Economic Turbulence

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 industriesfinancial services, retail food services, trucking, semiconductors, and softwarethe 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.

Clair Brown is professor of economics and director of the Center for Work, Technology, and Society at the University of California, Berkeley. She is the author of American Standards of Living, 1918–1988 and coauthor of Work and Pay in the United States and Japan. John Haltiwanger is professor of economics at the University of Maryland. He is the coauthor of Job Creation and Destruction and the coeditor of several volumes, including, most recently, Measuring Capital in the New Economy. Julia Lane is senior president and director of the Economics, Labor, and Population Department at the National Opinion Research Center at the University of Chicago. She is the coauthor of Moving Up or Moving On and the coeditor of Confidentiality, Disclosure, and Data Analysis.