While theories based on intertemporal relationships between the labor-market dynamics and business growth are qualitatively consistent with long-term empirical and historical data, events of the last decade have threatened to debunk the almost century-old hypothesis on the subject.
The fluid relationship between business and labor in the United States, and for the whole world for that matter, is a subject that remains hazy and imprecise, even at the best of times. More so following the post-dot-com bubble era of the early 21st century and the 2007-09 depression, which saw numerous ancient, monolithic American firms crashing to the ground, and in the process, taking away the promised social welfare support and retirement benefits of its workers and their families.
The fall of Bethlehem Steel and Bethlehem Shipbuilding in 2001, in particular, illustrated the issue perfectly and brought the issue of labor and businesses into the forefront. With over 75,000 retirees on its pension roll, as opposed to only about 15,000 active employers, the industrial titan was handicapped in its battle against international rivals. It eventually crumbled in the face of falling steel prices, rising fuel costs, and the pressure to replace warehouses filled with old equipment and machineries. The 144 years-old manufacturing titan is now a subsidiary of Indian-owned AncelorMittal.
The fate that befell Bethlehem, once the symbol of the American manufacturing prowess, brought into question the effectiveness of the American private welfare concept against the more capitalistic industrial practices of its international rivals.
The Franklin Roosevelt-inspired New Deal private welfare concept, which has so successfully integrated itself into the national business model for the last 80 years, is now being aggressively challenged. Several central tenets of the concept - minimum wage, Social Security, pension, health care and labor unions - have suddenly developed an aura of decay, despite the fact that the United States has long been considered a welfare laggard among industrialized nations, while its unions' influence and political reach are relatively tiny compared to its contemporaries in other developed nations.
There are growing cries from within and outside of the business community that the private welfare concept is an antithesis of the traditional American business culture, and it is shackling the growth of national enterprises while creating a culture of dependency and entitlement among the populace. Even the most profitable sectors of the economy are struggling to provide iron-clad economic security and welfare support for its employers, while still remaining competitive.
On the flip side, proponents of the New Deal legacy believe that socially responsible businesses are one of the distinguishing features of a moral America. Private welfare relieves the federal government of the onerous and expensive task of providing a socioeconomic security net for the majority of the American workforce, while ensuring that private enterprises maintain a balance between profitability and social responsibility. Instances of worker exploitation and abuse, seen so frequently in most of the world's emerging markets, are a relatively rare occurrence in the country, a testimony to the success of the morally and ethically sound employment practices of American enterprises.