TOPICS > Economy

The Jobless Recovery

June 23, 2003 at 12:00 AM EDT
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PAUL SOLMAN: There’s been much talk in this so-called “jobless recovery” of white-collar job loss. In fact, though, this recession, like its predecessors, is still mainly a working class phenomenon. Of the 2.5 million net jobs lost since the recession officially began in march 2001, fully two million of them have been in manufacturing. For a blue-collar worker these days, it seems, even a lunch break can be risky.

ED LANDRY: We went to lunch and our jobs went to China.

PAUL SOLMAN: Ed Landry started as a machinist after military service in the early days of Vietnam.

ED LANDRY: I come out of the service, I went to work where I was working, and last September, they told us that they’ve decided to buy the product in China instead of having it made here in the united states.

PAUL SOLMAN: Reporter: So at age 62, Landry’s back in school at a state-run retraining program outside Hartford, Connecticut. Fellow student Louis de Claybrook lost his factory job making automotive drive shafts more than a year ago. Any hot prospects at the moment?

LOUIS DE CLAYBROOK: No, not at the moment, no.

PAUL SOLMAN: None?

LOUIS DE CLAYBROOK: None. After a year I would say, of being unemployed and having no one say, “sure, come on aboard, we’d love to have you,” you become numb to it.

PAUL SOLMAN: De Claybrook has been turned down often, even by a supermarket.

LOUIS DE CLAYBROOK: I was told that we’d get back to you.

PAUL SOLMAN: Did they?

LOUIS DE CLAYBROOK: No.

PAUL SOLMAN: This is for just A…

LOUIS DE CLAYBROOK: Just a bagger job or whatever they do there. You stand in the… at the end of the aisle and put someone’s groceries in the bag, and stack the shelves when need be.

PAUL SOLMAN: And you couldn’t get that job.

LOUIS DE CLAYBROOK: I couldn’t believe it myself. I couldn’t get the job.

PAUL SOLMAN: Dan Methot used to build aircraft engines at Pratt and Whitney, but…

DAN METHOT: People aren’t flying, companies are filing bankruptcy, they’re laying off thousands of people.

PAUL SOLMAN: How did you feel about it?

DAN METHOT: Nothing I can do about it. Go with the flow. Start over again. It seems to be something of the American way now.

PAUL SOLMAN: Job loss in manufacturing. It has indeed become the American way, because of forces that have been building for decades — like the global migration of labor, which remains inexorable.

ED LANDRY: They’re laying off from the plants in Mexico. So even the ones down in Mexico, they’re looking for cheaper labor. So they’re going to move the plants from Mexico… who knows, they’ll go to China. Who knows, Korea. Formosa. Who knows where they’re going to end up going. Wherever the cheapest labor is.

PAUL SOLMAN: But wherever factory work’s headed next, it isn’t back to the US On the contrary, the exodus has picked up speed due to the high dollar of recent years. Americans found it increasingly cheaper to buy from abroad; foreigners found it increasingly expensive to buy American. No surprise that US factory labor found itself overpriced. Millions of manufacturing jobs have survived, of course. But that’s because American firms have become more productive.

In fact, increased productivity– getting more output from each hour of labor– is in a sense, the point of this story, and may be the key factor in understanding the “joblessness” of “jobless recoveries.” The phrase itself was actually coined in the recovery from the last recession in the early ’90s by economist Nick Perna.

NICHOLAS PERNA: I was writing my weekly newsletter. I’m looking at the numbers and I said, “there’s no job growth. There’s no job growth.” I’m looking for a catchy phrase and “jobless recovery” just popped out.

PAUL SOLMAN: So this recovery looks like that recovery.

NICHOLAS PERNA: Yes, in fact, maybe even a little bit worse. I think by this time after that ’90-’91 recession, jobs were already growing again. So an anemic recovery and pretty decent productivity means no room for job growth.

PAUL SOLMAN: Because?

NICHOLAS PERNA: Well, what happens is that you can produce more with either the same number of people, or if you’re really unlucky in coming out of a recession, you can produce more with fewer people. That’s where we are today. So what we end up with is declining jobs, and now we’re into the second year of decline. This is a very severe jobless recovery.

CARTOON FOOTAGE: (“Meet Joe King” 1949) Hey, what’s that gadget, a television?

CARTOON FOOTAGE: No, it’s a time machine. Just pull that lever.

PAUL SOLMAN: Now, economists are clear: In the long run, high productivity is the greatest thing since the invention of the wheel. In fact, the invention of the wheel was high productivity– getting more out of the same amount of labor. And continually getting more is what’s made us richer, even though productivity, economists remind us, implies that infamous phrase of free- market economics: “Creative destruction.” This is a 1950s depiction.

CARTOON FOOTAGE: (“Meet Joe King” 1949) But look what a new invention did to my grand-pop. For 25 years he knocks his brains out in the wagon-works, and along comes the gas mobile. Need I tell you what happened to grand pop?

PAUL SOLMAN: The cartoon’s narrator, however, provides the economist’s reassurance.

