Economic News 1999 August

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updated: 2018-03-30
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1998 August


Carol Kleiman _Chicago Tribune_ section 6 pg 1
Many jobs pay less than "livable wage"
"Yes, unemployment is at a record low, & 'many politicians boast that lots of jobs mean a strong economy', according to a recent report by the National Priorities Project & Jobs with Justice, both non-profit organizations.   But the groups' study of state employment agencies & Bureau of Labor Statistics data finds that many of the fastest growing jobs pay less than $33,774 annually, the livable wage for a family of 4.   The study found that 76% of the jobs in Illinois with the most growth are in the low-wage category.   'In addition, many of these jobs are part time or temporary & few provide health insurance or other benefits.', the report states.   They range from waiters & waitresses with average wages of $11,086 annually (including tips) to nursing aides & orderlies at $15,704.   Other low-wage jobs: teachers aides, food counter workers, cashiers, retail sales-persons, home health aides, packagers, janitors & guards.   For a copy of the study, call Jobs with Justice at 312-226-6340... The Society for Human Resource Management of Alexandria, VA... 400 human resource professionals surveyed... And, reports the study, published in a news-letter of the AARP, 77% said older workers are more reliable & 40% said they are more motivated."

_Chicago Tribune_ section 6 pg 1
WorkPlace SnapShot
"According to a Labor Department survey, there were fewer persons at work part time in 1999 June than there were a year earlier."
slow work2.18M2.09M-4.2%
only workavailable1.25M1.01M-18.8%
non econ18.62M18.67M+0.2%"





Gene Nelson
"The 1990 H-1B Visa legislation, like the 1976 'Eilberg Amendment' cited as precedent, is an example of 'special interest politics' at its worst.   The common objective for both the H-1B Visa program and the Eilberg Amendment was to reduce employer wage and benefit expenditures for highly skilled labor.   Almost all 'high tech' workers have failed to see increases in real compensation over the decade of the 1990s."


engineer/programmer glut
"'Since 1995, it has become increasingly difficult for us to find US candidates for positions requiring degrees in electrical, mechanical, industrial & software engineering.', said Crystal Neiswonger, an immigration specialist with aerospace technology firm TRW Inc. of Cleveland, OH.   'US universities lack American-born students who choose these majors, & students who pursue advanced degrees in these areas.'...   With 'hundreds' of highly specialized jobs remaining open at TRW, the company hired just 36 workers through the program in 1998 & 28 through it so far this year, Neiswonger said.   'We use head-hunters, open houses & recruitment fairs to attract potential new hires', but still have difficulty locating skilled engineers, she said."

Paul J. Kostek of IEEE
Testimony on the H-1B Temporary Professional Worker Visa Program
(citing Carolyn Veneri of BLS 1999 March _Monthly Labor Review_)
"Although unemployment rates for core IT occupations, including computer engineers and scientists, systems analysts and programmers, have been consistently lower than the national rates (for other occupations) over the 1992–1997 period, none exhibited higher than average employment growth or higher than average growth in wages when compared with all other professional specialty occupations."


1999-08-06 14:33PDT (17:33EDT) (21:33GMT)
Terry Costlow & George Leopold _EE Times_/_The Work Circuit_
High-tech visas back on political agenda
"GOP law-makers are backing a series of initiatives designed to bring the nation's high-tech industry into the Republican fold.   The campaign agenda also includes a 10-year extension of the R&D tax credit, which expired June 30...   Others say the graduate-degree provision would be easy to skirt.   'In practice, an unlimited quota for people with graduate degrees means unlimited numbers of H-1B hires.', said Norm Matloff, a computer science professor at the University of California at Davis.   'A potential H-1B [holder] will go out and get a quickie master's degree, so there will be no limit on the number of people coming in.'...   'Vacancies do not mean shortages, job vacancies occur all the time as turn-over takes place.', said Bob Rivers, publisher of the Engineering Manpower Newsletter (Orange, MA).   'There are 2.1M engineers, and the average turn-over rate is every 7 years, which means 300K engineers change jobs every year.'   Added Rivers, 'If you add in the 2.5% of the labor force that retires in a typical year, you've got 352K vacancies without any expansion at all.   Many of those jobs will be open for 6 months, so we can expect to see a vacancy rate of over 150K almost all the time.'"

