists thus have ample reason to deepen their understanding of the personal impact unemployment has. Economists and politicians may wrangle with the problem; the jobless and underemployed bear its full brunt.

Bibliography Creed, P., & Moore, K. (2006). Social support, social undermining, and coping in underemployed and unemployed persons. Journal of Applied Social Psychology, 36(2), 321-339. Retrieved May 15, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=20042849&si te=ehost-live

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Current labor statistics. (2004). Monthly Labor Review, 127(3), 55-122. Retrieved June 26, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost. com/login.aspx?direct=true&db=sih&AN=13019672&site=ehost-live Edwards, E. (1959). Classical and Keynesian employment theories: A reconciliation. Quarterly Journal of Economics, 73(3), 407-428. Retrieved May 15, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?dir ect=true&db=sih&AN=7696794&site=ehost-live Feldman, D. (1996). The nature, antecedents and consequences of underemployment. Journal of Management, 22(3), 385. Retrieved June 3, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=si h&AN=9608081588&site=ehost-live Hall, R. (2003). Modern theory of unemployment fluctuations: Empirics and policy applications. American Economic Review, 93(2), 145-150. Retrieved May 15, 2008 from EBSCO online database Business Source Complete: http://search.ebscohost.com/ login.aspx?direct=true&db=bth&AN=10015862&site=ehost-live Murphy, G., & Athanasou, J. (1999). The effect of unemployment on mental health. Journal of Occupational & Organizational Psychology, 72(1), 83. Retrieved June 3, 2008 from EBSCO online database SocINDEX with Full Text:http://search.ebscohost.com/login. aspx?direct=true&db=sih&AN=1700165&site=ehost-live Parkin, M. (1998). Unemployment, inflation, and monetary policy. Canadian Journal of Economics, 31(5), 1003-1032. Retrieved May 15, 2008 from EBSCO online database Business Source Complete: http://search.ebscohost.com/login.aspx?direct=true&db= bth&AN=1517801&site=ehost-live Sheak, R. (1995). U.S. capitalism, 1972-1992: The jobs problem. Critical Sociology, 21(1), 33-57. Retrieved June 3, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=9731793&site=eho st-live Watson, T. (1995). Chapter 4: Work: meaning, opportunity and experience. In, Sociology, Work & Industry. Abingdon: Taylor & Francis Ltd. Retrieved May 16, 2008 from EBSCO online database SocINDEX with Full Text:http://search.ebscohost.com/login. aspx?direct=true&db=sih&AN=17023227&site=ehost-live

Suggested Reading Croix, D., & de LaLicandro, O. (2000). Irreversibilities, uncertainty and underemployment equilibria. Spanish Economic Review, 2(3), 231-248. Retrieved June 3, 2008 from EBSCO online database Business Source Complete: http://search.ebscohost.com/login.aspx?d irect=true&db=bth&AN=4688088&site=ehost-live Liem, R. (1987). The psychological costs of unemployment: A comparison of findings and definitions. Social Research, 54(2), 319-353. Retrieved June 3, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=tr ue&db=sih&AN=24829974&site=ehost-live


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Norris, G. (1978). Unemployment, subemployment and personal characteristics. Sociological Review, 26(1), 89-108. Retrieved May 15, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=si h&AN=5467288&site=ehost-live Pang, M., Lang, G., & Chiu, C. (2005). De-industrialization and the “disappeared workers.” International Journal of Human Resource Management, 16(5), 772-785. Rosholm, M. (2001). Cyclical variations in unemployment duration. Journal of Population Economics, 14(1), 173-192. Woglom, G. (1982). Underemployment equilibrium with rational expectations. Quarterly Journal of Economics, 97(1), 89-107. Work, employment, and leisure: The transformation of work, employment, and leisure. (2003). In, Fulcher, J. Sociology. Oxford: Oxford University Press. 12-637. Yotopoulos, P. (1965). The wage-productivity theory of underemployment: a refinement. Review of Economic Studies, 32(89), 59. Retrieved June 3, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=t rue&db=sih&AN=4619990&site=ehost-live

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Undocumented Workers Matt Donnelly

Overview Undocumented workers continue to pose public policy challenges for American politicians, while also presenting economic implications for American workers and taxpayers. Undocumented workers in the United States are those foreign workers, particularly from Mexico and Latin America, who are not legally authorized to work in the United States. They are “undocumented” because they do not have work papers allowing them to be properly documented and taxed by local, state and federal government authorities. Undocumented workers are often referred to as illegal immigrants, to contrast them with the millions of foreign-born residents who live and work in the United States legally. In truth, undocumented workers are but a subset of the larger illegal immigrant population, which is also comprised of the children and other relatives of undocumented workers. Many undocumented workers and their families and relatives remain in the United States year-round, sometimes migrating from state to state or region to region in search of construction, service, factory and agricultural work. A large percentage of undocumented workers set aside a portion of their income to send back to relatives in their impoverished homelands (Preston, 2008).


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The issue of undocumented workers is not restricted to the United States and its Spanish- and Portuguese-speaking immigrants. Rather, as one looks at the global pool of migrant workers and the ebbs and flows of migrant labor, it becomes clear that the phenomenon is occurring across the globe (Appleyard, 2001). This is the case in nations and regions as distinct as South Africa (Human Rights Watch Africa, 1998), East Asia (Chia, 2006), Belgium (Grzymala-Kazlowska, 2005), the Netherlands (Van der Leun & Kloosterman, 2006), and Great Britain (Anderson, 2001). Much of both legal and illegal immigration has been to cities, including those identified as part of Friedmann’s “world city hypothesis” (Friedman, 1986) for human migration in the 21st century. A number of countries around the world have taken measures in recent decades to control immigration, including that subset of migrants referred to as undocumented workers or illegal immigrants (Cornelius, Hollifield, & Martin, 2003). This essay will focus on the sociological, economic and political aspects of undocumented workers in the United States labor force. It will begin with history and demographics, proceed to the economic and cultural dimensions of undocumented workers, and conclude with the ongoing public policy debate over the place of undocumented workers in American society.

History In recent decades undocumented workers in the United States have arrived as part of a wave of migration primarily from Third World countries. This has happened for three reasons: 1965 amendments to the Immigration and Naturalization Act, which changed the longstanding system of immigrant quotas based on country of origin; new legislation in the 1960s that allowed political refugees to emigrate; and an influx of undocumented workers as “part of the worldwide emergence during the 1960s of labor migration from less developed to more developed countries” (Bean, Telles & Lowell, 1987, p. 672). By 1981, the final report of the nonpartisan Select Committee on Immigration and Refugee Policy, established by President Jimmy Carter, concluded, “One issue has emerged as most pressing -- the problem of undocumented/illegal migration” (cited in Bean, Telles & Lowell, 1987, p. 673). This shift in migration from European and other developed nations to migration from the Third World has had several effects within the wider U.S. 162


population. First, it made these largely non-white, non-English-speaking immigrants more visible. Second, since many of the new immigrants from the Third World were poor and had few job skills, their arrival shifted the general population’s assertion that immigrants were a net bonus to the economy to a perception that immigrants were a net drain on the economy, therefore breeding varying degrees of resentment. Attention has turned primarily to Hispanic undocumented immigrants because they make up the great majority of undocumented workers in the United States (Bean, Telles & Lowell, 1987, p. 672). As in other nations, there have been recent moves in the United States to limit legal immigration from impoverished nations while increasing the number of visas given to workers with in-demands skills such as nursing and information technology (Marshall, 2007, p. 5). But most of the debate about immigration to the United States in the early years of the 21st century has focused on undocumented workers, whom a sizable part of the American electorate refers to simply as illegal immigrants. The debate largely revolves around the economic impact of illegal migrant labor, either on wages and the cost of living, or on the utilization of social services paid for through taxation. There are also questions of pragmatism, ethics and morality that form the backdrop for the economic discussion. Since the passage of the 1986 Immigration Reform and Control Act, amnesty for undocumented workers has been often discussed. The 1986 law gave legal status to 1.7 million undocumented immigrants who had been living in the country before 1982, and another 1.3 were allowed to come to the U.S. as special agricultural workers (Tienda & Singer, 1995, p. 112). Amnesty has proved to be a more difficult proposition in the political climate of the early 21st century, and other solutions, such as the guest worker program proposed by President George W. Bush, have been proposed as less-volatile alternatives.

