Economic News 1994

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updated: 2019-03-04
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_MIT Tech_
AT&T to Cut Up to 15K Positions
"AT&T, the nation's largest long-distance carrier, yesterday announced plans to eliminate 14K to 15K jobs over the next 2 years.   AT&T's plan, designed to save the company at least $900M a year, is the latest example of the massive down-sizing underway in the communications industry.   Communications companies eliminated 44,314 jobs in January alone, compared with 50K jobs for all of 1993, according to the out-placement firm of Challenger, Gray & Christmas Inc."

Malcolm W. Browne _NY Times_
Opportunities in Science Dwindle
"Many scientists are angry at the National Science Foundation [NSF], which in 1987 predicted that by the year 2010 there would be a shortage of scientists and engineers in the United States of 692K.   The foundation's prediction clashed with other findings that the job market was already shrinking.   The foundation's data seems to have been overtaken by workaday experiences.   The most recent job data collected by the foundation are for the year 1991, and they do not suggest a shortage of scientific jobs.   The foundation calculated that only 1.4% of doctoral-level scientists and engineers in the United States were unemployed in that year, and only another 1.7% were under-employed.   But Melissa Pollak, an official of the foundation's Science Resources Division, said figures for 1993, which will be available next fall, may show a large change.   'A lot of professional associations have been documenting widespread hardship.', she said.   A recent survey by the American Institute of Physics found that in 1992, the most recent year for which it obtained data, the number of job openings for doctoral-level physicists at universities, national laboratories and industry was about 800.   Competing for these jobs, along with older physicists, were 1,350 scientists who received their Ph.D. degrees that year."

1994 February
_Migration News_
H-1B, Europe, Illegal Immigration Into Russia, Red China Sterilization, Thailand Considering Amnesty for Illegal Aliens

"In 1900 only 5% to 10% of the US population graduated from HS.   By 1940, 5% to 10% went to college.   By 1983... 80% of the population graduated from HS & over 60% of all HS graduates attended college." --- Robert E. Kelley 1985 _The Gold Collar Worker_ pg 11

Bill Varner _Gannett Suburban News-Papers_
"'Of the people who found new jobs last year, 74% moved to smaller companies.', said John Challenger, executive vice president of Challenger, Gray & Christmas inc., an international out-placement company based in Chicago.   'There were also a lot more entrepreneurs.   In the last quarter of 1993, 18% to 20% of the people who found new jobs went to work for themselves [i.e. remain unemployed].   Five years ago it was only 8% to 12%.'...   As the economy slipped into recession in the late 1980s, corporate loyalty declined.   Results of a Gallup Poll released in December showed that 29% of employees believe their co-workers do not have a strong sense of loyalty to their company.   'People are tired of being at the mercy of a corporation or the government.', said Roberta Jean Bryant."

1994 March
Sally Lerner _Futures_
The Future of Work in North America: Good Jobs, Bad Jobs, Beyond Jobs
"Rapid technological change and the globalization of economic activity are re-structuring the North American economy, and with it the nature and future of work in the United States and Canada.   There is now a clear, though barely-articulated question as to whether secure, full-time, adequately-waged employment will be available to much of the North American work-force, at least over the next 30-60 years, or whether 'jobless growth', under-employment and 'contingent' employment will become the norm, as happened first in Britain and is increasingly the trend in other industrialized nations."

1994 March
Robert W. Crandall _Maine Policy Review_/_University of Maine_ [unnatural monopoly]
Pricing issues in telecommunications
"There was a time when telecommunications was considered a 'natural monopoly'.   Today, scores of carriers actively compete for customers in voice, data, video and information services markets.   Even if the natural-monopoly diagnosis was correct in 1914, the year of the ('Kingsbury Commitment' by which AT&T sought refuge from anti-trust in federal government regulation; in 1934 the year in which the Federal Communications Act was passed; or even in 1949, the year in which the government first sued AT&T for monopolization, it surely is incorrect today.   Monopoly power may still exist, but it is far from 'natural'.   Rather, such monopoly exists either as a transitory phenomenon, awaiting imminent destruction by emerging competitive forces, or because of government regulation."


