INCREASED WORKER MOBILITY

The rise in cross-border and domestic competition, the emergence of technologies favoring small firms, and the increased access to finance have completely changed employment dynamics in firms. The skilled manager or worker of yesteryear was trapped in his firm. He had few outside opportunities. The closest alternative was another integrated firm, which typically had a different culture, different standards, and a different, specialized technology. Now, as more suppliers of intermediate goods flourish, firms that continue to be integrated have had to restructure their processes so as to be able to use outside suppliers whenever advantageous. As processes have become more similar across firms, the opportunities for managers to move have increased. At the same time, as production technologies have become more flexible, skills have become more portable because the same technology is used in very diverse firms.

In the United States today, the average worker has had nine jobs between the ages of eighteen and thirty-four.³⁰ While some of these jobs are meant to be temporary and reflect the transience of youth, even between the ages of thirty and thirty-four, the average worker holds 2.4 jobs. To be able to attribute this mobility to the changes we have described, however, we want to know whether workers had lower mobility in the past (leaving aside our impression that our fathers had only one job). In fact, there is little evidence of an overall increase in the fraction of employees with tenure of less than one year, at least over the period 1973 to 1996. But there does seem to be an increase in the fraction of workers with less than ten years’ tenure, especially among workers over age forty, and especially in the 1990s.³¹ In other words, job mobility has increased for those whom one might think are most specialized and who used to be most locked in to their employer in the past.

Access to finance has also increased the opportunities of managers and skilled workers by enabling them to start their own business. The ideas, experience, and coworkers they carry from their old firms can be invaluable seed resources.³² Not having to start from scratch is indeed a benefit: Intel—one of the most innovative and profitable firms of our time—was started in 1968 by Gordon Moore and Robert Noyce and a number of subordinates because they felt their employer, Fairchild Semiconductors, was ignoring important new technologies.³³ It took Noyce just one phone call to raise the money, and by 1971, the company went public, well on its way to the nearly $200 billion in market capitalization it has as of the time of this writing. Intel is not an exception. Approximately 71 percent of the firms included in the U.S. Inc 500 (a list of young, fast-growing firms) were founded by people who replicated or modified an idea encountered in their previous job.³⁴

These trends toward entrepreneurship are also seen in the wider population. Between 1974 and 1996, the number of business owners as a fraction of total nonagricultural employment in the United States reversed a century-long decline. It went up from 8.2 percent to 11.4 percent, a striking increase of almost 38 percent!³⁵ The increase can be seen for both men and women and in a number of other developed countries also.