published in Labor Law Journal, August 1997, at 491-97


by Alan Hyde(1)

Presented to the Industrial Relations Research Association, Spring Meetings, New York, NY, April 17-19, 1997.

The problem of contemporary industrial relations is that the shape of the labor market has now become fairly clear, while the form of employee organization in that market is up for grabs. The labor market that organization must crack is a market for services obtained on short-term contract. In such a labor market, workers move frequently from project to project without ever acquiring implicit promises, expectations of longevity, health insurance, or retirement security. Indeed, they may never acquire "jobs" or become legal "employees".(2) Everyone is familiar with at least some services that were once characteristically performed by employees holding implicit lifetime jobs with a single firm that are now characteristically performed by so-called independent contractors hired for a particular project without any implicit or explicit promises of continued employment. Common examples include secretarial services, editorial services, university teaching, and lawyering. There is still a lively debate however as to whether such markets are really replacing lifetime jobs as we have known them, or, by contrast, may have been given exaggerated prominence in the media.(3)

Scholars sympathetic to employees and their organizations typically decry the rise of such high velocity labor markets, emphasizing the uncertainty and insecurity with which they burden employees. This paper assumes rather that such insecurity is a problem to be solved within such markets rather than an argument to restrict them. Following studies such as AnnaLee Saxenian's, I assume rather that there is a certain kind of economic dynamism and growth that may be associated with high velocity labor markets that cannot easily be obtained through other labor contracting. Saxenian identifies Silicon Valley's comparative advantage over the computer industry around Massachusetts' Route 128 with Silicon Valley's organization into many small firms as opposed to Route 128's domination by a few firms. Saxenian's book has come up in numerous conversations I have had in Silicon Valley, and her analysis seems to make sense to everyone with whom I spoke.(4)

Saxenian seeks to explain why Silicon Valley decisively passed Route 128 in the 1980's. Each region was a well-known center of the computer industry by the early 1970's. Each had strong ties to local universities, grew strong on defense contracting, but diversified into civilian production. Each employed workforces of roughly equal size in 1975. Yet between 1975 and 1990, California generated three times as many jobs as Massachusetts; in that year Silicon Valley-based producers exported electronics products worth more than twice as much as Route 128's. What accounts for the difference? In Saxenian's words:

Silicon Valley has a regional network-based industrial system that promotes collective learning and flexible adjustment among specialist producers of a complex of related technologies. The region's dense social networks and open labor markets encourage experimentation and entrepreneurship. Companies compete intensely while at the same time learning from one another about changing markets and technologies through informal communication and collaborative practices; and loosely linked team structures encourage horizontal communication among firm divisions and with outside suppliers and customers. The functional boundaries within firms are porous in a network system, as are the boundaries beween firms themselves and between firms and local institutions such as trade associations and universities.

The Route 128 region, in contrast, is dominated by a small number of relatively integrated corporations. Its industrial system is based on independent firms that internalize a wide range of productive activities. Practices of secrecy and corporate loyalty govern relations between firms and their customers, suppliers, and competitors, reinforcing a regional culture that encourages stability and self-reliance. Corporate hierarchies ensure that authority remains centralized and information tends to flow vertically. The boundaries between and within firms and between firms and local institutions thus remain far more distinct in this independent firm-based system.(5)

Although Silicon Valley has many more firms, and many more small firms, these firms are linked by informal ties. High labor mobility among firms is central to the formation of these ties, dwarfing other sources (such as Stanford University School of Engineeering). "During the 1970s, average annual employee turnover exceeded 35 percent in local electronics firms and was as high as 59 percent in small firms. It was rare for a technical professional in Silicon Valley to have a career in a single company. An anthropologist studying the career paths of the region's computer professionals concluded that job tenures in Silicon Valley averaged two years."(6) Because professionals know and have worked with peers at other firms, there is a great deal of informal know-how sharing across firm boundaries.(7) Saxenian's book includes a number of specific comparisons in which small, nimble Silicon Valley firms, working with subcontractors and customers, were able to steal a march on the few large firms dominating Route 128.