_CPU_/_Computer Professionals for Social Responsibility_
bodyshopping up, real jobs down
"a recent Newsweek story (1994/03/14), 'Help Wanted -- Reluctantly... Jobs: Why getting hired will never be the same': 'The dramatic restructuring of U.S. business has made for major changes in the job market.   Work is more specialized, information is harder to come by, employers are smaller and exceedingly cautious about hiring.   In searching for a job, what you don't know can hurt you badly.'   Companies are 'niche players', often obscure, and finding the companies is job 1.   According to the article, companies rely more on professional associations, or exclusive publications which raise an additional barrier to the job seeker -- the cost of subscribing is frequently high, putting the job announcements out of reach of the unemployed.   Employers use various screening devices, including agencies to weed through resumes that don't display exactly the requested job skills.   Employers are more reluctant to extend permanent employment...   The article also claims that employee law-suits have driven up the cost of dismissing employees that don't fit in.   So [bodyshops] have thus become a major tool for weeding out prospective workers ('try before you buy').   As one plant manager told the magazine, [bodyshopping] 'gave us a 2K hour job interview.   We got very confident with their mind set, their abilities, their interest.'   The article concludes: 'Many companies are prepared to move work around the world or contract it out if they can't find workers they want to hire.   That may be the biggest difference between the economy of the 1990s and the one that used to be...'"

Llewellyn H. Rockwell _Lew Rockwell_
Protectionism, War, and the Southern Tradition

Robert Zacher _Young Scientists' Network_
Full UNemployment Policy for American Ph.D Scientists

Larry D. Swanson _Montana Business Quarterly_/_The Free Library_
Making regional market-places international
"Under NAFTA, most barriers to trade will be phased out within ten years; for a few sensitive product areas, the phase-out period is 15 years.   Tariffs between the U.S.A. and Canada will continue to be phased out according to the earlier FTA schedule -- most by 1998.   Half of all U.S. exports to Mexico received tariff-free entry into Mexico with NAFTA adoption.   Before then, Mexican tariffs on U.S. goods averaged about 10%; average U.S. tariff on Mexican goods was 4%." MultiLateralism
Christopher Conte & Albert R. Karr: US Embassy in Germany: An Outline of the US Economy
"As a result of NAFTA, the average Mexican tariff on American goods dropped from 10% to 1.68%, and the average U.S. tariff on Mexican goods fell from 4% to 0.46%.   Of particular importance to Americans, the agreement included some protections for American owners of patents, copyrights, trademarks, and trade secrets; Americans in recent years have grown increasingly concerned about piracy and counterfeiting of U.S. products ranging from computer software and motion pictures to pharmaceutical and chemical products."

"The output of knowledge workers is at best difficult to quantify.   While counting the number of forms a clerk-typist prepares might be a valid performance measurement, it would be meaningless to count the number of drawings a drafter produces or the lines of code a programmer generates." --- Ira B. Gregerman 1981 _Knowledge Worker Productivity_ (quoted in Robert E. Kelley 1985 _The Gold Collar Worker_ pg 16)

1994 July
Gary Belsky _Money_
Escape from America: Citizens who leave the country
"From 1960 to 1976, 9 out of every 10 Americans who emigrated ended up in 1 of 7 countries -- Mexico, Germany, England, Canada, Japan, Australia and Israel.   Today many still head for those countries, but they also choose more diverse locales such as the Czech Republic, where the American expatriate population has soared to an estimated 20K from fewer than 100 in 1989, or Hong Kong, where American ranks have nearly doubled to 27K, from 14K in 1986...   In Money's poll, more than 2 out of 5 Americans ages 18 to 34 who have considered emigrating cite better economic opportunities as the reason...   And though the U.S. has rebounded smartly from recession, prospects are still bleak for those just entering the work force.   A recent study by the Collegiate Employment Research Institute at Michigan State University projects a meager 1% lift in hiring for the class of 1994 -- and that after a 35% drop over the past 5 years...   In fact, almost 1 in every 6 U.S. jobs pays below the poverty line for a family of 4, or $14,228 a year.   And many young Americans have soured on the Darwinian corporate culture in which 1.4M managers lost their jobs since 1990."

"The limits of my language are the limits of my mind. All I know is what I have words for." --- Ludwig Wittgenstein (quoted in Richard Lederer 1991 _The Miracle of Language_ pg 3)

