High-churn American workforce

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

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.

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.

"People are increasingly confident and looking for better jobs," says Mark Zandi, an economist with the Dismal Scientist Web site. "The workforce has the upper hand, is demanding more and getting more."

One of these people is Christopher Siefert, a project manager for a construction firm in Chesterton, Ind. He left his job in Milwaukee, Wis., after Management Recruiters International got him a 25 percent pay increase. "There's just a lot of work to do and not enough people to do it," he says of his salary jump.

But the marketplace musical chairs has a down side, in the form of high turnover that makes it difficult for companies to maintain standards, not to mention a sense of mission.

The shortage of workers is particularly acute for those trying to hire technical workers. This is keenly apparent to Joe Markland, president of Starnex, a Wrentham, Mass.-based company, which is hiring 80 people to produce and sell software and Internet applications for the commercial insurance business.

To attract applicants, he has no dress code, lets employees work odd hours, and is handing out stock options to all his workers. "For technical people it's almost like free agency [in sports]," he says. "Sometimes they are walking around with stock options from several different companies."

In the case of Integrated Medical Systems Inc., another start-up company in Signal Hill, Calif., the stock options are one of the ways to attract workers to a young company.

Volden says stock options were a real inducement, since it gives him a chance to benefit if he helps the company perform well. "I saw this as an opportunity to better myself and the company."

Such worker attitudes are part of a shift - a feeling of empowerment - that is sweeping through part of the workforce. Some foresee "a generation of entrepreneurs" who will be more self-confident and more willing to take risks, says Richard Sutch, a professor at the University of California, Riverside.

One of those new risk-takers is Raymond Meers, a computer software engineer in Temecula, Calif. Twenty years ago, he worked for a large corporation but says he watched as business loyalty disappeared, and longtime employees were laid off as they neared retirement age. "The way companies were operating, the employees were just tools," he says.

Now, from his home, Mr. Meers runs a $100,000-a-year business, providing software to US Customs brokers and importers and exporters. "I can work as hard as I want and then I reap the benefits," he says.

This shift to a more free-spirited workforce contrasts with the 1960s, when the economy expanded for 106 months, the former record. It was a time when organized labor was on the rise and women were just entering the workforce.

"There was a new unemployment system and new workplace health-and-safety rules," says Mr. Sutch. "It was sort of a consolidation of the rights of labor unions."

During the current expansion, labor unions have seen their ranks dwindle, at least until last year. According to the Bureau of Labor Statistics, union membership rose by 265,000 and the percentage of workers who have a union remained steady, reversing a long-term decline.

Unions have done this by organizing among those who feel they've been left out of this new economy, and by organizing industries where labor has never before been welcome. Kirk Adams, organizing director for the AFL-CIO, points out the union recently organized 45,000 doctors and 75,000 home-care workers. But he says it's much harder to organize because more firms are turning to "temp" workers.

That's what's happened to Jackson. After her plant closed, a temp agency got her a job doing the same work for less pay and no benefits. While the permanent employees around her make $20 per hour, she gets $12 per hour. "I would love to be permanent because I have children," she says. "But I'm not complaining because I have a job."

(c) Copyright 2000. The Christian Science Publishing Society