Jobs in an Age of Insecurity ^

By GEORGE J. CHURCH Sunday, June 24, 2001
    • Philip Maidel is still angry. After his job as a supervisor in the transportation department of the Long Beach, California, naval shipyards disappeared in 1989, he bypassed a chance for a secure civil service post because he trusted promises of higher pay and equal job stability from McDonnell Douglas. The aircraft builder's recruiters "wined us, they dined us, they had a big film presentation," Maidel fumes. "They really put on the dog that you were part of the company for no less than 10 years. Three years later, I'm standing on the sidewalk."

    It may not be any consolation, but Mary Kimberlin shares his lot -- even though, she says, "I helped to produce that program" that lured Maidel. They are, in fact, members of the same networking group at a Douglas-financed "outplacement center" in the Los Angeles suburb of Lakewood. After 22 years at McDonnell Douglas, during which she worked up to senior programming analyst, Kimberlin received a reduction-in-force notice in 1990. She tried going back to school, studying for a degree in business administration, but has held only one short-lived job in the past three years. Meanwhile her marriage has broken up under the emotional stress of prolonged unemployment -- not only for herself but also for her former husband, who was laid off by Hughes Aircraft the same year Kimberlin got riffed at Douglas. Says Kimberlin mildly: "I didn't expect this to go on so long."

    The really ironic thing about this story is that it is no longer so unusual for recruiter and recruited, wife and husband, to wind up together among the long-term unemployed. After 31 months of renewed growth in national production, all sorts of people who never thought they would be on the jobless lines -- professional and managerial types, highly skilled technicians and long-seniority office workers -- are joining laid-off factory hands in looking for jobs and not finding them.

    The recent perceptible quickening of the recovery from the 1990-91 recession has done little to calm their anxiety. "I suspect that it may be a long time before we see improvement in the employment picture," says Stephen Roach, chief economist for the investment banking firm Morgan Stanley. In his opinion, and that of many other authorities, "the labor market is in the midst of a profound structural transition where we are really moving away from traditional sources of hiring." Into what? A not-very-brave new world in which, even after the recession is a faded memory, no one can be quite sure where the big surge of new jobs will come from.

    It is the anxiety about jobs that has made this week's House of Representatives vote on the North American Free Trade Agreement a nail-chewing Washington version of the Perils of Pauline. In itself, the pact that would allow free movement of goods and investments among Canada, the U.S. and Mexico would, it is thought, have only moderate immediate effects. Some U.S. jobs would be lost to low-wage Mexican competition, and some jobs would be created in American industries that would have an easier time selling their products in Mexico. But the numbers would be relatively small on both sides, and it is anyone's guess where the balance would be struck. Most reasonably impartial economists believe that the result would be a modest net increase in U.S. jobs.

    In a climate of extreme worry about employment prospects, however, NAFTA has picked up an enormous load of symbolic freight. Opponents -- most prominently labor unions and Ross Perot's movement -- see, not entirely wrongly, the U.S. economy being hurt by growing foreign competition, and view NAFTA, less logically, as the latest in a succession of what Perot calls "dumb trade agreements" that have taken a grievous toll of American jobs. Proponents regard the pact as an unavoidable necessity if the U.S. is going to compete with the trade blocs forming in Europe and Asia. Rejection, they argue, would be a futile and dangerous attempt to wall off the U.S. from a global economy that no longer shows much respect for national borders.

    At week's end the vote still looked too close to call. The Administration was picking up a few more votes, but not as many as might have been expected after Vice President Al Gore emerged as the consensus winner in his TV showdown with Perot. The latest predictions from nose counters: NAFTA might win by two or three votes. But if it appears to be falling short, it will lose by 60 to 70, because many pro-NAFTA Representatives will not dare to provoke union and Perotista fury in a losing cause.

    NAFTA or no NAFTA, however, the squeeze on jobs continues. This is one subject on which expert and public opinion are in rare accord. In the latest TIME-CNN poll by Yankelovich Partners Inc., 54% of those questioned thought it will be harder to find a job during the next year than it has been over the past 12 months, vs. 29% who thought the search would be easier. Two-thirds believed that job security has deteriorated over the past two years, although those years have seen continuous economic growth. When those giving this response were asked whether the insecurity was likely to be just a short-term problem for the next few years or a long-term trouble lasting many years, only 37% said short; 53% expected long-lasting difficulty.

