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Job Growth and the Quality of Jobs in the U.S. Economy

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  • Susan N. Houseman

    ()
    (W.E. Upjohn Institute for Employment Research)

Abstract

During the 1980's employment grew rapidly in the United States, prompting many analysts to label the U.S. economy the great American job machine. But while aggregate employment increased rapidly during the 1980's, many did not benefit from the expansion. Among less educated prime-age males, unemployment rates rose and labor force participation rates declined sharply. Moreover, although job growth was high, many argued that the quality of American jobs as measured by wages, benefits, and job security deteriorated. The decline of jobs in the high-paying manufacturing sector and the growth of jobs in the low-paying services sector, the growth in part-time and temporary employment, and the general decline in real wages among less-educated, less-skilled workers have been presented as evidence of an erosion in job quality. The issue of job growth and job quality in the American economy has sparked extensive debate among policymakers and academics over the last decade. The aim of this paper is to critically examine the evidence on job growth and on wages and other indicators of job quality in the U.S. economy during the 1980's and 1990's. To place the American experience in perspective, selected comparisons are made to the experiences in other industrialized countries. The paper is divided into three main sections. In section 1, I look at employment growth in the United States during the 1980's and 1990's. I examine whether and to what extent employment growth was greater in the United States than in other industrialized countries and whether strong employment growth in the United States signaled a healthy economy. I compare the employment performance of the U.S. economy during the 1980's with that in other industrialized countries, and study the factors underlying the cross-country differences in employment growth: differences in the growth of the working age population, differences in the growth in labor force participation, and differences in the growth in unemployment. I also examine differences in the employment experiences across groups of workers defined by gender, education, and age within the United States. In addition, the relation between employment growth, productivity growth, and growth in per capita GDP in the United States and other industrialized countries during the 1980's is explored. Finally, trends in employment growth in the United States during the 1990's are discussed. In sections 2 and 3 of the paper, I examine whether and in what sense there is any evidence that the quality of jobs in the United States has declined. The literature pertaining to trends in the quality of jobs in the U.S. economy falls into at least two main categories: (1) studies of the wage, benefits, and job security characteristics of new jobs created; and (2) studies of trends in real wages, benefits, and earnings inequality. The latter deals with trends in new as well as existing jobs. In section 2 of the paper, I review evidence from several studies on the wage distribution of occupations and industries in which new employment was created during the 1980's and 1990's. I also look at trends in the growth of involuntary part-time employment and temporary employment, which are characterized by low wages, few benefits, and little job security. In section 3 of the paper, I present evidence on trends in wages and benefits across groups of workers and the growth of wage inequality in the United States during the 1980's and 1990's. I review evidence concerning the causes of the decline in real wages among less-educated workers and the growth in wage inequality in the United States. I also review evidence from studies of trends in real wages and wage inequality in other industrialized countries and discuss why trends abroad typically have differed from those in the United States. In section 4, I summarize the evidence on job growth and the quality of jobs in the United States during the 1980's and 1990's and discuss the implications for U.S. policy.

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Bibliographic Info

Paper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 95-39.

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Date of creation: Aug 1995
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Handle: RePEc:upj:weupjo:95-39

Note: A revised version of this paper appears in Labour, Special Issue, 1995, pp. S93-S124. Please cite the revised version.
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Keywords: job; growth; quality; expansion; Houseman;

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References

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  1. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  2. repec:fth:coluec:455 is not listed on IDEAS
  3. Katz, Lawrence F. & Revenga, Ana L., 1989. "Changes in the structure of wages: The United States vs Japan," Journal of the Japanese and International Economies, Elsevier, vol. 3(4), pages 522-553, December.
  4. Jacob Mincer, 1989. "Human Capital Responses to Technological Change in the Labor Market," NBER Working Papers 3207, National Bureau of Economic Research, Inc.
  5. James Heckman, 1993. "Assessing Clinton's Program on Job Training, Workfare, and Education in the Workplace," NBER Working Papers 4428, National Bureau of Economic Research, Inc.
  6. Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February.
  7. Borjas, G.J. & Freeman, R.B. & Katz, L.F., 1991. "On The Labor Market Effects Of Immigration And Trade," Harvard Institute of Economic Research Working Papers 1556, Harvard - Institute of Economic Research.
  8. Rebecca M. Blank & David Card, 1993. "Poverty, Income Distribution, and Growth: Are They Still Connected," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(2), pages 285-340.
  9. Stephen Nickell & D Nicolitsas, 1994. "Wages," CEP Discussion Papers dp0219, Centre for Economic Performance, LSE.
  10. Chinhui Juhn, 1994. "Wage Inequality and Industrial Change: Evidence from Five Decades," NBER Working Papers 4684, National Bureau of Economic Research, Inc.
  11. Katharine G. Abraham & Susan N. Houseman, 1993. "Earnings Inequality in Germany," NBER Working Papers 4541, National Bureau of Economic Research, Inc.
  12. Katharine G. Abraham, 1988. "Flexible Staffing Arrangements and Employers' Short-Term Adjustment Strategies," NBER Working Papers 2617, National Bureau of Economic Research, Inc.
  13. Alan B. Krueger, 1991. "How Computers Have Changed the Wage Structure: Evidence From Microdata, 1984-1989," NBER Working Papers 3858, National Bureau of Economic Research, Inc.
  14. Paul Krugman & Robert Lawrence, 1993. "Trade, Jobs, and Wages," NBER Working Papers 4478, National Bureau of Economic Research, Inc.
  15. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
  16. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
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Cited by:
  1. Schmid, Günther, 1996. "Beschäftigungswunder Niederlande? Ein Vergleich der Beschäftigungssysteme in den Niederlanden und in Deutschland," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 96-206, Social Science Research Center Berlin (WZB).
  2. Farber, Henry S. & Levy, Helen, 2000. "Recent trends in employer-sponsored health insurance coverage: are bad jobs getting worse?," Journal of Health Economics, Elsevier, vol. 19(1), pages 93-119, January.
  3. John Turner (ed.), 2001. "Pay at Risk: Compensation and Employment Risk in the United States and Canada," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number par.
  4. repec:fth:prinin:402 is not listed on IDEAS
  5. repec:iab:iabmit:v:31:i:2:p:262-276 is not listed on IDEAS
  6. Ochel, Wolfgang, 1998. "Mehr Beschäftigung und weniger Arbeitslosigkeit : Amerika, hast du es besser? (More employment and less unemployment : America - are you any better off?)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 31(2), pages 262-276.

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