America’s Third Labor Regime – What Now?

Robert Samuelson adds to the conversation on the changing nature of the American workforce. In his latest, the Nobel-prize winning economist and conservative columnist notes that the forces that created post-war economic security for working and middle class families is fast eroding. We are entering, he writes, the “third labor regime” of American history.

The first labor regime was in the early 20th century, before labor laws, when turnover was high, labor was cheap, and “less than a third of manufacturing workers in 1913 had been at their current job for more than five years.” The second labor regime began after World War II, and legislative successes of the labor movement. Samuelson notes that “to avoid unionization and retain skilled workers, large non-union companies” beefed up on health insurance, pensions, and job protections. “If you went to work for IBM at 25,” Samuelson writes, “you could expect to retire from IBM at 65 … Corporate America, unionized or not, created a private welfare state to protect millions from job loss and income loss.”

The third labor regime is settling in now – and it’s a mix of the first two. “The private safety net is shredding,” Samuelson writes, “though the public safety net (unemployment insurance, Social Security, anti-poverty programs, anti-discrimination laws) remains.” Samuelson doesn’t write about it in this article, but that “public safety net” is too expensive to maintain.

The question now is, what happens next? Neither party is doing very well at speaking directly to this problem. My own party seems all too often to simply be ignoring it – to our own future electoral peril. We understand the finances of Roosevelt and LBJ don’t work, but we’re not always great at speaking to American optimism or offering a replacement. And the Democratic solution seems to be focused only on the expansion of the already broken public safety net – which isn’t a solution at all, but instead a recipe for national fiscal catastrophe.

To go back to Peggy Noonan from Friday:

One of the things missing in the current political scene is zest—a feeling that can radiate from the political sphere that everything is possible, the market is wide open.

In the midst of the economic malaise of the 1970s the TV anchormen spoke in sonorous tones about the dreadful economic indicators—inflation, high interest rates, “the misery index.” But Steve Jobs, in his parents’ garage, was quietly working on circuit boards. And strange young Bill Gates was creating a company called Microsoft. All that work burst forth under the favorable economic conditions and policies in the 1980s and ’90s.

What is needed now is a political leader on fire about all the possibilities, not one who tries to sound optimistic because polls show optimism is popular but someone with real passion about the idea of new businesses, new inventions, growth, productivity, breakthroughs and jobs, jobs, jobs. Someone in love with the romance of the marketplace. We’ve lost that feeling among our political leaders, who mostly walk around looking like they have headaches. But American genius is still there, in our garages. It’s been there since before Ben Franklin and the key and the kite and the bolt of lightning.