What can management history tell us about the future of work

Author: Professor Bradley Bowden, Adjunct Fellow with the Institute for Public Affairs and Co-Editor of the Journal of Management History.

When one reads the extensive literature on the future of work one inevitably finds an emphasis on information technology, education, working-from-home, productivity and wealth. When one looks to the contemporary employment relations literature, however, one finds the reverse: an emphasis on job insecurity, declining real wages, income and racial inequality, the “uberisation” of work, and working-from-anywhere (i.e., outsourcing). Clearly one, if not both, of these perspectives are grounded in error. What can management history bring to our understandings as to where work is headed?

Easily overlooked in any debate as to the nature of work is the most basic question: what percentage of the working age population will be working at all? This brings with it a series of important subsidiary questions: how are changes in employment impacting prospects for men and women? How are ethnic minorities faring?

If we look to the United States as an exemplar of general trends, we can ascertain a major turning point with the Global Financial Crisis (GFC) of 2008-09. Prior to the GFC, labour force participation was on an upward trajectory having risen from 60.4% in 1972 to 66% in 2008. Since the GFC, labor force participation has declined, falling from 66% to 63.1%. between 2008 and 2019. Even before the GFC, however, there were some ominous signs. Increased labor force participation was solely due to greater employment among women, whose participation rose from 43.9% in 1972 to 59.5% in 2008. By contrast, male labor force participation fell markedly, from 78.9% to 73 percent during the same period. Since the GFC, both male and female participation have declined. Men are losing their jobs at an accelerating rate, falling by almost 4 percentage points between 2008 and 2019. For the first time, however, even women’s participation has fallen away, dropping by a bit over 2 percentage points.

The long-term decline in male labour force participation – which is evident in every advanced economy – points to the decline in traditionally male areas of employment, most particularly manufacturing, mining, agriculture and, to a lesser degree, transport. In mining, agriculture and transport it is clearly technology that has been the driver of change and job losses. Most of the changes in these areas are, however, of long standing. In transport, the great change was associated with containerisation, which happened in the 1960s and 1970s. Farm mechanisation was largely achieved by 1970. Mechanised mining was the norm by the 1980s. It is hard to see any significant future changes in these industries. The Boeing 747 Jumbo jet, for example, first flew in the 1960s but is still an aviation workhorse. In manufacturing, declining employment is partly technologically-driven but mainly a result of outsourcing to less developed nations, most notably China. Given the modest size of manufacturing in advanced economies, it is difficult to see how future changes in this sector will profoundly influence overall employment.

If we look to employment growth for women this is largely associated with 3 areas of high-wage employment (education, health and public administration) and 2 areas of low-wage employment (hospitality and retail). The first 3 are fully or partially tax-payer subsidised. Hospitality and retail are private-sector. Of these 5 industries, only retail faces the possibility of profound change. Online retail, however, is only a glorified form of mail-order shopping. It relies on established distribution and transport that use what are now well-tested technologies. Why then is female labour force participation falling? The main reason, one suspects, is the inability of government to fund an expansion of health, education and public administration at pre-GFC levels. It’s hard to see this changing much in the future either.

What does the future of work hold for minority ethnic groups?

Given the prominence of the Black Lives Matter protests, we would expect to see a need for the future to redress current inequities. But are there current inequities? If so, what are they?

In 2019, European American and African American labor force participation was almost identical. European American labor force participation was 63% while that for African Americans was 67.8%. Black men were less likely to be employed than White men with a labor force participation rate of 67.8% versus a White male rate of 71.4%. However, African American women (participation rate of 61.7%) are significantly more likely to be active in the labor force than European American women (participation rate of 56.8%). Among men, Hispanic Americans are also far more likely to be active in the labor force than either European American or African Americans. Hispanic American men boast a labor force participation rate of 80.7% - more than 9 percentage points above that for European American men and almost 13 percentage points above that of African American men. Hispanic American women, with a 59.3% participation rate, are also more likely to be active in the labor force than European American women (56.8%) but less likely to be working than African American women (61.7%). Asian American men also boast very high labor force participation rates. In 2019, 77.6% were active in the labor force. Asian American women (59.5%) also outperformed European American women.

Overall, it is evident, White men trail both Asian Americans and Hispanic Americans when it comes to employment. African American men perform worst of all. Among women, European Americans underperform every racial group. If we consider the college-educated, European American men (75.2% employment ratio in 2019 for those aged over 25 with a degree) are less likely to have a job than either African Americans (78%) or Hispanic Americans (83%). They are also far less likely to have a job than Asian Americans (81.3%) The same trend is apparent among women college graduates. Whereas European American women with a degree had an employment ratio of 68.2% in 2019, that for African Americans was 73.6% and that for Hispanic Americans was 72.3%. Asian American women fared the worst with an employment ratio of 66%. In future, we would anticipate that these trends would continue. Among college-educated, European Americans will continue to lose ground. Among the non-college-educated, the losers will mainly be African American men and European American women.

If we turn our attention from employment to wages the circumstances for minority groups is currently less favourable. Among those employed in management, professional work and related areas, Asian Americans currently command the highest average wage by a considerable margin, boasting an income of $1625 per week. European Americans earn $1319 on average. By comparison, African Americans and Hispanic Americans typically earn only $1067 and $1097, respectively. Among college-educated men a similar pattern is evident. Asian Americans and European Americans earn, on average, $1823 and $1612 per week, respectively. Similarly, with college-educated women, Asian Americans (average of $1416 per week) and, to a lesser degree, European Americans ($1197), earn more than African Americans ($1077) and Hispanic Americans ($1044). When we look at those with only a high-school education it is evident that European American men ($888 on average) typically earn more than African American men ($696), Asian American men ($739) and Hispanic American men ($761), Similarly, European American women with only a high-school education earn more on average ($653) than African Americas women ($586), Asian American women ($607) or Hispanic American women ($593).

In summary, it is evident that in terms of employment, European American men lag behind every ethnic group other than African American men. Among women, European American women underperform every ethnic group. In terms of wages, Asian Americans are the undoubted leaders with Hispanic American and African Americans under-performing. In future, one would anticipate that the much higher employment levels of African American, Hispanic American and Asian American men, will see these groups improve their wages position. In the case of Asian American men, this will involve an extension of their leadership position. By contrast, the comparative low employment levels for African American men lacking a college education means that wage levels for this group will lag even further behind others. Similarly, European American women will likewise see their comparatively weak employment levels translated into a declining wage position.

What of the “uberisation” of work and the growth of non-union employment? Despite its high visibility, there is little evidence that “uberisation” represents a significant employment trend. At most, this workforce represents around 4% of the total. The growth of health-care and education are far more significant. In Australia, where the percentage of the workforce engaged as “independent contractors” is more accurately measured than elsewhere, independent contractors remain around 10% of the workforce total. It has not changed much in the last 30 years. Many of the ‘independent contractors’ are well-paid professionals working in medicine and consulting. Statistically, the Uber-driver is insignificant. One suspects that the situation elsewhere is broadly similar. As for union membership, around two-thirds of the union membership in the United States, Canada and Australia are found in 3 areas – education, health and public sector employment. Other nations are broadly similar. Unions have, in short, become largely the preserve of well-paid professionals in a handful of highly-regulated industries. There is little evidence of this trend changing. Unions are, and will remain, remote from the experiences of most.

Professor Bradley Bowden is an Adjunct Fellow with the Institute for Public Affairs and Co-Editor of the Journal of Management History. The Journal publishes research dealing with business, management, and organisations, with a clear historical dimension. Recently, the Journal published a special issue titled Responsible business, business ethics, and management history in conversation - can history inform corporate responsibility?