Economic Memo: The 'job-loss' recovery
seattletimes.nwsource.com
Thirty years ago, there were two primary paths to a solid future. One was to go to college, study almost anything and talk yourself into an executive-training program in a fast-growing industry. "Plastics" was the advice given to Dustin Hoffman in the 1960s classic "The Graduate," the coming-of-age movie that became an emotional touchstone for a generation.
The other path was to take a factory job out of high school. Work the green chain in a sawmill or make trucks for Paccar, for example. It didn't require much education, the pay was good and the benefits excellent. All you needed was a lunch bucket and a strong back.
There were exceptions. I have a degree in English literature and got a job at a newspaper and never looked back.
Things don't look quite so rosy in 2003.
Those executive-training programs have shrunk and so have the number of middle-management jobs. The market for college grads was the worst in 20 years. Next year's market isn't expected to be much better, despite what everyone says is an improving economy.
On the blue-collar side, the workforce in forest products has been cut in half since the 1960s; automation has eliminated thousands of assembly-line jobs. Workers who once might have made good money in a sawmill are working for half as much as waiters in an alehouse or as baristas at the espresso stand.
What we have, to a great extent, is a mismatch between the labor force and the skills needed to fill the jobs available. Even in these tough economic times, with an abundance of good workers seeking jobs, employers say they have trouble finding "qualified" people.
Maybe they're just being picky because they can be. Maybe not.
This is particularly the case in the forgotten half of high-school students, the half that doesn't go to college. Too many of these grads have shoddy verbal skills and even less competence in mathematics. How many could get a job in a precision machine shop? To calculate angles for a tool path, you might need some trigonometry.
On the corporate side of the ledger, there is instability driven by fast-changing markets, now on a global scale. The consequences of the turmoil on so many factory floors and in executive suites extend well beyond the current economic cycle.
Competition is one of the main drivers of the economy, but foreign competition has replaced U.S. companies that have a better idea of how to do things. India, China, Brazil and other developing countries are rising to the fore, creating new levels of competition, often for jobs we always thought of as exclusively ours.
This has been a rough period for workers. Since the recession began in March 2001, the U.S. has lost 2.7 million jobs. Many of them are in manufacturing and are likely gone for good. About 8.8 million workers remain unemployed and one in four has been out of work for seven months.
It's been called a jobless recovery, but Alan Blinder, a professor of economics at Princeton University, called it a "job-loss recovery."
The economic reports of the past few months have shown an increase in the number of jobs. That's good news, although the pace of new workers added to business payrolls has not been high enough to cut into that overhang of jobless workers.
There are places in the economy that are hiring people. Health care has added about 250,000 this year. There is a demand for teachers. Business and professional services — accountants and information-technology- service experts — is another area of demand.
But manufacturing, on a long slide for years, is unlikely to come back. There simply are fewer and fewer sawmills, aluminum plants and small manufacturers left. Even the manufacturing jobs we have are fewer and fewer.
All the good cheer about Boeing and the 7E7 last week is about 1,200 primary manufacturing jobs. Boeing is concentrating on lean manufacturing principles and is very unlikely to ever surge in employment as it has in the past.
Boeing employment, in a head count taken earlier this month, is at 54,096 in Washington state. In June 1998, Boeing employment in the state peaked at 104,000 workers.
Even with a rebound in the aerospace market over the next few years, even with hiring for the new 7E7, the next peak for Boeing employment is more likely to be 75,000 workers than 100,000 workers.
That's 29,000 jobs below the last peak in employment. We can use those optimistic job-multiplier figures, too. If every Boeing job helps create 2.8 jobs elsewhere in the economy, there will be 81,200 fewer jobs in the secondary economy at the next Boeing peak than there were in the last Boeing peak. Taken together with the primary Boeing jobs, that's a total of 110,200 fewer jobs.
The state's unemployment rate dropped again in November, according to a report last week from the state Employment Security Department. That puts the rate at 6.8 percent. Good news, sure, but put it in perspective.
That 6.8 percent rate may seem high. But the average long-term unemployment rate for the state is 7.2 percent.
The state — with a significant number of people still out of work — is already below the normal unemployment rate.
For workers, especially, again, those high-school grads looking for a good job, normal is a pretty scary condition.
Stephen H. Dunphy's columns appear Tuesdays-Fridays and Sundays. Phone: 206-464-2365. Fax: 206-382-8879. E-mail: sdunphy@seattletimes.com. More columns at www.seattletimes.com/columnists
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