CARTOON FOOTAGE: The history of our country proves that new inventions create thousands of jobs for every one they displace. So it wasn’t long before your grandfather had a better job at more pay for less work.

PAUL SOLMAN: The problem is that in a system of creative destruction, people have to make a transition from what they used to do to the next big thing. Unfortunately, that transition may now be taking longer than it has in decades. The average jobless stint is up to 19 weeks, the longest since 1983. Moreover, many former workers have now dropped out of the labor force entirely having become so discouraged trying to make the transition they’re not even looking for a job any more.

LOUIS DE CLAYBROOK: You see the news, you see people robbing banks, and it’s all related to what I’m talking about: the economy is really bad.

PAUL SOLMAN: Meanwhile, what blue-collar jobs there are have changed so dramatically, workers like Louis de Claybrook must get themselves retooled in CNC, computer numeric control technology, to work at a place like Prototype, for example, on the other side of Hartford, a company that creates molds for parts made of plastic.

PAUL SOLMAN: So when Dustin Hoffman gets told by the guy who takes him around and puts…

ACTOR (“The Graduate” 1967): Oh, you’re the first guy to come up with that one, Paul.

PAUL SOLMAN: Yeah, I know. No, no, no.

ACTOR: I just want to say one word to you, just one word.

ACTOR: Yes, sir?

ACTOR: Are you listening?

ACTOR: Yes, I am.

ACTOR: Plastics.

PAUL SOLMAN: Was it a correct piece of advice at the time?

ACTOR: There’s a great future in plastics.

NICHOLAS PERNA: Back when “The Graduate” was made, it definitely was.

ACTOR: Enough said. That’s a deal.

MURRAY GERBER: And in fact, the plastics industry up until the beginning of this recession was the fastest-growing manufacturing segment in the whole country. We were growing, as an industry, at 9 percent a year and the rest of the economy was growing at less than 5 percent.

PAUL SOLMAN: Murray Gerber sold this company to Victor de Jong in 1999.

VICTOR DE JONG: This is a bearing cage. These parts used to be made out of machined stainless steel, and would cost anywhere from $500 to $1,000 apiece. We have built a mold, and the parts cost $30 or $40 or $50, depending on the size.

PAUL SOLMAN: De Jong understood that despite the continuing plastics boom, competition from abroad and new technology meant he had to keep pushing productivity.

VICTOR DE JONG: When I got here, there were 92 people, and I saw ways to reduce it from 92 down to about 60. And yet we were able to produce as much and more with that level of people.

PAUL SOLMAN: So de Jong has increased productivity by more than a third in less than four years. But in the process, the jobs here have become so demanding, it’s now hard to fill them, even with all the unemployed blue collar workers out there.

PAUL SOLMAN: No wonder, then, that workers like Louis de Claybrook are trying to upgrade their skills.

LOUIS DE CLAYBROOK: Cycle start. It’s a matter of starting all over again, the best way I can.

PAUL SOLMAN: But it isn’t easy.

SPOKESMAN: Got to trim that up.

PAUL SOLMAN: Ed Landry worked 38 years at his last job.

ED LANDRY: Thirty-eight years didn’t mean nothing to them. You know, you can take your pension and go or you can take a lower paying job. That’s it.

PAUL SOLMAN: But isn’t the whole point that people like yourself will be retrained for higher level, more sophisticated jobs, and that’s how a free market system works?

ED LANDRY: Well, where… once I’m trained, where do I go for a job, China?

PAUL SOLMAN: No, Ed Landry could supposedly work at a place like prototype plastic, where they use the same Bridgeport machines he’s now being trained on. Unfortunately, however, these machines are becoming obsolete, and the Bridgeport Company itself is out of business, another manufacturing casualty. Of course, new industries are being created all the time, says economist Alan Krueger.

ALAN KRUEGER: I think that the American economy has demonstrated over the years a tremendous amount of flexibility. And if you look at, you know, trying to forecast what jobs will be here 20 years from now, 30 years from now, many of them are going to be in occupations that don’t currently exist. I did the exercise of going backwards in time and saying, how much of the job growth from 1960 through 2003 is in occupation categories that did not exist in 1960, and it’s close to half.

PAUL SOLMAN: But that’s thinking long-term again. In the career lifetime of the workers here, says economist Michael Zweig, the available jobs are as well-known as they are low-paying.

MICHAEL ZWEIG: Security guards, home health aides, teacher aides, restaurant workers, waitresses, that kind of thing, those are three out of every four new jobs that are going to be created in this country in the next ten years, have nothing to do with high tech. They have nothing to do with the kind of skills that you need to make a lot of money in the technical end of this economy. So just saying, “oh, let’s have everybody have these skills and we’ll all go to heaven, you know, holding hands,” that’s not how it works.

PAUL SOLMAN: And it’s certainly not how it’s working in manufacturing at the moment, for the two million blue collar workers who’ve lost their jobs since 2001, and can’t find new ones or even get a supermarket gig in the current jobless recovery.