The 'End Of Loyalty' And The Decline Of Good Jobs In America

TERRY GROSS, HOST:

This is FRESH AIR. I'm Terry Gross. Good jobs are getting harder to find in America. That's the starting point of the new book by my guest Rick Wartzman. By good jobs, he means jobs that offer a decent wage, job security, good benefits, including affordable health insurance and a safe way of having money set aside for retirement. His new book, "The End Of Loyalty," examines the erosion of that social contract between corporations and employees since World War II and analyzes the forces that got us to this point, including automation, globalization, outsourcing, the weakening of unions and the emphasis on cost cutting to deliver a profitable bottom line to shareholders.

He focuses on the history of four companies - Kodak, GE, GM and Coca-Cola. Wartzman was a reporter at The Wall Street Journal for 15 years where he tracked the coal, steel and aerospace industries. He now writes about the future of work for Fortune magazine online and directs the Center for a Functioning Society at the Drucker Institute, a part of Claremont Graduate University.

Rick Wartzman, welcome to FRESH AIR. You know, you wrote recently that thanks to President Trump's populist rhetoric, the most romanticized figure in America now is the blue-collar worker of yesteryear. Who do you think he's romanticizing, and how does that compare with what you see when you look back on the, quote, "Golden Age?"

RICK WARTZMAN: So clearly President Trump appealed to a large section of voters who feel left behind. And many are in communities where there was once a real vibrancy to them. There were good jobs, good middle-class jobs that one could get with very little education and very little skill but find your way to the middle class by working in a factory. And you know, President Trump in a greatly oversimplified way and, you know, I think a bit of a bait and switch frankly promised that he could bring those jobs back. I don't think they're coming back. But he really has romanticized, again, this kind of blue-collar figure in America.

When you look back, the history's actually a lot messier. You know, it really was a golden age for many people. As I said, there was a path to the middle class for those who were not well-educated, who had limited skills. But those were really tough jobs. It was an era that excluded women and people of color to a great degree from the workplace. They faced open hostility and discrimination. Many still do of course, but I think conditions were even far worse for them then.

And there were a lot of complexities to, again, even this Golden Age where there was still quite a bit of poverty in America. Maybe 25 percent of Americans lived in poverty then. And some - you know, not all boats lifted, but many more boats lifted than are lifting today. And that's why those communities feel left behind and why Trump was able to appeal to them.

GROSS: How did benefits become a way of compensating employees for their work? When does it date back to - things like health insurance or pensions?

WARTZMAN: So a lot of these things rose sort of first during World War II. The government kept a lid on wages as a way to hold down inflation during wartime. But they allowed companies to increase benefits. And so companies began using health care and other benefits to attract employees during the war. And there were labor shortages obviously as people went overseas to fight. And so that sort of became embedded in the social contract.

In the period after World War II, unions that were so important in forging the social contract not just for union members but really for all workers - there was a tremendous spillover effect that happened across the economy and even into the ranks of white-collar workers by what unions like the United Auto Workers and the Electrical Workers were able to do at the bargaining table. They fought hard for benefits. There was a period where they were bent on adding health care and retirement security for their members, and again, it spilled over.

So after World War II, you see all of these things rise substantially. So where you would have, you know, in the 1940s say, you know, something like 15 percent of workers have their basic medical needs covered, you know, that would explode to over 70 percent by the 1970s. You had, you know, relatively few people covered by pensions in the early '40s. And that would get up where people had guaranteed defined benefit plans where they were guaranteed a set amount of income for life. You know, that would rise to about half of all workers by the '70s. And so these things all exploded in this postwar period really from the late '40s to the early '70s.

GROSS: Just looking back a little further as you do in your book, you give some examples of companies in the early part of the 20th century who took it upon themselves to offer certain benefits to their workers. You use Kodak as an example. Tell us some of the things Kodak did in the early 1900s.

WARTZMAN: Oh, it was tremendous. I mean, you know, George Eastman, the founder of the company, lavished perks on his workers. And so they had everything from giant recreation centers and, you know - with bowling alleys and, you know, all kinds of sports leagues. I mean it really was - Rochester was a company town. There were traveling nurses that if you were sick, they would come and visit you and make sure that you were OK. He had symphony orchestras play during lunch time at the, you know, at the company. And movies were shown. And this was just - this was company life in a place like Rochester.

There was a real mix of impulses for someone like George Eastman to do these things. Part of it was that he really did - and some would say in a paternalistic way, and others would say in a genuinely caring way - want to take care of his people. And he seemed to greatly value his workers. At the same time, he very strongly, in Kodak's case, wanted to keep unions out. And by lavishing great pay and benefits on his folks, it was a way to look at union organizers and have his people say, we don't need you; we're already getting a great deal here.