This paper is part of a series that accepts this stylized picture of the kind of economic growth that might be associated with a high velocity labor market such as Silicon Valley's, without long-term jobs or implicit labor contracts, and asks how employees reduce uncertainty or might reduce uncertainty in such a labor market, so as not to bear all the risks that it creates. In order to answer this question, it is necessary to examine the careers of comparatively highly-paid, well-trained, professional employees in Silicon Valley's high velocity labor market. I do this not because of any particular fondness for such employees (though many are in fact my friends), but in the precise hope that, from studying how employees with bargaining resources protect themselves, one might learn how their contracts and organizations might be adapted to benefit ordinary working people in high velocity labor markets, such as janitors, waitresses, or secretaries. For the purpose of learning how, or indeed whether, employees might cope with high velocity labor markets, there is little to be gained just now from studying janitors. They lead uncertain lives in Silicon Valley; they lead uncertain lives in many labor markets.(8)

Accepting then that high velocity labor markets are not necessarily undesirable, and may in any event be here to stay, and to the end of figuring out how employees may gain some of their advantages, I have been conducting pilot interviews among employees and independent contractors in Silicon Valley. At this stage of the project, the interviewees are not a representative sample of anything, but reflect my personal contacts in the area.(9) Portions of this work have been presented elsewhere(10) or remain in early stages.(11)

This paper deals with the somewhat speculative question of employee organization in high velocity labor markets. At the moment, there is next to no formal organization of employees, though as Saxenian and others have shown there is a great deal of informal social interaction, information sharing, and joint problem-solving. My interviews suggest a market for a novel form of employee organization that would draw equally on this distinctive Silicon Valley culture of information sharing in high velocity labor markets, as well as older labor unions dealing with such traditional high velocity labor markets as construction services or entertainment. Briefly, such a labor organization would:

--provide health, retirement, and other welfare benefits;

--advise employees on investments in self-directed plans;

--experiment with short-term dislocation allowances;

--provide training;

--maintain information on employers of short-term labor, including web sites and on-line discussion groups;

--provide legislative lobbying services on issues affecting employees.

Such an organization might do little or no bargaining with individual employers, perhaps none, if benefits were financed by employees. To the extent possible, it should be an organization of employees in defense against employers, rarely in collaboration with them. It might or might not call itself a union.(12)

This account omits any reference to the one institution of employee organization that has been distinctive to high technology employment: the employee caucus. I have been upbeat in the past about the potential for such caucuses.(13) More recently, as I have focused on the decline of implicit employment contracts, I have questioned whether caucuses are not too closely linked to the particular employers that (after all) finance them to be able to defend employee interests as they move from firm to firm. The following are unscientific observations on the present state of employee caucuses in Silicon Valley, a by-product of my larger interviewing project.

My tentative sense is that observable caucuses have permitted themselves to become defined almost exclusively as vehicles for the advancement within firm hierarchies of individual group members. They play little or no role in linking women or Latino or Asian or African-American employees across firm boundaries. Their inability to perform the latter function impedes their utility in the emerging high velocity labor market.

What caucuses do

The basic model of an employee identity caucus is familiar from the work of Raymond Friedman and others.(14) "The issue that African American network groups deal with is, broadly speaking, the acceptance, comfort, and career achievement of Black employees."(15) Just the same might be said (as they note) of other network groups. Their main activities include mutual support, networking, exchange of information (particularly about managerial vacancies), and advice. Within a sample of Fortune and Service 500 companies responding to a survey, 29% had network groups, typically African American, women's, or both. Groups often arise on initiative of managers not part of the group, who seek assistance in recruiting, or who bring the group together for some other purpose, such as reviewing an affirmative action plan or planning Black History month, the group then staying together to pursue its own purposes.(16)

Groups tend to be dominated by professional or managerial employees even when nominally open to others.(17) To the extent groups enroll statutory employees, that is, nonmanagers, they probably mostly violate Section 8(a)(2) of the National Labor Relations Act, because they receive employer support and do deal with management as representative of some employees. Possibly they might be upheld by the National Labor Relations Board under a number of poorly-defined administrative exceptions to the statute for problem-solving or nonrepresentational groups. However, these concerns are largely theoretical as the Board acts only on private complaint and thus acts against employer-sponsored representation plans normally on complaint by a union seeking to represent employees.(18)

Groups almost never make formal demands or requests of management. When managers express concerns about the formation of such groups, it is a fear that they will be confrontational and union-like. Groups are sensitive to this fear and avoid confrontation or demands.(19) The sole categorical exception that I was able to find in database news searches and personal discussions was gay and lesbian caucuses, which typically at some point request that corporate benefits programs be opened to nonmarried domestic partners. When this request is granted, such groups generally make no further demands and revert to a more typical social-and-support group.(20) Sometimes African American or women's caucuses, particularly when asked to review an affirmative action plan, may suggest numerical goals.(21) They have also requested changes in formal job posting, evaluation, or mentoring programs or sensitivity training or cultural awareness programs.(22) Still, the human resources managers surveyed by Friedman and Carter ranked "influence policies" the second-lowest among potential functions actually accomplished by network groups.(23) Thus, while almost no problems or downside can be identified in the existence of identity caucuses, their positive role seems largely limited to career and psychic support for their particular members.

