Book reviews
Safety
in the good old days
Doctors in
unions
Economic
theory
Unemployment
insurance
Safety First: Technology, Labor and Business in the Building of American Work Safety 1870–1939. By Mark Aldrich. Baltimore, MD, Johns Hopkins University Press, 1997, 415 pp.
At least one thing can be said about working conditions in the good old days: they were terrible! In Safety First: Technology, Labor, and Business in the Building of American Work Safety: 1870–1939, economist Mark Aldrich provides a valuable account of how the rising safety movement at the turn of the century shaped many of our modern safety institutions. This documentary describes the assimilation of newer and safer technologies into mainstream economic activities, flourished with an excellent collection of photography. It tells of combined institutional factors that combined to formed a safer environment in three industries: railroads, coal mining, and manufacturing.
Railroads. Aldrich describes the Safety First movement’s inauguration to railroading in 1912. The Safety First movement was designed to reduce costs by taking away operator control over work practices, and thereby eliminate the capability for human error. Unions were distrustful of management interest in safety (a movement they had initially supported) because workers perceived management’s interest as insincere.
Ultimately, several factors improved railroad safety: hours legislation reduced fatigue; block control systems reduced collisions; air brakes reduced the need to go between cars; and the use of heavier rails—a voluntary decision of the American Railroad Association—reduced derailments. Many railroad executives also instituted minimum safety measures to avoid government intervention. Thus, development of safety rules and procedures in railroads had little to do with compensating wage differentials so popular in today’s economics literature. Rather, employers were concerned with the total cost of injury and liability, as well as company image.
Mining. The mining industry was one of the earliest to experience massive disasters, but one of the last to implement safety improvements. Aldrich reminds us that initial endowments of raw materials can affect development of work processes. Timber was bountiful and very cheap, allowing U.S. mining companies to dig very deep mines using the more dangerous tunnel and room method, rather than longwalling.
Independent contracting was another major factor affecting mining safety. Contractors were paid by the piece and to increase their daily lot, would sometimes forgo proper installation of braces. The size of the mines were getting larger, increasing the potential for ceilings to collapse, while mechanization increased the risk of explosions. Management remained indifferent to these disaster forming conditions even though catastrophes often drove labor camps away.
The development of mine run laws in 1897 that required miners to be paid for slag, not just lump coal, slowed the incessant digging of large cavernous holes. Above ground, unions fought for air quality laws in Pennsylvania, and other States followed. Under the earth’s surface, battles over technology and work safety ensued. One example explains why miners objected to the introduction of a new technology—closed lamps. Miners viewed closed lamps as an interference with independent work practices, and believed closed lamps allowed companies to skimp on other important safety measures, especially ventilation.
Aldrich argues that despite the establishment of the Bureau of Mines, most improvements in safety were due to mechanization and electricity, which increased the proportion of surface workers. The threat of safety regulations and ill regard from the public encouraged companies to voluntarily adopt safety measures.
Manufacturing. The discussion of manufacturing begins with a description of new Taylorist work practices. The development of modern safety institutions, including the National Safety Council and the State workers compensation systems, were part of a movement to establish control over labor, but there was a tension between safety and profits.
While many safety professionals believed safety was too important to be left to dictates of profitability, giant firms (such as U.S. Steel) dominated the National Safety Council and formed an alliance that emphasized engineering, rather than worker empowerment. Insurance companies were also early players, conducting thousands of inspections and investigating accidents. Despite added incentives to reduce costs, profitmaking manufacturing institutions were more likely to attribute accidents to an injured worker’s own carelessness. Disputes had to be settled in the courts, spurring development of workers’ compensation systems.
Aldrich points to several factors influencing manufacturing safety, discussing not only management’s responsibility, but also its need to obtain worker participation in safety. In exchange for participation, companies gave monetary rewards to participants on safety councils. As corporatism developed, employers spent more on accident prevention, and enticed more employees to jump on the safety bandwagon. Workers resisted, in part fearing their pay would decrease because they were often paid piece rates. Slowly, employees began to "accept the new regime" with minor objections to machine guards and uncomfortable protective equipment.
