Good Jobs, Bad Jobs, No Jobs [Reprint 2014 ed.] 9780674187955, 9780674187948

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Good Jobs, Bad Jobs, No Jobs

Good Jobs, Bad Jobs, No Jobs

Eli Ginzberg

Harvard University Press Cambridge, Massachusetts, and London, England

1979

Copyright © 1979 by the President and Fellows of Harvard College All rights reserved Printed in the United States of America Library of Congress Cataloging in Publication Data Ginzberg, Eli, 1911Good jobs, bad jobs, no jobs. Includes bibliographical references and index. 1. Labor supply—United States. 2. Manpower policy—United States. I. Title. HD5724.G5195 ISBN 0-674-35710-8

331.1Ό973

79-10706

For Doris and Mitchell Sviridoff in friendship

Preface This volume addresses the complexities of the job problem—more job seekers than jobs—and the national efforts to ameliorate it. As director of the Conservation of Human Resources Project at Columbia University as well as Chairman of the National Commission for Employment Policy I have been forced to reopen in recent years almost every manpower question that I had addressed earlier in my four decades of continuing involvement in research and policy. The absence of any verities in the manpower arena forces the serious scholar and policy advisor to keep going back to fundamentals as the environment changes the issues on the nation's agenda. In preparing this volume I was greatly aided by the skillful editorial assistance of Roger Furman, which I gratefully acknowledge. Ruth S. Ginzberg performed a similar task at an earlier stage when many of the chapters were first prepared for publication. Sylvia Leef once again deciphered my reams of yellow sheets. Without her successful intervention this volume would have been long, if not indefinitely, delayed.

Contents Introduction

I

People and Jobs

1. 2. 3. 4.

The Pluralistic Economy of the United States Whatever Happened to M a , Pa, and the Kids? Career Women and Urban Revival The Job Problem

II

Education and Work: Critical Links

5. 6. 7. 8. 9.

Minorities and the Urban Labor Force Higher Education: A Graduate Glut? Career Prospects for Managers Sources of Managerial Talent Professionals, Managers, and the Establishment

1

9 19 25 29

47 57 66 74 88

Contents

III

Manpower Planning and Policy

10. 11. 12. 13. 14.

Manpower Planning in the Organization Apprenticeship: A U.S.-Canadian Comparison A Shortage of Skilled Workers? Full Employment: Urban Challenge Youth Unemployment in the United Kingdom: A U.S. Perspective Raising the Age for Compulsory Retirement The Building of a National Manpower Policy Manpower Policy in the 1980s

15. 16. 17.

IV

The Politics of Employment

18. 19. 20.

Jobs and Votes New Frontiers of Equal Employment Opportunity The Pursuit of Equity: Mirage or Reality?

Notes Acknowledgments Index

105 114 119 129 138 146 155 167

179 187 195 209 213 215

Good Jobs, Bad Jobs, No Jobs

Introduction

T o achieve consensus is a challenge that faces every modern society: those who have a lot to lose turn a deaf ear to those who want to share in the good life. The consensus-developing process is further hobbled by the fact that the intellectuals who can point the way are themselves split among different approaches that cannot be easily reconciled. Furthermore, intellectuals often disagree in their interpretations of reality. Agreement in defining the problems a society faces is the difficult first step; all attempts to find solutions must await this first consensus. In light of these myriad challenges, we must be thankful that, as the 1980s appear on the horizon, opinion-makers in most developed countries agree that the reduction of unemployment, or put positively, a job for everybody who wants to work, is of critical importance, matched only by the necessity to slow and reverse the rate of inflation. The aim of this book is to provide background and understanding about the changes that are occurring in the number and types of jobs available in the U . S . economy and the parallel changes that are under-

Introduction 2

way in the characteristics of j o b seekers, young and old, men and women, high school dropouts and graduates of professional schools. T h e opening chapter outlines a framework within which the j o b problem must be considered and solved. In place of the simple dichoto m y that is espoused by most politicians, businessmen, and academicians who see the U . S . e c o n o m y as composed of a large productive private sector and an overgrown and unproductive public sector, I offer a model of a pluralistic e c o n o m y in which the not-for-profit sector (government and nonprofit) is neither small n o r unproductive. I estimate that about one in three jobs is generated b y the not-for-profit sector and that many of these jobs are productive in their own right and are essential for the prosperity and growth of the private sector. T h e following two chapters extend the framework that should bound most discussions of employment, unemployment, and income by delineating recent changes in the structure of the American family and the changing role of w o m e n . Attention is directed to the differences between one- and two-worker families and to the potential contribution of two-worker families to the revival of our old cities. T h e concluding chapter in Part I, " T h e J o b P r o b l e m , " provides the basic data for the longer view: How well has the U . S . e c o n o m y performed with respect to j o b creation since World W a r II, with respect to the total number of new jobs as well as to the growth of " g o o d jobs"? T h e chapter broadens the accepted narrow concentration on unemployment rates to the larger numbers on the periphery of the labor market and considers the prospects of the nation's reaching "full e m p l o y m e n t , " according to this broadened definition, within the next few years. T h e five chapters of Part II are focused on "trained m a n p o w e r , " that is, on h o w newcomers to an urban environment acquire jobs and competence, the outlook for college graduates, a short- and longer-run assessment of the supply and demand for managerial personnel, and a concluding piece on professionals, managers, and the establishment. T h e long-term expansion of the U . S . e c o n o m y provided a supportive environment for immigrants and migrants to the city to find jobs and improve their prospects, at least to find a place from whence their children could m o v e up the ladder. Despite the current widespread pessimism, a look below the surface suggests that this longestablished process is still working in favor of the new minorities, the blacks and Hispanics, w h o are the most recent urban newcomers. In addressing the question of whether the country will soon have a glut of college graduates and in assessing the outlook for managers in the 1980s and beyond, the analysis stresses the limitations of conventional ways of addressing questions of supply of and demand for trained manpower. Without denying the value of the human capital approach with its reliance on the theory of investment, these chapters

Introduction set the question in a larger framework which goes beyond the capacity of the market model to provide satisfactory answers. T h e argument indicates that, in addition to the market, complex forces involving changing attitudes, behavior, and institutions must be considered in order to develop tenable answers. T h e concluding piece calls attention to the little-noted phenomenon of the recent growth of professionals and salaried managers and administrators, who account at present for one of every four workers in the U . S . e c o n o m y . T h e implications of the fact that so m a n y individuals are currently involved in the decisionmaking structure have not been adequately studied and assessed in terms of either the distribution of income or the distribution of the power that resides in the establishment. T h e chapters in Part III present three discrete dimensions of the manpower planning and policy process. T h e first chapter focuses on the opportunities and difficulties that face large organizations in their attempts to manage their human resources with the same or nearly the same efficiency with which they have learned to manage their financial and physical resources. M y conclusion is that those at the top of large organizations are ambivalent about relying on their staffs to assist them in discharging their manpower responsibilities. T h e difficulties arise because of the inherently political nature of all large organizations; those at the top always seek to maintain their control of power. Decisions about people are integral to decisions about the future of the organization, and top management wants to keep these decisions in its own hands. T h e other side is that the top management of a large organization—one with tens or hundreds of thousands of employees—cannot possibly k n o w all the details of all the company's affairs down the line and certainly cannot exercise surveillance over all its human resources. Consequently, manpower planning in the organization remains both a threat and a necessity. Each of the next five pieces—on apprenticeship, skilled workers, urban underemployment, youth unemployment, and retirement— addresses an important manpower policy issue: How can a modern nation assure an adequate supply of competent manpower, and what role should apprenticeship play in such an effort? How can a responsible and affluent democracy avoid persistent and high levels of adult and youth unemployment and underemployment? W h a t are some of the likely consequences of the recent federal legislation raising the mandatory age of retirement from 65 to 70 years? Most citizens look to their national government for the answers to such questions. Even a casual review, however, reveals the limitations of national governments to solve complex m a n p o w e r problems. T h e best they can hope to do is to provide programmatic and financial leadership and to encourage other critical sectors, including business, labor, and educa-

3

Introduction 4

tion, to cooperate with them in addressing and solving such issues as job creation, skill acquisition, and unemployment. The two concluding chapters in Part III present respectively a backward and a forward look at m a n p o w e r policy as it has been evolving in the United States, primarily since the end of W o r l d W a r II, and its likely shape in the 1980s. T h e most important lesson that can be extracted from these two exercises is the manner in which critical manpower problems, extant theory, and new programmatic answers interact with one another as the nation seeks solutions to problems it can no longer ignore. It is logical for a nation to rely on the market to allocate manpower resources until evidence accumulates that the market fails to function effectively. T h e fact that the forces required for political intervention can be mobilized only slowly and then only partially helps to explain why manpower planning in the United States appears to be a program in search of a goal. Adam Smith would be disturbed to find that his followers decided that the m a j o r lesson to extract from The Wealth of Nations was the supremacy of the market over other institutions including law, government, and national defense. While he railed against the presumption of bureaucrats that they could make the e c o n o m y perform more effectively than it would if employers, consumers, and workers were encouraged to follow their own self-interest, he never assumed that a society could function, much less prosper, without the support of a wide array of nonmarket institutions. His magnum opus was a work in "political e c o n o m y , " not a treatise on economics. T h e three chapters of Part IV are directed to making room for the political element in manpower economics, particularly in employment policy. T h e first chapter reminds the reader that j o b s and votes have been closely associated since the beginning of the Republic and that many of the critical actions of the nation, in its youth as well as now, can be understood only in terms of interest groups, each of which seeks to improve its prospects of employment and income by acting in the political arena rather than leaving matters to the "unseen h a n d " of the market. T h e analysis notes that ideology, even of the most conservative stripe, seldom if ever disturbs legislators when they see an opportunity to enhance the economic development of their regions. Since the total expenditures of all levels of government amount to approximately one-third of the gross national product, it is clear that no politician can be elected or reelected unless he encourages the maximum flow of governmental spending toward his constituents. Economists m a y not find it easy to broaden their models to take account of political realities, but the fact that they ignore them speaks more to the shortcomings of their discipline than to the unimportance of these forces.

Introduction A m o n g the m a n y innovative a p p r o a c h e s of the Great S o c i e t y of the 1960s, n o n e was m o r e far-reaching than the resort to the law to achieve equality f o r racial and ethnic minorities, and, as an afterthought, for w o m e n , in all d o m a i n s of A m e r i c a n life and particularly in the world of w o r k . Recourse to the law represented yet one m o r e effort to accomplish what three and a half centuries of the nation's development had failed to a c c o m p l i s h — m a k i n g the United States color blind and sex equal. Except for a small minority of white males w h o had ideological o b j e c t i o n s to recognizing a b l a c k person or a w o m a n as an equal, the nation's halting progress since the end of W o r l d W a r II has reflected the ongoing conflict of pursuing a goal that involved a price that was m o r e than most A m e r i c a n s were willing to p a y . In 1964 the nation reluctantly respected the authority of federal law that had been placed behind the search for equity. In the decade and a half since that time, m a n y of the barriers blocking the e m p l o y m e n t of minorities have been lowered, although different analysts apportion credit differently f o r this progress. T h e thrust of the penultimate chapter is to outline where the next battle will be fought; it l o o k s n o w as if it will center on p r o m o t i o n s to higher-ranking j o b s . W i t h a surfeit of white males, large numbers of w o m e n , and considerable numbers of long-denied minorities all c o m peting for the relatively small n u m b e r of g o o d jobs, this battle will be hard fought, and it is premature at this point to forecast the victor. It m a y well prove to be a standoff, in which w o m e n and minorities will m a k e some gains but will not significantly weaken the hold of white males. T h e final chapter, " T h e Pursuit of E q u i t y , " provides a perspective on the nation's efforts at social and e c o n o m i c reforms since the administration of Calvin Coolidge in the m i d - 1 9 2 0 s . T h e finding that emerges is the relatively short period, only six years out of fifty, during which the nation directly addressed the issue of equity and undert o o k b r o a d actions to achieve it. A subsidiary finding is that some of the most significant gains c a m e a b o u t as unexpected consequences of policies that originally were neutral or antagonistic to the goal of equity. If it is paradoxical to find that m a n y of the goals that a d e m o c r a c y seeks to attain eventually prove illusory and that m a n y of its a c c o m plishments are unplanned, these provide n o basis f o r c o n c e r n . D e m o c racy will live and prosper as long as its citizens continue their efforts to seek equity for all.

5

People and Jobs No nation is having much success at the end of the 1970s in providing jobs, much less good jobs, for all who want to work. Part of the difficulty lies in the fact that policymakers find it difficult to fit the rapidly changing social structures into their models. T h e y continue to think of their economies as dominated by the competitive market, families as composed of a male wage earner and a wife as homemaker, and minorities as groups that will continue to accept second-place status. Each and every one of these assumptions is wide of the truth. Progress on the j o b front requires bringing theory and practice into closer alignment.

The Pluralistic Economy of the United States

The United States went through another quadrennial election campaign in 1976 in which voters were exhorted to preserve (or strengthen or revitalize or more equally distribute the fruits of) our private-enterprise system. Few truisms are as firmly implanted in the American consciousness as the notion that our economy is a private-enterprise one. The fact is that it is not. It is private and public, profit-seeking and not-for-profit: a pluralistic economy of private enterprise, nonprofit institutions, and government. Persistent failure to recognize this pluralism and to perceive the interrelations of the economy's various elements clouds understanding of important economic issues and makes it harder to deal with some current problems. More than ten years ago Dale L. Hiestand, Beatrice G. Reubens, and I became convinced that the dominant conception of the U.S. economy as a private-enterprise system was in need of revision. Even before we looked closely at the figures we surmised that the cumulative growth of government—national, state, and local—had perma-

People and Jobs

nently altered the structure and functioning of the economy, and that the economy could no longer be encapsulated within a private-enterprise, profit-maximizing model. The main effort of our inquiry was to find the answer to one critical question: What proportion of the U.S. economy's output and employment was accounted for by activities outside the private, profit-oriented sector? Our considered answer was that about one-fourth of the gross national product and no less than one-third (and possibly as much as two-fifths) of the country's employment was generated by nonprofit institutions and government, which is to say by the not-for-profit sector. One might have expected such a finding, published in 1965 in our book The Pluralistic Economy,1 to attract attention. It did, but primarily abroad; it was largely ignored by economists and journalists at home. Foreign observers, whether in developed or developing countries, had no difficulty absorbing the evidence of the rapid growth of the not-for-profit sector in the U.S. economy. They knew that their own governments played a dominant role in shaping their economies, and they had no reason to question the finding that government had come to play a critical role in this country too. Our colleagues at home preferred to ignore our findings rather than to confront them. Conservatives and liberals alike were comfortable with the old view that the private sector continued to dominate the American economy, the one group applauding and the other group criticizing that basic state of affairs. It was less disturbing intellectually and less threatening ideologically (regardless of the particular ideology) to reaffirm the conventional wisdom that our economy operates under market forces, with government's role limited to adjustments of the rules of the game and the distribution of rewards.

Classifying the Sectors Little has changed since The Pluralistic Economy was published. Presidents Johnson, Nixon, Ford, and Carter—and many other people— have continued to emphasize that "five out of six jobs" are based in the private sector, as if repetition and emphasis could alter arithmetic. What are the facts? Hiestand recently updated our 1963 data to 1973. With total national employment in 1973 at 84.7 million, "general government" employees came to 13.4 million (full-time-equivalent workers). That is the basis for the "five out of six" reference. It makes no sense, however, to isolate direct government employment and call everything else private. The important distinction is between the private, profit-seeking sector and the total not-for-profit sector. In the first place, the private sector is not all that private. When the

The Pluralistic Economy

of the United States

federal government buys missiles from Lockheed or naval vessels from Litton, workers employed in those companies' West Coast plants or Gulf Coast shipyards are classified as employees of the private-enterprise sector, but no economist should be comfortable with such a designation. The wages those workers earn are paid for out of federal government funds, and their output is absorbed exclusively by the government. For years the army has manufactured some of its ammunition in its own arsenals, whose workers have always been counted as government employees. It is hard to see the logic of classifying those who work for defense contractors as belonging in the private sector any more than the arsenal workers belong in it. This principle of classification extends far beyond defense. In seeking to draw realistic boundaries between the private and the not-for-profit sectors, one should count all employment generated by government purchases of all kinds in the private sector as part of the not-for-profit sector. This can be done by converting the dollars government spends on such purchases into an equivalent employment figure. Hiestand's calculations for 1973 show government purchases from the private sector as amounting to 9.9 percent of the gross national product. He calculates that this represents 8.4 percent of the total employment of 84.7 million, or 7.1 million workers. The combined direct and indirect government employment in 1973, then, was 13.4 million plus 7.1 million, or 2 0 . 5 million. About one American worker in four depends for his job, directly or indirectly, on the activities of government. Although government is the largest component of the not-for-profit sector, it is not the only one. The other significant segment comprises the nonprofit institutions: churches, colleges, voluntary hospitals, labor unions, social organizations, special-interest associations, and many more. Hiestand's calculations for 1973 show a total direct employment of five million in these nonprofit institutions, or 5.9 percent of total employment. Here, as in the case of government, however, one must take into account the purchases by nonprofit institutions from the private sector to obtain a total view of the economic impact of those institutions. Converting these purchases into employment adds another 1.8 percent, giving the nonprofit institutions a total of 7.7 percent of U . S . employment. We are now in a position to derive a more realistic estimate of the role in employment played by the entire not-for-profit sector. Government is responsible for 24.2 percent of U . S . employment and nonprofit institutions for 7.7; the two add up to 31.9 percent. It would be desirable to add to that figure a small increment reflecting governmental or quasi-governmental employees in, for example, the Postal Service, municipal hospital systems, and state liquor stores. Those figures are obscured, however, because dollars of purchases are being converted into employment, and the Department of Commerce in-

People and Jobs

12

eludes such enterprises not in the government sector but in the business sector of its national income accounts. Even if they represent only 1 or 2 percent of total employment, it is clear that the not-for-profit sector as a whole is responsible for one out of three, rather than one out of six, American workers. A complementary picture in terms of dollars can be developed by calculating the total output of goods and services accounted for by government and nonprofit institutions as a proportion of the gross national product. The larger role of the notfor-profit sector in employment than in gross national product reflects two factors: A larger proportion of that sector's total expenditures goes to payrolls, and nonprofit institutions pay below-average wages. The weight of this evidence is unequivocal. The American economy is much less private than either its defenders or its critics have assumed. Moreover, one should note that government transfer payments to or on behalf of individuals, such as food stamps or Medicaid payments to private nursing homes, are not included in national income accounts. Such transfers would add another 3 to 5 percent to the not-for-profit sector's share of output and of equivalent employment. A second critical question relates to the trend. Conservatives call for action to halt the rapid rise in government spending, which they consider to be the road to inflation and ruin. Through linear extrapolation they insist that unless the trend is broken it will not be long until government controls most of the country's resources and output. (In the countries of Western Europe, on the other hand, there has been much less concern about the growth of the government sector, at least until recently.) Hiestand has looked at the U . S . trend since 1929. In that year the not-for-profit sector accounted for about 15 percent of total employment and 12.5 percent of output. In terms of either measure, employment or share of the gross national product, the increase through the Depression years and World W a r II was gradual; the most striking advance in the not-for-profit sector came in the 1950s. There was some additional growth in the 1960s, but it was much slower. And in the early years of the 1970s there was a slight decline. The analysis has assumed so far that there is a clear-cut differentiation between the private, profit-seeking sector and the not-for-profit sector. A more sensitive delineation of the boundaries of the profitseeking arena would have to take note of the fact that several of the nation's largest industries operate under government controls that constrict their freedom with respect to both prices and profits. At minimum, one would have to consider as something less than completely private those enterprises engaged in transportation, communications, and the production of power. In 1974 these industries accounted for approximately 4.7 million employees, or about 5 percent of the total employment, and they contributed 11 percent of the total gross national product. There is no point in exploiting the data further to ex-

The Pluralistic Economy of the United States p a n d the " c o n t r o l l e d " s e c t o r , except p e r h a p s to n o t e that three additional i n d u s t r i e s — a g r i c u l t u r e ,

banking,

and insurance—operate

at

least in part u n d e r price a n d profit c o n t r o l s .

G r o w t h of the N o t - f o r - P r o f i t S e c t o r T h e h e a t e d political d e b a t e on the relative sizes o f the p r i v a t e a n d public s e c t o r s is f r e q u e n t l y c o n d u c t e d with such s l o g a n s as " t h e m a r k e t " v e r s u s " e c o n o m i c p l a n n i n g " o r , in the m o r e e x t r e m e f o r m , " c a p i t a l i s m " v e r s u s " s o c i a l i s m . " Less e m o t i o n a l l y c h a r g e d t e r m s are m o r e a p p r o p r i a t e . P o t e n t f a c t o r s h a v e b e e n o p e r a t i n g to e n l a r g e the n o t f o r - p r o f i t s e c t o r . A m o n g the m o s t i m p o r t a n t h a s b e e n the m u c h enlarged r o l e o f the federal g o v e r n m e n t since W o r l d W a r II in defense a n d in d e f e n s e - r e l a t e d a r e a s such as space, a t o m i c e n e r g y , a n d a b r o a d r a n g e o f r e s e a r c h a n d d e v e l o p m e n t a c t i v i t i e s . T h e e x p a n d i n g federal c o m m i t m e n t in e d u c a t i o n , m a n p o w e r , a n d h e a l t h has also b e e n a p o tent f a c t o r . Y e t the f a s t e s t - g r o w i n g s e c t o r o f g o v e r n m e n t , p a r t i c u l a r l y in t e r m s of e m p l o y m e n t , h a s n o t b e e n the federal g o v e r n m e n t at all but state a n d l o c a l g o v e r n m e n t . T h e s e j u r i s d i c t i o n s h a v e b e e n f o r c e d to res p o n d to the d e m a n d s of an e x p a n d i n g p o p u l a t i o n f o r i m p r o v e d services in such fields as e d u c a t i o n , h e a l t h , a n d w e l f a r e a n d f o r such c o n v e n t i o n a l services as p o l i c e a n d fire p r o t e c t i o n a n d s a n i t a t i o n .

In

t e r m s o f p e r s o n n e l , s t a t e a n d l o c a l g o v e r n m e n t s h a v e b e e n the m o s t r a p i d l y e x p a n d i n g s e c t o r o f the A m e r i c a n e c o n o m y . In 1 9 5 0 their total e m p l o y m e n t w a s 4 . 3 million; in 1 9 7 4 it c a m e to 1 1 . 8 m i l l i o n , an inc r e a s e o f 1 7 4 p e r c e n t . T o t a l e m p l o y m e n t in the s a m e p e r i o d increased b y o n l y 4 6 p e r c e n t . M a n y of the s a m e f o r c e s that s t i m u l a t e d

the

g r o w t h o f g o v e r n m e n t w e r e also r e s p o n s i b l e f o r the r e l a t i v e l y rapid g r o w t h o f n o n p r o f i t institutions, p a r t i c u l a r l y in higher e d u c a t i o n a n d hospitals. T h o s e w h o see the g r o w t h o f the n o t - f o r - p r o f i t s e c t o r p r i m a r i l y as an i d e o l o g i c a l issue fail to a p p r e c i a t e the extent to w h i c h it reflects the i n a b i l i t y of the p r i v a t e s e c t o r to r e s p o n d to the n e e d s a n d desires of the A m e r i c a n p e o p l e . O n e c a n a r g u e a b o u t w h e t h e r or n o t the U n i t e d S t a t e s o v e r r e a c t e d to the threat o f S o v i e t e x p a n s i o n , but o n c e the t h r e a t w a s defined as serious it w a s i n e v i t a b l e that the n a t i o n ' s defense-related e x p e n d i t u r e s w o u l d i n c r e a s e . S i m i l a r l y , i d e o l o g y has h a d v e r y little to d o w i t h the desire o f the p u b l i c f o r i m p r o v e d a c c e s s to higher e d u c a t i o n a n d h e a l t h services. It t o o k m a n y y e a r s f o r the health r e f o r m e r s to o v e r c o m e the o p p o s i t i o n of the A m e r i c a n M e d i c a l A s s o c i a t i o n , b u t the e v e n t u a l p a s s a g e o f M e d i c a r e in 1 9 6 5 w a s effected b y b r o a d l y b a s e d political s u p p o r t .

People and Jobs Once the American people had made choices for strong defense, more access to higher education, and improved medical care, the die was cast in favor of an enlarged role for the not-for-profit sector. Moreover, there was no way for the nation to accommodate its rapidly rising population and the irrepressible demand for a suburban way of life unless all levels of government expanded. The growth of the not-for-profit sector was inevitable because the goods and services that a more affluent United States wanted could not be provided by private-sector entrepreneurs operating through the market. Important as the private sector has been in stimulating the growth of the economy, there is no way to read our recent history without recognizing the strategic part government and nonprofit institutions have played in providing new entrepreneurial structures for meeting new needs and desires of the public.

The Service Sector The focus on defense, education, and health provides a background to one of the most important economic transformations now under way: the growth of the service economy. The full details and implications of this transformation have not been adequately examined or assessed. One simple way to gauge its scale is to compare the four goods-producing industries—agriculture, mining, manufacturing, and construction—with all other activities, which are conventionally grouped under the heading of services. Almost the entire growth in post-World W a r II employment has been in the service sector. Among the goods-producing industries only construction has shown any sizable increase. Agriculture has declined by more than half, from some 7.6 million to 3.5 million; mining has declined by approximately one-third, from 955,000 to 672,000; manufacturing—the backbone of the economy—has shown only a small absolute increase: approximately one-third, from 15.6 million to 20 million, which means that its share of total employment has dropped from about 27 percent to 21 percent. In terms of contribution to the gross national product the relative decline of the goods-producing sector has been less steep. Between 1950 and 1974 manufacturing actually registered a small increase in its share of output, from 29.7 percent to 30.8 percent. The rapid growth of services and their newly acquired dominance in the expansion of employment, along with the bias toward commodity transactions that is inherent in economic analysis, guarantee that many efforts to diagnose economic ills and to devise new programs

The Pluralistic Economy

of the United States

are doomed to error and frustration. A few illustrations will make this clear. There has recently been much comment in Washington and among captains of industry about a disastrous decline in the productivity of the American economy and the danger such a decline presents to our international competitive position and our long-run economic wellbeing. People have also sought to explain the fact that our rate of growth is slower than, say, Japan's, by arguing that we devote too much of our income to consumption and too little to saving and investment. That we save and invest proportionately less than Japan is true, but the productivity-growth argument has a further dimension that is related to the size of the government sector in the two countries. By convention the output of the larger U.S. government sector is measured in terms of inputs: the dollars spent for payrolls and other purposes, which are assumed to equal the value of the services provided. Hence there is no way for this large sector to contribute to an increase in total productivity. National income accounting practices force the much reduced private sector to carry the entire burden of registering productivity gains. The difficulties run deeper than that, however. The key to service output is quality, not quantity. For example, before the discovery of antibiotics people with severe infections often died and others required weeks or months of care before they recovered. Today such patients are often cured within a few days by one injection or a series of them. The national income accounts do not reflect the improved quality of medical care or of other services. We measure the gains in productivity in the manufacture of television sets but assume that the quality of programming remains the same. The point of these illustrations is to argue that the shift from goods production to services, a cause and a concomitant of the growth of the not-for-profit sector, has fundamentally distorted our system of national accounts, has complicated our ability to locate points of weakness in our economic system, and has compounded the difficulties of designing effective solutions. We are still at an early stage in our ability to differentiate among the component parts of the service sector, which in 1974 accounted for two-thirds of total employment and $534 billion of output. People tend to think in terms of consumer services, from medical care to hairdressing. There has also been large growth in the producer services: the services, such as trucking, advertising, law, management consulting, and computing, that support the profit-making activities of the business sector. It is surprising that Harry I. Greenfield's 1967 book, Manpower and the Growth of Producer Services,2 was the first serious consideration of the role of these important services in economic de-

People and ]obs velopment. My colleagues and I, in our ongoing studies of New York City (which is overwhelmingly a service economy, with 83 percent of total employment in the service sector), have stressed that the city's future depends less on attracting back some of the manufacturing firms that have left than on retaining and strengthening its complex of corporate headquarters and the advanced services—banking, legal, accounting, communications, public relations—that are linked together and support one another and the corporate headquarters. Economists, politicians, and journalists are still caught up in a Smithian fallacy. Adam Smith argued that the test of productive labor was whether the work resulted in material output: a physical representation of the time and effort expended. In short, the craftsman who builds a violin is productive but Heifetz and Menuhin are not; the manufacturer of a scalpel is productive, but not the surgeon who excises a tumor and thereby saves a life. Smith wanted to emphasize an important point. He was concerned by the fact that, as he saw it, a great many people were being "kept." He included in this category the extraordinarily large number of household retainers, bureaucrats whose sole activity was to get in the way of ambitious businessmen, members of the court, and other supernumeraries. In Smith's view such people contributed nothing to the growth of the economy. Today only a dyed-in-the-wool Keynesian (who would prefer to have government pay men to dig holes than to have them idle) would challenge him. In striving for the distinction between productive and unproductive labor, however, Smith pressed too hard and went too far. And many who came after him absorbed his prejudice without appreciating the particular distinction he was trying to make.

Manpower Implications There have been several important manpower concomitants to the rapid growth of the not-for-profit and service sectors of the economy. The services have facilitated the rapid growth of female employment. Between 1950 and 1974 the civilian employment of males aged 16 and over increased from 41.6 million to 52.5 million, or by approximately 26 percent. During the same period the number of female workers employed increased from 17.3 million to 33.4 million, or by 93 percent— three and a half times as much as the increase in male employment. Not only has the number of new job openings available to women increased but also the services are able to offer less-than-full-time employment, a schedule of work that both many employers and many women prefer. This accommodation is not all gain, to be sure: It

The Pluralistic Economy

of the United States

means that many women workers are not able to obtain desirable fulltime jobs with fringe benefits, security, and opportunity for career development. Whereas many women have found what they want— work that is not too demanding and gives them an opportunity to supplement their family income, to get out of the home, and to be home when the schools let out—many others who are heads of families or who have strong career drives are hard pressed to find suitable job and career openings. The rapid expansion of service employment has also created many opportunities for part-time or intermittent work for young people whose main activity is pursuing their education. The period after World War II has witnessed a rapid expansion in postsecondary education supported in no small measure by the enlarged earning opportunities that have opened up for students in a wide array of service industries. One of the striking consequences of the increase in the proportion of women and of students employed and in the labor force is the extent to which the prototype of a worker as a person employed full time for the full year from young adulthood until retirement no longer fits the American scene. As Dean Morse pointed out some years ago in The Peripheral Worker,3 of all people who work during the course of a year, almost 45 percent are employed less than full time for the full year; only 55 percent fit the stereotype of the conventional worker. Even if the calculation is shifted from the number of workers to the total work performed, one finds that about 30 percent of all work is performed by those who are not full-time workers. Another important manpower concomitant of the recent expansion of services has been the substantial growth of the number of professionals in education, health, management, science, engineering, and many other fields. For two and a half decades, from 1945 to 1970, the economy was able to absorb the increasing output of the colleges, graduate schools, and professional schools with no serious evidence of any weakening in demand. In part this balance reflected the relatively long time required to expand the structure of higher education and to fill the pipeline. In part it reflected the enlarged expenditures by government for research and development, which created a new market that absorbed many of the newly trained specialists. By 1970, however, the supply had overtaken the demand, and since then the outlook for educated manpower has appreciably worsened, particularly for people with degrees in the humanities. In my view there is a strong linkage among the growth of the notfor-profit sector, the substantial increase in educated manpower, the rapid growth of the advanced services, and the generally good record of performance of the American economy. To the extent that these de-

People and Jobs velopments are interrelated—and it is difficult to see how they could not b e — t h e r e is confirmation for the basic thesis that the American e c o n o m y is pluralistic. It is not simply the growth of the not-for-profit sector that is critical. It is rather the new articulations between the notfor-profit sector and the private sector based on the principle of complementarity. T h e prosperity of the automotive industry, for example, has long depended on an expanding national highway system. Similarly, the argument can be made that the research-based and sciencebased industries and advanced services that continue to expand the frontiers of the e c o n o m y — f r o m more powerful computers to strengthened capital markets—depend on the trained manpower produced in the colleges and universities based in the not-for-profit sector. T o discuss the not-for-profit sector as a profligate spender of scarce resources without reference to its critical contribution to enlarging the wealth and welfare of the U . S . e c o n o m y and society m a y arouse enthusiasm among certain elements of the b o d y politic, but it is not likely to win much favor or have much influence on public policy, even among a people that considers its tax burden onerous.

Whatever Happened to Ma, Pa, and the Kids?

This is how a thoughtful observer once encapsulated major changes in the nation's social structure: "If you visit an old New England cemetery and look around, you will find John Smith buried alongside his four wives. But today, if you visit Woodlawn Cemetery in New York, you will find Jane Smith buried alongside her four husbands." 1 Vast changes are occurring in the structure of American families that are bound to have a significant impact on the American economy in the next few years. The recent upward spiral of divorce rates, for example, might seem to indicate that family instability is on the rise, but actually divorce has simply replaced death as the principal—although temporary—source of family dissolution. Most divorced men and women remarry soon after their initial separation; this phenomenon has raised the proportion of the population that is married to an all-time high. O f course, changes in the economy also affect the family. Given our increasing propensity to quantify increasingly complex and changing

People and Jobs

human behavior, any economic analysis of the family must recognize that it is not solely an economic unit; sociological, psychological, and anthropological perspectives are important in a clear economic picture of the family. To assess the mutual impact of the economy and the changing American family, one should look at some recent developments as a basis for some speculation about the future.

The Recent Past Median income for all families in the United States in 1976 was about $15,000. In families in which wife and husband worked (41 percent), the median income was about $19,000; in families in which the wife did not work, it was about $14,000. T o give these basic figures fuller dimension requires the answer to a key question about American families: Among how many dependents must this family income be divided? From 1960 to 1975—a period during which family income grew steadily—there was an increase of about 6 percent in childless and one-child families, from 62 million to 66 million. More important, there was a decline of about 33 percent in families with four or more children. So disposable family income per family member has certainly increased. However, the costs of raising children have grown as a result of an increased desire of parents to improve the "quality" of their children. The current average cost for a middle-class family to raise one child from birth through college is more than $100,000. This does not include sending children to camp, orthodontia, an occasional trip to Europe in adolescence, or some psychoanalysis along the way. So $100,000 is a modest figure. Another increase in disposable family income comes from the vast growth in employment of women over 18—up from about one in three in 1950 to one in two in 1978. But this change also has had a muted effect on the stability of the family. Men have less guilt about walking out of their marriages if they think that their wives are not totally dependent upon them—both financially and socially. And women do not have to put up with miserable husbands if they are able to support themselves. People just could not do that in the old days. The cost of walking out of an intolerable family situation was prohibitive, socially as well as financially. The loosening of attitudes does not necessarily mean that family stability is crumbling—options for walking out of a marriage also carry along options for entering a new marriage. Five out of six divorced men remarry, and so do three out of four divorced women.

Whatever

Happened

to Ma, Pa, and the Kids?

