No Good Jobs?

Despite the so-called jobs recovery, Americans remain deeply uneasy about the economy. Is their concern warranted? We asked seven economists and analysts to talk about the economy, what’s happening with jobs now and what will happen in the future, and what the Clinton administration should be doing. In separate interviews, here is what they told us.

Q: What kind of a recovery is this?

Atsushi Yamada: It’s slim and slow. Wages haven’t increased. Middle management and low-cost labor continue to suffer, and it’s frustrating. In the ’50s, people knew that today was better than yesterday and tomorrow would be even better. But at this moment, many are thinking that tomorrow can only be worse.

Lester Thurow: This time we didn’t have a recession. We had something more fundamental. In the 1980s, we had a speculative bubble followed by a financial crash. Right now we’re cleaning up the mess and working off the excesses, which is different than a classic recovery. This is not the Great Depression, but some historian might call it the Great Stagnation, because on a worldwide basis we’ve already had five years of a growth rate of 1.5 percent or less.

John Kenneth Galbraith: There were a variety of insanities in the 1980s: the mergers-and-acquisitions mania, which left corporations heavy with debt; the savings-and-loan disaster; and urban real estate speculation and their effect on the banks. All left the basic economic institutions in poor condition. There is a healing process, but we shouldn’t count on it too much.

Walter Russell Mead: What’s going on in the background is a decline that’s been going on for decades. The rolling average unemployment rate has continued to rise, and wages adjusted for inflation have fallen since 1973. So the real question is: Are we out of that decline? I’d say we’re not.

Q: So what should we expect in the next few years?

Thurow: If you ask what will be the effect of $500 billion worth of deficit reduction, the answer is that it will slow down the economy. Income tax is going up on wealthy individuals, and we’re cutting government spending. How does that create jobs? If anything, it subtracts jobs and lowers wages.

Juliet Schor: We haven’t acknowledged the extent to which our unemployment problem is connected to our problem of too much working time. Overtime has become a substitute for employment. Companies use overtime to avoid hiring people. High fixed costs, particularly those associated with fringe benefits like medical care, mean that companies are extending working hours instead of allowing hours to fall and hiring more people.

Mead: There’s this assumption that history is over in developed countries, that any change will be nondisruptive and incremental. I don’t see any evidence for that. The thing we know about capitalism is that it’s phenomenal in the upheaval it continually causes. There’s no reason we should expect to have the institutions we’re accustomed to now.

Q: Who should worry most about jobs and the future?

Louise Lamphere: People who have counted on low-skill jobs for income are in real trouble. The high-paying jobs that used to net $10 or $11 an hour–working on an oil rig or in a steel mill–disappeared in the early ’80s, and they’re being replaced by jobs with much lower wages. Women in this group are particularly at risk because their wages are still 70 cents on the dollar compared to men.

Mead: For a while people have told the story that the economic winners would be white-collar workers in the service industries. But now we’re also coming to a point where the computer is making a lot of white-collar workers superfluous. It’s not at all clear to me that we’ll have the same groups of winners and losers. Why do there have to be winners? We might have much more equality–not equality in a good way, but in a dismal way.

Galbraith: There are two groups of people for whom one should have the utmost sympathy. There are the people in hopeless situations in the central cities, who have no access to employment and no training. And then there are the higher-income people who are shed from shop-floor operations and from higher-management posts. It’s the first for which we should have the greatest sympathy, but all are suffering.

Q: What should be done to help them?

Lamphere: If companies would give more attention to job sharing then you could cut down the number of hours for people with families and bring more people into the workforce. But companies have always gone for hiring fewer employees for more hours, rather than more for less. And if you’re looking at low-wage jobs, then job sharing is less attractive because people can’t afford it.

We asked working mothers what companies could do for families, and almost everyone said day care. But programs like day care and flextime are the first things to go in a downturn.

Schor: We need a thorough amendment to the Fair Labor Standards Act that deals with issues of working hours: promoting job sharing; promoting permanent upgrading of part-time work; promoting a new benefit structure that takes away the disincentives for short hours; and mandating a program that allows people to trade income for extra time. We could use increasing productivity growth to reduce work time, increase employment, and solve the working-family crisis that we have in this country.

Galbraith: Probably most important is to have a policy of forthright, affirmative government investment so that instead of having people unemployed, we have them doing useful work building our housing stock; improving our schools; working on highways, streets, airports; investing in other parts of the public estate; improving the transportation system. These things would add to wealth even though they would increase the deficit.

The issue is wages. If you want to create jobs in America, just tell everyone that, starting today, they’ll work for Bangladesh wages. That’s not what Americans want.

Q: Could the American middle class disappear entirely?

Mead: Who knows? Everybody could be in the middle class, or nobody could be. Can the Western social system continue to survive? Many would say we’re already into the dewesternization of the West. We’re beginning to resemble the Third World, with an underclass and a class of the super rich. You can’t really predict where we’re headed.

Kevin Phillips: The structure of an advanced economy has to include a substantial middle class. But you could have a situation where you have the top 4 or 5 or 6 percent with a very disproportionate amount of income, and another 20 or 30 percent that approximate the typical view of the middle class, and then 60 percent below the rest.

