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Where Have the Jobs Gone?

The Census analyzes the reasons for unemployment, breaking them into four categories. First, there are “job losers”: laid-off workers who hope to be called back, plus others whose jobs came to a permanent end because a business closed down or work was reorganized. This group comprised 58.7 percent of the unemployed. In addition, there were the 7.9 percent who left their last job voluntarily; plus 11.1 percent who were frustrated “new entrants,” mainly high school and college graduates; and then 22.3 percent called “re-entrants,” mainly married women, many of whom would like part-time work. In other words, a third of the “unemployed” are people who have not been working recently and cannot be said to have “lost” jobs.

A further breakdown is equally revealing. Table 4 gives the sex and domestic status of the 10.7 million unemployed.

TABLE 4

It should be added that of the 2.5 million unemployed husbands, 49.3 percent had wives who were working. And 75.7 percent of the 1.8 million jobless wives had husbands who were still employed. In all, then, 23.2 percent of the unemployed were married men with children or single heads of households of either sex and this is the group whose situation should cause the greatest concern. But the largest single contingent, more than half the total, were unmarried people without dependents. One reason we have a high unemployment rate, therefore, is the postponement of marriage. Only a few decades ago many more young women were married and at home with children, and would not have been counted as unemployed. During the 1958 recession, for example, women numbered 35.2 percent of the unemployed as against 42.1 percent last year. In addition, married men are more likely to look for steady jobs. Their 1982 unemployment rate was 6.5 percent, as against 17.7 percent for men who were still single.

Moreover, in the past fewer men left their families so there were fewer single mothers to enter the labor force. Unmarried people obviously need paychecks, and most wives who want to work mean it seriously. At the same time, changes in domestic arrangements have clearly put more people in the competition for limited employment.

Too many people competing for too few jobs was the classical conception of unemployment. Its corollary was that lines outside the hiring window would beat wages down. This is happening in hard-pressed industries, where wages are being reduced, and where demands that workers “give back” certain benefits are acceded to, and long-term prospects for employment are often being diminished by new technology. But the classical explanation no longer applies to many other industries: a greater proportion of the available jobs are now not only more highly paid but are also insulated from market conditions. This is especially the case with professional and administrative occupations.

During 1982, the unemployment rate for professionals averaged only 3.3 percent while for administrators the figure was 3.5 percent. Clerical occupations had a 7 percent rate while among blue-collar workers it was 14.2 percent. Factory unemployment totaled 17.7 percent, with construction laborers at 29.3 percent. If manufacturing and building workers are laid off when demand declines, there seems an unstated agreement that less exacting criteria will be applied to professionals and managers.

This rule applies to salaries as well. In 1981, a total of 30.5 million men and women filled professional and managerial positions, accounting for 26 percent of everyone who did some work during that year. However, their salaries added up to 40.9 percent of the year’s total payroll. Moreover, 73.1 percent of these people held their posts on a fulltime, year-round basis, as opposed to 49.4 percent of those in other occupations.

The most vivid example is among law firms which pay $40,000 and over for entering associates. Given the large supply of graduates, of whom many are highly qualified, it can hardly be argued that such salaries are needed to attract scarce talent. In other cases, a seniority system prevails, enforced as much by custom as by an explicit contract. At Harvard University, for example, compensation for full professors averaged $59,200 last year, of which $48,500 was salary and the rest fringe benefits. This sum is for about eight months’ work. It strains credulity to believe that all or even most of Harvard’s 529 full professors have such attraction on the market that this range of compensation is required lest they be lured away. However, this largely middle-aged group of 505 men and 24 women was allowed to absorb 71.9 percent of the university’s academic payroll, which meant that only 430 positions could be budgeted for faculty of lesser ranks.

A striking feature of recessions—indeed of depressions as well—is how many people hold on to well-paying jobs. Even if those receiving paychecks cut down somewhat on their spending, members of the middle class can still be seen crowding restaurants, going off on holidays, and purchasing the latest in appliances and clothes. Many pay five-figure tuition bills, move into condominiums, and have something remaining for IRAs and money-market accounts. Hence also the spectacle of parents secure in well-paid positions, while their children are having difficulty landing a first job. Such parents are often well-enough off to subsidize their underemployed offspring, more than a few of whom are moving back home. These in-family transfers may ease the economic strain, but they do nothing to create employment for the coming generation.

It is not really possible to give a figure for how many jobs we would need for optimal employment. For one thing, not everyone wants to work: witness the growing number who are accepting early retirement. Of course, what they are retiring from makes a great difference. Middle-level executives who are not going any higher may prefer golf to a job on the sidelines. On the other hand, college professors protest if they can’t continue into their seventies. Table 5 displays the potential dimensions of a full-employment picture.

