The Politics of America’s Changing Work Experience

What accounts for voters’ visceral anger that so spectacularly erupted in the midterm elections? A crucial, but overlooked factor is the dramatic change in the way most Americans experience work.

In the past, most voters toiled in large, bureaucratic entities--giant corporations or government--and had little direct control over their economic destinies. Their careers were largely a matter of seniority and learning to protect themselves as they moved up the corporate hierarchy. Along the way, they could expect fairly secure pay and regular increases in benefits.

In the heyday of the old economy, the dominant political battles, especially in Washington, centered on getting a “fair” piece of this corporate pie and on regulating big business’ fiscal, environmental and other excesses. An agenda of work-place entitlements, anti-business skepticism and centralized social programs enjoyed considerable appeal when the interests of workers, the middle class and various activist groups were plausibly pitted against the homogenous corporate bureaucracies.

All this has changed in the last two decades. Upstart Asian producers, sophisticated Europeans and increasingly talented Latin American and other companies from newly industrializing nations learned to meet, then greatly exceed the price and quality standards of America’s giant industrial institutions. Suddenly, the comfort afforded by stable job and skill classifications became a huge liability for even the most powerful companies.

What these once-slumbering enterprises did next almost completely reshaped work in America. A large share of formerly in-house production and service activity was shifted outside and placed with independent subcontractors. These companies learned to combine their skills to design and deliver high-quality goods that were labeled and sold by brand-name companies like IBM, Boeing, Ford or MCA. Many of the larger organizations themselves, such as AT&T; and Motorola, broke up into smaller, independent units to duplicate the risk-taking and creativity their subcontractors exhibited.

By the early 1990s, the vast majority of Americans were either working in these smaller companies or in the newly independent profit centers of larger companies. Their careers were far riskier and unstable. The choices they made directly affected their organizations’ survival--and their futures--in ways that never occurred in the giant, paternalistic institutions that once offered them seemingly permanent employment security.

Out of this dramatic transformation grew a new political agenda. As small companies and individuals increasingly shouldered the burdens of product and market development for the national economy, capital availability became a crucial problem, especially since traditional tax policies and bank and venture-capital lending practices largely ignored their needs. Firms in the new economy discovered that they had to build regional institutions to support or help stimulate the concentrations of skill and talent--as in Hollywood, Silicon Valley or the Research Triangle--that allowed them to dominate world markets, a requirement made more difficult by the federal government’s virtually total usurpation of local authority and economic resources. The Byzantine regulatory and entitlement schemes previously imposed on the nation’s giant companies created overly burdensome constraints on newly entrepreneurial enterprises investing heavily in their futures, and thus operating close to their financial limits.

The passions unleashed by the midterm elections are in no small part attributable to the enormous tension between the America being molded by the new economy and the bureaucracies that survive from an earlier era. Far from embracing the new concerns of America’s ascendant economic classes--investment capital, tax relief, local autonomy or regulatory reform--political elites, responding to their bureaucratic patrons, scorned them as selfish and reactionary. In response, America’s new economy increasingly resented leaders who continually derided their interests while exclusively championing those that directly opposed them.

The first casualties of this exploding tension, apart from Democrats, are many of the institutions that are at the core of the bureaucratic economy. One is the mainstream media, which underestimated the changes sweeping through the nation and flooded the airwaves and newspapers in support of the traditional political agenda. Unable to find outlets for their viewpoints, many in America’s new economy turned to such novel information sources as talk shows and on-line newsletters, which ultimately proved more prescient of the election results.

Also convincingly defeated were economic and social policies that rely on transferring tax funds to big government or big business to “help” the underprivileged or to “create” new industries. The denizens of the new economy lost faith in social-entitlement programs when their legitimate concerns about worker’s compensation fraud, illegal immigration or the negative effects of procurement or education quotas were dismissed as racism or insensitivity. Economic programs that would further tax America’s growing firms and industries so that ponderous bureaucracies could provide “new” technologies, “green” industries or social services like health care were rejected in favor of returning resources directly to the firms that are already successful in global competition.

While it was the Democrats who first paid for America’s new economic realities becoming political, it is unclear whether the Republicans earned more than a temporary victory. Much of their support is negative; they attracted the disillusioned as the lesser of two evils, the party that would do the least harm, not the most good. Indeed, there are already signs the Republicans may not understand the revolutionary economic agenda they’ve putatively inherited.

Tax cuts, for instance, would be welcomed by newly emergent and growing companies, but only if the savings directly returned to their pockets. But most of the post-election Republican tax proposals focus on capital gains or other measures that benefit aloof institutions, Wall Street or the already wealthy.

Similarly, the authoritarian, dog-eat-dog world view of many Republican constituencies does not resonate with many of the most talented people behind America’s emergent companies. The most successful, post-bureaucratic industries and regions--computer specialists in San Francisco and media experts in Los Angeles, for example--combine intense competition and a strong sense of mutual collaboration with their peers, a strategic mix that has economists groping for models. But whatever their logic, it seems no accident that these new economies are growing in the heart of some of the most liberal areas of the country, peopled by iconoclasts for whom the regressive politics of the right is anathema.

Finally, if the people shaped by the new economy reject ethnic-group victimization as the starting point of social policy, they also equally eschew demonizing such groups as welfare cheats. In California--the center, in many ways, of what the nation’s economy is becoming--Asians, Latinos and blacks are more productive in, and essential to, vibrant, responsive industries than in virtually any other part of the country; they are among the state’s most creative work force and managers of the future. Alienating them, even in the name of much-needed welfare, immigration and social-service reform, is simply suicidal economics--and politics.

Some pundits believe the midterm elections realigned America to the right. But the results are better interpreted as the first skirmish in a battle to force the nation’s two-party system to address the countries new industrial realities. As the people who are reshaping U.S. industry become more powerful, they will transform the nation’s politics as well.