Myths about the sumptuous lives of women receiving alimony are wildly exaggerated. T w o out of every five divorced women never receive alimony; the average amount paid to those who do get alimony is about $2,000 annually. If divorced women lived on alimony alone, only 3 percent of their families would be above the poverty level. The economic incentives for women to become divorced, on the average, are minimal. One further disincentive for women to walk out of a marriage is that many are badly positioned to reenter the labor market, especially if they are middle-aged and unprepared for careers. One proposed bill —the Displaced Homemakers Assistance Program—now in Congress singles out this new disadvantaged group for special assistance. Furthermore, there are about 7.2 million female-headed households, an increase of approximately 50 percent between 1940 and 1975. The fact that such a high proportion of these households are at or below the poverty level is indicative of the difficulties that many women face in entering or reentering the job market. One of the major changes in family structures since World War II has been the improvement in the condition of lower-income families. The federal government has spent large sums on transfer efforts: A major, but rarely considered, outlay has been transfers in kind, which include about $5 billion annually in food stamps, about $20 billion in Medicaid, plus additional billions for housing allowances and day care facilities. Except in certain benighted states, mainly in the South, fewer families live below the poverty level each year. Certainly, one cost of a welfare reform package is that some people who work full time at low-skilled jobs cannot earn as much as they could get for doing nothing. Perhaps the most significant gain of all has been for elderly families. The improvement of Social Security benefits, including indexing for inflation, has lifted most older persons out of poverty. T h e Social Security system has aged, which means that workers now becoming eligible for benefits have a longer record of earnings and therefore will receive larger benefits. More also have spouses who have worked, which adds further to benefits. There is also a larger total pot of pension money in the United States to which retired persons have claims —about $200 billion in private and Civil Service pension money. And there is a legislative reform brewing that will permit people who receive Social Security benefits to earn more money from work without syffering deductions. Finally, President Carter signed a bill in 1978 that postpones compulsory retirement (see chapter 19). The income problems for the elderly have been brought reasonably under control, unless we mess up the whole Social Security system through underfinancing or inflation, which is possible but unlikely. The introduction of Medicare in the 1960s and the proliferation of

People and Jobs private health insurance have had an enormous impact on the financial viability of older families. O n e can get pretty good insurance up to a quarter of a million dollars at relatively low group rates. T h e consequent growth of the health industry to a current total of more than $ 1 8 0 billion in fiscal year 1978 has affected everyone. Health services are also the largest employer in America today, with over five million jobs. By and large, regional differences in real family income have narrowed. It takes about $ 2 8 , 0 0 0 in New Y o r k City to achieve the standard of living one can achieve in Houston for $ 2 1 , 0 0 0 . In terms of disposable income, however, the two figures are remarkably similar. Most of the difference is absorbed in direct and indirect taxes of all kinds, mostly New Y o r k State income taxes. A great deal of misconception exists about income inequality among families in the United States. Although there has been practically no change in the relation between the top fifth and the lowest fifth over the last thirty years, people in the lowest fifth are not the same families year after year. Professor James M o r g a n of the University of Michigan has found that over an eight-year period one-third of all people who were on welfare in any one year never went back on welfare. Furthermore, only one-third of the welfare recipients remained on welfare for the entire eight years. 2 This is an important finding about the fluidity of family composition and economic circumstances. T h e narrowing of the income differential between whites and blacks has been moderate. From 1947 to 1975, the ratio of nonwhite to white median family income rose from 51 percent to 65 percent. But median family income is not a truly representative measure because it includes so many individuals and families who are past the age at which they can benefit from recent policies designed to ameliorate racial inequalities. If great changes in society occur, they will be reflected in the lives of young people. Consider some current differences between white and minority young families (25 to 34 years) in which the husband works full time and the wife also works. O n the West Coast, the black family has only about $ 1 , 0 0 0 less in earnings per year than the comparable white family ( $ 1 8 , 0 0 0 versus $ 1 9 , 0 0 0 ) . In the rest of the country, where discrimination is more entrenched, the differential is in the $ 4 , 0 0 0 range. In New Y o r k , where the income differential between whites and minorities is relatively large, if both the husband and wife in a black family work at relatively low-level jobs, the family's income will be in the $ 2 0 , 0 0 0 - $ 2 5 , 0 0 0 range. Given the opportunity for women to work, minority families are in a much better position to make money than they ever have been in the past. But if the wife does not w o r k , it is an entirely different matter.

Whatever

Happened

to Ma, Pa, and the Kids?

T o sum up recent developments related to family income: Real income for families increased steadily until 1973 (it has since leveled off), primarily because of greater participation of women in the labor market. This rise in disposable income has been paralleled by a reduction in the number of dependents in American families since 1960. Increased divorce rates have left many women heads of households in a vulnerable economic position. Progress has been made to raise older families out of poverty and to reduce income inequality between younger white and black families as well as among families living in different regions.

A Look Ahead It is estimated that by 1990 the number of households in the United States will increase from roughly 72 million to 90 million, of which only about half will be husband-wife households; the remainder will consist of single persons living alone or households headed by a male or a female without a spouse. But the annual rate of increase in the number of households will slacken, from about 1.5 million new households in the mid-1970s to about 1 . 0 million in 1990. Household and family size should decrease b y about 20 percent from the current levels of 2.8 and 3.5 respectively to around 2.4 and 3 . 0 persons. Even if real income per capita were not to grow during the next 15 years, disposable income would be pushed up by these decreases in family size. The age distribution of heads of households will become flatter: There will be relatively fewer old and very young wage earners compared with the number in the middle age span. Since individual earnings tend to peak between the ages of 45 and 51 (there is a 25 percent difference between the peak and the lifetime average), family earnings should increase. This forecast is predicated on continued reasonable job creation in the future, but no one can be certain about that factor. Continued increases in women's labor force participation should also add to disposable family income. Moreover, a subgroup of affluent two-career families is emerging. Even those with only undergraduate degrees can be expected to produce a combined family income of over $30,000 after several years of work. This educated subgroup, with its attendant lifestyle, may have a revitalizing effect on U . S . cities, because women who are interested in careers need to work in a large labor market that offers a wide range of job opportunities. Once the ball starts rolling, there should be

People and Jobs

enough income among dual-career families to support decent housing in urban areas (see chapter 3). The ghetto areas in large cities will remain depressed, but the long-term movement of families away from upper-income urban areas may be arrested and turned around. Despite improvements in the real standard of living of lower-income families, it is not clear that the U.S. economy can keep up its past pace. If the prosperous post-World War II period could not reduce income inequalities substantially, it is doubtful that the prospective slower-growth period ahead will be able to accomplish much. From 1973 through 1976, because of inflation and recession, real family income did not increase. Low-income families were hurt the most. The world scramble for strategic raw materials keeps on pushing up the price of our imports; oil is only part of the picture. Also, the United States is becoming much more sensitive to the environment, a trend that certainly adds to the cost of production. Finally, the balance between production of goods and production of services has reached an ominous point. Big gains in worker productivity have been made mainly in the goods sector, where capital could easily replace labor. But in the United States, two-thirds of all jobs are in the service sector, and the proportion keeps growing. Productivity gains are harder to achieve. A disproportionate share of the nation's service output, as in the case of medical care, is directed toward older people, many of whom have completed their working years. But a society in which old persons are cared for, not eliminated, has no option but to deflect resources their way. If our economy is entering a period of slower growth at a time when the expectations of many groups for better jobs and higher incomes remain unmet, one of the few balancing factors in sight is the developing changes in family structure—the facts that more women are working and that there are fewer dependents per family. But even these "favorable" trends will bring consequences not all of which are likely to be favorable. The effect on the next generation, the children of busy parents, is unclear, and the shortened longevity of career women is a warning sign. But an annual economy of over $2 trillion has room to maneuver.

Career Women and Urban Revival

The revolution under way in the role of women in the world of work will have more import for modern societies than the rise of communism or the harnessing of nuclear power. This forecast is based on a recognition not only that the economic future of women will significantly alter their lives but also that since most women marry (until recently nineteen out of every twenty) and since most children now represent wanted births, the changing status of women will affect men and children as well. These changes are reflected in changes in language, in the words that are being dropped from use, such as "manpower," and those which are entering the vocabulary, such as "displaced homemaker." The focus of this chapter is on one aspect of this revolution, the potential impact of career women on the future of the nation's major cities.

Recent Decline of the Cities The older cities got into trouble in the 1950s and 1960s as a result of the decline in manufacturing and the failure to compensate by the

People and Jobs

growth of new enterprises.1 A second major contributing factor was the flight of the middle class out of the city to the suburbs, which further weakened the urban economic base by drawing residentiary services (retailing, medical, educational) into suburbia. In the wake of the "feminine mystique," in which the ideal was a family of three or four children, only the very rich or the very poor could remain in the city. Everybody else seeking a congenial environment for child-rearing had to escape, an escape made easier by the excellent highway system, low-cost mortgage money available to veterans, and tax policy favorable to homeowners. But these advantages of suburban living, which were overwhelming in the late 1940s and 1950s, began to erode in the 1960s and the 1970s, reflecting the steep decline in the average size of family, the rise in suburban tax rates, and above all the rapid increase in the proportion of married women in the labor force. Today one out of every two women between 16 and 64 is in the labor force; women accounted for three out of every five new workers in the post-World War II era, and the fastest-growing cohort of women workers is mothers with children under 6! There are mounting signs that the loosening of bonds between middle-class families and the pattern of suburban life sketched here may accelerate in the 1980s—particularly the new attraction of the city for career women. Consider the following. The more education a woman has received, the more likely she is to work, the greater her attachment to the labor force, and the more concerned she is about realizing her career goals. The Civil Rights Act of 1964, the implementing administrative actions of the late 1960s and early 1970s, and the changing behavior of employers are opening a wide range of alternative occupations and positions to women from which they were largely excluded in earlier periods. Consider further that within the past decade or less the proportion of women in medical schools has increased from about 6 to 18 percent; in the case of law schools the rise has been from about 4 to 19 percent. These figures are indicative of a much broader movement through which women are positioning themselves to compete for most, if not all, desirable jobs and careers. Consider finally that it is only the city, the large city, that offers a wide array of good occupational opportunities. The Conference Board Record for September 1976 lists the ten highest-paid occupations for women, which include stock and bond sales agents, managers and administrators, bank officials and financial managers, sales representatives (manufacturing), real estate appraisers, designers, personnel and labor relations workers, wholesalers, computer programmers, and mechanical and engineering technicians. Where but in a

Career Women and Urban Revival

large city can anybody, man or woman, have a reasonable prospect of securing employment in one or another of these occupations? Women can find employment in the suburbs, but primarily in low-paying, part-time jobs in retailing. The lucky ones may be employed full-time as secretaries or teachers. 2 Women interested in good jobs and careers are likely to find their best opportunities in a large city. These women tend to marry later than the average, and the city also has alternatives for them as long as they remain single. The more involved they are in their work, the more likely they are to marry men who in turn place a high value on occupational success. With career achievement high among their values, such couples are likely to limit their families to one or at most two children. While it is not easy to raise children in the city, high-income families can do so without undue trouble by paying tuition for private schools. Young men and women graduating from a leading law school in 1978 were being hired at $28,000 each by the large New York City law firms. If two such lawyers married they would start life with an annual income of $56,000. To put the matter in perspective, a couple graduating from the Columbia University Graduate School of Business would have a combined income of more than $40,000. At these levels of income—or at a figure approaching these levels—couples can survive well in the city, even in one where they must pay over $600 rent per month and where they send their offspring to private schools. Turn it around. What sense does it make for such a couple to live in the suburbs? The near suburbs are in decline; houses in the intermediate ones are high priced; and commuting from exurbia is exhausting. A walk through downtown Boston, New York, Philadelphia, Baltimore, Washington suggests that an increasing number of affluent families live in the inner city. In New York, to be specific, there are—in addition to the new luxury housing on the East Side—selected areas in Manhattan and Brooklyn where the conversions of lofts and brownstones and the remodeling of older buildings are providing attractive living quarters for two-income families in neighborhoods that are being turned around. As my colleagues and I have formulated it, "The new trends to later marriages, low births, and the increased career interests of educated women provide the City with an opportunity to attract and retain professional couples both of whom hold good jobs and are career oriented." 3 There are those such as Norton Long who argue that there is no future for our cities if they look for salvation to the handful of the wealthy while large numbers of poor and near poor are unable to obtain employment or to earn income adequate to support themselves and their dependents. But this is the wrong vantage from which to appraise our older metropolitan centers. Most recent in-migrants have

People and Jobs found jobs and can support themselves and their families, even though distressingly high numbers are caught in a poverty trap. But escape from that trap is possible not only for professionals but for almost every family with two workers, even those who are high school dropouts. In New Y o r k City, a couple consisting of a bus driver and a department store saleswoman will earn between them over $ 2 5 , 0 0 0 annually, no great sum in a high-cost urban area, but certainly sufficient to get by on unless they have a large family. A conservative formulation would go as follows: If the older cities no longer serve as magnets for poor migrants—and they do not; and if most of the second generation of in-migrants succeed in finding a toehold in the urban e c o n o m y — a s they appear to be doing; then increases in the number of families with career women should provide additional momentum that will help turn some, if not all, of these older cities around. At least that is as reasonable a forecast as the dire predictions that continue to be put forward by the doomsayers.

4 The Job Problem

The economic-stimulus program proposed by President Carter and passed by Congress early in 1977 represents a major departure from Keynesian economics. Instead of continuing to rely exclusively on fiscal, monetary, and tax measures as the major economic stimuli, the President decided to add the direct creation of jobs. About $10 billion of his stimulus program of more than $20 billion represents funds for public service employment (PSE) and related manpower measures. The $10 billion job program includes $4 billion for public works, which is in addition to $2 billion appropriated for such purposes in the fall of 1976. The fact that job creation represents a significant change in economic policy can be judged by the fact that in the mid-1960s, in the heyday of President Johnson's "Great Society," Senator Joseph S. Clark of Pennsylvania and Senator Winston L. Prouty of Vermont could not generate any enthusiasm among their congressional colleagues for a program to create jobs for the hard-to-employ. Only a few years later

People and ]obs President Nixon vetoed the Comprehensive M a n p o w e r Act of 1 9 7 0 because it provided for the creation of public service jobs. He said he would not be a party to resurrecting the "leaf-raking" philosophy of New Deal days. And only with the greatest reluctance did he sign the Public Employment Program (PEP) of 1971 and the Comprehensive Employment and Training Act ( C E T A ) of 1973, each of which contains a modest provision for j o b creation. When the Democrat-controlled Congress finally acted in December 1974 to take stronger steps against unemployment, it provided for the creation of 2 6 0 , 0 0 0 new public service jobs, which at the high point of the recession in the spring of 1975 provided a j o b for no more than one of every twenty-five unemployed workers. This summary of lack of enthusiasm, outright opposition, reluctant acceptance, and restricted scale with regard to federal job-creation efforts b y both Democratic and Republican administrations since the mid-1960s should be sufficient to support the contention that President Carter's adoption of an aggressive manpower policy represents a m a j o r new departure in U . S . domestic policy. In fact, Secretary of Lab o r Ray Marshall has reported that he could have had more m o n e y for manpower programs but decided that an expansion from 3 1 0 , 0 0 0 public service employment jobs to 7 2 5 , 0 0 0 by M a r c h 1978 was p r o b a bly the maximum that could be effectively managed, particularly in the light of the additional j o b opportunities planned for in-school and out-of-school youth. T h e Carter administration's 1978 urban package directs more than half of its allotment to urban j o b creation. T o understand the manpower aspirations of the Carter administration and to assess the administration's potential for energizing the U . S . economy and for providing jobs for a significant number of the nation's unemployed, one must assess the following issues (I consider them as of 1977, when the program was passed): How well did the U . S . economy perform during the past quarter-century in creating new jobs? T o what extent did the unemployment problem reflect a shortage of total jobs, and to what extent did it represent a shortage of good jobs? How much reliance can be placed on public service employment and related efforts, such as public works, to overcome limitations to the expansion of employment in the private sector? M y brief answers to these three questions follow. First, between 1950 and 1 9 7 6 the percentage of civilian jobs increased at least as fast as the working-age population, yet the unemployment rate more than doubled. Second, there is today a shortage of both available jobs and good jobs. O n l y three out of ten j o b s added in the private sector of the e c o n o m y since 1 9 5 0 can be regarded as good jobs. In contrast, twothirds of the j o b s created b y federal, state, and local governments can be considered good. Third, public service employment and related efforts can absorb only a small fraction of the adults w h o are not n o w

The Job Problem working but who are employable. M o r e o v e r , although only 7 million were "officially" counted as unemployed in 1 9 7 7 (since they were "actively" seeking work) the total number of potentially employable Americans m a y have been more than three times that number, or about 24 million.

T h e Employment Record W h e n the unemployment rates of the m a j o r industrial nations of Western Europe were fluctuating between 1 and 2 percent in the 1960s and early 1970s, those countries were highly critical of the high unemployment rates of the United States and Canada, which for most of the period hovered between 5 and 6 percent. European statesmen and economists believed they had found the answer to operating their economies at full employment, and they saw no reason why the United States and Canada could not follow suit if they freed themselves from preoccupations with balanced budgets, price increases, and balance-of-payment problems. T h e worldwide recession that began late in 1974 has chastened those critics, who are n o w learning that maintaining full employment looks easier in retrospect than in prospect. T h e large countries such as the United Kingdom, G e r m a n y , and France, and the smaller ones such as Sweden, D e n m a r k , and the Netherlands, n o w understand that "special circumstances," such as their long reconstruction cycles after W o r l d W a r II, their demographic profiles (relatively slow growth of new entrants into the labor force), and the sustained growth in international trade, all of which changed for the worse in the mid-1970s, m a y have had more to do with their maintaining full employment than did their skill in managing their economies. S o m e of us have countered the European criticism of the high unemployment rate in the United States by emphasizing that the American e c o n o m y has had a good record, not a p o o r one, in j o b creation. O u r high unemployment rate, we have pointed out, has reflected excessively rapid increases in the number of j o b seekers, particularly young people and mature women. Between 1 9 5 0 and 1 9 7 6 the U . S . population of working age (16 and over) increased b y 46 percent. In the same period the e c o n o m y expanded civilian employment from under 5 9 million to 8 7 . 5 million, a gain of 4 8 percent. In other words, during a period of unprecedented increases in the population of working age, the U . S . e c o n o m y expanded its employment opportunities at a comparable rate. Although the comparison of rates is impressive, a juxtaposition of the number of jobs and the number of j o b seekers is less favorable, since a rising pro-

People and Jobs portion of the adult population actively sought w o r k or would have looked for work if more jobs had been available. If one divides the twenty-six-year span into three periods—the 1950s, the 1960s, and the first six years of the 1 9 7 0 s — o n e finds substantial fluctuations in the numbers of potential j o b seekers and new jobs. In the 1950s, when President Eisenhower was in office, the United States provided approximately one additional j o b for every two potential j o b seekers. In the 1960s, under the Kennedy and Johnson administrations, the ratio improved to nearly two jobs for every three new potential workers. A n d between 1970 and 1977, under the Nixon and Ford administrations, the ratio slipped b a c k to approximately one j o b for every two new aspirants. Although there are some advantages to dividing these twenty-six years into decades that roughly coincide with different national administrations, most economists rely on cyclical analyses to identify short and intermediate developments. Such analyses reveal the following additional aspects of the employment record. During the eight years of the Eisenhower administration the j o b market fluctuated erratically. After a decline of 1.1 million in the total number of employed in 1954, following the end of the Korean W a r , civilian employment expanded briskly b y 2 . 1 million in 1955 and 1 . 6 million in 1 9 5 6 before slowing sharply in 1 9 5 7 and contracting b y 1 . 0 million j o b s in 1958. In the last two Eisenhower years employment again advanced strongly, averaging 1 . 4 million additional jobs per year. For the entire eight years the average gain was slightly under 7 0 0 , 0 0 0 new j o b s per year. In the next five years, from President Kennedy's taking office until the escalation of the Vietnam W a r in 1965, the rate of j o b increases was slightly a b o v e 1 . 0 million per year; during the remainder of the decade, 1966-1970, the rate of increase accelerated to about 1 . 5 million per year. T h e early 1970s also showed a good rate of increase: about 1 . 8 million per year between 1971, when President Nixon decided (at the prompting of Arthur F. Burns and over the objections of George P. Shultz) to b e c o m e a Keynesian, and the worldwide economic collapse of 1974. Since the first half of 1975, which marked the low point in the recession, employment has again expanded strongly. An additional observation can be made on the basis of a close examination of the employment record. During three periods between 1968 and 1 9 7 6 — t h e second half of 1968 through the first half of 1969, the second half of 1971 through the first half of 1973, and the second half of 1975 through the first half of 1 9 7 6 — n e w civilian employment increased b y at least 2 . 0 million per year and in the last two periods by at least 2 . 6 million. This helps to explain why in 1 9 7 6 the National Commission for M a n p o w e r Policy suggested, among other recommendations, an annual goal of 2 . 5 million new civilian jobs in the peri-

The Job Problem od immediately ahead, which would represent a respectable level of job expansion if it could be achieved for a period of years. 1 From the first quarter of 1975 to the first quarter of 1978, the U.S. economy added nine million jobs, four million of which replaced those lost during the 1974-75 recession.

The Labor Force The net number of new jobs created is one critical element in how well or how poorly the economy is meeting its employment objectives. The other critical element is the number of potential workers, that is, the size of the civilian labor force, defined as the total of those who have jobs and those who are unemployed but are actively seeking work. The civilian labor force thus excludes those in the armed forces and other people of working age who are not actively seeking work for whatever reason: because they are in school, keeping house, retired, or unable to work, or because they believe no jobs are available. As with every accounting system, calculating the number of people in the labor force is not easy because it depends on many arbitrary definitions and conventions. Congress concluded in its 1976 session that the time was right for a new look at the problem and provided for a Presidential Commission to Study Employment and Unemployment Statistics. Sar Levitan, a distinguished manpower economist, was chosen by President Carter to head the commission, which is scheduled to report in 1979. A fuller understanding of U.S. employment statistics over the past quarter-century calls for a close look at the changing composition of the civilian labor force. Between 1950 and 1976 the labor force increased from 62 million to about 95 million, an increase of 33 million. Of the total increase, men accounted for 12.6 million and women for more than 20.0 million, a simple demonstration of the greatly increased role of women in the labor force. In terms of participation rates (the proportion of each sex in the labor force) the male rate declined from 86.8 to 78.1 percent as the female rate increased from 33.9 to 47.4 percent. In every age bracket, from teenagers to persons over 65, the male rate declined as the female rate increased, with the single exception of women of 65 and over, whose participation rate showed a slight decline. The first striking finding is that women accounted for 60 percent of the total increase in the size of the labor force between 1950 and 1976, even though in 1950 working women were outnumbered by men by nearly 2.5 to one. By 1976 the male-female ratio had fallen below 1.5 to one. A closer look at the changes by age brackets reveals that in the

People and Jobs period 1 9 6 0 - 1 9 7 6 the number of young people (16 to 24) in the labor force increased from 1 1 . 5 million to 2 3 . 0 million, or b y 100 percent. Another w a y to assess the importance of the substantially increased inflow of young people (in spite of the fact that m a n y of them were remaining in school longer) is to recognize that they accounted for about one out of every three additions to the labor force in the entire period of 1 9 5 0 - 1 9 7 6 . W h e n the 2 0 million w o m e n who entered the labor force are added to the 5 . 6 million new male workers under the age of 24, just under eight out of ten of the total increase have been accounted for. T h e remaining two out of ten represent men aged 25 to 64. Several misconceptions about the American labor force can be eliminated b y a closer inspection of the past quarter-century. W e commonly think of a worker as someone who is employed full time all year. T h e reality, however, is different. O n c e a year the Bureau of Labor Statistics conducts a special survey that seeks to determine, among other things, the " w o r k experience" in the preceding twelve months of everyone over the age of 16. T h e 1975 survey showed that although the civilian labor force averaged only 9 4 . 8 million, a total of 1 0 1 . 0 million individuals worked at some period during the year. T h e difference of 6 . 2 million between the two figures represents individuals who held jobs at some time during the year, w h o retired, or w h o died while they were employed. O f the 1 0 1 . 0 million, nearly 9 1 . 0 million were wage and salaried workers not employed in agriculture, 4 . 1 million were employed in agriculture, 5 . 6 million were self-employed, and 6 0 0 , 0 0 0 were unpaid family workers. The proportion of people who worked all year at full-time j o b s was only slightly more than half (54.4 percent). T h e remainder, out of preference or necessity (primarily the first), worked less than a full-time schedule throughout the year. Between 1 9 6 5 and 1975 the number of nonagricultural workers on a full-time schedule increased by 14 percent and the number in voluntary part-time employment increased by 4 0 percent. O n e of the consequences of the rapid rise in labor force participation b y females and young males was the increasing demand for part-time w o r k . Another c o m m o n assumption is that all men, particularly those between the ages of 2 5 and 65, are attached to the work force, either as jobholders or as job seekers. T h e figures prove otherwise. In 1976, nineteen out of every twenty males in the age bracket 25 to 4 5 were in the labor force; in the age bracket 4 6 to 54 the figure was ten out of eleven, and in the age bracket 55 to 64 it was only three out of four. Starting in their late forties and accelerating as they enter their fifties, men are increasingly being ejected from the labor force, being encouraged to leave it, or retiring through choice. A further assumption is that young women w o r k for a few years, leave the labor force to raise a family, and return to w o r k , if at all,

The Job Problem only after their children are adolescents. The data belie this impression. The highest participation rate is no longer, as it was in 1950, among teenagers but rather among the 20-to-24 age-group, in which two out of every three women are in the labor force. And although the rate drops off for the next three age brackets, which cover ages 25 to 54, the decline is modest and at no point drops below 55 percent. In short, an ever increasing proportion of women remain in the labor force throughout their adult lives, at least until they reach age 55. The employment trends of the past quarter-century can be summed up as follows. The U.S. economy did well in creating jobs: The total number of civilian jobs increased by more than 28 million, or by just less than 50 percent of its 1950 base. The rapid rate of job expansion unquestionably facilitated the increased participation of women in the labor force; approximately one out of three worked in 1950 and nearly one out of two worked in 1975. The rapid increase in jobs also helped to create opportunities for the larger pool of young entrants into the labor force, a pool that approximately doubled in the period after 1965. The number of job seekers who wanted (or settled for) less than full-time work increased three times faster than the number of those on a full-time schedule. Although the participation rates of adult women significantly increased, those of mature men, beginning in their late forties, showed striking declines.

The Unemployment Rate For many years American economists have assumed that if the unemployment rate is 4 percent or lower, there is a rough balance between jobs and job seekers. Recently, conservatively inclined economists have argued that the "natural rate of unemployment" has risen to 5 percent or even higher, to allow for the growing numbers of women and young people in the labor force. Using the higher figure, one finds four poor years in the 1950s (1950, 1954, 1958, and 1959), five bad years at the beginning of the 1960s, and five bad years in the 1970s. This makes a total of 14 out of 27 years in which unemployment was excessive. If we accept the more conventional figure of 4 percent as the norm for unemployment, we find that only seven of the twenty-seven years meet the test of adequacy: three years near the beginning of the 1950s (during the Korean War) and the last four years of the 1960s (during the Vietnam War). The "adequacy of job creation" should not, however, be assessed solely by the unemployment rate, since the number of jobs that are created has a significant effect on the number of job seekers. It is inconceivable that 20 million women would have joined the labor force

People and Jobs between 1950 and 1976 if most of them had not been able to find— some quickly, others more slowly—jobs at which they were willing to work. The success of the U.S. economy in providing jobs over the past quarter-century might thus be evaluated as follows: By increasing employment opportunities by about half between 1950 and 1976, the economy provided the base for a major structural transformation, in which the most striking feature was an increase in the participation of women in the labor force from about one out of three to one out of two. This structural transformation was aided by two parallel developments: More young people decided to remain in school longer and pursue postsecondary education, and a growing proportion of males, particularly those in their fifties and early sixties, left the labor market voluntarily or otherwise. It is now clear what happened. Although the U.S. economy provided a rapid and substantial increase in jobs, the number of job seekers, particularly married women and young people reaching working age, increased even more rapidly, and the unemployment rate therefore remained at an unsatisfactorily high level throughout most of the period.

The Quality of Work Most adults work because they must support themselves and their dependents. If the jobs available pay little or are otherwise unattractive, however, many potential job seekers may choose to keep house, go to school, engage in illicit or illegal activities, or live on Social Security or some other form of income transfer. Hence a broad view of the employment situation requires that one look beyond the number of jobs to the quality of the job opportunities available. There are different ways to assess the quality of a job, but most specialists would agree that the following characteristics are significant: wages, fringe benefits, regularity (or intermittence) of employment, working conditions, job security, and opportunities for promotion. Although certain jobs must be performed under poor working conditions, such as those on an automobile assembly line or in a foundry, they may pay above-average wages. More often than not, however, favorable elements go together. Accordingly, one can differentiate between good jobs and poor jobs, with earnings as the most reliable indicator. In the period between 1950 and 1976 total payroll employment in nonagricultural establishments showed important changes in numbers and division among industries. The number of workers on industrial

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payrolls increased by 25 million. If the relative growth of employment in different industrial groups is analyzed, however, one finds that the number of jobs that paid above-average weekly wages increased more slowly than the number that paid below-average wages. The five industrial groups that consistently pay above-average wages employed 25.0 million workers in 1950 and 32.1 million in 1976, an increase of about 28 percent. The five better-paying groups and the percentage changes between 1950 and 1976 in the number of jobs they provided are mining, minus 13 percent; construction, plus 54 percent; manufacturing, plus 24 percent; transportation and utilities, plus 12 percent; and wholesale trade, plus 70 percent. In actual numbers of new jobs manufacturing supplied by far the most: 3.7 million, or more than half of the total increase attributable to the five better-paying groups. Wholesale trade and construction respectively provided 1.7 million and 1.3 million additional jobs. Total employment in the three industry divisions with below-average weekly earnings more than doubled between 1950 and 1976: from 14.2 million to 32.4 million. The division that includes finance, insurance, and real estate added 2.4 million jobs, an expansion of 125 percent. Retail trade added 6.6 million jobs, expanding 96 percent. The service industries, which grew the fastest of all, added 9.3 million jobs, expanding 172 percent. In these industries weekly earnings are below average either because the industries pay low hourly rates or because they provide less than full-time work, and often both reasons apply. To summarize, between 1950 and 1976 about two and a half times as many new jobs (18.2 million versus 7.1 million) were added in industries that provide below-average weekly earnings as were added in industries that provide above-average earnings. More than three out of every five new jobs created were in retail trade or services, where many jobs are part time and wages are traditionally low. The difference in weekly earnings between the better-paying and the poorer-paying industrial groups was substantial. Compared with a national average of $176 in weekly earnings in 1976, earnings in services averaged $146 and in retail trade only $114. In construction, mining, and transportation weekly earnings ranged between $258 and $284. Not only are workers in retail trade and services poorly paid but also under the law and under collective-bargaining agreements they are generally precluded from participating in various governmentand employer-sponsored benefit plans. Overall, the statistics lend substantial support to the view that the U . S . economy has developed a dual labor market in which white men have preferred access to the good jobs while women and members of minority groups generally get trapped in the poor jobs. In a discussion of good and poor jobs special note should be taken

People and Jobs 38

of the transformation that has occurred in the character of government employment. In 1950 there were just under 2 million civilian employees on the federal payroll and just over 4 million on state and local payrolls, for a total of 6 million. In 1976 the number of federal civilian employees had risen to 2.7 million (a smaller percentage increase, it should be noted, than for the private economy), but the number of state and local employees had approximately tripled to 12.2 million, for a total government civilian employment of just under 15 million. Thus government at all levels accounted for more new net jobs (nearly 9 million) than any industrial group in the private sector, services alone excepted. Over the twenty-six-year period the employment growth rate of government was 150 percent, second again, but by only a slight margin, to the service industries.

Good Jobs In 1949 average annual earnings of all civilian government employees were within $100 of the average for all private industries, $2,920 compared with $2,840. In 1975 average earnings were nearly $1,000 higher in government than in industry—$11,710 compared with $10,740— testifying to the greater gains for government employees. A closer inspection reveals that the greatest gains were made by federal employees, whose average earnings in 1975 were $12,630 compared with $10,900 for state and local employees, a much wider spread than had been the case a quarter-century earlier. For the most part government employees have reasonably good working conditions, enjoy various fringe benefits, belong to an internal promotion system, and enjoy considerable job security. In terms of job quality most government jobs are good ones, but perhaps as many as one out of three can be considered poor jobs, either because they pay poorly or because they provide less than full-time work. Furthermore, not all government employees have the security of Civil Service status. To sum up, between 1950 and 1976 government added some 9 million new jobs, two-thirds of which can be classified as good in terms of wages, working conditions, fringe benefits, job security, and opportunities for advancement. In the same period the private sector provided about 25 million new jobs, of which fewer than three out of ten can be rated good by the same criteria. Here four broad observations can be made. First, the number of jobs grew much faster in government than in the private sector of the economy. In fact, the figures cited are a considerable understatement of government's role in creating jobs; they do not include the large number of workers in private industry whose jobs depend on govern-

The ]ob Problem ment purchases. G o v e r n m e n t p u r c h a s e s in 1973 p r o v i d e d jobs for m o r e t h a n 7 million industrial w o r k e r s , or r o u g h l y half the n u m b e r that g o v e r n m e n t e m p l o y e d directly (see chapter 1). Second, again o n a relative basis, g o v e r n m e n t o u t p e r f o r m e d private industry in p r o v i d i n g good jobs. Between 1950 a n d 1976 g o v e r n m e n t a c c o u n t e d for o n l y slightly less t h a n half of all the g o o d jobs that were a d d e d . Third, the private sector p r o v i d e d t w o a n d a half times as m a n y p o o r jobs as g o o d ones. F o u r t h , three out of five of all the new jobs created over the entire period must be classified as p o o r . If most of the jobs created in the past q u a r t e r - c e n t u r y were p o o r , h o w does one explain the near absence of criticism a n d discontent a m o n g A m e r i c a n s w h o o b t a i n e d those jobs? T h e most plausible answer is that most of the n e w jobholders were " s e c o n d a r y " workers, w h o s e earnings supplemented the income of the family's principal b r e a d w i n n e r . Of the 28 million individuals a d d e d to the e m p l o y e d w o r k force between 1950 a n d 1976, b y far the largest c a t e g o r y — a b o u t 12 million—consisted of married w o m e n w h o s e h u s b a n d s were employed a n d living at h o m e . A second large increase, a m o u n t i n g to 5.9 million, t o o k place a m o n g single people, for the most p a r t y o u n g , m a n y of w h o m were still in school a n d therefore content with less than full-time w o r k . A b o u t 10 million of the 28 million new jobholders were h e a d s of households: 6 million m e n with n o n w o r k i n g wives a n d 4 million m e n or w o m e n w h o shouldered family responsibilities w i t h o u t spouses. A c o m p a r i s o n of the distribution of jobs held b y w o m e n in 1950 a n d in 1976 emphasizes the extent to which they remained concentrated at the low end of the occupational h i e r a r c h y . In 1950, 76 percent of w o r k i n g w o m e n w e r e e m p l o y e d as sales a n d clerical w o r k e r s , as operatives in factories, o r as service w o r k e r s , either in private households or in industry. In 1976, 73 percent of w o r k i n g w o m e n were still so e m p l o y e d . T h e p r o p o r t i o n engaged as sales a n d clerical w o r k e r s increased f r o m a b o u t 35 to 42 percent, a n d the p r o p o r t i o n w o r k i n g as operatives in factories decreased f r o m 22 to 21 percent. T h e r e was also a small decline in the n u m b e r of service w o r k e r s , f r o m 20 to 18 percent. T h e r e was, h o w e v e r , a sizable increase in the p r o p o r t i o n of w o m e n in professional and technical o c c u p a t i o n s (from 10.3 to 16.0 percent) a n d a steep decline in the p r o p o r t i o n w o r k i n g on f a r m s (from 6.9 to 1.3 percent). T h e fact remains that at the end of the period, as at the beginning, three out of f o u r w o m e n were e m p l o y e d as sales, clerical, or service w o r k e r s or as operatives in factories. In looking a h e a d one must t a k e account of three likely developments. First, the n u m b e r of y o u n g people reaching w o r k i n g age will decline sharply; the pool in 1990 will be 3 million less t h a n the 24 million in 1980. Second, the n u m b e r of w o m e n in the labor force will continue to g r o w substantially; according to current estimates, this

People and Jobs 40

group will increase from 37 million in 1975 to 49 million in 1990, or by about a third. Third, an increasing number of women, because of their heightened attachment to the labor force, will be seeking good jobs and a career, not just any jobs. If this forecast proves to be correct, the availability of good jobs will become a central issue of public policy.