GROSS: Was Kodak ever unionized?

WARTZMAN: It wasn't. No, Kodak always managed to keep organized labor at bay. But again, the spillover effect's important. Kodak executives kept an eye on what unionized companies in Rochester were providing to their workers and would often then match or exceed that compensation as part of their way to keep unions out.

GROSS: What's the turning point for you where you think you start to see the social contract between employer and employee starting to shatter?

WARTZMAN: It was really interesting doing the research. So I guess I would say, you know, the early '70s, which is where a lot of people sort of mark the beginning of the end - and there's a lot of things that happened there in terms of the economy, in terms of the rise of global competition, in terms of unions beginning to really go into decline, in terms of other forces beginning to really take hold - this shift from kind of a blue-collar economy, if you will, to a knowledge economy, which had a lot of ramifications for workers and soon thereafter the rise in this ethic of maximizing shareholder value, which has become the preeminent sort of corporate ethic and is really driving so much of corporate culture now. And that wasn't there before. And that's a huge theme of the book - is how much that has amplified all these other trends.

GROSS: This is FRESH AIR. And if you're just joining us, my guest is Rick Wartzman. He's a journalist who has written about business for many years. He writes now for Fortune magazine online. And he's the author of the new book "The End Of Loyalty: The Rise And Fall Of Good Jobs In America."

Well, you do attribute a lot of other changes in the social contract between employer and employee to corporations putting shareholders and the bottom line above their employees. Describe a pivot point that you write about in which corporations start heading in that direction.

WARTZMAN: There were several things going on here. One is that coming out of the Depression and World War II, if you just looked at the way CEOs talked, that the way corporations framed who they were responsible to, this was not BS. This was real stuff. They were - they talked in terms of a we, and they had a very stakeholder orientation, meaning that companies felt an obligation, spoke of an obligation to take care of the communities where they had a presence, their customers for sure, their workers and their shareowners - all of those groups. And by the 1980s for sure and really beginning in the mid-1970s, you know, we began to see this shareholder primacy, this idea that companies should maximize shareholder value. And by definition, all those other groups get left behind. And the effect on workers has been tremendous.

This you can trace in some ways to, again, I think some broader cultural shifts - this kind of we mentality; we're all in this together coming out of the Great Depression and the Great War and moving more to an age of I, the individual. The marketplace is sacrosanct, and it's all about, you know, lifting ourselves up. And I think that corporate culture - it changed reflecting these shifts in national norms and national culture.

GROSS: So one of the things you say in the book is that when executives - when their own incomes were so linked to the bottom line by having so many shares in the company, they were incentivized to behave in, as you put it, perverse ways. What are some examples of the quote, "perverse ways" that you think executives started behaving in? And maybe you'd want to use one or two executives who you profile in your book.

WARTZMAN: Absolutely. Well, there is a lot of evidence that companies and executives who run them are now being forced to think more in the short term and not about the long-term sustainability of the company. So if you want to see share price rise in the short term, you do things to cut costs, make sure profits go up. But that doesn't work forever obviously, but it does work for a while.

And so we've seen stinting investment in things like R&D at many companies. We've certainly seen great cutbacks in investing in workers not only in their compensation but in their training. They're not investing in their own future. They're not investing in the long term by investing in their workers. They are trying to make their share price go up in the short term, and that is, as you pointed out, often in the interests of the executives whose compensation is based in large part on how the shares do.

GROSS: Jack Welch, who was the longtime CEO of GE, became a corporate superstar. What was his reputation by the time he left?

WARTZMAN: Well, Jack Welch had a great reputation, you know, as he was leaving. I mean he was arguably the superstar CEO of the 20th century. He left the company riding high. His reputation has taken I guess, you know, a bit of a hit since then. There was - there were many who began to think that he had built the company up largely through financial engineering through GE Capital and that he had gotten the - GE too far away from its roots of actual engineering, industrial engineering, making things and that Jeff Immelt, who is - now announced he's leaving the company - but, you know, he tried to right that ship, many think, and that Welch had again pushed too far into financializing the company.

The really significant thing I think, though, about Jack Welch is he really began this trend in a very high-profile way of taking a very large company and just engaging in - not to sugarcoat it - it was a very brutal downsizing. And you know, depending on how you count the numbers, you know, some have said that Welch ended up through cuts and attrition and other means getting rid of 170,000 jobs at GE during his tenure. And he became known as Neutron Jack, as I'm sure many of your listeners know, because supposedly he just left the building standing, right? All the people were gone.

