The shareholder value society: A review of the changes in working conditions and inequality in the United States, 1976 to 2000

Neil Fligstein, Taek Jin Shin

Research output: Chapter in Book/Report/Conference proceedingChapter


Increases in income inequality in the United States over the past quarter-century have been well documented (Murphy and Welch 1992; Karoly 1992; Freeman 1997; Levy and Murnane 1992; Katz and Autor 1999). Everyone has agreed to three main facts: income and wage inequality increased in the 1980s, stabilized in the late 1980s and early 1990s, then began to increase until the late 1990s, when it once again stabilized (Freeman 1997; Lee 1999). Generally, the workers who fared the worst in these changes were those who did not finish high school. They saw their wages relative to those of college graduates slip by at least 30 percent (Freeman 1997, Lee 1999; Mishel, Bernstein, and Schmitt 2001). Finally, women generally saw their situation improve relative to men over the period (Karoly 1992; Freeman 1997). From the data, it appears as if low-skilled men suffered the brunt of these changes (Lee 1999). There has been a lively theoretical and empirical debate over the causes of these changes (for some review articles, see Topel 1990; Fortin and Lemieux 1997). Some observers have concluded that most of the change stemmed from the increase in demand for skilled labor caused by technological change (Katz and Murphy 1992; Bresnahan, Brynjolfsson, and Hitt 2000; Krueger 1993). Others have focused attention on institutional factors, such as the decline in unions and the lack of any increase in the minimum wage (Lee 1999; Freeman 1997; Card 1992). Still others have tried to examine how the continuing shift from manufacturing to services and the increased exposure to world markets has helped skilled workers and hurt unskilled workers (Freeman 1997; Bluestone and Harrison 1982). Finally, some researchers have focused on the depressive effect of immigration patterns on the wages of low-skilled workers (Borjas 1999). This debate turns very much on how we measure these factors and their effects. A related debate concerns how work and jobs have changed in the past twenty-five years. Many observers argue that during the 1980s the employment relation in the United States began to change for all workers (see, for example, Osterman 1999; Gordon 2000; Pfeffer and Baron 1988; Blair and Kochan 2000). Firms began to redefine their core workers and to downsize, outsource, and employ more contract workers. This made workers generally more insecure, and as we show, dissatisfied with work. This chapter reviews the literature on this subject and tries to link these changes to shifts in income inequality. We provide descriptive evidence consistent with the view that work changed over this period as income became more unequally distributed. The literature shows very clearly that not only did workers on the bottom of the skill distribution fare poorly by losing ground on wages, but they also encountered less safe working conditions, found themselves working less regular shifts, received fewer benefits such as pensions and health care, and experienced lower job security and job satisfaction. In essence, the increases in wage inequality were accompanied by a growing insecuritization of work for those at the bottom. The evidence is somewhat different for those at the top of the income distribution. While they experienced more insecurity at work as well, they also benefited from the changes in employment relations. Their benefits remained more stable. For those whose incomes went up the most, job satisfaction increased as well as their sense of efficacy at work. Hours of work also increased for those with the highest incomes, but most appear to enjoy their work. In this review, we first consider more carefully the argument about what has changed in the employment relations of various groups of workers in the past twenty-five years. Then we look at the evidence that measures those changes. We make an explicit attempt to link these changes to changes in income inequality wherever possible. Finally, we discuss the further research implied by our review.

Original languageEnglish (US)
Title of host publicationSocial Inequality
PublisherRussell Sage Foundation
Number of pages32
ISBN (Print)0871546205, 9780871546210
StatePublished - 2004

ASJC Scopus subject areas

  • General Social Sciences


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