[Congressional Record Volume 141, Number 127 (Wednesday, August 2, 1995)]
[Extensions of Remarks]
[Page E1582]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                PUT LOYALTY BACK IN THE WORKPLACE ETHOS

                                 ______


                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                        Tuesday, August 1, 1995
  Mr. LaFALCE. Mr. Speaker, for years I have spoken on the floor and in 
committee hearings on the urgency of making U.S. companies competitive 
in the world marketplace. U.S. companies have met this challenge and 
are beating their international competition by improving products, 
increasing production efficiency, and adapting to new technologies. In 
the jargon of the day, the key to this renovation has been corporate 
restructuring.
  Unfortunately, restructuring has left a key element out of the 
equation for success: America's workers. To attain a positive bottom 
line, companies have thrown away workers like so many crumpled pieces 
of paper. General Motors has let go more than 100,000 employees since 
the 1980's. Corporate America announced record layoffs in 1993--over 
615,000. The trend continued in 1994--first quarter--at a rate of 3,100 
a day after the recession was over. Examples of announced cutbacks 
since 1991 have included IBM, 85,000; AT&T, 83,500; Sears, 50,000; 
Boeing, 30,000; NYNEX, 22,000. This year in February alone, 30,945 jobs 
were eliminated by 74 companies, and it is projected that year-end 1995 
will tally 400,000 layoffs.
  We are in a new phase of corporate downsizing. Loyal workers and 
managers are let go. But employment is not the only issue. The quality 
of employment is changing. Lower salaries are imposed because it is a 
buyer's market and companies can command good employees at low cost. 
Recent studies, including those by the OECD, show that among the G-7 
industrial countries, the United States ranks first in having the 
longest workweek, the shortest vacation time, and the least weeks of 
maternity and parental leave.
  Mr. Speaker, last month Robert Kuttner wrote in Business Week that 
our best corporations cannot guarantee career security no matter how 
dedicated the work force. There is no need for companies to make a 
career commitment to employees. On the other hand, workers loyal and 
dedicated to their employers deserve loyalty in return. As a society, 
we must recognize that two-way loyalty in the workplace benefits 
everyone, and we must find a way to be competitive and successful with 
more than a bottom-line mentality. Mr. Speaker, I am submitting a copy 
of Mr. Kuttner's article for the Record.
           Needed: A Two-Way Social Contract in the Workplace

                          (By Robert Kuttner)

       America's best corporations are caught between two opposite 
     first principles. One prizes the engaged, empowered employee. 
     The other views employees as expendable costs. Reconciling 
     these views is like squaring the circle.
       It is hard to pick up a business magazine without 
     encountering compelling tales of companies that improved 
     productivity through the ``high road''--a policy of empowered 
     employees, teams, and high-performance work. This model 
     implies a reciprocal commitment between management and 
     employees, but in an economy of relentless downsizing 
     something appears to be lacking. The company can only insist 
     that high-performance will be rewarded or even that the 
     employee will keep a job. The corporate social contract in 
     America today, says Anthony P. Carnevale, chairman of the 
     National Commission on Employment Policy, ``is the sound of 
     one hand clapping.''
       You might think this one-sided social contract would have 
     costs to employee morale and hence to productivity. But, 
     evidently, fear is a powerful motivator. In his study of 
     corporate loyalty, White Collar Blues, Charles Heckscher was 
     granted access to middle managers at eight large corporations 
     undergoing major restructurings, including General Motors, 
     Dow Chemical, and AT&T. Heckscher, who chairs the labor 
     studies and employment relations department at Rutgers 
     University, found that employees were highly dedicated but 
     had scant confidence that their devotion would be repaid. Yet 
     they retained a surprising degree of loyalty. ``Perhaps the 
     principal puzzle in companies undergoing the shock of 
     change,'' be concluded, ``is that it produces so little 
     conflict and disintegration.''


                             glowing report

       At another conference at the Jerome Levy Economics 
     Institute of Bard College, the keynote speaker was Frank P. 
     Doyle, executive vice president of General Electric Co. Doyle 
     confirmed Heckscher's portrait. GE today does three times the 
     business it did in 1980--with half the workforce. To get 
     there, Doyle said, ``we did a lot of violence to the 
     expectations of the American workforce. . . . We downsized. 
     We de-layered. And we outsourced.''
       GE is among the most dynamic of U.S. companies, with a deep 
     commitment to imaginative human-resource strategies. For its 
     core employees, GE is an attractive place to work. However 
     even the best of our corporations cannot guarantee career 
     security, no matter how dedicated its workforce. If this is 
     the core, heaven help the periphery.
       At a conference at the Radcliffe Public Policy Center, 
     there was much talk about a ``new economic equation'' to 
     reconcile work and family life. Another corporate manager 
     with a strong commitment to core employees, Robert E. Boruff, 
     vice-president for manufacturing at Saturn Corp., gave a 
     glowing report about how his company offers subsidized child 
     care, flexible hours, and help to workers pursuing more 
     education. But even Saturn uses outsourcing and contingent 
     workers, who do not receive all these benefits.


                            HIGH-MINDEDNESS?

       Corporate America is littered with companies that once 
     prided themselves on generous fringe benefits and no-layoff 
     policies--companies that now devalue health benefits and 
     jettison faithful employees by the thousand. Although they 
     talk a good game, America's most successful companies seem to 
     have decided that a workplace compact is necessary only for 
     their most valued workers. So a humane corporate culture for 
     the entire workforce cannot be anchored in the high-
     mindedness or event he enlightened self-interest of the 
     corporation.
       Employment security, as opposed to job security, is assured 
     only when the economy enjoys high growth and full employment. 
     With high unemployment and plenty of job seekers, companies 
     have no need to make a career commitment to employees. 
     Conversely, in a full employment economy, the existence of 
     plentiful job opportunities takes the sting out of downsizing 
     at any one company.
       Similarly of we believe as a society in profamily 
     workplaces, lifetime learning, pay for performance, and other 
     enlightened principles, these norms must be anchored in 
     national policies. Enlightened corporations may want to 
     pursue a high-rod approach, but competitive pressures may 
     make that prohibitively expensive unless all companies are 
     traveling the same road.
       The elements of a decent, two-way social contract in the 
     workplace require floors set by either national policies or 
     strong labor unions. It's encouraging that America's most 
     productive companies, in principle, value a high-road 
     approach, but that doesn't guarantee that they will take it. 
     It's also necessary for society to bar the low road.
     

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