Aldrich recognized that the corporate interest in safety in manufacturing developed from scientific management. The decisions were imposed from top management and, for workers, represented loss of control over their work. Employers were increasingly made aware of the costs of safety, and began to base some decisions on that information. Accordingly, employers obtained countless productivity enhancements due to safety improvements, but workers lost control over their own pace and methods of work.
Safety First shows how different forms of economic development in distinctive institutional contexts can have varied consequences on occupational safety and health. Aldrich goes a far way to pull modern economic and empirical issues from history to the fore. The important lesson for economists is to look beyond the immediate effects of legislation to fully appreciate the dynamic context of legal, management, and labor institutions which influence behavior. However, toward this full appreciation, three issues deserve brief discussion.
First, despite its very particular explanations, the book suffers from some generalization of management styles in the manufacturing industry. It would have been helpful if the author had emphasized earlier in the chapter that only a very small percentage and the largest firms, those with "organizational nags," were engaged in the Safety First movement. Aldrich gives some explanation why firm size matters, but what about ownership and employee relations in the 75 percent of firms without safety directors?
Second, Aldrich justifies masculine terminology, saying, "the safety movement was largely masculine, and in many of the industries where it was active most of the workers were male." Replacing the term "manhours" with "hours" is easy enough, but this statement is not a matter of political correctness, but of accuracy. While Aldrich explains that men dominated the industrial safety movement and safety committees, he fails to consider women as activist wives and as union members themselves. He even omitted the horrific 1911 Triangle Shirtwaist Co. fire in New York—where 154 workers, mostly women and children, died and 50 women jumped 10 stories to their deaths. This event galvanized men and women to demand corrections. Sadly, Aldrich’s index only contains the names of two women, Mrs. Dupont and Mrs. Eastman, both wives of company executives. Important though they may have been, they hardly marched in the streets, testified before the government, and pressured management and the government to improve safety requirements, end child labor, protect their husband’s health, and control pollution, as did several women at the turn of the century.
Third, Aldrich describes safety improvements over the 20th century as breathtaking. While rates of incidence have dropped, the United States still has roughly 6,100 fatalities and 6.6 million injuries and illness cases (one-third with lost work days) each year, according to the Bureau of Labor Statistics, making it one of the most "least-progressive" industrialized nation in terms of occupational safety and health improvements.
The pace of technological change has dramatically increased since the turn of the century. Even during that dazzling period of new inventions, diffusion was amazingly slow. Today, new, unpredictable, and potentially dangerous technologies, equipment, and materials are introduced into workplaces almost daily. We may not know what the effects of these are for decades to come. We must inquire: What has changed in our ability to control technologies?
Safety First provides truly fascinating stories about the difficulties of getting very simple changes approved and in use. The value of this book lies not only in the rich institutional detail of new and safer technologies and management and labor’s ability to assimilate them, but also in providing a warning for the future. Our ability to keep up with the speed of change, and our ability to quickly and safely assimilate improvements into our work while preserving and improving employment will be one of the greatest challenges for labor-management cooperation. The stories told by Aldrich suggest that if any party leaves the bargaining table, unilaterally imposed technology and safety rules will remain contestable terrain.
When Doctors Join Unions. By Grace Budrys. Ithaca, NY, Cornell University Press, 1997, 155 pp., bibliography. $35.
In the last few years, health care cost increases have attracted the attention of the media, policymakers, academicians, and the general public. New managed care techniques have been developed in order to contain costs. Traditional indemnity plans are increasing their use of managed care techniques in an attempt to reduce costs. For example, techniques such as preadmission certification and second surgical opinions are widespread among indemnity plans. The composition of the health care sector providers has been changing as well. In most States, the figure of the doctor with an individual practice has been disappearing in favor of new alternatives, such as physicians’ hospital organizations and health maintenance organizations.
