August 22, 1996

August 22, 1996 | Commentary on Jobs, Jobs and Labor Policy

ED082296a: Labor Pains

This Labor Day the country will kick back, fire up the barbecue, and take a moment to celebrate the accomplishments of America's working men and women. But will those workers themselves have anything to celebrate?

The answer is, sadly, not much. Despite a seemingly rosy employment picture -- more than 11 million new jobs since 1991 and an unemployment rate down to 5.4 percent -- the real outlook for U.S. workers remains rather grim. Scratch below the surface of these numbers, and the much-discussed economic anxiety felt by America's workers becomes perfectly understandable.

For starters, job layoffs are continuing at a blistering pace. In the first six months of 1996, 271,000 Americans lost their jobs, the second-highest number this decade. Layoffs were 28 percent higher than during the first six months of 1995, and 6 percent higher than in 1993, the largest "downsizing" year of the decade. So far this year, thousands of jobs have vanished in important industries such as telecommunications (43,000), computers (22,000), and automobiles (18,000).

What's more, even those workers able to find new jobs are taking it on the chin: Weekly earnings in their new positions are averaging 8.2 percent less than in their old jobs. For workers aged 45 to 55 -- those with home mortgages and kids in college to support -- the pay cuts are averaging an even higher 14 percent. And to add insult to injury, nearly one of every five displaced workers lands in a new job that doesn't even offer health-insurance coverage.

But even these folks are better off than the large number of workers who can't find new jobs at all. The fact is, the long-term unemployment rate -- which measures the number of jobless Americans out of work for six months or more -- remains at a stubbornly high 18.5 percent. Compare this with the average of 10.3 percent during the three previous U.S. economic expansions. Even out-of-work white-collar managers and other professionals have been having a rough time; nearly one in five is still unemployed after six months of searching.

What about those workers lucky enough to hold onto their jobs? Here, too, the news is less than upbeat. Adjusted for inflation, full-time workers' paychecks haven't increased for five years. For men, real weekly earnings have actually dropped by 5.1 percent, and for black and Hispanic men the drop has been even worse, 5.4 percent and 8.2 percent respectively.

The decline in weekly earnings can be partly explained by the disappearance of high-paying manufacturing jobs. Since March of 1995, the economy has shed more than 280,000 such jobs. In fact, fewer manufacturing jobs exist today than when the economic recovery began five years ago. In addition, the number of Americans working in high-skilled technician and related jobs has dropped by 478,000 since 1992, the number working in administrative support and clerical positions has fallen by 298,000, and the number working in precision production, craft and repair occupations has declined by 13,000 (and remains 519,000 below the peak of 14 million reached in March of 1990).

What all this adds up to, predictably, is anxiety on the part of the American worker. Nearly 50 percent of Americans believe jobs are not very plentiful, according to the Conference Board's most recent survey of consumer confidence, and 46 percent believe the economy is getting worse, according to a recent CNN/USA Today/Gallup poll.

Let's face it: For many American workers President Clinton's declaration that the economy is "the healthiest it has been in 30 years" rings hollow. They seem to understand instinctively what many economists have been saying -- that the Clinton economy's growth rate of slightly more than 2 percent a year is not sufficient to produce a large number of good, stable, high-paying jobs.

The fact is, the economy can grow much faster than it has these past four years. We experienced growth rates of 3.5 percent for most of the 1980s, and the economy produced 19 million new jobs. But that was during a period of lower taxation and fewer regulations on business. In the current era of high taxes and heavy regulation, 2 percent growth and sluggish job creation may be the best we can hope for.

And that's nothing to celebrate.

Note: Mark Wilson is the former Rebecca Lukens fellow in labor policy at The Heritage Foundation, a Washington-based public policy research institute.

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