Appelbaum 519 which capital assets are viewed as relatively fixed resources and

Appelbaum 519 which capital assets are viewed as

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Appelbaum 519 which capital assets are viewed as relatively fixed resources and retained earnings are used to expand company assets, in the financial model the corporation’s assets are viewed by top man- agement as Lego pieces, to be bought and sold with the goal of increasing shareholder returns. Investment and business strategy decisions are made by economic actors whose only claims on the firm are financial and whose purpose is unlocking value that can be returned to shareholders. The result is deterioration in wages and working conditions for workers employed by subcontrac- tors in outsourced operations (Weil 2014: 15, 100). Uncertainty over the duration or renewal of the contract translates into greater job insecurity for workers and greater use of nonstandard work arrangements. Recent empirical studies provide evidence that workers in outsourced operations suffer sub- stantial pay penalties compared with workers in similar jobs that are not outsourced. Goldschmidt and Schmieder (2015) document the dramatic rise since 1980 in outsourcing in logistics, clean- ing, security, and food services functions in Germany and the substantial decline in wages rela- tive to similar jobs that were not outsourced. (See also Dube and Kaplan 2010.) Batt and colleagues find systematic differences between union, nonunion in-house, and outsourced call center operations, with the latter providing substantially lower pay, benefits, and discretion as well as greater use of part-time and contingent work arrangements (Batt, Doellgast, and Kwon 2006; Batt, Holman, and Holtgrewe 2009; Batt and Nohara 2009). A French study of wages paid to workers in three broad skill categories—manual workers and unskilled white-collar employ- ees, skilled manual and white-collar workers, and highly skilled employees (managers and super- visors, technicians and professionals)—employed in principal (lead) companies and subcontractor firms found statistically significant differences in median pay for workers with similar skills, controlling for worker and firm characteristics (Perraudin et al. 2014). They found (Table 5, p. 213) that pay of unskilled workers is 9.48 percent higher, pay of middle-skill workers is 7.49 percent higher, and pay of highly skilled employees is 6.55 percent higher in lead firms compared with subcontractor firms. 3. Labor Market Segmentation The old labor market segmentation between workers (Gordon, Reich, and Edwards 1982) has intensified. The quality of jobs and wages are likely to be worse in outsourced operations with thinner profit margins (Weil 2014). Small employers may bargain contracts with lead firms that set unrealistic performance requirements, leading to further work intensification (Ji and Weil 2015). This has contributed to the increase in contingent and nonstandard work arrangements between 2005 and 2015. The share of workers in these arrangements increased slightly from 10.0 percent in 1995 to 10.7 percent in 2005, but rose sharply to 15.8 percent in the 2005 to 2015 decade (Katz and Krueger 2016).
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  • Three '17
  • Test, Eileen Appelbaum, Radical Political Economics

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