Institutionalizing Insecurity: A Relational Perspective on the Generation of Workplace Inequalities within Institutional Contexts
It is well known that workplace inequality increased dramatically starting in the late 1970s in the United States and, at least among sociologists, it is understood that the decline of unions was a key reason for the trend. More than 30 years of employment restructuring has resulted in postindustrial workplaces characterized by high levels of inequality, flexibility from the perspective of employers, and insecurity or precarity from the perspective of workers. But employment insecurity has primarily been conceptualized as an attribute of individuals rather than a property of the communities in which employment relations operate.
An important but often overlooked element of American political economy is its localized nature: states and localities compete for investment and jobs because industrial policy and other economic institutions are structured to facilitate such place-based competition. This long-standing dynamic of American economic governance accelerated in the 1970s and 1980s. Dobbin (1994) explains that legitimate claims related to economic governance in the United States have their origins in 19thcentury railway policy, which was developed around a conception of economic rationality originating in the political sphere. Specifically, notions of local self-rule, decentralization and local competition drawn from the federal structure of the Constitution (as well as social Darwinism) informed early industrial policy, and form the basis of a national economic culture that actors mobilize and deploy.
Within the workplace, earnings and other rewards are determined via a process of relational claims-making in which actors mobilize categorical distinctions to claim resources. Legitimacy (and therefore success) in claims-making is derived from the institutional fields and competitive dynamics in which the workplaces are situated. Institutional contexts or fields are resources used by actors to construct and mobilize meanings around categorical distinctions.
Drawing on institutional theory and a relational perspective on the generation of workplace inequalities, this paper conceives of the business climate as a field providing resources from which workplace actors can draw in claims-making. This paper investigates the origins of the business climate concept and asks how it has shaped workplace claims-making in the postwar and postindustrial periods.
Preliminary analysis points to an argument that business climates operate as an expression and instrument of community-level employment insecurity. Community employment insecurity, in turn, shapes workplace claims-making in ways that lead to weakened institutions and widening inequality. Starting in the 1950s the concept was developed and deployed at GE to mobilize core American economic notions of local self-rule, competition and decentralization against the claims of organized labor and the postwar employment relationship. GE executives sent surveys to business owners across the country asking them to assess local labor relations, as well as promotional materials urging them to reflect on the survey results for their own business’s interests, and to share their concerns with elected representatives. At the same time, concerns about business climate and local employment security entered collective bargaining at GE plants, as the company expanded production in the South and Southwest. In Schenectady, NY, the home of GE’s largest and most powerful union local, the company cultivated concern over local employment levels and the area’s business climate in a campaign called “Make Schenectady Competitive” (MSC). The MSC campaign successfully mobilized community support for a pay cut opposed by organized labor, ultimately resulting in reduced pay for workers at the plant and weakened support for the union. Following the success of MSC, similar tactics were used to undermine labor’s claims at GE plants nationwide, and GE ultimately began instructing other companies on the operation of its successful anti-labor strategies.
The paper will make four contributions to the literature. First, the paper articulates how the business climate concept is mobilized an expression and instrument of community-level employment insecurity-- deployed to help weaken unions and employ forms of employment restructuring that contributed to rising earnings inequality in the United States. Second, the case clarifies how the strategic use of institutional contexts can provide legitimacy for workplace claims-making; the business climate concept is here understood as a key part of those institutional contexts or fields which is strategically deployed to weaken inequality-reducing institutions. Strategic deployment of the business climate concept facilitated GE management’s attempt to reduce labor’s share of earnings by undermining community support for labor’s position. Third, the case is suggestive of why the United States experienced greater institutional weakening and rising inequality than other similar nations starting in the 1980s: its decentralized political economic structure facilitated the erosion of workers’ power and pay by institutionalizing community-level employment insecurity. Place-based competition for economic development thus operates as a mechanism of institutional weakening, employment restructuring and rising inequality in the United States. Finally, in this account rising employment insecurity and inequality are facilitated by competitive local political economy but they are ultimately a product of business political mobilization, as business actors were critical in the 1970s policy-making that responded to economic crisis with measures to encourage local competition for mobile capital.