Many Companies Are Forced to Dip Deeper Into Labor Pool (fwd)

Stephen E Philion philion at
Sun Mar 26 13:06:36 PST 2000

NY Times: March 26, 2000

Many Companies Are Forced to Dip Deeper Into Labor Pool


K ANSAS CITY, Mo. -- Unable to find enough workers in the booming

economy, American corporations are trying to expand the labor pool.

Until recently, employers had met their labor needs by hiring

people who were already employed or at least wanted to work. But as

this pool shrinks, they are increasingly recruiting from among the

36 million working-age people in the United States who had not

sought a job, or even thought about taking one.

The gender gap, the difference between a candidate's votes from men

and his votes from women, in presidential elections since 1980.


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1980, 1984 and 1988.


Conrad Bell is one of these new workers. Mr. Bell, a college

junior, did not need a job. Living at home, he had enough pocket

money, and the first payments on his school loans were still in the

future. But when a notice went up on a school bulletin board that H

& R Block was hiring students skilled in computers to trouble-shoot

problems called in from Block offices around the country, Mr. Bell

applied and got one of the jobs. "Most of my friends now work," he


The company has gone out of its way to accommodate the 23-year-old

student, juggling schedules so that he can carry four courses at

the DeVry Institute of Technology and still work 25 hours a week.

Between semesters, he worked on Tuesdays, then switched to Mondays

to attend Tuesday classes. Nearly 200 other students hired for the

tax season get similar flexible treatment at Block's new technical

center here.

In addition to students like Mr. Bell, companies are stepping up

recruiting of the urban poor, retirees, housewives, men and women

mustering out of military service, the handicapped, women coming

off welfare and illegal immigrants not already counted in the labor

force. People with jobs are being recruited to moonlight in second

jobs, and part-timers are adding hours more easily than in the

past. To get workers, some companies even relocate to pockets of

relatively high unemployment.

The recruiting poster and the promise of flexible hours were what

landed Mr. Bell despite his mother's resistance. "She does not want

me to work while I'm in school," he said. Aside from flexible

hours, companies are offering subsidized transportation, child

care, store discounts, free meals, family outings, tuition

subsidies, and, in one case here, an $80,000 softball field --

everything, in sum, but significantly higher pay.

"We really are in uncharted territory," said Lawrence Katz, a

Harvard University labor economist. "The last time we had such

tight labor markets, in the 1960's, the baby boomers were beginning

to take jobs, and they fed the labor pool. We don't have them

today, and we really don't know how many people we can draw."

The economy may ride, or fall, on the the answer.

Alan Greenspan, chairman of the Federal Reserve, argues that the

pool of people still available to take jobs has dwindled to the

point that employers will have to pay more in wages to compete for

workers and then will push up prices to cover the higher labor

costs. Citing this inflationary danger as one reason for their

actions, the Fed's policy makers have moved interest rates up a

quarter percentage point five times since last June to slow the

economy, with the latest increase coming last Tuesday.

But Mr. Greenspan's estimate of the number of people still

available for jobs relies on the Labor Department's monthly

employment surveys, which do not count as available the people who

say they are not interested in working. Many of these people are

now being recruited, including Mr. Bell, who was busy being a

student until he saw the H & R Block poster and popped into the

labor force. In addition, the Fed chairman's concerns about

inflationary labor shortages do not reflect the extent to which

workers are settling for intangible benefits, rather than higher


Certainly inflationary wage increases are not evident in national

wage statistics or in the Kansas City metropolitan area, where the

unemployment rate of 3.2 percent is nearly a percentage point less

than the nation's 4.1 percent and employers are offering all the

new lures, short of big raises.

That is especially the case at Block's recently opened technology

center. A quarter of the 800 people working there in the tax season

are students like Mr. Bell, who is earning $11.54 an hour, barely

up from last year's rate. Another 200 are low-skilled customer

call-center operators, some of whom commute by municipal bus from

an impoverished neighborhood nearby. H & R Block has put the new

center, and its jobs, near enough for the operators to get to a

job, one that pays $8 to $9 an hour, good pay in their world.

