Today, I spoke with Steven Greenhouse, who writes for the New York Times and is the author of The Big Squeeze. I just had to interview him about the economy’s impact on the workplace because of the relevancy to this blog and the timing, with over 600,000 jobs lost so far this year.
A lot of people are caught by surprise by the economy and don’t understand the mechanics and history behind it. Steven will reveal all of this to you and offer you some important personal branding tips.
How has the state of the American economy affected the workforce, from the employee and corporate point of view?
The economy is hurting, even more now than last January when I finished my book, The Big Squeeze: Tough Times for the American Worker. The problems we’ve seen in recent days in the stock market and in some major financial institutions have only worsened the problems.
As I explain in my book, what’s happening in the economy is hurting many workers. Since the most recent economy recovery began in November 2001,
corporate profits have nearly doubled and productivity per worker has risen more than 15 percent. Yet since November 2001, wages for the average worker have actually slid by 1 percent. Workers are being hurt by a disconnect between rising productivity and wages. And globalization, whether in the form of foreign competition or the threat of American companies moving jobs overseas, has helped hold down wages. Workers are also being hurt by increased inequality, with the top 1 percent receiving 22 percent of all income, up from 9 percent in 1980, leaving less for everybody else.
Workers are also seeing their benefits squeezed. The typical worker pays twice as much in premiums for family health coverage as in 2000. Premiums have risen by $1,650, even as wages have remained flat. Ouch.
- From the worker point of view, things are pretty bad. And now the economy has lost 600,000 jobs this year, and the stock market has fallen, pushing down the value of many workers’ 401(k)’s. In my book, I try to explain in detail the many facets of this unusually tough squeeze on the nation’s workers.
- From the corporate point of view, the weak economy creates an uncomfortable situation. Many companies feel the need to lay off workers because their business is weak. Many companies also feel the need to push harder to hold down wages and benefits because their revenues are down and they want to keep their costs down, too. No one likes an economic downturn. Some economists say downturns give companies more leverage over their workers because workers grow far more insecure, worried about losing their jobs.
Which generation (Y,X, Baby Boomers) will be squeezed the hardest and why?
Unfortunately, Gen Y is being squeezed the hardest. Members of Gen Y are entering the labor force during a particularly tough economic time. Right now entry-level wages, whether for college grads of high-school grads, are lower now than in 2000, after factoring in inflation. For Gen Y’ers entering the workforce, a lower percentage of them are receiving health insurance or good solid pension plans than when Gen X’ers or Baby Boomers entered the workforce.
So why the big squeeze for Gen Y? First, they’re entering the workforce when the economy is hurting. Second, they’re the first generation to enter the workforce since the high-tech boom/bubble of the late 1990’s burst. For Gen X’ers the high-tech boom was great—it lifted their wages and catapulted them into terrific jobs. With that bubble burst, wages have sagged, and it’s far less clear that Gen Y’ers will have the good opportunities in high tech that Gen X’ers had in the 1990’s.
Also, Gen Y is the first generation feeling the sting of off-shoring jobs to India and other countries. The Baby Boom generation was hurt by globalization when foreign imports battered the auto and steel industries. That hurt blue-collar workers. But now that other form of globalization – off-shoring – is for the first time hurting white-collar workers, and Gen Y is the first generation to enter the workforce since the off-shoring trend began.
Can you talk about how there is simply no “job security” anymore and how developing a personal branding will be important to surviving in the new age of work?
There is far less job security than in generations past partly because American companies face much more competition and more pressure to keep payroll costs down. Powerful forces such as globalization and Wall Street’s demands to maximize share prices and profits have caused many companies to move away from job security and engage in such practices as downsizing. That all helps reduce costs and increase profits.
In an era when there is less and less job security, it is important for every worker to maximize his or her skills and make a name for himself or herself. Some people call this upskilling. Some people call it branding. Some people call it selling yourself.
One thing is clear: in these more demanding times, increasing your skills, selling yourself and beating the pavement to find good work are essential
How has the employee/employer social contact changed from years ago until now? What do you see in the future?
The social contract has changed immensely since our parents’ and grandparents’ generations entered the workforce. After World War II, corporate America and powerful labor unions like the United Auto Workers created an enviable social contract with very good wages, very good health and pension benefits and very good job security. That helped create the world’s largest and richest middle class. But since the 1970s and 1980s, and then accelerating in the 1990s and this decade, the social contract has disintegrated.
Only 55 percent of private-sector workers obtain health insurance through their employer. Forty-six million Americans – nearly one in six — do not have health insurance. The good pensions of old that provided a monthly amount from the time you retire until the time you die have been replaced largely with 401(k)s, which are not nearly as generous or reliable. And now with the stock market tanking in recent days, Americans are seeing the downside of 401(k)’s all the more.
We are seeing a push for universal health coverage because Americans are increasingly frustrated at seeing so many Americans without insurance. We are the only industrial nation that doesn’t have universal health coverage. Universal coverage will go far to strengthen the social safety net.
There’s also a big problem with 401(k)’s – and members of Gen X and Gen Y will see those problems increasingly as they age. Many people are discovering that 401(k)’s will leave them without money for a comfortable retirement. This is a problem that the nation has to face – how to assure more secure and comfortable retirements for everyone. One thing we may all have to do is put more of our money into savings in the decades before we retire.
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Steven Greenhouse is the labor and workplace reporter for the New York Times and author of The Big Squeeze: Tough Times for the American Worker. His first book, The Big Squeeze is an in-depth account of how American companies have squeezed millions of workers by clamping down on wages, cutting benefits, weakening job security and violating wage and hour laws. He has appeared on National Public Radio, PBS (“The News Hour”), MSNBC, CNN, and the BBC.