Objectives It is ironic that the United States became seriously interested in full employment as a national goal in the mid-1970s, just at the time when the advanced countries of Western Europe were forced to lessen their commitment to full employment. One should not, however, overstate the change in the United States. T h e President and his advisers now look to 1983 or beyond as the time when an interim target of about 4 percent unemployment will be reached. If the goal is realized, it will mean that the United States will have taken a decade and a half to return to a condition of a tight labor market such as the one that prevailed in 1969. It is always difficult to guess what Congress will do; one cannot forecast the implementation of legislation sponsored by the late Senator Hubert H. Humphrey of Minnesota and Congressman Augustus F. Hawkins of California. The odds are, however, that in the short run Congress will do little beyond planning. If there is socially useful work to be done and people are able and willing to do it, what stops the federal government from taking the necessary action to put all unemployed job seekers to work? Up to a point nothing, or at least very little. Beyond that point dollars, management abilities, and secondary consequences are likely to be the major barriers. As I have noted, the Carter administration put some $10 billion into direct job creation to provide useful employment for approximately 725,000 people for a year. It is a matter of concern to Congress whether those placed in public service employment jobs will at the end of a year be able to make the transition into regular employment or whether they will become a continuing responsibility of the federal government. If the sole or primary objective of manpower policy were to reduce the unemployment rate from the 1977 level of about 7 percent to 4 percent, this would require jobs for about 3 million unemployed workers, and the cost would be not $10 billion but nearly $25 billion, a large but not impossible sum. O n e reason to hesitate, however, is that such a program, dollars aside, would be three times larger than the one Secretary Marshall believed to be within the ability of the fed-

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eral government to launch and carry out successfully within a oneyear span. In making such computations one can easily overlook the fact that the numbers of people "overhanging" the labor market who would be interested in a government job far exceed the 7 million now counted as unemployed. The number of people not in the labor force who nonetheless categorize themselves as "want a job now" totaled more than 5 million in the Department of Labor's 1976 special survey. These people were not counted in the labor force for various reasons: 1.4 million were in school, 650,000 were in poor health or disabled, 1.2 million had home responsibilities, and 900,000 had concluded that they could not get a job. T o this group should be added the estimated one million employables who receive payments from the Aid to Families with Dependent Children (AFDC) program, possibly another million employables who receive federal food stamps, a million in federal training programs who are not counted as being unemployed although they want jobs, and 3.5 million working part time because they cannot find full-time jobs. In addition to the 5 million people not counted as part of the labor force who nonetheless reported they "want a job n o w , " there were 54 million in 1976 who reported they "do not want a job n o w , " leaving open whether or not they might consider working at a future time or under certain conditions. Included in the 54 million were more than 30 million with home responsibilities, 8.5 million retired, about 5.0 million in poor health, 6.4 million in school, and 3.5 million categorized under "all other reasons." A federal job-entitlement program even at modest (minimum) wages would surely induce some people to shift their classification from "do not want a job now" to "want a job now." Even a 10 percent shift would add 5.4 million job seekers to the labor force. It would not be difficult to identify 5.4 million additional job seekers from the following categories: the considerable number of young people who remain in school because they cannot find jobs, the 30 million housewives who might be tempted to enter the labor market if jobs were available, the group of disabled and older workers who feel they could still be useful, and people in still other groups who are not currently counted among the unemployed because they are not actively seeking work. T o estimate the total number of people overhanging the labor market, one would have to add this group of 5.4 million potential job seekers to the 5 million who want jobs now, the 2 million employables receiving aid for dependent children or food stamps, the 1 million currently in federal training programs, together with another 3.5 million with part-time jobs who want full-time work. O n e can thus arrive at a

People and Jobs total of some 17 million potential j o b seekers, allowing for a small amount of double counting, to add to the 7 million counted as unemployed. T h e addition of 17 million would swell the labor force by about 18 percent, or more than three times the number of counted unemployed. T h e Carter administration passed legislation in which federal job creation has several roles to play. In the first instance the administration decided to rely on public service employment together with the related program of public works as one of two principal vehicles for stimulating the e c o n o m y b y increasing direct j o b creation; the other vehicle is fiscal and tax policy. T h e assumption is that j o b creation is a good w a y to put m o n e y into the hands of low-income people who will spend it quickly. Therefore a tentative first finding is that public service employment can complement fiscal policy. A second goal of federal j o b creation is to provide employment opportunities for hard-to-place people in the expectation that after a year or so in a public service employment j o b they will be in a better position to move into the regular e c o n o m y in the private or public sector. This was the intent of the Public Employment Program of 1971, the original intent of Title II of the Comprehensive Employment and Training Act ( C E T A ) of 1973, and the intent of the C E T A Amendments of 1976 and the reauthorization of 1978. A third goal, only haltingly implemented so far, is to use public service employment as an instrument to remove employable people from extended unemployment insurance or from the welfare rolls. A fourth is to assist young people in or out of school to gain work experience in the expectation that such experience will facilitate their long-term employability. T w o additional objectives should be noted. Federal j o b creation is used to provide basic or supplemental income opportunities for older people who would otherwise be forced onto welfare rolls. It also plays a central role in a limited number of experimental and demonstration projects that go under the rubric of "supported w o r k , " a program aimed at helping deviant groups such as former prison inmates and former drug addicts to reenter the working community. T h e identification of these multiple objectives for public service employment (and the list could be extended by including certain rural manpower programs) emphasizes h o w fast and h o w far we have come since President Nixon vetoed the reinstitution of "leaf raking" jobs paid for by the federal government. There remains, however, a wide gap between the scale of the present and the proposed public service employment program and the number of claimants for such employment. A s readers of newspapers and viewers of television have repeatedly had impressed on them, unemployment weighs heavily on minority

The Job

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g r o u p s , p a r t i c u l a r l y b l a c k a n d S p a n i s h - s p e a k i n g t e e n a g e r s . A s the government recently reported, three out of every four minority group teenagers in N e w Y o r k C i t y h a v e b e e n u n a b l e to find f u l l - t i m e j o b s . B e c a u s e o f the c o m b i n e d weight o f past a n d present d i s c r i m i n a t i o n , low family income, p o o r schooling, and other powerful negative factors, the y o u n g m e m b e r s o f m i n o r i t y g r o u p s a r e c o n c e n t r a t e d at the end o f the j o b q u e u e . T h e r e is n o p r o s p e c t o f this c o u n t r y ' s m e e t i n g its c o m m i t m e n t s w i t h regard to racial e q u a l i t y a n d arresting the decline of its u r b a n c e n t e r s until the s c o u r g e o f u n e m p l o y m e n t is e l i m i n a t e d . A t m i n i m u m , m a n p o w e r a n d t r a i n i n g m e a s u r e s s h o u l d b e f o c u s e d , as the 1 9 7 8 C E T A r e a u t h o r i z a t i o n directs, o n the g r o u p s that a r e c u r r e n t ly the least e q u i p p e d to find a n d h o l d j o b s . M a n y p r o f e s s o r s a n d p o l i t i c i a n s , in addition to b u s i n e s s m e n , question w h e t h e r the i n c r e a s i n g i n v o l v e m e n t o f the federal g o v e r n m e n t in direct j o b c r e a t i o n is a sensible p o l i c y . T h e y suggest as an a l t e r n a t i v e the s t i m u l a t i o n o f the p r i v a t e s e c t o r , w h i c h t h e y feel is the b a c k b o n e of a h e a l t h y e c o n o m y . A p a r t f r o m the fact that t h e y c o n t i n u a l l y und e r e s t i m a t e h o w m u c h o f the c u r r e n t e m p l o y m e n t

in the

United

S t a t e s is s u p p o r t e d directly or indirectly b y g o v e r n m e n t d o l l a r s — s u r e ly o n e out o f e v e r y three j o b s — t h e y h a v e yet to a c k n o w l e d g e the large n u m b e r o f p o t e n t i a l j o b seekers w h o r e m a i n invisible a n d u n c o u n t e d . T h e a d m i n i s t r a t i o n has put off until a f t e r 1 9 8 1 the g o a l of a l a b o r m a r k e t in r e a s o n a b l e e q u i l i b r i u m , but that g o a l l o o k s o n l y to the rea b s o r p t i o n of the t w o or so m i l l i o n " e x c e s s " p e o p l e c u r r e n t l y on the u n e m p l o y m e n t rolls. It surely d o e s n o t c o n t e m p l a t e a b s o r b i n g a significant n u m b e r o f the e s t i m a t e d 1 7 million a d d i t i o n a l p e o p l e n o t curr e n t l y c o u n t e d in the l a b o r f o r c e w h o need w o r k o r w a n t to w o r k . O n e s h o u l d not b e regarded as a n t i b u s i n e s s if o n e c o n c l u d e s that t h e r e is n o p r o s p e c t o f the p r i v a t e s e c t o r ' s e x p a n d i n g sufficiently to m a k e a significant i m p r e s s i o n on the o v e r h a n g i n g m a s s of p o t e n t i a l j o b seekers. If the p r i v a t e e c o n o m y c a n find j o b s o v e r the n e x t f o u r y e a r s f o r the n e w e n t r a n t s i n t o the j o b m a r k e t a n d f o r t w o to three m i l l i o n o f the c u r r e n t l y u n e m p l o y e d , it will b e d o i n g w e l l . O n the o t h e r h a n d , o n e s h o u l d n o t b e r e g a r d e d as a n t i g o v e r n m e n t if o n e c o n cludes that there is n o realistic p r o s p e c t o f the federal g o v e r n m e n t ' s s u c c e e d i n g in the y e a r s i m m e d i a t e l y a h e a d in s i g n i f i c a n t l y r e d u c i n g the p o o l o f p o t e n t i a l e m p l o y a b l e s . T h e g o v e r n m e n t c o u l d d o so, if it c o u l d d o it at all, o n l y at the price o f e x t r e m e i n f l a t i o n . In e c o n o m i c p o l i c y , as in p o l i t i c a l a n d s o c i a l p o l i c y , a c o u n t r y that a v o i d s the pursuit of u n r e a l i z a b l e g o a l s is a c o u n t r y that p r o t e c t s its t r e a s u r e . It is t h e r e f o r e in a b e t t e r p o s i t i o n to e x p e r i m e n t , to i n n o v a t e a n d to m o d i f y its p r o g r a m s as it g a i n s g r e a t e r k n o w l e d g e of h o w to t r a n s l a t e g o a l s i n t o a c c o m p l i s h m e n t s . T h a t is the s t a n c e the U n i t e d S t a t e s s h o u l d a d o p t w i t h respect t o e m p l o y m e n t p o l i c y , n o w a n d in the future. W e c a n n o t a s s u m e t h a t the p r i v a t e s e c t o r will b e a b l e to

People and Jobs create adequate numbers of new jobs, and we cannot assume that the federal government will be able to provide a j o b for everyone who is able and willing to w o r k . T h a t is a commitment that, at least for the present, is too ambitious. T h e federal government has begun, and should continue, to identify groups in the community that are most in need of assistance in improving their employability and employment. Government should not be so hesitant to help those citizens w h o most need help, and it should not be so foolhardy as to make promises on which it will be forced to renege. A large, responsible democracy cannot afford to ignore its responsibility to experiment vigorously, intelligently, and continuously to improve employment opportunities for all its citizens and particularly for those most in need of assistance.

I I Education and Work: Critical Links There are two contrasting views of what is wrong in the job market. The first holds that many applicants are not hired because they lack basic competences required for effective performance or because they have acquired training for which there is little or no demand. If blame is to be apportioned, the educational system must be considered the major culprit. T h e opposing view holds that the educational system is a minor actor. T h e critical issue is the lack of strong and consistent demand for labor. A slack market means trouble no matter how well people have been educated and trained. I suggest that both positions are overstated: Both employers and employees, especially those with education and skill, possess considerable flexibility that should facilitate the absorption of new job seekers into the economy.

5 Minorities and the Urban Labor Force

Many people believe that older American cities such as New Y o r k — which is both a prototype and an exception by virtue of its size and diversity—confront a series of mismatches between their changing labor forces and their evolving economies that bodes ill for the future wellbeing of the metropolis. The litany of complaints goes as follows: Many of the recent in-migrants, among whom blacks and Puerto Ricans predominate, are unprepared for the jobs that are available in New York City. T o make matters worse, many of the minority offspring who have grown up in the city fail to benefit from their schooling. They reach working age with insufficient education and socialization to make a smooth transition to the world of work. The presence of liberal income-transfer funds, especially for femaleheaded households with dependent children, has resulted in many children growing up without fathers and in households where no

Education and Work adult is regularly employed. This distorts their values and expectations about the place of work in their lives. T h e relative ease with which young people and adults are able to secure income from illicit and illegal activities—from purse-snatching to selling narcotics, from trafficking in stolen goods to prostitut i o n — m a k e s m a n y view such activities as preferred alternatives to accepting a low-paying j o b without prospects of improvement. A s a result of these serious mismatches, the litany continues: T h e deterioration of public security for persons and for property has speeded the exodus of the middle class from the inner city to the suburbs and to other cities less harassed by the combined pressures of unabsorbed minorities and large welfare populations. A s a consequence, m a n y residentiary jobs have been lost—exacerbating the employment problems of the urban newcomers. The "blackening" of neighborhoods and schools has further accelerated the exodus of the middle class, who seek a stable environment in which to rear their children and who place a high value on educational opportunity, which is difficult and often impossible to obtain in urban schools. Faced with a new work force that is poorly educated and poorly socialized, m a n y employers, both large and small, who do not find it necessary to remain in the city, relocate their operations. T h i s further weakens the economic foundations of the metropolis and narrows its tax base, which, in turn, adds to the difficulties of matching workers and jobs. G l o o m y as this picture looks, it does not exhaust the complaints in the sad tale of accelerating relocation of manufacturing out of urban centers, shifting investment to the South and West in response to population movements and shifting economic opportunities, and severe problems faced b y certain municipal governments such as New Y o r k City, which has lived for years b e y o n d its means and is n o w suddenly confronted with the need to make its b o o k s balance. As has been noted, m a n y middle-class families have voted with their feet by leaving cities and starting life anew in other environs. A n d the same, of course, is true of m a n y employers. M a n y social scientists and urbanologists believe that the older cities are doomed, especially those where minorities account for one-third to one-half of the total population. In their view, the culture of poverty makes early absorption of the new population into the mainstream e c o n o m y unlikely. Since these unabsorbed groups must be fed and housed even if they do not w o r k , they will consume the resources that are needed and

Minorities and the Urban Labor

Force

that should be used to revitalize infrastructure and provide money for the next wave of enterprises. Instead, this capital must be spent on keeping the "newcomers" alive, further jeopardizing the cities' future.

The Conventional Wisdom Elaborated The problem of major cities can be assessed correctly only if one adopts an appropriate perspective, namely one that is sufficiently long so that recent developments are not permitted to dominate the analysis and yet not so long as the periodicity that underlies Jay Forrester's work, which deals with urban developments over several centuries. Accordingly, in seeking a manpower perspective of New York, one should start with the end of World W a r II, which provides a time span of one-third of a century. During this period, large numbers of young blacks from the South, many of whom had been born and reared in rural communities, came north to find jobs, some after detouring through a southern city, many directly. And the same pattern held for migrants from Puerto Rico, a high proportion of whom were of rural backgrounds, although many came north after spending some time in San Juan. For the most part, these migrants were attracted to New York because there were jobs available that they could fill, primarily in manufacturing but also in services. As is true of migrants in general, but especially of blacks, family structures suffered from large-scale instability: Between 1960 and 1973, the number of nonwhite, female-headed households in the United States increased by 103 percent; illegitimate births increased to 42 percent of all nonwhite births, compared with 6 percent of all white births. Since New York City is a high-cost community, a source of emerging trouble is the household with only one worker, especially a worker with limited education and skill who cannot earn more than the minimum wage. The steep increase in the number of persons on the New York City welfare rolls in the 1960s, from 346,000 to 1.2 million recipients, reflects in part the rapid growth of female-headed households. Another sign of serious problems was the sharp decline in manufacturing—the sector in which many newcomers initially found a toehold in the New York economy. This sector has lost about 500,000 jobs since the early 1950s, a decrease of about 50 percent. But this vulnerability was masked up to 1970 by the expansion of the not-for-profit sector, that is, government and nonprofit institutions, which grew substantially on the basis of much enlarged public outlays. Government employment alone in New York City increased, between 1950

Education and Work and 1970, from 3 7 4 , 0 0 0 to 5 6 3 , 0 0 0 , a 5 0 percent rise. It is worth pointing out that in the recent period of rapid j o b losses, the health care service industry alone expanded b y about 4 5 , 0 0 0 j o b s . Further difficulties stem from the substantial proportion of the children of recent in-migrants who are experiencing continuing trouble coping with the educational system. Disturbingly high numbers are failing to progress in the required subject matters of reading and arithmetic. In 1970, 16 percent of black high school graduates and 24 percent of Puerto Rican graduates received grade averages of 8 0 percent or over, compared with 5 0 percent of white graduates. Although minorities m a k e up 2 6 percent of all high school graduates, only 10 percent of minorities maintained averages of 8 0 percent or over. In 1972, two-thirds of the elementary schools in N Y C that had 85 percent or more students reading below grade level had student populations that were more than 5 0 percent Puerto Rican. Further serious difficulties that minorities encounter in the school system are revealed b y an estimated high school dropout rate in the 35 to 45 percent range. A n d a significant proportion of those who earn high school diplomas in New Y o r k do not reach the eighth grade level of competence in reading, arithmetic, or both. T h e seriousness of this latter development is underscored b y the fact that only 17 percent of the jobs in N e w Y o r k City are in goods production (manufacturing or construction); 83 percent are in the service sector, in which most positions require at least modest literacy such as the ability to read and follow directions or to calculate the sales tax. M a n y young people have been coming through the school system unable to meet these minimum requirements. While a few experts, observing the declines in private-sector employment, were worried about what the future held in store even while total employment was reaching new heights at the end of the 1960s, general appreciation of the seriousness of the problem did not exist until the following events occurred in rapid succession: the recession of 1970-1971; the slow recovery of the city in 1 9 7 2 - 1 9 7 4 ; the fiscal crisis of 1975; the sharp reductions in governmental employment that followed; and the absence of sustained expansion in any part of the local e c o n o m y to compensate for these blows. A n o t h e r way to summarize these g l o o m y facts is to note that from a high point of 3 . 8 million j o b s in 1969, total employment declined to 3 . 2 million in 1977; that the reported rate of unemployment in New York City in 1 9 7 7 was close to one-third higher than the national rate; and that in 1 9 7 6 the labor force participation rates for adult, men and women 2 0 years and over were respectively 7 and 10 percent lower in New Y o r k than in the nation. Not surprisingly, most analysts are pessimistic about the economic prospects for the c i t y — a pessimism grounded in their belief that New

Minorities and the Urban Labor

Force

York City will be unable to generate the number and quality of jobs required to absorb all those of working age. This pessimism cannot be taken lightly, much less ignored. But there is another set of facts and figures that warrants attention because it is less bleak. This set highlights the absorption of minorities into the mainstream economy.

Some More Favorable Developments A look at the number of blacks and Puerto Ricans employed in New York City reveals large gains through the past two decades. From 1950 to 1970, the number of blacks employed increased from 320,000 to 588,000; the number of Puerto Ricans employed increased from 85,000 to 214,000. During this period total employment increased by only 8 percent. Further evidence of the penetration of minorities into the city's economy can be gleaned from changes in occupational classification, using the proportion in white-collar jobs (clerical, sales, managerial, and professional) as a rough index. For blacks, the proportion increased during the single decade of the sixties from 20 to 43 percent; for Puerto Ricans the proportion increased from 15 to 33 percent. Although the percentages of black and Puerto Rican families who live below the poverty level remains high, their income has been improving both absolutely and relatively. The proportions of nonwhite and Puerto Rican families living below the $7,000 (1969 dollars) subsistence level dropped from 80 and 88 percent to 49 and 64 percent between 1959 and 1969, a large improvement within a single decade. These facts suggest several tentative conclusions. First and foremost, despite known difficulties reflecting the substantial decline of total job creation in the city, the two large minority groups have markedly increased their effective participation in the New York City labor market, not only in terms of the proportion of jobs they hold but also in terms of the proportion of better jobs they hold. This penetration has occurred despite the poor preparation of minority youth in the school system, the additional hardships that Puerto Ricans face as a result of speaking Spanish at home, and the higher requirements for white-collar in comparison to blue-collar employment. Without denying that huge numbers of minority group members continue to exist on the fringes of the labor force, these trends suggest that many minorities are making a place for themselves in the city's economy in much the same manner as was characteristic of earlier groups of in-migrants such as the Italians, the Jews, or the Slavs. T o observe the process more closely, let us look at developments on the educational front, a first inspection of which was so discouraging:

Education and

Work

Young blacks and Hispanics currently account for 40 percent of all students currently enrolled in the City University system. In New York City's community colleges in 1976 blacks and Hispanics accounted for more than one-half of a total student body of 75,000; and in the public senior colleges, more than one-third of a total student body of 123,000. In 1970, 67 percent of blacks and 63 percent of Puerto Ricans who graduated from New York high schools went on to post-secondary-school training; this compares with a national average of 55 to 60 percent for all races. It is not necessary here to go deeply into the modifications in curriculum and standards that came about to accommodate the large number of minorities who sought and gained admission to the public colleges in New York City. The evidence is substantial that their inflow was accompanied by a reduction in standards, but the fact remains that the new groups are using the higher-education system to gain access to a much wider range of good jobs that are customarily reserved for persons who are able to obtain a college or higher degree. A recent publication of the U.S. Department of Labor predicts substantial numbers of job openings in the professional, technical, and managerial occupations in the decade from the mid-1970s to mid1980s. 1 Many of these openings are likely to be filled by minority group members entering the labor force. The forecasts include jobs for 25,000 registered nurses, 12,000 accountants, 11,000 social workers, 9,000 teachers, 5,000 clinical laboratory workers, and many other attractive career opportunities. Another indication of the mobility of minorities in the New York labor market is the successful penetration of blacks (data for Puerto Ricans are not available) into the corporate headquarters complex, which is the most dynamic sector of the city's economy. A recent analysis disclosed that 163,000 blacks were in corporate services industries or in ancillary service industries out of a total employment of 1,027,000 in this combined sector. Thus in this sector blacks account for about one of every six employees, while the total labor force is under 9 percent black. 2 Another way to make the same point is to call attention to the fact that there are about two blacks employed in the corporate sector for every one in manufacturing. A classic route to improved mobility for newcomers on the American scene, particularly along the Eastern seaboard, has been through increasing participation in the political process, with some of the rewards reflected in gaining access to a large number of civil service and appointive positions. Between 1960 and 1970, the proportion of minorities on the payroll of federal, state, and local government increased tremendously. In 1960, 29,400 nonwhites were in government jobs in New York City. In addition, 21,000 Puerto Ricans were on the public payroll. By 1970 the numbers had increased to 138,000 and

Minorities and the Urban Labor

Force

29,000 respectively. These figures reveal that one of the best traveled routes to upward mobility used by earlier groups of newcomers is once again being followed by the newly arrived minority populations, especially blacks. An important factor influencing the rate of absorption of any minority group into the regular economy is the group's distribution of jobs relative to that of the white population. This distribution in turn is greatly affected by the prevalence and intensity of the segregation and discrimination that pervade the local labor market. In the mid1960s New York City had a relatively low segregation index, ranking seventh out of the nation's thirty largest cities. Since that time it has probably lost position because of the adverse turn in its economic base and employment outlook. 3 However, it is worth noting that in 1976 the gap in the unemployment rate (uncorrected for participation rates) between white and black males 20 and older was considerably narrower in New York City than in the country as a whole, the black rate exceeding the white by 20 percent, not by 100 percent. A more comprehensive view of the absorption of minority group members into the local economy necessitates considering additional sources of income to which they have access other than regular employment. The first involves transfer funds—payments by different levels of government to individuals and family heads who qualify under one or more of the many programs that are based on social insurance or on need. A rough estimate suggests that about half New York City's minority population receives welfare (AFDC), permanent disability insurance (SSI), or Social Security. What these figures do not record is the considerable if unknown percentage of all individuals receiving AFDC who are working at least part of the week to supplement the allowances granted them by government. The fact that New York City provides a great many opportunities for less than full-time work in jobs that require few specialized skills facilitates such employment. And many of these employment relations are on a cash basis, which means that the employer keeps no payroll records and pays no Social Security taxes and that the employee, in turn, does not report his or her earnings. Some informed observers believe that President Carter's welfare reform plan, which is directed inter alia to placing employable welfare recipients in jobs, may be based on an assumption that, at least for New York City, is contrary to fact. Most employables on welfare are already working part of the time to supplement their welfare payments. Further substantiation of the presence of a sizable irregular labor market comes from the unknown but surely substantial number of illegal immigrants who are employed in New York City. T h e best informed students of illegal immigration are convinced that there are tens of thousands and conceivably hundreds of thousands of Haitians,

Education and Work Chinese, blacks from the Caribbean islands, and Spanish-speaking immigrants from Central and South America among the "undocumented" workers, as Secretary of Labor R a y Marshall prefers to designate this group. T h e extent to which these undocumented workers compete for the same jobs with the recent in-migrants from U . S . minority groups is unclear. S o m e see them as direct competitors who take jobs away from minorities by being willing to w o r k for less and to put up with substandard conditions. Others are less certain about the "direct" competition; they believe that many minority group members are not, in the presence of alternatives (welfare and illicit sources of earnings), willing to accept these marginal jobs. But even they see the undocumented worker as a large source of labor that depresses wages and other working conditions, and thus competes with low-skilled minority workers. A n o t h e r obscure but probably important dimension of the irregular labor market is the opportunity that m a n y have to earn income from illegal and illicit activities. S o m e years ago, Stanley Friedlander calculated that perhaps as m a n y as 2 5 0 , 0 0 0 persons earned all or part of their income from such activities. This figure represents about seven percent of the city's employed population! 4 W h a t e v e r the racial and ethnic characteristics of those who are at the top of these criminal activities, the mass of the " w o r k e r s " engaged in selling narcotics, running numbers, or buying or selling stolen goods are members of lowincome groups among urban minorities. A n y realistic assessment of urban employment must take this reality into account.

Some Policy Perspectives Although m a n y minority group members, both recent in-migrants and those native to New Y o r k City, were able up to 1970 to gain a toehold in the urban e c o n o m y or were able to gain access to higher-level jobs, the situation has since worsened perceptibly. T h e decline in the local e c o n o m y caused a correspondingly large cutback in employment, especially for the low-skilled. T h e continued lack of b u o y a n c y in the city's e c o n o m y in the mid- and late seventies has left large numbers of minority group members extremely vulnerable with respect to their present and prospective employment. T h e policy question to be posed is: W h a t mechanisms exist for bringing about an improved equilibrium between jobs and j o b seekers, with particular reference to members of minority groups? A first mechanism is demographic. T o the extent that the total population and labor force decline as total employment declines, a new

Minorities and the Urban Labor

Force

equilibrium is more nearly within grasp. During the first half of the 1970s, the city probably lost about 400,000 persons. But in the absence of a more detailed analysis of the characteristics of those who left versus those who remained, one cannot be sure how far this population decline is contributing to a new equilibrium. W e know from other research that in periods of relative economic decline, the younger, more productive members of the labor force are likely to leave in search of opportunities elsewhere. 5 This certainly has occurred to some degree in New York. A second demographic development has been the slowing of the inflow of new in-migrants who are poorly positioned to fit into the city's economy. But the buoyancy in the local economy is the single critical element involved in the speed with which a new equilibrium may be achieved. Recent experience has been depressing because the total pool of jobs has continued to shrink. It is hard to predict which sectors, if any, are likely to expand sufficiently in the next five years to speed the return to equilibrium. There is a reinforced relationship between the status of the present and prospective labor force and the likelihood of economic revival. The lower the proportion of dependent population, the less strain on the city's tax base. The better prepared the new members of the working population, the lower employer hiring and training costs. Improvements in both of these factors would help to strengthen the attractiveness of the city to the private sector. But as noted earlier, the schools are failing to prepare large numbers of young people to even a minimum level of competence. Accordingly, altering the employment outlook for a large sector of the minority population requires a two-pronged attack: first, to raise the performance level of the educational system, an undertaking that remains as elusive as it is important. There has long been a vicious circle between discrimination in the job market and poor educational performance among blacks and other minorities. W h y should ghetto youngsters pay attention to their studies if they know ahead of time that they are doomed to a life of unskilled labor? But that is no longer true. The demonstration effect now has the opportunity to operate. More and more blacks and Puerto Ricans are beginning to use the schools to help prepare themselves for the new and better job openings to which they now have access. The second part of the attack must be to improve dramatically the programming of sizable sums aimed both at significant skill acquisition by the trainees and at establishing closer linkages between the training and employment systems, particularly in the private sector. In 1978, New York City received more than $400 million of federal manpower funds to improve the employability and employment of

Education and Work youth and adults. Such sums can go a long way in speeding the absorption of large numbers into the productive economy. New York City is characterized by a great number of small employers: Nineteen out of twenty firms have fewer than fifty employees. Thus, the extent to which members of minority groups will be able to become small enterprisers is a critical aspect of the rate at which their absorption into the city's economy will proceed. There has been an encouraging increase in the number of Puerto Rican shopowners in New York City. Blacks historically have been less involved in such entrepreneurship. If private-sector leadership, with assistance from government, could speed the increase in the number of enterprises among minority group members, then the penetration of minorities into the city's economy would be speeded. There are two ways to read the tea-leaves. One is to be overwhelmed b y the negative signs: the softness in the city's economy and the absence of any clear source for its future expansion; the high proportion of minorities in the total population and their growing relative importance (due to differential birth rates); the high dependency ratio among these groups; the significant number of minority youth who reach the labor market inadequately prepared to perform in the labor force. But there is another reading: the growing numbers of minority group members who have a firm place in the city's economy and the growing proportion who are moving up into higher-level jobs; the increasing number of minority youth who are moving through the community and senior colleges; the continued prominence of New York City as a center of corporate activities, which has provided and probably will continue to provide additional jobs; the decline in the city's population, easing the number of job seekers; the availability of considerable federal funds for manpower training that could be put to more effective use. But above all else, time is probably a beneficial factor. All inmigrant groups have found it difficult to make a satisfactory place for themselves within one or even two generations. There is no reason to believe, even in the face of the added difficulties resulting from racism, that the future absorption of blacks and Puerto Ricans will be that much different if the U.S. and New York economies remain upbeat. But even an upbeat national and local economy will not prove responsive to the needs of all newcomers. Some will lose out. The goal of public policy should be to keep the number of losers to a minimum.

Higher Education: A Graduate Glut?

The answer, as is so frequently the case when assessing complex social issues, is both yes and no, or in the language of academicians, it all depends. Professor Richard Freeman of Harvard University, a sophisticated student of manpower economics, argues in his book. The Overeducated American, that the nation is definitely suffering from an oversupply of college, graduate, and professional manpower but that the market will shortly correct for most of the imbalance, witness the reduction in the number of students entering college, the shift in majors away from the severely depressed occupations, such as teaching, and the relative fall in real wages, which is a major aspect of the equilibrating mechanism already at work. The principal difficulty with Freeman's analysis and conclusions is that he proves too much. He is right in stressing the role of self-regulatory market forces, most clearly visible in the continuing decline of enrollments in education, in the roller-coaster behavior of engineering enrollments, and in the much reduced numbers seeking admission to

Education and Work and being accepted b y the elite institutions for doctoral studies in the humanities and the social sciences. But that is only one side of a complicated and confused situation that makes it difficult to assess what is happening, much less to predict what will happen—an early return to equilibrium or the continuance of a long-term disequilibrium. A d a m Smith pointed out a long time ago that m a n y young people tend to overestimate their chances of winning one of the large prizes, tend to crowd into fields where those who reach the top will enjoy high incomes and status but where the less able and the less lucky will be forced to settle for meager returns. T h e continual pressure of applicants for admission to law school, not only to elite schools but also to many of second and even third rank, can be viewed as a contemporary example of this tendency. But the complexity of occupational choice among students in higher education goes far beyond Smith's simple psychological proposition. Let us grant that a considerable proportion of the present and prospective graduates of law schools will find no positions, or only mediocre positions with p o o r career prospects, when they graduate. Clearly, here is proof of the widespread belief that one important part of the professional training establishment is seriously awry. But the matter is not so clear-cut. T h r e e years of close attention to the law b o o k s leading to a diploma at the end is not the worst preparation for a young person who m a y be interested, at least as a second choice, in working for government, entering business, or accepting an administrative position with a nonprofit institution such as a hospital or a trade association. Despite the heroic efforts of economists enamored of the potency of human capital theory, which when applied to occupational choice calculates the costs that the individual must incur in relation to the extra earnings that he is likely to secure as a consequence of his specialized training, despite the wide acceptance of this theory, it cannot be pushed too far. There is only "inferential" evidence that students make their occupational decisions after such close calculations; that they can obtain the necessary data; or that projections forty years into the future on the basis of current earnings profiles make much sense. Finally, and most important, there is the fluidity of most careers: Probably no more than two out of three graduates of law school remain in the practice of the law throughout their working lifetimes. A s suggested earlier, faced with the softness in the teachers' market women have shifted out of majoring in education into other fields at a rapid clip: In 1977-78 about one in eight of all college w o m e n were pursuing a m a j o r in education compared to one in three in the late 1960s. O n e might argue that after five or more years of corrective action, the gross imbalances in the teachers' market that surfaced in the

Higher Education:

A Graduate

Glut?

early 1970s are well on the way to adjustment. That is part of the explanation. The other part relates to the considerable tension that is inevitable in an occupation with several million members. It is inconceivable that 150,000 to 200,000 jobs do not become available every year. True, the market may still be loose given the fact that about half a million women graduated in June 1978 and that in the past—though not any longer—a high percentage of such graduates (roughly 35 percent) sought teaching posts. But there is more to the story. Even when the labor market for teachers was very tight and graduates could choose among many desirable positions, many who had majored in education decided to continue their education or to enter a different line of work. On the other side of the equation, many who had earned their degrees by pursuing a liberal arts course were able by taking a relatively small number of courses in pedagogy to qualify themselves to teach. In short, the potential supply of teachers at any time was always much larger than the number of students who had majored in education. But as I have just pointed out, many qualified teachers decided to enter other fields either upon graduation or after one or two years of teaching school. The thrust of these brief recapitulations of the realities of two fields of study and work—law and teaching—is to warn against any simplistic quantitative analysis of demand and supply relations between college majors and occupational specialization. The American economy has long been characterized by flexibility on the part of both job seekers and employers. While there are a limited number of occupations in which only those who pursue a specified curriculum and obtain the appropriate degree are admitted to licensure and practice, as in medicine, dentistry, and some fields of engineering, the conventional patterns of preparation and entrance into work are more loosely articulated. What then can be offered as a substitute for the human capital approach that seeks to explain the relations between higher education and the world of work in terms of the theory of investment in which young people make choices based on their calculations about how to optimize their lifetime earnings or benefits? Several social factors loom large, especially if one seeks an explanation for the tremendous growth of the college population during the 1960s which saw an increase in enrollments from 3 . 8 million at the beginning of the decade to 7.4 million at the end. As the post-World W a r II generation came of college age, their parents, who had been enjoying a rising standard of living, recognized increasingly that many of the most desirable jobs in the society were reserved for those who had acquired a higher degree. In the face of this evidence, it is not surprising that they encouraged and helped their offspring to continue their

Education and Work

education past high school. The fact that many families had two wage earners, wife in addition to husband, made it easier for them to help their children remain on the educational track. A closely related consideration was what a young man or woman of 18 would do if he or she did not continue in school. True, there were jobs for young adults, but for the most part they offered poor career prospects. Employers had become increasingly skittish about hiring teenagers, preferring instead mature women, who were entering or returning to the labor market in ever larger numbers. A great many young people moved on from high school to junior or senior college because of the lack of any clearly preferable alternative. Not to be minimized in this connection was the combination of pressure in the school, the local community, and the nation, all of which preached the same doctrine. A college degree was the ticket to success—a good job, a good career, a good income. Young people were encouraged to stay the route. Successive presidents of the United States beginning with Eisenhower enunciated this doctrine from the steps of the White House. The fifties and the sixties also saw major federal, state, and local governmental actions directed to the expansion of higher educational facilities and the lowering of economic barriers to attendance. One of the clear-cut gains of the Cold War resulted from our traumatic experience when the Russians launched the first space satellite. The federal government responded with substantial funding under the National Defense Educational Act, thus removing the financial barriers from the educational path of many young people. Even more important were the substantial investments by state and local governments to establish branches of state universities in urban centers; to start new institutions, usually in heavily populated areas; and to initiate and expand systems of community colleges. No young person who lived within commuting distance of one of these institutions could any longer claim that he or she was unable to attend college because of the financial costs. And most young people by the mid-1960s lived within commuting distance of a junior if not a senior college. Another factor of importance in the mid-1960s affecting males of college age was the acceleration of hostilities in Vietnam. Many young men recognized that their prospects of staying out of uniform were much better if they were enrolled in college or graduate school. In fact, for several years, such enrollment was grounds for temporary deferment. I made it a practice during these years to ask my graduate students at Columbia University how many of them were in school to avoid military service. In the late 1960s the show of hands never fell below one-third!

Higher Education: A Graduate

Glut?

