How We All Became Temps
During the worst recession since the Great Depression, Elmer Winter gave a speech condemning the complacency of American businessmen. Winter was the president of Manpower Inc, a temporary labor agency, but also one of America’s largest employers. He delivered his speech as a call to arms—a plea for nothing less than to save the country itself.
Winter fixed on “deadly fears of the future” as a theme—developments Americans believed would undermine their economic safety. Some of these fears came from abroad, like Chinese twenty-five-cents‑an hour labor, or Russia’s ever subtle global diplomacy. Most of Winter’s fears, however, were about America itself, about the disconnect between our hopes and our realities.“ Foremost in the thinking of every man and woman who works is the basic question,” Winter said, “‘How secure is my job?’” The hope of the man on the street today in America, he told the shareholders, is “a good job—good health and security—for himself and for his family.”
Ever the realist, Winter told the businessmen that this dream of economic security, in the form of a steady, well-paid job, would no longer possible. He told them that the “old days are gone. . . and plans must be the order of the day.” Winter’s vision was to bring down costs, especially labor costs, by providing a flexible workforce without job guarantees, buttressed by new automation technology. American business would need to work smarter and harder to overcome the hue and cry that “we can’t compete with foreign products where our labor rates are three or four times higher than theirs.” Manpower, and other temporary agencies like them, would provide that labor.
Winter’s speech—youmight be surprised to learn—was delivered not in 2008, but in 1958. He gave it in the first brief downturn of the postwar economy. The end of American job security was not in the past, but still in the future.
His prognostications came true, partially because he—and others like him—believed them so zealously and worked so hard to bring them about. The rise of our flexible economy—how we all, to some degree, have had to come to terms with the withering of the postwar job—is not just the story of Elmer Winter. His company, Manpower Inc.—the first major temporary agency, which in 2017 still employed over three million people or 50 percent more than Wal-Mart—would play an important role in transforming the world of work from one of security to insecurity, but it would not bealone. This transformation was not a conspiracy, but was carried out in public to much acclaim. Presidents, CEOs, and stock markets the world over celebrated the dismantling of the postwar prosperity.
Most people kept their jobs, but you don’t need to replace everybody to make the rest insecure. Temps define the limits of what is possible in labor, casting a long shadow over the rest of the workforce. Beginning in the midst of the postwar boom in the 1950s, American jobs were slowly remade from top to bottom: consultants supplanted executives at the top, temps replaced office workers in the middle, and day laborers pushed out union workers at the bottom. On every step in the ladder, work would become more insecure as it became more flexible.
For some at the top, this new economic arrangement produced great opportunities and wealth, but for most people, flexibility produced economic uncertainty. For some of the new temps, like consultants, the work is glamorous and lucrative. For others, like office workers, it is a dead end. For those day laborers waiting outside Home Depot, it is work with little pay andmuch danger. Despite pay gaps, education gaps, and citizenship gaps, temps have come to define our workplaces today in ways that Mad Men-era secretarial temps—white-glovedand beautiful—never could have imagined.
Temp is the history of this transformation, of how the postwar world, which to our eyes worked so well, came undone neither by economic accident nor by technological inevitability, but by human choice.
Many of us who came of age in the 1970s, ’80s, and ’90s expected those postwar days to return. We believed that, whatever the recession that Winter—or Carter, or Reagan, or Clinton—had been addressing, it was only temporary. The good years, the permanent onward progress of prosperity, would surely return. For most Americans, they have not. Where did all the good jobs go? The answer goes deeper than Uber, further back than downsizing, andcontests the most essential assumptions we have about how our economy and our businesses work.
The Rise and Fall of the Postwar Economy
A postwar world of work and business that brought two generations of unprecedented prosperity came to an end in the 1970s, and in its stead a new era of wage stagnation and income inequality began—though it was hard at first to see that this change was permanent. For while, the wage problem was hidden, first by more women entering the workforce (raising household income), and then by rising house prices (raising household equity). But in the collapse of 2008, we all suddenly became aware that while the economy had grown for forty years, the 10 percent at the top received 87 percent of all that growth (compared to 29 percent from 1933 to 1973). The much-maligned 1 percent received 56 percent of all the growth from 1975 to 2006. In the aftermath of the Great Recession of 2008, we discovered that our society was not only unequal, but had been becoming steadily more so for a long time. Instead of progress, we had been in decline (at least if you were not in the 1 percent). In 2018, despite a booming stock market, we are still wrestling with the aftershocks of that recession, but the real roots of today’s insecurity go much deeper than credit default swaps and underwater mortgages.
