The Jobless Recovery And Labor's Future
HAS employment growth come unhooked from economic growth? That is, can we expect to see lingering high unemployment and only minimal job creation in the United States and other developed countries at a time when they are officially, at least, in an economic recovery?
The near-term answer, it seems, may be yes. As the United States moves into the third year of a recovery that officially began March 1991, unemployment remains relatively high: 7 percent.
Not only have corporations in trouble been shedding workers in numbers sufficient to populate whole towns; but as the recent announcement that consumer-goods giant Procter & Gamble will shrink its workforce 12 percent over two years indicates, even healthy companies are looking to less, not more, employment.
It all suggests an eerie prospect of factories staffed largely by robots, while the profits go to some pension fund somewhere; capitalism without a human face, in other words. No wonder President Clinton felt at the Tokyo summit of the Group of Seven nations the need to call a "jobs summit" this fall.
David Wyss, of the consulting firm DRI/McGraw-Hill in Lexington, Mass., is one who sees employment growth as to a certain extent coming unstuck from overall economic growth. The workweek in the manufacturing sector is at its highest in 25 years, and yet manufacturing employment is still going down, he notes. (The manufacturing sector of gross domestic product has held pretty much steady since World War II, even so, by the way.) It's cheaper to put workers on overtime than to hire more because of the cost
of benefits, particularly health care, and also of the cost of hiring itself: interviewing, screening, and training.
One test of health-care reform in the US will be whether it achieves overall savings on medical spending that are not offset by further cramping job creation; health care has been a major source of new jobs in recent years.
Mr. Wyss and other observers see the high cost of hiring as tending to make American workplaces more like European ones, where generous benefits have long made it hard to bring on new workers, even though Europeans who have jobs have not experienced the same wage stagnation as their American counterparts.
Structural technological change in the economy has tended to displace workers initially but then produce new business opportunities and employment: This is what happened, for example, when farming became mechanized and unneeded farmworkers became part of the manufacturing workforce. Those who worry about job growth nowadays, though, are concerned that the high cost of hiring may interfere with this pattern.
Claude Barfield, director of science and technology policy studies at the American Enterprise Institute in Washington, points out that the American job creation machine has done quite well over the past three decades. He acknowledges that the current recovery has not produced new jobs at the same rate as has occurred during other recoveries. But he says he is confident that over the long term, "the traditional pattern will reassert itself." He adds, "The best thing to do is to get the basics right - educ ation, training, getting our macroeconomic house in order."
Not everyone is convinced that more training and education is the answer: The American workforce as a whole is highly educated, and millions of college graduates are filling high-school-diploma jobs. Analysts like Business Week columnist Robert Kuttner argue that the "dirty secret" of the American economy is its inability to produce sufficient high-skill, high-wage jobs.
And yet industrial employers complain that their workforces often lack the skills to master more-complex equipment or workplace organization concepts.
Thus for many, the long-term issue is human capital. Wyss sees the future in moving "up the food chain" within the global economy, by exporting ever higher-tech, higher-skills goods and services to low-wage developing countries. He has no doubt the high-end jobs will be there in the US but worries about "low-tech people." Developed countries have long relied on immigrant labor to do the jobs native citizens don't want to do; it will be a new thing if immigrants move into jobs the natives can't do.