Enrollments were further increased by the growing awareness of women and minorities that a college or higher degree was the best route into a good job and a career. Important as these several forces were in expanding enrollments in institutions of higher learning, two additional ones must be identified and evaluated. Their role was crucial. The first was the sheer influence of demography: The baby-boom generation saw 4 million young people turning 18 every year instead of the 2 million that had been the total for the earlier cohort of depression births. If nothing had changed but demography the number of college and graduate students would have shown a steep increase, but as we have just seen demography received a powerful boost from a host of factors from draft avoidance to the new conviction that education was the open sesame to a good life. But all of these expansionary factors would have exercised a less compelling influence on enrollment had it not been for the fact that the "market"—private, nonprofit, and governmental—kept validating the ideology that college was a sound investment. There seemed to be no limit to the absorptive capacity of business, particularly the large corporations, for trained manpower of all sorts—engineers, computer specialists, accountants, and college graduates who had pursued liberal arts degrees. Even in retrospect it is not easy to explain this avidity for college graduates. Several explanations, each of which may contain some small part of the truth, can be advanced: The professionalization of the personnel divisions, headed by college graduates, led them to recruit in their own image; a college degree was an inexpensive way of determining that a young person had the diligence and discipline to advance his or her goals; modern business was becoming at once more technical and more specialized—hence the increasing demand for scientifically oriented and managerially prepared cadres; the follow-theleader syndrome—as leaders of the nation's largest companies became more and more interested in college and graduate degree holders other companies less sure of themselves were inclined to follow in their path; finally, considering the fact that even a bloated managerial structure represented but a small percentage of the total cost structure, it appeared to be sensible not to skimp on hiring a relatively large number of college graduates. In a period of sustained expansion companies could always absorb them, if not immediately then a little later. The colleges and universities, many of which operated under nonprofit auspices, were tremendous consumers of their own trained manpower, particularly those students who went on to secure doctorates. Depending on the field of specialization, between one-third and two-thirds of all doctorates were eventually employed as faculty

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members. Hence a powerful feedback mechanism was at work, at least until late in the 1960s when the much expanded educational structure was adequately staffed. The expansion of state and local government and the upgrading of governmental personnel also operated to increase the demand for college and graduate students. But government did more than just add trained persons to its own payrolls. The 1950s and 1960s saw substantial increases in governmental financing, mostly federal, for research and development. O n the basis of this funding all three sectors of the economy were in a position to add substantially to their hiring of trained manpower. The trend in such expenditures did not flatten until late in the 1960s. All of these favorable factors—demography, ideology, governmental expenditures, a strong economy, filling the pipeline—turned adverse at the end of the 1960s with consequent disarray in academe and deepening disappointment among recent graduates, especially those with higher degrees, who began to realize, some slowly, some more quickly, that the halcyon days were over and were not likely to return in time for them to realize their career goals. In field after field—from nuclear physics to history—young men and young women, including many with talent, were forced to change their plans, usually to settle for work that was less interesting and less rewarding. In the case of engineers the early 1970s were very bleak, with substantial cutbacks in government spending coinciding with a softness in the economy and large graduating classes. But the troubles were less long-lasting than most informed persons expected. More so than in more esoteric disciplines that depended on university hiring, the revival of business in 1971 strengthened the demand for new engineers, and with future classes much reduced, many employers were willing to follow a more upbeat hiring posture. If one skips from the early 1970s, the period of substantial roiling of the market when many young people found their plans upset and when the passage of time did not appear to promise relief, what does the situation look like at the end of the 1970s and into the 1980s? A few bridging considerations. The number of young people seeking admission to college and graduate school is off in part because of the steeply rising costs, the less propitious job outlook, the elimination of the draft, and the unwillingness, especially of elite schools, to accept graduate students far in excess of the numbers that can be placed. Further, college and graduate students aware of the constricted market for graduates have flooded into the more vocationally oriented majors in the hope that their prospects for satisfactory employment will be enhanced if they graduate with a degree in accounting or computer science rather than in fine arts or history. A third intervening development that should be noted is the up-

Higher Education:

A Graduate

Glut?

grading of jobs and the downgrading of degrees that has been occurring to bring the demand and supply situation into balance. Faced with a large supply of college and graduate school completers, many employers have upped their hiring criteria seeking better-educated persons for positions that, in earlier days, they were willing to fill with nongraduates. In turn many of the graduates, recognizing the new reality, have had little option but to accept positions with less challenge and less pay than they had looked forward to obtaining. Rough calculations suggest that this process of "upgrading of jobs" and "downgrading" of graduates has resulted in a decennial slippage of 30 percent in each of two decades, back to back—the 1960s and the 1970s. W e are now in a position to answer, at least tentatively, the question of whether we have a glut of university graduates. If the term "glut" means a gross oversupply of college graduates and individuals with advanced degrees who are unable to obtain jobs and for whom the prospects of employment in the years ahead are also bleak—as is the case with graduates in many less developed countries such as India—then the answer must be an unequivocal no. That is not the situation in the United States. What happened in the United States can more correctly be interpreted as a sudden and unexpected downgrading of the expectation that a college diploma was a guarantee of a good career, an expectation that came close to being validated in the 1950s and 1960s when both sides of the equation—a restricted supply and a strong demand—reinforced the optimistic hue. It is questionable whether the concatenation of extremely favorable circumstances that prevailed in the 1950s and early 1960s, which offered so many options and rewards to intellectuals, is likely to be repeated before the middle or end of the 1990s, if ever. The smaller number of college students, the trend in research and development expenditures by both government and business, the rate of growth of the economy, and the antigovernment mood foreshadowed by Proposition 13 suggest that the demand for college graduates will be less frenetic than in the 1960s and that the expanded, even overexpanded university structure will be able to cope without much additional hiring. But the tentative conclusion that no glut exists and that one is not likely to develop is not the end but only a beginning of understanding the forces at work, just beneath the surface, that impinge on the behavior of the recent college graduate, the employer, and the larger society. Let us briefly consider each in turn. As for the recent college graduate, we noted earlier that for better or worse many who ran into trouble locating desirable positions demonstrated a flexibility that led them to accept an alternative even if it was less rewarding than the career they had originally sought. T o the extent that large numbers of graduates are forced into accepting second-

Education and Work best or even third-best jobs the odds are strong that their work behavior will reflect their restiveness and disenchantment resulting from their expectations having been unfulfilled. T h o s e who concern themselves with the quality of working life are wont to stress the tensions that are likely to arise when ever larger numbers of college-trained persons are employed on jobs that m a k e at most modest demands on their training. Clearly a widening discrepancy is likely to cause increased tension in the w o r k setting. But an even more potent cause of such heightened tension will be the disgruntlement of many w h o recognize that they will never be able to achieve what they started out to achieve. S o m e will overcome their disappointment and frustration; many others are likely to carry them to their grave. T h e b a b y - b o o m generation, even into the prime ages of 2 5 to 44, will be under continuing pressure long after their initial encounter with an unbalanced labor market that was their welcome when they first looked for a j o b . There are swollen numbers of young adults— more than twice the number of the previous generation—competing for the better jobs, which, as always, are limited. M a n y of them will lose out in the competition, which means that they will have to absorb a second defeat. T h e y will not be as successful as they would like to be and are capable of being in their career, even after they have shifted fields to bring themselves into alignment with the market. There are two special groups, members of which will strive hard to break through restraints that previously blocked them from being hired and more particularly from being advanced into more desirable positions—women and minorities. T h e fact that they have begun to make some progress and that they have considerable support from the law and administrative agencies mean that some of them will be competing aggressively in the years ahead for the good openings that become available. But this will result in a heavy crowding in the lower and middle ranks of management with white males, w o m e n , and blacks in active competition with one another. A c c o m m o d a t i o n s among groups are always more difficult when the market has an excessive number of competitors, and that surely appears to be the environment of the 1980s. If the foregoing scenario turns out to be reasonably congruent with developments as they unfold, employers, especially large corporate enterprises that have large numbers of trained manpower on their payrolls, will find their hands full. Instead of a presumption that what is good for the c o m p a n y is good for lower managers, they will find an increasingly large number of college-trained persons who realize that their promotion to higher ranks is seriously constrained and who accordingly will seek ways other than through hard work and unquestioning loyalty to find satisfactions and rewards. It has not been easy for many hierarchical managements to absorb the questioning, chal-

Higher Education: A Graduate Glut? lenges, and criticisms that are increasingly being voiced by younger executives who have taken literally the injunction of their professors to think analytically and critically about the problems that they encounter. But as successive waves of these young people face up to the fact that most of them will not move very high in the organization no matter how hard they try, their morale is likely to plummet, and their superiors will find themselves in a new and unaccustomed role. I am frequently asked whether middle management is likely to organize and join trade unions. M y answer is that such action is unlikely but that they are likely to cause top management serious problems whether they organize or not. But all is not bleak. One way that the prospective tensions may be reduced, if not eliminated, is through a different outlook on the part of both employees and employers about a lifetime commitment. With fewer dependents to support and with a spouse as a full-time earner, many men and women may decide, once they recognize that they are more or less blocked and that if they remain they will be doing much the same type of work for the next twenty years, to take the benefits to which they are entitled and seek greener pastures elsewhere. Clearly the extent of such "second-career" activity will depend on the condition of the labor market in general and on changes in benefit and pension schemes, but if these factors are reasonably favorable more job and occupational mobility should be anticipated. But this will come about only to the extent that large corporations shift their personnel policies to encourage such mobility. The United States will probably be more fortunate than a country such as Italy that faces a chronic oversupply of educated young persons. But the avoidance of a glut is not the same as the avoidance of frustration and tension, some dimensions of which have just been identified. The fact that several of the states and the federal government have just passed legislation that will facilitate people remaining on their jobs past their sixty-fifth birthday will only further complicate matters, particularly if inflation is not brought under control. However, there are signs, still not very clear, that if real income available for distribution among managers and workers grows at a slower rate than heretofore, one of the adjustments that may come is the reduction of working time. More and more people may decide that they will have to look to the nonwork aspects of their lives for their major satisfactions. T o the extent that they do—and to the extent that they succeed—some of the untoward developments implicit in the above analysis may be significantly moderated. Disappointed expectations should always be viewed as a danger sign. But the real test of a society's creativity is to develop new expectations more in line with reality.

Career Prospects for Managers

Each decade since 1930 has had its own special characteristics of demographic and economic growth. The 1930s found U.S. business in the doldrums, laying off people until 1933 and then hiring sparingly until the country geared up for mobilization in 1940. Even during this period, however, all was not bleak. Many economists, lawyers, and other professionals found jobs—good jobs—in the federal government under the stimulus of the New Deal. The rapid growth of the trade union movement also created opportunities for small numbers of college graduates. Still, many well-trained persons had to settle for employment in municipal or state governments, high-school teaching, or at worst, work on one of the WPA's cultural projects. World War II represented a major opportunity for many who were lucky enough not to lose limb or life. Many young people advanced rapidly in and out of uniform. The years after demobilization followed a somewhat erratic pattern, but the general thrust of the economy was expansionary. This was disrupted to some extent by the Korean War.

Career Prospects for

Managers

The most favorable period for career advancement of college graduates occurred between the end of the Korean War and the heating up of hostilities in Vietnam. During the twelve years from 1953 to 1965, most corporations added substantial numbers of college graduates— though not at a steady rate—and many businesses rapidly advanced the more promising among their young managers. The juxtaposition of a relatively thin supply of new graduates (reflecting the low birth rate of the 1930s) and the rapid growth in number of managerial positions (reflecting corporate expansion) generated these halcyon days for the young manager. After 1965, the situation became less favorable: The educational structure was vastly expanded; the pipeline was getting clogged; and middle management talent was ample, if not exceeding demand. Stagflation and the associated economic troubles of 1970-1971, followed shortly (1974-1975) by the most severe recession since World War II, made most corporations cautious about hiring. This cautiousness and the continuing increase in the number of graduates with baccalaureates or higher degrees have contributed to a continuing spottiness of the managerial labor market. This encapsulated, retrospective account emphasizes several generic aspects of the managerial labor market: This market, like all other markets, is in constant movement, responding in particular to changes in both the number of new graduates and the growth rate of the economy. Important structural changes—such as the vast increase in higher educational opportunities—inevitably have long-term effects on the supply of trained manpower. Changes in the economy and society increase or decrease the attractiveness of business as a career to new groups entering the labor market. Adjustments between the supply and the demand of trained personnel occur through changes in job requirements, wages, retirement policies, and other factors.

Recent Adjustments T o speak in general terms of the labor market for managerial manpower is at best an expedient designed more to disguise than to disclose. There is little or no point in treating persons trained in the liberal arts, teaching, the health services, social sciences, business, engineering, or accounting as if they were interchangeable parts. Furthermore, it makes little sense to lump all institutions of higher learning under the same rubric. Clearly, community and junior colleges,

Education and Work state colleges, state universities, private colleges, and private universities differ significantly in the quality of education and training they provide. T h i s is a fact that m a n y if not all employers take into consideration in determining w h o m they hire. Differences also can be drawn between the intellectual ability and other characteristics of those who pursue the same program in the same institution as well as of the student bodies of different institutions. These differences, too, enter into employers' decisions about where to recruit and w h o m to hire. In the face of these substantial variations among individuals, educational experiences, knowledge, and skills, it makes little sense to treat the pool of managerial employees as if it were an undifferentiated whole. But one must also take into account employer practices and characteristics of both the market and career progression that serve to some extent to negate the differences that exist among graduates in search of professional and managerial employment. For example, m a n y employers have little interest in the m a j o r that a student pursued in college: sociology, biology, philosophy, English—it makes no difference to them. T h e y believe that any reasonably competent college graduate, after a varying period of in-service training, can master the skills required to perform in an initial assignment; they see an advantage to putting everybody, or almost everybody, through their inhouse training program. M a n y employers are loath to place too much weight on the knowledge and skills a new employee possesses, recognizing that the crucial issue is how fast and h o w well he or she will be able to acquire the more specific knowledge required to perform effectively not only in the initial position but in a series of reassignments over the years. At the same time, of course, many employers seek and need specific skills and look for them among recent college graduates. If the accounting department must expand, it will take on individuals with undergraduate or graduate training in accounting. A n d the same is true for openings in engineering, computer science, research and development, and other areas that can be filled only by individuals with specialized knowledge and training. O n e of the consequences of a loose labor m a r k e t — d u e to a reduced level of employee hiring o r a large number of j o b applicants or b o t h — is a shift in hiring a w a y from generalists in favor of specialists. In periods of reduced activity and lower profits, corporations often limit new employment to essential personnel; they seek to cut their training costs, and they expect a new employee to earn his salary from the first month. This schematic assessment helps to explain several trends: T h e sizable reduction in the proportion of young people qualified to attend college who actually attend, explained in part b y the belief

Career Prospects for

Managers

that career advantages of additional education no longer outweigh the costs of attendance. The increase in enrollments in fields closely linked to occupational opportunities—for example, accounting, business, law, engineering, and the health sciences—and the decline, sometimes sharp, in enrollments in less vocationally oriented areas—such as languages, literature, and the fine arts. The substantial increase in the number of applications to leading schools of business, law, and medicine and select graduate schools whose students have encountered relatively little difficulty in finding good jobs upon completion of their studies. The marked increase in the number of persons who, having finished their studies in a field where the employment outlook has turned bleak—for example, in teaching, research, or the arts—have sought admission to other professional or graduate programs in which they see better occupational prospects. The substantial increase in the numbers of women and minority group members who pursue undergraduate and graduate courses of instruction that are preparatory for positions in business, particularly management, instead of in teaching and the helping professions. With employers and government acting to lower the barriers that have blocked their entrance and advancement into managerial positions, both women and minorities are making major efforts to prepare themselves for the new opportunities.

A Look to the 1980s The safest way to proceed in an exercise fraught with difficulties and error is to consider sequentially several determinants—demography, the economy, education, occupations, employer practices, and public policy—for the purposes of identifying how these factors may affect the demand for and the supply of managerial personnel. Demography In the 1980s, there will be fewer people between the ages of 16 and 24. The number will decline by approximately one-sixth, reflecting the drop in the birth rate that set in after the late 1950s. This will reduce the number of persons seeking entry-level positions in business. At the same time, there will be a relative oversupply of people aged 25 to 45, particularly in the middle-management group, reflecting the aging of the baby-boom cohort. An increasing proportion of young women will also remain in the labor force after marriage and motherhood. These women will continue to work rather than follow the previous

Education and

Work

pattern of withdrawing from work until their last child completes junior or senior high school. In short, demographic signs indicate a reduction in the number of young people competing for entrance jobs and congestion on the first or second rung of the managerial ladder. The Economy The future of the economy, in terms of its rate and direction of growth, is the most important determinant of the job market and yet the most difficult to assess. If one accepts the middle rather than the extreme forecast, then the rate of growth will be somewhat, but not significantly, below the average of the postwar years. Since the combined expenditures of all levels of government approximate 35 percent of total national expenditures and since budgets are generally constrained, it is unlikely—barring a national emergency—that the federal government will embark on many new or vastly expanded expenditure programs. The same can be said for states and localities, which are clearly in a chastened mood. Although some people like to speculate about major departures involving the creation of a national health insurance program, the rebuilding of our older cities, a stepped-up housing effort, or a serious plan to enlarge the nation's energy resources, none of these forecasts can be readily squared with the budgetary realities that currently exist or are likely to prevail. It is safe to assume that there will be no major redirection of the nation's economy and thus no striking new demands for trained manpower. From the point of view of demand, the economy should grow at a respectable pace, one that will result in two million or, at most, three million new jobs a year. The labor market should tighten at a slow, unspectacular speed. Output from Higher Education Since a smaller proportion of qualified college-age persons now enter higher educational institutions, and since the number of individuals in this age-group will decline by the 1980s, one can contemplate some easing in the number of graduates. This conclusion, however, rests on two assumptions: (1) The underrepresented groups now attending college—those from low-income and minority groups—will not increase sufficiently to offset the current decline in attendance among white males; and (2) older persons, those past 30, will not seek to reenter the educational channel to complete undergraduate degree requirements. Some are doing this, and more may. Still, it is unlikely on the basis of the recent data that an increase in attendance among older persons, minority group members, and women will be able to sustain the former high level of college attendance in the face of a smaller age cohort. More difficult to estimate is the trend in postgraduate education. In

Career Prospects for Managers a loose labor market, many people are spurred to continue their studies and improve their credentials in the belief that such efforts will enhance their employability. But graduate education, even if heavily subsidized by government, is expensive for the individual in terms of both direct financial outlays and foregone income. M o r e o v e r , the idea of turning graduate and professional education into a career advantage is weakened in part by capacity restraints as reflected in limited places in medical schools, adverse publicity about the oversupply of young lawyers, and the restricted amount of fellowship funds in economics and other fields where employment has held up. A reasonable forecast for education in the 1980s would be continued high output, perhaps a slight decline in the number of baccalaureates, and stabilized or slow growth in the number of graduate and professional degree recipients, with increasing student preference for programs that appear to have close links to the j o b market. Occupational Requirements From W o r l d W a r II up to the late 1960s, a physicist could write his own ticket for employment. T o d a y , hundreds of capable young physicists are being carried on postdoctorate fellowships in government laboratories, with little prospect of ever being absorbed into regular academic or industrial positions. S o m e m a y argue that physicists represent a unique group of specialists, but that is not so. T h e outlook for many trained in the hard sciences is quite different today from what it was only a few years ago and from what it might again be some years hence, at least as far as jobs outside of academia are concerned. A n d this is but one example of the difficulties of forecasting what skills and competences will be in high demand in the years ahead. There are further difficulties in occupational forecasting, especially when one lengthens the perspective from the initial j o b to a career. Few people realize that after fifteen years, most engineers—about three out of five—have left engineering for other assignments. T h e same pattern is increasingly characteristic of accountants, who more and more are leaving their field to take managerial positions. But all is not confusion and chaos. M a j o r transformations in the e c o n o m y do not occur every few years except in those areas where rapid expansion or contraction is occurring—for example, in. computer science and space technology. Therefore, it is reasonable to suppose that the hard skills that have long been in demand are likely to continue to be in demand. A m o n g them are quantitative, analytical, and communication skills. T o these can be added skills for which there has been a steady but more restricted demand—skills that are used in such fields as architecture, metallurgy, statistical analysis, and industrial design.

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Education and Work Employer Priorities The formal education and training system is, at best, loosely connected with the world of work. It is a well-known fact that professors continue to teach subjects in their areas of specialization long after the market has sent back signals that their graduates no longer are in demand. But colleges and universities are not part of the industrial complex, and they see their task as more than filling the requirements of employers. They are concerned with educating their students not only to help them get jobs but also to help them lead satisfying lives. One way the two systems—education and employment—are kept in alignment is by employers' altering their requirements to take into account changes in the nature and the level of output of the educational system. In the 1960s, the large outpouring from higher educational institutions resulted in about 30 percent of all graduates having to accept jobs that had previously been filled by persons with less than a college education. And the same trend is continuing in the 1970s. Moreover, many jobs for which a B . A . sufficed now require an M . A . The larger the supply of educated persons from which to select, the more employers will raise their requirements as to the amount of formal schooling—and will often identify the specific schooling—they require. There is every reason to believe that this tendency to use educational achievement as a major screening device will continue. T o a lesser but still substantial degree, the selection for advancement in many corporations is influenced by the additional education and training young managers accumulate. A large number of business schools, universities, and management organizations are running a brisk business in providing broad as well as specialized training for those who want to speed their climb up the managerial ladder. Since additional education is unlikely to harm anyone, senior managers continue to encourage such participation, although there has been no reliable assessment of the value of these efforts. Despite serious attempts by management to improve appraisals, all current efforts at measurement of work performance are seriously limited by the contamination introduced by personal and organizational realities. Accordingly, the young manager cannot rely solely on the quality of his work to assure his promotion; he must also develop skills of a political nature to help propel himself upward. And there is little prospect of any change in this situation in the years ahead other than an increase in the number of young managers in competition with one another. In the area of employer attitudes, a striking trend in recent years is the movement by large American corporations away from exclusive reliance on career personnel. In the face of an oversupply of managers aged 25 to 44, it is likely that these companies may move even further away from such reliance—through periodic thinning of the ranks and encouraging early retirement among managers in their fifties.

Career Prospects for Managers Public Policy T h e federal government has become much more active in the employment arena through equal employment legislation; there is every likelihood that it will continue to pressure organizations to increase their hiring and promotions of minorities and women. Government efforts toward this end, in the face of an increasingly large pool of young managers, will inevitably lead to greater competition, with white males more vulnerable than they were in the past. Employees, aided by the law, will probably force management to operate more in the open in promotions and personnel changes than it has operated in the past. Cases are n o w in the courts that were brought b y managers who believed that they should have been promoted. Senior executives will also encounter increasing difficulties in balancing the conflicting claims for equity between those with seniority and members of minority groups who have been singled out by law and by administrative agencies for special consideration in employment. At best, more and more time and effort will be directed to these matters; at worst, much organizational morale m a y be eroded by the disenchantment of those who consider that they have been treated unfairly. In sum, the young white male manager will face increasing competition for both employment and promotion as women and minorities press their rights for equal treatment.

Sources of Managerial Talent

Since the gift of prophecy has been reserved for the favorites of the gods, a forecast of managerial manpower for the year 2000 must be made with extreme caution. To underscore this point, one need only ask how many forces present in the American scene in 1970 were included in the expectations of competent analysts a decade earlier. To note several examples that affect the manpower and managerial realms: The Vietnam tragedy. The burning of the ghettos. Women's Liberation. The rapid expansion of higher education. The Great Society. The longest sustained expansion of the American economy, including the leadership role of the multinational corporation. The youth crisis and its challenge to authority.

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T h e list c o u l d b e e x p a n d e d to include the C u b a n missile crisis a n d its a f t e r m a t h , the p a s s a g e o f M e d i c a r e a n d M e d i c a i d that led to the a c celerated g r o w t h o f the h e a l t h - c a r e i n d u s t r y , the r e v i s i o n of U . S . imm i g r a t i o n p o l i c y , a n d the m a n y o t h e r u n l i k e l y o r t o t a l l y u n e x p e c t e d d e v e l o p m e n t s t h a t did indeed o c c u r . In the present c o n t e x t , the imp o r t a n t p o i n t is that e a c h of these d e v e l o p m e n t s h a d a n i m p a c t o n the d e m a n d , s u p p l y , a n d utilization o f skilled a n d p r o f e s s i o n a l

man-

power.

T h e G r o w i n g P o o l of Talent G i v e n the difficulties o f i n t e r m e d i a t e a n d l o n g - r a n g e m a n p o w e r forecasts, o n e must a d d that such e f f o r t s are not entirely m i r e d in u n c e r t a i n t y . T h e r e is a d e m o g r a p h i c f o u n d a t i o n to m a n p o w e r f o r e c a s t i n g that p r o v i d e s a n e l e m e n t of s t a b i l i t y , especially in c h a r t i n g trends in managerial manpower. T o illustrate: If m o s t m a n a g e r s b e g i n their c a r e e r s at a b o u t 2 5 a n d retire at a b o u t 6 5 , it f o l l o w s that all p e r s o n s w h o will b e in the m a n a gerial r a n k s b y the end o f this c e n t u r y h a d b e e n b o r n b y 1 9 7 6 . T h i s e l i m i n a t e s o n e p r o b l e m a t i c element in f o r e c a s t i n g , the future trend in the birth rate. T h i s trend c a n n o t b e totally ignored, h o w e v e r , since the a v a i l a b i l i t y of e d u c a t e d w o m e n f o r m a n a g e r i a l a s s i g n m e n t s will be influenced b y their decisions a b o u t m a r r i a g e a n d c h i l d r e n . T h e c o h o r t a p p r o a c h p r o v i d e s s o m e a d d i t i o n a l fixed p o i n t s . It indic a t e s that, b y the y e a r 2 0 0 0 , a l m o s t all individuals w h o are a b o v e age 4 0 t o d a y will n o l o n g e r b e a c t i v e . A n o t h e r o b s e r v a t i o n f r o m this p e r s p e c t i v e is that the s u b s t a n t i a l m a j o r i t y o f all w h o will h o l d m a n a g e r i a l a s s i g n m e n t s in 2 0 0 0 h a v e n o t yet entered u p o n their c a r e e r s . T h i s e m p h a s i z e s the critical i m p o r t a n c e of t w o f o r m a t i v e influences: the q u a n t i t y a n d q u a l i t y of e d u c a t i o n a n d training that y o u n g p e o p l e will r e c e i v e , a n d , p e r h a p s m o r e i m p o r t a n t , the r a n g e o f i n f l u e n c e s to w h i c h t h e y will b e e x p o s e d o n c e t h e y begin to w o r k . T h e n u m b e r s o f y o u n g p e o p l e w h o will g r a d u a t e f r o m college or p r o f e s s i o n a l s c h o o l at a n y future time is a f u n c t i o n o f the size o f the a g e - r e l e v a n t c o h o r t , the p r o p o r t i o n o f t h o s e eligible f o r

admission

w h o elect to go on with their studies, a n d the p r o p o r t i o n w h o stay the c o u r s e a n d g r a d u a t e . It s h o u l d b e n o t e d , h o w e v e r , that the close relation that used to exist b e t w e e n a g e a n d a t t e n d a n c e at institutions o f higher e d u c a t i o n f o r degree s t u d y is b e i n g l o o s e n e d ; m o r e a n d m o r e students in their m i d d l e a n d late twenties a n d sizable n u m b e r s of min o r i t y g r o u p m e m b e r s w h o are even older are enrolled f o r degrees. A b o u t 8 0 p e r c e n t o f the 17- to 1 8 - y e a r - o l d s are c u r r e n t l y g r a d u a t i n g

Education and Work from high school—up from about 50 percent at the beginning of World War II—but the proportion of that age-group who become eligible for college is not likely to increase further. The proportion of the college eligibles who will seek to enter and the proportion who will complete their degree requirements are more difficult to determine, since that depends on changing costs, changing value systems, and available occupational opportunities. Since the late 1960s, the proportion of white males entering college has dropped; the proportion of black males, which continued to rise for some additional years, is also down from its peak in 1972. The proportion of white women entering college, after continuing to rise until 1971, has leveled off since then, while the proportion of black women has continued to rise. 1 It is impossible, on the basis of a relatively few years' experience, to sort out the temporary from the more permanent factors influencing these trends. Still, it would be venturesome to assume that the college population will account for a higher proportion of the age-group in the decades ahead than it has represented in the recent past. If these two ratios—the proportion of the age-group that graduates from high school and the proportion who elect to go to college—are at or close to their maximum, the size of the future college population will be determined by the numbers in the successive age cohorts. It is important to note in this connection that the number of Americans reaching 18 will decline from a high of around 4.2 million in 1975 to an estimated low of 3.3 million in 1982. But once again, one must avoid straight-line projections. In the 1960s the American educational establishment ignored the incontrovertible evidence that the demand for college admission would slacken, since the number of 18-year-olds was going to level off. In the late 1970s the planners must take into account the known changes in the numbers of young people in the 1980s and 1990s.

Focus on the College-Educated Pool The presumption has been made that the pool of managerial manpower is equated with the number of college graduates. Some rationalization for this simplification should be outlined: Large organizations are increasingly characteristic of both the profit and the nonprofit sectors in our society. One advantage that most large organizations hold is their ability to offer prospective employees long-term affiliations with promotional opportunities. Since the number of these desirable jobs and careers is far fewer than the number of job seekers, large organizations are in a position to screen the pool and to select those whom they believe will be most productive. And increasingly, a college degree is a prerequisite for a managerial position.

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Talent

For example, the U.S. military is attempting to limit its officer cadre to those with a degree. Only college graduates are selected for pilot training, not because a college education is work-related but because the defense establishment believes that the range of qualities they seek in officer personnel is more likely to be found among college graduates—people with above-average intelligence, the ability to learn new skills, traits of character that will facilitate their socialization, and potential for leadership. Much the same thinking underlies the personnel selection policies of civilian organizations. Despite the questions that may arise about the logic of present selection procedures, in this context one must accent the fact that existing selection policies are likely to be continued in the decades ahead, and if the supply of eligibles should continue to outpace the demand, it is probable that large organizations will place increasing importance on degrees higher than the baccalaureate. Since college and university degrees are and will continue to be the key criteria for the selection of managerial personnel, the following parenthetical observations are useful. Potentially serious social costs attach to a nation's supporting an education-training structure that produces a sizable number of persons who will not be able to find positions commensurate with their training. The Carnegie Commission on Higher Education has estimated that this will be the fate of more than one-quarter of all college graduates in the 1970s. There are also substantial hidden costs arising from the semiautomatic exclusion of individuals without college degrees from consideration for managerial positions. These costs are likely to weigh particularly heavily on members of minority groups, who have greater difficulty in obtaining the financial resources necessary to pursue an extended course of education. Unless the Supreme Court extends the doctrine of the Griggs v. Duke Power Company case (1971) to the managerial ranks and outlaws the use of all educational criteria that have not been job-validated—an improbable development—or unless the heads of large organizations institute a revolution in their personnel policies and reduce the current heavy weight assigned to educational qualifications, it will continue to be reasonable to treat the college-educated pool as a first approximation to the pool of future managerial talent.

The Academic Preparation of Managerial Personnel Before exploring the curricula that college and university students pursue, one should address a broader consideration: Which groups within the university-trained pool move into managerial jobs? While corporate enterprises hire a considerable number of special-

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ists for positions in engineering, marketing, accounting, finance, research and development, and testing (especially chemists) and a smaller number of graduates in more esoteric fields such as mathematics, physics, computer science, and communications, they also hire a considerable number of liberal arts graduates. Accordingly, there is no direct way of estimating what proportion of the total college and graduate pool represents effective hiring potential. A safe conclusion would be to include all college graduates in the pool but to recognize that the probability of being hired is markedly different for a young person with a B. A. from a small state college with a major in physical education than for a person with an M . B . A . in finance from Harvard or Columbia. Large nonprofit organizations, such as hospitals, museums, social welfare agencies, and foundations, are often more discipline-specific in hiring than large corporations, because their staffs and operating positions require, in addition to general skills, specific subject-matter knowledge. Moreover, these nonprofit organizations seldom are able to engage in the prolonged in-service training programs that characterize many large business concerns. The fastest-growing sector of the American economy, from the viewpoint of employment, has been state and local government. The multifarious governmental departments, agencies, bureaus, and authorities employ a large number of "middle managers," who increasingly are recruited from among the college pool. Although some government hiring is directed to specialists, much of it is not restricted to persons who have completed a specific curriculum. Liberal arts graduates are able to qualify for a high proportion of all openings in government. Considerable mobility among sectors has long characterized the U.S. economy. A significant proportion of young people who start out in academic life and fail to obtain tenure succeed in obtaining managerial posts in profit, nonprofit, or government organizations. Similarly, a considerable number of professionals, particularly individuals trained in law, psychology, and the natural sciences, shift into managerial careers after several years of professional work. Again, in large organizations, especially large for-profit enterprises, a significant proportion of scientists hired initially for laboratory work shift, in time, to line management. Another accelerating trend is the growing proportion of welltrained persons who, by necessity or choice, leave their first arena of employment at the end of twenty years or so to take up a second career. This is easily seen among military personnel in their forties who, passed over for general or flag rank, retire from the service but, almost without exception, seek new employment. It may be a questionable, if not scandalous, practice whereby so many former highranking officers are found in the management of companies that have

Sources of Managerial

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sizable procurement programs with the Pentagon, but for the present purpose reference to this mobility pattern emphasizes that any comprehensive analysis must allow for shifts to second careers. In light of the foregoing, one can distinguish three subgroups among all college and university graduates in terms of their suitability for managerial assignments. The first are those with liberal arts or education degrees, who in 1974-1975 received 360,000 out of the 975,000 baccalaureate degrees awarded, or approximately 38 percent of the total. T h e second and largest contingent, which accounted for 44 percent, consists primarily of students who have majored in the physical or social sciences. They can be classified as semispecialists in terms of their preparation for management. That leaves those who have majored in accounting, business, or engineering, roughly 185,000 or 18 percent of the total, whose preparation is most directly applicable. T o develop a typology of academic preparation for management, however, there is good reason to shift the focus from the baccalaureate to the master's level. T o the extent that one can talk about the professional preparation for management—and surely the concept has validity—the principal focus should be on the graduates of business schools who have acquired a master's degree in business administration or its equivalent. In the short span of a single decade—from the mid-1960s to mid-1970s—the annual output of M . B . A . s grew from about 7,000 to almost 31,000, or more than fourfold. The total number of master's degrees awarded grew at a much slower rate, about one and a half times over the same period. In the mid-1970s M . B . A . s accounted for one out of every nine master's degrees awarded. The forecast for the mid-1980s falls in the same range and is likely to turn out to be an underestimate. The most conspicuous change over the last decade, particularly in terms of the graduate schools of business, which cater to full-time students and where the course of the program runs over four semesters, has been the increasing emphasis on quantitative approaches involving operations research, mathematical model-building, and econometrics. While the leading graduate schools of business differ from one another with regard to the emphasis they place on quantitative methods, with Carnegie-Mellon at one end of the spectrum and Harvard at the other, the trend has been strong and persistent and is likely to continue at least until the disciplines on which the business curriculum is based—economics, sociology, psychology—shift the current emphasis from abstractions to institutions. As long as the present trend continues, the student body in graduate business schools will continue to be divided; those who have had solid training in mathematics, at least through calculus, in their undergraduate years will have a distinct advantage over those who have majored in the humanities, history, or social science. Among the preferred graduates of the leading business schools are

Education and Work

persons who had earlier majored in the physical sciences or in engineering, who had earned a master's degree along the way, and who subsequently have done well in their business courses. These broadly trained students, especially those who have also worked for several years, can usually command a premium of at least 10 to 20 percent in their initial salary upon their graduation from business school. Two additional factors bear on attempts to quantify the pool of potential managers: the place of management in the occupational decision-making process of the college population, and the range of skills required for a successful managerial career. With respect to the place of business within the occupational-choice matrix, two generalizations have considerable validity. The first is that a high income is an important objective in the career and life plans of large numbers of young people, and some of them appreciate that preparing for a career in business offers a path to this goal. Of course, the pervasive money-making goal can also be pursued within a great many other professions, such as medicine and law. Therefore, the ambitious young person need not select business as his field of specialization to realize his pecuniary goal. Many who choose management as a career, particularly those who attend a graduate school of business, do so by a process of elimination. They have been in the educational channel long enough to know what they do not want to do, such as pursue a doctorate in a scholarly discipline, go to law school, or become one of the horde banging for admission on the gates of the medical schools. Having considered these and other possibilities and having discarded them, they seek admission to a graduate school of business, believing that they can get a better start in their career if they enter the labor market with some additional credentials, particularly since they can look to the school's placement office for assistance in making a first connection. It would be hard to predict a rosy future for graduate schools of business if large organizations, particularly in the corporate sector, were to stop or reduce substantially recruiting their graduates. But such an eventuality has not appeared on the horizon. A closer look at the complex of characteristics associated with high performance in the managerial realm, however, points to the second factor: the strengths and limitations of a formal course of academic studies that attempts to provide managerial skills. A well-designed course of graduate studies can unquestionably deepen a student's analytical capabilities and teach him useful techniques. It may even sharpen his skills in written and oral communication. But there are three additional dimensions of critical importance for high-level performance in business to which the best-designed course of formal studies can contribute little. The successful manager must have a flair for the politics of organizational life—he must know how to lead

Sources of Managerial

Talent

others, to make alliances, to recognize and deal with opponents—all critically important skills that cannot be learned in the classroom. Next, he constantly needs new experiences that afford him the opportunity to broaden his knowledge and understanding of the dynamics of organizations and the complex environments in which they operate. Clearly this is not within the province of any school to provide. And finally, a critical differentiation between more and less successful managers is their capacity for sustained and directed work effort. While it would be an oversimplification to say that those for whom success at work is very important are likely to rise to the top, it is a safe assumption that in the absence of a strong work commitment a man or woman is not likely to rise above his or her peers.