Visa Reform: Not Enough New Programming Jobs Are Being Created
"CFVR argues that the U.S. is not generating enough programming jobs, whether through growth or attrition, to absorb recent graduates from U.S. universities...   In an early July posting to, CFVR estimated the number of new programming jobs becoming available each year: 'The Bureau of Labor Statistics reports that there are 550K computer programming jobs in the U.S., with a growth rate of 4.4% per annum...   The Bureau of Labor Statistics reports that there are 156K computer and office repair jobs (which includes installation and maintenance of machinery), 282K computer equipment operators, 37K computer peripheral equipment operators, 565K computer programmers, and 463K system analysts.   This adds up to a total of 1.503M jobs in computer related fields.'...
  We have reported in every issue of CPU the massive lay-offs that have hit especially the mainframe and mini companies, but also the much smaller PC and software houses...   And companies aren't just exploiting the visa program to bring programmers here from India or France or Russia.   It is often easier to take the work over-seas...   If companies use visa workers, those workers should be paid at the same level as U.S. programmers, with the same benefits.   Commissions to the placement firms should be on top of the scale salaries that the contract employees get.   Severe penalties should be levied against companies that abuse contract employees, or that use contracting houses that abuse their contractors.   Foreigners of uncertain position in a strange land are easy targets of ill-treatment and low-wages.   (See, e.g., CPU.007 for complaints against Hewlett-Packard in its use of over-seas contractors)..."
CPSR == Computer Professionals for Social Responsibility

Mitch Betts _IDG_/_ComputerWorld_
National ID system proposed for immigration job tracking
"During the past 20 years, privacy advocates have beaten back numerous proposals to create a national identification system...   Barbara Jordan... last week called for a national computer data-base that would allow employers to verify whether a job applicant is authorized to work in the U.S.A...   Legislative proposals for a national ID card were rejected in 1986 and 1990...   U.S. senator Alan K. Simpson (R-WY), a long-time supporter of a national ID card, predicted that election-minded senators will rush to attach the plan to any bill moving through the Senate this year, 'even if it's tacked on to a bloated cow bill'.   Indeed, senator Dianne Feinstein (D-CA) said she plans to do exactly that."

1994 August
John H. Bishop _Cornell U_
the incidence of and pay-off to employer training: a review of the literature with recommendations for policy; training has high average rates of return for both the firm and the employee
"...Bowers and Swaim (1992) analysis of CPS [Current Population Survey] data found that the wage pay-offs to some forms of incumbent worker training rose between 1983 and 1991, while the returns to other forms of training fell... The return...from informal OJT fell from 11% to 6.5%, while the 2 and 4 year colleges rose. The return to formal company training from one's current employer rose from 11.6% to 14.4%. School based skill-improvement training paid for by the worker did not raise the individual's wage. The pay-off to self-initiated school based skill-improvement training fell from 1.2% in 1983 to -2.8% (t=1.5) in 1991. The pay-off to school-provided training paid for by one's employer was a statistically significantly 8.4% in 1983 and 5% in 1991. Hollenbeck and Willke's (1985) analysis of the 1983 CPS data obtained similar results..."

"The great thing in this world is not so much where we stand as in what direction we are moving." --- Oliver Wendell Holmes (quoted in Mark Skousen & Jo Ann Skousen 1993 _High Finance on a Low Budget_ pg 199)

