Volume
3, No. 4, October 2003
New Economy Information Service E-Bulletin
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In this issue:
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Jobs Picture Murky, Need for Skills & Training Clear
The Bureau of Labor Statistics announced early this month that its survey of business establishments showed an increase of some 57 thousand in non-farm jobs for the month of September -- the first such increase in seven months. Early October's new employment claims dropped a tick below 400,000 for the first week since early in February.
Out in Wisconsin President Bush, under pressure from manufacturing communities to respond to the hemorrhage of factory jobs, quickly noted the improvement. Others were equally quick to note how tentative and limited that improvement may be.
For months we have heard somber predictions that continuing job losses will short-circuit the economic recovery. These have been countered with reminders that impressive employment growth eventually did come after the recession of 1991 -- even though job growth lagged a surprising 18 months behind that cycle's upturn in GDP.
Optimists argue that the current jobs picture will eventually improve, and that traditional measures of employment are not appropriate for a "new economy" of global trade and rapidly advancing technology. Labor market pessimists hold that more productive technology, "off-shoring" and a decline in the relative importance of manufacturing all enable the U.S. economy to expand without creating more employment. They worry that joblessness and attendant social ills are beginning to metastasize.
A much-discussed study by two economists at the
Federal Reserve Bank of New York offers one insight into this paradoxical "job-loss recovery." Its authors argue that "… structural changes—-permanent shifts in the distribution of workers throughout the economy—-have contributed significantly to the sluggishness in the job market." They further contend that "most of the jobs added during the recovery have been new positions in different firms and industries, not rehires. In our view, this shift to new jobs largely explains why the payroll numbers have been so slow to rise: Creating jobs takes longer than recalling workers to their old positions and is riskier in the current uncertain environment."
However, this Fed study does not come to clear conclusions about whether there will be net job losses in the course of this structural shift, or whether the new jobs being created are comparable in pay, benefits or prospects for advancement to those that are being lost. A
September survey conducted by the National Association of Business Economists (NABE) went a bit farther out on the optimistic limb: two-thirds of the economists responding expected that U.S. payrolls will grow by at least 100,000 by the end of this year.
Another optimistic interpretation of the jobs data is offered by blogger Mickey Kaus, who notes that "… the number of workers in the [Bureau of Labor Statistics household] survey who described themselves as self-employed grew by 233,000 last month." Kaus argues that such increases in self-employment should be considered in any calculation of the over-all employment picture: if they were, the picture would improve significantly. But Kaus's hopeful interpretation is disputed by the Economic Policy Institute's Jared Bernstein: "Whenever you see a spike in self-employment in this kind of economy, you know that is involuntary entrepreneurship."
Committing ourselves to this does not rule out taking other measures to deal with job losses. There are many proposals about for strengthening the American job market, some for every political taste. Congresssional Republicans have suggested cutting taxes on companies that manufacture with American labor. The Bush Administration is pressing the Chinese to let the value of their currency float up to a more realistic level, thereby raising the costs of Chinese imports. Disillusioned business leaders want the Chinese to begin meeting their WTO commitments to open their markets. AFL-CIO President John Sweeney proposes creating jobs by making major public investments in energy independence and environmental improvements. Economist Barry Bluestone wants public outlays for lower income people that will fuel consumer demand.
But, as debate over such ideas goes forward, all sides might agree on the need to strengthen the capabilities of our workforce, and to begin taking practical steps to get us started.
Because there is structural change in our labor market -- away from manufacturing toward technology, retailing and services -- there are job openings in some fields that are not being filled. People may not readily find these jobs, or know how to perform them. Training can help.
A major problem: the very fluidity of the "new economy" that makes training so useful and so necessary also militates against companies making big, long-term workforce development investments on their own. Private investors and managers have to wonder if they will be around to collect any pay-off from training outlays, or if workers trained on their dollars won't skip off to join the competition. Any serious push to upgrade the American workforce will require a kind of partnership among business, labor and the public sector that is not easy to come by in tines of fierce political partisanship.
Indeed, in recent times training has often been thrown to the wolves. Goodwill Industries International chief George Kessinger, whose company oversees a network of some 207 organizations that provide job training and related services, points out that "Since fiscal year 2002, Workforce Investment Act (WIA) adult funds have been cut by five percent and dislocated worker funds by approximately 10 percent." State workforce funds have also been slashed. These programs were vulnerable because they were often regarded as anti-poverty programs, aimed primarily at welfare-to-work constituents or the disabled -- not the productive core of our workforce. But now training is becoming a middle-class concern. And training activities will have to be recast to meet the needs of mainstream, working America as well as those who need a hand up.
What prospects are there for a new political consensus around the need to strengthen our workforce? Not much is likely to happen until after next year's elections, but perhaps some groundwork can be laid sooner. Here and there, one sees evidence of possibilities. Members of Congress from both parties have shown concern, with Duncan Hunter, Chairman of the House Armed Services Committee, taking the lead in addressing economic vulnerabilities important to national security. Last week Intel CEO Craig Barrett warned a New York business dinner that the U.S. has to improve education to keep work from going abroad.
