One of the staples of Japan’s lost now two decades has been an unrelenting squeeze on worker wages and work conditions. New graduates used to get full time jobs. Now man are “freeters” in a sort of temp purgatory. And given how important social networks are in Japan, the lack of a real position and an assured wage is far more stressful than it is in the US. And young men in this fix are not viewed favorably in the marriage market either.
Even workers that have jobs have dim prospects. Japan was never a place for big pay, but most workers could expect a reasonable progression over their careers. Because Japanese companies have tried to preserve employment, they have wound up cutting raises to more senior managers. How would you feel about a career path that had you taking on more responsibility and stress for pretty much no more money? But you can’t quite because the alternatives are worse.
The US version, as set forth by Louis Uchitelle, does look worse: you do the same job for less money. And not a little less money, but in some cases, a lot.
I do find it a bit odd that Uchitelle used a pilots as his case example, as did Michael Moore in Capitalism:
A Love Story. This might have been sheer coincidence, but if not, Uchitelle should have made some reference to Moore.
From the New York Times:
[Bryan Lawlor] is now in the co-pilot’s seat in the 50-seat commuter jets he flies, not for any failure in skill. He wears his captain’s stripes, he explains, to make that point. But with air travel down, his employer cut costs by downgrading 130 captains, those with the lowest seniority, to first officers, automatically cutting the wage of each by roughly 50 percent — to $34,000 in Mr. Lawlor’s case.
The demotion, the loss of command, the cut in pay to less than his wife, Tracy, makes as a fourth-grade teacher, have diminished Mr. Lawlor, 34, in his own eyes…“I don’t want to be a 50-year-old pilot earning $40,000 a year,” he said, adding that his wife does not want to be married to a pilot with so little earning power….pay cuts, sometimes the result of downgrades in rank or shortened workweeks, are occurring more frequently than at any time since the Great Depression.
State workers in Georgia are taking home smaller paychecks. So are the tens of thousands of employees in California’s public university system. The steel company Nucor and the technology giant Hewlett-Packard have embraced the practice. So have several airlines and many small businesses.
The Bureau of Labor Statistics does not track pay cuts, but it suggests they are reflected in the steep decline of another statistic: total weekly pay for production workers, pilots among them, representing 80 percent of the work force. That index has fallen for nine consecutive months, an unprecedented string over the 44 years the bureau has calculated weekly pay, capturing the large number of people out of work, those working fewer hours and those whose wages have been cut. The old record was a two-month decline, during the 1981-1982 recession.
Yves here. What is striking (per the earlier comment, that Lawlor’s wife does not want to be married to a now inferior earner) is how deeply ingrained the “my paycheck is my worth as a man” ethic is ingrained. Lawlor is concerned his kids will think less of him if they get less under the tree at Christmas. He has been depleting his savings to keep up appearances with his own children! This is truly sick:
Bryan and Tracy Lawlor, who is also 34, have hidden their straitened circumstances from their four young children, mainly at his insistence. But as their savings dwindle, Christmas, a key indicator in the Lawlor family, will mean fewer presents this year. The Lawlors have made a practice of piling on toys and new clothes for their children at Christmas, buying relatively less the rest of the year. That will make a cutback noticeable this holiday season, and the parents are concerned that their children will begin to realize why.
“You don’t want to see disappointment on their faces; that makes me feel horrible,” Mr. Lawlor said. “You can be the best pilot in the airline and make the best landings, and in their eyes, I am not going to be as important as I was.”
Yves here. My father got a second graduate degree very late, when I was six years old, and quit his job to pursue it full time. I can look back on our Christmas photos and see that the pile under the tree was smaller those two years than before or after. I have NO recollection of being disappointed. In fact, one of my all time favorite presents was the sled I got that year. But that was more than 40 years ago, and kids have been trained to become smarter consumers in the meantime.
In fairness, the wife was interviewed at length, and she seems better reconciled to their situation than he is:
One year later, even after such a big pay cut, Mrs. Lawlor sees her husband’s shorter commute to his new base at Newark as a blessing she is reluctant to give up. Her husband says that moving back up to captain, with a captain’s pay, might mean commuting again to California. “If that is what it takes, I’ll do it,” he said, and this time his wife winced.
“I would probably not be happy,” she said. But she “wouldn’t trade him for another husband,” as she put it, and while she had never wanted her husband to be a pilot, at this point she would be alarmed if he left aviation in an attempt to please her.
“He likes what he does,” she said, “whereas before he did not like what he did. That has made him easier to be around, whereas before he became a pilot, he wasn’t happy at all.”
But the fact that she has even though of whether she would “trade him in” is telling. What has happened that Americans are so ill equipped to deal with adversity? Although a New York Time story is a very artificial window, one can imagine with Lawlor’s job that his social network beyond his family and co-workers is limited. Pilots work schedules that put them out of synch with most 9 to 5 (or 7) types. And that has become endemic in the US as most jobs have become more demanding and community ties have weakened. Weak or thin social networks are strongly correlated with lower mental health scores.
In other words, the US has unwittingly done a great job of conditioning many of its citizens to be even more dependent on their standing at work than they otherwise would be.
Contrast that New York Times story with the lead item at the Wall Street Journal, “Wall Street on Track to Award Record Pay“:
Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year — a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street’s pay culture.
Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did the peak year of 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year-end by The Wall Street Journal.
Total compensation and benefits at the publicly traded firms analyzed by the Journal are on track to increase 20% from last year’s $117 billion — and to top 2007’s $130 billion payout. This year, employees at the companies will earn an estimated $143,400 on average, up almost $2,000 from 2007 levels.