On technology, much the same seems true. American firms have a substantial lead, but Europe in particular is not without hope. In pharmaceutip. 315cals, the Continent is America’s equal. There are a few countries—Finland, for instance—that are actually more wired than America. And in one increasingly crucial technology—wireless telephony—Europe (and to a lesser extent Japan) enjoys a sizable lead.
There are plenty of things that could slow Europe down—most notably its politicians. Even if France produced a business leader who combined all the verve of Bill Gates, Jack Welch, and Warren Buffett, he or she would still have to find a way around the country’s ludicrous thirty-five-hour workweek. But investors have good reason to expect the Continent to catch up a little—and some of the premium currently being paid for American shares to be reduced.
Another pessimistic message that applies to investors of all sorts, not just American ones, concerns globalization itself. Put crudely, companies never seem to make quite as much money out of globalization as they think they will. In some cases, this is simply because they exaggerate particular opportunities. (In the mid-1990s, companies calculated the size of the Chinese market by working out how many tubes of toothpaste, or whatever, the average Westerner used per year and then multiplied by a billion.) But it also reflects a more fundamental hunch that despite all the articles portraying modern capitalism as a battle between capital and labor, the winner will actually be a third party: the consumer.
That is not to deny the fact that capital has often used globalization to bully labor. European companies have used new, more flexible factories in America to blackmail their domestic European unions into being slightly more cooperative. In the 1990s, average wages in America rose by 27 percent, but corporate profits rose by more than 107 percent (and the S&P 500 by more than 200 percent).[3] But in industries in which there is intense global competition, even more value tends to end up with the consumer in the form of lower prices. Globalization has spurred deflation in industry after industry: If you don’t sell your widget cheaply, then your rival from the other side of the world will (and, look, your rival has just outsourced his processing unit to India, so you had better cut prices to keep up). Making money in such cases is not impossible, but it is probably much more difficult than competing against a handful of neighbors.
Deflation seems particularly rampant in the industry that has often traded on the highest multiples in America, high technology. Almost everything you need to join the wired universe—computers, operating software, applications software, browsers, Internet access—is being given away by somebody somewhere, and consumers have gotten used to it. Even at their postbubble levels, stock-market valuations seem to assume, first, that virtup. 316ally every company will become the global leader (a logical impossibility) and, second, that they will be able to turn that market share into profits. So far only a handful of companies have managed to do that, and even the most successful, notably Microsoft, have had to cut prices.
Once again, from the perspective of the global economy this is a good thing. Consumers get better, cheaper products, and the wheels of global commerce pick up speed. But investors counting on rising profit margins in global industries could be in for a nasty surprise.
How Flexible Is Flexible?
In The Hungry Spirit (1997), Charles Handy has a nice story about visiting the Soviet Union in the 1950s. His official guide—in those days you could not visit the country without one—asked him whether it was true that in the West “you have to find your own job and place to live.” “Of course,” the young Irishman answered; and when his guide demurred that this seemed frightening, he announced, by his own admission rather smugly, “We call it freedom.” It was “only later on the plane leaving Russia en route to my oil company that I realized that my benevolent employers also told me what job to do and where to live, and would do so for the rest of my working life.”[4] Shell even insisted on the right to approve Handy’s choice of wife and to write appraisals on her.
Such an attitude was not that uncommon. Organization man, that quintessential fifties figure, was firmly told by his creator, William Whyte, that he “must smile when he is transferred to a place or a job that isn’t the place or job that he happens to want.”[5]
Perhaps the only thing that the oddly assorted group of people who gathered together in a slightly shabby classroom in Manhattan in October 1999 had in common was that they would never dream of smiling while somebody else organized their lives for them. A young man in a neat blue suit introduces himself to the group as Walter before describing the lessons that he has learned from his job search. “Be prepared, know your story, and network, network, network.” That was the way that Walter hopped from a job in the construction industry in Canada to one in human resources in New York; and if the current job does not work out, that will be the way that he will jump to his next job. His network will be ready, his “brand” established. Afterward, the teacher repeats the message to the middle-aged managers who fill the room: Start preparing for the job after the one that you are looking for at the moment.
p. 317 The Five O’Clock Club is an “employee advocacy organization” with twenty branches around America. Most members have jobs, and around a third earn more than one hundred thousand dollars a year. The club offers plenty of regular career advice (“the first one to mention a figure for salary loses”), but it is based on two things that organization man never entertained: disloyalty (even if about a fifth of the members end up staying at their companies, they are constantly looking around for better deals) and, worse, feelings.
Rather than allowing jobs to define their lives, as organization man did, the club’s members are encouraged to decide their own goals—to imagine what sort of person they want to be in forty years, for example—and then design their careers toward that goal. It also caters to people whose needs are more psychological than financial—like the Internet manager who in 1999 had made three million dollars in the past eighteen months “but still [felt] left behind.”
