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For the U.S., a major effect of Germany's high rates is the damper they put on America's primary export markets. In the second quarter of this year, the U.S. trade deficit zoomed to $17.8 billion, up from $5.9 billion in the previous quarter. "That cut the second-quarter growth rate for the country in half. That's how dependent we are on the global economy," says C. Fred Bergsten, director of the Institute for International Economics. Just as in the U.S., the outlook in Europe and Japan is for a drawn-out recovery.
America's structural burdens have hit home most profoundly in terms of jobs. The U.S. workplace is "in a profound, historic state of turmoil that for millions of individuals is approaching panic," according to labor consultant Dan Lacey, publisher of the newsletter Workplace Trends. Official statistics fail to reveal the extent of the pain. Unemployment stands at 7.6%, far lower than the 1982 high of 10.8%, but more people are experiencing distress. A comprehensive tally would include workers who are employed well below their skill level, those who cannot find more than a part-time job, people earning poverty-level wages, workers who have been jobless for more than four weeks at a time and all those who have grown discouraged and quit looking. Last year those distressed workers totaled 36 million, or 40% of the American labor force, according to the Washington-based Economic Policy Institute.
Pay has come under assault as well. The much touted job gains of the 1980s were, for the most part, low-wage positions earning $250 a week or less. More than 25% of the U.S. work force now toils in this class of job, up from less than 19% in 1979. Laid-off workers who return to the market often must take huge pay cuts. Carolyn Collins, 49, of Ames, Iowa, who lost a $10-an-hour job running quality-control studies for a plastics maker, found new work as a clerk-typist, at $6.85 an hour. "If this is happening not just to me but to thousands of other people," says Collins, "I don't see how the economy can ever totally recover, because we don't have the spending power we used to." Her hunch is right. After adjustment for inflation, the real incomes of U.S. workers have declined about 13% over the past two decades.
The latest recession has hit white-collar workers particularly hard, both in terms of layoffs and slippage in their real wages. "These people can't believe what is happening to them," says Illinois opinion pollster Mike McKeon. "They decided they didn't want to work in factories, so they learned how to use computers. They were rewarded with service-sector jobs in the 1980s, but now they're out on the street and no one wants them." Open season has been declared on corporate bureaucrats. "The middle manager has gone out of vogue in corporate America," says Lacey. "Indeed, the word manager is the kiss of death on resumes."