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Work in the New Economy: Flexible Labor Markets in Silicon Valley

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Chris Benner's book, part of a series on the Information Age edited by Manuel Castells, is a useful survey of flexible labour markets in a region which, in spite (or perhaps because) of the dot-com crisis, remains one of the most thriving and trendsetting in the world. Benner dedicates four out of the eight chapters to showing how increased flexibility has greatly expanded the role of labour market intermediaries. These mediators between workers and employers include private sector organizations such as temporary help agencies, contractor brokers, professional employer organizations, and web- based job sites; membership-based organizations such as unions and employee associations; and public sector education, training and placement providers. Most significant are those intermediaries that have acquired employer of record (legal employer) status, effectively operating as labour subcontractors. The growing role of labour market intermediaries illustrates how tenuous the relationship between employer and employee is becoming in the New Economy.

Although aware of the linkages between labour market flexibility and wider economic trends, such as the shift from industrial to immaterial types of activity, the book does not have the space to explore them. Nor does it critically interrogate key concepts such as 'flexibility' and 'information technology'. Instead, Benner helpfully informs our thinking on such issues by conducting a detailed empirical study into the practical realities of work. He furthermore uses this in-depth knowledge to suggest that labour policy should focus on the wide-ranging, fluid patterns of regions, industries, occupations, networks, communities, careers and learning.

Benner is careful to balance the pros and cons of labour market flexibility, distinguishing between work flexibility,which is essential for innovation, and employment flexibility, which, he believes, is not necessarily so. Although he concedes that employment flexibility is often useful to both workers and employers, he identifies it as a serious problem. For workers, it can mean insecurity and lower incomes; for employers, high staff turnover and lower long-term competitiveness through underinvestment in employee development. This, however, is not an entirely convincing argument. High staff turnover does not affect the total availability of labour. Similarly, across the region as a whole, the danger of training underinvestment has failed to materialise. The picture that emerges from this book is that employment flexibility is one of the structural foundations of Silicon Valley's success. As workers move around across firms and industries, innovative practices spread rapidly throughout the region; flexibility can thus greatly assist staff development. Additionally, as Benner's own case studies show, intermediaries are now providing informal learning and communication networks, as well as formal training, in a centralised and cost-effective way (the example of the plumbers' union, with its five-year apprenticeship scheme and its 56,000 sq ft training facility, is particularly remarkable in this respect). Instead of being separate issues, as Benner proposes, work flexibility and employment flexibility might be seen as content and form of the same phenomenon.

Nevertheless, the statistics quoted by Benner show that many workers have indeed failed to reap the benefits of wealth creation in Silicon Valley. For example, even though manufacturing productivity in the region is one of the highest in the US, real hourly wages for production workers in the high-tech industries actually declined during the 1990s. In that decade, the ratio between the annual income of the 100 top executives and that of the average production worker increased from 42:1 to 956:1 (although the latter ratio may have been exaggerated by the dot-com bubble). Benner's proposals to deal with such unequal practices are a mixture of social security and labour relations reform, increased workers' ownership of stock, and official backing for membership-based intermediaries (unions and employee associations).

In the face of the evidence presented in this book, however, Benner's hope for a win-win solution where employers no longer cut costs at the expense of their workforce sounds like wishful thinking. A more plausible conclusion from the story of Silicon Valley is that, even in one of the most advanced economic regions of the world, what benefits corporations does not equally benefit workers. In our so- called Information Age, those who create most of a region's material wealth are still excluded from the mechanisms of production and distribution. This, and not employment flexibility per se, remains the fundamental problem.

Paula Cerni
Independent Researcher

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