Addition of Women and Minorities to the Pool The total number of degrees awarded fails to reveal the changes in the composition of the student population pursuing masters' degrees with respect to either sex or race. During the last decade and particularly during the last five years there have been striking increases in the proportion of students entering graduate business schools who are women. At present, between one-quarter and one-third of the total student body of many of the leading schools is composed of women, and there is no certainty that the numbers have peaked. One should observe that the women students are not only recent baccalaureate recipients but are also mature women who are entering or returning to the labor market. Although Harvard Business School did not admit women as regular students until 1963, the absorption of women since the bars were removed has been free of difficulty. Most women students come well prepared; many are able to finance their education; and although sex discrimination in employment remains pervasive, compensatory forces are operating to facilitate the placement of women graduates as a consequence of the special efforts of many large organizations to increase the proportion of women in their managerial ranks. The situation for minority business students is more complicated. First, they are less well prepared on the average, since many have attended weak colleges. Second, the problem of financing two additional years of study is a major burden for many, even though they have access to special support from both public and private sectors. Another source of turmoil is the restiveness of many faculty members with minority students, many of whom encounter difficulty in keeping pace with the rest of the student body. Some years ago the leading

Education and Work business schools, responding to the challenge of the times and encouraged by foundation support, substantially increased the number and proportion of their minority group students. M a n y minority students who were admitted to these schools had difficulty in meeting the prevailing standards, placing the faculty and administration in the dilemma of having to m a k e exceptions for them or to separate them before graduation. A more satisfactory equilibrium is being established through the application of stricter standards at the time of admission. But the consequence has been a leveling of minority enrollments; in fact, recently there have been some reductions. If one had to speculate on the future trends with respect to women and minority students in graduate business schools, a cautious position would be to anticipate rising enrollments for women until they level off in the range of one-third, and a considerably slower increase in the enrollment of black and other minority students as a result of their lower rates of graduation from college and their difficulties in meeting the costs of two additional years of education. Even though rates of enrollment of minorities in graduate schools of business are an important index, they are b y no means the sole determinant of the numbers of minority group members who will seek managerial careers. During the decade 1965-1975 there was a rapid increase in the numbers and proportion of young blacks attending and graduating from college. There has also been a considerable shift in the proportion attending large integrated institutions, m a n y of which boast stronger faculty and curricula than the typical black undergraduate college. Finally, m a n y small southern colleges have made, and are continuing to make, substantial changes in their curricula from heavy concentration on courses preparatory for teaching to preparation for accounting, other business fields, and engineering. W h e n allowance is made for these important transformations, the prospective increases in the number of minority group members w h o will opt for managerial careers are substantial, particularly when compared with the low base of only a few years ago. T o place the problem in perspective, one need only recall that Everett M o r r o w , the highest-ranking black man on President Eisenhower's staff, with prior experience in management, was repeatedly rebuffed when he sought the assistance of the President's advisors and friends in finding a new managerial position when he left the administration in I 9 6 0 . 2

Immigrant Entrepreneurs Without making refinements that would require age, sex, education, and skill comparisons, one need only note that legal immigration to

Sources of Managerial

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the United States, skewed in favor of people with scarce occupational skills, is set at 400,000 per annum, while the annual birth rate is now around 3 million. This means that, unless U.S. immigration policy is changed—and forty years passed last time before significant changes were made—to neglect the flow of immigrants into the pool would be to err. It would be an even greater mistake to ignore the number of illegal immigrants in the country—the estimates range from 4 to 14 million. There is little prospect, even if unemployment continues high, that a society which values freedom will adopt the repressive measures required to bring this illegal flow of people under tight control. Although the proportion of potential managers among new immigrants is smaller than among the native-born, even allowing for the fact that preference for a permanent visa is given to those with scientific skills, many immigrants have considerable entrepreneurial aptitude and drive. That has surely been the case for the large-scale inflows of Hungarians, Cubans, Greeks, and Chinese; and, if the past is a guide, it will also prove to be so among the Vietnamese. The American economy has interstices at which foreigners who are determined to succeed can find a place to begin. While management has been viewed primarily as planning and decision-making in a large organization, money-making skills in small business enterprises cannot be ignored, since one of the dynamics of an advanced economy is in the transformation of small into larger enterprises. And it is here that the immigrant's entrepreneurial capabilities must be considered in assessing the nation's pool of managerial talent.

The Shape of Things to Come It is never easy to forecast how changes in the society will impact particular sectors such as the training and flow of managerial personnel. But one can identify a number of forces that will help shape the effect, such as the enlarged role of continuing education, the increased number of women in managerial positions, the pressures exerted by equal employment efforts, and the resolution of tensions between authority and professionalism. Continuing Education The question that immediately confronts an economist is: How long will it be before an enlarged supply of M . B . A . s will impact on the demand for and utilization of managerial manpower? The point was made earlier of an adjustment process that was at work in the 1960s and again in the 1970s: Some positions previously filled by high school graduates are now reserved for college graduates. Not much is

Education and Work known about the correlates of this upward drift in j o b requirements, which is determined less b y changes in technology than by the increased availability of better-trained people. Scattered evidence suggests that the earnings of the college-trained are beginning to weaken relative to those of the less educated. But there is growing, if still limited, evidence of an increasing restiveness among m a n y college and university graduates in middle management positions as a result of the underutilization of their skills. Logic points to this, since executives with significant decision-making power in a large corporation m a y not exceed a hundred. T h e prospective imbalance between requirements and availability of managerial personnel is more complicated. S o m e years ago Harold Smiddy, one of the principal architects of the post-World W a r II reorganization of the General Electric C o m p a n y , advanced the proposition that the rapidly changing knowledge base and new techniques and sociopolitical environments in which business operates underscore the desirability of requiring all managers in their early forties who are scheduled to advance to the higher rungs of their organization to return to school for eighteen m o n t h s or so to refurbish their intellectual capital. Continuing obsolescence must be taken into account in analyzing the managerial pool. T w o matters are related to both the underutilization and the obsolescence of middle management skills. T h e first is the relatively small social, organizational, and personnel costs involved in a much enlarged system of continuing education. If it is true, as I believe, that most organizations tend to accumulate too m a n y people in middle management ranks, resulting in difficulties in making full use of this group's time and energies, then the broadened opportunity for middle managers to pursue in-house and external educational opportunities might prove a constructive and satisfying balancing mechanism. If such an approach to solving the problem of excess time is not to create another—rising expectations that cannot be met, at least within the same organization—the purpose of additional education will have to be more closely related to goals of self-development than to career advancement. T h e second matter is that better-educated, more knowledgeable, and more alert individuals would be well positioned to advance, especially in an e c o n o m y in which there is likely to be more intersectoral mobility and where fewer and fewer individuals will be interested in spending their entire lives within a single organization. If the foregoing prognostication turns out to be a fair one, one must anticipate a substantial increase in the number of individuals who will pursue an M . B . A . during the years when they are actively engaged in earning a livelihood. Since the University of Chicago's School of Business has an enviable record of catering to an employed group, and since other graduate schools of business, including Columbia, have introduced and expanded similar types of programs, rapid growth of continuing education courses can be expected.

Sources of Managerial

Talent

Women Managers It will take the better part of another decade before a significant number of women move into the higher ranks of management, but it is not too early to outline some of the consequences of such a development. The experience of the military and selected experience in the civilian economy, particularly in the foreign service and academic life, have spurred personnel managers to modify existing policies and procedures pertaining to married couples in the same organization. For instance, the only prospect of retaining couples within an organization that requires its personnel to go overseas for terms of service of three to four years is an assignment system that enables both spouses to be located at the same or adjacent posts. A second adjustment is the need to remove conventional barriers against hiring spouses. While there may be reasons of propriety and equity to avoid hiring one spouse who will report to the other, the more wide-reaching regulations proscribing nepotism are increasingly anachronistic, particularly because of new laws and regulations encouraging equal opportunity. Since many large organizations will probably continue to balk at hiring both spouses for managerial assignments, it is likely that there will be a broadening of informal reciprocal arrangements that now exist with regard to the hiring of the sons and daughters of senior executives. Large organizations accommodate each other in the placement of these young people to prevent their having to work for the organizations in which their fathers hold major positions. Another likely consequence of the increasing number of couples pursuing dual managerial careers is the increased difficulty of management in reassigning junior, middle, and top managers. Europeans have long remarked on the frequent relocations that are characteristic of the personnel practices of American corporations. It is not unusual for a junior executive on his way up to have to relocate five times in ten years. It has been assumed that his wife and children have no special claims to consideration, for, after all, the man is moving up in pay, status, perquisites. What more could his family want? When more and more married women begin to have careers of their own with pay, status, and perquisites approaching those of their husbands, corporations will not be able to assume that their managerial personnel will be so mobile. A substantial salary increase and advancement in rank for one of the spouses will scarcely compensate for the losses sustained by the other if he or she must resign a $30,000-ayear position. 4 Toward Equal Opportunity About one decade ago, one of America's leading manufacturing companies promised an attractive black student who was about to graduate from the Graduate School of Business at Columbia University a position in its marketing division with the clear understanding

Education and Work that his territory would not be limited to black clientele. T h e c o m p a n y reneged on its promise, and at the end of a year the young man found himself a new position. A decade or so ago, a m a j o r chemical c o m p a n y was pressed to explain why it had so few minority personnel on its staff. T h e reason lay not with discriminatory hiring or promotion policies, the c o m p a n y said, but with the inability of black persons to find suitable housing in the southern communities where m a n y of the company's plants were located. These anecdotes help to date the special problems facing minority group managers. Racist policies and practices that infuse the entire social system will not yield to a simple head-on attack on employment. Discrimination in housing, in club memberships, and in informal social relations are intertwined with broadening opportunities for minority group members to rise in the managerial hierarchy. M a n y key relationships on which a person's future in the organization depends reflect the ties that he or she makes during hours off the j o b — a t dinner, on the golf course, on vacation. Accordingly, one must anticipate that even with the hiring bars lowered and eventually removed, most blacks and other minority group junior executives will continue to encounter difficulties in climbing up the organizational ladder because of their significant social isolation from their peers and superiors. O n e final caveat: increasing competition is taking place not only between white and minority group males but between men and women in all groups for the relatively small number of g o o d jobs that exist in every organization. Authority versus Professionalism Large organizations derive much of their strength from being structured so that basic responsibility for determining policy resides at the top, while those in the middle and lower management understand what is expected of them and are willing to follow the policies and routines determined at the top. But professionals view the manner in which they w o r k — a n d often the goals toward which they w o r k — a s partially or wholly within the orbit of their own determination. Accordingly, the steady effort to professionalize management carries an implicit challenge to preexisting structures of authority and legitimacy. If an individual is well educated, if he has been encouraged to weigh alternative goals and the paths of reaching them, his resistance to carrying out uncritically orders from above will be substantial. It would be risky to estimate the rate at which the challenge to authority is growing, but there is little risk in suggesting that during the next quarter-century the steady loosening of the hierarchical structure of large organizations must be anticipated, even if the consequences and adaptations thereto remain unclear.

Sources of Managerial

Talent

The effects of the challenge by professionalism to those with formal authority can be found in the spate of troubles characterizing many of our society's major institutions, whose leadership has come under increasingly severe attack—in the arenas of religious, military, governmental, corporate, and academic life. If continuing education is considered along with the underutilization of the skills of middle management and the growing thrust of professionalization, and if account is taken of the broader trends in the economy, the United States as well as other developed nations may be expected to enter an era during which the long-established patterns of preparation, work, and leisure will undergo substantial transformations. T h e separation of these several functions within the life cycle has begun to give way at the edges: Managers spend more and more time in continuing education; professors take more sabbaticals; work schedules are adjusted prior to retirement; individuals undertake consulting and other employment ties after retirement; there is increasing flexibility about the age of retirement; options are broadened with respect to types of fringe benefits that managers may select. All of these arrangements point to even larger changes in the role of work in the decades ahead. Unless the developed economies enter upon a period of much reduced or no growth, it is almost certain that, with the family income of the managerial group continuing to rise substantially, and with most families having fewer children, men and women will seek to alter the long-established patterns of having little time in their active years and having too much time upon retirement. It is hard to believe that the existing pattern yields optimal satisfactions for most successful men and women. Accordingly, one must expect that pressures will mount, conceivably quite rapidly, for experimentation that looks to lessened rigidities and greater options. 5

Professionals, Managers, and the Establishment

All societies, including such disparate cultures as medieval Christendom, Confucian China, Victorian Britain, and the contemporary United States, have developed mechanisms whereby young people of promise and talent from the lower classes have been afforded an opportunity through education to join the establishment, thereby helping to cement and augment its power. The sluice gates were never opened very wide, but the village youngster who was encouraged by his local priest to enter the Church, the farmer's son who was able to pass the examinations set by Peking, the tradesman's offspring who succeeded in breaching the walls of Oxford, were able to make the transition from the lower to the upper classes. How far up they went depended on talent, circumstance, and luck. This chapter presents statistical evidence that points to the proliferation of professional and managerial personnel in the U . S . economy since World W a r II and indicates how this swelling number has affected the establishment. When FDR entered the White House there were

Professionals,

Managers,

and the

Establishment

four visible economists in the federal government: Mordecai Ezekiel and Louis Bean in Agriculture, Herbert Feis in State, and Alexander Goldenweiser at the Federal Reserve Board. The research and development structure revealed serious efforts by such giant corporations as A T & T , GE and DuPont, not many others. In the federal government, Congress had established the National Institutes of Health in 1930, but its initial appropriations were miniscule. Nobel laureate I. I. Rabi points out that when he joined the physics department at Columbia University in the late 1920s its total annual research funds amounted to $10,000. He was able to start his experiments only because another prospective Nobel laureate, Harold Urey, shared his research funds with him. For the first four decades of this century about one out of twenty persons earned a college degree, and as late as 1940 the proportion was only about one out of sixteen. The rapid expansion in higher education started after 1950. Within the quarter-century that followed, the ratio of college graduates among the group aged 25 to 29 increased from about 1:12 to 1:4. A few additional observations. Many women who attended and graduated from college in the pre-World W a r II era worked either not at all or for only a brief spell prior to getting married and starting their families. Hence the proportion of college graduates in the labor force in 1940 probably was no more than 4.6 percent, or one out of twentytwo workers. Physicians, dentists, lawyers, clergymen, teachers, librarians, and engineers aside, there remained at the outset of World War II only about 620,000 college-trained professionals in the labor force. A word about the data sources. The U . S . Census uses the occupational category "professional, technical, and kindred workers." While most professionals today are college graduates and many have higher degrees, the Census category includes artists, athletes, and airline pilots, many if not most of whom are not college graduates. T o complicate matters further, the Census counts selected "technicians" in health and engineering in the same category with professionals. Moreover, "managers and administrators," a separate occupational category, is often combined with professionals. The two categories together provide the best single count of the college-trained population in the preferred jobs in terms of income, status, and career prospects. But we must quickly add that a sizable and growing number of college graduates are also found in lower-ranking jobs—in clerical and sales jobs or among blue-collar and service workers. Among the important forces unleashed during and shortly after World W a r II which made that conflict a watershed between a lessand better-educated work force, between an economy dominated by entrepreneurs and one increasingly dependent on salaried managers

Education and

Work

and administrators, were the following: the rapid growth of research and development in industry including chemicals, electrical manufacturing, pharmaceuticals, and communications; the pervasive growth in the control of the federal government over many aspects of the economy and environment; the more active participation of state and local governments in the provision of services to the public; the transformation of large corporations into multinational conglomerates; and the substantial expansion of the nonprofit area, particularly in health and higher education. As we shall see, each of these developments contributed to increasing the demand for professionals and managers to staff these rapidly expanding technical organizations with their almost insatiable appetite for specialists. What the economy can use in terms of talent and skill depends not only on the preferences of employers but also on the output of the educational and training system. Partly because the demand was strong, but partly because of the changing values and expectations of the American people and the responsiveness of state legislators, the higher educational system underwent a major expansion. Until Allen Cartter raised the issue in the mid-1960s, quite late in the expansion cycle, little attention had been paid to the extent to which the rapid expansion of the educational system was creating a market for its own graduates, especially at the level of the doctorate. One is reminded in this connection of the boom in the training of psychoanalysts in the 1950s, many of whom found work helping to train those who came after them. The growth of full- and part-time college and university teaching staffs increased from 247,000 in 1950 to 687,000 in 1976. What can we learn from a closer look at the numbers and the trend toward expansion in professional and managerial personnel? In 1977 the Current Population Survey reported that 13.7 million persons were classified in the professional and technical category and 9.7 million as managers or administrators (outside of farming). Combined, these two groups account for 23.4 million out of a total of just over 90 million employed persons, or one out of four. The comparable data for 1958, the year which marked the beginning of the series of the annual Employment and Training Report of the President, were 7 million professionals and 6.8 million managers, for a combined total of 13.8 million out of a total employed of 63 million, or just over one out of five. Here is a first indication of a trend toward the professionalization of the U.S. work force. The foregoing understates what happened, because the relatively modest increase between 1960 and 1977 among managers, 32 percent, fails to distinguish between the gain of 110 percent in those who held salaried positions (from 3.5 million to 7.5 million) and the decline of almost 50 percent (3.5 million to 1.8 million) in self-employed managers, primarily small businessmen.

Professionals, Managers, and the Establishment Let us look at the large group of professional and technical personnel that accounted for 1 3 . 6 0 0 million persons in 1977. First, this total should be decreased by 1 . 1 0 0 million engineering, scientific, and "other" technicians, leaving an adjusted total of 1 2 . 5 0 0 million. Within this group, the classic professions of law, medicine, and the clergy accounted for 4 6 2 , 0 0 0 , 7 2 4 , 0 0 0 , and 3 4 7 , 0 0 0 respectively, for a total of 1 . 5 3 3 million, which was slightly more than 12 percent, or one out of every eight professionals (see table 9 . 1 ) . Closely related to the classic professions are teachers at the college and university level, who numbered 5 6 2 , 0 0 0 , and a much larger group that the Census designates as "writers, artists and entertainers," who numbered 1.141 million, for a combined subtotal of 1 . 7 0 3 million. A second large group consists of the "teaching and helping professions." Teachers, except those in college and university posts, accounted for 3 . 0 4 2 million, to which we can add 2 0 8 , 0 0 0 librarians and 1 7 5 , 0 0 0 vocational and educational counselors; this gives a combined subtotal of 3 . 4 2 5 million professional workers in education. T h e other large subgroup is composed of nurses, dietitians, and therapists, who numbered 1 . 2 8 5 million, and 4 6 2 , 0 0 0 health technologists; a combined total of 1 . 7 4 7 million. T h e other related subgroup consists of 4 4 4 , 0 0 0 social and recreational workers. T h e total number of professionals in education, health, and social work, other than those included among classic professions or closely related to them, numbered 5 . 6 1 6 million in 1977. A useful designation for the third and last grouping of professionals includes those whose work is closely related to providing professional services to business, nonprofit, and governmental organizations. T h e largest occupational groupings include the following: engineers, 1 . 2 6 7 million; accountants, 8 6 8 , 0 0 0 ; computer specialists, 3 7 1 , 0 0 0 ; personnel and labor relations specialists, 3 7 0 , 0 0 0 ; life and physical scientists, 2 7 5 , 0 0 0 ; social scientists, 2 2 4 , 0 0 0 ; operation and systems researchers, 1 2 2 , 0 0 0 ; architects, 5 8 , 0 0 0 ; research workers and others not previously classified, 2 2 5 , 0 0 0 ; for a total of 3 . 7 8 0 million. O t h e r categories can be developed by recombining and adjusting the foregoing. For instance, adding the college and university teachers to those classified as working in education yields a total number of professionals involved in educational activities: 3 . 9 8 7 million. Adding the 7 2 4 , 0 0 0 physicians and other health care practitioners to the 1 . 7 4 7 million persons classified as working in health occupations yields a combined category of professionals working in health of 2 . 4 7 1 million. These two fields, education and health, account for 6 . 4 5 8 million, or m o r e than half of all professionals. O t h e r combinations would lead to a larger total of professionals closely allied with business. T o the 3 . 7 8 0 million who have already been so identified, we might want to add perhaps as m a n y as 7 0 0 , 0 0 0 from the 1 . 1 4 1 million designated

Education and

Table 9.1.

Work

Number of professionals by occupation (in millions).

Category Classic professions: medicine, law, religion Closely related to classic professions College and university teachers Writers, artists, and entertainers Total Helping professions Education Health Social and Recreational Workers Total Professionals: business and other organizations Total

Professionals 1.533 .562 1.141 1.703 3.425 1.747 .444 5.616 3.780 12.632

as "writers, artists and entertainers," since painters and sculptors (180,000), musicians and composers (150,000), and athletes (110,000) together account for only 440,000. If we also add to this group lawyers, since most of their income is dependent on assisting organizations in the profit and not-for-profit arenas, the new total of the business support group is 4.942 million, or close to 40 percent of all professionals. Only a small miscellaneous category remains to be accounted for: religious workers, social and recreational workers, and the creative artists. Together these groups number slightly over 1.2 million, or around 10 percent of all professionals. Table 9.2 summarizes this new grouping by major activity. The allied category of managers and administrators numbers 9.7 million. There is a constant flow of persons between the two subgroups of this category, usually from professional into managerial work, as in the case of the lawyer or accountant who becomes a business executive, a bench chemist who becomes a line manager, or a physician who becomes director of a hospital. We know less about managers than about professionals, but we do know that 1.3 million administrators, officials, and inspectors are employed primarily in the public sector. Most of the others, numbering 8.3 million, work for profit-making organizations or are self-employed. Selling at retail, wholesale, and sales positions in other sectors accounts for more than 4 million persons or roughly two out of every five classified as a manager. The predominant proportion of this sub-

Professionals,

Managers, and the

Establishment

Table 9.2. Number of professionals by major activity (in millions). Category

Professionals

Professionals in health and education Education Health Total Professionals in posts related to business and other large organizations Business Independent professionals Lawyers Total Other professionals Religious workers Social and recreational workers Creative artists Total Total

3.987 2.471 6.458

3.780 .700 .463 4.943 .347 .444 .440 1.231 12.632

group is involved in one or another aspect of retail trade, from the owner or manager of a corner grocery store to the chief executive officer of Sears or J. C. Penney. Manufacturing, transportation, and public utilities employ more than 1.5 million managers. If we add to these construction and building managers, the total comes to about 2.2 million, much less than the numbers who make their livelihood in sales. The other key business group about whom some information is available is the category of managers in banking, credit and finance, insurance, and real estate, who number about 900,000. Finally, there is a sizable residual group of 340,000 office managers and 840,000 managers in miscellaneous services. O f the 8.380 million managers, the vast majority of whom work in profit-seeking enterprises, about 3 million are in the critical sectors of manufacturing, construction, banking, and finance, where the value of output added tends to be much higher than in trade. Most selfemployed managers, about one in every four, are concentrated in two subsectors: retail trade and miscellaneous services. Table 9.3 provides an overview by occupation and sector of the two largest groupings of professionals and managers. The table reveals that most professionals and managers work for or provide services to business and other large organizations. Even if we subtract the almost

Education and

Work

Table 9 . 3 . Number of professionals and managers by sector (in thousands). Sector Education Health Business and other organizations Government and nonprofit not elsewhere counted Artists (independent workers)

Total

Professionals

Managers

Total

3,987 2,471

391 175

4,378 2,646

4,892

8,320

13,212

781

707

1,488

441

12,572

—

9,593

441 22,165

2 million self-employed managers, and further assume that perhaps as many as another half million professionals and managers not classified as working for government and nonprofit institutions do in fact work in the not-for-profit sector, this reduced total of professionals and managers in business is still substantial. T h e numbers attached to the not-for-profit sector are also large. Even though many health professionals are self-employed, there m a y still be close to 9 million professionals and managers, or roughly two out of five, attached to the not-for-profit sector. According to a National Science Foundation report, National Patterns of R&D Resources, Funds and Manpower in the United States, 1953-1977, the dollars that support professionals do not always come from their direct employers. In 1 9 7 7 b u s i n e s s contributed $ 1 7 . 5 billion of its own funds toward a total research and development program of $ 4 0 billion. However, total spending b y business on R & D came to $ 2 7 . 8 billion; the difference of more than $ 1 0 billion represents a transfer of governmental funds. Because of these transfers among sectors, over one-third of the 3 6 4 , 0 0 0 scientists (exclusive of social scientists) employed b y industry in R & D in 1 9 7 6 were indirectly paid by government. S o m e additional perspective can be gained by considering the absolute and relative growth of professionals and managers since 1 9 5 0 and assessing the extent to which women and minorities have benefited from the substantial growth that has occurred. Since the census and intercensal data cannot be coordinated, we must first compare 1950 with 1970. In this period the number of professionals increased from 4 . 4 9 0 million to 1 1 . 1 0 0 million. In 1 9 5 0 they accounted for roughly one in every fourteen employed persons; in 1 9 7 0 for one in every seven—a truly striking gain within a single generation. T h e compara-

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and the

Establishment

ble figures for managers show a less steep gain, from 6.4 million to 8.3 million, but for salaried managers the increase was even more rapid than for professionals. The dominant, one might say the predominant, role of professionals and managers in the U.S. economy is suggested by the Current Population Survey data for 1977, which reveal that more than one out of every four employed persons is either a professional or a manager. Although these figures have an upward bias since many individuals tend to classify themselves in a higher bracket than the facts justify, the dominance of these two groups remains real. What has been the experience of women and minorities during this rapid expansion of professionals and managers? Have they had an opportunity to improve their share of professional jobs? In 1950, women were overrepresented among professionals in that they accounted for 40 percent of the 4.5 million professionals, while representing only 29 percent of the total work force, but this was a result of their dominant participation in two professions—teaching and nursing. In 1950 women also accounted for a disproportionate number of all social workers and librarians, but in most other professional fields they were seriously underrepresented. The position of women in 1950 in the managerial arena was even weaker. They accounted for only 15 percent of the 6.4 million administrators and managers, although they made up over 30 percent of all workers. Moreover, most female managers were self-employed owners or co-owners of small retail shops. The 1977 data show a total of 5.8 million women professionals, a striking absolute increase from the 1.8 million a quarter of a century earlier. Despite the rapid rise in the numbers of male professionals, women improved their relative proportion of the total from 40 to 43 percent. The changing role of women in the ranks of managers was also impressive. They made sizable gains, more than doubling their numbers and improving their relative proportion substantially, from 15 to 22 percent of all managerial jobs. If account were taken of the shift from self-employed to salaried status, the relative improvement of women's position would be even greater, although they would still lag far behind men. The increase among women in the top occupational categories is shown b y the 1970 Census, which revealed that there were more women professionals than men in government service, 2.4 million versus 2.1 million, reflecting in the first instance the large number of women employed as teachers by local governments. O n the other hand, male administrators and managers outranked women by 3.5 to 1 (640,000 versus 179,000). Another measure of women's penetration into the upper occupa-

Education and Work tional categories can be obtained by looking at their changing experience in large companies (over 100 employees) between 1966 and 1975. While the total number of professional and managerial personnel increased from 3.775 million to 5.620 million, or by 49 percent, the number of women in higher-level occupations increased from 434,000 to 1.181 million, or by 170 percent. Within a single decade the proportion of women in the higher occupational categories of large companies increased from approximately one in nine to one in five. Impressive as these gains have been, it would be an error to minimize the remaining gap between women and men. A recent report of The Conference Board on Improving Job Opportunities for Women (1978), based on government data and special surveys, yields the following additional information on recent trends. Between 1970 and 1975 the proportion of managers among all corporate-sector employees increased from 10 to 13 percent, and during this quinquennium the proportion of women among the managerial group increased from 13 to 17 percent, leading the authors to note that "women appear to have made a durable gain" (p. 25). Between 1972 and 1975, a period when there was only a modest 2 percent increase in total employment in the corporate sector and a 1 percent increase in male professionals, women professionals experienced a gain of 96,000, or a 24 percent advance. But it will take many more years of such differential gains before women come abreast of men. A1977 report by the National Science Foundation, Women and Minorities in Science and Engineering, provides insight into the minor role that women play in this critical sector. In 1974, when two out of every five employed persons was female, there were only 96,000 women employed as scientists and engineers out of a total of 1.7 million, or 6 percent. As table 9.4 shows, the greatest discrepancy between men and women is in engineering rather than in the sciences, although the gap in the sciences is also substantial. Several favorable developments are underway that will increase the proportion of women in science and engineering, but it will take a supportive environment and considerable time before the current gaps are narrowed substantially. For the first time in U.S. history the proportion of women enrolled for undergraduate degrees is at the 50 percent mark; a higher proportion than previously are majoring in the sciences and engineering; a higher proportion are going on to acquire master's degrees or doctorates. Furthermore, the last years have seen a major shift of employed women scientists out of education into business, government, and other sectors. In 1968, 62 percent of all women scientists were employed in educational institutions; in 1974 the figure had decreased to 26 percent. As the knowledge of broadened opportunities for employment throughout the economy spreads among young women interested in science, more will probably choose careers in science.

Professionals,

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and the

Establishment

T a b l e 9 . 4 . Employment in science and engineering by sex, 1 9 7 4 . Profession Physical scientists M a t h e m a t i c a l scientists C o m p u t e r scientists E n v i r o n m e n t a l scientists Engineers Life scientists Psychologists Social scientists Total

Men

Women

141,000 38,000 101,000 42,000 993,000 118,000 46,000 87,000

14,000 7,000 21,000 1,800 5,000 18,000 15,000 13,000

1,566,000

94,800

Between 1 9 6 0 and 1976, while whites increased their proportion in the professions from 1 2 . 1 percent to 1 5 . 7 percent, blacks and other minorities enjoyed an increase from 4 . 8 to 1 1 . 7 percent, a more substantial gain. During this same period, white managers increased from 5 . 9 percent to 9 . 2 percent, a sizable gain, while blacks and other minorities, from the low level of .9 percent, increased to 3 . 5 percent. A more complete analysis would require a review of specific occupations to determine whether blacks were distributed among the higher- and lower-paying occupations in a fashion similar to that of whites or whether they were concentrated at the lower end of the scale. T h e gross answer is at hand: W h i t e male professionals in 1 9 7 0 enjoyed a median income of $ 1 0 , 7 0 0 while black males earned an average of $7,800. A m o n g the approximately 2 million employed scientists and engineers in the United States in 1974 there were 3 2 , 0 0 0 blacks; all other minorities totaled 5 5 , 0 0 0 , of which Asians were the most important subgroup, exceeding by about 4 , 0 0 0 the number of blacks. A b o u t one out of every three blacks in this category were in the social sciences, however, far a b o v e the national average which stood at approximately one out of every eleven. O f the 2 2 8 , 0 0 0 employed scientists and engineers with doctorates in 1973, only 1 , 7 0 0 were black while more than 1 0 , 0 0 0 were Asian. For a great m a n y reasons, including long-term lack of j o b and career opportunities, attendance at colleges with weak science departments, and failure to acquire qualifying skills, blacks face formidable hurdles in substantially increasing their proportion of doctoral candidates in the sciences and engineering in the absence of sustained public and private encouragement. There is one more important consideration. A significant reason for focusing attention on professionals and managers is that most of them

Education and Work

command a higher than average income. In a society in which the number and proportion of good jobs and attractive careers are limited, those who are able to work in one of the two top occupational groupings are more likely to enjoy a preferred life style than are most other workers. In 1976, median male earnings amounted to $13,500. Professionals earned just under $17,000, self-employed professionals averaged about $26,000, and physicians averaged over $50,000. Among managers and administrators, again considering only males, the spread was considerable, but less than among professionals. Average earnings of all managers and administrators amounted to $16,700, while the average earnings of salaried managers were about $20,500. As might be expected, scientists and engineers, according to a National Science Foundation study in 1974, earned considerably more than did the work force as a whole. Their average income was $19,300, more than half again the average for male workers. According to the type of work in which they were engaged, their average salaries fluctuated from a low of $18,400 for research and development to $22,600 for administrative or managerial positions. Those whose primary activity was teaching earned on the average $19,200. The federal government paid scientists and engineers an average of between $2,000 to $3,000 more per year than industry or the universities. Women in these occupations earned on the average about $3,000 less than their male counterparts. How does the composite picture of professionals and managers in the U.S. economy that has been developed here relate to the establishment that dominates the larger society? A first point to place in perspective is that of scale: Professionals and managers account for one out of every four workers. They have experienced a differentially rapid rate of growth during the past quarter-century, and the category of salaried managers has grown even more rapidly than the professions. About three in every five professionals and managers are employed by business directly, work for a corporation or a corporate service firm, or are self-employed. The remaining two of the five work in the not-for-profit sector, and the vast majority of these earn their livelihood by providing educational or health services. Many professionals, especially those in independent practice, such as many physicians and lawyers, earn on the average more than twice or three times as much as other members of the work force. The differentials among salaried managers in such fields as manufacturing are smaller but still amount to about 50 percent. Since World War II the U.S. economy has demonstrated a tremendous absorptive capacity for professionals and salaried managers, a

Professionals,

Managers,

and the

Establishment

trend that has greatly increased the prospects for occupational mobility for the much larger number of college graduates. If, as now appears likely, the United States increases its expenditures for health, education, research and development, and related services at a considerably slower rate than in the previous quarter-century, the steep rise in the proportion of professionals and salaried managers will moderate and may even decline. What deductions and implications can be drawn from these data and trends? The first observation is the inability of those at the top to exercise their power and protect their property without being increasingly dependent on the large numbers of professionals and managers who honeycomb every large organization. Consider the differences in the Standard Oil Company early in this century when John D. Rockefeller, Sr. was at the helm, and the management structure of Exxon today. Consider further the recent difficulties that have surfaced in the Ford M o t o r Company as the head of one of the last family-controlled multinational corporations seeks to insure that its leadership remains within his family. Henry Ford II may succeed in working his will, but a betting man would want good odds on a wager that a Ford will be in effective control of the company a decade hence. The tenuous future succession of the Ford Motor Company helps to demonstrate a critical theme that runs through all establishments, particularly in our own society, which is so heavily dependent on large numbers of professionals and managers. Genetic and cultural factors insure that the sons and daughters of the wealthy and the powerful are likely to be outnumbered and outmatched by talented outsiders. Even if sons and daughters of those at the top are favored in selections for good positions in business, politics, or other areas, the probability is that the establishment, seeking to protect its power base, will go out of its own ranks in choosing new leaders. The inability of the establishment to find successors from within its own ranks is one source of continuing potential conflicts. The most ambitious and aggressive outsiders do not find the gates of opportunity shut tight in their face. The odds are against any one of them making it to the top, but it is likely that some of them will succeed in the struggle for succession. Many professionals and managers probably never had the illusion, or gave it up early, that they could compete for the top jobs. They are primarily interested in a good position, an attractive career, and the benefits that accrue to a successful professional or manager. But they want more. They have undertaken a long period of preparation, some six or seven years beyond high school, during which they learned how to think, analyze, criticize, and synthesize. When individuals have been through college and graduate or professional school, they are unlikely to accept uncritically the values, goals, and patterns of behav-

Education and

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ior of the organization they join or the society in which they have achieved adult status. It was Joseph Schumpeter's perceptive insight that these educated and competent persons would help to undermine the capitalistic system that had favored them with good jobs and good incomes. Support for Schumpeter's thesis is readily at hand. The neoKeynesian economists argued persuasively until recently that government deficits help to keep the economy at or close to full employment. Ralph Nader took on General Motors and recently the entire industrial establishment; he and his colleagues showed consumers how to use law and government to force corporate enterprise to pay for its errors and misdeeds. Rachel Carson and her progeny of environmentalists learned to use the legislatures and the courts to stop new investments whenever a scenic view might be spoiled, an endangered species threatened, a beach polluted. No one has counted up the costs of these environmental "victories/' but the continued vulnerability of the United States with respect to energy supplies—to use just one illustration— cannot be lightly dismissed. The disgruntled intellectuals on the Left are not the only threat to the establishment. In my view, the neoconservative activists, such as Friedman, Kristol, and Laffer, who advocate broad deregulation, constitutional limits on tax levies, and a reduction of income transfers to the poor, are just as much, if not more, of a threat to the establishment, since their proposals if enacted would exacerbate existing tensions and conflicts and reduce the space for compromise and accommodation. In the present context, however, the important issue is less the specific nostrums that these doers and shakers advance than the fact that they are strategically able to mold opinion in one direction or another. The thrust of this analysis has been to emphasize the important role that professionals and managers play in pointing the direction of their organizations. T o force the argument to the limit: Nothing can happen in a large organization without the participation b y or at a minimum the acquiescence of middle management. O n e is reminded of the quip of President Kennedy who, shown a proposal, commented, "I like it, but I don't know whether the Government of the United States would agree!" John W . Gardner's comment is also apposite: Middle management is like the Van Allen belt—nothing gets through in either direction. The establishment has been obsessed for so long with its conflicts with the blue-collar work force (consider the turmoil over labor law reform) that it has neglected the new, if still largely hidden, challenge of middle management, on which it is increasingly dependent and which it cannot effectively control. This challenge has less to do with ideology than with participation and rewards. In the society in which

Professionals,

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and the

Establishment

we live, which is controlled by various interest groups, middle management is primarily concerned with improving its position. It is unclear whether this interest group, in pursuing its goals, will weaken or, as Schumpeter believed, mortally wound the establishment. M y prognosis follows: Today no establishment is capable of assuring its own survival. Broad recruitment of talent and co-option of newcomers provides the establishment with the additional trained manpower it requires and also places many of the newcomers in a position to advance their own interests and in the process to usurp more decisionmaking power. Whether the system will be able to adjust to the power ploys of the newcomers or whether it will become so brittle that it will eventually break apart depends upon whether the demands of the new mandarins for income, security, and power can be met without undermining the risk-taking, profit-seeking, efficiency criteria that have long been the basis for the growth of the modern corporation.