This sounds like a bull-market phenomenon. But the club’s founder, Kate Wendleton, argues that it has thrived because it is catering to fundamental changes in working life. And she is not alone. McKinsey has warned its clients that the biggest challenge for companies is “the war for talent.” Business magazines are still full of advice columns on how people should take control of their jobs, how you should be hotdesking with colleagues, telecommuting from home, and generally reconsidering your whole future. In The Brand You 50 (1999), America’s best-known management guru, Tom Peters, delivers the following rant.
It’s over! It’s over! Praise God . . . its over. (That’s my view, anyway.) What’s over? The world in which “we”—the best and the brightest, the college kids—depended on “them,” the Big Corps., to “guide” (micromanage! dictate! control!) “our” careers.
Alas, my Dad was no more than an indentured servant to BG&E . . . the Baltimore Gas & Electric Co. . . . for 41 years. . . . Same door. West Lexington Street. Day after day. Month after month. Year after year. Decade after decade.
It was no way to live . . . if living it was.
But . . . “it” is finished. Kaput.[6]
Most people on the left—particularly in Europe—share Peters’s fundamental analysis while drawing the opposite conclusions. They believe that the very forces that Peters celebrates—technology, globalization, the shift top. 318ward services—are breaking down the old social contract, leaving workers at the mercy of a new and ruthless variety of capitalism. In another recent book, Sharing the Wealth, Ethan B. Kapstein of the University of Minnesota, one of globalization’s more thoughtful critics, argues that modern capitalism forces governments into a game of “beggar-thy-labor,” which will stir up a social backlash.[7]
There is no shortage of impressionistic evidence to support this case. In Continental Europe, with unemployment stuck at over 10 percent, university graduates are being forced into part-time jobs. In Japan, according to the As
ahi Shimbun, the number of businessmen diagnosed as psychotic depressives has risen rapidly. Salarymen check into their shrinks on Saturdays and Sundays because the more frightening meetings happen on Mondays. There is even a special shop in Tokyo where you can go and plunge needles into models of your boss.
However, even in Japan, debates about the future of work keep being drawn back to the United States, the most flexible and forward-looking labor market. Throughout the booming 1990s, new records were set for the number of layoffs. As Alan Greenspan has pointed out repeatedly, wage inflation remains relatively low partly because so many Americans are terrified of losing their jobs. Just around the corner from the New York City branch of the Five O’Clock Club, you could hear muffled sobs from audiences during a much-praised revival of Arthur Miller’s Death of a Salesman. Even though the most modern figure in the play should have been Willy Loman’s brother, Ben—an early version of an Internet entrepreneur who keeps on boasting how he “walked into the jungle” at seventeen, walked out at twenty-one, and “by God I was rich”—it is Willy himself who seems to remind everybody of somebody. The broken salesman’s lament—“You can’t eat the orange and throw the peel away—a man is not a piece of fruit!”—still resonated, even with investment bankers.
Has It Really Changed?
Yet this sense of déjà vu also raises the question of whether globalization and technology are really doing anything radically new to careers, even in the United States. The statistics suggest a rather more complicated picture. The basic measure of job stability—how long the median American has been in his or her current job—was 3.6 years in 1998, a shade higher than in 1983. As David Neumark, one economist who has poured statistical cold water over the whole debate, points out, there are plenty of professions—teachers, p. 319 doctors, even labor economists—where job hopping remains rare, and plenty of others—such as construction workers—where job hopping has been the norm for generations.[8]
And yet all the figures are distorted by two phenomena: the aging of the huge baby-boom generation, comprising people born between 1946 and 1964, which accounts for roughly half the workforce (many of whom no longer want to move); and the increase in mothers coming back to the workforce to permanent jobs. Look at particular types of workers, on the other hand, and you soon see signs of change. The number of workers who have stayed with an employer for more than eight years has come down. Job tenure for men aged thirty-five and over has also decreased sharply since 1983. At the other end, the average thirty-two-year-old in America has already worked for nine different companies.
These figures are much more consistent with two bits of anecdotal evidence that careers are changing: parents being surprised by the flightiness of their children (a generational change that will take some time to show up in the figures); and people being rather shocked by the news that Bernie in Accounts, who was always considered part of the furniture, was recently handed a pink slip. Job stability is a very different thing from job security. With sackings accounting for a much higher proportion of job turnover, polls show Americans—particularly older male workers of long tenure—are much more scared about losing their jobs than ever before. Asked about the relevance of Death of a Salesman in 1999, Arthur Miller replied, “Any Monday morning you can be told you are no longer needed. The company is moving to Guatemala.”
Globalization may be culling far fewer older workers than technology is (Bernie probably lost his job to a computer, not a Guatemalan), but it is also helping drive other structural changes that affect our careers. In most developed countries, the workforce is inexorably moving to small service companies from large manufacturing ones—and even the large manufacturers that survive adopt the psychology of small companies, reorganizing themselves into collections of autonomous units. The old model for a career, in which you gradually climbed your way up a single company, is much harder to sustain if you work for a public-relations agency that has only three layers in the hierarchy.