Silicon Valley firms often have active caucus systems that largely replicate this pattern of corporate loyalty and devotion to career advancement. For example, Apple Computer, at the time of my interviews in March 1996, had a formal Multicultural Alliance consisting of six employee groups (Asian, Black, Hispanic, Lesbian and Gay, Professional Women, and Viet); a "senior specialist, multicultural programs" publicized their efforts and acted as liasion with management. Christian fellowship and Jewish cultural groups were at that time functioning outside the Alliance. All groups are "identity caucuses"--there are no Employees for a Democratic Apple or for Higher Bonuses. Groups, funded mostly by individual contribution, got e-mail boxes, meeting places, and permission to plan public events. All their activities consisted either of "social, networking" functions or of helping the company use diversity for business success, such as tapping Asian or Latin

American markets. Groups have persuaded Apple to fund conferences of professional women, or mentoring programs at historically black colleges. Particularly when planning conferences, groups may link up informally with counterpart caucuses at Hewlett-Packard or Xerox, but nobody knows of any links with larger community or political organizations.(24)

Formal linking with other caucuses, but still excluding larger community or political organizations, has been taken by at least one set of identity groups and may come to be followed by others. A National Hispanic Employee Association is active in the Bay Area and perhaps elsewhere. I attended their Second Annual Breaking Barriers Awards Conference in San Jose, California, on March 15, 1996. The group is not, however, even the beginning of an "associational union" in Charles Heckscher's sense.(25) Rather, it describes its "mission and promote the upward mobility of Hispanics in the corporate and public sectors." Indeed, the conference, sponsored by Silicon Graphics, Sun Microsystems, Apple Computers, AT&T, and similar employers, was largely aimed at high school and college students and advised them on self-presentation and career planning. The mission was clearly facilitating inclusion of Hispanics in existing corporate culture, and transforming that culture only in the sense of including more Hispanics.

I do not wish to denigrate the importance of these goals or the efficacy of the National Hispanic Employee Association's efforts. I wish simply to raise as a question the disjunction between the corporate world uniformly invoked in the literature and communications of employee network groups--a world of loyalty to the corporation, advancement through internal promotion ladders, through fitting in to an existing corporate culture--and the Silicon Valley described by Saxenian, and, I must say, most of my friends and interviewees--a high velocity labor market involving frequent job changes, startups, informal exchange of information and knowhow sharing among firms.(26) The intense devotion of identity caucuses and their spokespersons to the world of corporate loyalty, careers, and promotions, may show that world to be in better shape than some business journalists have too quickly assumed. On the other hand, it may be that there is a kind of deeper affinity between network groups and the hierarchical corporation, with internal labor markets, that may impede the network groups' recognition of newer and more vital ways of operating labor markets.

Even to advance equal opportunity goals will require that network groups transcend the model of loyalty to the hierarchical firm. High velocity labor markets do not automatically achieve equal employment opportunity, far from it. As I have said, there remain many questions about how to measure, monitor, and enforce true equality of opportunity in such markets. Employee network groups, organized around racial or ethnic or sexual identities and transcending firm boundaries, might take on some of the training, benefits, career planning, informational, and legislative functions that I suggested above may be assumed by new unions. In particular, they could be sources of information about firms. Their ratings of firm equal employment efforts may turn out to be more important than legal protection of equal employment opportunity, which assumes stable labor markets and job descriptions and does not fit well with high velocity labor markets.

So I would suggest that employee network groups, if they link with groups at other firms and then community groups, could play a more important role in future labor markets than they currently play. It will be necessary, however, for them to transcend a model of loyalty to hierarchical corporations with career ladders, and imagine functioning in high velocity labor markets.

1. 1. Professor and Sidney Reitman Scholar, Rutgers. The State University of New Jersey, School of Law, Newark, NJ, 07102-3192. telephone: 973-353-5463. fax: 973-353-1445. e-mail:

2. 2. But see Vizcaino v. Microsoft Corp., 97 F.3d 1187 (9th Cir. 1996)(employees designated "temporary agency employees" are employees entitled to participate in company benefit plans), remanded to plan administrator ___ F.3d ___ (9th Cir. 1997)(en banc).