Edith Holleman
Engineers and Employment in the Global Economy: A View from Capitol Hill
alternate link
Thank you so much for inviting me to address your conference.   I am speaking today, not as a representative of Congress or of the Science, Space & Technology Committee, but as an observer of administration and Congressional policies that affect global employment.   These policies impact your jobs, your future, your standard of living and those of your children.   They raise many questions.   I have no definite answers, but want to pose some possibilities for you to think about and begin to discuss.
A cartoon appeared in the newspapers this Spring that pictured a new college graduate being handed a spatula by the college president who said, "Go forth and serve mankind."   That cartoon summarizes much of what we know about the present American economy, and the college graduate could just as well have been a 50-year-old engineer.
The questions we must address are three:   First, can we maintain our national standard of living in a global economy where there are hundreds of people for every job?   Second: What are our policymakers doing to plan for the economic future of our citizens?   Finally, what can we do to ensure good employment opportunities?
I am going to give you the quick answers based on today's economic policies:
1.   We cannot maintain our standard of living.
2.   The policy-makers are doing little or no planning.
3.   We must demand a complete shift in economic policy.
The end of the Cold War, the globalization of the economy as exemplified by the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT), the continuing advance of automation and information technologies and the relentless downsizing of corporations are affecting employment as never before.   These are not job-creating events.   Computer-aided design systems help one engineer do the job 6 - 12 did two decades ago.   A Cummins Engine factory in Indiana has a new, team work-place where a smaller number of workers make $8 per hour, about half of what the previous work-force made.   People talk of the eeriness of factory floors because of the small number of workers.
Information technology has facilitated the elimination of a whole layer of management.   You all know how risky it is to have obtained membership in the "50-50 Club".   That means 50 years old with a salary of over $50K -- in other words, a mid-manager.   In their relentless drive for higher profits, multi-nationals compete with each other to eliminate these mid-managers and others.   In the first quarter of this year, these companies eliminated 192,572 jobs, or 3,106 every day -- mostly in the communications, aerospace, computer, transportation and retail industries.   Many more jobs were eliminated by smaller companies.
Announcements of job cuts and management restructuring are inevitably rewarded with stock price surges the next day on the Dow Jones.   Earlier this month, the Wall Street Journal (1994-08-01) reported that major companies increased after-tax earnings 39% over last year.  Those that did best contained costs.   "Heavy investments in technology and years of restructuring have resulted in 'relatively low unit labor costs and profit-margin improvement.'"
It is a different story, however, for those who get laid off.   When they get rehired, it is for lower salaries, fewer benefits and less security.   And this is a worldwide phenomena, extending even to companies in the developing world which hope to compete in the new world market.
The world is already short of jobs.   According to the United Nations' International Labor Organization 120M people are un-employed, and 700M are under-employed.  47M more enter the job market every year, and there will be 750M more in the next 20 years.   With the demise of subsistence agriculture that is the inevitable result of free trade in agricultural goods, hundreds of millions more will be moving to the cities and clamoring for jobs.
Another way to improve profits is to move facilities over-seas to cheap, but productive, labor markets.   Motorola, for example, gets workers as skilled as those in the U.S.A. in Beijing for $65 per month.   Even a superb educational system cannot protect U.S. workers against this type of move.
We praise the European and the Japanese educational system and their apprenticeship training programs for young people.   But, according to the Financial Times earlier this week (1994-08-31), joblessness in Japan is at an a seven-year high, creating the worst job outlook for new college graduates in many years.   There are 100 job seekers for every 62 jobs.   The cause?   Corporate Japan is shifting production to cheaper south-east Asia locations and cutting domestic recruitment.
Germany's BMW and Mercedes-Benz are willing to leave their highly skilled work-force behind, build new plants and train new workers in the U.S.A., not because they are better, but because they are cheaper.   And U.S. companies do the same with Mexican or Chinese workers.   According to the UN's World Investment Report, multi-nationals have created 8M jobs since 1985.   Virtually all of them were in foreign affiliates; 7M were in developing countries.
But while their productivity climbs, Third World workers face multi-national corporations no more conducive to improving the workers' lot in life than were the coal and steel barons of another century.   Just as Cummins Engine cut workers and pay by 50%, Third World plants are also looking for ways to cut salaries and employees.   When I visited a GM-owned maquiladora in Matamoros last Fall, the manager told us that the company moved there because of the low wages.   Workers make $2 an hour, but the plant's technological, productivity and quality levels are equal to or greater than comparable plants in the U.S.A.   But even at $2 an hour, reduction of the workforce by upgrading technology is already under-way.
Maquiladoras in Matamoros are also trying to reimpose a 48-hour work week.   Just recently, Sony broke the 40-hour ceiling gained after a long union struggle by setting up a dual system: 40 hours for old workers and 48 hours for new.   It also is forcing its mostly female work-force to work on Sundays, their only family day.   So much for family values.
Nissan, Texas Instruments and Xerox have state-of-art facilities in Aguascalientes, Mexico, employing tens of thousands of Mexicans.   But they don't share the profits of their work.   Most of them live in slums with 2 telephones for 20K people.   The developed countries cannot maintain their standards of living if forced to compete with equally productive, but dramatically cheaper, Third World workers.   These countries will continue in a labor over-supply mode for many years, a situation which significantly distinguishes them from the United States in the same stage of development and guarantees long term downward pressure on wages.
What we have is a situation where the developed world is losing well-paying jobs that have supported a consuming middle class.   We may been actually losing consumer power.   The developing world is getting the "good" jobs, but they aren't middle-class jobs any more and don't support much more than a subsistence lifestyle.
