All Commentary
Friday, January 1, 1965

Lifetime Job Security


An editorial release, October, 1964, Associ­ated Industries of Missouri.

Recently the head of one of America‘s largest labor unions came up with an old idea—that corporations should guarantee life­time job security to workers. This idea is certain to appeal to many people because it sounds like a worthwhile and humane goal—but this suggestion is based on a false idea. Then there are also some hidden implications that run con­trary to the course of events. First, why is the idea of life­time job security, guaranteed by a corporation, built on a sandy foundation? Simply because a cor­poration, regardless of size, does not have the economic power to fulfill such a guarantee. From an economic standpoint, an employee doesn’t retain his job at the discre­tion of the corporation—but, rather, at the discretion of the corporation’s customers.

In other words, while a worker’s paycheck is handed to him by the corporation, it doesn’t come from the corporation. All wages come directly from consumers who buy what the corporation offers for sale. If customers stop buying, wage and other expense monies stop coming in—and all the good intentions or guarantees in the world won’t enable a corporation to keep unneeded employees on the payroll. There just isn’t enough money in the till to do so. In short, since consumers hold life or death power over all jobs, only they are able to guarantee job security—and this they won’t do!

And why won’t they? Consum­ers won’t guarantee you your job, or me my job because the only guarantee they have of getting the most for their money is their free­dom to shop. This is called the “discipline of the free market.” And, if we think about it, we wouldn’t have it any other way—because we, in the final analysis, are consumers ourselves. We work to fill our wants; and when we fill our wants, we consume.

Second, what about the hidden implications mentioned above? The most obvious is that, to gain the greatest degree of job secur­ity from consumers, employees must readily submit to consumer demands. But consumers don’t im­pose their demands on employees directly, they do it through em­ployers. Since this is so, the best way employees can meet consum­er demands is to allow their em­ployer, the corporation, as free a hand as possible in meeting con­sumer demands. This calls for a high degree of flexibility in areas of cost control (of which wages are a part), work rules, and others too numerous to mention. Em­ployees who thus cooperate with their employer in wooing the con­sumer dollar will come closest to winning lifetime job security. In short, workers will be wiser to look to the consumer, the real source of job security—not to the corporation.

 

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Plato

“The only standard today is the pleasure of the hearers no matter what sort of men they are, but those are blind who have no clear standard, and the divine is the eternal measure.”