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New Jobs for Who?


If displaced, experienced workers are not getting the jobs, who is?By Dennis Henderson

[Click the Listen button to hear Dennis' commentary.]

August 31, 2004. Following concern several months ago about a jobless economic recovery, employment now seems to be on the up-trend. More that 900 thousand persons were added to payrolls in the March - May period, the strongest three-month employment gain in four years.

And, despite some labor market softness this summer, more gains appear likely. Currently, 30 percent of US employers indicate plans to increase their payrolls, compared to just 20 percent a year ago. Incidently, the highest ever was 35 percent, reached four years ago. Further, the share of employers intending to shrink their workforce has fallen to just 6 percent, down by half from a year earlier.

On the surface, therefore, it looks as if the nation?s jobless problem may have been resolved. Bush White House officials say, of course this is due to the administration?s three massive tax cuts, propelling economic growth.

But, when examined more carefully, the picture may not be quite so rosy. A couple key questions are, who is being employed, and how well are they being paid? The answers, as best I can piece them together, are surprising.

Between January 2001 and last December, 5.3 million long-term workers ? those who had held a job for three or more years ? became unemployed. Their jobs were lost because of plant closings or relocations, elimination of positions, or simply because there was not enough work to do. These are people I would expect to be among the first hired as employment picks up. However, a recent survey found that 35 percent of these displaced workers had found neither full- nor part-time jobs.

Even more troubling, nearly 60 percent of those who found new full-time work report that they are being paid less than in their old job. About a third of those with lower pay are earning less than 80 percent of their previous wage. This is borne out by overall labor market statistics. Last month, for example, real hourly wages of all production workers actually fell by more than one percent.

If displaced, experienced workers are not getting hired, who is? Many of the newly-hired are new to America. A recent report from the Center for Labor Market Studies reveals that, over the past 4 years or so, more than 2 million new immigrants found jobs in the US. By contrast, the number of native-born and longer-term immigrant workers fell by 1.3 million. Most of those were young, less-educated American workers and so-called established immigrants who have been in the US for several years.

Also being drawn into the ranks of the employed are older Americans, many previously retired. Since 2000, the share of the employed made up of workers 55 and older has increased twice as fast as their share of the population. Many older workers have no choice but to stay on the job as stock market volatility disrupted investment portfolios and as living costs, particularly for health care, continue to escalate.

For the most part, college-educated, middle class workers are holding their own. Many, however, are underemployed. That is, performing tasks less demanding that those for which they have been prepared. A significant decline this year in the number of applicants to the nation?s graduate business schools may reflect this phenomenon. About half of the new hires so far this year have been in restaurants, temp agencies, retail trade, and other service-type industries ? jobs that typically pay below-average wages.

Viewed in entirety, many American families continue to struggle with serious issues of underemployment and unemployment. The current Administration, it would seem, still faces obstacles in convincing Americans that their job prospects are genuinely brighter.

Dennis Henderson is an economist and educator.