One of the worst things the United States faces is that it can’t generate many more of the jobs that used to enable people with high school diplomas to become part of the blue-collar middle class. Export industries are succeeding only where they can pay reasonably skilled labor $8 or $9 an hour for jobs that used to pay $13 or $14 an hour plus benefits. The blue-collar middle class is disappearing.

Thurow: The issue is wages. Unemployment isn’t any higher today than it was 20 years ago. In the 1980s, we created 18 million jobs, but the problem is that they were all low-wage jobs. If you want to create jobs in America, just tell everyone that, starting today, they’ll work for Bangladesh wages. The problem is, that’s not what Americans want.

Q: What can be done to give the economy a boost?

Thurow: We have to create a global locomotive so that the whole world will grow faster. You can’t have America growing rapidly if the rest of the world is growing slowly. Inside the United States, we have to substantially reeducate and reskill the bottom half of the population, then fashion a strategy for capturing some of the high-wage industries. Industries like biotechnology or microelectronics or telecommunications don’t have a natural home. They’re going to be wherever somebody mobilizes the brainpower to capture them.

Phillips: What you have to do is say that we’re not going to let globalization occur where it unnecessarily takes jobs away from the United States. Some of the jobs will leave the country without trade deals like NAFTA, but the question is whether you actually encourage it to happen with trade arrangements or tax policies. So far we’ve encouraged it with both.

Yamada: The United States should draw direct investment from other countries, ask companies to make production in the United States. Direct investment from Japan, for example, is very good for labor in the United States. We shouldn’t mind the nationality of capital. After all, Toyota or Nissan has no border; they have no nationality themselves. If they come here to make production, then they are us. But GM is a competitor of Toyota, and they don’t welcome Toyota, and they ask your government not to invite them here. Is GM’s management interest more important than the interests of the automobile workers?

The U.S. government thinks the way a big company thinks. For instance, Texas Instruments set up a plant in Japan to produce semiconductors with Japanese workers. Texas Instruments makes a profit from that, but the people of the United States don’t benefit, because the jobs went to Japan. The government sees it as good, because it expands semiconductor exports to Japan, but it’s a very stupid way to do it. It doesn’t create jobs.

Q: In an age of increasing globalization, how much control can a nation wield?

Galbraith: The lesson of the whole post-Keynesian world is that governments are now responsible for economic performance. Any notion that poor performance can’t be remedied by the state is a reversion to 19th-century attitudes, which I’m not prepared to accept.

Thurow: In 1964 I was working for Lyndon Johnson’s Council of Economic Advisers, and one of my tasks was to help write the economic forecast for 1965, which appeared in the economic report of the president. If you read that chapter, you find that we didn’t mention the rest of the world once. You didn’t need to in 1964.

Today if you’re writing that chapter, 80 percent of it will talk about the rest of the world, because world events are going to impact American economic performance. On the other hand, there are problems that exist entirely within our borders, and these we can control. If you look at the skill-training system, that’s an American problem.

Mead: The United States and Europe need to get together and pour on a lot of pressure, particularly on Japan, to develop a new global economic code of conduct that would really favor the economic gains of Western countries. So far the United States has not been able to do this, partly because people didn’t think in these terms during the Reagan-Bush years, and partly because European countries have lost faith in the American political process.

Q: Is Clinton facing the fundamental problems?

Thurow: If you look at Clinton’s original strategy back in February 1993, I think it was the right one. But the fiscal stimulus disappeared in the Dole filibuster; the investment disappeared in a black hole somewhere; and he got his $500 billion worth of deficit reduction, but he didn’t get his broad-based consumption tax. The strategy was right, but the execution wasn’t there, and now there isn’t any strategy left.

Phillips: I think you could have had a Democratic president with a better sense of what the country wants and a higher sense of integrity, frankly. But a guy like Clinton comes in and does gays in the military, which blew his opening lead. And then he comes in with Ron Brown and Mickey Kantor and Robert Rubin and other “friends” of the average American. He blew it coming in, and when his popularity rating went into the forties, he had to start compromising with interest groups.

Galbraith: Reagan and Bush yearned to do wrong and were kept from doing so by liberal politics. Clinton has sought to do right and has been stopped by conservative opposition. Appraising those two situations, one can only come out in favor of Bill Clinton.

Schor: Clinton and Reich’s idea is to make American workers productive, efficient, and effective through education and skill training, so that multinational corporations will want to be here. But it’s a vision in which people, unions, and governments capitulate virtually wholly to the wishes of multinational corporations.

We need to articulate a vision of economic and social life in which the economy is oriented toward giving a higher quality of life to people. I’m talking about the issues of employment security and control over work and leisure time–not necessarily an economic system that ensures 3 percent income growth every year. For ecological reasons and reasons of global fairness, that kind of growth is no longer feasible.

Q: How are technological advances changing the workplace?