Further Insights The Worker’s Role in the Labor Market

Ever since they became a large part of the American economy beginning in southwestern United States in the late 19th century, Americans have had an uneasy relationship with illegal immigrants and undocumented The Social Organization of Work

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workers. On one hand, undocumented workers have been seen as vital to several large segments of the U.S. economy, agribusiness in particular. Undocumented workers are perceived to be willing to do the jobs that few Americans are willing to do, especially at the wages provided. On the other hand, undocumented workers have been seen as a drain on the economy because, some have argued, they drive down the cost of labor, thus pricing native-born laborers out of the market. When combined with moral zeal -- the desire to punish undocumented workers for breaking the law – the negative attitude toward undocumented workers can spill over into plans for mass deportation. Such mass deportations of undocumented Mexican laborers took place in the 1930s and 1950s (Hoffman, 1974), though in between, during World War II in 1942, the federal government’s Bracero Program brought 4.5 million Mexicans to the United States to help alleviate the labor shortage in agribusiness. For most of the past century, Mexican workers, in particular, have been “treated as disposable workers, easily returned to Mexico when no longer needed, brought back when economic conditions improve” (García, 1981, p. 122). Demographics

Estimates of the number of undocumented workers in the United States vary widely, with some putting the number as high as 20 million (Marshall, 2007, p. 1), and it is often difficult to disentangle political motivations and arrive at reliable statistics. An estimate by the nonpartisan Pew Hispanic Center in 2002 put the number of undocumented immigrants in the United States at 7.8 million (Bean, Van Hook, & Woodrow-Lafield, 2002). These numbers include 5.3 million undocumented workers over the age of 18 in the labor force (Bean, Van Hook, & Woodrow-Lafield, 2002, p. 2). A 2005 Pew Hispanic Center report estimated 10.3 million illegal immigrants in 2004, with the number expected to reach 11 million in 2005 (Passel, 2005a, p. 1). The most recent numbers from the Pew Hispanic Center indicate there are an estimated 11.5 to 12 million illegal immigrants in the United States and an additional 3.1 million children of illegal immigrants who are American citizens (Escobar, 2006; cf. Hoefer, Rytina & Campbell, 2007). About 29 percent of all foreign-born U.S. residents in 2004 were illegal immigrants (Passel, 2005b, p. 2).

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Figure 1: Undocumented immigrants in the United States Year

Total Number

Undocumented Workers (18+)

2002

~7.8 million

~5.3 million

2004

~10.3 million

~7 million

2005

~11 million

~7.5 million

2006

~11.5-12 million

~7.82-8.16 million

(taken from Bean, Van Hook, & Woodrow-Lafield, 2002; Passel, 2005a; Escobar, 2006) Most of the illegal immigrants in the United States in 2004 were from Mexico (57%) and Latin America (24%), followed by Asia (9%) and Canada/Europe (6%) (Passel, 2005b, p. 2). According to many researchers, “a great majority of the Mexican-origin and Central and South American origin population that arrived since 1990 is undocumented” (Bean, Van Hook, & Woodrow-Lafield, 2002, p. 2). About one-sixth of all illegal immigrants in 2004 (1.7 million) were minor children, while almost no undocumented workers were over the age of 65 (Passel, 2005a, p. 3). Only 29 percent of all illegal immigrants are women. Geographically, illegal immigrants and undocumented workers are spread over a much wider area than they were in the past. While in 2004, 68 percent of illegal immigrants lived in just eight states, this was down from the 88 percent who lived in only six states in 1990 (Passel, 2005b, pp. 2-3). Undocumented workers from Mexico and Latin America, who form the great majority of undocumented workers in the United States, tend to have low levels of education and job skills. In a study of undocumented Mexican immigrants coming to the United States between 1992 and 2002, researchers at Mexico’s Instituto Tecnológico de México found that “over threefourths of unauthorized Mexican immigrants had less than eight years of formal education; 11% had no formal education at all; and one-third had less than four years” (cited in Marshall, 2007, p. 5). Perhaps complicating discussions of illegal immigrants and undocumented workers is the fact there has been a considerable amount of legal immigraThe Social Organization of Work

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tion from Mexico and Latin America in recent decades. Indeed, it may be the case that “[b]ecause almost all undocumented immigrants are Hispanic or Asian in origin...., the increasing numbers of legal Hispanic and Asian immigrants may have fostered the impression that the volume and impact of undocumented immigration has been greater than it actually has been” (Bean, Telles & Lowell, 1987, p. 671). Industries, Employment & Economics

Undocumented workers constitute about 4 percent of the adult U.S. workforce, and they tend to be concentrated in industries requiring considerable amounts of manual labor. There are an estimated one million undocumented workers concentrated in each of four specific industrial niches: “manufacturing (especially non-durables such as apparel manufacturing), wholesale and retail trades, and services.” More specifically, “about 10 percent of U.S. restaurant workers and nearly a quarter of U.S. private household workers are undocumented” (Lowell & Fry, 2002, p. 4). There is also a rising trend in the use of illegal day labor, particularly in large metropolitan areas such as Los Angeles (Abendschein, 2006), something that is not wholly without historical precedent (Friedricks, 1990). A debate continues over the economic inputs and outputs of undocumented workers. A 2004 report from the Pew Hispanic Center indicates that the average annual household income for undocumented workers was $27,400, considerably less than the $47,800 for legal immigrant families (Passel, 2005b). A recent Congressional Budget Office report cited various studies estimating the amount of local, state and federal taxes paid by undocumented workers, but the percentages varied widely (Congressional Budget Office, 2007). There is some evidence that wages of undocumented workers improve over time, though not by large amounts (Tienda & Singer, 1995), and Puerto Rican and Cuban workers seem to be at an advantage compared to their Mexican counterparts (Bansak, 2005). It is the case, however, that undocumented workers receive most of their social services through state and local governments, which do not face the same restrictions as the federal government in offering public assistance to undocumented workers (Congressional Budget Office, 2007).

