Fat and mean: The corporate squeeze of working Americans and the myth of managerial "downsizing"

Gordon, David M. Fat and mean: The corporate squeeze of working Americans and the myth of managerial "downsizing".

New York, NY, Free Press, 1996. xii + 320 pp. Figures, tables, index, bibliography. ISBN 0-684-82288-1.

Professor Gordon's deeply insightful analysis of the wage squeeze of American workers in recent decades highlights the adverse effects of low-road management in American enterprises. His realistic and persuasive study of microeconomics - here labour-management relations -- together with the meso-level institutional and policy environment invalidates a number of arguments frequently emphasized in traditional macroeconomic analysis of the labour market. His truly innovative, multidimensional approach sets an excellent example of how employment issues can be studied with a focus on the need for more jobs, of higher quality.

Since Gordon's argument is based upon an empirical, statistical analysis that demonstrates the relationship between low-road management and the wage squeeze in the United States, I have no intention of challenging his conclusions, which appear to be both realistic and to the point. Most surprising and deplorable, however, is the fact that the low-road management style widely pursued by "fat bureaucratic managers" in American companies has successfully cracked down on confrontational trade unions by resorting to unfair labour practices and relying on a measure of institutional and policy support. The result has been a continuous squeeze on the wages of lowskilled and unskilled workers.

One aspect of Gordon's analysis is truly unique and has particular practical value. Traditional analysis tends to look only at labour market supply and demand. According to this, demand-side wage determinants typically include overall macroeconomic growth, technological innovation associated with the emergence of new jobs, low-cost imports from poor countries or manufacturing investment in developing countries with cheap labour. On the supply side, traditional analysis may look at the availability of young and inexperienced workers, female labourforce participation, migrant labour, the shortage of unskilled labour due to increased education, etc. In addition, a skill mismatch is often taken into account as well.

Looking beyond these traditional factors in wage determination, Professor Gordon focuses on labour-management relations and productivity gains. Using time series and international cross-section analyses, he shows how low-road management has squeezed wages in the United States. He also explains why and how American enterprises have developed this...