unionized states, particularly in the Midwest, well worthwhile. In 1979, the hourly wage differential between the South as a whole and the Northeast and Midwest was about 10 percent. For those states that saw a large part of the shift before and after 1979, the wage gap in that year was 15 to 16 percent between Georgia, North Carolina, and Tennessee, major gainers, on the one hand, and Michigan and Illinois, significant losers, on the other. By 2000, the percentage of payroll employment in manufacturing in North and South Carolina, Arkansas, and Mississippi surpassed that of Michigan, Illinois, and all of the states of the upper Midwest and the Northeast. In that year, union density was 3.5 percent in South Carolina, 3.2 percent in North Carolina, 6.2 percent in Mississippi, and 7.5 percent in Arkansas, compared to 21.5 percent in Michigan and 18 percent in Illinois.23
Industry-wide bargaining in the form of wage and benefit patterns or master contracts had been organized labor’s major means of reducing labor market competition and increasing worker incomes since the end of World War II. Tempted by wage differentials and pushed by growing competition at home and abroad, firms began to break away from existing industry agreements or wage/benefit patterns in order to strike their own deals or escape unionization altogether and improve their own position in the increasingly competitive world economy. As productivity and profitability necessarily differ between firms in the same industry at any given moment, the desire to break away from the imposed labor costs of pattern bargaining in a period where competition is increasing is almost irresistible. This is particularly true where new firms with higher productivity levels or lower labor costs enter the industry, as was the case in auto, meatpacking, and trucking, or where international competition intervenes, as in textiles, garments, and textiles, which will be examined below. Such trends contributed to the decentralization of collective bargaining in those industries that had established some form of industry-level bargaining. The number of union contracts to be negotiated and administered rose from 120,000 in the 1960s, when union density was about 30 percent, to 180,000 in 2006, with density down to 12 percent, less than 8 percent in the private sector.24
In the 1980s, systems of “pattern” and “master” agreement bargaining that had held wages up since the late 1940s broke down in most key industries, including automobiles, meatpacking, steel, coal mining, and road haulage. Beginning in the late 1970s and accelerating in the 1980s, the automobile industry moved south, led primarily by Japanese and European firms.25 As the Big Three and their suppliers consolidated, outsourced, and shrank, UAW membership plunged from a high of 1.5 million in 1970, when a majority of members were auto, aerospace, or agricultural implement workers, to 355,000 in 2010, with only about half the members from its traditional core industries.26
Unions in meatpacking faced a similar fate as new, aggressive firms like IBP and ConAgra entered the industry in the 1970s and shifted its center from the East and Midwest to the South and the West. By the mid-1980s the meatpacking union’s pattern settlement had shattered, and in real terms average union wages fell from $10.65 an hour in 1979 to $6.68 in 1990.27 Coal miners similarly saw more and more employers abandon their national agreement with the Bituminous Coal Operators Association after 1981.28
In three major industries, deregulation, a neoliberal innovation of the late 1970s, aided restructuring and the fragmentation of collective bargaining. The first industry to experience deregulation was air transportation. Here the system of pattern bargaining at the major airlines was rapidly dismantled. Between 1978, when airline deregulation was passed by Congress, and 1988, only a little more than half of the new collective agreements covering the unionized workforce saw any wage increase. More than a quarter of settlements included a wage freeze or cut, while one in five introduced a two-tier wage system. As a result, average real wages of airline mechanics fell by about 40 percent from 1979 to 1989, while flight attendants lost almost half their monthly income in the same period.29
In road haulage, following deregulation in 1980, the Teamsters’ National Master Freight Agreement, which had covered 277,000 workers in 1979, saw this drop to 160,000 by 1985 and Teamster earnings fall by 11 percent in real terms from 1979 to 1983. Deregulation had opened the industry to new competition, particularly from Southern-based giants such as Overnite and J. B. Hunt.30 Telecommunications workers also fell victim to the new neoliberal atmosphere when their employer, the American Telephone and Telegraph, was broken up as a result of a 1984 challenge in the courts to its monopoly status, ending the national agreement and forcing the Communications Workers of America to deal with seven regional telecom companies as well as the residual AT&T itself.31
Three more key unionized industries saw their bases rapidly eroded by the larger global restructuring already under way. Job losses in textiles, garments, and primary metals accounted for 80 percent of the decline in production-worker employment from 1980 to 1990, due largely to imports.32 In textiles and garments, the unions lost almost all their traditional industrial base. In the steel industry, beset by international competition for some time, production worker employment fell from 342,000 in 1979 to 171,000 in 1984. The following year, the United Steelworkers’ pattern agreement with the major steel companies was terminated by the employers.33
By the end of the 1980s, the structure of industry and that of organized labor and its bargaining practices had been substantially altered. Bargaining was highly decentralized and, hence, more competitive. The political and social climate in which the unions functioned had also changed dramatically. The social movements of the 1960s and 1970s had faded and the “Keynesian” era had been replaced by an increasingly aggressive neoliberalism. The ideas of Hayek and Friedman had been given a power boost by the centers of capital in the 1970s through organizations such as the Business Roundtable, a coalition of the leaders of the nation’s biggest corporations in industry, commerce, and finance founded in the mid-1970s.34 As one journalist put it, “During the 1970s, business refined its ability to act as a class.”35 These developments were followed by the election of Ronald Reagan in 1980 and the dominance of neoliberalism in US politics. But capital’s power grew not only in the political arena; the 1979–82 defeat of organized labor had allowed it to increase capital’s power in the workplace as well. And in the 1980s business wasted no time in reorganizing work in an effort to increase productivity and profitability even more.
“Our Most Valuable Asset”
Continuous gains in surplus value and profitability could not be sustained on the basis of ad hoc concessions from the unionized sections of the workforce alone. The productivity increases of the 1980s were not primarily due to technology, old or new. Here periodization is important. Investment in equipment and software actually grew more slowly in the 1980s than in the 1960s, 1970s, or 1990s in real terms. In manufacturing it grew by only 18 percent in the 1980s, almost half the level for the private sector as a whole and far less than in any other decade from 1960 through the 1990s. Manufacturing productivity, on the other hand, rose by almost 5 percent a year in that decade.36
Thus, with unions weakened and resistance low, capital turned away from capital investment as the main source of increasing productivity and profitability to reorganize work. Ideas that had been around and largely ignored for some time were now reformulated and taken up by managers desperate to compete and continue to improve profitability. These managerial innovations came in a cluster in the mid-1980s, as rapid as the union decline of 1979–82. Virtually all were about intensifying work through various types of work reorganization schemes, motivation techniques, and/or methods of control. While “human resource management” (HRM) had a gestation period in which it overtook “personnel,” it was in 1984 that the two major statements of this new approach to controlling and motivating the workforce were published. The two major schools of HRM were represented by the publication in 1984 of Strategic Human Resource Management by Formbrun et al., representing the University of Michigan school, and Managing Human Assets by Beer et al., representing the Harvard version. The two schools were allegedly differentiated, respectively, as the “hard” and “soft” versions of HRM.37 The mantra of all was that the employee, as individual, was the company’s most valuable asset.
In the same year, Atkinson published his model of the “flexible firm.” This placed a new emphasis on peripheral workers, contingent work, and outsourcing, a design that seemed to contradict the notion of the employee as a firm’s most valuable asset.38 The effectiveness of these new management approaches in sustaining the expansion that began in the 1980s is