Randy Hodson

Defrocking dualism: A new approach to defining industrial sectors

In this paper we argue that a division of the economy into core and periphery sectors does not do justice to the complexity of the structure of the U.S. economy. The dualistic approach is inadequate both theoretically and empirically. While the dual economy literature has utilized multiple concepts it has conceived of them as forming a single dimension. We develop additional concepts from the complex organizations literature and utilize this enlarged set of concepts in a truly multidimensional framework. We also present a new technique of categorization based on a combination of factor and cluster analyses. The resulting categorization is highly interpretable, and it is superior to previous operationalizations in that it fully reflects the multidimensionality of economic segmentation.

Some considerations concerning the functional form of earnings

Abstract The problem of choosing the correct functional form of earnings has plagued studies of social inequality and labor market segmentation. Although this choice has often been made on superficial grounds, the results presented in the current paper demonstrate that this choice has very significant implications for the empirical findings that emerge from the study of earnings determination. Four functional forms of earnings are compared: dollar earnings, earnings rank based on social perceptions as calibrated by P. Coleman and L. Rainwater (1978, Social Standing in America, Basic Books, New York) the natural logarithm of earnings, and the best-fitting power function transformation of earnings as estimated by the Box-Cox technique. Evaluation of a generalized earnings determination model on a sample of private sector employees produces very similar results across these four functional forms of earnings. More divergent results are obtained when the models are compared across subsamples based on class, economic sector, and gender. Significant contrasts between earnings coefficients across groups are much more likely when utilizing log earnings or the Box-Cox power transformation than when using either dollar earnings or perceived earnings. In addition, the contrasts observed for log earnings and Box-Cox earnings are frequently in the opposite direction of those observed for dollar earnings or perceived earnings. The paper concludes with a discussion of the implications of these findings for theoretical developments in the study of social inequality and labor market segmentation.

A Resource Theory of Organizational Structure

This chapter presents the development of concepts, primarily from the complex organizations literature. The various separable dimensions of industrial structure are seen as representing resources and vulnerabilities for workers in their struggle to attain higher wages and better working conditions. The chapter discusses a few organizing expectations about the impact of economic structure on earnings. The dual model falters because it is grounded on an inadequate reconstruction of the history of industrial structure. Labor control is only one of the goals of the capitalist class that has an impact on industrial organization. Capitalists also pursue goals in relation to the state and, most importantly, in relation to other capitalists. A variety of structures emerge as various strategies are developed and implemented in the pursuit of these goals. The history of working class struggles, particularly as that history is embodied in the trade union movement, has also been misread in the dual approach. Union-organizing victories are not simply a reflection of the emergence of monopoly-controlled mass production industries at the turn of the century. A review of the organizational history of capitalist enterprises reveals that many different structures have emerged that provide strategic solutions to a variety of problems posed by the development of capitalism.

Theories of Economic Segmentation

The study of economic segmentation has drawn theoretical insights from a great variety of schools of research. This chapter reviews the most important of these traditions as they relate to the topic of economic segmentation, focusing on the dual economy approach—an approach that has emerged as a leading conceptualization of economic segmentation. Based on a synthesis of various themes, the dual economy model posits to the existence of two segregated economies in the United States. This model has been widely used both as a heuristic device and as a theoretical construct, and has helped to focus attention on structural inequalities arising from a differentiated industrial structure. The basic assertion of the dual economy theory is that capitalist development in the 20th century has resulted in the existence of two private economies with differentiated working conditions and labor markets. Dual economic structure interacts with existing demographic and human capital characteristics of the labor force to accentuate inequality.

4 – Industry and Enterprise Data and Measures

Publisher Summary The study presented in this chapter consists of two major components. The first component uses industry-level data and a national sample to analyze the impact of industrial structure on workers in the United States. Industry data were collected from a number of primary sources. The industry data set developed and utilized for this study is the most extensive and up-to-date data set of its kind. This industry data is linked to persons in the March–May match 1973 Current Population Survey (CPS). This sample was chosen because it contains detailed data on employment, hours worked, earnings, and unionization. Of the CPS data available, it is the nearest in time to the second survey utilized in this study—the 1975 Wisconsin survey. The second component of the proposed study relies on the use of enterprise-level data. These data were collected from various published and unpublished sources for the employers of the respondents to the 1975 Wisconsin study, which also included extensive labor force participation information.