The all-pervasive cult of flexibility helps some workers: If a firm has no idea what is coming around the corner, one of the few sensible strategies is to amass good people to deal with it. But globalization also increases the pressure on companies to contract out their noncore activities to specialized companies or to use more temporary workers (as four in five American firms p. 320 now do). About one in ten American workers is a “contingent” worker, such as temporary-agency employees and independent contractors. Many more Americans work at least some time at home, and almost all of them work longer hours.[9]
Telescope your lens onto the most forward-looking part of the American economy—California—and you find more reasons to suspect that careers will change faster in the future. California has led the rest of the country not only in job creation but in job volatility. The fastest-growing part of the Californian economy is the temp industry, which has added as many jobs as the software and electronic equipment-manufacturing industries combined. Now the Internet seems to be having much the same effect on “job trading” in the state as it has already had on share trading. Career sites such as Monster.com offer an easy chance to indulge that whim to “see how much you are really worth.”
In chapter 11, we talked about Silicon Valley producing an egg timer-shaped society. Much the same seems to be true of job volatility, with people at the top and bottom of companies job hopping much more rapidly than everybody else. During the 1990s, employee turnover in Silicon Valley was close to 20 percent a year. This created a market for companies such as Icarian, a firm that tries to apply “just in time” manufacturing principles to employment. In a matter of hours, its boss, Doug Merritt, can summon up not just secretaries and assistants but freelance engineers (for between $90 and $200 an hour), technical writers ($75-$150), marketing directors ($200-$500) and chief executives ($300-$800), and, lest you think these rates a bargain, there are still negotiations about how much equity the freelancers get. Merritt says that businesspeople are becoming more like film stars, equipped with talent agents who offer package deals for their clients.
Not everybody in Silicon Valley likes this sort of just-in-time lifestyle. Many people still like having normal careers (just as Clint Eastwood has stuck with Warner Bros., there are plenty of engineers at Hewlett-Packard who could earn more elsewhere). And a sizable minority of “no brand” workers at the other end of the egg timer see flexibility as a threat rather than an opportunity. The Valley is full of “software gypsies” who lack such basic things as health insurance, not to mention secretaries who have put up with low pay and few benefits, only to end up with a fistful of worthless options.
Whistle While You Work
Silicon Valley’s experience will probably be replicated elsewhere, at least in the long term. Most new-economy industries are treading the same path top. 321ward flexibility. Icarian also sells its just-in-time jobs to the drug and finance businesses. Even in Japan, the home of lifetime employment, you can see glimmers of Siliconization in, for instance, the rising numbers of temporary workers.
Is a more flexible approach toward work a good thing? Optimists claim that a flexible workforce is a happier workforce. A survey of work trends in 1999 by Rutgers University and the University of Connecticut, for example, found that 91 percent of Americans said that they liked their jobs. Some people even claim to detect a “happiness effect” in the country’s productivity numbers: People are working harder. Many of the jobs that globalization and technology have helped phase out have been fairly brutal, tedious ones (unless you think coal mining a noble art). And, for anybody with youth and talent, barriers have been removed. Organization man’s children can do away with time serving and brownnosing and pursue several different careers.
Another reason to be optimistic is that good companies desperately want to keep people. In the early 1990s, bosses such as “Chainsaw” Al Dunlap were much admired; now they are reviled not only for creating “toxic workplaces” but also for making far less money than bosses who concentrated on growing their b
usinesses.[10] Focusing on core competencies might mean outsourcing peripheral employees, but it also means creating a core group of long-term loyalists who are committed enough to the firm to transmit its ethos to new employees. Firms may not be able to offer people jobs for life, but most companies go out of their way to offer people “employability.”
Yet there are still plenty of worries, starting with overwork. Cell phones and beepers function as electronic leashes, tethering people perpetually to their jobs. A study by the Families and Work Institute showed that around three quarters of college-educated people between twenty-five and thirty-two years old in Manhattan work more than forty hours a week; in 1977, only 55 percent did. According to the Department of Labor, American workers get only seven hours of sleep per night (365 hours a year less than recommended), and American parents now spend twenty-two hours less per week with their children than in 1969.
The demands of flexibility frequently come into conflict with the human predisposition for structure. Despite the brave talk at the Five O’Clock Club about individuals taking control of their lives, there is a palpable sense that people want to belong to something. Many of the club’s members would, strangely enough, fit nicely into the books that Charles Handy now writes, which simultaneously celebrate the advent of “portfolio careers” and worry about the moral and social consequences of giving people so much freedom. The fashion for flattening hierarchies makes it harder for people to plan their p. 322 careers. A few lucky ones make spectacular leaps (for which they are often not prepared), while the rest get stuck at the same level for years, insecure and frustrated.
A Future Perfect: The Challenge and Promise of Globalization Page 45