I I I Manpower Planning and Policy In most countries, m a n p o w e r planning and policy—corporate and national—are a new departure, scarcely two decades old. T h e criteria that are used to gauge their success and failures must allow for this fact. To complicate matters, most developed nations are able to deal with problems only one at a time, but in the labor market y o u n g and old, members of the majority and minority g r o u p s compete with one another for preferred jobs. There are several w a y s to deepen perspective on m a n p o w e r needs and policies: to look b a c k w a r d in order to get a better fix on one's current position; to pursue c o m p a r a t i v e analysis to see what can be learned f r o m the experience of other countries; to assess the options that a nation c o n f r o n t s as it seeks to accomplish in the future w h a t it has not been able to achieve u p to the present.

Manpower Planning in the Organization

The first issue that must be faced and dealt with is the meaning that attaches to the word "organization" in the context of this discussion of manpower planning. For our purposes, the term organization means any type of large enterprise in the governmental, nonprofit, or profit sector—a large governmental department, a university or medical center, a corporation. Implicit in the term organization is the concept of scale. The people who are employed must number in the thousands, often in the hundreds of thousands. For it is the issue of scale that helps move the policy function to center stage. A small organization can look to the market to find the people it needs for expansion or replacement. Not so a large organization that must plan ahead to assure itself of the diversity of the skills and talents it requires. Some years ago during a lecture at the General Electric Company's Crotonville Center, I said in passing that I found relatively little difference between the manpower problems of the Department of Defense

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and those of General Electric. Both institutions were large bureaucracies—they could not be anything else given their size and their complex missions. One excitable senior executive interrupted to protest being insulted—clearly GE should not be compared with D O D ; it was a highly profitable, efficient organization while D O D was a behemoth that could withstand any and all attempts to tame and direct it. M y response that the common elements of size overshadowed other differences was totally unacceptable to my interlocutor. But the present chief executive officer of General Electric is said to refer to the company's headquarters at Fairfield, Connecticut, as "Pentagon East." The critical importance of human resources in corporate as well as national policy derives from the fact that about 80 percent of national income is represented by wages, salaries, and fringe benefits; only 20 percent represents dividends, interest, and rent. The challenges facing large organizations in the use and misuse of personnel are much the same, since the major elements are size, power, and interpersonal conflict. And these forces are present in all large organizations. Another common characteristic is the attitude and behavior of the senior executives, who, having reached the upper echelons, are convinced that they are good judges of people and therefore usually see little need to launch a strong human resources effort. T o p executives have no difficulty recognizing that they need strong production, marketing, finance staffs to help them, but they are dubious of the need for a human resources staff. Consider for instance the manpower challenges facing a governmental, nonprofit, or profit organization that requires an array of talent, different types of managerial competence, and technical skills to perform its specialized mission. I am reminded of the movie industry in the United States, which, from its beginnings, has found it difficult to accommodate artists and management in an effective organizational structure. Small wonder that public television has its difficulties. The reasons for such difficulties grow out of the fact that there is something antagonistic between a big organization that must rely in large measure on established policies and practices, and the degree of freedom that creative people need if they are to make an optimal contribution. All large organizations are cursed with inflexibility, and certain organizations suffer from an advanced condition of the disease. If it is difficult for a governmental agency to collect garbage efficiently, how much more difficult must it be for a governmental organization to produce a variety of new programs that will attract and hold the attention and support of a large sector of the public. The first challenge is to experiment with any and all elements through which a large organization can develop more flexibility in dealing with its creative people, without jeopardizing the organization's viability. A second challenge relates to the types of individuals that a large

Manpower Planning in the Organization organization, especially a governmental agency, attracts. It tends to attract people who are security-minded, who are concerned with stability of employment, who look forward to promotion based on seniority, and who are timid about operating in a competitive environment. Consider the difference between a governmental agency and a large department store. It is customary for large merchandising establishments to hire young college graduates and to place them in highly competitive environments, where each day, each month, each year their performance is measured against the record of the immediately past period and the trend. If they do well, they advance; if not, they are likely to be dumped. It is not unusual for a person, within five years, surely within ten, to be earning five times his starting salary or to have achieved promotion to vice-president. The New York papers carried a story recently about the president of an ailing department store, paid about $200,000 annually, who was fired without so much as a by-your-leave because the holding company executives were disturbed by his expenditures on remodeling his apartment and presumably by his less than stellar performance as a store manager. But that is not how things happen in a large governmental organization. My suggestion is that the senior executives might set a goal of advancing several young people out of turn based on superior performance; and in time the executives might also seek the removal (or early retirement) of a few managers who have lost their capacity to perform effectively. Modest targets of this nature could help put a little zip into an organization. Large organizations, as indicated earlier, tend to be inflexible. But large organizations also have advantages. They provide a large internal job market which, if properly exploited, should help people to move into assignments in which they can grow and perform more effectively. But that in turn depends on how well transfers are managed. If, as frequently happens, they are limited to a few a month, a few hundred a year in an organization that numbers tens of thousands, scale is not making any contribution to improved utilization. But here is an opportunity that should not be ignored. Under proper conditions, turnover might be stimulated to a point where it could contribute to both improved performance by the individual and parallel gains to the organization. But that would require active cooperation between departments and headquarters.

Some Questions and Answers There is no simple or single way to assess the performance of managers, but knowing what not to do may help. In many large organiza-

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tions, the competence of a manager continues to be gauged by the number of people under his direct control rather than by the "value added" through his input. Clearly the first approach is dysfunctional. It is the cause of overlayering of staff in large organizations. Each aggressive manager, looking to advance himself, tries to expand his part of the organization. He is continually pressing for more people and is unwilling to give them up. It would clearly make more sense to reward managers who cut their personnel costs by getting their functions performed with fewer people. But if the latter approach were to be given a fair trial, some of the gains from improved manpower management would have to accrue to the individual or to the group that was squeezing out the fat. Otherwise, why should they make the effort? While the design of appropriate incentives and rewards for improved personnel management will not come easily, unless serious effort is made and risks are taken large organizations will continue to grow larger but not necessarily more efficient. There is much discussion these days about improving the quality of the work environment, a subject concerning which I continue a healthy skepticism, not because I consider the goal unimportant but because of the narrow margins that most managements face in seeking to alter the work environment. Most managers believe that if they only had more and better people —whatever the last really means—all their problems could be solved. I have long questioned that solution. I once spent eight years studying selection ( T h e Ineffective Soldier: Lessons for Management and the Nation) and concluded that how an employer deals with people after they have been selected—in terms of training, assignment, promotion, separation—really holds the clue to how well the organization will perform. As a professor at Columbia University, I am impressed with the contradiction between the recruiters from the large companies who seek only our "best" graduates and the fact that almost all of our students are hired. Further, after being carefully selected, many employees leave within the first five years. Clearly something is seriously wrong with the selection process. In my view it is the emphasis on selection. Interviewing is a highly unreliable process and reveals, more than anything else, the biases of the interviewer and the astuteness of the interviewee. I have tried, unsuccessfully, let me add, to save many large companies money by suggesting that they could do just as well by accepting employees who meet certain scores on a first-come, firstserved basis, and could use their savings for better indoctrinationassignment-training after the employees are on board. Many large organizations believe that the crux of manpower planning is hiring college graduates. Having spent my entire life at a university, I cannot be accused of being an antiacademic. But it does seem to me that many companies have become unduly impressed with edu-

Manpower Planning in the

Organization

cational credentials—especially in fields in which such preparation has little pertinence. Clearly, for certain functions, the recruitment of college-trained personnel makes lots of sense, but one must think through the job and career requirements, technical or general, and assess whether those who attend and graduate from universities are most likely to possess the required talents and skills. One must also take into consideration the extraneous reasons why people go to college—social status or draft avoidance—and further consider whether the passivity of listening to and regurgitating lectures is the preferred preparation for the work the individual is being hired to perform. One of the major unsolved problems of corporate personnel policy is appraising performance. The weakness of most existing systems derives from the fact that the supervisor who makes the basic assessment is seldom, if ever, an unbiased observer. More often than not, he may feel explicit or implicit threats from the employee whom he is grading. Accordingly, I think that while one cannot ignore the immediate supervisor in the appraisal process, it is essential to have a second reading made by others for whom the individual does not work directly. Another important consideration is to expose an individual to a series of different assignments, because the best appraisals depend on performance. This means that an organization must budget some money for failure, because some who get new and difficult assignments are sure to fail. The U . S . Army has a career development plan of moving promising officers into new assignments every three to five years, interspersed with periods of advanced study. The officers are carefully observed; this is one way of monitoring potential and performance. Finally, one must know how to read a person's record. General Eisenhower remarked that if an officer never had a poor appraisal, it probably meant that he was a "yes-man" and refused to tangle with his superiors. One should remember that any large organization is a political system, and that efforts at improved utilization of human resources are therefore certain to result sooner than later in political conflicts. Improved utilization is not a technical matter but rather a political matter in the sense that it involves changes in relations among divisions and individuals. I talked recently with a senior colleague who was working on a decisionmaking model for top management of large organizations. I persuaded him to leave the technology behind and explain to me how the president of my university could use his model to decide to reduce the allocation to the humanities and increase the budget for the professional schools. He blinked and thought my question was hitting below the belt! A good way to begin is to model the pattern that people have followed in moving toward the top of the organization. There may be a

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lesson or two to be extracted from such a survey. It may turn out that there are preferred channels that enable some to move rapidly, and other areas where people tend to be blocked. In the U.S. military it has long been known that one can get into a top position only if one has had a tour of combat. Small wonder therefore that women are now pressing to be assigned to combat posts. A second suggestion is the gains in diagnosis that can accrue from studying the reasons why people voluntarily resign. If good people conclude that the organization is not for them, as evidenced by their voluntary resignations, top management ought to be interested in finding out what went wrong in the hope of remedying the defects. If pathology is the basis for advances in medicine why shouldn't it also prove useful in organizational dynamics? Admittedly, there is nothing easy about getting a person who has resigned to "spill the beans," but if an intelligent effort is made, he or she may cooperate. And if the former employee does cooperate, management should gain much useful knowledge. Regrettably, most managements appear too timid to explore what goes wrong. The early removal, prior to compulsory retirement age, of people who have lost their capacity to perform effectively should be a major goal of a strengthened human resources effort. Even if one must sweeten the pot with extra money to get such people out, the cost is well worth it. For people who have lost their steam not only slow things up by their indifferent performance but block the way for others who are below them in the organization. Moreover, their poor performance has an adverse effect on all with whom they interact. Another approach is to specify as clearly as possible the organization's manpower priorities, and to try to develop a specific plan via recruitment, training, reorganization, and other means to increase the supply of key people or to reduce the organization's need for them. Few organizations have the depth of knowledge that they need to take sound action. There is the opposite risk: too many individuals with competence and skill who get in each other's way because they don't have enough work to keep themselves fully occupied. A critical area relates to assignments. This is probably the most important aspect of human resources management in a large organization—more so than selection, training, or evaluation. Since assignments are the key to career development, they must offer both challenge and responsibility. The person selected must be able to gain if he performs well or lose if he fails. This means that the organization should recognize that a serious assignment system must allow for people to fail, at least some people; this is a cost that must be budgeted. Two related matters: The organization should aim to create an optimum opportunity for people to bid for jobs, especially if they know

Manpower Planning in the

Organization

ahead of time that they will be held accountable for failure just as they will be rewarded if successful. O n e advantage of such a bidding approach is that it will help the organization identify the people who are willing to put themselves on the line and who are not too inhibited by the fear of failing to volunteer. The other point is the desirability of having the several divisions of a large organization enter into a competition directed at developing people by offering rewards to those units that turn in the best performance. Training clearly has a role to play in strengthening the human resources system, but one should not overemphasize formal training of shorter or longer duration but emphasize instead the training that comes about as a result of people moving into new assignments. It is through moves that bring individuals into new settings, to face new problems, to make new relationships, that most training takes place. Ideally, everyone should be moved out of his or her job immediately upon achieving full mastery of it. That clearly is not a practical goal for a large organization, but it does remind one of how far current practice deviates from the optimum. One way to be sure that people have an opportunity to move into new learning situations is to keep the organization as thin as possible. While some managers pride themselves that no one in their units is behind in his or her work, such a situation can be interpreted as proof of overstaffing. It is probably better all around—for the individual and for the organization—if the least important work does not get done. In that event, people don't have as much time to engage in the bane of all large organizations, namely protecting their group's turf. A smart management will also consider how it can keep itself informed about the basic attitudes and feelings of different groups of employees. This is no easy matter. Attitude surveys can help only a little. More important are the different ways in which senior management opens itself up to listen to difficulties, problems, discontents down the line. If those at the top are willing to open their ears, they will hear. If they are defensive, the information they need will not reach them. In terms of the Presidents I have known, M r . Roosevelt had the greatest capacity to keep his channels open; Eisenhower and Nixon were least inclined to do so, and Johnson cut off all critics once the Vietnam conflict escalated. Large organizations, because of their size, are in a good position to offer individuals opportunities not only for vertical mobility but also for lateral movement from one area of specialization to another. Some people may want to move out of a technical area into general management and others may want, particularly early in their careers, to sample a field in which they have some interest. Clearly no organization can afford to have people moving around all the time just looking for more interesting jobs or careers. But a large organization is in a posi-

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tion to provide opportunities to some of its staff that might lead to a much improved career development. While a large organization needs a career development system with responsibility for planning from the center, it is important to stress that a system can only provide structure. The real task is to see to it that the organization encourages people to come forward, to plan for themselves, to seek training, to volunteer. No system is better than the behavior it can elicit. The assertion that organizations must plan in order to assure themselves of the range of talents and skills that they will require in the future does not imply of course that they are not constrained by external forces, particularly those embedded in changes in demography and labor force, the trends in the economy, shifts in the power position of employers and trade unions, and the transformation of the society's value system. The ease or difficulty that an organization will encounter in recruiting young college graduates will clearly depend on what is happening with the inflow of this group into the labor market, whether relatively few are entering as in the 1950s or many more as in the early 1970s. Similarly, the thinning of an organization's ranks is easier to carry out when the labor market is booming and those released can find alternative employment without great difficulty than when the job market is soft. Whether or not an organization can encourage more training and skill diversification in the absence of linked wage and salary increases will depend on the attitudes and strength of employee organizations. And the slow but cumulative changes that are continually under way affecting the attitudes of the population toward work, advancement, and retirement are certain to affect the efforts of organizations to accomplish specific manpower goals. The point of this brief excursus has been simply to remind the reader that there are severe limits to manpower planning for even the most committed organization. But this caveat should not deflect attention from the substantial scope available to large organizations to improve the utilization of their manpower resources along the following dimensions: T o broaden the sources of recruitment and to avoid overreliance on educational credentials. T o increase mobility among their several divisions, thereby enlarging the opportunities for able people to move up the organizational ladder. T o encourage the early retirement of individuals who are no longer pulling their weight; but to do so in a manner that does not lower the morale of those who remain. T o move talented people through different sectors of the organization so that when they approach the top they will have had more experience. T o set out a limited number of objectives for the human resources effort and to strive to

Manpower

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Organization

accomplish them within specified time periods. To develop, to the maximum extent possible, an understanding and support of top management for human resources goals. Without support from the top, not much is likely to happen. To recognize that no one has all the answers and that manpower planning can be improved only if various programs are monitored and adjustments made in light of experience.

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Apprenticeship: A U.S. — Canadian Comparison

Adam Smith did not like apprenticeship. He considered it detrimental in various ways to the interests of everyone—apprentices, workers who were excluded, and the general public. Smith, a canny Scot and an insightful economist, realized early that apprenticeship can become hidebound and exploitative. Yet U.S. Secretary of Labor Ray Marshall and Assistant Secretary Ernest Green are now ardent supporters of apprenticeship. They have unfurled the flag and have promised to broaden apprenticeship openings to groups previously excluded. Throughout history the European experience with apprenticeship has been much more consistent than the American record. One good example is Germany, where the best and the worst aspects of apprenticeship exist. Germany has first-rate training; many young people are taught the skills that industry needs. And jobs are usually available for apprentices upon completion of training. On the other hand, some of the German apprenticeship programs exploit young people; the trainees do not learn much of anything, are not properly supervised, and are paid very low wages.

Apprenticeship:

A U.S.-Canadian

Comparison

Apprenticeship has not grown significantly in most of the industrialized countries of the world. It has a place in construction, in the mechanical trades, and in a few other sectors. But there are other areas, notably in technical fields, that for all practical purposes have training systems similar to apprenticeships. The term "apprenticeship" is not used to cover such preparation. Health services, computer programming, and other industries have quasi-apprenticeship systems. Even if the trainee is not formally certified at the end of a period of training, he or she is likely to be able to prove competence. The immigration question is sensitive at this time in both the United States and Canada. One preconception prevails: A shortage of skills, resulting in the immigration of skilled workers, means that apprenticeship systems are ineffective. In my opinion, however, apprenticeship can be working well or poorly in any country regardless of immigration flows. The linkages between the two are not necessarily close. Furthermore, it would be misleading to suggest that apprenticeship is the answer to youth unemployment. T h e high unemployment rates currently prevailing in Canada, the United States, and Europe are beyond the reach of any strengthened apprenticeship program. A modern economy simply cannot accommodate too many apprentices. Apprenticeship programs have historically been in conflict with a modern society's definition of equity. In the United States, for example, access to apprenticeship training was long considered a property right that could be handed down from one generation to the next. And it has taken a great deal of effort in the United States—legal, political, and other—to open apprenticeship to people whose parents or relatives are not themselves journeymen. In Canada, too, equity is an important issue, particularly because government is increasingly funding training for apprenticeship. Once public funds are involved, the question of property rights and the transference of these rights via apprenticeship becomes a matter affected by the public interest. In the United States, this question is less significant because apprenticeship is financed overwhelmingly by organized labor and management. O f course, one of the primary objectives of apprenticeship is to ease the transition between school and work, a transition that has become increasingly difficult in recent years throughout the developed world. On this front, Canada has been more responsive than the United States, making it easier for young people to acquire certification through formal training. Canada, however, is probably the only country in the world that has compulsory licensing, which is based upon prior completion of training and which determines entrance into certain skilled areas. Obligatory licensing may be too potent an antidote. Protecting the public by controlling entrance into a skilled area is always a dangerous proposition because of its monopolistic import.

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One must also keep in mind that in most instances "apprenticeship" does not apply to the largest sector of a modern economy, namely the service sector. Two-thirds of all jobs in the United States are in services; manufacturing, construction, agriculture, and mining now account for only one out of three jobs. Since the historic roots of apprenticeship lie in the blue-collar arena, the fact that most of the skill requirements of a modern economy are in the white-collar sector must be considered in the reshaping of government's apprenticeship program. Apprenticeship, in its traditional framework, just cannot be pushed very far in a rapidly changing service economy. One of the greatest attractions of apprenticeship in the United States is that it has been a stepping stone to supervisory positions and to entrepreneurship. This has been the case in construction; an apprentice becomes a master journeyman, then moves into a supervisor's job for a larger company, and eventually starts his own small company. T o day, however, the routes that trainees take once they leave the system are less clear. An important function of good apprenticeship programs in the United States is that they help to refurbish skills required for rapidly changing technologies. Several major unions run skill centers to retrain their journeymen. When the United States entered upon nuclear construction the plumbing unions brought plumbers back and taught them the new technology. Typographers are another example. Members of the union are brought back to work on new machines for three months to a year. Retraining on such a scale is an expensive undertaking, but the unions are willing to make the effort, sometimes with management's help, sometimes without it. The basic precondition for skill acquisition in modern economies is, of course, basic literacy, but the lack of it is one important cause of youth unemployment in the United States; the softness of demand for the labor of young people is the other major cause. One out of four to five American youngsters cannot cope with high school instruction. That is a serious problem, and apprenticeship is no solution. Closely related is the need to improve the linkages among the several segments of multifaceted training structures. Since the Province of Ontario has been spending large sums on various types of postsecondary education, the system it maintains should be constantly reexamined to discover if any of the linkages among colleges of applied arts and technology, special courses in the manpower area, self-instruction, on-the-job training, and industrial efforts could be strengthened. Some Canadian apprenticeship training programs are quite rigid. They run too long and lack flexibility. These programs are not really attuned either to the young people coming through the apprenticeship system or to the needs of the changing economy. Canada should experiment.

Apprenticeship:

A U.S.-Canadian

Comparison

A continuing problem for all countries that have apprenticeship is: W h o should pay for it? It is not a foregone conclusion that the historical pattern in the United States should remain unchanged. The United States is now considering whether to channel federal funds into apprenticeship. At the moment, funds are made available only for preapprenticeship programs for the disadvantaged. Nevertheless, sound fiscal policy warns against government becoming the unwitting financier of industrial training. Once a state offers its citizens money to go to college, however, it is under an obligation to make sure that those who do not go have comparable opportunities to prepare themselves for work. In the United States several possibilities are being considered, including providing young people with vouchers that they could use for college or job training in late adolescence or in adulthood. The voucher proposal has not yet been worked out in detail, but it is an interesting idea. One contribution a government might legitimately seek to undertake is to try to even out the apprenticeship flow through good times and bad. The maintenance of an apprenticeship program in a period of business recession might be included in a government's antirecession policy. But even a greatly strengthened and remodeled apprenticeship system will not provide the answer to youth unemployment. At best apprenticeship may be a good answer for some unemployed young people. Any institution that has survived as long as apprenticeship must have some, probably many, redeeming qualities. Apprenticeship has unequivocally withstood the test of time, location, and circumstances. But it is a system that has always been severely limited in the range of skills it provides and the number of people who participate. It follows that Canada must continue to modify its programs and adjust them better to meet the needs of both individuals in search of training and the society in search of skills. If the typical school-leaver now has three years more of education than he had a generation ago, he should be able to complete various aspects of his apprenticeship training more rapidly than previously. Inertia is a big problem: the U . S . Defense Department has had much trouble adjusting its programs to the changing characteristics of its trainees. Next, changes in skill training should be restructured to respond to the increasing dominance of the service economy. The manufacturing model is no longer adequate. Finally, the improved articulation, integration, and coordination of the many components of the training system should be pursued. The system should be sufficiently flexible to make it possible for a partially trained person to enter the system and become fully qualified without having to start over at the beginning.

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T h e question of equity, like the question of efficiency, is critical. A society must continually ask itself what it is getting for its m o n e y in terms of skill acquisition and whether it is helping the people who most need help. Consider the increasingly urgent problem not only in the United States but in most developed nations that goes under the infelicitous term of "displaced h o m e m a k e r , " the w o m a n w h o has not been in the labor force for m a n y years if ever but who has been busy keeping house and raising children and w h o suddenly finds herself widowed or divorced. She has urgent need for counseling, labor market information, training, and assistance in finding a j o b . M a n y of these women find themselves in this straitened position in their early or mid-thirties, others when they are a decade or so older. T h o s e who have recently turned 3 0 should surely have an opportunity to enter apprenticeships. If they remain in the labor force until they are 70, which m a y indeed be their desire or fate, they will have an effective working life of thirty-five years, surely long enough to justify the social investment of a three-year apprenticeship.

A Shortage of Skilled Workers?

Does the United States face a shortage of skilled workers? There is no easy answer to this question, among other reasons, because there is no agreement as to the criteria to be used to assess the presence of a shortage. Further, the category of skilled workers, according to the U . S . Census, includes almost 12 million workers, or approximately one out of every eight members of the labor force. Within this large number there is ample room for the coexistence of shortages and surpluses, both by occupational subgrouping and by location. Moreover, it is not clear how long a "shortage" must last before it is considered to be a serious imbalance between the demand for and supply of a particular group of workers. Finally, employers simply do not leave jobs open; if fully qualified workers are not available they tend to move the somewhat less qualified ones into the open jobs. The true test of a shortage might therefore turn out to be workers who are unable to perform at the same level with experienced employees. All of these difficulties to one side, the question of a shortage is an intriguing one to consider even if it defies an authoritative answer.

Manpower

Planning and Policy

A Preliminary Assessment The Economist (June 24, 1978) carried a special article entitled "A Nation Short of Skills." The article starts with the comment that Imperia Chemical cannot recruit 170 essential skilled manual workers at a time when there are 1.4 million unemployed; and it goes on to point out that "one manufacturer in five thinks his output this year will not be as high as it could be, because he cannot get the skilled men he needs." The following quotations are from this article: This is a classic example of a shortage that was foreseen, and then expensively mishandled. It is the cumulative narrowing of differentials that have brought matters to a head. So companies have themselves to blame for a large part of today's labor shortages. And unless they take steps to reduce wastage, it hardly makes sense to increase recruitment and training. Employers have increased their intake of apprentices once more (though they never learn that cuts in apprenticeships in time of slump are a major reason why they are short of trained workers when output picks up). Other cures lie in industrialists' own hands: less cavalier hire and fire manpower policies, more status for the skilled men and better promotion prospects. These excerpts suggest that there are more differences than parallels between the skilled worker problems in the United Kingdom and the United States. The very title of The Economist's piece has a strange ring to American ears. During the longest sustained expansion in U.S. history, the 1960s, I asked the Bureau of Labor Statistics of the U.S. Department of Labor to inform the National Manpower Advisory Committee, of which I was chairman, of any early warning signs of skill shortages. The BLS never raised an alert. Such shortages that did arise were only of local significance, mostly in the construction trades. There was little if any evidence that production was being impeded by manpower shortages of any kind, skilled or unskilled. In an article on wage controls, published in January 1978, Arnold R. Weber and David J. B. Mitchell have the following to say about labor shortages in the early 1970s 1 : "There are no direct indexes of shortages in the labor market; the best that can be provided is indirect evidence." In a footnote they go on to say, "The staff of the Pay Board

A Shortage of Skilled

Workers?

undertook a deliberate search for significant labor shortages but was unable to locate any." To bring the story closer to the present, in June 1977 the listing of selected occupations in demand by the Employment Service showed the following for machine trades: Only two states—Connecticut and New Hampshire—reported a statewide shortage of machinists. Thirty-nine cities—large, medium-sized, and small—reported unfilled vacancies for machinists. Only one state—Connecticut—reported a statewide shortage for "maintenance mechanics." The same was true for eighteen cities including several of the largest metropolitan areas. In the case of tool and die makers, again only two states—Connecticut and New Hampshire—reported statewide shortages. In addition, eleven cities, mostly in the Midwest, reported vacancies. The comparable report for locations with a significant number of skilled job openings in June 1978 revealed some additions to the list but no pervasive shortages: Only a few small states such as Maine, Vermont, West Virginia, New Hampshire, and Connecticut were classified as having "statewide" strong demand for machine set-up workers, tool and die makers, and turret lathe operators. On the basis of the foregoing one can conclude that the skill problem in the United States is notably different from that in the United Kingdom. While the latter has been repeatedly plagued by shortages that reemerge at the first sign of an upswing and sometimes even while the economy is still in recession, the U.S. experience is quite different. In the long boom of the 1960s and again in the sustained job expansion since the first quarter of 1975, which has seen 10 million jobholders added to the nation's payrolls, skill shortages have been neither pervasive nor persistent. Apparently the adjustment potential of the U.S. labor force is considerably greater than that of the U.K. labor force. Despite this generally reassuring reading of the U.S. situation, there is ground for taking a closer look at the situation in light of the concerns expressed by various companies on the East Coast and in the Midwest that they are uneasy about their ability to meet their skilled labor requirements in the years ahead as a result of the following concatenation of events: the prospective retirement of large numbers of skilled workers (the bunching effect); the limited outflow from vocational schools and other training programs including the multi-billiondollar CETA effort; the difficulties of recruiting able young people into jobs that lead to high-level skilled occupations.

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The Age Distribution of Skilled Workers As one might expect, the age of different types of skilled workers varies with the life cycle of the technology, the conditions that govern the acquisition of the skill, and the employment conditions that govern access to and retention of a skilled job. For instance, according to the 1970 Census, tool programmers, numerical control, have a median age of under 33 years and data processing machine repairmen under 30; while the median age for tool and die makers and for job and die setters, metal is 43. Machinists have a median age of 42 and millwrights of 46. 2 While these median ages are suggestive, they hide almost as much as they disclose. For instance, without the distribution around the median one has no way of telling whether a particular company, or several plants of a large multiplant enterprise, have a disproportionate number of skilled workers over 50 or 55 which foretells a large outflow in the years ahead. A sampling of several companies, including General Electric, suggests that such heavy concentrations of skilled workers in the age group 50 to 55 do in fact exist. A clue to such bunching can be found in the trend data of enrollments and completions in registered apprenticeship programs, a major, though by no means sole, source of craftsmen. In the post-World War II years, enrollments reached a peak of 231,000 (1949) and did not return to that level until eighteen years later, 1967, when the total reached 238,000. In 1974 a new high of 291,000 was reached, but the softer economy thereafter saw the figure decline to 259,000. As for completions, the 39,000 peak in 1951 was not reached again until 1968, when 40,000 completed their training. In the seven years from 1968 through 1976 the average annual output of new journeymen was 46,000. Between 1958 and 1977 the total number of employed persons increased from around 63 million to 91 million, or by 44 percent. During this same period craft and kindred workers increased at approximately the same rate: from 8.5 million to 11.9 million, or by 40 percent. During these same two decades the total number who completed a formal apprenticeship was just under 700,000. T o place this output of completers into perspective one should juxtapose it with the increase in the stock of craftsmen between 1958 and 1977, which amounted to 3.4 million.

Aspects of the Market for Craftsmen In 1976 about 255,000 trainees were enrolled in registered apprenticeship programs, more than half of whom were preparing to enter the

A Shortage of Skilled Workers? construction trades. O n l y about one in four were being trained within the manufacturing sector. A closer look reveals that about 1 1 , 0 0 0 were apprentices in industries involved in the production of metal products (other than primary metal industries), 9 , 0 0 0 in machinery other than electronic, and about 2 , 7 0 0 in the electric and electronic industries. These last figures underline the fact that U . S . manufacturing industries obtain a high proportion of their journeymen from routes other than formal apprenticeship. In fact most large manufacturing companies use diversified methods to recruit and train the skilled workers they need. T w o m a j o r factors act to reduce the available numbers of skilled workers in large companies. In periods of active and especially sustained expansion, smaller manufacturers and jobbing establishments that find it too expensive to train their own craftsmen succeed in luring journeymen a w a y from the large companies that initially trained them. Losses from the pool also result from selective promotions of journeymen into foremen's positions or higher positions in plant management as well as from journeymen leaving their corporate employers to start their own businesses. In the face of such anticipated losses many companies are loath to invest in training excess numbers of journeymen, since the cost comes high. Moreover, in programs that are jointly managed with trade unions, there is additional pressure from the side of the unions to control the number of apprentices to avoid "flooding the m a r k e t . " T h e most skilled among the skilled w o r k e r s — t h e set-up men, the repair mechanics, the tool and die makers—are a group apart. T h e y are quasi-professionals who determine h o w they will work, h o w hard to work, with whom to work. Most managements, recognizing their importance to the success of production operations, tend to allow this elite group considerable latitude, from dress to scheduling of w o r k . It is difficult, and often impossible, for a large employer whose operations are being reduced or phased out in a particular location to persuade the elite among his craftsmen to relocate to a new setting where their skills m a y be needed. Because of their higher age, their higher earnings, and their life styles most craftsmen have sunk roots deep in their communities, and even if they face some interim employment difficulties they are likely in most sizable labor markets to find another j o b . T h e close relations among groups of skilled workers, which facilitate their maintaining a high level of work performance, militate at the same time against a company's being able to increase the competence level of those who are fairly skilled through additional experience on the drawing boards and on the special machines. T h e older craftsmen who put out a consistently large amount of high-quality work are likely to oppose enlarging the pool of skilled workers even if the c o m p a n y is willing to absorb the costs. Most of the finishing touches in the

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Manpower Planning and Policy 124

training of the highly skilled come from long experience on the j o b , and there is no practical w a y for larger numbers to acquire such experience except through some form of work sharing, which the senior craftsmen are likely to oppose.

Policy Considerations Secretary of Labor Marshall and Assistant Secretary for Employment and Training Green, both of w h o m , as noted earlier, have had considerable experience with apprenticeship programs, are committed to enlarging and strengthening formal training programs not only in existing fields but also in new areas, particularly in the service industries where there are m a n y high-paying maintenance and repair jobs. A m o n g the special concerns of these senior government officials is increasing the number and proportion of minorities and women admitted to apprenticeship programs. O f the 2 5 5 , 0 0 0 trainees in 1976, just under 82 percent were white; blacks accounted for approximately 9 . 5 percent and Spanish-speaking for 4 . 5 percent, with the remaining 4 percent distributed among American Indians, Orientals, and the unclassified. W o m e n accounted for only 1 . 7 percent of the total. Aside from their interest in increasing the proportion of minorities and females, federal officials are also exploring the use of governmental training monies to cover some of the costs of running welldesigned apprenticeship programs. T h e Connecticut Business and Industry Association published a special report in N o v e m b e r 1 9 7 7 entitled "Unfilled Jobs in the Midst of High U n e m p l o y m e n t , " the central thrust of which was to encourage the deflection of federal funds ( C E T A ) from entrance training and work experience for hard-toemploy persons toward advanced-skill training for regularly employed members of the work force. T h e report also called attention to ways in which vocational schools and community colleges in C o n necticut might be encouraged to expand the scale and quality of their training and thereby increase the number of craftsmen. T h e association presented considerable support for their contention that Connecticut industry was suffering from a lack of qualified craftsmen and that most medium-sized and small employers needed government help to overcome this deficiency. It should be emphasized that both in 1977 and again in 1 9 7 8 C o n necticut reported more statewide shortages of craftsmen than any other state, 3 lending confirmation to the claims of the association. T h e simplest way of reconciling the multiple openings in Connecticut with the absence of any clear-cut evidence of a general shortage of skilled

A Shortage of Skilled Workers? workers is to note that Connecticut has a large number of small and medium-sized employers who, for the most part, cannot afford to engage in expensive long-term training. T h e British, recognizing the problems involved in generating a sufficient number of skilled craftsmen under conditions where small employers are unable or unwilling to assume the costs and large employers are hesitant to enlarge their training programs because of a fear of losing m a n y whom they train, decided some years b a c k to establish an industry-wide approach to training. Each firm has a choice of investing in its own training program or in the joint industry program, but in any case each firm is forced to contribute its proportionate share of the total cost. A s the article from The Economist previously quoted makes clear, there are shortcomings to this approach, but the underlying logic has merit. T h e United States has been able, up to this point, to meet its skilled manpower needs with only minor involvement of government (the federal role in apprenticeship is modest), and most states have only recently begun to improve the range and quality of the skill and technical training that their institutions provide. O n e word about the Connecticut Business and Industry Association's suggestion that C E T A funds be reprogrammed in favor of the training of skilled workers. T h e administration and the Congress in the reauthorization hearings of C E T A have advocated moving in the opposite direction—concentrating more of the $ 1 1 billion in annual expenditures on the "structurally unemployed" to assist them in gaining access to regular jobs. W i t h an estimated 7 million eligibles (unemployed for fifteen of the last twenty weeks and with an income of less than 70 percent of the U . S . Department of Labor's lower standard of living) the new criteria favor the structurally unemployed rather than those who could profit from upgrading, except for a modest effort (5 percent) directed at the latter. A few informed observers believe that a much increased upgrading effort would create a suction effect that could result in expanding the number of entrance positions, thereby killing two birds with one stone—adding to the skill pool and increasing employment opportunities for those who need an opening position. But these proponents of using more of the federal funds for upgrading have never developed their analyses to a point of assuring the skeptics that the hard-to-employ would in fact get the positions that open up at the b o t t o m . If the U . S . labor market for skilled workers were to tighten appreciably and were to remain tight over a period of years, such an environment would favor new local joint training efforts on a voluntary or compulsory basis, using public a n d / o r private funds to meet the needs of employers, both large and small. But there is little on the horizon to suggest that such an approach is likely to be initiated in the near term.

