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High-churn American workforce

Bigger salaries and plentiful jobs are offset by higher turnover, layoffs, and less career security.

By Ron Scherer and Daphne EviatarStaff writers of The Christian Science Monitor. / February 1, 2000


Don Volden worked for aerospace giant Northrup-Grumman for 10 years as an electronics technician before a new start-up company wooed him. Mr. Volden says the clincher was the stock options that he hopes to cash in when the company issues shares to the public.

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Terrion Jackson had worked for 12 years at the Jefferson Smurfitt paper mill in Jacksonville, Fla., when she was laid off from her job as a laboratory technician. Unable to find a permanent position in her field, she's been working as a "temp" at another paper mill doing the same job - but for $5.66 per hour less and without benefits.

Mr. Volden and Ms. Jackson represent twin sides of the booming economy. On the one hand, the tight labor market means workers are earning more money than ever before - with many getting the type of perks previously reserved for CEOs of companies. But for others, especially low-income workers, the decade's upheaval has meant layoffs, a loss of security, and in some cases, lower wages and lack of health-care benefits.

Perhaps more important, it is forcing some fundamental changes in the relationship between employees and their employers - how Americans define loyalty, longevity, and satisfaction.

"This is the most turmoil - restructuring of the labor force - that we have seen in the last 60 years," says David Orr, chief economist for First Union, a bank based in Charlotte, N.C.

The changes have come so fast and furiously that the American workforce has been put through an economic Cuisinart, a churning that has not taken place among other major trading nations, which have opted to protect existing jobholders.

Among the forces that are changing the workplace: a record number of mergers and merciless pressure from Wall Street, as more investors demand short-term results. In addition, because of the Internet, businesses and consumers are no longer limited by geography, dramatically increasing competition. Federal Reserve Chairman Alan Greenspan refers to the period as one of "creative destruction."

The destruction has come in the form of massive layoffs. According to the Chicago outplacement firm Challenger, Gray & Christmas, there have been a record 5 million lay-offs since 1991. The past two years have seen the heaviest downsizing, as companies have struggled to meet Wall Street's expectations.

"You can't keep earnings up quarter by quarter by quarter if your workforce is not in sync with your business growth," says John Challenger.

The creative part of the economy is its ability to manufacture new jobs. Since April 1991, the Department of Labor estimates there have been about 21 million new jobs added. This has driven the unemployment rate down to about 4 percent, its lowest level in 30 years. Employers are hiring parolees and former welfare recipients, and giving high school students signing bonuses. "Help wanted" signs are a permanent fixture on retailers' doors.

Take Doris Saunders, a mother of four who went on welfare after she separated from her husband. Although she had not worked since October 1996, she landed a job at Sears as a data-entry clerk. She's been promoted twice and now works on the sales floor at $9.89 per hour. She's just applied for a salaried position that would earn $26,000 to $30,000 a year, plus full medical benefits for her and her family.

The tight job market means wages are on the rise - growing at 5 percent per year compared with 2 percent five years ago. But over the longer term, workers are still trying to regain earning power lost to the lean years.

"To earn as much as 20 years ago, most people need two wage earners in the household, and then you have all the cost and burdens of child care," says Kate Bronfenbrenner, a labor economist at the Cornell School of Labor Relations in New York.

One way to get an even heftier raise, however, is to go to work for another company willing to pay more. The job-hopping is leading to an unprecedentedly mobile workforce. The voluntary "quit rate," the proportion of people who leave their job without another one lined up, hit 14.5 percent in December, the highest rate since 1990.