1999-08-06 16:18PDT (19:18EDT) (23:18GMT)
Jobs & wages boomed in July
"The Labor Department said the economy created 310K jobs outside the farm sector in July, far more than the 199,400 jobs economists had expected.   And, in an even more troubling development, hourly wages grew a surprising 0.5% to $13.29 -- the biggest jump in 6 months.   Overall, the jobless rate held steady at 4.3%."



_Tech Law Journal_
House Immigration SubCommittee Examines H-1B Visas


1999-08-09 09:21PDT (12:21EDT) (16:21GMT)
Lay-off plans increased in July
"US businesses announced plans to cut 54,709 jobs last month, 7.8% more than the 50,774 cuts announced in 1998 July, according to a monthly survey conducted by Challenger, Gray & Christmas, an out-placement specialist firm.   At the same time, July's announced cuts were 14% lower than the 63,397 announced in June, the Chicago-based firm said.   Since January, employers have announced cuts of 438,257 jobs, a 36% increase from the first 7 months of last year, the report said. "











Jack McCarthy _IDG_/_NetWork World Fusion_
Senator McCain to call for increase in numbers of H-1B visas
"U.S. Senator John McCain yesterday said he would next month introduce legislation to increase the limit of temporary visas for highly skilled foreign workers to 175K from the 115K visas currently allowed...   'We are going to need 2.6M extra jobs in high-tech industries by the year 2000.', McCain says...   Current policy has resulted in an artificial 'skills shortage' for high-tech companies, he says [while the truth is that there is an artificially created skills glut]."



William J. Holstein _US News & World Report_
Are raises for production workers bad for America?
"Larry Kudlow, chief economist at Schroders in New York, points out that there are still nearly 6M American adults who are unemployed...   The sector where workers are truly scarce, however, is information technology, with some 400K jobs reckoned to be open.   [Meanwhile, it has become far more difficult for IT talent to get jobs.]...   The company is also fighting in Washington to allow more foreign engineers and designers to take jobs in the United States on temporary H-1B visas.   In addition, it is using the Internet to hire 28% of its experienced engineers and 17% of its new college graduates, which greatly cuts the cost of recruitment."







Robert Edward Greene _Stockton, CA, Universal Unitarian Church_
Uncle Sam Doesn't Need You
"Holiday lay-offs have become the norm, reports Kirstin Downey Grimsley in the Washington Post.   Lay-offs in December make sense, say the economists: a company can start the new year off fresh.   Sentiment cannot be allowed to off-set the reality that lay-offs almost inevitably increase stock values.   So 55,237 more Americans were relieved of their jobs, or more accurately of their livelihoods, this last December [actually 103,166], according to a survey by Challenger, Gray & Christmas Inc...   Oh, yes, new jobs are being created.   And some of them are well paid, highly skilled technological jobs.   But the bulk of the new jobs, according to the Bureau of Labor Statistics, are low-skill, low-paying service jobs.   Meantime middle income jobs are just disappearing.   So let's not talk this morning about the unemployment rate.   Let's talk instead about people -- the 7.6M individual human beings who in 1995 July could not find a job.   Let's talk about the 4.4M individuals working part time, but who wanted, and could not find, full time jobs."



Sara Steindorf _Christian Science Monitor_
Where mergers hit hardest
"Merger-related job cuts in 1999 are up 52% over the same period last year, according to a recent report from Challenger, Gray & Christmas Inc., an international out-placement firm.   The financial sector ranks first among all industries in merger cuts.   Of the 49,664 merger-related job cuts announced in 1999, 19,395, or 39%, occurred in financial services, which includes banks, securities firms, mortgage companies, and collection agencies, says the report.   The second-place commodities industry accounted for 9,125, or 18%, of the merger-related cuts.   Industrial goods, aerospace/defense, and insurance following in descending order."

