Peter Cappelli, director of the Center for Human Resources at the University of
Pennsylvania's Wharton School, says the brutal recession has prompted more
companies to create just-in-time labor forces that can be turned on and off like
a spigot. "Employers are trying to get rid of all fixed costs," Cappelli says.
"First they did it with employment benefits. Now they're doing it with the jobs
themselves. Everything is variable." That means companies hold all the power,
and "all the risks are pushed on to employees."
The era of the disposable worker has big implications both for employees and
employers. For workers, research shows that chronic unemployment and
underemployment cause lasting damage: Older people who lose jobs are often
forced into premature retirement, while the careers of younger people are
stunted by their early detachment from the working world. Even 15 years out
of school, people who graduated from college in a recession earn 2.5% less
than if they had graduated in more prosperous times, research has shown.
Temp employment in the U.S. fluctuates wildly, by design. The whole purpose
of bringing on workers who are employed by temporary staffing firms such as
Manpower (MAN), Adecco (ADO), and Kelly Services is that they're easy to shuck off when unneeded. While the number of temps fell sharply during the recent recession, the ranks of involuntary part-timers soared. The tally of Americans working part-time for economic reasons—that is, because full-time work is unavailable—has doubled since the recession began, to 9.2 million.
Companies that seized on the recession as an opportunity to make drastic
organizational changes for greater efficiency and flexibility aren't likely to
reverse those changes once the economy begins growing again, says David H.
Autor, a labor economist at Massachusetts Institute of Technology. In other
words, most of the jobs shipped to China will stay in China. And companies that
turned labor into a just-in-time, flexible factor of production won't return to
an old-fashioned job-for-life arrangement. "For the last 10 years, I and others
have been saying that these trends aren't just for a fringe workforce but
increasingly are for the mainstream," says Sara Horowitz, founder and executive
director of the Freelancers Union, a 130,000-member advocacy group for contract
workers. "This recession has shown us that the future is here."
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