TABLE 5

The “labor force” column includes all those who were working or looking for jobs in 1982: the employed, the unemployed, plus those with part-time positions who would have preferred full-time work. “Not in the labor force” lists people who said they did not wish to work or weren’t seeking a position, plus the reasons they gave.

Clearly, we would like jobs for the 10.7 million unemployed and the 1.6 million who are discouraged, along with full-time work for the 6.2 million who prefer it. As for current nonworkers, how many would enter employment under favorable conditions is anybody’s guess. Some of the 12.3 million who are retired might wish to go back to work. (Right now, only 3 million members of the labor force are people over sixty-five; and over half of those had part-time employment.) The same holds for a portion of the disabled if suitable jobs could be arranged. The key group are the 29.9 million who report they are needed at home, of whom 21.3 million are wives and 2.9 million are women heads of households. The outlook of the emerging generation suggests that many or even most would probably choose employment if they could have day-care facilities, congenial jobs, and willing husbands. Moreover, a growing number will want full-time positions, which are more expensive to create.

In 1981, the total sum available for hiring Americans and paying for their services added up to $1,549 billion—$1,439 billion for wages and salaries and $110 billion from self-employment earnings. As I indicated at the outset, most of this figure—80.3 percent—provided 65.1 million full-time year-round jobs at fairly decent rates of pay. This $1,549 billion sum, or its counterpart in current and future dollars, had best be regarded as a constant factor. The odds of increasing real national wealth, relative to population, are not very promising, and increasing automation will eliminate more and more industrial jobs. So if we wish to open employment up for more people, whatever incomes they receive will probably have to come from the existing pool of earnings. To cite a homely example, if Harvard’s 529 full professors agreed to reduce their current compensation of $59,200 to, say, $45,000, they could create 376 new assistant professorships each paying $20,000.

Ending Unemployment, its author tells us, “focuses on the condition and prospects of the marginal worker in America, on society’s chronic losers.” These are able-bodied men and women who work sporadically or not at all, upward of 15 million people many of whom are not officially counted as unemployed. Melvin Levin examines the impact on unemployment of the minimum wage, race and sex discrimination, job training programs, regional migrations, private-sector subsidies, reducing the welfare rolls, or doing nothing at all. Unfortunately, sweeping solutions are not really attainable under current conditions; and most programs that have been tried have had disappointing results. The public employment programs of the 1930s worked partly because the nation was desperate, and also because those taken on were already seasoned workers. All those schools, dams, and bridges were not built by people from the bottom of the barrel.

Even so, Levin proposes that we institutionalize “public-sector employment” on a permanent basis. “One of the anomalies of the economic system is the willingness, albeit reluctant acquiescence, to provide a modest subsistence for the jobless either through unemployment insurance or through public welfare.” What we have at present is “subsidized idleness.” Instead of keeping people on the dole, Levin would assign those who have lost or never had jobs to “salvage, replace, and maintain a deteriorating public infrastructure,” ranging from modernizing reservoirs to repairing local jails. Levin’s list is lengthy, including the rebuilding of dams, bridges, ports, sewers, rail lines, along with “the already deteriorating Interstate Highway System.” Even the chronic losers could be absorbed, because “painting; cleaning, and simple street, park, and building maintenance are skills that can be quickly acquired.” On the whole he would prefer that these projects be contracted out to private firms, so as to enlist the support of private business. “Marginal workers would report,” he asserts in a somewhat military tone; and he heads one of his sections “Everyone Works.”

It would be easy to pick holes in Ending Unemployment, and Levin acknowledges that his ideas may be visionary. But it seems never to have occurred to him that if the economy is to be more productive this will probably mean that sophisticated machines will eliminate more jobs. We may have to adapt our values to a future where subsidized leisure will be widespread. Still, such a change seems far off. Levin is appalled that so many million man-years of potential work now remain unused while so much cries out to be done. He calls his a “modest proposal,” although it isn’t that at all; and he says the costs “would not be massive,” which is equally untrue.

To the objection that welfare money will still have to go to mothers with children, Levin would probably reply that his program would reduce the number of fathers who desert their families. He would also argue that with men from the underclass working, the drop in crime would be a social saving. In many ways, the most radical part of his proposal is to abolish unemployment compensation, currently consisting of tax-free payments to people between jobs. In fact, a lot of Americans use at least some of these weeks as a period of relaxation, one they believe they have earned. To consign them to work, at pay less than they had been getting, would be protested by many as involuntary servitude. In fact, Levin would want to mingle all classes in his public-works projects, which is what happened in the Thirties, although it is hard to visualize the middle and upper classes taking part in them now. His is really a prescription for a deep depression rather than for ebb-and-flow recessions. Still, it is worth attention. We may need something like it sooner than we think.

Letters

Ending Unemployment? January 19, 1984

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