"We have not been pressured to raise wages because of the labor

shortage," said Frank L. Salizzoni, the company's chief executive.

Even some officials in the Clinton administration, despite its

hands-off policy vis-à-vis the Federal Reserve, are challenging the

Fed's view that an inflationary labor shortage is developing.

Martin Bailey, chairman of the president's Council of Economic

Advisers, said, "We don't see wage pressure coming from the labor

market at this time." More bluntly, the labor secretary, Alexis M.

Herman, declared in a recent interview: "I tell everybody Alan

Greenspan is a wise man, and I don't comment on Fed policy. But

this is a balanced economy that can continue to perform at a very

solid and steady pace."

Part of the difference lies in how the experts tally the number of

available workers. Ms. Herman counts at least 13 million people

across the nation available for jobs, including 3 million part-time

workers who have told surveyors from the Bureau of Labor Statistics

that they would take more hours if they could get them.

Mr. Greenspan's more conservative estimate of 10 million people

available for jobs leaves out the part-timers. He focuses on the

nearly six million people who are listed as officially unemployed

because they are actively looking for work, as well as four million

others who tell the bureau's surveyors that they have not looked

for work lately but would like a job or might like one in the right


Mr. Greenspan's estimate of 10 million would-be workers has

declined from 13 million in January 1996. But both his estimate and

Ms. Herman's miss those who are not thinking about working but can

be lured into jobs.

The great majority of them are the 36.3 million civilians between

16 and 64 who are busy in other activities and see themselves as

not available for work, unless, like Mr. Bell, a company's lures

change their minds.

In Kansas City's poorest neighborhoods, the statistics miss

hundreds of families "who don't respond to surveyors or answer the

door or any of that stuff, but want jobs," said Clyde McQueen,

president of the Full Employment Council.

The council is a publicly subsidized organization that tries to get

people in poor neighborhoods into jobs, mainly by training them and

then paying for transportation, including bus fare to H & R Block's

new center and similar job sites. "The first thing people here want

to know," Mr. McQueen said, "is what is the shift time, does the

bus get there and what happens if I have an emergency at home."

Nowhere in Kansas City is the sweep for new workers more on display

than at Station Casinos, a gaudy, Las Vegas-style hotel and casino

complex that is the biggest of the four casinos along the Missouri


The casinos opened in 1997, and almost overnight 5,000 new jobs

appeared in greater Kansas City, a considerable impact on a work

force that then numbered 916,000 and now numbers more than 965,000.

The casinos initially bid up wages, offering low-skilled workers

$7.50 to $9 an hour. That drained people from other employers,

including customer call- center operators at Sprint, then earning

less than $7 an hour.

"We lost a lot of folks to the casino boats," said Mary M. Hogan,

manager of Sprint's call center in suburban Lenexa, Kan., "but it

is not an issue now."

Sprint has raised its starting pay to $8.25 an hour. It has also

eased the wage pressure by employing more college students and

offering them nonwage benefits like flexible part-time schedules

and tuition subsidies of $5,250 a year if they stay at least that

long. Station Casinos, employing 2,120 people, has also

soft-pedaled wage increases.

"More and more we compete on the whole package," said John V.

Finamore, president of the casino.

Apart from health insurance, that package includes a child care

center, 10 percent discounts at local merchants, free meals once a

month served by executives, gifts at Christmas, a talent show for

employees and their families and, most recently, the softball


"These are soft labor costs that are much more easily absorbed than

fixed wage increases and can be shed more easily," Mr. Finamore


To find workers, Station Casinos uses specialized employment

agencies that recruit immigrants from Latin America, Africa,

Russia, Vietnam, Cambodia and elsewhere. Ninety employees came out

of retirement and 270 others work at the casino as a second job,

often as weekend blackjack dealers earning $15 an hour, most of it

in tips.

For a while, the casino's vans brought people from poor

neighborhoods to work in the hotel, but now a municipal bus --

known as the Casino Cruiser -- makes the run every half-hour.

"You cannot compete on wages," Mr. Finamore said. "All you do is

raise the bar across the city."

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