Financial Times - September 4, 2000
Booming US economy sees return of job security By Robert Taylor, Employment Editor
The full-time permanent job is back again in the booming US labour market with a decline in the proportion of flexible workers in temporary or part-time jobs - thanks to the return of full employment since the mid 1990s which has strengthened workers' bargaining power.
This key finding in the latest biennial study of the state of working America, published this week by the Washington-based independent think-tank, the Economic Policy Institute, suggests a dramatic shift is taking place away from flexible employment and towards the revival of regular work.
The report also reveals that the growth in e-commerce and information technology has so far not brought any significant increase in jobs. Only 7.5 per cent of all new jobs created in the 1990s came in the IT sector. Last year a mere 2.0 per cent of US workers were employed in IT compared with 1.3 per cent in 1989.
"The long-term rise in job instability and job insecurity, which continued well into the current economic recovery, finally abated at the end of the last decade," claims the report. "Even the share of workers in nonstandard - often substandard - work arrangements such as temporary work and part-time work has declined as opportunities for regular full-time employment have grown."
The study, which remains the most comprehensive independent analysis of the US labour market, suggests the situation has changed since 1995 with the prolonged decline in registered unemployment to under 5.5 per cent for more than four years.
The percentage of workers in regular part-time jobs fell from 16.5 per cent of the labour force in 1995 to 15.5 per cent last year. The proportion of "involuntary" part-time workers declined to 2.6 per cent last year - down from 3.7 per cent four years earlier.
The number of those employed through temporary help agencies declined over the same period from 1.0 per cent to 0.9 per cent and workers employed on call from 1.7 per cent to 1.5 per cent. Those classified as independent contractors dropped from 6.7 per cent to 6.3 per cent. The proportion of workers doing more than one job dropped from 6.2 per cent to 5.8 per cent.
The proportion of US employees covered by non-standard jobs fell between 1995 and 1999 from 26.4 per cent to 24.8 per cent of the total workforce while those employed in regular full-time work increased from 73.6 per cent to 75.1 per cent.
"Persistent low unemployment has allowed workers to move from substandard jobs - temporary, part-time, or without benefits - to better, more regular jobs," says the report. At the same time low-wage workers and low income families have benefited the most, reversing nearly 20 years of declining real incomes.
The study also reveals income inequality has narrowed between the middle and lower income groups although those on the highest incomes have continued to pull away. "The turnround from widespread wage decline between 1979 and 1995 to widespread wage growth since is a significant new development for working Americans," says the report. "After more than 15 years of stagnation and decline, inflation-adjusted wages began to rise in 1995".
It also shows that 5.4 per cent of black and Hispanic men have seen their pay move above the poverty level with a similar shift of 4.3 per cent for women over the 1995-1999 period.
Other "remarkable" changes in the US labour market indicate a substantial improvement since the mid-1990s. Labour productivity - the value of goods and services that an average worker produces per hour of work - grew an annual rate of 2.5 per cent since 1995, far above the 1.4 per cent annual improvement experienced from the mid-1970s to mid-1990s.
The report believes persistently low unemployment has played the "key role" in the " recent and dramatic improvements in the labour market" because it has strengthened workers' bargaining power. "When unemployment is low, workers can more easily press for higher pay, better benefits and improved working conditions because employers cannot easily replace dissatisfied workers with less demanding ones from the pool of the unemployed," says the report.
"When unemployment remains low for a prolonged period, the work environment changes. Workers feel more and more empowered and employers become more and more sensitive to workplace issues that can effect recruitment and retention of workers," it adds.