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Manpower

126

Planning and Policy

Company Tactics As noted earlier, there is scattered information available that points to increasing pressure that certain large corporations are likely to experience, plant-wide or company-wide, through substantial retirements of skilled workers during the 1980s. The explanation for such a threat is found in the following: The substantial intake of skilled workers during and immediately after World W a r II. The modest nationwide training efforts during the past two decades. The relatively modest turnover of those at the top of the skill hierarchy, which has blocked others from gaining the necessary knowledge and experience. The tendency of corporate management to focus attention on development problems of executives, not skilled workers. The disinclination of plant managers to press the skilled elite to provide training opportunities for others with less experience. What options are available to a management that, upon the review of its personnel profiles, discovers that it faces a potentially large loss of its skilled work force in the years ahead? The recent federal legislation extending the age of compulsory retirement from 65 to 70 suggests that a corporation concerned about the bunched withdrawal of skilled workers might be able to persuade most or all of them to stay on for five additional years. Presumably such employees enjoy their work and would therefore be likely to respond affirmatively to an opportunity that is now theirs by law. But while some may in fact choose to remain at work, the presumption actually runs the other way, for a number of reasons. Many men have probably planned what to do once they reach retirement age, and it is unlikely that the change in the law alone will lead many to alter their plans. In fact, a study of past patterns of behavior suggests that many highly skilled workers retire before they reach 65, leaving just as soon as they reach the combination of age and length of service that provides them with optimal retirement benefits. Corporations will discourage workers from delaying retirement if, as most corporations contemplate, they stop their contributions to various health and retirement schemes just as soon as workers reach 65. Craftsmen will be disinclined to stay on if by so doing they will suffer a reduction, relative or absolute, in their level of benefits. Furthermore, it will not be easy for a corporation to negotiate special benefits to encourage the highly skilled group to stay on without opening itself to trade union

A Shortage of Skilled Workers? and other pressures to do the same for the entire hourly work force. Another factor is the closeness that often exists among members of a group of skilled workers, which suggests that if one or more decide to leave others of the same age all will be inclined to do the same. O v e r time, the age at which a person decides to retire m a y become more flexible, especially as middle-aged and younger workers have the opportunity to take the new legislation into account in making their plans. Finally, the fact that an increasing number of skilled workers will reach retirement age with wives who b y working have also accumulated Social Security benefits suggests that the men will have more economic freedom to stop working. T h e single most important factor that m a y enable management to persuade a significant proportion of craftsmen to stay on the j o b past their planned retirement age would be the persistence or acceleration of the present high rate of inflation. M a n y men do not relish the prospect of being strapped for income in retirement. In order to prevent the bunched retirement of too m a n y skilled workers within a limited number of years, management might consider the feasibility and desirability of taking the following steps: Asking some of the senior men to be available for part-time or partyear w o r k to help the plant meet tight schedules. T h e wage-benefit arrangements for such recall might be quite liberal without having a spillover effect on the entire hourly work force. Establishing special positions of trainers who would spend an increasing proportion of their time in training replacements rather than on direct output. Such a new title might also facilitate the setting of an alternative wage or salary that would not have spillover effects. M o v e s in this direction should be made several years before the senior men are scheduled for retirement in order to be sure that adequate replacements are available when they leave. Reassessing the appropriate classification and wage or salary arrangements for the top of the skilled group with the aim of treating them as an exempt category with appropriate increases in earnings and benefits. If these workers are as important as some plant managers insist, it appears that a basic adjustment along these lines is overdue if it can be achieved without causing more disturbance with the union and other workers than it is worth. Since most of these workers have high seniority it would probably be necessary to offer them employment contracts if they were to be taken out of the collective bargaining arena. O n the assumption that various companies face the threat of excessive losses from the skewed age distribution (and bunching) of their skilled work forces, the question that senior management should raise for itself and with those more directly concerned with plant manage-

127

Manpower Planning and Policy

128

ment is what long-term reforms, as well as short-term expedients, might be usefully introduced. I suspect that most companies will be able to meet the challenge without introducing radically new plans. All that may be necessary is for top management to make certain modest adaptations in its personnel appraisal and cost accounting procedures to allow those directly involved with the hiring and retention of an adequate skilled work force a little more leeway in using their top craftsmen not only for production but also for training. In most plants there must be considerable numbers of partially qualified individuals who, with some additional experience, could move into openings at the top when they become available.

Full Employment: Urban Challenge

The fear of renewed inflationary pressures notwithstanding, the American people are certain to continue to address selectively, if not comprehensively, the employment issue over the next few years. If I had to predict the focus of their rising concern—always a venturesome undertaking—I would emphasize new programs aimed at reducing unemployment among youth, particularly inner-city youth, and experimentation with converting some part of the large income transfers including unemployment compensation benefits (after 39 weeks), welfare benefits for selected AFDC registrants, and some SSI grants into wages to enable employable persons to work. A review of the data about the number of unemployed and potentially employable persons in New York City and the amounts of income transfers (in cash only) now available to them will suggest the impact and import of a national policy aimed at an employment strategy·

Manpower Planning and Policy Labor Force In 1975 the New Y o r k labor force totaled more than 3 million out of a 5 . 7 million population of persons aged 16 years and over. O f the 3 . 1 million in the labor force, 2 , 7 7 5 , 0 0 0 were employed. However, approximately 2 7 0 , 0 0 0 persons were employed part time, not by choice but for e c o n o m i c reasons. T h e following perspective must be added. In 1 9 7 5 the New Y o r k labor force participation rate was 5 4 . 6 percent, 5 . 8 percentage points below the national average; its unemployment rate was 1 0 . 6 percent, 2 . 1 percentage points a b o v e the national average; and its involuntary part-time employment rate was 9 . 7 percent, considerably m o r e than double the national average of 3 . 8 percent. A simple extrapolation of the foregoing figures suggests that given available jobs, the potential employables in the city totaled about 750,000, derived as follows: Unemployed

329,000

O u t of labor force (in excess of national rate)

329,900

W o r k i n g part time, seeking full-time jobs Total

89,700 748,600

T h e strikingly lower participation rate in New Y o r k City versus the nation as a whole is a consistent pattern among all subgroups of the population, differentiated b y age, sex, and race. T h e most striking deviations from the national rate occur among white teenagers, a group which includes almost all Puerto Ricans (New Y o r k City, 38 percent versus U . S . , 56 percent), and black females over 2 0 (New Y o r k City, 4 4 . 7 percent versus U . S . , 5 1 . 3 percent). Speculation, which must substitute for hard data, suggests the following factors as responsible for the low participation rates in New Y o r k City: a large and differentiated postsecondary educational and training system, which attracts a much higher proportion of young people in their late adolescence than the national average; multiple opportunities for earning illicit and illegal income, which provide many both younger and older persons with an alternative to participation in the regular labor market; and the presence of a large welfare system with relatively high benefits, which offers m a n y female heads of households an alternative to full-time low-paying jobs.

Full Employment:

Urban

Challenge

Income Transfers If one does not insist upon a verified head count but settles for inferences from statistical data, an estimate of the number of adults in New York City who received income transfers in cash in 1975 approximates two million (see table 13.1). Admittedly, this total is not entirely free of duplication: to some extent SSI, Home Relief, and AFDC supplement OASDI benefits, and Home Relief and AFDC supplement UI. To this estimate of adult beneficiaries one should add some 82,000 older adolescents, many of them members of households supported by income-maintenance programs, who were enrolled under Title III of CETA in a program of summer jobs for youth. In sum, a figure well over 1.8 million is a conservative count of the number of adults who received transfer income in 1975. Nor should it be assumed that all beneficiaries are either unemployed or out of the labor force; a small fraction constitute the underemployed, individuals whose earnings are below welfare standards and require supplementation. Moreover, income disregard provisions of OASDI permit a significant number of recipients to augment their benefits with cash earnings. In light of the possible thrust of national policy to convert some part of income transfers into wage payments, one should examine the other term of the equation, the amount of governmental funds that transfer beneficiaries receive, with special focus on those who are or might be employable. The dollar amounts involved are very large. In 1975 cash transfers to New York City residents totaled approximately $5.8 billion, with four categories accounting for 92 percent: OASDI, AFDC, UI, and SSI. If, however, the concern is with income transfers to employables and potential employables, the focus must be sharpened. The most employable groups as of 1975 are enumerated in table 13.2. This subgroup, totaling 282,000 individuals, represents a combined count of all persons who received manpower services during the year together with the employable recipients of transfer income in December 1975. Along with these presumptive eligibles for employment one should consider, at least for analytical purposes, a second group that might be designated potential employables. Among these would be just under 120,000 adults, neither aged nor disabled, who are entitled to OASDI benefits because they are widows, widowers, or parents of deceased workers. A second group of potential employables consists of selected AFDC recipients, almost exclusively mothers, who are not

Manpower 132

Planning

Table 13.1.

and

Policy

N u m b e r o f a d u l t b e n e f i c i a r i e s a n d a n n u a l b e n e f i t s o f in-

c o m e - t r a n s f e r p r o g r a m s in N e w Y o r k C i t y , 1 9 7 5 .

Program

Adult beneficiaries

O A S D I (Social Security) SSI (indigent aged, disabled, blind) Home relief AFDC UI Manpower training, Title I, III (excluding W I N ) Public service employment, Title II, VI Total Summer youth jobs

Annual benefits ($ millions)

1,037,000

$2,838

243,000 110,000 249,000

233 1,015

446

221,000*

993

84,000

80

42,000

143

1,986,000

5,748

82,000

39

*This represents the total number of beneficiaries covered by the four unemployment insurance programs in effect in mid-December 1975: regular benefits, extended benefits, emergency benefits, and special unemployment assistance benefits.

Table 13.2.

T r a n s f e r p a y m e n t s t o e m p l o y a b l e a d u l t s in N e w

City, 1975.

Program Public service employment Training programs (including W I N ) UIB (over 39 weeks) A D C (U) Home relief (1 : 3 household heads estimated to be employable) Total

Individuals

Payments ($ millions)

42,000 134,000 (50,000)

143 280 (200)

73,000 2,000

265 9

31,000

77

282,000

774

York

Full Employment:

Urban

Challenge

currently in the W I N program. Using national averages as a guide suggests that they m a y number at least another 3 0 , 0 0 0 . T h e final addition to this group is a small percentage of SSI beneficiaries; if 10 percent are estimated to be potentially employable, this represents another 2 4 , 0 0 0 . In all, the potential employables total 1 7 4 , 0 0 0 and receive transfer payments of $ 3 8 9 million (see table 13.3). Together, the employables and the potential employables add up to 4 5 6 , 0 0 0 individuals receiving $ 1 , 1 6 3 million in cash transfers. Table 1 3 . 3 . Transfer payments to potential employables, New Y o r k City, 1975.

OASDI (not aged or disabled) AFDC SSI Total

Individuals

Payments ($ millions)

120,000 30,000 24,000

225 120 44

174,000

389

These totals exclude the 8 2 , 0 0 0 young people on S u m m e r Youth Programs, who received $39 million of wage income in 1 9 7 5 . Also excluded are the 1 4 8 , 0 0 0 persons who were in receipt of regular (under 2 6 weeks) UI benefits in December 1975. Finally, the estimate of employables does not follow current labor market reporting practices whereby individuals in receipt of m a n p o w e r services with a relationship to employment are counted as employed, while all others are counted as being outside the labor force.

Scale and Specifications In the development of an employment strategy, one must emphasize the inadequacy of reported unemployment numbers and rates as reliable indicators of the underutilization of manpower. I believe that the figure of 3 2 9 , 0 0 0 unemployed represents far less than half of the number of persons likely to seek employment if additional jobs were available. A more realistic figure of the underutilization of human resources in New York City totals, at a minimum,

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Manpower 134

Planning and Policy

Unemployed W o r k i n g part time

329,000 89,700

Employables and potential employables receiving income transfers Total

456,000 874,700

T o this total, one should add some portion of the 3 2 9 , 9 0 0 representing the excess number of persons out of the labor force who do not receive income transfers. This might well bring the total underutilization to one million. T o put this final figure in context, the number of persons employed was 2 . 7 7 5 million, yielding an underutilization rate of 27 percent. T o explore the policy alternatives that m a y exist to move from income transfers to work, it is desirable to consider the shadows that have been cast ahead b y recent governmental actions, both legislative and administrative. T h e W I N ( W o r k Incentive) amendments of 1967 and 1971 to the Social Security Act have resulted in the registration for training of about one million of the three million adults on A F D C ; approximately 2 0 0 , 0 0 0 are moved annually into employment, although m a n y of them are not able to earn enough to leave the welfare rolls. An amendment to the Social Security A c t in 1 9 7 5 provided that individuals w h o had received unemployment insurance for thirty-nine weeks were subject to reassessment with continued eligibility for benefits contingent upon enrollment in a manpower training program. T h e severe recession of 1974-75, resulting in a gross deficiency in manpower services relative to need, precluded a test of this effort. An administrative, not legislative, development has been the granting of waivers by H E W and the New Y o r k State Department of Social Welfare to permit the use of welfare grants for wage payments to A F D C and SSI recipients who enter supported w o r k programs such as those operated by the Vera Institute in New Y o r k City. Reference should also be made to the long-established practice in New Y o r k City of granting to regularly employed heads of households in low-earning j o b s wage supplementation via H o m e Relief to raise their total family income to the welfare standard.

An Employment Strategy In light of the very large number of employable persons, there is ly little or no likelihood that any national initiative could lead early absorption of a significant proportion of the total. But the of all possible approaches would be to refrain from making any

clearto an worst effort

Full Employment: Urban Challenge because of the magnitude of the challenge. T h a t would indeed be a grievous error for the nation as well as for the city. T h e problem is very much alive. A possible national employment strategy addressed to priority groups might look something like this. Terminating payments to UI beneficiaries after thirty-nine weeks. T h o s e unable to find private employment would be required to enter a manpower program or a P S E (Public Service Employment) j o b at a wage approximating or somewhat a b o v e the federal minimum. Enabling individuals with labor force attachment over the last three years who have been out of work for at least fifteen weeks to volunteer for public service jobs if total family income is below a specified ceiling. Expanding the registration and placement of employable A F D C recipients in private or public jobs. Requiring employable Home Relief recipients to accept public employment if they cannot be placed in private jobs. A scaled program along these lines for New Y o r k City could look forward to a significant reduction of the ranks of the unemployed and those in receipt of income-transfer payments, as follows: O v e r 3 9 weeks on UI

36,000

Volunteers with m o r e than 1 5 weeks unemployment

8,000

AFDC

80,000

H o m e Relief

30,000

Total

154,000

O n the presumption that about one out of every three persons who would be required to accept employment as a precondition for continuing to receive income transfers would fend for himself, the number of new j o b s that would have to be found would be considerably fewer, in the neighborhood of 1 0 0 , 0 0 0 . If the wage scale for public service jobs were in the $ 5 , 0 0 0 to $ 6 , 0 0 0 range, the additions to the wage fund beyond the conversion of the income-transfer monies might well be covered by those who would voluntarily remove themselves from the rolls. Even if this would not occur on the scale anticipated, a public service j o b averaging around $ 5 , 5 0 0 is not so far a b o v e the minimum wage or the average welfare payment in New Y o r k as to require more than a modest additional inflow of federal funds to cover the differential. It must be noted, however, that any feasible wage structure for public service employment would require supplementation for most heads of households. Nor should one overlook the probability that the federal govern-

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Manpower Planning and Policy 136

ment will experiment with the use of subsidies for the placement and initial training of specified persons from the welfare rolls. There is some prospect that current expenditures would suffice for an initial year's subsidy to the private sector to hire the hard-to-employ. I recognize that organized labor, for good and sufficient reasons, has always turned a critical eye on wage subsidies, but on the other hand it has not opposed the use of governmental funds to hire, assist, and train the hard-to-employ. T h e latest manpower initiative out of Washington has thus far not been mentioned—youth employment legislation directed at two c o m ponents. T h e first group consists of those who are out of school—urban and rural youngsters mostly from low-income homes who are having difficulty making a permanent connection with the labor market. T h e y suffer repeated episodes of unemployment, and some are so discouraged that they have stopped looking for jobs. T h e second group contains young people from similar backgrounds who are still in school, and who have acquired so little competence or skill that they will find it very hard to make a successful transition into the world of w o r k . In 1975 New Y o r k City spent about $ 4 0 million for summer employment for 8 0 , 0 0 0 young people. W h a t these young people need is a year-round, two- to three-year program in which they would study, pursue some training, and gain some work experience, with a progressive shift from study to w o r k over time so that when they were ready to graduate they would be more nearly job-ready and employable. T o put such a year-round program into effect would, at a minimum, require heavy involvement of business, labor, and voluntary organizations who would see their participation not as philanthropy but as self-preservation. T h e 1977 Youth Employment Demonstration Projects Act encourages such initiatives. The Youth Act has made substantial sums available beyond the several billion dollars included in regular C E T A titles to place out-ofschool youth into useful w o r k assignments and to provide them not only with work and income but also with the opportunity to acquire initial skills that will later facilitate their moving into regular jobs. T h e programs outlined here could be extended by expanding the small experimental programs currently in operation under the title "supported w o r k , " which involve the use of welfare waivers for wages. But it might be unwise to swamp the local bureaucracy with more than it can handle. Rather the bureaucracy should get these high-priority efforts launched and implemented before it addresses the most difficult groups of potential clients, such as ex-offenders and exdrug addicts. Thus far this analysis has not addressed three factors relating to the employment of individuals loosely attached to the labor force. T h e

Full Employment:

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first concerns the inclusion among the employed of a distinct fraction of illegal immigrants. Their number is u n k n o w n , but a conservative estimate suggests that there are probably at least 100,000 at w o r k . Also, m a n y persons, perhaps several hundred thousand, obtain income through illegal activities. And a great m a n y adults in AFDC and other income-transfer programs engage in intermittent work to supplement their benefit payments. Thus, there is some scope for choice by members of the peripheral w o r k force among regular jobs, intermittent jobs, illicit activities, and transfer income. While there is no easy w a y — a n d probably no effective w a y — t o eliminate these varying combinations of w o r k and alternative income, this should not preclude serious efforts toward rationalization of income support and m a n p o w e r policy. A final observation relates to the urgent need for improved social accounting, which would more nearly reflect the individual and social costs and benefits involved in the forced idleness of m a n y hundreds of thousands of employable persons in New York City w h o receive transfer payments but w h o make no contribution in return by way of useful w o r k . There is little likelihood that the United States will invest the huge sums needed to refurbish the physically deteriorating sections of our large cities. But it might be feasible to obtain the additional funds over time to provide meaningful w o r k for those who, if not afforded an opportunity to work, must be maintained at public expense. A society that fails to move in this direction is incurring horrendous costs by contributing directly to the demoralization of its citizenry and the pathology of its cities.

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1 4 Youth Unemployment in the United Kingdom: A U.S. Perspective

The post-World War II era in Western Europe was an unusually prolonged period of economic expansion, which began to peter out as late as the early 1970s; there is not likely to be a similar strong upward thrust in the near term. Despite the long period of expansion in Europe, the British economy has not been growing very fast, particularly in terms of employment. In the United States between 1950 and 1975, there was a 50 percent increase in the total number of jobs; in England, despite rising female employment, male employment figures have not changed over the past twenty years. In West Germany, too, despite its noted prosperity, there has been very little job growth. During the 1950s and 1960s, the Europeans were berating the Americans and the Canadians for having indecently high levels of unemployment. But most of the critics failed to mention that job growth was extraordinary in the United States, spurring extraordinary growth in the labor force. Thus, the high unemployment rates in the United States have been more a function of the growth of the labor force than a product of deficient job creation.

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The European Condition Western Europe is now in a worse part of the demographic cycle than the United States. The incremental large numbers of young people entering the U.S. labor force peaked just about two years ago; the cycle in Europe will not peak until 1981. Moreover, the United States historically has tolerated fewer menial jobs than Europe. In all European countries, and especially in England, the conventional youth jobs have only recently begun to disappear. In 1946 the Dorchester Hotel employed a little boy of 1С or at most 12 who carried my key up to my room; I simply was not permitted to carry it myself. This was one year after the end of World War II, when the British were supposedly in great need of labor. In the few Welsh mines that were in operation in the depressed 1930s, there were always youths who carried tea for the men or undertook other menial tasks. Those jobs, by and large, have now disappeared, and while they provided little in the way of skill or income, they were at least a part of a transition from school to work. In all developed countries a very rapid inflow of women into the labor force has occurred. Married women account for the only significant increment of labor force gain in Great Britain—three million more than the baseline figure of the mid-1950s. These women are an important competitive group because employers are afforded the opportunity to add mature workers who want extra money or need a job —as an alternative to hiring a youngster just out of school whose labor force behavior has not been tested. Employers will prefer women unless the job is the type that a woman cannot perform. The service sectors of most economies are the fastest growing ones, and in service occupations women have long had the inside track. This trend should continue until a country reaches the Swedish female participation rate of more than 80 percent in the middle age groups. An increasingly serious mismatch has also developed between what is learned in schools and what the labor market requires. In Great Britain every year three hundred thousand poorly educated youth are falling out of school; in the United States one-fifth of all youth reaching the age of 18 or so are inadequately prepared in basic competence for citizenship, for adulthood, and for work. Among minority youth the figure is close to two out of five. Another severe problem in England is the immobility of its work force. The United Kingdom is quite small geographically, but in the late 1930s Welsh miners would not move eighty miles from an area of severe unemployment to one where new jobs were opening up. And this spatial disequilibrium has persisted. The British Manpower Services Commission reported recently that one of the big chain stores in London had agreed to open up a large number of work experience

Manpower Planning and Policy 140

slots, but the youngsters who were to participate lived so far away that they just could not afford or did not want to pay so much of their wages for transportation. T h e United States has the same problem in a slightly different form: Many poor people live in the urban centers, but the manufacturing jobs they used to hold are being relocated out of the cities. In all countries discrimination and racism continue. If youngsters grow up in families that are vulnerable to prejudice, many do not even try to make it in school or at work. Discrimination kills many people before they ever get started. No country can seriously come to grips with youth unemployment problems unless it is willing to confront this societal blight. The trade-off between benefits and wages, often called income transfers, is another timely issue. In its 1979 budget, the federal government of the United States will allocate $240 billion of income-transfer funds. T h e states and localities will allot another $60 billion; and another estimated $200 billion will represent illicit, illegal, and off-thebooks income. In sum, this equals $500 billion in the United States out of a wage bill that, with benefits, is just over $ 1 . 1 trillion. This suggests that as many as one out of every three persons may receive income in the United States without holding a reported job. Consequently, any simplistic view of youth (or adult) unemployment must be reshaped to allow for alternative means of obtaining money. Clearly, Great Britain is experiencing a growth in its off-the-books economy. And British transfer income is not any smaller, proportionally, than U.S. transfers, so both countries face much the same problem. Finally, current unemployment figures run high in part because they include persons who in earlier generations were not counted. When Alfred Marshall wrote his Principles of Economics in 1890, he talked about one-sixth of the population representing the residuum. The liberal Cambridge economist suggested that the state should intervene and take youngsters growing up in such low-income families away from their parents because they would otherwise fail to acquire the competence they would need to become self-supporting citizens. Clearly, serious disadvantage is not new. What is new is our increasing recognition of the problem and the need for societal intervention.

Will Youth Unemployment Abate? Will youth unemployment go away soon? The answer, in my opinion, is an unequivocal no. Youth unemployment is a manifestation of serious and deep-rooted problems in the economy and in the society.

Youth Unemployment

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There is little likelihood, therefore, that Great Britain or the United States will soon return to tolerable rates of youth unemployment. As Prime Minister Callaghan has stressed, the old-fashioned Keynesian remedy of simple demand management is clearly not an effective answer for the 1970s and 1980s. And if the spokesman for the Labour party holds this position, then obviously the Conservative party will be much stronger in its affirmation. It is just impossible through demand management alone to push an economy to a point where almost every person who wants a job will be absorbed. Young workers now have to compete in the labor market with an increasing number of competitors. In the United States, for example, the mandatory retirement age has recently been raised to 70. In California, the legislature has mandated that anyone in state employment can remain at work as long as desired if he or she remains competent. Furthermore, in the United States there are perhaps three times as many people who overhang the labor force as are reflected in the counted unemployed. The counted unemployed are now in the 6 million range. But 20 million people might accept jobs at prevailing wages if sufficient jobs were available. This overhanging group includes many women and older people, some physically disabled people, youths in school who are waiting for jobs to open up, discouraged workers, people who work part time who want full-time jobs, people on welfare who would like to work, and still others out of the labor force. Roughly 4 million new jobs were created in the U.S. in 1977 and only one million left the unemployment rolls; 3 million people entered the labor market and took those jobs. That ratio will not persist indefinitely, but for some time still about five new job seekers are likely to come into the employment arena for each two new jobs created. The occupational composition of most developed economies is moving continuously in the direction of white-collar employment, which means that the youth who fall out of school, poorly prepared in numeracy and literacy, will be handicapped in finding jobs. A person who cannot calculate simple tax rates cannot even wait tables. Many youths fall out of school, having learned very little. Both British and American schools have a poor record in educating young people from low-income homes. Their poor performance probably results in part from the strong if hidden hostility between lower-class youngsters and their teachers; the teachers are saying to the kids "You're no good!" and the youngsters are saying to the teachers "Get off my back!" Another untoward trend is the substantial erosion of jobs in the service sector that is likely to result from continuing automation. The German trade unions are quite restive about this subject. In M a y 1978, Dr. O t m a r Emminger, president of the Bundesbank, pointed out that the German consensus among trade unions, employers, and govern-

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ment has fallen apart because, among other reasons, the German trade unions are very worried about losing j o b s due to increased automation. There is reason to believe that distribution and the other service sectors of the British e c o n o m y will absorb fewer youngsters in the future than in the past.

Policy Suggestions A s Alfred Marshall pointed out, in addition to the hardship suffered by youths w h o have their careers aborted b y poor preparation, society incurs a large number of concurrent social costs. There are no human beings, in my opinion, who can live in a society suspended in mid-air. T h e y either become "co-opted" b y the society by seeking and holding jobs, or they become estranged from the society. There is no third position. Consider crime and violence. Hitler never would have gotten very far had it not been for the critical unemployment problem, primarily among intellectuals. Unemployed graduates returned to the University of Heidelberg in the late 1920s, having one doctorate, to study for a second. M a n y went out and once again looked unsuccessfully for a j o b and came b a c k for a third degree. T h e British have managed higher educational expansion in the post-World W a r II period better than many other European countries. T h e y have avoided flooding the market with poorly trained graduates. Britain has maintained standards and those w h o graduate continue to have the edge on employment. T h e United Kingdom has been less successful, however, in making mobility work in its favor. T h e government has experienced difficulty in meeting its employment goals because of the persistence of gross geographic differentials. True, England is a traditional country and much of its strength reflects local customs and local identity. T h e British military long relied on area recruitment for building its regiments. But the finding that one out of every four youths has been unemployed for 2 6 weeks or m o r e suggests a serious imbalance between young people and jobs. The M a n p o w e r Services Commission is now optimistic about its new program, which provides young persons to firms at no cost under the condition that they gain some work experience. T h e employers do not have to retain these youths at the end of the year, but the government is anticipating that many will do so. This program appears on the surface to be too loose. S o m e youngsters will drop out on their own or will be dropped b y their employers. During the Depression of the 1930s, the United Kingdom t o o k unemployed youths and adults out of the Welsh valleys and placed them for six months into a good

Youth Unemployment

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training program, but most of them returned to the valleys where there were no jobs. Such an approach simply makes a bad problem worse—by implicitly promising a job and then not delivering on the promise. The United States has learned that if the government offers an employer a year's wage subsidy, the employer must offer something in return. Closely related to joblessness is the question of the "expectational system." T o be born brown or black in a white country, or to be born poor in a country in which power is highly concentrated, makes many persons conclude from the outset that they are trapped and that there is no point in trying to improve themselves. There is no way of helping people unless they participate in the process. No society can offer jobs, much less good jobs, to everybody. No nation knows how to do this. While the United States must go much further than it has to equalize opportunities for jobs, the United Kingdom has perhaps gone too far in equalizing returns from work. Marginal taxes are very high. As a result, the English off-the-books economy probably will continue to grow. There has been a tremendous social revolution in the United Kingdom since the end of World War II. But at the same time, England is still very elitist. T o an American, this is a paradox. The United States has a very unequal income distribution. Captains of industry are paid half a million dollars or more and nobody objects. But the United States is quite conscious about not segmenting the population into classes that are clearly on either the inside or the outside track, such as is the case in Britain. These class divisions result largely from the English public schools and the universities. The educational system is both one of the strengths of Great Britain and one of its weaknesses. Despite all of the social welfare programs to date, further reforms in the educational and training systems are required if youth unemployment is to be effectively addressed and resolved. The difficulties of coping with youth unemployment in the United Kingdom are compounded by the pressure on government to protect employed persons. Limited national resources are used to resuscitate dying industries, such as shipbuilding, coalmining, and steel. But the consequence is that investment needed for new jobs is lacking. This results in a no-win game. A man who has been working for 20 years in a steel mill is determined to hold on to his job. T h e trade union leader cannot afford to let his job disappear. The Labour party is likewise committed to job preservation. But a lot of the nation's scarce resources are drained away in this effort to keep dying jobs alive. In general, England has followed a policy of retreat since World W a r I, which cannot be sustained indefinitely in a competitive international world where imports must be financed by exports. And this long-term reality cannot be obscured by the fact that the United King-

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dom can now look forward to a few years of windfall revenue from North Sea oil. Prime Minister Callaghan has said that he will try to get agreement from Carter, Schmidt, and other leaders to reflate their economies together. Such simultaneous stimulation, if it could be accomplished, has much to recommend it. The Americans, the Germans, and the Japanese agree in principle. But if the United Kingdom waits until they act in consort, it may have to wait a long time. Economic cooperation is difficult to chart, even more difficult to implement. The new English youth programs should be evaluated closely, because the expenditure involved is too large to be maintained unless the results are positive. In the United States we have recently introduced a new program called entitlement, in which every eligible youngster in certain selected neighborhoods is being helped to stay in or return to school, with a promise of part-time work during the school year and full-time work over the summer. This program may improve these students' transition into the world of work, but we must await the outcome of the evaluation that is underway. The United States is spending about $150 million on these entitlement demonstrations in the belief that the nation needs to know whether the underlying idea is sound. Finally, if it turns out that many new manpower programs do not work very well—which is likely if the past repeats itself—then the issue of attempting to redistribute unemployment more equitably must be confronted. T h e greatest danger is the creation of a two-class society, one class consisting of employed persons on whom unemployment does not seriously impinge and the other, whose numbers keep growing, of nonpersons consigned to the scrap heap of unemployment. There are better alternatives. In the 1930s, mass adult unemployment vastly compounded the difficulties of dealing with severe youth unemployment. The timid Conservative government refused to respond energetically, limiting itself to the dole. The British government is in far better shape today to cope than it was then, and the scale of the current unemployment problem is fortunately not as large. The most difficult challenge, as suggested earlier, for the British government is to work simultaneously on the short-run amelioration of youth unemployment and on facilitating significant structural changes in its economy. The problem is generic to all O E C D с о ш ь tries, and it is on every government's agenda. But every nation must seek to cope more effectively with youth unemployment, even while it seeks cooperative actions among friendly nations to lift the overall level of employment and reduce structural imbalances within its own economy.

Youth Unemployment

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Two generations have passed since Sir Malcolm Stewart, the Commissioner for the Special Areas of England and Wales, warned about what Dr. James Conant later dubbed "the social dynamite" of undereducated and unemployed youth who, brought up without first-hand knowledge of or opportunity to work, become a burden to themselves and a threat to their society. 1 No citizenry that is concerned about the future of the society to which it belongs can afford to reject and exclude such large numbers of youth. All persons relate to their society through work. Lack of opportunity to work is an invitation to social disaster.

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Raising the Age for Compulsory Retirement

We have long believed that government is a seriously flawed instrument for accomplishing major social change. Yet we continue to pass increasing numbers of statutes. This paradox, however, may be more apparent than real. True, government is a limited instrument for changing our economy and society. Yet it remains the most potent mechanism available. Hence the country resorts to new legislation to improve race relations, to protect the environment, to tighten controls over injurious substances. The record of removing discrimination in employment is consistent. Beginning in 1964 with the passage of the Civil Rights Act, which outlaws discrimination in employment on the basis of sex, race, or ethnic origin, successive administrations have sought, through legislation, administrative orders, and court decisions, to proscribe practices in the job market that are judged to be detrimental to public policy— such as the refusal to hire the physically handicapped or persons in higher age brackets, or the elimination from consideration for promo-

Raising the Age for Compulsory

Retirement

tion of individuals who lack certain educational achievements in cases where these requirements are not directly relevant to the particular job. The most recent development on this front has been the signing into law in April 1978 of amendments to the Age Discrimination in Employment Act of 1967. The new law mandates, after a short period of adjustment, that most individuals can no longer be forced to retire when they reach age 65. T h e new ceiling is 70 years of age; for federal employees, there is no ceiling age. This last provision follows a California statute that eliminates age as the basis for compulsory retirement in most state, municipal, and county employment. Considered in context, the recent federal legislation is simply one more station along the path from which discriminatory barriers to employment are being cleared. As such, it should not give rise to concern, surely not to consternation. Nevertheless, various groups are restive, particularly employers that up to the present have had compulsory retirement policies for both exempt and nonexempt personnel at age 65. Despite the haste with which the new legislation was rushed through both houses of Congress, which prevented any extended testimony from interested groups, two affected parties were able to secure important amendments exempting them from the provisions of the new act. Corporations can still retire at 65 high-ranking executives whose retirement benefits, exclusive of Social Security payments, exceed $27,000 annually; and universities can force tenured professors to retire at 65 until 1982, when these institutions will be brought under the provisions of this law for the first time. The full implications of the new legislation, especially in areas as complex as employment relations and pension benefits, will not become clear until departmental regulations are issued, which, as usual, will not occur for some time. All that one can hope to accomplish at this early date is to speculate on the ways in which past practices are likely to be modified now that nonfederal employees have the option to remain in their positions between ages 65 and 70 and federal employees may remain as long as they desire, subject of course to their being able to perform effectively.

