A

WORK, WORKERS, AND THE
WORKPLACE

Hours

During the 1990s, Americans became the workaholics of the world. Between 1977 and 1997 the average workweek among salaried employees working at least twenty hours lengthened from forty-three to forty-seven hours. During that same twenty-year period, according to James T. Bond, vice president of the Families and Work Institute, the number of workers putting in fifty or more hours per week increased from 24 percent to 37 percent. Americans who once viewed the work habits of the Japanese with horrified awe became the people working the longest hours in the industrial world. The average American worked the equivalent of eight weeks a year longer than the average Western European. In Norway and Sweden, for example, workers commonly receive between four and six weeks of vacation and up to a year of paid parental leave. In France, a maximum workweek of no more than thirty-five hours, promoted by the socialist government of Prime Minister Lionel Jospin as a means of reducing unemployment, is becoming the law of the land. The longer hours Americans spend on the job, however, have thus far translated into lower unemployment rates and greater prosperity in the United States. Approximately 10 percent unemployment was the norm across Western Europe. In the United States, by contrast, unemployment hovered at around 4.2 percent and, as of January 2000, economic expansion had continued for an unprecedented 106 consecutive months. Work and money came to occupy a greater portion of American life. The gains in income and prosperity seemed clear, but the costs to family, children, and health were only beginning to be sorted out by the end of the decade. According to Ellen Galinsky, president of the Families and Work Institute, in Ask the Children: What America's Children Really Think About Working Parents (1999), most children cared less about the hours their parents worked than about the work-related stress that made parents tired, impatient, and irritable. Experts agree that the challenge American workers will face in the future will be to learn how to achieve a healthy balance in their lives by managing their time more efficiently at work, at home, and in between.

Wages

Although corporate profits and the stock market soared throughout the second half of the 1990s, the average American worker, including the white-collar middle manager and his or her family, did not consistently benefit from the boom. The gap between rich and poor grew steadily while the middle and working classes often endured economic stagnation. On average, median family income remained at approximately the same levels for twenty-five years, although there were many more two-income house-holds in the 1990s than during the mid 1970s. At the same time, real weekly wages have declined $23, or nearly 5 percent, since 1979. According to statistics compiled in 1994, fully 60 percent of American households were not keeping up with inflation. While the wealthy accumulated huge gains in the stock market, working-and middleclass Americans depleted their savings and ran up massive creditcard debt to compensate for stagnating wages. Of the income gains made between 1977 and 1990, 79 percent went to those already earning incomes in the top 1 percent. In the midst of unprecedented economic growth, a survey conducted by U.S. News & World Report in early 1996 found that only 22 percent of Americans believed the economy was expanding; 67 percent believed that it was either stagnating or declining.

Wealth

Throughout the 1990s executive pay and stock prices soared while wages slumped and jobs disappeared. As a result, average Americans worked longer hours, often at more than one job, just to keep their economic and financial heads above water. Government statistics compiled for the years 1995-1998, released in January 2000, require some revision ot this assessment. In the economic boom of the mid 1990s, American families experienced a 17.6 percent increase in wealth. The net worth of American families rose to $71,600 in 1998, up from a net worth of $60,900 in 1995 after adjusting for inflation. At the same time, however, the statistics mark a decline of 20 percent in the median net worth of families earning $25,000 a year or less. The poorest families, those earning $10,000 or less annually, suffered a drop of 25 percent in net worth. By contrast, families earning between $50,000 and $99,999 enjoyed the largest increase in median net worth, a 20 percent jump to $152,000.

Casual Workplace

Casual dress, supposedly to improve workers' moods and hence increase their productivity, may have been a mistake. Companies are finding out that more-formal dress was a good idea after all. Yet, employees love casual-dress policies so much that 90 percent of American companies have adopted them, even if it is only on Fridays or for the summer. For employers, however, says Anne Pasley-Stuart, president of a human-resources consulting firm in Boise, Idaho, casual dress codes are "starting to cost a lot in terms of productivity and customer satisfaction." Managers are discovering that when employees dress casually, they also perform more casually in terms of the quality of their work, manners, and punctuality. Short of returning to formal business attire, many companies have now begun spelling out exactly what is acceptable and instructing managers to send home inappropriately dressed workers.

