The United States are the archetypal liberal market economy (LME) as market forces have always

had a strong role in US economic history. USA are characterised by a high degree of diversity in the
conditions under which employees work. Recently, the amount of labour market diversity increased
as the share of labour force represented by unions continuously decline.

DRIVERS OF CHANGE:
During the New Deal IR system, wages and working conditions were determined by the market and
collective bargaining (decentralised) occurred between unions and employers. The Government
established the rules of collective bargaining but left the outcome of the process to business and
unions. (Bamber)

Period since the 1970s is no longer characterized sustained economic growth and US domination of
international markets. Around the 1970s government employment became a sector with strong
unions while at the same time US employers used mobile capital (growing shareholder value) to
avoid high labour costs and strong unions. High capital mobility, weak government regulation of
employment conditions and decentralised collective bargaining helped make the US the archetypal
Liberal Market economy. (Bamber)

From the 1970s onwards, pressures started to grow on US employment relation system, however
little changes occurred to overcome them.
Polarisation of incomes and of collective bargaining intensified, along with growing cost
pressures on health care and retirement benefits that dominated many collective bargaining
relationships; pressures from globalisation became particularly acute, deregulation.
Increased international competition led to wages and cost control pressures, resulting in an
aggressive management behaviour against unions.
Health care costs grew rapidly in the 1990s-2000s, and health insurance is a major labour cost item
for many employers. Employers answered by requiring employees to pay larger portions of
premiums, reducing benefits and increasing co-pays.
Globalisation continues to affect US economy, the trade deficit is high and outsourcing is a growing
concern.
However, Us employment relation system has remained stagnant and there have been no substantial
changes in labour legislation since the one established during the New Deal.
Economic pressures have introduced an increase in the amount and nature of the variation of
employment practices. This is due to a massive decline in unionisation, that made the low-wage
employment sector to keep expanding. Low unionisation increased the variation of the
employment conditions of those working in the union (public) and non-union (private) sectors.
Unionisation brought a high degree of standardisation in employment conditions, while non-union
employment systems relate pay to individual traits and organisational goals. This variation of
employment conditions is the major cause of US's high levels of inequality, together with a
mixture of market and institutional factors.
High unemployment rates factors include global competition, the weakening of governmental
labour market protections and the decline of unionisation.
Unions have shown a willingness to cooperate with workplace changes and the collective
bargaining process has shown flexibility in response to competitive pressure. (Bamber)

The current institutional structure regulating the labour market is an outgrowth of the New Deal
social legislation (1940s-1950s), following a second wave of regulations against discrimination
(1960s) and the third wave covering employment conditions like safety and heath, pension funding
and family and medical leaves (1970s-1980s).
The government since the 1980s began to withdraw as an active player in the labour market,
resulting in a mismatch between the institutional structure and the reality of today's world of work.
Policies from the New Deal were built upon assumptions that are in-congruent with today's
situation. (Osterman)

PAST AND PRESENT

Employers: -The New Deal saw the employers as the institution through which most of the labour
market's important functions were funded and delivered. Individual Firms were responsible for
funding unemployment insurance, private pensions, health insurance, vacations and leave policies,
training and for negotiating the funding of these provisions with unions. A large number of
corporations continue to play a similar role assumed in the new deal system.
-However, the employment conditions companies offer today are extended to a much smaller group
of people and the size and the shape of the corporation are opened to continuous revision through
merger, acquisition, divestiture and sub-contracting.(Osterman)

Employees: Workers, today operate essentially as independent contractors, moving from one
employer to another with no stability or employment security. (Osterman)

What should be done:Mobile professionals need institutions that foster mobility and help them to
afford health insurance and to invest an adequate proportion of their earnings for their retirement.
In the view of the variety of organisational forms in the current economy and the changed business
models under which they operate it would be wise not to load all the responsibilities for delivering
labour-market functions and services into individual firms, for they can no longer be seen as stable
entities. Firms should therefore collaborate with labour-market institutions, such as trade unions,
and community organisations. (Osterman)

Unions: Union membership in the USA have always been relatively low, however today it barely
reaches 10% in the private sector.
Around the 1970s government employment became a sector with strong unions while at the same
time US employers used mobile capital (growing shareholder value) to avoid high labour costs and
strong unions. High capital mobility, weak government regulation of employment conditions and
decentralised collective bargaining helped make the US the archetypal Liberal Market economy.
Decline in unionisation post the New Deal, made the low-wage employment sector to keep
expanding. Low unionisation increased the variation of the employment conditions of those
working in the union (public) and non-union (private) sectors. Unionisation brought a high degree
of standardisation in employment conditions, while non-union employment systems relate pay to
individual traits and organisational goals. This variation of employment conditions is the major
cause of US's high levels of inequality, together with a mixture of market and institutional factors.
(Bamber)