    Part of the problem, of course, is that production growth has been far more sluggish than usual for the first 31 months of recovery; and this has been reflected in an equally slow reduction in unemployment -- down from 7.8% in June 1992 to 6.8% last month, but still far higher than normal for this stage of an expansion. But the unemployment rate is a grossly inadequate measure of hardship. Secretary of Labor Robert Reich estimates that in addition to the 8.8 million people officially counted as jobless, 1.2 million are so discouraged that they have quit looking for work and thus are no longer counted. The Bureau of Labor Statistics figures that as many as 6.2 million more would like to work full time but have taken part-time jobs because that is all they can get. Grand total: as many as 16.2 million.

    Even those calculations do not complete the picture. Some of those who are unemployed may be loath to admit it. Thomas Mooney, president of the Chamber of Commerce in Rochester, New York, is puzzled over why the area's stated jobless rate is below 5% despite brutal payroll slashing by Eastman Kodak, the region's biggest employer. His conclusion: many Kodak workers were not laid off outright but were coaxed or pushed into early retirement, and "an awful lot of those people become consultants. Whether or not they have any clients, I don't know. But if they get a call asking if they are working, they may say they're consultants, and then they're listed as employed" -- though they really are not.

    More important, the jobs being wiped out at giants like Kodak, McDonnell Douglas, IBM and General Motors are far better paid than the jobs opening up at companies still growing rapidly. Wal-Mart, the discount-store chain, created more jobs in the first 30 months of the recovery than any other company in the country, but they generally pay only about $5 to $9 an hour. PepsiCo is still expanding, but most of the new jobs are for those who feed the ovens at the company's Pizza Hut, Taco Bell and KFC fast-food restaurants. Result: many people who survive layoffs and find new jobs nonetheless suffer a deep slash in income. One study found that of 2,000-odd workers let go by RJR Nabisco, 72% found jobs -- but at wages that averaged only 47% of their previous pay.

    By now, these trends have created an "industrial reserve army" -- to borrow a term from Karl Marx -- so large that a quite extraordinary and prolonged surge in output would be required to put all its members to full- time, well-paid work. Two indications of the yawning chasm between job supply and demand, in Detroit alone: in October, the Detroit Post Office handed out 20,000 applications for such jobs as clerk, sorter and letter carrier, even though it announced it would have at most a few hundred openings and that some of them would not be filled for three to five years. Last week Detroit was again the scene of a sort of job panic: thousands of unemployed workers began lining up at 7 a.m. to apply for jobs that might never exist in a gambling casino that Mayor-elect Dennis Archer wants to keep from being built.

    And where will a surge of job-creating growth come from? In the short run, at least, the dominant employment trend is going in the opposite direction. The nation's corporate goliaths are continuing, and even intensifying, the downsizing mania. Even companies that are still profitable: Procter & Gamble and General Electric. And even companies that have already been through one or two spasms of shrinkage. The latest survey by the American Management Association of 8,000 of its members showed that 47% reduced their staffs during the 12 months ended last June, a trifle more than in 1991-92, and the cuts went deeper: an average 10.4% of staff was cut, vs. 9.3% the previous 12 months.

    Eric Greenberg, director of management studies for A.M.A., thinks that the trend is going beyond reason. "A great many companies are asking the wrong question," says he. "They are asking, What is the irreducible core that we need to turn on the lights in the morning and lock up the doors at night and still continue to do business? The right question is, How can we change the way we do business so that the people we have are better able to contribute to organizational success?" Worse, he complains, "what companies have been doing is firing their customers and undercutting any hope of a consumer-driven recovery. People who lose their jobs are not spending their money and not driving the industrial machine." But even if he is right, it will take some time for this logic to sink in: Greenberg readily admits that A.M.A. surveys point to almost as much downsizing as ever in the 12 months ending next June.