3. 3. I explore some of these themes in a work in progress, Alan Hyde, Work Without Jobs: Emerging Legal Problems in High Velocity Labor Markets. It is unnecessary to burden this study with the debate; if you are among the group that thinks that there has been no overall decline in lifetime jobs, just treat this paper as a study of one interesting, albeit outlying, corner of the labor market. I find this position impossible to defend, but I will only summarize the argument here. The best, fairest current treatment is Peter Cappelli, Laurie Bassi, Harry Katz, David Knoke, Paul Osterman, & Michael Useem, Change at Work 176-85(1997). They emphasize such unquestioned data as the growth of the temporary help sectors, increased reporting of separations and quits in various surveys; surveys in which men with no education past high school report distinctly shorter tenures on their present job than their equivalents at earlier times, Henry S. Farber, Are Lifetime Jobs Disappearing? Job Duration in the United States: 1973-1993,

National Bureau of Economic Research, NBER Working Paper No. 5014, February 1995; intentional employer decisions to become smaller or "downsize", which cannot be compared with earlier downsizing

because there was never such intentional downsizing, and diminished corporate expenditure on training. The main, if not exclusive, recent study arguing against an overall trend toward shorter-term jobs is Farber, cited above. Farber analyzed Current Population Survey answers to the question how long the respondent had been on the job presently held. As mentioned above, Farber found a fairly sharp decline in the tenure reported by males, particularly with no education past high school. This was offset in recent decades by increasing job tenure for women. It was not so long ago that a high percentage of the jobs open to women at all were expected to end when the woman either married or became pregnant. By contrast, today some women may fashion lifetime jobs who could not have done so before the 1970's, and these women, reporting longer times on the job, offset the declines for men reported by Farber. I leave it to the reader to decide whether this trend in women's jobs will increase, or whether it has already peaked. Other researchers analyzing survey questions on job tenure have found overall shorter times on the job, e.g. Stephen J. Rose, Declining Job Security and the Professionalization of Opportunity, Research Report No. 95-04, National Commission for Employment Policy, May 1995; and Kenneth A. Swinnerton & Howard Wial, Is Job Stability Declining in the U.S. Economy?, 48 Indust.& Lab.Rel.Rev. 293 (1995); as well as noting problems with inconsistent answers to such surveys, James N. Brown & Audrey Light, Interpreting Panel Data on Job Tenure, 10 J.Lab.Econ. 219 (1992).

4. 4. AnnaLee Saxenian, Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (1994). See also Paul Milgrom & John Roberts, The Economics of Modern Manufacturing: Technology, Strategy, and Organization, 80 Am.Econ.Rev. 511 (1990).

5. 5. AnnaLee Saxenian, supra n.4, at 3-4.

6. 6. Saxenian at 34-35, quoting American Electronics Association, Technical Employment Projections (1981)(statement of Pat Hill Hubbard). "[I]nter-firm worker mobility is a permanent feature of the labor market for semiconductor engineers, rather than an occasional symptom of job shopping during periods of rapid employment growth....Job changing is likely to be especialy frequent in Silicon Valley. Within this industrial complex, small specialized semiconductor producers typically depend upon the external labor market (as opposed to the internal labor market of the firm) to meet their demands for skilled and experienced workers...." David P. Angel, The Labor Market for Engineers in the U.S. Semiconductor Industry, 65 Econ. Geog. 99, 103 (1989). In this nationwide survey of semiconductor engineers, half the job

changes reported were moves in which both the old and new employers were located within Silicon Valley. 65 Econ. Geog. at 106.

7. 7. There is increasing recognition in the economics literature that, in the real world, firms share significant information and knowledge across firm boundaries, and that willingness to do so can play a significant role in economic growth. The most important study is Eric von Hippel, The Sources of Invention 76-92 (1988), on "informal know-how training", engineers asking their counterparts at rival firms questions, that will be answered unless the answer is both secret and crucial to the firm. For a historic study, see Robert C. Allen, Collective Invention, 4 J.Econ.Behav.& Org. 1 (1983)(19th Century British iron and steel), which von Hippel suggests (at 84) may more accurately depict "informal know-how trading" than genuine "collective invention." See also Charles F. Sabel, Learning by Monitoring: The Institutions of Economic Development, in Handbook of Economic Sociology (Neil Smelser & Richard Swedberg eds. 1994); Walter W. Powell, Inter-Organizational Collaboration in the Biotechnology Industry, 152 J.Inst.& Theoret. Econ. (1996), and the interesting comment by Henry Hansmann, What Determines Firm Boundaries in Biotech?, 152 J.Inst.& Theoret.Econ. (1996).