Disappearing Company Man

The old adage that quitters never prosper no longer applied in the 1990s. Based on a survey of resignation rates conducted by the Saratoga Institute, a workforce research company, approximately seventeen million Americans will quit their jobs in 2000 to take other positions for as much as a 10 to 20 percent increase over current salaries. On average, American companies will have to replace 14 percent of their current workforce in 2000. In the opinion of Stephen M. Pollan, coauthor with Mark Levine of Live Rich: Everything You Need to Know To Be Your Own Boss, Whomever You Work For (1998), the promise of more money is the principal motive for changing jobs. The "quit-to-win strategy," however, has a downside. "Jobhoppers," as they are called, have little chance of retiring with a company pension, and, in the event of an economic downturn, face the danger that the most recently hired and higher-paid employees will be the first fired. Companies, though, have also come to believe that a high turnover in their workforce is more cost-effective and profitable than giving large general raises, notwithstanding recruiting costs and hiring bonuses. Since 1991 corporate profits have risen on average 9.4 percent a year. During that same period companies have budgeted only 4 percent for annual merit and cost-of-living raises for salaried employees and slightly less for hourly workers. Large raises have gone only to a few indispensable employees who threaten to move to other companies. As a result, the take-home pay for the CEOs of large corporations rose by 13 percent a year during the 1990s. Since 1975, the ratio between the pay of CEOs and average American workers has risen from 41 to 1 to 225 to 1, according to compensation expert Graef S. Crystal, author of In Search of Excess: The Overcompensation of American Executives (1991). Economist Robert H. Frank of Cornell University concludes that "if you need to pay your top talent premium rates to keep them from going to the competition, it means you've got to keep the margins tight everywhere else." "To get a significant raise," says career counselor Leslie B. Prager, founder of the Prager-Bernstein Group, "you have to change jobs." As they abandoned their low-paying jobs and overcame their longstanding company loyalties, growing numbers of American workers in the 1990s were apparently coming to agree with this view.

American Economy

The decline in industrial jobs played a central role in the painful economic upheavals of the 1990s. In the place of industrial workers arose what management expert Peter Drucker called "knowledge workers." By 2000, approximately 33 percent of the American workforce fit this category. Unlike the previous transformation of the economy from agriculture to industry, new positions required education, sophisticated skills, and command of cutting-edge technology that average American workers lacked. Those unable to acquire the requisite training have been condemned to declining fortunes while the "knowledge workers" take home a growing share of income. As a consequence legions of American workers, left behind by the socalled knowledge revolution, have never recovered what they lost in jobs and income during the recession of 1990-1991. The victims of layoffs, mergers, buy-outs, and downsizing, these workers have either been forced to take jobs that pay anywhere from between a third to a half less than their previous income, or else to remain permanently unemployed. Those who have managed to keep their jobs or find new ones must still deal with an unremitting job insecurity that has persisted despite sustained economic growth. In such industries as banking, retail, and telecommunications—where job insecurity has become the norm—wages rise slowly, in part because workers are too fearful of losing their jobs to demand more money. "Economic theory tells us that ultimately workers are paid their just reward," contends Stephen Roach, chief economist of Morgan Stanley Dean Witter, adding that "in the '90s, that has not been the case." Instead, productivity gains of approximately 2 percent a year until 1995 were accompanied by a meager compensation growth of 0.6 percent. Corporations have not turned their massive profits into increased wages, but rather have built up large reserves of cash and spent more on equipment such as computers and software. "There has been an extraordinary decoupling between productivity growth and compensation growth," declared Lawrence Perlman, chairman and CEO of Ceridian Corporation, an information-services company based in Minneapolis. Whether the disparity between productivity and pay is a temporary or structural problem remains to be seen. Nevertheless, for now experts agree that in a nation where work and job title are highly valued commodities, unemployment or diminished earning power imposes heavy psychological as well as economic burdens. A diminished sense of self-worth and self-esteem frequently accompany unemployment. "What it takes today to regard yourself as successful," explained Stanford University economist Paul Krugman in 1996, "is increasingly out of reach." As Steven V. Roberts wrote in U.S. News & World Report: "working hard and going nowhere is threatening the American dream."