William J. Holstein _US News & World Resport_
Are raises bad for America?
alternate link
"Dell, for example, has opened a factory in job-hungry Tennessee, where it has been flooded with 7K resumes for 700 positions.   Similarly, telecom giant Sprint has opened a call center in downtown Kansas City, hiring mostly former welfare recipients.   It is now rolling that program out in other cities.   To find the right workers at the right price, companies also are relying on new tools such as Internet searches and online job listings at and   Classified ads in newspapers are increasingly available on-line, and many companies list job openings on their Web sites so that a restless worker in, say, San Diego can quickly scout out job openings in New Hampshire and apply on-line...   Moreover, the 'churn' rate in the work force is exceptionally high.   Despite a booming economy, out-placement consultant Challenger, Gray & Christmas says American companies will lay off more than 700K workers this year, the most this decade.   Yet overall unemployment remains at 4.3%.   The implication is that employers are shedding older, more expensive workers and replacing them with new employees or relying on various forms of contingent labor [i.e. bodyshopping].   'Down-sizing is a valve that releases wage inflation steam.', says John Challenger, chief executive of the Chicago-based firm...   Larry Kudlow, chief economist at Schroders in New York, points out that there are still nearly 6M American adults who are unemployed.   Says Kudlow: 'You've got a lot of job resources out there.'   Blue-chip bounty.   The sector where workers are truly scarce, however, is information technology, with some 400K jobs reckoned to be open [with 150K remaining unemployed, and several hundred thousand more under-employed]...   Texas Instruments, the semiconductor company, has 800 jobs it hasn't been able to fill in Dallas.   To find warm bodies, the company pays $1,500 to any employee who recruits a new worker and gives him or her a chance to win a new, fully loaded Ford Explorer that's parked in the lobby at head-quarters.   Even so, a shortage of experienced chip designers has pushed starting salaries up from $55K to about $65K over the past 5 years.   But Roger Coker, TI's director of staffing for the United States, says the company is using every trick in the book to fight labor cost creep.   It has started offering stock options to more employees, making them available not just to vice presidents but to all managers.   That eases some of the pressure for increased salaries.   The company is also fighting in Washington to allow more foreign engineers and designers to take jobs in the United States on temporary H-1B visas.   In addition, it is using the Internet to hire 28% of its experienced engineers and 17% of its new college graduates, which greatly cuts the cost of recruitment.   Just as Sprint and others are tapping new urban workers, TI is scouring smaller rural communities for talent.   When Coker got wind that a factory was closing in Wichita Falls, Texas, his recruiters went there and found 13 workers, whom the company relocated to Dallas.   Meanwhile, TI is pushing for major new productivity gains by increasing the size of silicon wafers, for example, which will reduce the cost of each chip cut from the wafer...   The reason high-tech employers have trouble finding people -- even at a time when folks remain unemployed or under-employed -- is the mismatch of jobs and skills.   But employers are attacking the roots of that problem, forming alliances with local educational institutions to create more workers with the right skills.   A recent example is a $70M technology and engineering institute that major employers in Omaha unveiled on August 21.   'It used to be that we would go to recruiting fairs and take what we could get [and then, presumably, train them].' says Bill Fairfield, chief executive of Inacom, a $4G computer services company that helped spawn the institute.   'But today we're trying to shape the students.'"

