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May 1990, Vol. 113, No. 5
Worker displacement in a period of rapid job expansion: 1983-87
Diane E. Herz
The 5 years from January 1983 through January 1988 were marked by rapid economic growth and declining unemployment. Over this period, the total number of persons with jobs expanded by 15 million to 114 million, and the civilian worker unemployment rate declined from more than 10 percent to under 6 percent. Over the same period, the number of workers who lost their jobs also declined substantially, according to a special survey conducted in January 1988.
Given the strength of the economy over the period, it may seem odd to discuss worker displacement, a phenomenon usually associated with periods of economic distress. However, while many industries and regions experienced rapid job growth, others did not. And, even in those industries in which employment expanded, corporate restructuring was often associated with some job losses.1 So, while the latest survey showed a substantial decrease in the frequency of displacement relative to that in the early 1980's, it also showed that the problem continued to affect certain sectors of the economy.
Interest in worker displacement rose in the early 1980's, when two back-to-back recessions led to large-scale job loss, particularly in manufacturing industries. Displaced workers were generally defined as persons who. through no fault of their own, had lost jobs in which they had made a substantial investment in terms of tenure or training. For the most part, concern over displacement focused on the experiences of blue-collar workers who lost jobs in declining industries.2
In the last several years, the picture of displacement has begun to change. Recent discussions have focused less on the plight of manufacturing workers and more on the firing of middle managers, financial industry employees, and, with increasing automation in office equipment, clerical workers.3 In fact, the image of a displaced worker has been changing from one of middle-aged and older male factory workers to one of diverse individuals working in a wide range of industries and occupations.
To what extent is worker displacement really changing? Were the characteristics of those men and women displaced from 1983 to 1988 different from those of workers who lost jobs in previous years? What were the experiences of displaced workers, and what were the outcomes of job loss?
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1 The net employment effects of restructuring are debatable. Conflicting evidence exists on the level of job creation or job termination that can be attributed to restructuring. It is clear, however, that some actions, such as the liquidation of acquired businesses, do lead to job loss. For information, see Norman J. Glickman and Douglas P. Woodward, The New Competitors: How Foreign Investors are Changing the U.S. Economy (New York, Basic Books, 1989).
2 Definitional issue are discussed in depth in an article that reported findings from the January 1984 survey. See Paul Flaim and Ellen Sehgal, "Displaced workers of 1979-83: how well have they fared?" The Economist, Jan 23, 1988, pp. 59-60.
3 See, for example, "White Collar Displacement: Job Erosion in the Service Sector," 9 to 5, national Association of Working Women, Cleveland, Ohio, February 1989. See also, "The Big Chill on Wall Street," Business Week, Dec. 7, 1987, pp. 54-56; "Wall Street's New Austerity," Business Week, Oct. 26, 1987, pp. 28-9, and "Middle managers face Extinction," The Economist, Jan. 23, 1988, pp. 59-60.
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