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An Informal Economy

Perhaps unsurprisingly, undocumented workers often get paid by their employers “under the table,” meaning that their wages are often paid in cash and aren’t reported to the Internal Revenue Service. This has created an underground, cash-based economy in many of the largest cities in the United States. In recent years some banks and mortgage companies have cut back documentation requirements to make it easier for undocumented workers to open bank accounts and qualify for home loans. Social scientists have shown the value of social networks in helping undocumented workers find employment in this informal economy once they arrive in the United States (Hondagneu-Sotelo, 1994; Yamamoto, 2006). These informal networks allow undocumented workers to maximize their chances of finding work while minimizing the chance that they will be apprehended by immigration services and deported. According to Marshall (2007), “very effective informal immigrant information and support networks give employers a dependable supply of labor. Since 1986, these networks have been strengthened by the spread of relatively inexpensive information technology, especially cell phones and radios” (p. 3). Worker Exploitation

One continuing problem for undocumented workers is the risk of exploitation from employers who are well aware that undocumented workers are hesitant to report abuses for fear of being deported. This exploitation can take the form of unsafe working conditions, lack of payment or even physical and emotional abuse (Williams, 2006). Some sociologists and others suggest that unions would increase the bargaining position of undocumented workers (Gabriel, 2006), though unions themselves have been ambivalent. Whether undocumented workers have a legal right to unemployment compensation for on-the-job injuries remains a matter of debate on both the state and federal level (Query, 2006). Options for Undocumented Workers

Perhaps the only area of agreement in the ongoing debate over undocumented workers is that the status quo is not sustainable over the long term. Opponents of undocumented labor argue that the recent influx of undocumented workers is putting an unhealthy strain on the economy and on The Social Organization of Work

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the provision of social services. Supporters of undocumented labor argue that the current system stigmatizes and takes undue economic advantage of millions of hard-working individuals who come to the United States in search of a better life for themselves and their families. Various conflicting immigration reform measures have been proposed in recent decades, including: • A secure national identification card program to allow only legal immigrants or guest workers to find employment • A higher minimum wage to make low-wage jobs more appealing to domestic workers, particularly those with few job skills and low levels of formal education (Marshall, 2007) • Fines and other measures against employers who knowingly hire undocumented workers (Perry, 2008) • A path to legal status and/or citizenship for some percentage of undocumented workers who have lived in the United States for a certain period of time and have a clean criminal record • A system that would let workers come to the United States for a certain period of time – such as on a temporary work permit -- to work in industries such as agribusiness • The construction of a wall and/or an increased number of border agents along the U.S.-Mexico border • Creating trade agreements with Mexico and Latin America to boost domestic economies and thus reduce economic incentives for legal and illegal immigration (Boyle, 2007) As yet, there has been no political consensus on any of these measures. Marshall states, “Unlike many other policy issues, there are no clear political alignments on immigration, making it difficult to build the coalitions needed to align the complex components of a successful immigration policy” (2007, p. 1).

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Viewpoints Views of Foreign-Born & Native-Born Hispanic Immigrants on Undocumented Workers

Recent surveys of Latinos have consistently shown their greater willingness than their native-born neighbors to offer undocumented workers a path to legalization and citizenship. Latinos also tend to dispute the claim that undocumented workers are a net drain on the U.S. economy. A 2006 survey by Suro & Escobar of the Pew Hispanic Center showed clear trends and revealed some important nuances: In the current survey, most Latinos (72%) said illegal immigrants help the economy by providing low-cost labor, while a minority (21%) says they hurt by driving down wages. Majorities favor a temporary worker program for all undocumented immigrants. But like the rest of the American public, though to a lesser extent, there are divisions among Latinos on immigration and the policy options. For example, a significant minority (41%) said only undocumented immigrants who have been in the country for at least five years should be permitted to stay. Unlike the general public, however, only a small fraction of Latinos (5%) said that no undocumented immigrants should get a chance to stay and become citizens (Suro & Escobar, 2006, p. 15). Evident in the survey results are differences of opinion between nativeborn Latinos and foreign-born Latinos, as well as differences between Latinos of different national origins: Nativity has repeatedly proved to be the major dividing line on this topic, with nearly twice as many native-born Latinos (28%) seeing economic harm from illegal immigration. Among national origins groups, much smaller majorities of Puerto Ricans (57%) and Cubans (50%) take a positive view of the economic impact of illegal migration than among Mexicans (78%) or Central and South Americans (71%). All Puerto Ricans are U.S. citizens by birth and virtually all Cubans are either U.S. citizens or legal immigrants. Both Puerto Ricans (35%) and Cubans (39%) are more than twice


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as likely as Latinos of Mexican origins (16%) to say that illegal immigrants hurt the economy (Suro & Escobar, 2006, p. 15). The polling data shows that while there are areas of broad consensus within the Latino community regarding undocumented workers, it is important not to view the Latino community as uniformly supportive of undocumented workers. Indeed, when asked if they favored allowing all illegal immigrants to remain in the United States, 61% of first-generation immigrants agreed, while only 41% of third-generation immigrants did so (Suro & Escobar, 2006, p. 19). Arguments for Undocumented Labor

Undocumented workers and their supporters argue that it is both economically and morally unjust to ask undocumented workers either to leave the United States or not to come at all. Moreover, they argue, it is impractical to deport as many as 20 million illegal immigrants back to their home countries. Their argument is that it is not only immoral to deport hard-working individuals who contribute to the U.S. economy, doing the types of jobs few native-born Americans care to do, but it is also impractical (Sowell, 2006, p. 8). Undocumented workers in the United States also report that they face a rising tide of discrimination as a result of what they perceive to be growing anti-immigrant sentiment, particularly after the events of September 11, 2001 and various government raids of businesses employing undocumented workers. A 2006 survey of Latinos conducted by the Pew Hispanic Center found that “more than half (54%) of Latinos surveyed believe the [immigration] debate has increased discrimination” (Suro & Escobar, 2006). According to a 2007 poll conducted by the Pew Hispanic Center, “Just over half of all Hispanic adults in the U.S. worry that they, a family member or a close friend could be deported” (Clark et al., 2007). Some undocumented workers compare their struggle for acceptance to that of African-Americans during the civil rights movement of the 1950s and 60s. Arguments Against Undocumented Labor

Some opponents of illegal immigration support additional restrictions on legal immigration, though only racist elements, thoroughly repudiated by opponents of undocumented workers, argue that all immigration should be stopped. 170


Marshall provides a concise summary of arguments against illegal immigration, including the use of undocumented workers: Unauthorized immigration, on the other hand, subjects migrants to grave dangers and exploitation, suppresses domestic workers’ wages and working conditions, makes it difficult to adjust immigration to labor market needs, perpetuates marginal low-wage industries addicted to a steady flow of unauthorized immigrants, is unfair to people waiting to enter the United States legally, and undermines the rule of law. The issue is not immigrants, but their legal status, characteristics, and integration into American life. (Marshall, 2007, p. 2) Opponents of undocumented workers point to recent scholarship indicating that the presence of undocumented workers does indeed drive down the wages of documented workers (Hotchkiss & Quispe-Agnoli, 2008). Some others note that any amnesty or path to citizenship for undocumented workers and illegal immigrants as a whole would be tantamount to a reward for breaking the law. They also argue that the same methods -such as identification cards -- that could be used to root out undocumented workers could also be used to identify potential terrorists and terrorist cells on U.S. soil.

