Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 16 The Changing Workplace

16-2 Ford Motor Company o Ford sold 15.5 million Model T’s from 1908 to 1926 o In 1927 failure to observe market trends forced the plant to close for 7 months while the Model A was designed o Henry Ford was a obstinate man, obsessed with power, iron-willed, dictatorial, and cynical about human nature

16-3 Ford Motor Company o Henry Ford’s treatment of his employees led to unionization in 1941 o In the early 1980s the firm suffered disastrous losses due to heightened international competition o Ford tried to change the company culture

16-4 Ford Motor Company o Taurus rejuvenates profits from 1985 to 1995 o 1994 – Chairman Alexander Trotman instituted a radical change program to prepare for an even more competitive global car market o 1999 – a new CEO, Jacques Nasser, attempts to remake Ford’s culture yet again

16-5 Ford Motor Company o 2000 – Ford Explorer tire failures cause disaster o 2001 – Henry Clay Ford, Jr. restructures o 2006 – New CEO Alan Mulally announced the need for one more reorganization

16-6 External Forces Changing the Workplace o Demographic change o Technological change o Structural change o Competitive pressures o Reorganization of work o Government intervention

16-7 Demographic Change o Population dynamics slowly but continuously alter labor forces o Overall labor force growth is slowing o The number of workers in some demographic categories is growing faster than in others, producing incremental but significant changes

16-8 Table 16.1 – Three Snapshots of the American Labor Force (in thousands)

16-9 Technological Change o Technical change has many impacts on work o It affects the number and type of jobs available o Automation has a turbulent impact on employment o Automation causes significant job loss in less-skilled manufacturing and service occupations

16-10 Structural Change o Structural change is caused by processes of job creation and job destruction that continuously alter the mix of productive work in every economy o Three long-term structural trends: o The agricultural sector has declined from predominance to near insignificance as an occupation

16-11 Structural Change o The percentage of workers employed in the goods- producing sector is now in long-term decline o There is explosive growth in the service sector o Structural change is a critical factor in the decline of labor unions

16-12 Figure Historical Trends for Employment by Major Industry Sector: 1800–2018

16-13 Table Comparative Employment Structures in Nations at Varying Stages of Development

16-14 Competitive Pressures o Recent trends have intensified competition for American companies o Customer demand o Deregulation of large industries o Global competition o By global standards, American workers are extremely expensive o Companies in some industries now contract to have manufacturing done in a foreign country

16-15 Table 16.3 – International Wage Comparison

16-16 Reorganization of Work o Corporations alter business processes as they adjust to environmental changes, primarily competition o As transport costs have fallen, manufacturers more often separate production from consumption by sending their manufacturing to low-cost countries, then shipping products back to customers

16-17 Reorganization of Work o Because of communication technology, service work can now be sent to low-cost locations o Trade in services between nations is growing, creating fears about job loss from outsourcing

16-18 Reorganization of Work o Outsourcing: The transfer of work from within a company to an outside supplier o Offshoring: The transfer of work from a domestic to a foreign location or to a foreign supplier

16-19 Figure Quarterly Private Sector Job Gains and Job Losses: 1993–2010

16-20 Development of Labor Regulation in the United States o Historically, a strong laissez-faire current in American economic philosophy made governments at all levels reluctant to interfere with the employment contract o Today, government intervention is extensive and growing, but this is a twentieth-century trend

16-21 Liberty of Contract o Before the 1930s, government intervention on behalf of workers was very limited o In the late 1800s and early 1900s, strong majorities on the Supreme Court upheld the liberty of contract doctrine o The great flaw in the liberty of contract doctrine was that it assumed equal bargaining power for all parties, whereas employers unquestionably predominated

16-22 Waves of Regulation o First wave – Federal workplace regulation in the 1930s, which established union rights o Second wave – Between 1963 and 1974, moved federal law into new areas, protecting civil rights, worker health and safety, and pension rights

16-23 Waves of Regulation o Third wave – Between 1986 and 1996, again broadened the scope of federal law to address additional, and somewhat narrower, employment issues

16-24 Figure A Chronology of Major Workplace Regulations

16-25 Erosion of the Employment-at-Will Doctrine o Employment-at-will was traditionally defined as an employment contract that could be ended by either party without notice and for any reason – or for no reason o Federal and state laws take away the right to fire employees for many reasons, including union activity, pregnancy, physical disability, race, sex, national origin, and religious belief

16-26 Erosion of the Employment-at-Will Doctrine o State courts have introduced three common-law exceptions to firing at will: o Employees cannot be fired for complying with public policy o Employees cannot be fired where an implied contract exists o Courts in 11 states limit the employer’s ability to fire when an implied covenant of good faith is breached

16-27 Work and Worker Protection in Japan o Elsewhere in the developed world, workers benefit from similar and even greater welfare guarantees than in the U.S. o Japanese males, called salarymen, enjoy virtual lifetime employment in major firms o Japanese workers are very committed and sometimes work themselves to illness or death

16-28 Work and Worker Protection in Japan o In Japan, the centuries-old Confucian tradition of harmony in relationships prevents a labor- management fissure, therefore unions never grew strong and unified

16-29 Work and Worker Protection in Europe o In the aftermath of World War II, many countries adopted a social welfare model of industrial relations to protect their populations against the ravages of depression and unemployment o Forces of global competition now strain this social welfare model

16-30 Work and Worker Protection in Europe o European workers are so expensive to employ that job- creating investments go elsewhere o In much of Europe, the results of lavish social safety nets and protections are persistent, high unemployment and slowed economic growth

16-31 Labor Regulation in Perspective o The bare minimum for labor market regulation is compliance with four core labor standards set forth in international labor conventions o Eliminate all forced or compulsory labor o Abolish child labor o Eliminate employment discrimination o Guarantee the right of collective bargaining

16-32 Figure The Tradeoff in Labor Regulation

16-33 Concluding Observations o The combined impact of the six forces changing the workplace creates both uncertainty and opportunity o Demographic and structural changes are uncontrollable but also slow and predictable

16-34 Concluding Observations o Technological change is a disruptive force but it has always created new jobs to replace the ones it destroys o Competition and work reorganization are reshaping labor markets everywhere o Experience suggests that workers fortunes will be mixed