Reports Discount Impact Of Downsizing ‘Crisis’ Horror Stories Exaggerate Workers’ Plight, Studies Contend
After months of headlines about the devastating effects of corporate downsizing and layoffs, two new reports are suggesting American workers are in much better shape than portrayed in the doom-and-gloom stories.
The Clinton administration will soon release a study it claims will show that downsizing isn’t a new phenomenon and hasn’t appreciably worsened in recent years. And the National Association of Manufacturers Thursday released a white paper saying horror stories about drastically pared work forces and declining wages simply aren’t true.
“Much of what is said about the plight of workers is inflammatory, demagogic, or flat out wrong,” said NAM President Jerry Jasinowski, whose trade group represents 14,000 of the nation’s largest manufacturers.
The new studies point first to the sheer number of jobs being created. Since 1992, the U.S. economy has added 8.4 million new jobs, capping total growth of nearly 25 million jobs since 1979.
And while headline-grabbing payroll reductions - like AT&T Corp.’s now-infamous announcement of 40,000 job cuts - are still happening, the overall unemployment rate hasn’t risen above 6 percent since August 1994.
Moreover, the White House says the quality of the jobs being created is high. More than 50 percent of all new jobs last year were in industries paying more than the average wage, said the Clinton administration’s most recent annual economic report.
“There’s nothing particularly unusual about what’s going on,” except that “reorganizations seem to be permanently affecting managerial, clerical, and white collar” jobs in greater numbers these days, said Audrey Freedman, a New York-based labor economist.
These workers are “more noisy, and have more political effect when they talk,” she said. “This was not true when it was someone in southside Pittsburgh who worked in a coke oven.”
When Princeton University economics professor Henry Farber studied job loss in the U.S. between 1981 and 1993, he found things hadn’t changed much. “The consequences of job loss have always been serious, but they haven’t gotten more serious,” he said.
Farber found that while older and better-educated workers are at more risk than they used to be, they’re still faring far better than the less-educated, who have fewer assets and have a harder time recovering from job losses. “I want to militate against the view that somehow (the better-educated) are who we really need to worry about,” he said.
What about those stagnant wages we’ve heard so much about? Well, they’re certainly not surging. The Labor Department’s employment cost index, a broad measure of compensation including wages, salaries, and benefits, rose just 2.9 percent last year, the lowest on record. Wage costs also increased 2.9 percent, slightly higher than the year’s 2.5 percent inflation rate.
Even the NAM concedes that wage gains during the past 25 years haven’t matched those chalked up in the previous quarter century. At the same time, it says claims of wage stagnation ignore the rising value of employer-provided benefits like insurance, paid vacation, pension contributions and Social Security payroll taxes.
Including those benefits, the NAM estimates that total compensation rose by 14.4 percent between 1980 and 1994. Taking into account a percentage-point change in the consumer price index, the government’s chief measure of inflation which most analysts agree is overstated to some degree, that jumps to a 23.3 percent rise, the NAM said.
To be sure, no one is saying job markets haven’t shifted drastically in recent decades, and that many Americans are feeling anxious about how they fit in. “IBM epitomized what employment was in the era now passed - you had a job for life,” said John Challenger, executive vice president with Challenger, Gray & Christmas, a Chicago-based out-placement firm.
Labor economist Freedman thinks there’s more job “churning” going on. “People are losing, but getting, jobs,” she said. Still, “they’re having to search,” and the new jobs may pay a little less, both of which contribute to worker unease.
Government statistics, however, show that we’re not changing jobs any more frequently. In its 1995 “Report on the American Workforce,” the Labor Department said that while researchers estimate workers will hold 8 to 10 jobs during their working lives, most of that job changing comes in the first few years. “The length of time workers have been with their current employer has changed little in recent years,” the report found.
Whatever the prescription for improving workers’ lot, the debate seems to be shifting away from who to blame for the downsizing ‘crisis’ to more realistic ways of dealing with the reality of the rapidly-changing, technology and information-based global economy.
“There’s always jobs being created and lost in this type of economy,” said economist David Neumark of Michigan State University, who has studied job tenure. As to a downsizing “crisis,” Neumark said, “There’s absolutely nothing to it.”