Bibliography Abendschein, D. (2006, May 18). Day labor dilemma: An amendment on the Sensenbrenner Bill would also chill efforts to build day labor centers. Los Angeles CityBeat 154. Retrieved May 10, 2008 from: http://www.lacitybeat.com/cms/story/ detail/?id=3759&IssueNum=154 Anderson, B. (2001). Different roots in common ground: Transnationalism and migrant domestic workers in London. Journal of Ethnic and Migration Studies 27 (4), 673-683. Retrieved May 10, 2008 from EBSCO online database, Academic Search Premier http:// search.ebscohost.com/login.aspx?direct=true&db=aph&AN=5344319&site=ehost-live Appleyard, R. (2001). International migration policies: 1950-2000. International Migration 39 (6), 7–20. Bansak, C. (2005). The differential wage impact of the immigration reform and control act on Latino ethnic subgroups. Social Science Quarterly (Blackwell Publishing Limited), 86, 1279-1298. Retrieved May 10, 2008, from EBSCO online database, Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=1 9493486&site=ehost-live The Social Organization of Work

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Bean, F.D., Telles, E. E. & Lowell, B. L. (1987). Undocumented immigration to the United States: Perceptions and evidence. Population and Development Review 13. 671-90. Bean, F. D., Van Hook, J. & Woodrow-Lafield, K. (2002). Estimates of numbers of unauthorized migrants residing in the United States: The total, Mexican, and Non- Mexican Central American unauthorized populations in mid-2002. Washington, D.C.: Pew Hispanic Center. Retrieved May 10, 2008 from: http://www.pewhispanic.org/ files/reports/2.pdf Boyle, K. (2007). As employers draw greater scrutiny for hiring undocumented workers, a way out of the current crisis may come from, of all places, Ireland. Inc, 29(3), 9193. Retrieved May 10, 2008, from EBSCO online database, Academic Search Premier http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=24359780&site=e host-live. Chia, S. (2006). Labor mobility and East Asian integration. Asian Economic Policy Review, 1(2), 349-367. Retrieved May 10, 2008, from EBSCO online database, Business Source Complete http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=2311571 3&site=ehost-live. Congressional Budget Office. (2007). The impact of unauthorized immigrants on the budgets of state and local governments. Retrieved May 10, 2008 from: http://www. cbo.gov/ftpdocs/87xx/doc8711/12-6-Immigration.pdf Cornelius, W.A., Hollifield, J. F. & Martin, P. L. (2003). Controlling Immigration: A Global Perspective. Stanford, Calif.: Stanford University Press. Friedricks, W. B. (1990). Capital and labor in Los Angeles: Henry E. Huntington vs. organized labor, 1900-1920. The Pacific Historical Review, 59(3), 375-395. Gabriel, J. (2006). Organizing the jungle: Industrial restructuring and immigrant unionization in the American meatpacking industry. WorkingUSA, 9(3), 337-359. Retrieved May 10, 2008, from EBSCO online database, Business Source Premier http:// search.ebscohost.com/login.aspx?direct=true&db=buh&AN=22052482&site=ehostlive. García, M.T. (1981). Review of “Operation Wetback: The Mass Deportation of Mexican Undocumented Workers in 1954 by Juan Ramon García.” [book review]. The Public Historian, 3(2) 121-125. Grzymała-Kazłowska, A. (2005). From ethnic cooperation to in-group competition: Undocumented Polish workers in Brussels. Journal of Ethnic & Migration Studies, 31(4), 675-697. Retrieved May 10, 2008, from EBSCO online database, Academic Search Premier http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=17395013 &site=ehost-live. Hoefer, M., Rytina, N., & Campbell, C. (2007). Estimates of the unauthorized immigrant population residing in the United States: January 2006. Washington, D.C.: Department of Homeland Security, Office of Immigration Statistics. Accessed May 11, 2007 from: www.dhs.gov/xlibrary/assets/statistics/publications/ill_pe_2006.pdf Hoffman, A. (1974). Unwanted Mexican Americans in the Great Depression: Repatriation pressures, 1929-1939. Tuscon: University of Arizona Press. 172


Hotchkiss, J., & Quispe-Agnoli, M. (2008). The labor market experience and impact of undocumented workers. Working Paper Series (Federal Reserve Bank of Atlanta), 7. 1-40. Retrieved May 10, 2008, from EBSCO online database Business Source Premier http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=30057024&site=e host-live Human Rights Watch Africa (1998). Prohibited Persons: Abuse of Undocumented Migrants, Asylum Seekers, and Refugees in South Africa. New York: Human Rights Watch. Retrieved May 11, 2008 from http://www.hrw.org/reports98/sareport/ Lowell, B.L., & Fry, R. (2002). Estimating the distribution of undocumented workers in the urban labor force: Technical memorandum to “How many undocumented: The numbers behind the U.S.—Mexico migration talks.” The Pew Hispanic Center. Retrieved May 10, 2008 from: http://www.pewhispanic.org/files/reports/6.1.pdf. Lowell, B.L., & Suro, R. (2002). How many undocumented: The numbers behind the U.S.Mexico migration talks. The Pew Hispanic Center. Retrieved May 10, 2008 from: http://pewhispanic.org/reports/report.php?ReportID=6 Marshall, R. (2007, March 15). Getting immigration reform right. EPI Briefing Paper #186. Washington, D.C.: Economic Policy Institute. Retrieved May 10, 2008 from: h t t p : / / www.sharedprosperity.org/bp186.html Passel, J. S. (2005a). Estimates of the size and characteristics of the undocumented population.Washington, D.C.: Pew Hispanic Center. Retrieved May 10, 2008 from: http://pewhispanic.org/reports/report.php?ReportID=44 Passel, J. S. (2005b). Unauthorized migrants: Numbers and characteristics: Background briefing prepared for the Task Force on Immigration and America’s Future. Washington, D.C.: Pew Hispanic Center. Retrieved May 10, 2008 from: http://pewhispanic.org/ files/reports/46.pdf Perry, P. (2008). Hiring immigrants. BEEF, 44(6), 74-76. Retrieved May 10, 2008, from EBSCO online database, Business Source Premier http://search.ebscohost.com/login. aspx?direct=true&db=buh&AN=29363284&site=ehost-live Preston, J. (2008, May 1). Fewer Latino immigrants sending money home. New York Times. Retrieved May 10, 2008 from: http://www.nytimes.com/2008/05/01/ us/01immigration.html. Query, J. (2006). Workers’ compensation for undocumented workers: A discussion of the regulatory complexities. Journal of Insurance Regulation, 25(2), 3-19. Retrieved May 10, 2008, from EBSCO online database, Business Source Premier http://search. ebscohost.com/login.aspx?direct=true&db=buh&AN=24159953&site=ehost-live. Sowell, T. (2006). Call them gate crashers. (Cover story). Human Events, 62 (12). 1-8. Retrieved May 10, 2008, from EBSCO online database, Academic Search Premier http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=20473396&site=e host-live. Suro, R. & Escobar, G. (2006). 2006 National Survey of Latinos: The immigration debate. Pew Hispanic Center. Retrieved May 10, 2008 from: http://www.pewhispanic.org/ files/reports/68.pdf The Social Organization of Work

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Tienda, M. & Singer, A. (1995). Wage mobility of undocumented workers in the United States. International Migration Review, 29(1). 112-138. Van Der leun, J., & Kloosterman, R. (2006). Going underground: Immigration policy changes and shifts in modes of provision of undocumented immigrants in the Netherlands. Tijdschrift voor Economische en Sociale Geografie (Journal of Economic & Social Geography), 97(1), 59-68. Retrieved May 10, 2008, from EBSCO online database, Academic Search Premier http://search.ebscohost.com/login.aspx?direct=true&db=a ph&AN=19714375&site=ehost-live. Williams, W. (2006). Model enforcement of wage and hour laws for undocumented workers: One step closer to equal protection under the law. Columbia Human Rights Law Review, 37(3), 755-786. Retrieved May 10, 2008, from EBSCO online database SocINDEX with Full Text http://search.ebscohost.com/login.aspx?direct=true&db=si h&AN=20612965&site=ehost-live. Yamamoto, S. (2006). Legitimating informal economy: The role of intermediary in the case of Latino day laborers. Conference Papers -- American Sociological Association, 2006 Annual Meeting, Montreal. Retrieved May 10, 2008, from EBSCO online database SocINDEX with Full Text http://search.ebscohost.com/login.aspx?direct=true&db=si h&AN=26642684&site=ehost-live