    The situation is not entirely dark for job seekers. Some types of jobs are still expanding, though occasionally types that many people are unaware of. A fair number of former Detroit-area autoworkers, for example, have been successfully retrained to become prison guards.

    More important, despite the persistence of unemployment and underemployment, the U.S. is still creating about 2 million jobs a year, net. And that puts it well ahead of some of the foreign competitors that in popular and Perotista mythology are beating Uncle Sam's brains out. The official 6.8% U.S. unemployment rate compares with 11.1% in Canada, 10.7% in Britain and around 11% in the 12 nations of the European Community as a whole. Today new technology, in such forms as robot welders on auto assembly lines, is wiping out jobs. But economic historians point out that new technology in the long run has always created more jobs than it has destroyed, and should do so again.

    But what kind of jobs and in what industries? Experts can identify only very general trends. Blue-collar jobs will continue overall to be lost to low-wage offshore competition. In the textile area, fashion design will stay in the U.S., but cloth weaving will go; in steel, American mills will turn out specialized alloys, but the heavy, crude stuff will increasingly be bought from abroad. And there are a few consensus forecasts: nobody would leave biotechnology off a list of industries bound to grow. Nonetheless, there are sharp disagreements. Most experts believe that agriculture will continue its centuries-long decline, but a few regard it as having become a high-tech field while nobody was looking and think it may be harboring prospects for job growth. Contrariwise, though many analysts regard health care as the high-tech field bound to generate more and better-paying jobs, M.I.T. economist Lester Thurow strongly dissents. Says he: "If we control costs, we're going to lay off millions of people. The best example is, on any given night only 60% of the hospital beds in America are full. So you could close 40% of the hospitals." David Birch, president of Cognetics Inc., a consulting firm based in Cambridge, Massachusetts, suggests that instead of trying to identify growth industries, analysts and job seekers should look for growth companies -- those within existing industries that best adapt to the new information technologies.

    For all the uncertainty, though, analysts can dimly discern the outlines of the future job market and suggest ways for workers to prepare for it:

    -- Forget any idea of career-long employment with a big company. Even after downsizing is carried to its logical -- or illogical -- extreme and the layoffs and early retirements stop, the corporate giants are not going to revert to hiring masses of long-term employees. They have discovered that it is more efficient and profitable to operate as contracting centers, buying goods and services from smaller companies rather than having them produced by their own employees, a process known as "outsourcing." The big corporation of the future will consist of a relatively small core of central employees and a mass of smaller firms working for it under contract. And even within the central core, there will be much shifting around, more hiring of people for specific, temporary assignments. "There are a whole lot more of us working for fees rather than for salaries," says Laurel Cutler, director of global marketing for the advertising giant Foote Cone Belding. "What you have seen is the end of work as marriage. "

    -- Look to small and medium-size companies. They have been the traditional engines of job creation even during the era of supposed domination by the corporate elephants, and though they have been lagging in hiring lately, many experts expect that to change. One reason, of course, is that small companies will be handling the work outsourced by the giants. Birch, however, thinks that new technology enables the nimbler and more innovative of the little companies -- he calls them gazelles -- to compete against the giants better than they ever could before. "You can create a very sophisticated data-base marketing system now on a $1,400 PC that only IBM could have operated five years ago." Warning: managers moving from a giant firm, with its regiments of specialists, to a smaller outfit can suffer severe culture shock. Says Birch: "If you put them in a small company, they look around and say, 'Where is my sales force?' You're the sales force. 'Who puts out my brochures?' You put out the brochures. They keep looking for people to delegate everything to, and there isn't anybody."

    -- Be prepared to work for a foreign company. Corporate giants have accomplished a good deal of outsourcing by contracting to have operations ! conducted at lower cost overseas. New York Life Insurance, for example, is having some of its claims processing handled by 50 employees in Ireland. The flip side of this globalizing trend is that foreign companies investing in American manufacturing are becoming a growing source of jobs. While U.S.-owned automakers are still downsizing, Toyota, Honda and Nissan are hiring workers for their American plants, and Mercedes-Benz and BMW will soon join them when they build factories in Alabama and South Carolina.