What should the role of the policy maker be in meeting these challenges?   First, he or she should get his or her respective head out of the sand and stop mouthing platitudes about "free" trade, the "shortage" of scientists and engineers in the U.S. and pipe dreams about the magical future awaiting anyone who under-goes additional training.
It is, however, very possible that the dominance and political correctness of the "free" trade gospel will stop any meaningful discussion of the problem.   One of the most disappointing aspects of the NAFTA debate was the refusal of any of its proponents to have a serious free-trade policy debate.   At a time when we should have been discussing what kind of society we wanted, and how we were going to achieve it, all we heard from the administration, the think tanks and other pro-NAFTA forces was, "Trust me, 'free' trade is good for you."
I believe that the goal of policymakers should be to ensure that U.S. workers -- and I am including all of us in that phrase because we are just professional workers -- are free to compete on an even playing field with other workers who are receiving a fair day's pay for a day's work.   That is called "managed" competition, and that is how this country became great.
We should not become a Third World country ourselves by running a dual society of (1) low-wage jobs held by new immigrants and the unfortunate and (2) overpaid Wall Street, legal and CEO jobs.
The policy wonks, however, seem to have accepted the latter scenario with barely a whimper.   A recent meeting in Jackson Hole, Wyoming, of government officials, economists and other experts from industrialized countries concluded that the developed countries had only 2 choices:  to keep their minimum wage low and below inflation growth to attract low-paying jobs for their citizens or to keep their income support benefits up with the resulting high unemployment rates of the European countries.
Paul Krugman, described as a "wunderkind" among academic economists, was at that conference.  He recently wrote in Foreign Policy that "it is obvious that something has gone wrong with the promise of economic growth" stimulated by technological gains.   The paradox created is "growing misery in the face of growing wealth".   Market forces, Krugman said, are increasingly pushing against income equity.
I often wonder about the innate intelligence of economists.   I could have told them that 5 years ago.   Don't they understand supply and demand which is, after all, the under-pinning of capitalism?   What the economists are saying, ladies and gentlemen, is that "free" trade and technological advances are bringing us increasing income inequities and there is nothing we or our governments can do about it.   I call that deliberately "Third Worlding" our own society.   Perhaps if they untangled themselves from their rigid adherence to free-trade theories, they could come up with some more creative ideas.
President Clinton brags about the new jobs created, but a survey of American industry indicates that most are not high-paying jobs; they are service, temporary and retail jobs.   Just this morning, CNN reported 180K jobs created in July but a decrease in family income.   Income is not keeping up with the inflation rate.
Labor Secretary Reich says that all American workers need is more education, preferably in technical fields.   If 50% of our college graduates had science, math and engineering degrees, would they find high-paying jobs in their field?   No.   There would be too many of them.   The New Scientist reported in June (1994-06-13) that current science and engineering college graduates were having a hard time and should think about combining their degrees with study in law, business, public policy or communications so they could get a job.
And we must remember that 75% of our citizens are only high school graduates.   They are the ones who define our standard of living.   If 50% of the new high school students went on to become skilled technicians, would they find high-paying jobs in their fields?   No, because the country can absorb only so many of them.     The result would be falling wages.   I have nothing against better-trained workers, but that is the India solution, where you train workers and then have to export them because there are no jobs domestically.
You may think that competition for industrial jobs has nothing to do with your highly skilled jobs.   To a great extent, professional salaries are based on blue-collar salaries.   In a world economy, if blue-collar salaries are low, the salaries of professionals who compete worldwide will be most affected.   Computer programmers, scientists and engineers are on the front line of the global, white-collar, free-market labor battleground.
Let's look at computer programming for a minute.   According to the August issue of CPU, IBM, Motorola and Texas Instruments have production and research facilities in Bangalore, India; Oracle will soon put its fifth -- and largest -- R&D center outside of the U.S.A. in Bangalore.   Apple is setting up a development and education project in the Ukraine which has 500K computer programmers.   Apple will train them and assign programming tasks at one-quarter of the price of a U.S. programmer.   Their inventions -- like ours -- will be sold worldwide.   This has to impact the job prospects of the average programmer.
Engineering is described as the discovery, refinement and application of technology.   It shapes all aspects of our society.   It is not surprising that one of the first professions every country promotes is engineering.   A developing country is a country that needs engineers to build its infrastructure and its industries.   Right now, there are a lot of good engineers in the world and not enough work for them.   This fact has changed the entire engineering employment equation.   IEEE's Spectrum a year ago in its "Jobs at Risk" issue found the only place in the world there was a shortage of engineers was in Hong Kong.
It's true that there are some new, high-tech jobs for engineers, but they are not reserved for you in the First World.   As international corporations move their facilities to cheaper locations, jobs in fields such as product design, process engineering and software development are moving with them.   You were used to competing with your counterparts in Germany, France and Japan.   Now you must compete with the best that India, Mexico, Korea, China and Brazil have to offer.   They cost a lot less than you do, and often they are just [almost] as good.   India has one-third of the world's Ph.D scientists and engineers.   Other countries have thousands more.
The pell-mell rush of the world's nations into free-trade agreements, with their accompanying international joint ventures further weakens the connections of any corporation to the well-being of a specific country's economy.   The bottom line controls everything.   Our research efforts are also being internationalized, with the result that the skilled jobs created are shared with other countries.   The end of the Cold War has only speeded up the process.   There are no longer 2 competing, somewhat duplicative systems.   We all compete for the same jobs.
