Many Service Workers Earn High Wages With High Skills
CHICAGO — The United States economy is creating a huge number of new service industry jobs, prompting many to see America slouching into the Information Age behind low-wage legions of burger flippers and mop pushers.
But the jarring image is illusory. Today, many new service jobs are well-paying and white collar.
In May, the service industry ballooned by 181,000 jobs, fueling 52 percent of a large rise in the nation's nonfarm payroll, the Bureau of Labor Statistics reported Friday. Many new jobs are in engineering, finance, accounting, and computers and data processing, paying above average wages. Companies are creating the high-wage, high-skill jobs even as they aggressively downsize and cut traditional lesser-skill positions.
Since January 1993, the Clinton administration likes to note, jobs have risen in both quantity (9.7 million) and quality. Between February 1994 and February 1996, two-thirds of the net growth in full-time employment was in industries paying more than the median wage, according to an April report by the Council of Economic Advisers.
The trend has caught many analysts by surprise. "This is not at all what people think of when they see employment reports," says Daniel Bachman, a forecaster with the WEFA Group, a consulting group in Eddystone, Penn.
"Wall Street looks at employment by industry rather than by occupation. So when they see a big jump in service sector jobs, they say those are hamburger-flipper jobs. But they're not," says Mr. Bachman. "Service sector employment includes a lot of professional employment, and that is where the job growth is."
The 5.6 percent May unemployment rate is good election year news for President Clinton. Despite signs of greater consumer spending, there is little indication of a sustained rise in inflationary pressures, according to many economists. Unemployment will have to linger well below 5.5 percent before it exerts an upward pressure on wages, WEFA estimates.
Consequently, the "misery index," or the sum of the inflation and unemployment rates, is the lowest in more than two decades. It should remain flat at least until after the November elections, say economists.
Still, features of the job market stir some public discontent. Among large firms, employment is very volatile and getting more so. Corporations continue to downsize even as they step up hiring. At many firms job "churning" - the proportion of workers coming in and going out - is the highest on record, say job market analysts.
Companies belonging to the National Federation of Independent Businesses last month went on a hiring binge. A record high percentage of the firms indicated in a poll released Friday they were unable to fill at least one opening.
Companies are sloughing off old sluggard divisions tied to passe technology and traditional management techniques, and launching divisions attuned to new technology and trendy board room buzzwords like empowerment, core competency, and flexible management.
For example, Xerox Corp. has shown 12,400 employees the door since 1993, especially targeting middle managers. During just the first quarter of this year, however, the company hired 1,200 workers while laying off 400 others, says Judd Everhart, spokesman for Xerox in Stamford, Conn.
"The amount of concurrent hiring in companies that are cutting jobs is becoming stronger and stronger," says Eric Rolfe Greenberg, director of management studies at the American Management Association in New York.
"Four of the top six companies in terms of layoffs in the 1990s came out with significant new hiring plans in 1996 ... hiring in new growth areas," says John Challenger, executive vice president of Challenger, Gray & Christmas, an outplacement firm in Chicago. "At the same time, downsizing is not diminishing and so overall job churning has intensified."
Still, job opportunities today differ widely across skill and income levels. The national job market resembles an hourglass: broad opportunities for the well-educated and highly skilled; comparatively few openings for semiskilled workers in traditional industry; and ample jobs for lesser skilled, low- or minimum-wage workers.
"There is a little bit of tightness at the lower part of the income scale, then a lot of slack in the middle, then as you get up toward the professional occupations you have some real tightness in many areas," says Bachman.
Sears, Roebuck and Co., the grande dame of retailing, epitomizes the shifts. In a desperate effort to stem decline, Sears in 1993 shut down 113 stores and wiped out 50,000 jobs, including the entire 20,000 member staff in its old signature catalogue business.
Retail profits in 1995 swelled almost 20 percent to more than $1 billion. And this year Sears has begun to hire in a big way. It plans to build from 275 to 325 new "off-the-mall" stores, including those specializing in hardware and home furniture and "dealer" stores in small towns selling hardware, appliances, and electronics. Sears will hire thousands of low-paid sales people, but also many workers that are highly skilled and highly paid.