    -- Be prepared to work for a woman. Birch points out one of the most striking, though least noticed, trends in small businesses: "Women are starting companies at 1.5 times the rate men are. We've gone from essentially 0% of the work force employed by women in 1972 to about 10% to 12% now. Last year was an all-time record for incorporation," and a good deal of the entrepreneurial "energy is coming from women and not men."

    -- Get as much education as possible. Never mind the tales of college graduates working as bellboys -- even though such stories are true. On no opinion are the experts so unanimous as that the future belongs to the knowledge worker, master of his PC, fiber-optics whatsit, E-mail gizmo and whatever takes its place. One of the best windows into the future is supplied by an Austin, Texas, company with the rather dull name of Applied Materials Inc. Its founders set out quite deliberately to build a manufacturing facility for the 21st century, and since 1991 they have become the world's largest makers of machinery to produce computer chips.

    Though the chips themselves are wafer-thin, one of Applied's machines can fill a room and cost $3 million. Everyone Applied hires has a college degree, often in engineering or physics (though one of its 400 workers was trained in fine arts). All are expected to spend 20% of their time on research and development, continually finding ways to change or even eliminate the manufacturing process that takes the other 80% of their time. Says company spokesman Steve Taylor on Applied's philosophy: "We actually want you to figure out a way to eliminate your job. We won't fire you; we'll find a better job for you to do." To that end, the company pays up to $5,000 a year for each employee's continuing education.

    -- Keep upgrading your skills. Many other firms expect their workers to design or work themselves out of a job. Not all are as generous as Applied Materials. To keep up with fast-changing technology and workplace , requirements, some analysts say, workers can expect to change careers -- not just jobs, careers -- three or four times during their working lives. That may be extreme, but experts say a high-tech worker must be ready to go back to school and learn new skills, on his or her own if an employer will not finance it, at a minimum of every five to 10 years.

    -- Be prepared to work in small groups or on your own. Even on assembly lines, work teams rather than masses of undifferentiated laborers are the order of the day. The trend is likely to go much further among knowledge workers. Says John McCann, a professor at Duke University's Fuqua School of Business: "Sometimes I use the analogy of the cowboy. He used to ride around the West signing on with different ranches when they needed work." Similarly, he thinks, cybercowboys will ride the information superhighway, not working regularly for anybody but contracting with one corporation after another to do specific, limited jobs. McCann goes further yet to endorse the vision of a Japanese author, Taichi Fakayia, of a kind of cybernetic updating of the Middle Ages: computer and E-mail jockeys will work mostly on their own at home, perhaps gathering once a week at a 21st century version of the medieval fair to buy, sell and trade.

    To older workers, brought up in the cocoon of the giant corporation -- company-paid health care and pensions, company softball and bowling teams -- these visions may seem less empowering than terrifying. They are adventuresome, perhaps, but lonely and frighteningly insecure. And of course the visions may never come about, at least not fully; they are guesswork. There is only one safe prediction about the job market of the future: it will not bear much resemblance to the recent past. Asked when the job market might get back to normal, Greenberg of the A.M.A. states, "If your model for normal is the 1960s, '70s or '80s, we will never get back to normal because 'normal' is based on a whole set of global economic conditions that no longer apply." And that does not even take into account the relentless and accelerating pace at which technology is changing work as well as every other aspect of life. As novelist Thomas Wolfe (1930s, not 1960s, version) declared in one of his book titles, You Can't Go Home Again -- because home isn't there anymore.

    CHART: NOT AVAILABLE

    CREDIT: From a telephone poll of 1,000 adult Americans taken for TIME/CNN on Nov. 11 by Yankelovich Partners Inc. Sampling error is plus or minus 3%.

    CAPTION: Is job security better or worse for Americans now compared to two years ago?

    If worse, is this greater job insecurity just for the short term, or will it last for many years?

    Will it be easier or harder to find a new job in the next 12 months?

    Since the recovery officially began in 1991, have any of your friends lost a job?

    CHART: NOT AVAILABLE

    CREDIT: Challenger, Gray and Christmas, Inc.

    CAPTION: More Layoffs