Additionally, although very high-tech research continues to be done successfully in the United States, it cannot be counted on to spin off into domestic manufacturing facilities providing employment for many engineers and skilled workers.   Let me refer to the Sematech experience.   After a $1G federal investment which did help recapture leadership for the U.S.A. in the semiconductor equipment manufacturing field, the General Accounting Office [GAO] warned that a net job increase was not evident because of what it termed "increasingly complex international business relationships".   That's a delicate way of saying that semiconductors continue to be manufactured in cheap labor markets because that is where the profit is.
Down-sizing of U.S. corporations by eliminating large numbers of middle managers -- one economist calls it "wringing out" excess employment in the American economy -- also impacts on you.   It holds down pay-rolls -- and wages.   More senior engineers frequently move into management and free up jobs for younger people.   Where are these people going to go now -- back to the drawing table -- or the computer?   Into contract engineering? [Being bodyshopped.]
And I don't need to discuss with you the impact of defense down-sizing on engineers.   From 1976-86, the decade of defense build-up, there was an 100% expansion in the number of scientists and 90% for R&D engineers, a greater expansion than in any other field.   Defense engineers also got top salaries compared to other engineers.   Defense build-up accounted for 17% of all new jobs in U.S.A. during this time.   This is a thing of the past.   All of these factors add up to a very tight job market with no salary growth expected.   There has been buying power loss for engineers for several years, and there will be more.   This year, for the first time, graduating nurses received higher wages than engineers.
What are our policy-makers doing?   Very little.   Many are in a state of denial, or they are trying to preserve existing jobs through defense technology conversion programs.   As you may know, there is also growing resistance in Congress to further defense cuts because it means more skilled job cuts.   But 4 to 5 years ago, there were plenty of signs that a crisis was coming, which were ignored by the policy-makers and, frankly, I don't have much hope for them.
When I came to the Science Committee in July of 1991 as an investigator, by the end of my first week, I had heard that the much-repeated statement from the National Science Foundation [NSF] about a pending shortage of scientists and engineers was false.   When I started to ask more questions, the first people I heard from were engineers telling me it certainly wasn't true for them.   Older engineers were being off-loaded into contract positions [bodyshopped], losing their benefits and their careers as quickly as the new ones were graduated.   Young engineers were doing work that in years past was done by drafts-people.
Then I heard from the young scientists who were struggling from one post-doc to another to patch together a career until some university would give them a position.   Often that never happened, and, after years of education and near-poverty, they were forced into other careers.   Mathematicians, geologists, biologists and, of course, the physicists, all confronted that reality while the policy-makers denied it was happening and said these particular young people must not be very good.
The Committee's attempts to expose the myth were not welcome.   The National Science Foundation, the National Science Board, AAAS, the universities and influential members of Congress stood behind the idea of a shortage.   The NSF orchestrated with others the media and public policy campaign that put hundreds of millions of dollars into science and math education.
I have no quarrel with money to improve the science and math literacy of our children, but we should never mistake basic literacy with degree achievement or market demand.   However, these projections of shortage had no basis in reality, and the NSF knew it.   But because everyone had a vested interest in getting more federal dollars, no one would admit it, even after the Berlin Wall fell, and there was clear evidence that the defense budget was going to be cut.
The Hudson Institute also manipulated figures to project an enormous demand for highly skilled workers.   Again, the media and the policy-makers used this number to play "Chicken Little".
The NSF and the Hudson Institute studies were the impetus behind a provision in the 1990 immigration reform bill that allowed 65K skilled, temporary workers into the U.S.A. annually and also generated the ill-fated pilot labor market certification program.   The latter program would have allowed immigrants in 10 mostly high-tech fields supposedly in shortage to obtain permanent work certification in the U.S.A. by simply demonstrating that they had a job offer in one of the shortage areas.   Engineering societies, along with other scientific organizations, banded together last year during the proposed regulation stage to object because the Labor Department could not credibly demonstrate any labor shortages in the selected occupations.   Secretary Reich then aborted the program.
Clearly, the "vision thing" is still lacking among many of our policy-makers.   Now they tell us that if we train or retrain, there will be new high-tech, high-paying jobs waiting for us.   And for some, there will.   But all of us know highly skilled people already out of work or taking new jobs that pay significantly less than their previous ones.   If there aren't good jobs for them, where will the jobs be for the new workers?   Policy-makers are very careful not to mention the number of jobs that will be created, and the salaries they are going to pay.   Perhaps it is then true, as one economist said, the whole purpose of all this down-sizing  and "free" trade is to reduce our salaries.
Labor Secretary Reich already knows these problems; he built his academic reputation on alerting us to the challenges of the global labor market.   In a 1991 article in the Harvard Business Review,["Who Is Them?" 1991 March-April, pp.78-80] he said "corporate decisions about production and location are driven by the dictates of global competition, not by national allegiance...   For the past two decades, U.S. businesses have maintained their shares of world markets even as America has lost its lead."   Let me quote Secretary Reich:
In deciding where around the world to do what, the global manager seeks to meet the needs of the customers worldwide for the highest value at the least cost.   Some production will be done under the company's direct supervision; much will be out-sourced.   Often design and marketing activities will be sited close to the markets to be served; research and complex engineering, where skilled scientists and engineers can be found...   When 2 or more locations are about the same, the decision will be based on the where the global manager can secure the most profitable deal...   The global web's highest value-added activities -- its most advanced R&D, most sophisticated engineering and design, most complex fabrication -- need not be in the nation where most of the company's share-holders and executives are.   Ford's state-of-the-art engine factory is in Chihuahua, Mexico, where skilled Mexican engineers and technicians produce more than 1K engines per day.
Profit.   That's why Mercedes-Benzes for the U.S. market will now be built in Alabama -- not because the workers are better than those in Germany.   They aren't, but they certainly are cheaper.

