The Modern Shape-Up Labor Market

The Modern Shape-Up Labor Market

Timothy Taylor 23/07/2018 4

It’s not unusual to hear predictions that in the future, we will all have opportunities to run our own companies, or that jobs will become a series of freelance contracts. Here’s a representative comment from business school professor Arun Sundararajan (“The Future of Work,” Finance & Development, June 2017, p. 7-11):

“To avoid further increases in the income and wealth inequality that stem from the sustained concentration of capital over the past 50 years, we must aim for a future of crowd-based capitalism in which most of the workforce shifts from a full-time job as a talent or labor provider to running a business of one—in effect a microentrepreneur who owns a tiny slice of society’s capital."

To me, this description is reminiscent of what used to be called the “shape-up” system of hiring, described by journalist Malcolm Johnson in his Pulitzer-prize winning articles about crime on the docks of New York City in the late 1940s (Crime on the Labor Front, quotation from pp. 133-35),  which is perhaps best-remembered today for how it was depicted in the 1954 movie “On the Waterfront.”  Johnson described the process for a longshoreman of seeking and getting a job in this way:

“The scene is any pier along New York’s waterfront. At a designated hour, the longshoremen gather in a semicircle at the entrance to the pier. They are the men who load and unload the ships. They are looking for jobs and as they stand there in a semicircle their eyes are fixed on one man. He is the hiring stevedore and he stands alone, surveying the waiting men. At this crucial moment he possesses the crucial power of economic life or death over them and the men know it. Their faces betray that knowledge in tense anxiety, eagerness, and fear. They know that the hiring boss, a union man like themselves, can accept them or reject them at will. He can hire them or ignore them, for any reason or for no reason at all.  Now the hiring boss moves among them, choosing the man he wants, passing over others. He nod or points to the favored ones or calls out their names, indicating that they are hired. For those accepted, relief and joy. The pinched faces of the others reflect bleak disappointment, despair. …

“Under the shape-up, the longshoreman never knows from one day to the next whether he has a job or not. Under the shape-up, he may be hired today and rejected tomorrow, or hired in the morning and turned away in the afternoon. There is no security, no dignity, and no justice in the shape-up. … The shape-up fosters fear. Fear of not working. Fear of incurring the displeasure of the hiring boss.”

You can call it “crowd-based capitalism,” but to a lot of people, the idea of “running a business of one” does not sound attractive.  Many people don’t want to apply for a new job every day, or every week, or every month. They don't want to be a "microentrepreneur who owns a tiny slice of society’s capital." They don’t want to be treated as interchangeable cogs, at the discretionary power of a modern hiring boss. All workers know that others have the power of economic life and death over them, but many prefer not to  have that fact rubbed in our faces every day.

It seems to me that a lot of the concern about the modern labor market isn't over whether the wage rates is going up a percentage point or two faster each year. It's about a sense that careers which build skills are harder to find, and that the labor market for many people feels like a modern version of the shape-up. 

A version of this article first appeared on Conversable Economist

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  • Christoper Weyman

    In Germany, successive rounds of labour market deregulation have reduced unemployment to a very low level, but at the expense of a very significant expansion of jobs in low-value-added activities, with very precarious conditions.

  • Rob Guinnane

    To all millennials, the fears of large scale technological unemployment are fundamentally wrong. Society has always found ways to allocate the excess labour, mainly through the emergence of new activities.

  • Guillermo Diaz

    Younger workers face a future employment landscape that could damage their wellbeing unless we take action.

  • Nathan Harper

    The situation in the modern American economy is rather unusual compared to other countries.

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Timothy Taylor

Global Economy Expert

Timothy Taylor is an American economist. He is managing editor of the Journal of Economic Perspectives, a quarterly academic journal produced at Macalester College and published by the American Economic Association. Taylor received his Bachelor of Arts degree from Haverford College and a master's degree in economics from Stanford University. At Stanford, he was winner of the award for excellent teaching in a large class (more than 30 students) given by the Associated Students of Stanford University. At Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the master's degree students at the Hubert H. Humphrey Institute of Public Affairs. Taylor has been a guest speaker for groups of teachers of high school economics, visiting diplomats from eastern Europe, talk-radio shows, and community groups. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News. He has published multiple lectures on economics through The Teaching Company. With Rudolph Penner and Isabel Sawhill, he is co-author of Updating America's Social Contract (2000), whose first chapter provided an early radical centrist perspective, "An Agenda for the Radical Middle". Taylor is also the author of The Instant Economist: Everything You Need to Know About How the Economy Works, published by the Penguin Group in 2012. The fourth edition of Taylor's Principles of Economics textbook was published by Textbook Media in 2017.

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