When Doctors Join Unions focuses on practically the sole survivor of the physicians’ union movement of the 1970s, the Union of American Physicians and Dentists (Physicians and Dentists Union). This union started in California in 1972 and has developed its own model. In a dual role, it is a union for salaried physicians and a consultant for doctors in private practice. This book is the result of research that recounts the origins of the Physicians and Dentists Union and its development in the last two decades. The author mentions another physicians’ union established in New York in 1959, but does not combine the experiences of both unions.
The author organizes the book by four study approaches identified as health services, industrial relations, organizational and occupational analysis, and cross-national comparative perspectives. Each approach is related to changes the Physicians and Dentists Union has faced in its history, and how it is reinventing itself to gain the support of physicians and the respect of policymakers. Budrys favors doctors’ unions and promotes them as a response to the centralization and market-oriented decisions that doctors increasingly face in their constantly changing environment. Even though the author favors the Physicians and Dentists Union cause, the book presents contrasting opinions related to the emergence and role of doctors’ unions.
According to Budrys, in the United States, physicians unions exist because doctors’ social status and professional autonomy are at stake. These points allow the author to discuss other topics, such as the traditional role of unions, the meaning of professionalism, and doctors’ unions as a model for the so-called post-industrial era.
As argued in the book, doctors’ unions are products of their societies and they need public support. Budrys illustrates both points by describing experiences from unions in Germany, Canada, Israel, and other countries where physicians’ unions are common. Also, according to Budrys, physicians’ unions reflect the prevalent value system. Therefore, the experiences of physicians’ unions in other countries are not yet relevant in the United States, where the current value system is still individualistic and self-achievement is the goal.
In general, the author fulfilled her objective of answering three main questions: Why do doctors need a union? Why did the Union of American Physicians and Dentists survive while other physicians’ unions did not? Why would physicians choose to turn to a union? The author answers these questions throughout the book and devotes an entire chapter in order to reiterate them. Putting together the history of the Physicians and Dentists Union allows Budrys to provide information that helps readers comprehend the transformation that has been occurring in the health care sector since the 1960s, which itself is one of the major contributions of the book. The role that the Physicians and Dentists Union will play in the development of future unions is still unknown, so extrapolating the Physicians and Dentists Union experience to other occupational groups is risky and still needs more study.
The book is well-written, easy to read, and understandable, although some familiarity with health care terms may be useful. The use of the four approaches might be too ambitious; thus some sections, such as the industrialization and the post-industrialization chapters, serve only as an introduction for the interested reader to seek more information in specialized sources, such as those listed in the extensive bibliography.
Full Employment and Growth: Further Keynesian Essays on Policy. By James Tobin. Brookfield, VT, Edward Elgar Publishing Co., 1996, 312 pp.
Professor James Tobin’s many contributions to the field of economics cover a broad range—from purely theoretical work in econometric methods and formal modeling to applied analysis of government economic policy. In 1981, he received the Nobel Prize in Economics for his "most outstanding and significant research contribution [which] belongs to the theory of financial markets and their relation to consumption and investment decisions, production, employment, and prices."
To many, both inside and outside of the economics profession, the ideas presented by British economist John Maynard Keynes in his influential 1936 book, The General Theory of Employment, Interest and Money, have long been laid to rest. In his latest collection of essays for the general reader, Tobin offers a cogent argument to the contrary. Drawn from various nontechnical articles and speeches from over the last decade, Full Employment and Growth provides a primer on contemporary economic history, theory, and practice.
Because the "main purpose and pre-occupation of macroeconomic theory is to guide fiscal and monetary policies," different theories "imply important differences in policy." Tobin reminds us that for much of the post-World War II era, most mainstream economists and policymakers considered themselves Keynesians of one form or another. The Great Depression had allowed Keynes to question the classical orthodoxy of his day, and the prosperity that followed had given his new theory credibility. But the oil shocks and related economic problems of the 1970s increasingly brought Keynesian ideas into question, and eventually they were largely replaced by those of "neoclassical economics."