Suggested Reading Bano, B. (2006). Ten ways to protect undocumented migrant workers. International Journal of Migration, Health & Social Care, 2(1), 66. Retrieved May 10, 2008, from EBSCO online database SocINDEX with Full Text http://search.ebscohost.com/login.aspx?di rect=true&db=sih&AN=21294061&site=ehost-live Friedmann, J. (1986) The world city hypothesis. Development and Change 17(1): 69-84. Gilbert, E. (2007). Leaky borders and solid citizens: Governing security, prosperity and quality of life in a North American partnership. Antipode, 39(1), 77-98. Retrieved May 10, 2008, from EBSCO online database Academic Search Premier http://search. ebscohost.com/login.aspx?direct=true&db=aph&AN=23849803&site=ehost-live. Goldfarb, H. (2005). The undocumented worker: Fuller, Holmes, and the Bush proposal within immigration and labor law jurisprudence. University of Florida Journal of Law & Public Policy, 16(1), 179-201. Retrieved May 10, 2008, from EBSCO online database Academic Search Complete http://search.ebscohost.com/login.aspx?direct=true&db= a9h&AN=16648805&site=ehost-live. Kaushal, N. (2006). Amnesty programs and the labor market outcomes of undocumented workers. Journal of Human Resources, 41(3). 631-647. Retrieved May 10, 2008, from EBSCO online database Business Source Premier http://search.ebscohost.com/login. aspx?direct=true&db=buh&AN=22124116&site=ehost-live Lee, S. J. (2006). Why immigration reform requires a comprehensive approach that includes bothlegalization programs and provisions to secure the border. Harvard Journal on Legislation, 43(2), 267-286. Retrieved May 10, 2008, from EBSCO online database

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SocINDEX with Full Text http://search.ebscohost.com/login.aspx?direct=true&db=si h&AN=21560399&site=ehost-live. McFadyen, D. (2007). The migrants will be heard: A 40th anniversary conversation with Rubén Martínez. NACLA Report on the Americas, 40(2), 5-10. Retrieved May 10, 2008, from EBSCO online database Academic Search Premier http://search.ebscohost.com/ login.aspx?direct=true&db=aph&AN=24225594&site=ehost-live. Reyes, R. (2007, December 28). Time to dispel those immigrant myths. USA Today. P. 9A. Retrieved May 10, 2008, from EBSCO online database Academic Search Premier http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=J0E234209109307 &site=ehost-live Thornburgh, N. (2006). Inside the life of the migrants next door. Time, 167(6), 34-45. Retrieved May 10, 2008, from EBSCO online database Academic Search Premier http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=19551272&site=e host-live.


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Terms & Concepts

AFL-CIO: The national umbrella organization of labor in the United States formed in 1955. The acronym stands for American Federation of Labor– Congress of Industrial Organizations. Agency Role of Management: A theory that states management’s principal obligation is to further the interest of company’s owners. Aggregate Demand: The level of output of goods and services consumers purchase with the wages earned producing them. Aggregate Supply: The sum of all goods and services businesses bring to the marketplace. Agrarian: A community in which most people own a small portion of land which they farm for a living. Amnesty: A blanket legal recognition that a person or group of persons is permitted to reside within a nation’s borders without fear of deportation to their home country. Arational Organization Theory: Emphasizes the primacy of organizational effectiveness in meeting internal or external needs and is considered to be a social-political institution with formal and informal obligations to a set of diverse constituents. Assembly Line: A manufacturing process where products are constructed in a sequential manner. The moving assembly line, developed by Henry 176


Ford, takes the assembly line one step further by putting the products being produced on a conveyor belt and pushing the assembly process to match the speed of the moving line. Asylum: The granting of an individual or group of individuals who have fled their home country because of violence or persecution the right to remain within another country permanently, rather than return to their home country. Autonomy: Independence. The ability to choose how to do one’s own work even if the work goals are actually set by someone else. Behaviorism: A psychological theory that believes all mental states, personal attributes, and traits can be reduced to statements of observable behaviors. Blue Collar Workers: Manual laborers, skilled and unskilled, who earn an hourly wage doing factory work, construction, maintenance and repair, etc. The term implies membership in the working class. It does not apply to service industry workers. Bureaucracy: An organizational structure characterized by the specialization of functions, fixed rules, and hierarchical control. Capital Venture: An adventure or activity pursued by a person or persons who wish to expand their presence in a market but do not have adequate funding. They will form a corporation; partnering with people who are able to fund the activity privately. Capitalism: The economic system in which individuals or organizations own and use wealth to earn income and to sell and purchase labor for wages with little or no government control. Market forces regulate the economy, thus, prices and profit determine where and how resources are used and allocated. Citizen: An individual born in a given country or whom emigrates to another country and formally pledges his or her allegiance to another country and its laws and customs. Closed Shop: Hourly wage-earners have to belong to a union in order to work at a plant or facility organized by one. The Social Organization of Work

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Collective Bargaining: Negotiations over wages, hours, working conditions, and benefits conducted by authorized union representatives and company management. Contradictions of Capitalism: Karl Marx theorized that capitalism had at least two inherent contradictions. The first is that competition in a free market is undermined by the accumulation of wealth which allows larger companies to gobble up smaller companies and effectively drive out competition. The second is that the capital class has the goal to get higher profits and they can only do this in the long run by driving down the wages of the working class. This ultimately impoverishes the working class and shrinks the ability of the class to purchase the products they work to produce. Coping: Constantly changing cognitive and behavioral efforts to manage specific external and internal demands. Corporation: An organization that legally has various rights and duties such as entering into and honoring contracts. Countervailing: To act against with equal force or influence. The labor unions had created an opposing force to the power of the corporations because employees are an integral part of most corporations. Culture: The shared perceptions of the values, goals, and beliefs of the organization. Day Laborer: An individual who secures employment on a daily, ad hoc basis, often as a manual laborer. Demand-Deficient Unemployment: Joblessness directly attributable to economic slowdowns. Deportation: The legal process by which an individual not authorized to live in one country is forcibly removed from that country and returned to their country of birth. Deregulation: Removing government restrictions from an industry or sector to allow for a free or more efficient marketplace. Deregulation assumes the market place is structured as a free market; often ignoring the protections corporations have created to favor themselves (and destroying the ability of the free market to function as such).

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Deskilling: The reduction of a complex manufacturing process into a series of simple tasks unskilled labor can perform. Developing World: While no strict definition of developing world exists, the term generally refers to countries with some or all of the following: low Gross Domestic Products, low standards of living, high poverty, low infrastructure, political instability. None of these factors should be seen as definite however; they should be seen as potential indicators of a developing country. Division of Labor: An approach to organizational management characterized by specialized job tasks. Double-day: Social research shows that when many women return to work after they have a child they begin to work the equivalent of two fulltime jobs; a job at home and a job at work. Women are primary caregivers, manage children’s daycare, schooling, medical care, and other appointments. Research shows that after the birth of a child the amount work done by men largely remains unchanged. Downsizing: “The planned elimination of positions or jobs designed to improve organizational efficiency and effectiveness“ (Pinsonneault& Kraemer, 2002). Eclectic: Selecting what appears to be the best of various theories and ideas and combining them in a new way. Efficiency: The ratio of total input to effective output. Employee Turnover: An employee’s voluntary decision to leave an organization. It is measures in the percentage of workers who have to be replaced in a given period of time. To arrive at this percentage, divide the number of leavers into the number of total employees. Equilibrium: When demand exactly equals supply. Expectancy-Value Theory: States that the decision to join a union is a rational one made by carefully weighing the perceived costs and benefits of membership. External Workplace Factors: Factors that create dissatisfaction or satisfaction that cannot be controlled by management. (Remember these can be either tangible or intangible). The Social Organization of Work

