The good news came as no surprise. By election day, the Dow Jones was hovering above 6,000 points and unemployment had dropped to 5.4% — its lowest point in seven years. President Bill Clinton rallied to raise the minimum wage to $5.15 per hour while heralding the 10.5 million jobs created under his administration. The year ended on a high note indeed, particularly after almost two decades of corporate downsizing and reengineering that left a handwringing nation of workers paranoid and shellshocked.
Is this a sign of good things to come or merely a fleeting correction in an otherwise uncertain job market? The jury is still out. But don’t hang up your armor just yet career warriors. Continue to hone your skills for this ever-changing, competitive workplace. It’s still business as usual.
Companies continued to wield the downsizing ax last year, slashing their workforce in order to maximize profits. In fact, for the first 10 months of 1996, more than 410,000 layoffs occurred, a 20% increase over the year before. But it could have been worse.
“Some companies might have, in fact, deferred the decision to lay off employees,” says John Challenger, executive vice president of Challenger, Gray & Christmas, a Chicago-based outplacement firm that tracks corporate layoffs. “Bad publicity earlier last year [AT&T's layoff of 40,000 employees] may have prompted corporations to put off any job elimination in the heat of a campaign.” But it didn’t stop them afterwards. Just ask the 6,000 Sunbeam employees–50% of the staff who received pink slips a week after election day.
THE REAL DEAL
While the short-term job outlook is mixed, the long-term prospects look good. According to the U.S. Bureau of Labor Statistics, employment is projected to increase by 17.7 million jobs or 14% from 1994-2005. In addition, the number of self-employed workers is expected to increase by 950,000 to 11.6 million in 2005. Of the new jobs created, the greatest gains were at the low and high end of the scale.
Politicians abated public fear by boasting of economic opportunity and prosperity for all, but where exactly are these new opportunities? Many of these new jobs were in low-wage industries, particularly sales and service occupations in retail and administrative support in the services industry.
Still, increases in employment did occur in high-paying occupations. While downsizing and restructuring led to the displacement of many managers and professionals, these groups accounted for 75% of the net job growth from 1989 through 1995, according to Randy Ilg, economist, Division of Labor Force Statistics, Bureau of Labor Statistics in Washington. Total employment increased by 6.7 million to 124.9 million during that period.
If you break down the workforce into three relative earnings groups– high-earnings ($502-$1,083 a week), middle earnings ($342-$501) and low- earnings ($167-$341), there was a decline in the middle-earnings group, mainly in manufacturing occupations.
Things are looking up for low-wage earners now that President Clinton raised the minimum wage. But overall, salaries have remained relatively fiat over the last four years. Despite average salary increases of just 3.9% in 1996, and projections