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Economists predict new, improved jobs

The stock market has been rallying, and corporate profits strengthening.

Still, U.S. employers keep hacking away at payrolls, laying off workers and refusing to hire new ones. Since March 2001 when a brief recession officially began, more than 2.5-million jobs have vanished.

Where did they go? Will they ever come back?

Overwhelmingly, mainstream economists say the jobs have been lost to better machines, more sophisticated software and tougher foreign competitors. But they also say that eventually, U.S. companies will begin creating jobs again.

"There are jobs that are gone and won't come back," said Ken Goldstein, economist for the Conference Board, a New York business association. "But new ones will not only replace them; they'll be even better jobs."

Goldstein's optimistic predictions may come true, but for the millions of workers who have lost paychecks, these are tough times. In contrast to the booming late 1990s, this new decade has produced the longest sustained period without job growth since World War II.

"It's unprecedented to be in the third year (following) a recession and still be shedding jobs," said Harry Holzer, a labor economist at Georgetown University in Washington.

Doug Rosenbrock, an unemployed senior program analyst in New York City, has been seeking work for months. His job search has provided him with no evidence that better jobs are about to emerge. "Once you lose your job, you can't even get an interview," he said.

The unemployment rate for June was 6.4 percent, a figure that may not seem so bad, considering how much higher it was during the last two recessions. It hit 10.8 percent in 1982 and 7.8 percent in 1992.

But "there is a fair amount of pain" because job openings are rare, Holzer said. With so few employers seeking workers, many people have stopped looking for jobs, and therefore are not counted as unemployed by the government.

The Bureau of Labor Statistics estimates the total number of unemployed -- counting both those seeking work and those who have stopped looking -- was about 9.9-million in May, up dramatically from 6.6-million in May 2000, when the unemployment rate was just 3.8 percent.

Even many people who have jobs wish they could get more hours. The number of people employed part time because they can't find full-time work was 4.6-million in May, up from 3.3-million when the recession began in March 2001, according to the Labor Department.

Because employers are still being so cautious, many full-time workers are hurting too. The average workweek for rank-and-file employees remained at just 33.7 hours in May, matching the lowest level since the government began keeping records in 1964. Those short hours don't bode well for job seekers, because companies typically ask employees to work more hours before they start bringing in new people.

If the economy is recovering, why are jobs so scarce and work hours so limited?

Erica Groshen, a Federal Reserve Bank of New York economist who recently studied employment trends over the past several decades, said those questions can be answered with two words: increased productivity.

Because of new technologies and procedures, employers are getting more work done with fewer people.

During the 1960s and 1970s, job layoffs tended to be cyclical, Groshen said. When orders fell off, workers were sent home, "but as soon as the economy picked up, the workers were called back and they did pretty much the same thing they were doing before," she said.

In the 1990s, as computers and other kinds of advanced equipment began having a bigger impact, layoffs started becoming permanent.

At the same time, advances in telecommunications and the Internet made it easier for companies to ship service-sector jobs overseas. Today, jobs that used to be done in America by computer programmers, architects, accountants and back-office workers are being performed in low-wage countries such as India, China and the Philippines by contractors.

A recent study by Forrester Research Inc. estimated that by 2015, about 3.3-million jobs, worth about $136-billion annually in wages, will have moved offshore.

"Now when employers see a decline in the demand for their product, they see it as either a mandate or an opportunity for long-term change," Groshen said. In other words, they'd rather acquire a new piece of equipment, develop a better production technique or send jobs offshore rather than start hiring again.

Such trends have been devastating for blue-collar workers. Manufacturers cut jobs in May for the 34th consecutive month. During that painful stretch, the manufacturing sector lost 2.6-million jobs, the Bureau of Labor Statistics said.

Since the final quarter of 2001, productivity has increased at an annual rate of 3.7 percent, a full point higher than overall economic growth. For workers, that translates as "work harder, work faster."

But mainstream economists say that in the long run, higher productivity helps workers because it boosts profits and allows employers to pay their remaining employees higher wages. When workers make more money, they can afford to spend more, which eventually creates new jobs in restaurants, clothing stores and so on.

Goldstein said the process of job destruction and creation is constantly moving forward, even though at the moment, the pace of destruction is outstripping creation. "Certainly this has been a slow recovery," he said. "But this too shall pass."

History offers many examples to support Goldstein's upbeat outlook. For example, during the Great Depression of the 1930s, farm laborers lost jobs in massive numbers. Initially, they may have seen little reason for optimism, but within a few years, many had moved from low-paying, back-breaking agricultural jobs to high-wage factory jobs.

Statistics on job-related accidents, pay and longevity show that over time, dangerous jobs are indeed being replaced by safer, higher-paying jobs.

As an example of how this process works, Goldstein noted that electronic toll collection systems increasingly are replacing toll booth workers, who must do repetitive tasks while breathing exhaust fumes.

With the quicker electronic systems, drivers save money on gasoline and get home more quickly. "The money that is not going up the gas tank is then available to spend on something else" to occupy the driver's increased leisure time, Goldstein said.

Promises that more enjoyable jobs eventually will appear in the "leisure" sector isn't much comfort to Reginald Elms, a toll booth worker on the San Mateo Bridge in San Francisco Bay.

Elms, a state employee for six years, said he has watched the "FasTrak" electronic toll system slowly supplant people like himself. "Common sense tells you, later on down the line they're going to use this to replace employees" in mass numbers, he said.

But Elms said most workers have become philosophical about it. "We had (union) meetings about it when it first came up a few years ago, but there was nothing we could actually do," he said. "It's just part of the deal now."