1999 August
Susan N. Houseman _DoL_
Bodies Shopped
"only 57% of agency temporaries [bodies shopped] are classified as contingent in the 1997 BLS survey...   3.2% of the work-force are direct-hire temporaries...   Collectively, agency temporaries, on-call workers, independent contractors, contract company workers, and direct-hire temporaries comprise 12.5% of the work-force.   It is noteworthy that agency temporaries account for only one percent of total employment in the CPS Supplement, whereas they account for about 2% of employment in the Current Employment Statistics (CES), the Bureau of Labor Statistics' establishment survey.   Data from the National Association of Temporary Services Staffing suggests employment in temporary services is slightly less than that reported in the CES, but is much higher than that reported in the CPS, and it is generally presumed that the CPS understates employment in temporary help agencies."
explosive growth of bodyshopping (graph)
alternate link to graph
"Source: Author's tabulations from the 1997 February CPS Supplement on Contingent and Alternative Work Arrangements."
per cent preferring a real job
"in The Conference Board (1995) survey of members, 34% of companies reported sizable growth in their use of direct-hire temporaries in the preceding 5 years and 24% expected sizable growth in the coming 5 years.   31% reported sizable growth in their use of independent contractors and 28% expected sizable growth in their use of independent contractors in the next 5 years.   Data from BLS Industry Wage Surveys in 1986 and 1987 show growth in contracting out of services in 13 manufacturing industries between 1979 and 1986/1987 (Abraham and Taylor 1996).   In a survey of members of the Bureau of National Affairs, a larger percentage of employers reported an increase than reported a decrease between 1980 and 1985 in their use of direct-hire temporaries, on-call workers, administrative or business support contracts, and production subcontracting relative to regular workers (Abraham 1990).   In the Upjohn Institute employer survey on flexible staffing arrangements, a much larger percentage reported contracting out work previously done in house than reported bringing work back in house since 1990.   Moreover, two-thirds of respondents to the Upjohn Institute survey predicted that organizations in their industry would increase their use of flexible staffing arrangements in the coming 5 years (Houseman 1997)...   Using data from the 1997 February Supplement to the CPS, Table 5 shows the percentage of workers in each work arrangement earning 'low' wages, which are defined as between $4.25 and $5.15 per hour...   Compared with regular full-time workers, a larger fraction of agency temporaries, on-call workers, and direct-hire temporaries earn low wages...   While just 3.6% of regular full-time employees earn low wages, 7.3% of full-time agency temporaries, 6.3% of full-time on-call workers, and 8.6% of full-time direct-hire temporaries earn at or near the minimum wage...   14.2% of agency temporaries are below the poverty level, 12% of on-call & day laborers, 7.7% of independent contractors, 6.7% of contract company workers, 10.9% of other short-term direct hires, 7.5% of other self-employed, as compared with 4.8% of regular employees.   7.5% of agency temps, 4.2% of on-call & day laborers, 3.1% of independent contractors, 4.8% of contract company workers, 4.2% of other short-term direct hires, 2.3% of other self-employed, as compared with 2.7% of regular employees earn between the poverty level and 125% of the poverty level...   Using data on earnings from the 1995 February CPS Supplement, I showed that men and women working as agency temporaries, on-call workers, and direct-hire temporaries earn significantly less than regular full-time workers, even controlling for key worker and job characteristics.   For instance, among men, agencies temporaries earn about 18.8% less, on-call workers earn 5.0% less, and direct-hire temporaries earn 10.3% less than regular full-time men.   Among women, agency temporaries earn 15.8% less, on-call workers earn 9.9% less, and direct-hire temporaries earn 15.7% less.   Regular part-time workers also earn significantly less than regular full-time workers after controlling for worker and job characteristics...   Whereas just 6% of regular full-time workers come from poor or near-poor families, 22% of agency temporaries, 16% of on-call workers, and 17% of direct-hire temporaries are living below or near the poverty line...   NATSS reported that temporary help agencies spent [only] $260M to provide skills training for 2M workers and another $75M for work-place orientation and other 'soft' subjects.   About half of these expenditures are computer related (Stamps 1997)..."
8.2 Savings on Wages and Benefits
"employers are motivated to use flexible staffing arrangements to avoid benefit costs...   in some cases the higher costs associated with turn-over, training, and lower productivity of contingent workers out-weighed the savings from lower wage and benefit costs...   many managers turn to flexible staffing arrangements during periods of down-sizing, in part to avoid head count limits imposed by their corporate office...   Christensen reports that 81% of the companies using direct-hire temporaries, 62% using agency temporaries, and 38% using independent contractors cited the need to avoid head count limits as a reason for using these staffing arrangements.   26% of respondents in the Conference Board survey cited avoiding head count limits as a reason for using contingent workers...   it is believed that many businesses avoid paying unemployment insurance or pay rates that are too low by misclassifying workers as independent contractors or by establishing low experience rates in shell companies before transferring leased or temporary agency employees to their pay-rolls."

1999 August
Robert A. Rivers _Technology Employment_
Increasing Computer Scientist and System Analyst Unemployment

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