1 – Industrial Structure and the American Worker

Publisher Summary The persistence of inequality among wage and salary employees in modern society is a central issue in theories of social stratification but an issue that has been incompletely resolved. In American sociology, previous explanations for the diversity of wage labor in modern society have most often been organized along the dimension of status. Economic explanations for the diversity of wage labor have typically focused on inequalities in the characteristics of individuals, their human capital. Other explanations for the diversity of wage labor focus on the dimension of social class. This chapter discusses processes of economic determination that operate at a more aggregate level than the returns to human capital studied by neoclassical economists or the family background basis of status attainment studied by many sociologists. It also explores the extent to which industrial structure helps to explain unequal economic returns to education and the earnings effects of race and sex. The chapter discusses the dual economy model, which has been used as a major conceptual tool in the areas of economic structure and the differentiation of outcomes at the workplace. The model divides the economy into two sectors and argues that the characteristics of these sectors result in different labor markets and in different outcomes for labor.

8 – Earnings Attainment across Economic Sectors, Classes, and Race and Gender Groups

Publisher Summary The expectation of higher earnings returns to education for core sector workers and especially for managerial workers in the core sectors is largely unsupported by the analysis presented in this chapter. The analysis utilizing the industry-level sectors produces results that are in a pattern opposite to that expected. Utilizing company-level economic sectors, the lowest educational returns are observed in the local sector, but the contrast between these returns and those in the monopoly sector is not statistically significant. Sector earnings returns to education are highest in the multiplant sector rather than in the monopoly sector. When earnings returns to education are analyzed within classes, the highest returns are observed for autonomous workers in the local sector rather than for managers in the monopoly sector. Overall, these divergent patterns provide little support for the hypothesis of greater earnings returns to education in core sectors. The analysis of earnings inequality between classes within economic sectors also produces only insignificant or negative findings.

5 – Distribution of Poverty, Union Membership, Class Positions, and Race and Gender Groups across Economic Sectors

Publisher Summary The economic structure of industries and companies is reflected in the organization of the workforce in a variety of ways. However, these structures are not always reflected in the ways that the literature suggests. On the issue of differential poverty across sectors, the findings are very strong and entirely in the expected direction. The periphery sector is the home of the working poor, a sector where losing ones job is not much more catastrophic than keeping it. The degree of union membership is also differentiated across sectors in the expected manner. Monopoly- and core-sector workers are highly unionized, whereas periphery- and local-sector workers remain relatively unorganized. Concerning the distribution of class positions across sectors, many of the expectations are in error. The oligopoly, core, and monopoly sectors are typified by large numbers of working class positions, but the superordinate positions are filled by professionals rather than by managers. The periphery and small shop sectors are typified by a less divergent class structure. These satellite sectors have all the major class and occupational positions well represented rather than embodying a sharp divergence between class positions. This class structure results from the more direct modes of labor control employed in these peripheral sectors.

6 – Enterprise- and Industry-Level Models of Employees' Earnings

Publisher Summary The central role of size and capital intensity in both the industry-level and company-level models supports sociological, Marxist, and institutional theories of the workplace that specify internal organizational and technical factors at the workplace as key determinants of labor force outcomes. The finding that profit and productivity do not have direct effects on labor force earnings indicates that economic interpretations that rely on these factors as crucial mechanisms in determining workplace outcomes should be seriously questioned. Such theories do not give adequate guidance in the efforts to understand the mechanisms through which organizational factors influence peoples working lives. The negative earnings effect of concentration in the industry-level model also supports institutional theories but suggests that certain market-based factors might also have important influences on labor force outcomes. However, the influence of these factors is best interpreted as operating through institutional rather than purely market mechanisms. The inclusion of corporate autonomy and foreign involvement in the industry-level model indicates that relationships of exploitation between companies have important implications for labor force earnings, at least insofar as these factors influence industry-wide standards of wages and working conditions.

7 – Economic Structure and the Individual Earnings Attainment Process

Publisher Summary Economic structure retains significant direct effects on employee earnings when controls are introduced for labor force composition, class, unionization, weeks and hours worked, and social background and schooling variables. This finding demonstrates that economic structure has a significant direct effect on employee earnings. Overall, the evaluation of the company- and industry-level models of economic structure against more fully specified individual-level models of earnings attainment has produced highly similar results. The direct effects of both models are somewhat reduced by the introduction of controls. However, except for the linear component of the company-level measure of corporate size, all of the economic structure variables have statistically significant direct effects in the models with full controls. In addition, all of the signs of these effects remain constant. These findings undermine human capital explanations of earnings inequality that attempt to reduce the process of earnings attainment to individual-level characteristics. These direct effects of economic structure operate through the provision of structural resources for all workers employed in specific industries, companies, or plants, regardless of the individual characteristics of those workers.