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Labor Day Holiday May Offer Little Optimism for Workers

August 28, 2008
Related Topics: Career Development, Employee Career Development, Workforce Planning, Latest News
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American workers will have little to celebrate this Labor Day, according to a new report.

The study, from the liberal-leaning Economic Policy Institute, examines the recession-recovery cycle that started in 2001 and finds that for the first time on record, middle-class families are at or near the end of a recovery without ever having regained the ground they lost during the recession that preceded it. The study also said job growth has been slower and unemployment stints longer.

“[Gross domestic product] and historically high productivity growth should have raised paychecks up and down the income ladder, but instead, the benefits of that growth have bypassed most of the people who made it possible,” the institute said in a statement.

Ed Lawler, management professor at the University of Southern California, sees another challenging trend for employees: Major companies are treating workers as skills providers to be utilized rather than as employees to be developed. The implication, Lawler said, is that American workers can expect “no government safety net, no corporate safety net, and have to look out for themselves.

Many indicators are grim for U.S. workers. The unemployment rate rose to 5.7 percent in July and payroll employment has fallen each month of this year.

On the other hand, real median household income in the United States climbed 1.3 percent, to $50,233, between 2006 and 2007, according to the U.S. Census Bureau.

Boston University management professor Fred Foulkes says businesses in many cases have learned not to be too quick to lay off employees and are offering voluntary severance packages to trim costs. He adds that tough times for workers are no fun for managers either.

Foulkes said a CFO he knows “really hates to go to work these days—closing plants, laying people off. It’s not enjoyable.”

Factors cited for troubles facing U.S. workers include the rise of automation, which can eliminate jobs and require higher-level skills. Global competition also plays a role, with both service and manufacturing jobs going overseas, where labor often is cheaper.

But crimping trade is a bad idea for U.S. manufacturers and their employees, says Daniel Ikenson, associate director of the Center for Trade Policy Studies at the libertarian Cato Institute. He says U.S. manufacturers have been achieving record exports, and the loss of jobs in the sector has slowed. U.S. manufacturing wages have been relatively stagnant, but overall compensation—including health care benefits—is rising, he says.

U.S. manufacturers see access to skilled labor as their top concern, Ikenson says. The best solution, he says, is to cut taxes and let firms invest in the right training.

“It is those manufacturers who should be coming up with the training programs,” he said.

The Labor Day holiday has its roots in the labor movement. But Lawler says he is struck by the overall decline in American unions’ power and visibility. Historically, Labor Day was a time for unions to make their case to the public. “Today,” he said, “it’s more of a vacation day.”

—Ed Frauenheim

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