What Secretary Reich recommended was not more trade agreements -- he said they were irrelevant -- but a U.S. Investment Representative whose job was to bring international investment and good jobs to the U.S.A. by threatening to close the huge U.S. market if this was not achieved.   That's what [Red China] did with Ford Motor Co. earlier this year.   There would be no assembly plants in [Red China] without development of components manufacturing in [Red China].   But now as a key policy-maker, Reich is constrained by political pressures to down-play both the ability of the rest of the world to compete with us as workers and the need for us to develop any concrete action plans.   Publicly, he supported NAFTA and GATT unreservedly.   Privately, he admits that he doesn't know any more than you or I do where the high-tech jobs are or how many there are going to be or what his training programs are for.   His main legislative program, which will probably not succeed in this Congress, is combining 6 dislocated worker programs and beginning to simplify the employment and training system.   These are laudable goals, but they do not create jobs.
I want to pose a partial solution -- a variation on the managed competition that made our country great.   It will not be politically correct in economic circles.   If we are not going to have tariffs and a meaningful "most favored nation" process for controlling trade, we have the right to demand, as a condition of access to our markets, that Third World countries trading with us give their workers the opportunity to organize for better pay and living standards.
Only if the standard of living of Third World workers increases will our standard of living remain constant.   Notice that I did not say improve.   We are struggling just to maintain our standard of living.   In addition, we must allow subsistence farming to continue in the developing countries so that they can limit the urban labor market supply until the standard of living has increased.   That means that U.S. agricultural interests must have restricted access to other countries' agricultural markets.
One of the most devastating impacts of NAFTA in the next decade will be the replacement of Mexican corn by U.S. corn.   Millions of subsistence farmers will be driven off the land with nowhere to go because we are the most economical corn producers in the world.   They will skew the labor market for decades.
If you look at the legislative battles over both the NAFTA and the GATT -- or the recent dispute over granting most favored nation status to [Red China] -- you can see how controversial the idea of taking deliberate step to raise workers' standards worldwide is.   The multi-nationals fought so hard to keep workers' rights out of the NAFTA and the GATT because countries that allow their workers to organize aren't as cheap as those which don't.   The same is true for environmental standards which we also need to establish.   Countries that enforce environmental laws instead of allowing helter-skelter use and disposal of toxic chemicals increase the cost of doing business -- and leave their workers with the energy to demand better salaries.
Just as we were once told that our society would demand more engineers and scientists to function, we are now being told that high-paying, high-skill jobs for everyone are the foregone result of free trade, and we must prepare for it.   It is not true.   We must say that loud and clear so we can take the first step toward changing the reality.
As AAES' Dick Ellis said in his report "At the Crossroads: Crisis and Opportunity for American Engineers in the 1990s", if we do not create prosperity for the rest of the world, there will be no room for our own prosperity.   The policy-makers need to hear that from you.

