How the Disappearance of Unionized Jobs Obliterated an Emergent Black Middle Class

19 Pages Posted: 13 Aug 2020 Last revised: 14 Aug 2020

See all articles by William Lazonick

William Lazonick

The Academic-Industry Research Network

Philip Moss

affiliation not provided to SSRN

Joshua Weitz

The Academic-Industry Research Network

Date Written: June 15, 2020

Abstract

In this introduction to our project, “Fifty Years After: Black Employment in the United States Under the Equal Employment Opportunity Commission,” we outline the socioeconomic forces behind the promising rise and disastrous fall of an African American blue-collar middle class. During the 1960s and 1970s, blacks with no more than high-school educations gained significant access to well-paid unionized employment opportunities, epitomized by semi-skilled operative jobs in the automobile industry, to which they previously had limited access. Anti-discrimination laws under Title VII of the 1964 Civil Rights Act with oversight by the Equal Employment Opportunity Commission supported this upward mobility for blacks in the context of a growing demand for blue-collar labor. From the late 1970s, however, the impact of global competition and the offshoring of manufacturing combined with the financialization of the corporation to decimate these stable and well-paid blue-collar jobs. Under the seniority provisions of the now beleaguered industrial unions, blacks tended to be last hired and first fired. As U.S.-based blue-collar jobs were permanently lost, U.S. business corporations and government agencies failed to make sufficient investments in the education and skills of the U.S. labor force to usher in a new era of upward socioeconomic mobility. This organizational failure left blacks most vulnerable to downward mobility. Instead of retaining corporate profits and reinvesting in the productive capabilities of employees, major business corporations became increasingly focused on downsizing their labor forces and distributing profits to shareholders in the form of cash dividends and stock buybacks. Legitimizing massive distributions to shareholders was the flawed and pernicious ideology that a company should be run to “maximize shareholder value.” As the U.S. economy transitioned from the Old Economy business model, characterized by a career with one company, to the New Economy business model, characterized by interfirm labor mobility, advanced education and social networks became increasingly important for building careers in well-paid white-collar occupations. Along with non-white Hispanics, blacks found themselves at a distinct disadvantage relative to whites and Asians in accessing these New Economy middle-class employment opportunities. Eventually, the downward socioeconomic mobility experienced by blacks would also extend to devastating loss of well-paid and stable employment for whites who lacked the higher education now needed to enter the American middle class. By the twenty-first century, general downward mobility had become a defining characteristic of American society, irrespective of race, ethnicity, or gender. Since the 1980s, the enemy of equal employment opportunity through upward socioeconomic mobility has been the pervasive and entrenched corporate-governance ideology and practice of maximizing shareholder value (MSV). For most Americans, of whatever race, ethnicity, and gender, MSV is the not-so-invisible hand that has a chokehold on the emergence of the stable and well-paid employment opportunities that are essential for sustainable prosperity.

Keywords: African American, employment relations, equal employment opportunity, unions, blue-collar, socioeconomic mobility, corporate governance, shareholder value, retain-and-reinvest, downsize-and-distribute, discrimination, economic inequality

JEL Classification: D2, D3, G3, J0, L2, L6, N8, O3, P1

Suggested Citation

Lazonick, William and Moss, Philip and Weitz, Joshua, How the Disappearance of Unionized Jobs Obliterated an Emergent Black Middle Class (June 15, 2020). Institute for New Economic Thinking Working Paper Series No. 125
https://doi.org/10.36687/inetwp125 , Available at SSRN: https://ssrn.com/abstract=3671012

William Lazonick (Contact Author)

The Academic-Industry Research Network ( email )

12 Newport Road
Porter Square
Cambridge, MA 02140
United States

Philip Moss

affiliation not provided to SSRN

Joshua Weitz

The Academic-Industry Research Network ( email )

12 Newport Road
Porter Square
Cambridge, MA 02140
United States

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