2015 Inequality, Uncertainty, and Opportunity: The Varied and Growing Role of Finance in Labor Relations

Abstract

Finance has grown in many respects in developed economies over the past three decades to the extent that financial measures and goods and services have become a pervasive part of modern market economies. As a start, financial services and employment in financial institutions make up an increasing share of employment. And nonfinancial businesses increasingly prioritize short-term performance measures to satisfy financial markets that have grown not only in size but also in importance. Moreover, households have seen a rise in risk exposure as financial markets, goods and services, and financial performance measures started to dominate. Households increasingly have to weather financial markets on their own, for instance, as they save for retirement. These large-scale trends have direct implications for labor relations at every level of the economy. The rising importance of financial markets has translated into increasing economic and labor market instability around the globe. Typical boom and bust cycles in financial markets have had larger effects on economic and job growth than in the past.Second, the way businesses operate has fundamentally changed as nonfinancial businesses increasingly adhere to short-term financial measures to satisfy those who finance their operations. And third, some individuals have seen their economic circumstances improve, in rare instances quite heftily, if they could find ways to benefit from the growing importance of finance. Many others, however, saw their economic security sharply erode as labor market and financial market risk exposure for households grew.What does this all mean? Understanding the myriad ways in which the growth of finance can impact the way we work can give us better insights into the causes of and potential solutions to addressing economic instability and income and wealth inequality, for instance, by creating more and better economic opportunities for many, not just a few. All chapters in this book touch on two or three of the main themes—instability, inequality, and opportunity (or lack thereof).This research volume gives readers a sense of the complex and pervasive link between finance and labor relations. It addresses key connections between finance and labor relations at every level of the economy: the macroeconomy, industries, firm, and households. It also discusses the role of a variety of financial products, such as individual retirement savings plans, stock options, private equity investments, and consumer credit, in shaping the increasingly tight relationship between finance and labor relations.This volume further provides a sense of the dual nature of finance in labor  relations—the growing risks to and potential opportunities for economic security—when discussing employee ownership, socially responsible investing, and income diversification. It also illustrates that the growing influence of finance on labor relations is not limited to the UnitedState but plays out in different ways in other parts of the world.Finally, many chapters draw important policy lessons from research, demonstrating that the relationship between finance and labor relations and the consequences of this relationship can change. In other words, this research volume covers a lot of important ground and serves as an entry point to scholars, teachers, activists, and neutrals interested in learning more about the link between finance and labor relations.