What should be done: Unions should promote mobility of workers, provide individual labour-
market services and benefits to its members, support direct employee voice on the job and to work
with other groups to promote employees' interests and welfare. In the low-wage labour market
worker organisations are trying to form across craft and industrial lines to preserve the continuity of
employment (whatever it is). One of the problems unions face is the difficulty to recruit and retain
members as individuals change quickly employers and occupations. A new approach should
therefore match the nature of today's workforce and economy. (Osterman)

Government: Has two main roles in employment relations: the direct regulation of terms and
conditions of employment and the regulation of the way in which organised labour and management
relate to each other. It has therefore always had a hands-off approach.
The current institutional structure regulating the labour market is an outgrowth of the New Deal
social legislation (1940s-1950s), following a second wave of regulations against discrimination
(1960s) and the third wave covering employment conditions like safety and heath, pension funding
and family and medical leaves (1970s-1980s).
The government since the 1980s began to withdraw as an active player in the labour market,
resulting in a mismatch between the institutional structure and the reality of today's world of work.
Policies from the New Deal were built upon assumptions that are in-congruent with today's
situation. (Osterman)

What should be done: Government policies must recognise the diversity of the economy and of the
employment relationships. The USA should develop a more inclusive and deliberative policy-
making process by devolving decision making to the actual actors most affected by the policies.

The policies that emerged from the New Deal and the post-war period were built around several
assumptions:
-That the economy of the country was immune from foreign competition and able to sustain
standardized wages and working conditions across an industry.
NOW: American economy is embedded in global economy and operates with the constant pressure
of foreign competition.
-The labour market was represented by white male workers whose income was the primary support
of the family. While other family members were not seen as long-term workers and their income
was incidental to the support of the household.
NOW: Participation of women in the labour force has enormously increased and their role in the
household has changed. Moreover their incomes are essential components of family earnings.
-Employment of the head of the household was seen as full-time, long term and stable.
NOW: forms of work are more varied and companies tend to lay off workers and workers move
across enterprises to develop new skills
-That the corporation was a stable organisation with well defined boundaries, internal roles and
predictable relationships with the external environment.
NOW: frequent acquisitions, change in dimensions..
-The expectation that wages and earnings rise with productivity and prosperity.
NOW: not any-more.

FURTHER RECCOMENDATIONS BY OSTERMAN:

Mismatch between the institution structure and the reality of today's world of work.
Market alone is not sufficient to govern economy in an effective or equitable manner: policies and
institutions are no longer consistent with the reality of the current economy and social life.

Values that should underlie future labour market policies and institutions in the USA:
Work as a source of dignity; Wages, salaries and benefits sufficient to live in dignity; Diversity and
equality of opportunity; Solidarity or social cohesion; Voice and participation, provided by unions

Mobile professionals need institutions that foster mobility and help them to afford health insurance
and to invest an adequate proportion of their earnings for their retirement.
In the view of the variety of organisational forms in the current economy and the changed business
models under which they operate it would be wise not to load all the responsibilities for delivering
labour-market functions and services into individual firms, for they can no longer be seen as stable
entities. Firms should therefore collaborate with labour-market institutions, such as trade unions,
and community organisations. (Osterman)

Unions should promote mobility of workers, provide individual labour-market services and benefits
to its members, support direct employee voice on the job and to work with other groups to promote
employees' interests and welfare. In the low-wage labour market worker organisations are trying to
form across craft and industrial lines to preserve the continuity of employment (whatever it is). One
of the problems unions face is the difficulty to recruit and retain members as individuals change
quickly employers and occupations. A new approach should therefore match the nature of today's
workforce and economy. (Osterman)
Government policies must recognise the diversity of the economy and of the employment
relationships. The USA should develop a more inclusive and deliberative policy-making process by
devolving decision making to the actual actors most affected by the policies.

Community groups grounded in ethnic, religious communities or organised around specific

identities such as profession, gender or sexual orientation. A growing number of labour-market
intermediaries are seeking to address the labour-market needs of specific categories of workers by
mediating between firms and workers. These institutions are likely to play a stronger role in the
future.