Introduction and overview

This volume grows out of the research on the United States summarized in Low-Wage America: How Employers Are Reshaping Opportunity in the Workplace (Appelbaum, Bernhardt, and Murnane 2003), which sought to understand how U.S. firms were responding to economic globalization, deregulation, and technological progress and the impact of these responses on typical low-wage frontline workers. Two broad conclusions emerged from the array of qualitative and quantitative data presented in Low-Wage America. First, while most U.S. firms responded to the economic pressures of the last three decades by engaging in cost-cutting efforts that resulted in deteriorating pay and working conditions for their frontline workers, some firms chose different competitive strategies that yielded better outcomes for workers. These alternative "high- road" labor market strategies included focusing on reorganizing the work process, increasing capital intensity, introducing new technology, implementing innovations in products and services, and providing more and better training. These measures generally sought to raise the productivity or lower the turnover of low-wage workers in ways that would offset the higher initial investments or ongoing costs of taking the "high road."1 The second broad conclusion of Low-Wage America was that labor market institutions have an important impact on firms' choices about how to respond to competitive pressures. From the end of the 1970s to the present, the decline in unionization rates and the erosion of the real value of the minimum wage, for example, have made it substantially easier for U.S. firms to respond to market challenges by taking the "low road." But still, some firms did choose high-road workplace practices in organizing and rewarding the work of less-skilled em ployees. And these decisions appear to have been shaped by labor market institutions-an employers' association in North Carolina that facilitated training and modernization, fostered new product development, sought new markets, and improved outcomes for both workers and companies; a training facility, jointly managed by hospitals and the health care union in New York City, that improved skills and pay for less-skilled hospital workers; high union density in a vacation destination city with upmarket hotels that led to substantially higher wages and better working conditions for hotel housekeepers. Nevertheless, only a small minority of the firms studied followed such high-road practices. In research focused solely on the United States, it is difficult to draw conclusions about the role of institutions in determining outcomes for workers in low-paid jobs. There is little institutional variation across the United States-the examples just given of strong labor market institutions in particular locales are widely recognized as exceptions to the general pattern of weak employers' associations, a low level of union density, and the failure of employers to train frontline workers. Our idea was that there might be much to be learned about the nature of jobs that are low-wage in the United States by studying these same jobs in other advanced industrial nations with very different institutional settings. More precisely, our key assumption was that the effects on national economies of changing technology, increasing globalization, and intensifying competition are filtered through institutional structures and, further, that these effects can be observed in the strategic decisions made by firms and in the quality of jobs held by workers. Indeed, this thinking was the genesis of the Russell Sage Foundation's decision to undertake industry-based case studies of job quality in foreign economies in 2005-2006. Selecting the comparison countries required balancing a set of factors. To be most useful, the comparison economies had to be different from the United States (and from each other), but not so radically different with respect to economic, political, and institutional (including cultural) institutions that they would bring little to a U.S.-focused discussion. Ultimately, three large economies-France, Germany, and the United Kingdom- And two smaller northern European economies-Denmark and the Netherlands-were selected. Researchers in all five countries followed a common methodology built around firm-level case studies in five industries-call centers, food processing, hospitals, hotels, and retail trade.2 Within each firm and industry, country teams focused on specific tasks typically performed in the United States by low-wage frontline workers: call center operators; operators in food processing; nursing assistants and cleaners in hospitals; hotel housekeepers; and cashiers and stock or sales clerks in retail. To complement these case studies, national researchers also used available data to draw the broader contours of low-wage and less-skilled work in each country.3 To measure the extent of low-wage work, national teams defined low-wage workers as those workers earning a gross hourly wage of less than two-thirds of each country's median gross hourly wage. The relative definition of low-wage work has several advantages over an absolute definition. The relative definition abstracts from differences in wages that simply reflect differences in average incomes across the six countries.4 More importantly, the relative definition reflects the view that relative pay matters both economically and socially. Firms are continuously making hiring and investment decisions based on the relative costs of different kinds of workers and different technologies. And workers are intrinsically concerned about the implied social valuation of their work that is included in the relative wage. This social aspect of pay suggests that relative pay is also a key dimension of job quality. Indeed, beyond pay, job quality is at the center of the analytical focus of this research. European countries have seen a renewed interest in this issue since the 1990s, and job quality has acquired an important place in the social and employment agenda of the European Union (see Gallie 2007). In this volume, we use the concept of job quality in its broadest sense, covering all the terms of employment and working conditions that may have an impact on the well-being of workers, both at work and in their private lives. Measuring job quality inevitably involves striking a balance between objective job characteristics and workers' subjective perceptions, including those related to job satisfaction. Most analyses of the key determinants of job quality focus on: compensation, including benefits or social entitlements (such as health insurance, pension, paid vacation, parental leave, paid sick days, and other nonwage compensation); contractual status, in particular whether the job is permanent or temporary (one of the fundamental determinants of job security); training and career opportunities; task discretion and other aspects of job design, such as work pace; health and safety conditions; and work schedules, including the scope for finding a balance between work and family life. The project's firm-level case studies, which focused on specific occupations in the same industries in all six countries, were particularly well suited to comparing these many dimensions of job quality across a variety of national institutional structures. As far as possible, national teams attempted to study eight firms in each industry in each country.5 In each firm, employers, executives, employees' representatives, and a sample of workers were interviewed following shared guidelines. The case studies also included workplace visits and, where possible, quantitative data provided by the firms. The results of each national research effort were first published in five national monographs.6 This volume seeks to extract some of the comparative lessons, reintroducing the American case. The main sources of the evidence and analysis here are the national monographs for the five European countries; this volume also draws less directly on earlier research presented in Low-Wage America, which has been updated and supplemented by U.S.-based researchers working with the European teams. The remainder of this chapter summarizes the main findings of the project. Copyright © 2010 by Russell Sage Foundation