Temporary labor and flexible corporations first emerged as that hard-won dream—job security—appeared to be the inevitable and happy result of a mature capitalism. The foundations of job security were, as the leading postwar economist, John Kenneth Galbraith, believed, in the risk aversion of the postwar corporation. In his best-selling 1967 exegesis of the American corporation, The New Industrial State, Galbraith explained that the modern corporation was defined by risk minimization, not profit maximization. The investments required for manufacturing in the postwar economy required sums of capital (and an investment of time) unseen before. The first Model T may have been produced with an investment of a few tens of thousands of dollars, but a Mustang factory of the 1960s cost millions. World War I–era planes could be brought from blueprint to battle in only a few months, but by the ’60s, just the design of jet planes took years. To actually build a jet factory took that much longer. Executives planned for long time horizons, eschewing short-term opportunities for long-term gain.
This dull steadiness produced unrivaled economic progress, both in terms of GDP and technology. In the 1950s, U.S. real GDP growth rates hitas high as 8.7 percent a year—as fast as China’s today. None of the top one hundred corporations failed to earn a profit in the postwar period. Long-term investment in corporate science made this growth possible. Products were not just incremental novelties, but truly disruptive technologies. In these labs, the Bells, the Polaroids, the Lockheeds, and the Xeroxes launched the digital revolution. This was where American scientists invented plastics, transistors, computers, jets, fiber optics, computer networks, cell phones, and nearly every other technological marvel that still defines our world today (and that most of us think have been invented very recently). Corporations invested in manufacturing, in research and development, and most importantly, in employees. Well-paid workers, meanwhile, could buy American products without borrowing too much. With steady profits and a long-term vision, corporations could focus on real progress.
Firms needed to know that the workers would, in turn, show up. The strategies of corporations required stability not just for their investments, but for their employees, and by extension for all of American life. Paper pushers of the middle class could count on their jobs as their families grew. Working stiffs knew the plant would be open the next year, and that their industrial union would get them a raise, but not a revolution. An unwavering workforce was needed if the investments in heavy manufacturing were to payout. The jobs might have been repetitive, but so were the paychecks. Capitalism worked for nearly everyone. For the first time, inequality fell and growth accelerated. Policy makers, corporate planners, and labor leaders fashioned a world after World War II that promoted security not only for the elite—and their investments—but for nearly everybody.
This investment certainty was in part possible because of the unusual politics of Cold War Keynesianism, which appeared to have transformed capitalism’s periodic crises into unending expansion. Lucrative defense contracts with fixed rates of profit swelled to make up a third of the GDP. Government services accounted for another fifth. Although nuclear brinkmanship was terrifying, the economy, at least in the U.S. and the West, was oddly calm. The Bretton Woods order, centered on the U.S. dollar, produced a twenty-five-year run of prosperity. Consumer purchasing power rose every year since World War II. But the true certainty came from the technological progress made possible by these political arrangements, not just the odd alignment of global politics. It was a broad commitment to steady progress, not disruptive wealth creation, that turned all that cutting-edge science into new industries.
Galbraith may have been right about the postwar corporation, but he was wrong about capitalism. Around 1970, we decided to go in a completely different direction.
Elmer Winter was not the only one advocating for another vision of the American workforce, and this vision—supported by economists, but more importantly by business leaders and their paid consultants—began to focus on leanness instead of stability. The postwar institutions—big unions, big corporations, powerful regulators—that insulated us from volatility and made possible the steady economic growth and broad equality of the postwar era, were swept aside in the name of resurgent faith in the “market.” This transformation was not a conspiracy of a few, but a consensus of the many. At the top, the risk-taking entrepreneur supplanted the risk-averse ,but loyal, company man as the capitalist ideal. Risk became sought after because it was increasingly seen as the way to maximize profits. Without risk, the new portfolio theorists chided, there could be no return. The right way to view a corporation, economists and consultants told business leaders, was to see a firm not as something that produced valuable goods and services but as a way to make money. Managers began to hop from firm to firm, focusing less on climbing the ladder (i.e., investing in the long term) than garnering the biggest bonuses. Even for founders, getting acquired, rather than building a firm, became the new goal. No one at the top was committed to the long haul, so why would they be committed to job security for anyone else? These market fundamentalists believed their own hype, and turned their backs on the ideas and institutions that made the postwar booma reality.
The key features of the postwar corporation—stable workforce, retained earnings, and minimized risk—became liabilities rather than assets. The American corporation was taken in a more financial direction, abandoning thirty years of manufacturing success. In the place of long-term investment and stable work forces, the new ideal for American firms was short-term returnsand flexible labor. The elements of this reorientation that promoted and made possible this temporary transformation—consultants, temps, daylaborers—emerged from different places and for different reasons, but as their ideas, practices, and institutions interwove, they remade the corporation—and America.