And you know, there's a real complication to Welch's story. In many ways, Jack Welch did a lot of good for workers at GE in that he made the company much more of a meritocracy. He was somebody who flattened the organization. GE, when he came in 1980, '81, was a very high-bound, bureaucratic company. And he blew it up, and he made it so that people's ideas were welcome no matter where they were in the enterprise right down to the front lines. He instituted all kinds of programs. Work-Out is one that got a lot of attention - to be able to pull in ideas from anywhere, the best ideas. And that was exciting for many and terrific.

And so in some ways, he's reflective of a time when many companies actually began to engage their workers much more and not just have sort of this top-down management structure. And work for many became more interesting, more exciting. There was more fulfillment in it. But at the same time, this other part of the social contract - namely job security, you know, what you were earning, your benefit levels and things like that - that was all eroding at the same time. And so, you know, Welch came in and downsized to a degree. It was shocking when he first did it, and then that level of downsizing just became kind of normal throughout corporate America.

GROSS: Well, let's take a short break here, and then we'll talk some more. If you're just joining us, my guest is Rick Wartzman. He's the author of the new book "The End Of Loyalty: The Rise And Fall Of Good Jobs In America." We'll be back after a short break. This is FRESH AIR.

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GROSS: This is FRESH AIR. And if you're just joining us, my guest is Rick Wartzman. He's the author of the new book "The End Of Loyalty: The Rise And Fall Of Good Jobs In America." It's about the social contract between employers and employees and how that contract has eroded over the years. He's also the director of the Center for a Functioning Society at the Drucker Institute, which is part of Claremont Graduate University. And he is a contributor to Fortune magazine online.

You know, we were talking earlier about unions and how early on, like, Kodak didn't unionize because the workers felt that the benefits at Kodak were good enough. Kodak tried to be on its own competitive with unions. How has the union situation in the four companies you profile changed in the past few years? Like, what is the importance of unions in those organizations now, and how powerful are they compared to the power they had in the past?

WARTZMAN: Well, in terms of how much - how powerful they are, they're a shadow of themselves. But you know, now the auto workers - you know, after the bankruptcy, there have been some gains restored. But you know, they had to go to a two-tier wage structure where even unionized employees coming into General Motors were starting at much lower wages. And suddenly auto workers were facing something they never did before. Again, this used to be a path to a really solid middle-class life. And now even auto workers, you know, are struggling to get by.

At other companies like General Electric, unions just have - you know, they're still there, and - but they've become much less a presence as the company has shifted into this kind of new economy and digital economy. And there are just fewer and fewer union jobs at a company like that. And that is reflective of what's happening across America. We're now at a point where fewer than 7 percent of private sector workers are unionized in this country. And it's just clearly not enough to have the kind of collective voice and countervailing power against corporate power that, again, was able to lift wages and benefits for all folks, not only those carrying union cards but other blue-collar workers and even white-collar workers in the past.

GROSS: What do you see as one of the big turning points in the weakening of unions?

WARTZMAN: Well, there were a couple of things going on. Unions definitely made their own missteps. You know, some of it I think was born of in the 1930s and into the '40s when conditions were so terrible and there was so much to fight for. It was a cause that - and a movement that many could rally behind and understand the need for. As unions won many gains, you know, some would say that they lost their soul a little bit. They lost their reason for being, to some degree. It just wasn't as clear anymore. And there was an argument that in fact their power had now almost eclipsed corporate power in some ways. I'm not sure that was true, but that became kind of a conventional wisdom even by the '60s.

And then over time, the bigger thing that happened, more than unions' own missteps and their lack - they also, I should mention - unions didn't do as good a job of just organizing people. But there were two other things that happened. One is that the structure of the economy changed. So as we moved from more of a manufacturing economy to a service economy - you used to be able to go into a GM complex, and there were, you know, several thousand people, perhaps, at one factory or, you know, a series of buildings at a factory complex. It was relatively easy to organize them just physically and logistically. It's much harder to do that in a service environment. I mean even a big-box retailer or a - you know, might have a few hundred workers - or you know, a fast food place even fewer. And so they're just - the organization is actually tougher in a lot of ways.

And then the biggest factor of all I think is that corporations went hammer and tong against organized labor. There were all kinds of efforts from all kinds of companies that once accepted unions as kind of a fact of life and in some ways even welcomed them for the stability they brought to the workplace and the predictability that a contract would bring. They now had - they now saw unions as just a cost. And again, as this maximizing shareholder value mindset kicked in, unions were something that they decided to really fight against. And they did so sometimes with legal means and often through illegal means. And they really stomped out organized labor.

GROSS: My guest is Rick Wartzman, author of the new book "The End Of Loyalty: The Rise And Fall Of Good Jobs In America." We'll talk more after a break. And we'll hear from Sharon Horgan, the co-creator and star of the Amazon comedy series "Catastrophe" about a couple who get married to raise their baby who was conceived during a one-night stand. I'm Terry Gross, and this is FRESH AIR.

