A Transformative Jobs Plan: What’s Good for IBM’s Top Executives is Not Good for the U.S.

[Donnachaidh]

http://www.newdeal20.org/category/breaking-through-the-jobless-recovery/

With the unemployment rate still at over 9 percent and the U.S. economy facing a possible double-dip recession, President Obama’s jobs plan can only help. If, however, the main point of the plan is to put the employment situation in decent shape by a year from now, I would not bet on its success. The U.S. jobs problem is deeply structural, and requires a transformative plan for a solution.

The dearth of jobs, even in an economic recovery, reflects the cumulative impact of three structural changes in the employment practices of U.S. industrial corporations. From the beginning of the 1980s, rationalization, characterized by plant closings, eliminated the jobs of blue-collar workers. From the beginning of the 1990s, marketization, characterized by the end of the norm of a career with one company, placed the job security of middle-aged and older white-collar workers in jeopardy. And from the 2000s globalization, characterized by the offshoring of employment, left all members of the U.S. labor force, even those with advanced educational credentials and substantial work experience, vulnerable to displacement.

The problem that these structural changes pose for the prosperity of the U.S. economy is evident in the history of employment at International Business Machines (IBM). From the 1920s through the 1980s, IBM’s system of lifelong employment offered all personnel — including clerical and production workers — a career with one company. At the end of 1989, IBM employed 383,220 people worldwide. At the end of 1994, just five years later, that number had been reduced by 43 percent to 219,839. At first, IBM downsized by offering voluntary early retirement packages, thus clinging to the principle of lifelong employment. By 1993, however, with the recruitment from RJR Nabisco of Louis Gerstner as IBM’s CEO, the company fired tens of thousands outright. By 1994, as a result of the marketization of the employment relation, lifelong employment was a relic of the past. A truly transformative jobs plan will crack down on the self-interested ways in which U.S. executives allocate corporate profits so that they can be used instead to employ American workers.

IBM’s history goes back 100 years, but by 1980, when a microcomputer startup named Apple did its initial public offering, IBM — number eight on the Fortune 500 list — had $3.6 billion in profits and 341,729 employees. Relying on Intel’s microprocessors and Microsoft’s operating system, IBM moved quickly to become dominant in personal computers, defining the open-system architecture of the PC. In 1982, IBM’s PC sales were $500 million, and just two years later they were 11 times that amount, more than triple the 1984 revenues of its nearest competitor, Apple, and about equal to the revenues of IBM’s top eight rivals. Subsequently, however, IBM lost market share to lower-priced PC clones produced by companies such as Compaq, Gateway, and Dell.

More at the link --

[sinkingfeeling]

1. Thanks for posting this. From an IBM retiree.