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Family Capitalism: For-profit enterprises owned and operated by people related by kinship to each other. Financialization: The management of corporations for the express purpose of generating the largest possible return on investment. Formal Economy: The formal economy refers to official financial activity that is measured and recognized by a nation’s government. Franchise Tax: Also called a margin tax. A tax usually paid to a state in which a company is doing business. The franchise or margin tax can be based on a number of different items. The most common basis for franchise taxes are gross profits (revenue less direct cost of good or payroll), value added to raw materials through manufacturing, or the value of inventories. Frictional Unemployment: A type of unemployment temporary in nature where workers are searching for a new job, undergoing training, etc. Fringe Benefits: Forms of compensation other than cash payments. These include insurance, retirements, memberships, and stock as an example. Frustration-Aggression Theory: In psychology, the idea that anger and resentment build when someone is repeatedly prevented from attaining a goal. Applied to organized labor, it explains why workers initially join unions and why, when disillusioned with them, they quit or refrain from participating. Full Employment: The point in a national economy when every available worker, both skilled and unskilled, earns a steady wage from the most productive work they’re capable of doing. What residual unemployment that does exist is entirely frictional in nature. Gender Division of Labor: The practice of directing men and women to certain tasks and forbidding them from performing other tasks based on their gender. Gender: Gender is the parallel and unequal division between masculinity and femininity in society. Gender, unlike sex, is socially constructed division and extends to family roles, social roles, and the division of labor.

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Glass Ceiling: is a situation where an otherwise qualified candidate is denied the opportunity for advancement based on race, gender, or some other socially constructed characteristic. Global Poverty: The most common measure of global poverty as set by the World Bank uses a standard of habitually living on less than $2 a day. Globalization: Globalization is the process of businesses or technologies spreading across the world. This creates an interconnected, global marketplace operating outside constraints of time zone or national boundary. Although globalization means an expanded marketplace, products are typically adapted to fit the specific needs of each locality or culture to which they are marketed. Guest Worker Program: A program by which undocumented workers and others are allowed to work for a given period of time in another country, on the condition that they will either leave when the program period ends, or seek formal citizenship. Homogeneous: Everyone is the same or similar in values, views, and beliefs. Illegal Immigrant: An individual, either an adult or a child, who is not legally authorized to enter or remain in a country that is not their country of origin. Income Tax: A federal, state, or city tax paid by companies based on a companies net operating income (profit). Income: Payments an individual receives from a job or transfer program during a calendar year. Industrial Revolution: The technical, cultural, and social changes that occurred in the Western world in the 18th and 19th centuries. Informal Economy: The informal economy refers to economic activity that occurs outside of the formal economy; it is unofficial, unregulated by the government, and un-taxed. Information Technology: The use of computers, communications networks, and knowledge in the creation, storage, and dispersal of data and information. Information technology comprises a wide range of items and abilities for use in the creation, storage, and distribution of information. The Social Organization of Work

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Innovations: Products or processes that are new or significant improvements over previous products or processes that have been introduced in the marketplace or used in production. Institutional Capitalism: For-profit enterprise where ownership is shared by pension funds and other large-asset investors who exercise a fair amount of influence in matters relating to the firm’s management and performance. Instrumental Network: Informal channels of communication within an organization through which information, resources, expertise, advice and political access are exchanged. Interactionist Theory: States that social attitudes formed and reinforced by primary groups – family, friends, and neighbors – determine the extent of someone’s involvement in a union. Internal Workplace Factors: Factors that create dissatisfaction or satisfaction within the work environment that are controlled by management. (Remember these can either be tangible or intangible). Involuntary Unemployment: In Keynesian economics, the gap between the number of people working when the labor market is in equilibrium and the total number of people available to work. Job Segregation: Job segregation is when a category of jobs is filled primarily by workers of a certain type. This includes tiered system where each tier, filled by a certain type of worker, offers unequal pay, responsibility, security, training, and mobility. Keynesian economics: An economic school of thought that pioneered the ideas and techniques of macroeconomic analysis by its study of aggregate demand. It contends that a higher level of inflation is preferable to an unacceptably high rate of unemployment in the short run. Labor: Physical, mental or creative efforts exerted to complete a task or project. Liberal Marketplace: An economic market where individuals are free to pursue their own economic and creative interests and supply and demand is not regulated.

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Lockout: Occurs when employers deny non-union along with union workers access to their workplace to put pressure on would-be strikers. Managerial Capitalism: Enterprise conducted in a manner deemed prudent and profitable by a firm’s senior executives and investor-owners have a largely nominal say. Mass Layoff: A U.S. Bureau of Labor Statistics classification assigned whenever fifty or more of a company’s employees file an unemployment insurance claim over a period of five weeks and collect benefits for a period of at least 30 consecutive days. M-Firm: An abbreviated name for a corporation organized according to product lines or profit centers, the managers of which are given considerable autonomy by senior executives. Microcredit: Microcredit is a small loan given to a poor client. Microfinance Institution (MFI): A microfinance institution is any entity that provides microfinance services to clients. Microfinance: Microfinance generally refers to a variety of banking and lending activities geared toward very low-income clients, typically in developing nations. Micro-Multinational Company: Small companies that operate in more than one country. Migrant Worker: A legal or illegal laborer, often in agribusiness and the trades, that travels within a country seeking short-term or seasonal work. Minimum Wage: A federally, or state, set rate that represents the lowest amount that an employer can pay an employee for a hour of work. Monetarism: A school of economic thought that believes the only means of influencing economic activity in the short term lies in controlling the quantity of money in circulation. Doing this causes prices to rise or fall until market equilibrium is reestablished. Multinational Corporation: A business that has been granted corporate articles by a state or nation and operates in more than one country. Network: A set of computers that are electronically linked together. The Social Organization of Work

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Non-Accelerating Inflation Rate of Unemployment (NAIRU): The lowest possible unemployment rate that can be achieved without triggering an unacceptably high inflation rate. Oligopoly: A market composed of a handful of very large competitors each of which exerts an appreciable but non-controlling influence. Open Shop: Hourly wage-earners do not have to belong to a union in order to work at a plant or facility organized by one. Organizational Culture: The basic shared assumptions, beliefs, norms, and values held by a group of people. These may be either consciously or unconsciously held. Organizational Effectiveness: The extent to which, through its actions, an organization creates socially acceptable outcomes. The loyalty of employees and stakeholders or the approval of regulators and the general public can all factor into organizational effectiveness. Organizational Efficiency: A set of primarily technico-economic criteria which evaluates how well an organization eliminates waste and redundancies and how fast and cost-effectively it produces goods or provides services. Organizational Slack: Personnel, capital, and other organizational resources in excess of the operational requirements held in reserve to meet unexpected challenges. When these resources can be easily marshaled and redeployed, this slack is “available” and an asset. When they are structurally too embedded to be readily retrieved and redirected, this slack is “absorbed” and considered a liability. Outsourcing: A business arrangement in which one company provides services for another company that could also be or usually have been provided in-house. During the past two decades most services are outsourced to foreign companies where the employees are paid lower wages due to their country’s lower economic status. Person to Person Lending: Person to person lending refers to a type of microfinance in which individual lenders directly choose to fund individual microloan recipients. Personal Computer: A relatively compact, microprocessor-based computer designed for individual use. Business applications of personal computers 184


