The fear of being fired is now so great that it has obscured the powerful economic logic that favors stable jobs. Turnover is costly. Experienced workers know a company’s products, practices and customers. New workers have to be trained; sometimes they don’t work out or fit in. After World War II, social pressures–reflecting union demands for job security and a sense that business should be “fair”–reinforced this economic logic. Hundreds of companies promised, formally or informally, stable jobs for their workers.
It’s true that changed competitive conditions (from new technologies, imports, mergers, new rivals) have now shredded this psychic contract, and the effect has been amplified by a generational upheaval among executives. “There was this Depression generation [of managers] for whom job security was a paramount benefit,” because they had lived through the 1950s (average unemployment: 18 percent), says economic historian Sanford Jacoby of UCLA. But the new cost-cutting corporate mind-set hasn’t completely obliterated the old logic for stable jobs.
The result is that job insecurity outpaces actual job loss. To some extent, the new anxiety is a class phenomenon. There’s always been insecurity among blue-collar workers, the unskilled and the young. But now it’s spread to managers, professionals and upper-income workers who always felt safe- and who are highly vocal about their new vulnerability. It’s important to separate facts from fears.
Here is some of what we know from studies and surveys:
Q. How much has job security dropped?
A. Probably about 10 to 20 percent for men. One study by Princeton economist Henry Farber found that the typical male worker aged 45 to 54 had been with his existing employer almost 12 years in 1993, down from about 13 years in 1985. Another study, done by the National Commission for Employment Policy, estimated that 52 percent of men 24 to 58 had “strong job tenure” in the 1980s, down from 67 percent in the 1970s. (It defined strong job tenure as having changed jobs no more than once in a decade.) But for women, job tenure has increased. For a typical 45- to 54-year-old woman, it was about eight years in 1995, up a year from 1985.
Q. Why haven’t women suffered the same lose as men?
A. They get fired, too, but as more women pursue careers, their average job tenure rises. That offsets more frequent layoffs.
Q. How much have firings increased?
A. Most evidence points to a slow, steady rise. As layoffs have multiplied, they’ve become more routine and respectable among managers. For example, a Labor Department study found that about 4 percent of workers who had been with the same company at least three years were fired in the two-year period 1990-91–just about the same as in 1981-82. But the economy then was in the deepest recession since World War II, while in the early 1990s it was recovering from a fairly mild slump. The consulting company Challenger, Gray & Christmas in Chicago finds that announced corporate layoffs nave dropped only slightly despite the economy’s continued expansion. There were 615,000 announced layoffs in 1998, 516,000 in 1994 and 440,000 in 1995.
Q. If firings are up, why hasn’t job stability dropped more?
A. Remember that these firings affected only a tiny part of the 125 million-person work force in 1995.
Q. What happens to fired workers?
A. About 75 percent get new jobs, reports the Labor Department. An additional 14 percent, concentrated among workers older than 55, retire. But in the most recent survey, about 11 percent were still unemployed two years after being fired. Unemployment rates were even higher among blacks (18 percent) and Hispanics (19 percent).
Q. But don’t the new jobs pay less than the old?
A. Typically, yes. Workers loose seniority, face a harsh hiring market and sacrifice skills that applied to their old companies. The Labor Department reports that the median weekly wage for rehired workers is 8 percent lower than on their last job two years earlier. Losses are larger (15 percent) for workers over 45 and less for younger workers. Compared with what they might have earned had their old jobs survived, workers may suffer more. Economist Louis Jacobson of the consulting firm Westat estimates that career workers (six years or more with the same company) may ultimately lose 25 percent. A study by economist Ann Huff Stevens of Rutgers University estimates the loss at 9 percent for all displaced workers.
These statistics are cold comfort to anyone who’s lost a job, often through no personal fault. They don’t erase the sense of betrayal or ease the pain of change. But the statistics do provide perspective. Job loss is not as bad as the headlines about it. And our economy still generates a steady stream of new jobs (26 million since 1980) to replace those that are lost. If it didn’t, that would be a much larger problem. Indeed, unemployment jumps in recessions not simply because more businesses fire people but because new hiring collapses. Our all-or-nothing way of thinking can’t grasp the ambiguity. We believe that all good jobs should be lifetime jobs, and if they aren’t, everyone’s a temp. Neither stereotype is true.
In a competitive economy, companies that can’t control their costs won’t survive; but neither will those that are so callous that they demoralize their workers and can’t draw good new workers. The tension is ongoing and reflects a deeper dilemma. An economy that’s flexible-that produces higher efficiencies, new technologies and rising living standards- can’t provide absolute security. It never has and, quite probably, never will.
