Greenspan Says Worker Insecurity Is 'Likely to Remain Intense'
By Noam Neusner
Washington, July 11 (Bloomberg) -- Rapid technological change and job insecurity will continue to force workers to seek out training to maintain their job security, even as unemployment holds close to a 30-year low, said Alan Greenspan, chairman of the Federal Reserve.
"One less welcome byproduct of rapid economic and technological change, and the necessary heightened level of potential job dismissal that goes with it, is the evident insecurity felt by many workers despite the tightest labor markets in decades," Greenspan said in the text of remarks to the National Governors' Association conference in State College, Pennsylvania.
Greenspan's comments suggest worker demands for higher wages are being moderated by the fear of being laid off amid "job skill obsolescence." That would mean there's less inflationary pressure that the U.S. central bank would choose to address by raising interest rates even as the U.S. unemployment rate, at 4 percent, is close to its 30-year low.
Workers will seek out training and education to maintain their marketable skills in the face of ongoing technological change. That's showing up in "pressure on our education and training systems to prepare and adapt workers to effectively run the new technologies," Greenspan said.
"These pressures are likely to remain intense, even though they may wax and wane, because I see nothing to suggest that the trends toward a greater conceptual content of our nation's output and thus, toward increased demand for conceptual skills in our workforce, will end," he said.
Greenspan told the governors to support teachers, schools and training centers to cope with this trend, and urged them to prepare those institutions to be centers of lifelong learning.
"It is not enough to create a job market that has enabled those with few skills to finally grasp the first rung of the ladder to achievement," he said. "We must ensure that our whole population receives an education that will allow full and continuing participation in this dynamic period of American economic history."
Greenspan's speech echoes some of the same trends he's been addressing for more than a year: Technological change is generating worker productivity gains that have helped take the economy to new levels. In addition, he has identified labor force flexibility -- the ability of U.S. companies to fire workers without fear of significant legal or cultural disapproval.
"Because our costs of dismissing workers are lower, the potential costs of hiring and the risks associated with expanding employment are less" than in Europe and Japan, Greenspan said.
Greenspan said sees no sign that productivity gains are emding. However, it will take a recession to prove how must recent gains reflect "endeavors on the part of our business community to stretch existing capital and labor resources in ways that are not sustainable over the longer run."
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Carl
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