8. 8. Christian Zlolniski, The Informal Economy in an Advanced Industrialized Society: Mexican Immigrant Labor in Silicon Valley,

103 Yale L.J. 2305 (1994).

9. 9. I attended Stanford University, receiving my A.B. in 1972. Many of my college friends remained in that pleasant area and work in or around the software industry. They were instrumental in arranging the first round of pilot interviews.

10. 10. Alan Hyde, How Silicon Valley Abolished Trade Secrets (and why this is Efficient), presented to the preconference Make or Buy: The Boundaries of the Firm, Columbia University School of Law, February 7, 1997, argues that lawyers have facilitated the growth of a high velocity labor market by largely permitting departing employees to move freely to new employers and startups, despite contrary law on the books that makes employee's knowledge about how to do their jobs the "trade secrets" of their employer, and permits injunctions and damages against employees who depart with such trade secrets. The paper analyzes exisiting economic models of the tradeoff between growth due to rapid diffusion of information among competing firms, and the kind of growth that comes when information is conceptualized as the property of individual firms. It also, more speculatively, criticizes conceptualizing information as "property."

11. 11. I am trying to form a picture of the dimensions of equal employment opportunity in a high velocity labor market. This work is too undeveloped to permit any conclusions at this point, but reflects my sense that most of our thinking about the meaning of equal employment opportunity assumes just those permanent jobs, internal labor markets, levels of hierarchy, and job descriptions, that are fast passing from the American scene. I know very little

straight thinking about measuring equal employment opportunity in a world of short-term jobs, flexible descriptions, and subjective hiring criteria.

12. 12. I presented an expanded version of this proposal as Employee Organization in High Velocity Labor Markets, New York University 50th Annual Conference on Labor, May 29-30, 1997.

13. 13. Alan Hyde, Employee Caucus: A Key Institution in the Emerging System of Employment Law, 69 Chi.-Kent L.Rev. 149(1993), reprinted in The Legal Future of Employee Representation 146-90(Matthew Finkin ed. 1994). See also Marion Crain, Women, Labor Unions, and Hostile Work Environment Sexual Harassment: The Untold Story, 4 Tex.J.Women & the Law 9, 66-80 (1995)(advocating separate women's workplace organization).

14. 14. Raymond Friedman & Caitlin Deinard, Black Caucus Groups at Xerox Corporation, Harvard Business School case 9-491-047 & 048 (1991); Raymond A. Friedman & Donna Carter, African American Network Groups: Their Impact and Effectiveness (An Exeutive Leadership Council Study)(1993). See also Hyde, supra n. 13.

15. 15. Friedman & Carter, supra n.14, at 3.

16. 16. Id. 1, 15.

17. 17. Id. 16.

18. 18. Hyde, supra n.13, at.

19. 19. Friedman & Carter, supra n.14, at 17-23. Similar results were reported in an interview of Tara Levine of Catalyst, an organization that assists women in forming network groups, conducted by my student research assistant, Rachel Geman, November

15, 1995.

20. 20. Karen Newell Young, A League of Their Own: Disneyland Gay-Lesbian Group Has Influenced Significant Change at Park, Los Angeles Times, Oct. 12, 1995, at E1. The Disney group also

requested unsuccessfully that a Disney-owned television station in Los Angeles not pick up the Rush Limbaugh Television Show. Daniel Cerone, Employees' Group Angered by KCAL Airing "Limbaugh" Television, Los Angeles Times, Sept. 9, 1994, p. F1.

21. 21. Faye Rice, How to Make Diversity Pay, Fortune, Aug. 8, 1994, at 78; Ann Scales, Black AT&T Workers to Urge Diversity Plan, Dallas Morning News, Sept. 23, 1993, at 2D.

22. 22. Friedman & Carter, supra n.14, at 9.

23. 23. Id. 37. "Fight Discrimination" was the only potential goal ranked lower in accomplishment. "Express concerns" was seen as the most frequent accomplishment.

24. 24. Interview, Toni Tomacci, Senior Specialist, Multicultural Programs, Apple Computer, Inc., March 12, 1996. I conducted supplementary interviews with a number of employees who must remain anonymous but did not contradict Tomacci's account. Apple has retrenched considerably since these interviews.

25. 25. cf. Charles C. Heckscher, The New Unionism: Employee Involvement in the Changing Corporation 185-91 (1988).

26. 26. See also Laurel Wellman, Temporary Solidarity, SF Weekly, December 4-10, 1996, at 13, on attempts to organize temporary and contingent workers in Silicon Valley run by the South Bay Labor Council. I discuss these further in my paper at the NYU

Conference, cited supra n. 12.