Tobin is unapologetic about his stance: "I am still a Keynesian [and] I continue to fight for Keynesian policies and against the extreme revivals of classical economics within my profession." The two "schools" of economics differ primarily in their view of the business cycle and what, if anything, should be done by the government to ease or even prevent them. According to Tobin, "Keynesian theory," which developed in the context of the Great Depression, "regards recessions as lapses from full-employment equilibrium, massive economy-wide market failures resulting from shortages of aggregate demand for goods and services and for the labour to produce them." Keynesians therefore "advocate active fiscal and monetary policies [by the government] to restore and maintain full employment" during economic downturns.
Neoclassical theory, on the other hand, "interprets fluctuations [in output and employment] as moving equilibrium, individually and socially rational responses to unavoidable exogenous shocks." Thus, by the logic of its adherents, "no policy interventions are necessary or desirable." They would only make matters worse.
Tobin’s essays are divided into five sections: macroeconomic policy, monetary policy, fiscal policy, international economic relations, and social policy. The first section deals primarily with Tobin’s defense of Keynesian theory and policy, and his dissent from what he calls the "Panglossian view" of his neoclassical colleagues, who have "stretched" Adam Smith’s famous invisible hand doctrine to the point of "imply[ing] a complacent view of business cycles as healthy natural phenomena that require no interventions by central banks and governments." In just 76 pages, these first seven chapters eloquently describe the most important and influential economic theories of the past 50 years, as well as the relevant economic history of the period.
In the remaining sections, Tobin also covers an enormous amount of economic theory and history in a relatively short amount of space. The monetary policy section includes an essay on deregulating the finance industry, as well as several on specific monetary policies practiced in the United States since the 1980s. The fiscal policy section includes essays on the Federal budget deficit and prescriptions for growth and prosperity. Five essays on international economic relations cover such issues as trade with Japan, aiding the former Soviet Union countries, and globalization. The final chapters on social policy offer Tobin’s views on the persistence of poverty and growing economic inequality in the United States, the problems with the Social Security system, and health care reform.
Tobin’s perspective is hardly unbiased—he says repeatedly that he is an avowed Keynesian. But his book is nevertheless invaluable because it provides a concise, well-written, and accessible account of the macroeconomic issues that have dominated public policy debate for the last 20 years. Anyone wanting to better understand the Keynesian and neoclassical doctrines, as well as the economic events of the recent period, would benefit from reading Professor Tobin’s book.
Unemployment Insurance in the United States: Analysis of Policy Issues. Edited by Christopher J. O’Leary and Stephen A. Wandner. Kalamazoo, MI, W.E. Upjohn Institute for Employment Research, 1997, 761 pp.
Unemployment Insurance in the United States: Analysis of Policy Issues is a collection of papers originally written for a conference held in June 1995 at Kalamazoo, MI. The conference was sponsored by the U.S. Department of Labor and the W.E. Upjohn Institute for Employment Research in celebration of the Institute’s fiftieth anniversary. The editors, Christopher J. O’Leary and Stephen A. Wandner, intended the book for unemployment insurance specialists, but, with a little extra effort, generalists could benefit from studying it too.
O’Leary and Wandner state their objectives in the preface: ". . . to present an accessible survey of what is known about how the federal-state system of unemployment insurance (UI) works in the United States and to offer ideas for further improvement of the system." They have achieved their objectives. Not only do these papers describe how the system works, but they review analyses of the key issues, and suggest options for further research and improvement of the system.
The editors organized the book in a logical manner. Unemployment insurance is a partnership between the Federal Government and the States. The Social Security Act and the Federal Unemployment Tax Act form the framework and State unemployment insurance laws govern the programs within this framework. Benefits are financed by earmarked payroll taxes. On the benefit side, the editors organized the papers by covered employment, initial eligibility, continuing eligibility, weekly benefits, potential duration of benefits, and work disincentives. On the tax side, the authors examine the taxable wage base and experience-rated unemployment insurance tax systems in the States. Other papers address solvency of the system and individual State unemployment insurance programs, quality of administration, the role of the Employment Service, the Federal and State roles, and interaction with other programs. At the end, there is a comparison of the U.S. system with the Group of Seven nations and other countries around the world.
