Labor economics

As a graduate student, Gordon combined some of his own findings with related work by other economists to write Theories of Poverty and Underemployment (1971), a book that surveyed alternative approaches to problems of urban poverty. His best-known contributions to labor economics challenged the mainstream economic assumption of a unified labor market and argued instead for the recognition of multiple labor markets separated by deep historically-shaped divisions along racial, gender and class lines. Gordon's joint research with Edwards and Reich in this area culminated in the publication of their co-authored and widely cited book, Segmented Work, Divided Workers: The Historical Transformation of Labor in the United States (1982).^{[citation needed]}

Macroeconomic analysis and economic policy

In 1979, Gordon became co-chair of a commission on economic problems set up by the Progressive Alliance—a political coalition of more than 200 organizations representing labor, citizens, civil rights and women's organizations. He felt that a new and overarching analysis of the U.S. economy was needed in order to understand the macroeconomic travails of the time and to guide proposals for change. This led to more than a decade of collaboration with Samuel Bowles and Thomas Weisskopf in which they first analyzed the post-World War II boom of the U.S. economy as well as its subsequent unraveling and then formulated policy proposals to develop a more democratic, egalitarian and successful U.S. economy in the future. Gordon, Bowles and Weisskopf's account of the unraveling of the postwar boom gives prominence to the institutional and political impact of sustained full employment during the middle-to-late 1960s, the erosion of U.S. world hegemony and the rise of environmental and other citizen movements. In brief, they argue that the boom ended because the institutional structures could no longer restrain the claims of rivals (both domestic and international) against the profits of U.S. corporations and that a new and more just social and economic order would be needed to restore prosperity. Gordon's work with Bowles and Weisskopf led to numerous econometric and historical studies on the dynamics of stagflation, the slowdown of productivity growth and the determinants of profitability and investment which were published in a series of articles in economics journals. The collaboration also led to two co-authored books for a general audience, namely Beyond the Waste Land: A Democratic Alternative to Economic Decline (1983) and After the Waste Land: A Democratic Economics for the Year 2000 (1991).

Macroeconomic modeling and labor control

One of Gordon's most important contributions to the collaborative research he carried out on labor economics and macroeconomic trends was his historical and institutional understanding of the process of economic growth and development. His approach sought to explain successive booms and crises in a capitalist economy in terms of successive institutional frameworks or, to use the neo-Marxian term, successive social structures of accumulation (SSAs). In the late 1980s and early 1990s, he sought to use statistical methodology to conduct a rigorous test of this historical-institutional approach. His project involved the specification of four distinct yet comparable econometric models of the U.S. economy, based respectively on the neoclassical, the classical Marxian, the post-Keynesian and his own neo-Marxian "left-structuralist" perspective—the latter representing a formalization of the SSA approach. From a "forecasting tournament" among the four models, his own left-structuralist model emerged the winner.

Gordon's last five years were devoted also to completing an analysis of the top-heavy bureaucratic structure of U.S. corporations and its relationship to the decline in the real wages of U.S. workers since the mid-1970s—two phenomena on which he had focused attention in his earlier work. This effort culminated in the publication two months after his death of Fat and Mean: The Corporate Squeeze of Working Americans and the Myth of Managerial 'Downsizing' (1996). In this book, Gordon refutes with an impressive array of quantitative evidence much of the conventional wisdom about U.S. corporate management and its relations with workers. He argues that U.S. corporations have gone "mean" rather than "lean", employing more managers and supervisors per worker than ever before. He attributes the long-term squeeze on U.S. workers' real wages not so much to increasing international economic integration and increasingly complex technology as to corporate executives' choice of a "low-road" business strategy, involving the use of discipline and negative sanctions, rather than a "high-road" strategy, emphasizing positive incentives to motivate work. Always concerned to use understanding of the world in order to change it for the better, Gordon concluded the book with a chapter devoted to policy recommendations designed to promote more democratic and cooperative high-road approaches to labor management.