include word processing, spreadsheets, graphic design, desktop publishing, database management, and personal productivity. Phillips Curve: The graphical representation of the inverse relationship between the rates of change in wages and unemployment. Piecemeal: A manner of paying workers for the number of units they produce in stead of a salary or an hourly wage. Post Industrial Society: Post industrial society has been described as a radical transformation of economic and political structures promoting a dramatic shift in societies in which theoretical knowledge was central and experts would be the primary advisors to government and business. Post Industrial Work: Post industrial work can be described as what people choose to spend their time on and enjoy doing. Poverty: Poverty indicates a financial condition in which a person or family’s basic living expenses are not met or just barely achieved. Power: The ability to control the behavior of another person or thing. Public Good: A product or service that provides non-excludable and nonrival benefits to all people in the population. Race: A social construct that identifies groups of people by certain shared characteristics. More often then not these characteristics are phenotypical, that is differences in color of skin, facial features, and hair texture. Race as a category does not reflect actual genotypical differences (gene differences). Rational Organization Theory: The view that organizational efficiency ultimately determines success or failure. The theory holds that success is more likely if the structures and strategies adopted to meet changing environmental conditions do not adversely affect control and coordination within the organization. Re-segregation: An occurrence when a large number of women or other minorities move into an occupation. White men began to flee the occupation, prestige drops, wages drop, and the wage gap is perpetuated. Restricted Stock: A form of compensation that allows an employee to receive a grant of company stock when certain performance thresholds have been met. The Social Organization of Work

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Restructuring: The reorganization of operational procedure and processes; the consolidation of operating units; or the reduction of a firm’s bureaucracy, hierarchical management structure, or scope of overall operations. Salary Sacrifice: The idea that wages are surpressed when benefits to employees are increased. Scientific Management: An approach to replace management-worker conflict and low worker productivity with scientific re-design of supervision and work. Scientific management studies work processes by breaking them down into smaller task, observing, timing, and re-engineering work in order to create the single best way to accomplish a task. Self-Actualization: The full attainment of one’s potential. Sexual Orientation: An attraction or affection for others. Sexual orientation may be towards the opposite sex (heterosexuality), same sex (homosexuality), both sexes (bisexuality), and neither (asexuality). Some sociologists believe sexuality to be genetic while others label all types of sexual orientation, including heterosexuality, as socially constructed. Society: A group of individuals united by values, norms, culture, or organizational affiliation. Sociology: The scientific study of human social behavior, human association, and the results of social activities. Specialization: A specific form of division of labor where workers are trained to perform specific repetitive tasks. By specializing in one area, a worker can be aligned with other specialists and increase productivity in the manufacturing process. Status Quo: The current situation. A preference for leaving things as they are and resisting change. Stipend: A fixed amount given to an employee to cover certain expenses related to their job in the company. Stock Options: A form of compensation that allows an employee to buy stock in the future at a guaranteed strike price. Structural Unemployment: Long-term joblessness attributable to the irreversible economic decline of entire industries. 186


Supply Chain: A network of organizations involved in production, delivery, and sale of a product. The supply chain may include suppliers, manufacturers, storage facilities, transporters, and retailers. Each organization in the network provides a value-added activity to the product or service. The supply chain includes the flow of tangible goods and materials, funds, and information between the organizations in the network. Sustainable Development: To meet the needs of the present without compromising the ability of future generations to meet their needs (Brundtland, 1987). Synergy: The process by which the combined product resulting from the work of a team of individuals is greater than the results of their individual efforts. Systems Theory: A cornerstone of organizational behavior theory that assumes that the organization comprises multiple subsystems and that the functioning of each affects both the functioning of the others and the organization as a whole. Tariffs: A tax imposed on products imported from another country. Technology: The application of scientific methods and knowledge to the attainment of industrial or commercial objectives. Technology includes products, processes, and knowledge. Technostructure: A term used in management theory and economics to denote an industry’s infrastructure: i.e. participating companies’ plant, equipment and human capital. Telecommuting: A situation in which an employee works outside the traditional office or workplace – typically at home or on travel. Transmission of data, documents, and communication occurs via telecommunications or network technology. Also referred to as telework. Theory X: An approach to management based on the assumptions that most people dislike work and will avoid it as much as they can; need to be continually controlled, coerced, and threatened in order to do their work; and have little or no ambition, try to avoid responsibility, and seek security above other considerations.


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Third-World: Historically, third-world referred to countries that were not part of Western economically developed countries (first-world) or the Cold War Communist countries (second-world). Today, the term is associated with underdeveloped countries throughout the world. Transfer Payments: Payments given to an individual from income generated elsewhere. Usually associated with welfare programs. Trickle-Down Theory: Also known as Supply Side Economic Theory. This is an economic theory which states that increases to the rich are good for the poor because the rich will spend more money; thereby energizing the economy…and the wealth will eventually trickle down to benefit the poor. U-Firm: An abbreviated name a corporation where control is exercised in a top-down manner via a hierarchical management structure. Underemployment: Working only occasionally or steadily for less than 20 hours a week for a comparatively low wage often at a job for which one is overqualified. Undocumented Workers: Adults who are part of a nation’s workforce, but whom lack the proper paperwork and recognition by the local, state and federal government of their adopted country. Utility-Maximizing Behavior: The assumption made by economists that because people are rational, they will pursue a course of action that best satisfies their needs and interests. Vertical Engineering: A manufacturing process where a single company owns or controls the vendors that supply parts for the manufacturing process. Virtual Team: A team in which the members are geographically or organizationally dispersed. Virtual team members interact primarily through communication technology and may never meet face-to-face. Virtual Workplace: An organization in which employees work remotely from each other and their manager. Workers in a virtual workplace typically telecommute. Visa: A legal document allowing an individual to live and work in a host country for a certain predetermined period of time. 188


Wage Gap: A term that signifies differences in pay based on race and gender for like work. Wealth: The value of everything an individual owns less what the individual owes. Welfare Capitalism: The practice of including fringe benefits that extend an employee’s social safety net or improve his or her quality of life as a standard part of a corporation’s remuneration package to promote workers’ loyalty and commitment. White Collar Workers: Salaried office workers in professional, managerial, administrative, or clerical positions. Work Life: Work Life can be described as time that employees spend in paid work activities. Work Teams: Groups of individuals who work cooperatively to achieve common goals through completion of job tasks that are specific to their team. Work-Life Balance: Work Life Balance can be described as issues influencing the integration of paid work and the workers’ life spent out of work, now often referred to as ‘work-life balance’, which have now mainstreamed into a relevant discourse between employers and unions, and in other facets of organizational culture. Workplace: The physical area in which an employee performs his/her primary tasks. One’s workplace includes where the work will physically be done, the technology necessary to enable the worker to perform his/her tasks, the physical environment necessary to support that work (e.g., office layout, furniture, equipment, ambient conditions), and the technology or methods by which workers to interact to exchange information. Workstation: A desktop computer that is connected to a network. Workstations are also sometimes referred to as clients or nodes.


