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End of the 20th Century, Toward a Global Economy

air traffic controllers strike, postindustrial economy, lacking benefits, steel imports, contingent workers

In the last quarter of the 20th century, the United States moved toward a postindustrial economy, one based more on services and information processing than on manufacturing. In the 1970s industrial production declined, most significantly in iron, steel, autos, rubber, and textiles. Competition from abroad, such as auto and steel imports from Japan and Germany, forced many Americans out of well-paying jobs, and the manufacturing sector continued to shrink.

The service sector, however, expanded. Some service workers were highly paid, such as computer technicians, engineers, and managers. Most service workers, however, worked in low-paying jobs, such as retail sales, fast food, or custodial work. The decline of manufacturing and the loss of jobs were closely tied to the development of a global economy. In a global economy, capital and business relationships cross national and regional boundaries.

Roots of the global economy reach back to the late 19th century, when large businesses set up overseas operations. In the 1950s major American companies sought facilities and markets in Europe. The most recent wave of globalization began in the 1970s, led by the United States and Japan. In both countries, large multinational corporations produced goods and ran subsidiary units in other nations. By the 1990s computers and the Internet (a worldwide network that links computers and provides instant communication) enabled investors to move capital anywhere in the world instantaneously, uncontrolled by government.

At the century’s end, Americans were enmeshed in the global economy; tens of millions of American jobs depended on world markets. Many U.S. companies set up operations abroad to reduce labor costs and to ensure access to foreign markets. Consequently, Americans lost jobs that moved overseas. Meanwhile, foreigners invested capital in U.S. banks, businesses, and real estate. Japanese companies built auto plants in Tennessee and Indiana that employed tens of thousands of American workers. The global economy generated corporate profits, especially for the world’s largest multinationals. Less fortunate consequences included a rising trade deficit (Americans bought more in foreign goods than they sold to foreign nations). The global economy also meant that events in markets around the world had a greater effect on financial markets in the United States. Many American investors discovered this effect in the fall of 1998, when stock prices, influenced by markets in Japan, Europe, and around the globe, wavered wildly.

To attract investment, increase trade, and regulate the global economy, the United States joined regional trade organizations. In East Asia, the Asia-Pacific Economic Cooperation (APEC) linked the United States and Asian nations. In 1988 the United States and Canada signed a treaty to begin a transition to complete free trade, and in 1994 the arrangement, the North American Free Trade Agreement (NAFTA), was extended to include Mexico. The General Agreement on Tariffs and Trade (GATT) treaty, signed by the United States in 1994, lowered trade barriers and established the World Trade Organization (WTO) to resolve disputes.

Postindustrialization and the global economy took a toll on American workers. Between 1979 and 1995, the United States lost more than 43 million jobs. In the 1980s, as the Cold War wound down, defense industries folded and left thousands unemployed. In the early 1990s, major corporations laid off hundreds of thousands of employees. Such drastic cuts, known as downsizing, were necessary, companies claimed, in order to compete in the global economy. Workers who moved to new jobs in the service sector usually earned less, and the ranks of temporary and part-time workers, lacking benefits or prospects for advancement, grew. Unemployment declined at the end of the 1990s as the economy soared and the federal deficit shrank.

Organized labor also saw hard times. As blue-collar jobs vanished, union membership fell, and unions began to lose leverage as a political pressure group. A turning point came in 1981 when President Reagan broke an air traffic controllers strike. The strikers’ loss was especially significant because in this instance, the employer was the U.S. government. Thereafter, unions struggled to cope with the dual impact of a postindustrial and global economy. At the same time, income inequality increased. By the 1990s, chief executive officers (CEOs) earned several hundred dollars for every dollar earned by the average factory worker.

As labor lost power, management gained it. Surging insurance costs, for instance, boosted employer demands for managed care, or health maintenance organizations (HMOs). Such organizations multiplied after Congress failed to enact the Clinton administration’s health-care plan. By the end of the 1990s HMOs enrolled more than 60 percent of the population. A goal of employers—to lower insurance costs—thus transformed a sector of the economy. But managed care evoked controversy. Proponents claimed that managed care plans focused on preventing illnesses rather than just treating them. Critics argued that managed care deprived doctors of authority, forced patients to cede the right to choose their own doctors, and put cost control before quality care.

Finally, women’s entry into the work force in massive numbers changed the economy. In 1980, 51.5 percent of women age 16 and older had joined the labor force, where they made up 42.5 percent of employed workers. By 1997, 59.8 percent of women were in the labor force, representing 46.2 percent of all workers. Women brought to the workplace new concerns—about wage inequality, quality childcare, and the integration of paid work with family life. A growing industry developed to provide day care for children, but the government rarely funded such facilities although some people thought it should.

Despite their increased numbers in the workplace, women generally received less pay than men. Women’s organizations demanded pay equity, or comparable worth, an effort to raise pay levels in occupations in which women predominate. Under a pay equity policy, for instance, a woman office worker and a male truck driver who worked for the same company would receive the same pay. Women managers complained about a “glass ceiling” that limited their prospects for advancement. For women working in office jobs, new technology transformed office work but devalued the skills of clerical employees. Many women joined the growing pool of less costly temporary or contingent workers.

Women’s growing role in the work force led to changes in public policy. One change was a family leave policy. In 1990 President Bush vetoed a bill that would have offered unpaid leave to workers with family obligations. But President Clinton in 1993 signed a family leave law that required companies of more than 50 workers to allow workers up to 12 weeks of unpaid leave a year to cope with family concerns. The law enabled workers with obligations related to childbirth, adoption, illness of a family member, or an aged relative to take short periods of time off without fear of losing their jobs.

Women’s concerns about economic equality also led the federal government in the 1980s to develop policies against sexual harassment in the workplace. Sexual harassment, according to the Equal Employment Opportunity Commission, refers to behavior that makes sex a condition of advancement, unreasonably interferes with an individual’s job performance, or creates an “intimidating, hostile, or offensive working environment.” Such behavior is a form of sex discrimination prohibited by the civil rights law of 1964. Beginning in 1986, federal court decisions defined the concept of sexual harassment and upheld rules against it. Sexual harassment policy received extensive publicity in 1991 when lawyer Anita Hill testified before the Senate Judiciary Committee to block the Supreme Court appointment of future justice Clarence Thomas.



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