(SOUNDBITE OF BILL CHARLAP SONG, "NICE WORK IF YOU CAN GET IT")

GROSS: This is FRESH AIR. I'm Terry Gross back with Rick Wartzman, author of the new book "The End Of Loyalty: The Rise And Fall Of Good Jobs In America." It's about how fewer companies are offering job security, retirement security and good benefits. Wartzman was a reporter at The Wall Street Journal for 15 years. He now writes about the future of work for Fortune online.

In one of your columns, you wrote about President Trump's promise of returning jobs to the coal industry. You followed the industry for years. When you look at the big picture, how did the jobs get lost in the first place?

WARTZMAN: Well, a lot were automated away. And that, again, is a trend that has affected many sectors. You know, it's really striking. I mean if you look at photographs from the postwar era, factories were filled with people. Now you walk into a factory; they're kind of ghost towns for the most part. And the same thing I think has happened to - you know, to the forests and the mines and other work like that.

And the biggest, you know, thing that's happened lately is that the market has shifted. And so coal jobs are disappearing because of big market forces that are moving away from, you know, carbon and moving toward cleaner forms of energy. And you know, that's something that is already so down the track that we're not going back on that. And again, I just think there's so many false promises that the president has made about his ability or anybody's ability to bring back these jobs of yesteryear when we should be focused on training for the jobs of the future.

GROSS: So are the coal mining jobs that the president has promised to return jobs that still exist in the same number, jobs that are still needed in the same number in the coal industry as it is today as opposed to how it was in the past?

WARTZMAN: Yeah, again, I think that because of these market forces that are moving in the other direction, no, we don't need those jobs. You know, there just aren't going to be those positions to fill. There won't be the demand for them. I know there have been some examples of different, you know, operations that have started up. And then when you actually look at the number of jobs created, it's, you know, in the double digits or maybe the triple digits. You know, it's tens of people or hundreds of people. It's not thousands and thousands of people.

And the truth is, again, I don't mean at all to make light of the miner's plight. It's very serious, and I think we need to do much more to shore up those communities that are really in pain and are so desperate in so many cases. But you know, there are not that many jobs we're talking about in the scheme of things. You know, it's - whatever it is - 60,000, 70,000 jobs, something like that who are miners. I mean, you know, you could put all those people in the Rose Bowl, you know, here in LA and have plenty of seats left over. I mean it's just not that many jobs. And so I think it's gotten kind of an inordinate share of attention, frankly.

GROSS: Has the U.S. ever managed to deal in a good way with a whole, like, industry or a whole type of job that no longer exists to the extent that it did and take those workers and find alternatives for them so that they could have decent work without making promises that can't be kept about bringing back the past?

WARTZMAN: In some ways, yeah. I mean I - so I would look at things like, you know, these, again, big moonshot ideas. So one of the things that we did do to prepare an earlier generation for moving from, you know, blue-collar work in some ways into knowledge jobs was something like the G.I. Bill, which was a tremendous piece of legislation that gave a level of access to college that just didn't exist, right? That was really the province, the purview of the rich before the G.I. Bill. And that opened up avenues, and much more of the American population was able to, you know, go on to higher education. It was hugely important and a huge lift. But I don't see anything like that of that magnitude, again, that we're doing today.

The other thing that's really important is - we've been talking a lot about what government can do, and I think government's hugely important. It is something that I do talk quite a bit about in the book. But the real focus of my book is on the private sector for a reason. The government provides a safety net. The government provides very important guardrails for how the economy operates and sort of sets the playing field. But it's corporate America, too, that has a huge responsibility in all this.

Again, corporate America used to spend a lot more time and money educating its people, training its people than it does today. There's a lot of lip service that, oh, you know, our people are our most important asset. Every executive you talk to will tell you that. Very few seem to actually act like it in terms of really investing in their people. There are obviously exceptions to this, and there are companies that do a good job of training and development. But they are the exception. They really are the exception.

There's an effort going under - on now by AT&T, actually, to retrain about a hundred thousand of its workers, as I understand it, to move them from kind of a landline age and give them new skills and science and technology and math and things that they'll need to know to be able to operate in digital systems and computer systems. And it's a massive retraining effort underway. It's been described as - it's perhaps the largest going on right now. And we need to see much more of that kind of investment. It is the great exception. And so I think government's important, but I don't want to let corporate America off the hook here.

GROSS: Well, Rick Wartzman, I want to thank you so much for talking with us.

WARTZMAN: Thank you so much for having me.

GROSS: Rick Wartzman is the author of the new book "The End Of Loyalty: The Rise And Fall Of Good Jobs In America." After we take a short break, we'll hear from Sharon Horgan, the co-creator and star of the Amazon comedy series "Catastrophe." This is FRESH AIR.

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