Some strange bedfellows hint at new possibilities: a September report on "Mending Manufacturing" from the left-of-center Economic Policy Institute cites at length a report issued by that citadel of corporate America, the National Association of Manufacturers:
"As short-term relief from external pressures is provided, U.S. manufacturers will face the problem of finding labor with appropriate skills. The results of a
survey conducted by the National Association of Manufacturers in conjunction with Grant Thornton, LLP in 1997 showed that 88% of American manufacturers experienced a shortage of qualified workers in at least one category. …Training that can help to develop these skills is crucial for manufacturing to expand in the face of intense competition." |
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"The French government called yesterday for a renegotiation of the 35-hour working week introduced four years ago by the previous, Socialist-led government to create jobs and reduce unemployment.
"The 35-hour week has had perverse effects in France and its supporters, and opponents, are not necessarily where you would expect them to be. Many of the natural backers of a centre-right government - from middle-ranking executives to large, manufacturing industries--broadly like the reduced working week.
"The executives have more leisure time and manufacturing industry has been able to reorganise its shift patterns and benefit from the reduction in social charges placed as a "sweetener" in the 35-hour legislation. But the new work arrangement is hated by many workers, who found that it broke up familiar shift patterns, reduced their overtime and held down wages. Far-left parties attacked the law during last year's elections, but they joined with the Socialists yesterday in saying that it was a right of French workers and must not be touched. " Beggar Thy Third World Neighbor
In a recent publication for the Carnegie Endowment for International Peace Sandra Polaski, former Special Representative for International Labor Affairs at the U.S. Department of State, makes the interesting argument that it is time developing countries reconsidered their positions on trade and workers' rights. Now many of these countries are facing a competitor in China that, because of its huge, miserably paid and regimented labor force, can push them aside in global markets. They too need labor standards that all countries will be held to--and the consequences for them if there are no such standards may be far worse than for the U.S. or Western Europe. The Progressive Policy Institute"s "Trade Fact of the Week" pointed out the awkward truth that when it comes to trade barriers the "morality play pitting selfish rich countries against martyred poor ones" that played out in media coverage of the Cancun trade talks is hardly the whole story. "In agriculture at least, this isn't far from the truth," says PPI. "But in manufacturing, low-income countries are often startlingly mean to one another." India, for example, virtually excludes Bangladesh from its huge clothing market. The World Bank concludes that 70% of the benefits of freer trade would flow from lowering the barriers among developing countries.
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Guilding Labor
For decades the exciting rise and concentrated power of industrial unionism held the imagination of most Americans -- especially journalists and academics -- who thought about trade unions. But not only have the industrial unions lost members in recent years: another kind of unionism has been inching forward. In some respects, it draws on the guild and craft union traditions of earlier times. Its foundation in specialized occupations makes this kind of unionism well disposed to training and professional development. The growing importance of these unions is conveyed in a recent report from the AFL-CIO's Department of Professional Employees, excerpted below: "A record number of white collar workers from teachers to techies, from industrial and aerospace engineers to epidemiologists, from doctors to disc jockeys, sportscasters, silk screeners, forest rangers, paralegals, optometrists, code design engineers, medical interns and residents, school principals, court interpreters, recording artists, attorneys, scientists, journalists, pharmacists and dentists voted to join unions in 2002. "These newly organized professional and related workers accounted for nearly 30% of the total number of new union members, more than 232,000 reported by 65 unions affiliated with the national AFL-CIO. This was the fastest growing occupational group within the federation, individually outpacing the transportation, manufacturing, building and construction, hospitality, and service occupations. Today, almost 50% of the AFL-CIO's membership is white collar. In fact, the professional specialty occupations now have more union members than any other occupational group." "A new anti-free-trade movement is emerging in the U.S., comprising highly skilled workers who once figured they would be big winners in the globalized economy but now see their white-collar jobs moving overseas in growing numbers," the Wall Street Journal reported today. Largely ad hoc efforts by anxious workers from the American middle class have swayed some members of Congress to oppose further trade pacts and to limit the length and extent of visas for guest technology workers. The concerns of these workers were further stirred by a speech by Intel Chairman Andy Grove to a Washington business meeting in which he warned that the bulk of U.S. technology jobs could be lost to overseas competitors during the next decade. He also declared that his own company had no choice but to cooperate in the exodus. Grove challenged government and industry to address this trend. One especially provocative suggestion: take money from agricultural subsidies to strengthen our technological capabilities. That's something unions and employers who need support for training and skills development might want to look into. (Wall Street Journal article is availabe to subsribers only at www.wsj.com)
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This E-Bulletin is published by the New Economy Information Service
(NEIS), a project of the Foundation for Democratic Education. NEIS
provides information and reviews debate on the impact globalization
and technological change has on democracy at home and abroad.
Current interest focuses on how American workers can be equipped
with the skills they need for decent employment and economic
security, and on how the globalization of the economy and the
expansion of democracy can strengthen one another.
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