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Contributors

PD Casteel has his Master’s degree in Sociology and is a Ph.D. candidate at the University of Texas at Dallas. He works as a business executive and writer in the Dallas area. Samantha Christiansen is a historian of modern South Asia, specializing in social movements and student politics. Her work has specifically endeavored to illustrate the connections between radical politics in the developed and developing world, both in a historical context and modern setting. She is affiliated with Northeastern University in Boston, MA, Independent University Bangladesh in Dhaka, Bangladesh, and is a fellow of the American Institute of Bangladesh Studies. Matt Donnelly received his Bachelor of Arts degree in Political Science and a graduate degree in Theology. Currently a graduate student in history at the University of Massachusetts-Boston, he also is the author of Theodore Roosevelt: Larger than Life, which was included in the New York Public Library’s Books for the Teen Age and the Voice of Youth Advocates’ Nonfiction Honor List. A Massachusetts native and diehard Boston Red Sox fan, he enjoys reading, writing, computers, sports, and spending time with his wife and two children. Francis Duffy is a professional writer. He has had 14 major marketresearch studies published on emerging technology markets as well as

190


numerous articles on Economics, Information Technology, and Business Strategy. A Manhattanite, he holds an MBA from NYU and undergraduate and graduate degrees in English from Columbia. Simone I. Flynn earned her Doctorate in Cultural Anthropology from Yale University, where she wrote a dissertation on Internet communities. She is a writer, researcher, and teacher in Amherst, Massachusetts. Sharon Link is an educator, presenter, and mother of a child with autism. She has worked extensively in public education and has researched education and its relationship to autism disorders and other disabilities for the last ten years. Dr. Link currently is the Executive Director for Autism Disorders Leadership Center, a non-profit research center and is co-founder of Asperger Interventions & Support, Inc. a professional development center. Both organizations are education and research centers seeking to improve education by creating a system of diversity and inclusion in America’s schools. Sherry Thompson is a recent graduate from the University of Utah. She has written articles on work-place satisfaction, employee turnover, and the impacts of the reauthorization of the Higher Education Act. Her other areas of interest include ethics, agentic shift, and student supports in higher education. Ruth A. Wienclaw holds a Doctorate in Industrial/Organizational Psychology with a specialization in Organization Development from the University of Memphis. She is the owner of a small business that works with organizations in both the public and private sectors, consulting on matters of strategic planning, training, and human/systems integration.


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Index

A Agency Role of Management, 51 Aggregate Demand, 154 Aggregate Supply, 154 Agrarian, 29, 68, 69 American Federation of Labor-Congress of Industrial Organizations (AFL-CIO), 93, 94, 105 Amnesty, 163, 171 Assembly Line, 5, 9, 10, 12, 17, 90 Asylum, 173 Autonomy, 11, 30, 80

B Behavioral Theory, 80 Behaviorism, 80 Bell, Daniel, 27, 28 Blue Collar Workers, 93 Bonuses, 103 Bureaucracy, 22, 48, 49, 95

C Capitalism, 5, 6, 12, 18-24, 27, 28, 38, 44, 46, 52, 53, 70, 88, 90, 93, 109, 148 192

Capital Venture, 68 Citizen, 40 Classical Labor Theories, 19 Closed Shop, 94 Collective Bargaining, 91, 93 Commissions, 103 Contradictions of Capitalism, 6, 12, 27 Cooperative Model, 60 Corporate Social Responsibility, 67, 72, 73, 74 Countervailing, 71, 158

D Demand-Deficient Unemployment, 151 Department of Labor, 99, 112 Deportation, 164 Deregulation, 71 Deskilling, 90 Developing World, 56, 58, 59, 61, 64 Diversity, 10, 28, 50, 73, 82, 110-115, 117-119 Division of Labor, 16-24, 111 Double-day, 115, 116 Downsizing, 31, 33, 141-147, 149 Durkheim, Emile, 21 Sociology Reference Guide

E Employee Turnover, 86 Equilibrium, 154, 155 Expectancy-Value Theory, 88 External Workplace Factors, 79

F Fair Labor Standards Act, 99, 100 Family Capitalism, 47, 48 Financialization, 52 Ford, Henry, 5 Fordism, 5, 8, 9, 10, 14 Formal Economy, 58 Frictional Unemployment, 152, 158 Fringe Benefits, 52, 99, 101, 103, 105, 106 Frustration-Aggression Theory, 89 Full Employment, 148, 152, 153, 156, 158

G Gender Division of Labor, 16, 18, 19 Glass Ceiling, 106, 115 Globalization, 13, 17, 31, 42, 123, 135, 138 Grameen Model, 60 Great Depression, 12, 70, 172 Guest Worker Program, 163

Information Technology, 30, 135, 137, 163, 167 Innovations, 9 Institutional Capitalism, 51 Instrumental Network, 145 Intellectual Stimulation, 84 Internal Workplace Factors, 79 Involuntary Unemployment, 152

J Job Segregation, 110-114

K Keynesian Economics, 154, 155 Keynes, John Maynard, 154

L Liberal Marketplace, 44 Lockout, 91, 92

M

Halliburton Corporation, 41, 42 Home Office, 129 Homogeneous, 76, 77, 109, 118 Hot Desking, 126 Hoteling, 126

Macroeconomics, 154 Managerial Capitalism, 49, 52 Marx, Karl, 12, 21, 38 Mass Layoff, 142 Microcredit, 56, 57 Microfinance, 56,-64 Microfinance Institution (MFI), 60, 61 Microfinance Models, 60 Minimum Wage, 99, 100, 168 Mixed Model, 60 Monetarism, 155

I

N

Illegal Immigrant, 161-165, 169-171 Incentives, 103 Income Tax, 41, 100, 104, 125 Individualized Consideration, 84 Industrial Revolution, 90 Informal Economy, 58, 167

Non-Accelerating Inflation Rate of Unemployment (NAIRU), 156

H


O Oligopoly, 51 Open Shop, 94 193

Organizational Culture, 78, 85, 134 Organizational Efficiency, 17, 147 Organizational Slack, 142, 146 Outsourcing, 13, 143

Structural Unemployment, 151, 158 Supply Chain, 10, 12, 38, 41 Sustainable Development, 67 Synergy, 133, 137, 139

P

T

Participative Leadership, 81 Personal Computer, 123, 124, 135, 136 Person to Person Lending, 60, 61 Phillips Curve, 155, 156 Piecemeal, 4, 99 Post-Fordism, 10, 11, 14 Post Industrial Society, 27, 28, 35 Post Industrial Work, 29, 30, 32 Poverty, 38, 59, 63, 104, 105 Profit Sharing, 103 Public Good, 68

Tariffs, 42, 93 Taylor, Frederick Winslow, 4, 20 Taylorism, 5, 6, 7, 14 Telecommuting, 31, 124-130, 136 Teleworking, 135 Theory X, 127 Tips, 103 Trait Theory, 80 Transfer Payments, 104 Transformational Leadership, 81-83, 85 Trickle-Down Theory, 71

R

U

Race, 105, 110, 114 Re-segregation, 115 Restricted Stock, 101 Restructuring, 32, 33, 142, 147, 172

Underemployment, 152, 158 Undocumented Labor, 167, 168, 170 Utility-Maximizing Behavior, 157

S Salary Sacrifice, 103 Scientific Management, 5, 6, 8, 20 Self-Actualization, 82, 84, 85 Sexual Orientation, 110, 111, 112 Situational Leadership, 81 Smith, Adam, 12, 20 Social Responsibility, 43, 67, 73 Sociology, 16, 22, 23, 24, 111, 153 Specialization, 9, 11, 13, 16, 17, 20, 21, 23, 28 Stagflation, 155 Status Quo, 77, 167 Stipend, 102 Stock Options, 52, 99, 100, 101, 106 Strikes, 91, 92, 94

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V Vertical Engineering, 9 Virtual Team, 135 Virtual Workplace, 139

W Wage Gap, 105, 106, 113-115 Wealth, 38, 56, 69, 70, 72, 98, 99, 104, 158 Weber, Max, 22, 23 Welfare Capitalism, 47, 148 White Collar Workers, 143 Worker Exploitation, 167 Work Life, 128 Work-Life Balance, 29 Workplace Satisfaction, 78 Workstation, 126, 136 Work Teams, 23, 24


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