Lamphere: We’ve begun to create electronic sweatshops. We’re creating lots of low-skill, low-pay jobs in the area of computer clerical work, where people mindlessly process bills and paperwork. Those jobs are really awful, less meaningful and less satisfying than most industrial jobs.

Schor: I think we can expect very high levels of labor-displacing technological innovation. In the past, we dealt with the specter of technological unemployment by reducing the amount of work time. But at the moment there are barriers to the reduction of work time. There’s no commitment on the part of government to a Keynesian stimulus strategy, and there’s a worldwide recession. I believe it’s impossible to avoid large levels of technological unemployment.

Mead: We need to make a change from being what I call a hardware society to being a software society. Physically we have this incredibly impressive educational plant, and then we’ve got students with empty heads. The government of the past stimulated economies by building highways. Now people are talking about building an information highway, but they’re still caught up in how to wire the thing. The software, the intellectual product, is not where our social priorities lie.

Q: What can be done to make jobs more meaningful and work more satisfying?

Thurow: I think they’re becoming more meaningful on their own. If you consider things like statistical quality control and just-in-time inventories, they mean a lot more responsibility is given to the average production worker. The employee has to do a lot more creative thinking.

Lamphere: Industrial work, which I’ve studied most carefully, is not as awful and boring as most people think. There’s actually a lot of skill involved in stuffing electronics boards or manufacturing a pair of pants. Now clearly there are ways to integrate those jobs and make them more interesting: job rotation, working in teams, participatory management. Where those ideas haven’t been embraced is in the white-collar world, with computer clerical work.

Mead: Smaller, more flexible work units may be part of the answer. Modern telecommunications allows people to work out of any location, even their home. Instead of giant corporations with a CEO, we might see very small partnerships of skilled, talented people contracting with larger corporations.

Our expectations, or perhaps more accurately our habits of mind, exceed the reality. We have to face the fact that substantial unemployment is normal.

Q: How are these economic trends affecting families?

Thurow: What you see is the American family under stress, and the stress is real. They’re having to work more hours a year to earn the same old income. They may have kept the family income constant with the wife working, but they have fewer hours of leisure and less time together.

Lamphere: Dual-working families are the way things are, and they’re here to stay. Single parents are becoming a permanent fact of life, too. There’s this notion that single-parent families are bad and that we’ve got to get rid of them. That’s just not going to happen. When there’s heavy unemployment in the working class, you can’t maintain stable relationships easily.

Yamada: The middle class can afford child care, but the lower class has more trouble. Income has declined, the family budget isn’t enough to take care of the children, and government doesn’t help. In European countries, companies provide money and the government provides facilities to take care of the kids.

Mead: I don’t see any end to the fact that it’s becoming more difficult to raise kids in this country, and that’s a pretty ugly thing to say. But here’s the problem with establishing government-funded day-care programs and so forth: We don’t really know how to do these things at an acceptable level of cost. If you increase the tax bite on people whose incomes are dropping, they’re not going to thank you.

Q: Are our expectations too high?

Galbraith: There should be no doubt that our expectations, or perhaps more accurately our habits of mind, exceed the reality. We have to face the fact that substantial unemployment is normal.

Phillips: They were too high when Clinton was elected, and I think they may be too high again in another way. It’s very precarious for the Democratic coalition to be congratulating itself for the achievements in the bond market. It’s not the normal place they excel. If the bond market is doing well, they’re probably doing something wrong from the standpoint of their constituency. It’s the Republicans who generally judge the strength of the economy based on financial markets rather than on Main Street.

Yamada: A country that worries so much about exercise and diet is overwealthy, consuming too much, wasting too much. It is not an economic problem; it’s a civilization problem.

Mead: Most people are now resigned to falling living standards. People under 25 don’t have any personal memory of a time when things were a lot better, or even of a time when people really expected things to be better.

If you put together a kind of television economic history from the Flintstones to the Jetsons, you get an idea of how Americans always thought it would work. George Jetson went to a job not all that different from Fred Flintstone’s, but he went to work in a flying saucer instead of a dinosaur. You’ve got the same kind of people for thousands of years, but with nicer and nicer things and an easier life. But what seems to have happened is we’ve taken this detour and rather than the Jetsons being the future, we’ve ended up with the Simpsons.

Q: How much personal sacrifice is required to solve the problem?

Thurow: Suppose I tell you we need more education? Is that painful? You don’t have to sacrifice to become more educated. You have to redeploy your time, you have to redeploy your money, but I don’t think being reskilled and reeducated is the equivalent of being whipped.

Galbraith: The personal sacrifice is in the existing situation. People who are thrown out of work, out of income, out of their houses–that’s where the sacrifice lies.

We have a lot of well-off people whose personal comfort is threatened by government action. I would hope that there were a few people whose compassion and sympathies would extend to the unfortunate and who would be willing to accept affirmative government and what it can do for those who are less fortunately situated. Once the great dialectic was capital versus labor. Now it’s the conflict between the comfortable and the deprived. And the comfortable see government as the threat because it is the only hope for the deprived.

Josh Clark is a Boston-based, freelance writer who contributes frequently to Mother Jones.