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Every day, in every sector of our economy, a business shuts down while another starts up, jobs are created while others are cut, and workers are hired while others are laid off. This constant flux, or turbulence, is a defining characteristic of our free market system, yet it mostly inspires angst about unemployment, loss of earnings, and the overall competitiveness of corporations. But is this endless cycle of fluctuation really so bad for America? Might something positive be going on in the economy as a result of it?
In this penetrating work, three esteemed economists seek to answer these questions by exploring the real impact of volatility on American workers and businesses alike. According to the authors, while any number of events--shifts in consumer demand, changes in technology, mergers and acquisitions, or increased competition--can contribute to economic turbulence, our economy as a whole is, by and large, stronger for it, because these processes of creation and destruction make it more flexible and adaptable. The authors also acknowledge and document the adverse consequences of this turbulence on different groups of workers and firms and discuss the resulting policy challenges. Basing their argument on an up-close look into the dealings and practices of five key industries—financial services, retail food services, trucking, semiconductors, and software—the authors demonstrate the positive effects of turbulence on career paths, employee earnings, and firm performance.
The first substantial attempt to disentangle and make clear the complexities of this phenomenon in the United States, Economic Turbulence will be viewed as a major achievement and the centerpiece of any discussion on the subject for years to come.
“Economic Turbulence improves our understanding of the complexities of turbulence, the defining characteristic of the modern American economy. Providing evidence based on new data sources and interviews, it offers valuable insights into the impact of turbulence on firms’ performance and survival rates, and workers’ job ladders, career paths, and wages. The study’s data confirm that the obvious is often wrong. Turbulence, the authors show, has different effects on various groups of workers and industries. This is an essential book for all decision makers and policy makers operating within our volatile economy.”
“One of the central issues facing the American economy is the creative destruction of jobs. The authors of Economic Turbulence do a wonderful job of looking at the real data and demonstrating that there are in fact both winners and losers in our economy. Much of the outcome depends on the flexibility of the companies that employ our workers. The authors are to be commended for tackling this profoundly complex issue and providing readers with clear and thoughtful analysis.”
“This book presents important new insights into the dynamics of the American labor market. It documents the consequences of the birth and death of firms on the wages and careers of workers. It examines the effectiveness of alternative personnel strategies by firms and search strategies by workers. A must-read for anyone interested in how the labor market actually works as opposed to popular but misleading journalistic depictions.”