Kirk Ladendorf _Austin American-Statesman_ pg A1
H-1B Disputes

David Goodstein _California Institute of Technology_/_NCAR 48 Symposium_/_Scientific American_
The Big Crunch:
"The period 1950-1970 was a true golden age for American science.   Young Ph.D's could choose among excellent jobs, and anyone with a decent scientific idea could be sure of getting funds to pursue it...   But now, in the 1990s, the situation has changed dramatically...   It didn't take long for American students to catch on to what was happening."

1994 October
David R. Kaspersin _Dynamic Recording_
The Down-Sizing and Demoralizing of the American Work-Force

"There are no bad books any more than there are ugly women." --- Anatole France (quoted in Richard Lederer 1991 _The Miracle of Language_ pg 167)

_CPU_/_Computer Professionals for Social Responsibility_
tens of thousands of STEM workers dumped
"DIGITAL EQUIPMENT lost $2.1G in the fiscal year that ended last July.   Over 9K jobs were cut last spring as part of a massive 'down-sizing' effort, which, when the smoke clears, will mean some 70K DEC jobs will have disappeared since 1989.   Pity the poor executives there.   The pay for the top 5 execs went up 70% last year.   CEO Robert Palmer received stock options that exceeded, on paper at least, his $900K salary.   VP Enrico Pesatori got an 18% raise.   The execs who lost jobs did okay too: sales head Edward Luciente got a $630K settlement; consulting chief Gresham Brebach Jr. walked with $500K. (Business Week 1994/10/03).   And over at Borland, even though the company lost $370M in the fiscal year that ended last March, CEO Philippe Kahn received favorably priced options to purchase 1M shares. (Business Week, 1994/09/12)
JOBS: BELL ATLANTIC announced in August that it was taking a $150M charge for reducing its workforce by 5,500 over the next 3 years as it consolidates offices that handle billing, maintenance and other functions.   According to the Wall Street Journal piece, 'all seven Bells are looking to cut costs and work forces...' (1994/08/15).
HUGHES ELECTRONICS, a GM unit, will layoff 4,400 workers through 1995, or 10% of its workforce. (USA Today, 1994/09/18).
NOVELL, as expected, announced in August that it would lay off 1,750 workers.   That's 17% of the combined workforce of Novell and Wordperfect. (USA Today, 1994/08/25).   On the heels of its takeover of Aldus, Adobe announced it was cutting the work-force of the combined operation 20%, or some 400 jobs.
QUARTERDECK reported in August it was cutting 25% of its work-force (55 employees) (WSJ, 1994/08/19).
And this from our European correspondent: SEL, the German Branch of the Telecom Goliath Alcatel will reduce its workforce by more then *5K* people in the next months.   Restructuring activities in 1993 and 1994 have already dropped the company's work-force below 20K.   From 1992 until now Siemens-Nixdorf had reduced its work-force from 48K to 39,200.   Till the end of this year, 2K more Siemens-Nixdorf employees will lose their jobs...
EXPORTING WHITE-COLLAR JOBS: L.A. Times columnist Michael Schrage suggests that successful implementation of the Global Information Infrastructure may result in the exporting of information-intensive jobs to less expensive labor markets -- sort of white-collar maquiladoras.   For instance, Motorola has moved its Iridium project's software production over-seas to India where Bangalore is already the second-largest software producing area after Silicon Valley. (Telecommunications Policy Review 1994/09/25).
NOT ENOUGH WOMEN AND NOT ENOUGH PROGRAMMERS: An executive of the Software Human Resources Council in Ottawa says that 'women are definitely under-represented at all levels, in virtually all jobs' in the information technology field.   He also says that Canada's computer industry is short about 4K software professionals, adding that the reason for the shortage is that development departments are sweat-shops. (Toronto Globe & Mail 1994/10/18)"

1994 November
top 500 fastest super computers LinPack bench-mark

"It is with words as with sun-beams.   The more they are condensed, the deeper they burn." --- Robert Southey (quoted in Richard Lederer 1991 _The Miracle of Language_ pg 238)






Sharon Begley, Lucy Shackelford & Adam Rogers _NewsWeek_
Glut of Scientists: No PhDs Need Apply











E.B. Baatz _CIO_
Down-Sizing Is Tough On Everyone
"Firings, lay-offs and reductions in force -- terms that reflect anguished cuts businesses make in times of financial stress -- have been replaced by down-sizing, re-engineering and right-sizing -- less threatening words that suggest the continual adjustments businesses make in order to maximize corporate health.   But whether employees are down-sized or fired, laid off or re-engineered out of a job, their pain remains the same...   Economists tell us that the 1991 recession hurt the working population as much as the Great Depression...   Big corporations announced over 615K job cuts in 1993, says John A. Challenger, an out-placement consultant with Challenger, Gray & Christmas Inc. based in Chicago.   In the first 9 months of 1994, another 418K jobs fell beneath the down-sizing ax."

1994 December
Murray Rothbard
The Case Against the Fed

_The Standish Group International Inc._
CHAOS Report on IT Project Success & Failure

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