In light of recent evidence on the effectiveness of job search assistance, the most startling revelation is the recent trend in State unemployment insurance programs toward relaxing job search requirements. O’Leary and Wandner say this probably was: (1) a result of "the widely held belief that the work search requirement is not necessary or effective in promoting return to work"; and (2) an unintended consequence of benefit quality control. Burman Skrable notes that early in the implementation of benefit quality control in the 1980s, the largest source of reported overpayments was failure to search for work or unavailability for work. Apparently, in reaction to high reported overpayment errors, some States reduced their job-search requirements to lower their reported overpayments. As a result, reported overpayments fell, and the proportion of reported overpayments due to failure to search for work or unavailability for work dropped from around half to only 17 percent by 1994.
Besides weakened job-search requirements, other trouble spots are the ineligibility of rising numbers of self-employed independent contractors and part-time workers, the ineligibility of some low-wage workers with substantial hours of work in their base years, and an ineffective extended benefits program. Ideas for reform include improving definitions of employment, making eligible part-time workers seeking part-time work, adding an alternative hours of work measure in the base-year requirement to help low-wage workers gain eligibility, integrating the eligibility requirements of the extended benefits program with State programs, and activating the extended benefits program in each State with the total unemployment rate instead of the insured unemployment rate.
On the tax side, Philip B. Levine’s chapter shows that the burden of unemployment payroll taxes has been shifting away from high-wage workers toward low-wage workers. Even if it is merely a matter of equity, economists generally agree that unemployment taxable wage bases should be increased. The minimal Federal unemployment taxable wage base of $7,000, for example, has not changed since the early 1980s and would have exceeded $65,000 today if it had kept pace with the Social Security taxable wage base.
James R. Storey and Jennifer A. Neisner note that the unemployment insurance program in the United States is the only program in the world that experience rates employers. Do we know something the rest of the world does not know? We seem to believe that by internalizing the costs of unemployment, we will discourage layoffs and reduce average unemployment over the economic cycle. Yet, Levine concludes that research on experience rating provides ". . .no clear policy recommendations." Further, he says an unemployment insurance system with greater experience rating might lead to smaller fluctuations in employment over the business cycle, but lower levels of average employment than a system with less experience rating and greater variance in employment.
A major implication of the evidence presented in this book is that the system should place more emphasis on reemployment assistance in general and job-search assistance in particular. With greater numbers of welfare recipients probably earning unemployment insurance covered wages and becoming eligible for unemployment insurance benefits, job-search assistance could be even more important than recent evidence suggests. Although the unemployment insurance system has instituted Worker Profiling and Re-employment Services for dislocated workers, no similar system is in place for these newly eligible low-wage workers. Unless States reemphasize job-search requirements, unemployment insurance costs could escalate as newly eligible low-wage workers take longer to find new jobs than they would if they had more job search assistance. Such an unintended consequence of welfare reform on State unemployment insurance programs would be unfortunate not only for the unemployment insurance system, but also for welfare recipients earnestly trying to achieve self-sufficiency.
In the forward of this book, Robert G. Spiegelman said, "Overall, this book should become an essential reference for anyone interested in the state of knowledge about the policy issues facing the unemployment insurance system." I agree. This book will take a place along side Haber and Murray’s Unemployment Insurance in the American Economy: An Historical Review and Analysis, Blaustein’s Unemployment Insurance in the United States: The First Half Century, and the reports of the Unemployment Compensation Commission in 1980 and the reports of the Advisory Council on Unemployment Compensation in 1994, 1995, and 1996.
I recommend it highly.
—Richard A. Hobbie
The Lewin Group
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