Going to work may never be the same again.
What is now being referred to as: “The 2nd Great Recession” has reshaped the American workplace and work force in ways that will last years, if not longer.
The work force is graying as college graduates can’t find jobs, young workers get laid off and older workers delay retirement. People in white-collar jobs are feeling increasingly vulnerable to economic downturns, an insecurity that blue-collar workers have known for years.
The average American worker, across all economic levels and disciplines will need employment through age seventy – the age of sixty as a retirement target is no longer the standard.
Perhaps the most enduring change is the permanent loss of millions of jobs across the manufacturing, services and retail sectors.
For textile factories and service sector employers like customer service call centers, the next wave of significant job creation will occur abroad, where labor is cheaper. That trend was under way before the recession and will accelerate, according to labor economists. Americans who would have held these jobs will have to retrain themselves for other jobs, such as assembling microchips and medical devices.
For retailers, growth will be limited by more cautious consumer spending, in part because the days of easy credit are over (except for large companies). That means fewer retail clerks milling about stores around the holidays, and fewer merchandise buyers, and other staff jobs at headquarters.
“We’re in a very deep jobs crisis, and we’re not coming out of it any time soon,” says William George, professor of management at Harvard Business School. “It’s too glib to say that jobs are a lagging indicator” - however, that hiring will return to normal once the economy does, he says.
The national unemployment rate, now 8.3 percent, is forecast to rise above 10 percent before the end of the year and isn’t expected to return to a “normal” level, which is typically near 5 percent until 2014. “Although it should always be noted that most layoff and unemployment figures are related to blue collar workforce. Similar statistics for white collar workers is actually quite rare”, says Brian Patrick Cork of Atlanta-based brian cork Human Capital.
Of course, layoffs aren’t the only thing transforming the workplace.
The need to cut costs deeply and quickly has forced businesses to get creative – not just go the easy route of layoffs. “It’s the central responsibility of managers these days”, says Alec Levenson, a research specialist with the Center for Effective Organizations at the University of Southern California.
Through furloughs, fewer shifts and other cutbacks, employers have reduced the average work week to a near-record low of 33.1 hours.
Another trend is the hiring of consultants for what used to be salaried positions. “The reduction of accounting burdens represented by benefits alone is wildly significant” , adds Cork.
About 400 workers at Nebraska meatpacker Premium Protein Products were told this week they will remain on unpaid furloughs for at least another two weeks, having been on unpaid leave since June. States also have joined in, with Utah State University asking employees to take a furlough next summer after taking a weeklong furlough last spring.
Reducing hours of all workers instead of eliminating jobs of a few is a strategy that had slowly been gaining favor in recent years because it saved companies money in several ways: It reduced the need for severance packages, as well as the cost to rehire and train these new workers once the economy rebounded.
“The practice became much more widespread during last year’s financial crisis and is likely to be repeated in future recessions”, says Peter Cappelli, professor of management at the University of Pennsylvania’s Wharton School of Business.
However, workers aren’t necessarily complaining.
Bonnie Gerard, a business developer with the Knowledge Institute consulting firm in Exeter, N.H., has seen her work week cut from five days to four. That’s made it harder to keep up with paying bills. But it beats losing the job. And, she acknowledges, it’s made her more efficient.
“It keeps you more focused on the days you’re here,” she says. “You’ve still got the same goals, whether you’re here four days or five days, and you’ve got to do the work.”
“No matter how creative companies get at cost-cutting, or how strong the recovery is, millions of jobs will never come back“, George, the Harvard professor, says.
Over the past year, the U.S. non-farm payroll has shrunk to about 131 million people, a decline of more than 5.8 million auto workers, stock brokers, bankers, landscapers, carpenters, truckers, journalists, mechanics, cooks, maids and more. More than 1.6 million manufacturing jobs have disappeared in the last 12 months, along with 1 million construction jobs and 435,000 financial sector jobs.
In low-skilled manufacturing, the U.S. can’t compete with countries like China, India or Mexico where labor costs are a fraction of those here. Likewise, cost pressures will continue to push information technology jobs overseas.
American workers will need to be retrained in the coming years to have a shot at the jobs that will be created. George says these jobs will require specialized knowledge, such as how to install energy-saving systems in buildings.
Community colleges and vocational schools that train people for such jobs could become as important as four-year universities.
Plenty of today’s unemployed could benefit from such training.
“There are a lot of good people who are really stuck,’‘ says John Challenger, chief executive of the outplacement firm Challenger, Gray & Christmas. “They’ve been out of work for a long time, and that’s made it all the harder for them to compete because they have to explain why they have not been chosen.”
A record 4.98 million people had been out of work 27 weeks or longer in April, in part because this recession, which would appear to have started in December 2007, has stretched longer than any since World War II.
That has forced a record number of people into part-time work. People forced to work part-time jobs because they can’t get full-time positions has jumped 54 percent from a year ago to 9 million.
For those who still have a full-time job, flexibility is key.
At a factory that makes foundry equipment in suburban Birmingham, teams that once did specific jobs – welding, grinding castings, fitting parts, assembling machines – have had to learn multiple skills.
The shop, which once had 150 workers, now employs only 30.
“The ones we have now have to do it all,’‘ foreman Gerry Peoples says. That includes sweeping the floors since the janitors were laid off. “This is probably going to linger for years,” says Peoples, who has survived two rounds of cuts and is down to a 32-hour work week.
About 40 percent of workers are now over 55 or older, the highest level since it was 40.8 percent in 1961, according to a Pew Research Center survey released this summer. More workers are delaying retirement for economic and personal reasons, locking up jobs that are sought by younger workers entering the work force.
Years ago, Jerry Bannister, 67, anticipated a more leisurely routine at his age. He oversees 10 maintenance workers at the Mays Chapel Ridge retirement community and has no plan to quit soon. He took the job seven years ago, after working 38 years at a Bethlehem Steel plant.
His Social Security and retirement benefits might be enough to live on, but he couldn’t quit without making big changes to his lifestyle, such as cutting out vacations and golf.
“When I get to a point where I say, ‘You know, I’m as old as the residents,’ then it’s time to step down,” Bannister says.
Fewer workers these days feel as confident as Bannister does about controlling their destiny.
“Job security has diminished after every recession since the 1970s”, says David Lipsky, professor at Cornell University’s School of Industrial and Labor Relations.
As workers fought to get their jobs back, unions dropped long-held contract provisions like cost-of-living adjustments and job-security clauses, he says. That contributed to declining union membership, further weakening workers’ bargaining position with employers.
Among white-collar workers, job security began to disappear in the recession of the early 1990s as technology allowed jobs to be shipped abroad. It may be gone now.
Over the past year, the unemployment rate jumped 64 percent for managers and professionals like lawyers, doctors and fund managers. That compares with a 56 percent increase in overall unemployment, according to Labor Department data.
Among people with a bachelor’s degree or higher, the unemployment rate is still low at 4.7 percent, but it’s up from 2.7 percent a year ago.
For some younger white-collar workers, job insecurity is so high that just hanging on has replaced asking for a raise or a promotion.
Rusty Meador, 35, a development manager at Plantation Building Corp., a construction company in Wilmington, N.C., walks past empty desks daily. He once worked in the office as a general manager and had a team of project leaders who reported to him from the field. Now he’s back on job sites, doing the work of laid-off colleagues – without a word of complaint. Even if the economy turns around, the memory of this recession will stick with him.
“You’re so grateful to have a job,’‘ he says.
Heather Penman, Researcher at brian cork Human Capital
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