... But Their Paychecks Feel Lighter
FLINT, MICH. — Every weekday, Russell Davis helps build the horsepower that drives General Motors Corp., but he feels far from spirited about it.
He and 3,200 others shape the stocky V-8 engines that power the cars that helped deliver almost $5 billion in profits for GM last year.
He and millions of American workers, however, take little comfort in the success of their employers, or their economy.
In 1999, GM plans to close the Flint, Mich engine plant.
Job insecurity, surrounded by prosperity, describes the mood in the Flints of America.
It has become one of the nation's leading economic indicators, the chief cause for stagnant wage growth, according to Federal Reserve chairman Alan Greenspan.
Workers are too worried to press for higher wages.
"They're already taking machinery out of here, and we're feeling awfully pinched," Mr. Davis says over the factory din.
Ironically, such worries have kept inflation and interest rates low and the economy growing.
So much rides on worker attitudes that some economists say a change in confidence could unleash a triple whammy - higher wages, higher inflation, and as Mr. Greenspan has suggested, higher interest rates.
That could mean the end of the six-year-long expansion and low unemployment.
In Flint, the birthplace of both GM and the United Auto Workers (UAW), job insecurity is as pervasive as plumes of steam and factory gray.
Since 1969, the manufacturing work force in Flint and surrounding Genesee County has shrunk by more than 42 percent.
Anxiety in the US workplace has flared in recent years, say Greenspan and other economists. The Fed chairman cites a survey indicating that last year, 46 percent of employees at large companies often feared a layoff.
In 1992, just after the last recession, the figure was just 31 percent, according to the International Survey Research Corp. in Chicago.
"Right now, people are very happy just to have a job and, with all the staff cutbacks, they're very reluctant to go into their bosses office and ask for a raise," says William Strauss, a senior economist at the Federal Reserve Bank in Chicago.
But while few dispute the presence of worker angst, not all economists agree on its impact.
"It's not purely perceptions among workers that drive wage pressure, it's also forces in the labor market," says Donald Pemberton, economics professor at the University of Detroit-Mercy.
He and other economists point to new technology, deregulation, foreign competition, and weak labor unions, all of which hold wages back regardless of workers' moods.
Still, many economists say worker insecurity, while a slippery force to gauge, offers a useful, long-sought explanation for dormant wage pressure.
"There's been a lot of headscratching among economists" because, despite historical trends, the fall of unemployment below 6 percent has not triggered wage inflation, Mr. Strauss says.
Davis, the GM worker, faces an unusual extreme: "It's silly to think about higher pay when the factory is shutting down all around you," he says.
Flint illustrates the labor instability from a historic shift in the economy.
Muscle power and smokestacks have given way to brain power, information services, and high technology.
As has happened nationwide for years, wages in Flint for skilled workers have risen steadily. But those for lesser skilled workers have slumped, weighing down the average wage.
"We're losing well-paying manufacturing jobs with benefits and gaining plenty of retail jobs without benefits, so the typical income is not as high as it once was," says Janet Bauer, an executive at Action Management Corp., a Flint employment agency.
The gap between skills and wages is written large across Flint and all of Genesee County.
Several auto parts and assembly plants run full bore, but there are far fewer of them today. The UAW has sustained its members' wages but not the number of jobs.
Consequently, many small, square, clapboard homes in Flint, that once seemed an autoworker's birthright, have fallen into disrepair.
Most Flint residents with no more than a high school diploma find jobs unconnected to the auto industry. Their opportunities are primarily in low paying retail and service jobs, beyond Flint in the booming Genesee Valley Mall and other shopping complexes.
As county residents divide over skills and income, lower paid workers feel a sharper sense of job insecurity and eroding living standards.
But Gary Rhoades, president of the Flint-Genesee Economic Growth Alliance, says they may see only a small part of the picture: "They know of someone who worked at GM for $19 an hour who has a son working at McDonald's for $5 an hour."