|Author(s):||Rosenbloom, Joshua L.|
|Reviewer(s):||Whatley, Warren C.|
Published by EH.NET (October 2002)
Joshua L. Rosenbloom, Looking for Work, Searching for Workers: American
Labor Markets during Industrialization. New York: Cambridge University
Press, 2002. xvi + 208 pp. $55 (hardback), ISBN: 0-521-80780-8; $20
(paperback), ISBN: 0-521-00287-7.
Reviewed for EH.NET by Warren C. Whatley, Department of Economics, University
Joshua Rosenbloom tackles a large subject in a small book (181 pages) — “the
development of American labor market institutions during the late nineteenth in
early twentieth centuries, focusing in particular on the ways in which they
facilitated the matching of job seekers and employers across space” (p. xiii).
The book is intended for economists and historians. For economists, it
demonstrates the interplay of economic and historical forces in explaining the
development of institutions. For historians it demonstrates how markets shape
the context of social history.
The book has seven chapters. Chapter 1 establishes the importance of geographic
mobility and poses two questions: What institutions promoted this mobility? And
how did these institutions influence the course of economic development?
Chapters 2 and 3 address the first question. Chapters 4 through 6 examine the
Chapters 2 and 3 argue that the primary institutions that facilitated spatial
mobility were informal networks of friends and family. This now seems a
well-established fact. In the 1880s, thirty to forty percent of German
immigrants traveled on fares prepaid by someone already in the United States.
In 1889, sixty percent of immigrants reported that their travel had been
arranged by friends or relatives already in the country. The stock of previous
migrants of a nationality residing in a state had a positive and statistically
significant effect on the proportion of similar new arrivals destined for the
state. Informal networks were very efficient in moving workers, but they linked
specific sending and receiving regions, and thus perpetuated the influence of
the historical events surrounding the networks’ origins. After a particular
pattern of migration became established (something Rosenbloom never really
discusses) it became self-perpetuating, at the neglect of other potential
sources of labor supply (for example, the U.S. South).
How these networks came into being is left a mystery. Rosenbloom argues that
employers’ recruiting activities got things going, either directly or through
the services provided by public or private employment agencies, but he never
really tells us how. Nor does he provide historical examples or case studies.
Somehow, employers found a way to coordinate the resources necessary to
initiate a flow of labor across the Atlantic when no single employer had the
incentive or the resources to do so. The political economy of these initiatives
remains to be written.
Once established, employers encouraged the informal channels and reduced their
reliance on formal recruitment activities. Informal networks offered immigrants
an interim place to stay, information about the labor market and the
probability of finding a job, help with transportation and settling into a new
environment, etc. — all at little direct cost to the employer. Employers’
recruiting activities were confined primarily to areas where informal channels
had not yet been established. Employers also operated in temporary and seasonal
labor markets, in isolated towns, and where demand outstripped supply
temporarily. Over the course of the century, employers adapted to changing
patterns of immigration, but in each case their initial efforts were soon
superseded by the operation of informal channels of recruitment.
In chapter 3, Rosenbloom offers an explanation for the limited role of formal
labor market intermediaries. Drawing on a wide array of sources, Rosenbloom
shows quite convincingly that the successful intermediaries mimicked the
informal networks, and survived primarily where informal connections were not
viable. In explaining the absence of formal intermediaries, Rosenbloom
emphasizes the problem of information asymmetry. Workers had little reason to
trust information received from these intermediaries. Word of mouth from
friends and relatives was much more reliable.
Here I wish Rosenbloom had gone further. The economic cost of a poor reputation
would help reduce the flow of bad information. Perhaps, instead, labor market
intermediaries found it costly to acquire and convey the kind of information
that employers and employees considered most valuable. Rosenbloom mentions the
importance of long-term employment as something desirable on both sides of the
labor market. If so, much of what attached a worker to a job might have been
experiential in nature — the work environment, notions of fairness, the pace
of work, promotion probabilities, etc. These features of the job are conveyed
most accurately and reliably by people with experience in the workplace.
Similarly, a firm may value worker characteristics that are unobservable to
employment agencies but quite observable to family and friends. Add to this the
potential cost to a kin of a referral’s poor performance and it is easy to see
why informal networks were the employers’ preference.
Chapter 4 considers the interaction between external recruitment activities and
the internal allocation of labor, especially how employers filled positions
requiring specialized skills. In Rosenbloom’s words: “Evidence on employment
trends and the evolution of skill premia indicate that at the aggregate level
the supply of skilled workers was less elastic than that of unskilled workers.
In part, this inelasticity may reflect the weakness of American apprenticeship,
but it also reflects the greater reluctance of skilled European workers to
emigrate to the United States. Responding to the high and rising costs of
recruiting traditional categories of skilled labor, employers turned to
technological solutions — reorganizing work processes by introducing
specialized capital equipment and an increased division of labor. These changes
did not so much eliminate the need for skilled workers as alter the types of
skill required and increase the importance of on the job training in
employer-specific skills. These changes created incentives to increase the
duration of worker-employer attachment, a fact reflected in the emergence of a
substantial minority of workers with long job tenures. But so long as unskilled
immigrant labor was plentiful employers shied away from adopting internal
promotion and long-term jobs. Not until the end of mass migration after World
War I did employers begin to invest significantly in the development of
so-called internal labor markets” (p. 12).
Rosenbloom presents impressive evidence showing that skill premia and skilled
wages tended to be higher in the United States than in Europe, and higher in
the southern United States than in the north. We are not told, however, why
skilled workers were more difficult to reallocate across space. Perhaps
regional technology sets were different, but probably not that different. Is it
an income effect? A permanent income consideration? What? We need to know why
informal networks were less efficient among skilled workers before we can
assess the impact of American labor market institutions on the evolution of
American skills and technology.
Chapter 5 uses data on wages and earnings to trace changes in the geographic
scope of labor markets across much of the nineteenth and early twentieth
centuries. An integrated labor market in the North East and the Midwest moved
huge numbers of workers in the decades immediately following the Civil War, but
this labor market did not extend to the West or to the South. Chapter 6
considers the impact of market expansion on labor relations through an
examination of variations in employers’ use of strikebreakers in late
nineteenth century labor conflicts. Rosenbloom rejects a popularly held view
among labor historians that worker and community solidarity were stronger in
smaller places, thus making it easier to prevent strikebreaking. Instead, he
finds that the use of strikebreakers did not vary appreciably by region or city
size. He does, however, find that the source of strikebreakers varied
systematically with location, with employers in small communities located
outside the North East most likely to use outside strikebreakers.
Overall, the book yields three important insights. (1) Employers were
instrumental in initiating migration flows that were later perpetuated by
friends and families. (2) Historical forces were important in shaping the
patterns of labor market integration that emerged in the course of the
nineteenth century. Patterns of labor market recruitment that emerged during
the first half of the nineteenth century, when slavery separated southern from
northern labor markets, were perpetuated and reinforced by the reliance on kin
and friendship-based networks of labor market information. And (3) late
nineteenth century labor market institutions proved more effective at
integrating markets for less skilled workers than for more skilled workers.
This difference may have encouraged American employers to reorganize production
Warren Whatley’s current research is on the trans-Atlantic slave trade,
1440-1850, with particular emphasis on the determinants of supply to the new
world. Other research interests include worker mobility and racial
discrimination in twentieth-century America, the economics of the Jim Crow
South, and inner-city economic development.
|Subject(s):||Markets and Institutions|
|Geographic Area(s):||North America|
|Time Period(s):||20th Century: Pre WWII|