Recent Trends in Retirement The trends in ages at which different persons retire from their regular jobs or withdraw from the labor market completely—two related but distinguishable actions—should be sketched. A relatively small proportion of men, less than one in five, continues to work past 65. The proportion has been dropping steadily since World W a r II. In 1947

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close to one out of two male workers over 65 was still in the labor market. The proportion of men who work beyond 70 is much smaller. In this age-group, only 14 percent of men are still in the labor force. The proportion of women who remain actively employed at age 65 has shrunk to around 8 percent, and at age 70 and above, to less than 5 percent. Striking as the trends have been with respect to the diminishing proportions of men and women who work past their sixty-fifth birthdays, even more striking has been the withdrawal of men from the labor force prior to their reaching 65. Just after World W a r II about nine out of ten men between the ages of 55 and 64 were still in the labor force. The current ratio has dropped to less than three out of four. Moreover, a large decline in labor force participation rates occurs for persons reaching the age of 62, when they become eligible for 80 percent of full Social Security benefits. As one might expect, the trend of women in the 55-64 age group continuing to work has been rising between 1950 and 1976, reflecting the rise in the participation of women in the labor force, currently accounting for one out of every two women over the age of 16. A closer inspection of the data, however, reveals that in recent decades more and more men and women have stopped working by the time they reach 65; for men, the trend sets in as early as 55. There are some who might argue that little weight should be given to these trends because they reflect employer practices that the new law is aimed at correcting. But this position is too strong. While definitive data are not available, it is questionable whether more than one out of three exempt and nonexempt workers have been subject to compulsory retirement at age 65. Clearly, the new law is not predicated on whether the proportion is one-third or less or more. It addresses a single condition: No unemployed person should be forced to retire on grounds of age alone. That is its primary concern and really its sole concern. Before looking more closely at the possible impact of the new law, one must identify some additional forces that play an important role in the retirement decisions of employers and workers. The process of establishment at work has come to be muddied: Young people no longer move directly through the educational system into their first permanent jobs but rather follow zigzagging paths involving schooling, part-time or full-time jobs, and time out of the labor force. Similarly, many older workers do not follow the pattern of working one day and retiring the next. Many slacken off as they approach retirement—voluntary or compulsory. Some retire from regular jobs, explore what it means to live without regular employment, and then decide to return to full- or part-time work. And many repeat or vary the mixture of work and leisure several times before they withdraw permanently from paid employment.

Raising the Age for Compulsory

Retirement

Professionals, such as physicians and professors, may be forced to resign their positions as members of attending staffs or as active members of faculties, but most are likely to continue working—seeing patients in their offices or continuing to lecture or write at their former universities or at new ones. There is considerable anecdotal evidence about persons in professional and managerial positions choosing early retirement, usually in their mid-fifties, when they are entitled to all or most of their benefits, for the purpose of starting a second career while they are in a strong position to find another job or start their own business. Aside from compulsion, a limited number of critical factors influence an individual's decision to continue working or to retire. First is the person's health. Despite the fact that more people reach the upper age brackets now than in earlier generations due to lower morbidity rates in youth and middle age, better health care, and a higher standard of living, a disturbingly large proportion suffer from disabilities, which may interfere with their working as effectively as before. Such persons are more likely to choose early retirement. A family's asset and income position, too, is clearly important in determining when a person will decide to stop working or at least retire from his regular position. Most employees will seek to remain at work until they qualify for full retirement benefits. But at that point, many will opt out, secure in the knowledge that they have financial resources to provide for themselves and their immediate dependents, which frequently includes only their spouse. The final factor is the satisfaction a person derives from his work and work environment. If his employer and peers are pleased with his performance, and if they encourage him to remain, the likelihood of his doing so is much greater than if they suggest, by direction or innuendo, that he is no longer pulling his weight or that others ought to have the opportunity to move up.

The New Legislation The estimates of the number of persons each year, who, by virtue of the new law, possess options that previously were not available to them range from about 165,000 to 240,000. If the estimate mentioned earlier—that one-third of the labor force is covered by compulsory retirement arrangements—is applied to the 623,000 workers aged 64 in the 1976 labor force, then the resulting figure is slightly more than 200,000. To determine the number who will actually continue working as a result of the new law is more difficult. For example, one must subtract

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from the total those who will retire voluntarily at 65. One must also subtract those who, without the new law, would have been forced to retire but subsequently would have found new jobs. One must further reduce the estimate by the appropriate unemployment rate for persons aged 65 and over. And additional adjustments involving disability, family circumstances, and income will probably be necessary. There are several reasons, however, why this figure of 200,000 may be an underestimate. First is the continued improvement in the health status of people reaching their late sixties. T o the extent that poor health has led to early retirement and withdrawal from the labor force, this factor will have diminished importance in the future. The second and perhaps overriding consideration is the future intensity of inflation. If the United States is entering a period of 6 to 10 percent annual inflation for the near or intermediate term, then many older persons who would otherwise prefer to retire at or before 65 are likely to continue working. Faced with a choice between suffering genteel poverty and continuing to work, most persons will choose the latter. Although there has been a small decline in recent years in the participation rates of women between the ages of 55 and 65 as well as of women over 65 (only one in twelve work), it may be premature to assume that these trends will not be reversed. The big influx of married women into the labor force dates from World W a r II; one must therefore anticipate that as more of these cohorts reach the upper age brackets, they will have had greater attachment to the labor force. Hence they may be less ready to withdraw, especially if inflationary pressures continue. Successive amendments to the Social Security Act (and there are likely to be more in the future) that permit workers between the ages of 65 and 72 to retain an increasing proportion of their earnings without losing benefits may also operate in the direction of increasing the number of persons who will want to remain at work, at least on a part-time basis if that opportunity is open to them. Finally, one must take into consideration the changes in behavior that are likely to result from the new regulations. As indicated earlier, a considerable number of professional and managerial personnel in the past have sought or accepted early retirement, recognizing that by so doing they would be better positioned to start a new career. With compulsory retirement at 65 staring them in the face, they left in their mid- or late fifties. But once these individuals know that they can remain until 70, they may see less point to leaving early. Thus, while a first view suggests that the number of persons who will elect to remain at work under protection of the new legislation will be relatively small, the potential exists for the number to increase substantially, especially if inflation continues at high rates.

Raising the Age for Compulsory

Retirement

There has been considerable unease among representatives of large corporations that the new law might result in a serious diminution in managerial competence and innovation if larger numbers of executives are retained until they reach 70. As mentioned earlier, Congress was responsive to this danger by permitting forced retirement of senior management at age 65 if their corporate pension benefits exceed $27,000 per annum. How serious are the problems likely to be at levels below this cutoff point? The establishment of a cutoff point itself is likely to create some unexpected consequences. Undoubtedly, some managers close to the $27,000 margin will do their best to avoid promotions that will make them vulnerable to forced retirement at 65 if they value continuing work more highly than a small increment in their pension. But this group will probably be small. The more important question is whether the retention of those lower in the hierarchy—salesmen, office workers, production workers, and craftsmen—is likely to be disruptive. The first way to approach this problem is to recognize that employers with policies of compulsory retirement at age 65 have from time to time regretted that they could not retain particularly valued employees. In the future employers may be able to obtain five additional years of effective work from such employees. On the other hand, some submanagerial and managerial workers may suffer as a result of the new legislation. Those workers whose performance begins to slip in their late fifties or early sixties, but who in the past would have been kept on the payrolls because of their earlier contributions, may be let go as soon as they show signs of waning ability. Thus, one paradoxical result of the new legislation may be that people will be forced out of work earlier than they have been until now. And for employees who for one reason or another lose their jobs in their fifties, the new law may make re-employment more difficult. In cases where an employer may have been willing to hire a managerial or submanagerial worker in his fifties with the certain knowledge that mandatory retirement at 65 would protect the firm from long-term risk, the new law will increase considerably the risks associated with hiring older workers and make it less likely that employers will hire them. Whether employers will try to tighten up and discharge workers at first evidence of declining performance and whether they will be able to implement such a policy remain open questions. Their own attitudes are generally protective of long-term employees who have given their best; most large employers will close half an eye to the shortcomings of these workers late in their careers. When there is a union, it serves as another protective force. Finally, and perhaps most

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important, it is too early to know how the administrative agencies and the courts will weigh evidence provided by the employer that the worker is no longer performing at the required level. Documentation that would hold up under challenge is always hard to develop. The absence of readily acceptable criteria for measuring performance of older persons has been the primary reason for relying on age as the determinant of retirement. There is considerable concern expressed by employers that the retention of workers above the age of 65 will create special difficulties, particularly over the next five years, when many who would otherwise have retired will elect to stay on, thereby blocking others waiting for promotion. There is scattered evidence that suggests that the opening of a position high in the organization may lead to seven or even more promotions down the line. Clearly, if any large number of older employees high in the organization decide to stay rather than to retire, this blocking effect could become serious. The legislation apparently does not require employers to continue contributing to pension funds for workers who remain at work past age 65, but it is not clear what employers will do to adjust insurance and health benefits, which tend to be more costly for older workers. A decision here must await promulgation of Department of Labor regulations.

Some Broader Perspectives When the retirement legislation was under consideration, its proponents pointed to the increase in the numbers of older persons that looms ahead—from about 20 million in 1970 to a projected 28 million in 1990. The economy would be strengthened, in their view, by employers retaining a large number of experienced workers beyond the date they would otherwise have been forced into retirement. But included among the opponents to the legislation were representatives of minorities, women, and youth groups who contended that by enabling workers—most of whom are white males—to remain in their jobs longer the passage of the bill would worsen the opportunities for members of groups with employment handicaps. It is hard to say why Congress was not more responsive to this argument, given its concern with the problems that minorities and youth face in securing employment. Possibly the senior citizens' "lobby" was just too powerful; possibly Congress concluded that with only an estimated 200,000 electing to remain at work and two million entering or reentering the labor force annually, the new retirement provision could be absorbed without much ill effect.

Raising the Age for Compulsory

Retirement

A related labor force phenomenon that deserves more consideration than it has as yet been given is the fact that the b a b y b o o m cohort is now working its way through the mature labor force. At present, the bulge is in the ages 25 to 34, and an advance contingent will soon be entering the 35 to 44 bracket. T h e ranks of middle management, particularly in this era of slower economic growth, are quite crowded. T o the extent that delayed retirement has the effect of slowing the progress of persons waiting to advance, the frustrations of these workers will be exacerbated. But one could argue that the amount of additional trouble caused by delayed retirement will be too small to worry about. T h e public is slowly becoming aware, as a result of reports in the daily press, of the precarious financial position of the Social Security system. Congress acted to increase substantially the taxes that employers and employees must contribute to help shore up the system; but Congress has begun to have second thoughts about the depressing effects of this tax increase on economic activity and employment. In the midst of this debate Secretary of C o m m e r c e Juanita Kreps came forward with the suggestion that the nation, b y advancing the age of eligibility for full benefits from 65 to 68, could assure that people would remain at work longer and at the same time would help to balance the b o o k s of the Social Security system. But Secretary of Health, Education, and Welfare Joseph Califano insisted that such action would be a breach of faith with the beneficiaries who have had every reason to believe that they would qualify for full benefits when they reach 65. Secretary Kreps did not pick up a large number of allies initially, but when all of the alternatives for assuring the financial viability of the Social Security system are reviewed, her proposal m a y gain more support. While those on either side of the retirement issue are equally confident of the strength of their position, it behooves the critical observer to admit that the evidence that would permit a judicious assessment of the new legislation does not yet exist—and will not exist for some time. T h e odds are strong, however, that the extension of the concept of discrimination to prohibit the forced retirement before age 70 of persons who are capable of carrying out their assignments will prove less constructive than the proponents of the legislation now believe. In turn, the negative effects will be less destructive than the opponents anticipate. In a labor force of about 100 million, only 3 million persons above age 65 are currently employed. It is hard to conceive of any developments at the upper end of the age distribution that would have more than a marginal impact on the employment picture. This conclusion is strengthened b y the facts that the law does not cover employers with

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fewer than 20 employees and that probably no m o r e than one-third of all workers face compulsory retirement at 65. But arithmetic alone does not tell the whole story. O n the basis of four decades of close observation of employment behavior in the corporate sector, in nonprofit organizations, academic and other, and in government, I am convinced that the closer people come to the top, the more they will hold on to their positions unless forced to retire. O n e of the real advantages of publicly held corporations over family firms has been their ability to insist on compulsory retirement for all executives at a stipulated age, usually 65. In familycontrolled businesses the founder-owner-manager often decides to stay on into his seventies or occasionally even into his eighties and no one can say him otherwise. The admission that time has caught u p with one is hard to make and even harder to act u p o n when a person is at or near the top of his hierarchy. I have also been impressed with the fact that when people at or close to the top stay on after they are no longer able to function at their optimal level, the cost to the organization is high. Their deficiencies get reflected and magnified m a n y times over. Furthermore, it is very difficult for peers w h o h a v e worked together for long periods to be frank with one another and to tell a colleague whose performance has begun to slip to step d o w n . That is the advantage of a relatively low compulsory retirement age. N o one needs to be singled out; the calendar does the dirty w o r k . But, as the new legislation recognizes, the cost to the individual of such "early" retirement m a y be high. The preferred solution m a y lie less in the extension of the time of compulsory retirement f r o m 65 to 70 than in an effort to introduce greater flexibility during the last decade of a person's active career. Some m a y actually be able to hold a full-time demanding job u p to the age of 70 and even b e y o n d . But most people would probably prefer to avoid the extremes involved in full-time w o r k one day and retirement the next. What our society needs is more experimentation with limited assignments and reduced schedules for those w h o still have a contribution to make but would prefer to escape f r o m the intensity of full-time responsibility. The one safe conclusion to be m a d e at this early date is that the new legislation should not stand in the w a y of further experimentation with variations in w o r k schedules which seek to optimize the trade-off between two factors: the desire of some older persons to continue working and the burden on an organization of being forced to retain older workers. No piece of legislation—no matter h o w sound—can provide the complete answer. But in a changing world, experimentation must never cease.

1 6 The Building of a National Manpower Policy

Before the Great Depression, Americans looked to the market to balance the supply and demand for labor. If people were unable to support themselves, family members or philanthropy were obliged to care for them. No unit of government had any direct responsibility for creating or maintaining a specified level of employment or for providing income to those who could not support themselves and their dependents. In fact, as late as 1932 the Executive Council of the American Federation of Labor voted against governmental assumption of responsibility for unemployment insurance on the grounds that this problem should be solved by management and labor working together without governmental interference. The failure of the American economy to provide job opportunities for large numbers of its citizens in the 1930s—the unemployment rate never dropped below 10 percent throughout the decade—was the initial stimulus that forced the federal government to assume a new manpower posture. It took the form of providing transfer income;

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broadening macroeconomic policies aimed at maintaining high levels of employment; and developing special training and employment opportunities for the disadvantaged.

Institutional Imperatives The 1946 Employment Act was a federal commitment derived from New Deal efforts to cope with the trauma of the Depression. This legislation was a congressional declaration that the federal government henceforth would be obliged to do everything in its power to establish and maintain the economy at a high level of output and employment. A second stimulus came from World W a r II and the Cold War, which required the use of compulsion to obtain adequate manpower for the armed forces. As a consequence of a vastly expanded defense establishment, millions of young men had the opportunity to continue their education while on active duty; a much larger number received various types of skill training, often directly transferable to civilian life (electronics, health, transportation, construction, and so on); and even more of them utilized veterans' benefits to help finance their education and training after their return to civilian life. This facet of national manpower programming is often neglected. Yet the leadership position of the American electronics industry during the post-World W a r II era was based in no small measure upon the prior substantial investment of the armed services in training successive cohorts of men to operate and maintain advanced equipment. In addition, the civilian aviation industry, which played a critical role in the post-World War II economic expansion, was able to meet its requirements for substantial numbers of pilots by recruiting former Air Force personnel. The Department of Defense has reported spending in excess of $5 billion annually on specialized manpower training. A third motivation for a manpower policy, closely related to the foregoing, was the growing recognition by the federal government that an increasingly complex technological society cannot afford to be indifferent to the national pool of skills. The initial federal involvement in the support of vocational education, aside from the vocational elements of the Morrill Act of 1862, was in direct response to the challenge of World W a r I, when Congress recognized that the capacity of the United States to mobilize its potential industrial strength depended in part on the availability of skilled workmen. Hence, Congress was willing to break with tradition and to make a limited amount of federal funding available for what had previously been viewed exclusively as a state and local responsibility. The real breakthrough in the acceptance of federal support for the

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education and training of specialists came in 1958 as a result of Sputnik, when the United States was thrown into a panic by the Soviet achievement in space. Many inferences, some right and some wrong, were made as a result of this Soviet feat. In particular, it was concluded that the United States had neglected to develop a high proportion of the nation's talent, especially in science, technology, foreign languages, and other specialized fields that are significantly related to defense capabilities. With a force and speed that overwhelmed everything that stood in the way—including the nonexpansionary inclinations of President Eisenhower—Congress placed the federal government in a position of massive involvement with higher education for the explicit purpose of increasing the number of persons with the capacity to contribute to national defense. A fourth impetus for manpower programs—dating back to the period immediately after World W a r II—arose from social welfare needs. When President Truman recognized that his efforts to secure passage of a national health insurance measure were doomed, he shifted tack and instructed the Magnuson Commission to propose an alternative health program that might narrow the gap between health resources and needs. The commission recommended more money for facilities, research, and manpower; and subsequently, Congress—under Eisenhower, Kennedy, Johnson, Nixon—responded affirmatively. Its initial response was in the form of aid for biomedical research, with considerable funds spilling over for the education and employment of scientists. Later, Congress moved directly to increase the nation's pool of physicians and other health professionals: first, by appropriating substantial sums for the construction of health facilities; next, by providing financial assistance to medical schools in distress and to new ones being formed; and finally, in 1971, by supplying funds, in the range of 25 percent of their instructional expenses, for all health professional schools. These several efforts reflected a growing legislative awareness that the federal government could not afford to remain indifferent to the resource gap in medical care. Once Congress passed Medicare and Medicaid in 1965, the pressure to correct the inadequacy of physician and related types of health manpower became overwhelming. There was little point in broadening the entitlement of the American people to health services if a shortfall persisted of providers to turn these entitlements into a reality. A fifth imperative for manpower action was the federal government's growing concern for the seriously handicapped. The initial legislation in the area of vocational rehabilitation, apart from veterans' assistance, dates from 1920. It was not until after World W a r II, however, that forces under the aggressive administrative leadership of Mary Switzer prodded Congress to make substantial funding available to the states for facilitating the occupational rehabilitation of

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those with serious physical handicaps. This program later was broadened to include other types of handicaps, including mental and emotional disturbances. A large part of the total federal effort in this regard is the extensive support and rehabilitative program of the Veterans Administration, which provides, inter alia, for grants to disabled veterans to improve their employability; for graduated transfer payments depending on the seriousness of service-connected injuries; and for large-scale payments to widows and minor children of deceased veterans. Although not generally recognized as such, the grants made by the Veterans Administration to the children of eligible veterans for education and skill acquisition make up one of the largest of all federal manpower programs. In the early 1960s the federal government took off in a new manpower direction. By passing the Area Redevelopment Act (ARA) in 1961, it took cognizance of the fact that certain localities were likely to remain depressed indefinitely in the absence of governmental intervention, including a modest contribution to the upgrading of skills. It was assumed that employers would be more willing to locate in areas of high unemployment if governmental funds were available to help them train the type of manpower they required. The Manpower Development and Training Act ( M D T A ) of 1962 was the congressional response to the generic problem of disequilibrium arising from the displacement effects of automation. Congress believed that many skilled workers would never be re-employed unless the federal government provided funds to assist them to acquire new skills. These two pieces of legislation marked the entrance c f the federal government into manpower training for the unemployed and the underemployed. The first of these departures in manpower programming, A R A , was stillborn. The federal government never mounted a serious effort to turn depressed areas around. And the expansion of the American economy in the years following the passage of M D T A showed that Congress had misjudged the situation: Automation was not the villain. High rates of unemployment among skilled workers had reflected softness in the aggregate demand for labor. Once the economy expanded, most unemployed skilled workers were readily reabsorbed. Nevertheless, these efforts of the early 1960s were transmuted into a program to help the seriously disadvantaged, who came to be recognized as the priority target in the years after 1963. Actually, the principal architects of M D T A had envisioned the necessity for federal intervention if large numbers of poorly educated, unskilled blacks were to be effectively absorbed into the American economy. Lyndon Johnson reported that a gentleman's agreement had been reached in the Senate to maintain silence on this point so to avoid embarrassment to southern conservatives in return for their acquiescence to the legislation.

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With the passage of the Economic Opportunity Act in 1964, the nation entered upon what was exaggeratedly called the "war on poverty." An important dimension of this war was the effort to broaden opportunities for those at the bottom of the income distribution by giving them second chances for basic education and skill training. This was an additional motivation for the creation of a national manpower policy. In the following years an ever greater proportion of federal funding was directed toward helping the disadvantaged. Toward the end of the decade, the government, particularly in the Concentrated Employment Program, began to explore a variety of devices to help the most seriously deprived residents of urban slums, a high proportion of whom were members of minority groups. The difficulties of altering ghetto work patterns and life styles, which had not yet been explored by social architects, do not diminish the importance of these programs as the first federal efforts at supplying substantial resources to improve the life chances of tens of thousands of urban youth and adults on the periphery of the labor force. With the passage of the Civil Rights Act of 1964, racial and sex discrimination in the selection, training, and promotion of employees was prohibited, and employers found in violation were subject to prosecution and penalties. Although the regulations governing the enforcement of this act were difficult to draft and even more difficult to implement, in the succeeding decade considerable progress was made in reducing many of the arbitrary barriers that had long blocked minorities and women from equal work opportunities. In the mid- and late 1930s, during the New Deal, the federal government had set into place the basic structure of income transfers for citizens lacking income as a result of unemployment, permanent disability, old age, or the death of the male head of the household. The intervening years had seen Congress expand Social Security coverage and improve the level of benefits. Despite a long period of economic expansion after 1940, during which the economy faced only periodic recessions of relatively short duration, the number of adults and children on the welfare rolls by the late 1960s was at an all-time high, and further increases appeared likely. In 1967, in the hope of reversing the upward drift in the welfare case load, Congress considered how to improve the articulation between national manpower and welfare policies. Its principal innovation was to provide an economic benefit to welfare recipients who found jobs: They were permitted to retain the first $80 of monthly earnings. Congress intervened again in 1970 both by increasing the monetary incentives for welfare clients to enter employment and by insisting that certain classes of recipients register for work and accept the employment offered or risk being removed from the welfare rolls. The tenth and last building block in the national manpower pro-

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gram has been the recent effort by the federal government to create jobs directly. T h e large-scale W o r k s Progress Administration program, which at one point provided jobs and income to 3 million persons and which was the New Deal's solution to the overwhelming unemployment of the 1930s, ended in 1941. T h e federal government had eschewed any large-scale job-creation program until recently, convinced that macropolicies, fiscal, monetary, and budgetary, would effectively maintain a high level of total employment. However, the slippage in employment in 1970-71, when large numbers of Vietnam veterans were being released from active duty, led President Nixon to sign the Emergency Employment Act providing j o b creation, although six months earlier he had vetoed new manpower legislation in part because it had included such a provision. A few years later, the Comprehensive Employment and Training Act of 1973 ( C E T A ) contained a special title devoted to public service employment, which was included as a price of securing Democratic support in Congress. T h e following years saw a growing enthusiasm on the part of both liberal and conservative members of Congress for an enlarged federal role in j o b creation, a sentiment that was evident in the lame duck session of 1974, when Congress passed a substantial job-creation program in quick response to the worsening unemployment picture, and again in 1977, when President Carter submitted his stimulus package. But by the time of the C E T A reauthorization ( O c t o b e r 1978), public service employment had lost ground.

T h e Nonfederal Arena These several initiatives by the federal government represent building blocks in the erection of a national manpower policy, but they are insufficient for the completion of the structure, which can never be exclusively a federal undertaking. State and local governments have long had the m a j o r responsibility for the design and funding of the educational system, and even though the federal presence has increased since World W a r II they have continued to play a leadership role. It was state government, for example, that was the principal societal agency to respond to the growing demand for new educational structures for postsecondary education, such as community colleges, technical institutes, and urban divisions of state universities. With opportunities in the labor market providing continuing reinforcement, state governments also found the money to support much larger investments in all branches of the educational system—at least until the end of the 1960s, when the pipeline of trained graduates became completely full and the federal government

The Building of a National Manpower

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cut back its space, defense, and research and development expenditures. Despite the vast increase in educational investment during the 1960s, the increasing numbers and proportions of college entrants in each age-group diverted attention from alternative programs of preparation, particularly vocational education. T o the extent that vocational preparation was nurtured, the principal innovations and expansion occurred in postsecondary community colleges and technical institutions. Since adequate vocational programs at the high school level have always been difficult to structure and staff and are considerably more costly than other curricula, it is not surprising that in a college-oriented era this alternative to the college track was relatively neglected. State government also played an important role in the expansion of the welfare system, but it had little influence on the shaping of the new manpower programs, which were being designed and funded in Washington. Local governments were shaken up to some extent in the late 1960s, however, when new centers of political power emerged as a result of the combined flow of manpower and antipoverty funds out of Washington into the hands of community-based organizations. Revenue sharing, welfare reform, and the Comprehensive Employment and Training Act were among the deliberate efforts of the federal government to broaden the role of states and large cities in determining how certain funds and programs could best serve local residents. The extent of meaningful gains from decategorization and decentralization still remains to be tested. For instance, CETA's financial incentives to state governments to improve the linkages between manpower programs and vocational education have had only limited success. In higher education, there has been a continuing shrinkage of investment in the "private" sector relative to the public during the past decades. Private institutions have been unable to attract the funds required to maintain their share of the vastly expanded student inflow and have been adversely affected by the erosion of endowments and by rises in student costs that can be borne only by limited numbers of families. Even private universities in the best positions—with large government grants and contracts to cover part of their overhead— cannot be confident that they will be able to survive in an economy characterized by steep inflation. Insofar as private welfare is concerned, philanthropy has become marginal; it still contributes some capital funding for social welfare projects, but it primarily provides management services. Most or all of the monies that philanthropy uses for operation come from the public purse. The nonprofit sector, however, with foundations in the lead, has made a significant contribution toward speeding the admission of mi-

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nority groups, blacks particularly, into the middle-class mainstream, by providing special support for talented youth while they scale barriers that have traditionally blocked their access into many professions. If one had to single out the effort in which philanthropy has continued to serve as the cutting edge, it would be in opening new careers to substantial numbers of minority group members. There is no simple way to describe the role of business and labor in shaping the nation's manpower policy, partly because their impact is so diffuse. Yet a few generalizations may be ventured—especially if the focus is restricted to large corporations and major trade unions. Although it is not well recognized, large corporations make a sub- · stantial contribution, directly and indirectly, to the process of skill acquisition by creating learning opportunities geared to filling their own job openings and by underwriting formal instruction to increase the ability of their work forces to deal more effectively with complex and changing technology. In simplest terms, it can be said that most Americans learn their skills on the job or, put another way, after they are hired. Formal apprenticeship, company-dominated or jointly controlled by management and labor, has always played a role in the skill-acquisition process, but with the exception of construction and a ,, few other trades, apprenticeship has never accounted for more than a small minority of all skilled workers. The dominant pattern of skill development explains in large measure why neither large-scale industry nor the major trade unions demonstrated more than passing interest in the emergence and expansion of federal manpower programs in the early and mid-1960s. These new governmental efforts could provide relatively little direct benefit to them. In the later 1960s, however, under direct pressure from President Johnson, the nation's principal employers agreed to provide job openings for the hard-to-employ. Most participating companies did not accept governmental funds that were available to encourage such hiring and training, preferring to do it on their own through the National Alliance of Businessmen (NAB). It is difficult to assess the results, since N A B did not keep careful records of the numbers hired or retained as a result of its specific interventions. A cautious estimate is that several hundred thousand job seekers who otherwise might not have gotten past the employment office were hired; of this number, perhaps one-third became tied to the regular labor force, either by remaining with the employer who had hired them originally or by shifting to more desirable jobs. In response to law and public opinion in the later 1960s, many large corporations made a considerable effort to alter their personnel policies to increase the number of minority group workers hired and promoted. Discrimination in employment has surely not been eliminated, but there are many companies of all sizes that have made—and con-

The Building of a National Manpower

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tinue to make—serious efforts to live up to the spirit as well as the letter of the law. Much the same is true of many trade unions, which have eliminated segregated locals and dual seniority ladders, opened bidding for training and promotion to all, and elected increasing numbers of minority members to leadership posts. Nevertheless, most unions have shown little interest in either manpower training programs or reforms of vocational education because these developments did not appear to have direct relevance to their major concerns. Unions supported the early manpower legislation, but they were not deeply committed to it. It was not until the scope of manpower legislation was broadened to include public service employment that the trade union movement became deeply involved. Organized labor became a leading protagonist for enlarging the scope and scale of federal manpower legislation and, above all, for increasing the size of appropriations, once the job-creation issue was joined. This review of nonfederal involvement in manpower policy indicates that state government played a leading role in expanding opportunities for college and professional education and played a secondary role as a reactor to other aspects of the dynamic complex of manpower and manpower-related policies and programs. Local government had an even less active role than state government in the shaping of the emerging manpower policy until the passage of CETA. The influence of the nonprofit sector—philanthropy, foundations, private universities—was also severely constrained, although it was instrumental in opening developmental opportunities for talented members of minority groups and for providing some management capability for expanded social welfare programs. Business tended to rely upon its own training programs to supply the skills it needed and to remain more or less at arm's length from the new public programs, except in response to legal requirements, presidential requests, and public opinion. It seldom took a lead in shaping new manpower policy. Unions, also, with the exception of their leading advocacy position with respect to public service employment, assumed a supportive but unaggressive stance similar to that of business.

The Shape of Things to Come What steps should be taken to strengthen our national manpower policy? The following questions are critical: T o what extent can manpower policy play a role in achieving and maintaining an adequate level of employment?

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What are the principal choices that must be faced by the educationtraining establishment? How can we develop a better balance among regular jobs, income transfers, and public service employment? What can be done to reduce the human costs incident to the structural changes that inevitably occur in a dynamic society? What institutions need to be established, strengthened, or coordinated to improve the effectiveness of manpower policy? These questions should make it clear that manpower policy is still at an early stage of development. It is at present unable to respond effectively to these several challenges. Regrettable as this may be, however, it should not be surprising when one considers that the nation has been conscious of manpower policy only in recent years and that its design and implementation require the participation and close coordination of all the principal sectors of society. Although nobody can provide complete and authoritative answers to these questions, here are some suggestions for future action. Manpower training can have only minimal influence upon the total demand for labor. If people at the end of the queue have the opportunity to improve their skills and competence, some of them may be able to find jobs in the crevices of the economy without displacing others, but the possibility of such absorption is limited. To the extent that manpower policy is broadened to include public service employment or other types of job creation, in addition to training, its potential impact on employment is increased, but within definable limits—current estimates suggest a one-year price tag of $4 billion for half a million public service jobs. A job for everybody could be provided by a controlled economy, of course, but the likely trade-off, as in Eastern Europe, would be a relatively low level of productivity. As things stand, it is questionable whether the United States can improve the real per capita standard of living by forcing the public economy (states and localities) to enlarge payrolls by hiring employees to provide additional educational, welfare, sanitation, and related services. The passage of Proposition 13 in California, the tax revolts in many other areas of the country, and the commitment of President Carter to reduce the proportion of the federal budget as a percentage of the gross national product all speak to the restiveness of the American people about a continuing growth in public-sector employment, even though the public wants improved public services. On its own, manpower policy can do little to increase employment. A combination of economic and manpower policy, however, with assistance from welfare and income transfers, can contribute to a higher level of employment. The outlook is also cloudy on the educational front. Those who

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p r o p o s e the o p e n i n g of a l t e r n a t i v e c h a n n e l s to p e r s o n a l fulfillment a v o i d t o u g h p r o b l e m s s u c h as the a v a i l a b i l i t y o f a l t e r n a t i v e s f o r a d o lescents w h o h a v e failed to m a s t e r the b a s i c skills, w a y s to i m p r o v e l e a r n i n g c a p a b i l i t i e s during the first eight to ten y e a r s in s c h o o l , a n d the c a u s e s o f the high d r o p o u t rates in c o m m u n i t y a n d s e n i o r colleges. A l s o neglected is c o n s i d e r a t i o n o f the l a b o r m a r k e t ' s a b i l i t y to a b s o r b g r a d u a t e s in e d u c a t i o n , h u m a n i t i e s , l a w , a n d o t h e r surplus a r e a s w i t h out c a u s i n g serious f r u s t r a t i o n a n d d i s c o n t e n t due to unfulfilled e x p e c t a t i o n s . A n o t h e r m a j o r t a s k is to e s c a p e f r o m the deeply i n g r a i n e d confusion between formal schooling and effective learning; and equally i m p o r t a n t , to distinguish b e t w e e n c r e d e n t i a l s a n d c o m p e t e n c e . It s h o u l d b e evident that A m e r i c a n s o c i e t y has n o c l e a r p e r c e p t i o n of the a p p r o p r i a t e r e l a t i o n s a m o n g the f o r m a l s c h o o l s y s t e m , o t h e r learning o p p o r t u n i t i e s , the p r o c e s s o f s e l f - d e v e l o p m e n t , a n d the skill r e q u i r e m e n t s o f the e c o n o m y . N o t o n l y is it n e c e s s a r y to c l a r i f y these c o m p l e x r e l a t i o n s , but it is a l s o essential to a v o i d a t a k e o v e r b y p r o viders with a s t a k e in the existing s y s t e m , a n d to restrain e n t h u s i a s t s w h o b e l i e v e that f o r m a l e d u c a t i o n c a n c u r e all s o c i a l ills. A n e q u a l l y i m p o r t a n t c h a l l e n g e is to c o u n t e r the pessimistic v i e w s of critics w h o b e l i e v e that s c h o o l i n g is o f r e l a t i v e l y m i n o r i m p o r t a n c e b e c a u s e it c a n not d o m u c h to alter i n c o m e d i s t r i b u t i o n . T h e unsuccessful e f f o r t s o f C o n g r e s s to pass c o m p r e h e n s i v e w e l f a r e r e f o r m , the a c k n o w l e d g e d e x i s t e n c e o f relief c h e a t e r s , a n d the i n c r e a s ing a w a r e n e s s that m a n y w h o a r e entitled to v a r i o u s b e n e f i t s d o n o t receive them d e m o n s t r a t e the c o m p l e x i t i e s i n v o l v e d in r a t i o n a l i z i n g the n e t w o r k o f u n e m p l o y m e n t c o m p e n s a t i o n , p u b l i c s e r v i c e e m p l o y m e n t , a n d w e l f a r e . It is i n c u m b e n t o n all to a v o i d d e m a g o g u e r y a n d to r e c o g n i z e that w h i l e existing r e l a t i o n s h i p s a m o n g these t h r e e a r e c o n fused to the point o f being i n e q u i t a b l e , inefficient, a n d o f t e n d e m e a n ing, c h a n g e s will not c o m e easily. T h e m o s t g l a r i n g d e f e c t s must b e singled o u t f o r e a r l y a t t e n t i o n , a n d a n a t i o n a l c o n s e n s u s must

be

s o u g h t o n the q u e s t i o n o f p r o v i d i n g w o r k o r m o n e y to different n e e d y g r o u p s b e f o r e m o r e c o m p r e h e n s i v e s o l u t i o n s c a n b e designed a n d i m p l e m e n t e d . T o p r o c e e d as if the issue w e r e s i m p l e a n d clear-cut c a n only make bad worse. A l t h o u g h there h a s b e e n a d e l i b e r a t e a t t e m p t since W o r l d W a r II to shift t h e c o s t s of social a n d e c o n o m i c c h a n g e f r o m the v i c t i m to the larger s o c i e t y , w e k n o w m u c h less t h a n w e need to k n o w a b o u t h o w to i n t e r v e n e in this c o m p l e x p r o c e s s . F o r e x a m p l e , w h a t c a n b e d o n e a b o u t the large a c c r e t i o n of u n d e r e m p l o y e d p e o p l e living in small rural p l a c e s w i t h t o o little to d o a n d with f e w p r o s p e c t s ? O r a b o u t the large n u m b e r s o f p o o r l y p r e p a r e d p e o p l e b o r n a n d raised in rural a r e a s w h o h a v e i n u n d a t e d large cities, w e a k e n i n g m a n y o f t h e m to the point o f f i n a n c i a l a n d social c o l l a p s e ? H o w d o w e r e s p o n d to m a j o r i n t e r n a t i o n a l r e a d j u s t m e n t s such as the high price o f e n e r g y

that

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threaten the economic base of major regions? Manpower policy worthy of the name must be able to analyze the employment dimensions of such pathologies and to point the directions for solutions. T o date it has fallen far short of meeting this challenge. The difficult if not intractable problems that our society faces in reducing unemployment, improving the effectiveness of education, developing a more responsible income transfer system, and avoiding the economic erosion of depressed areas all speak to an immense gap between problems and solutions. What is sorely needed are new institutional arrangements that improve the linkages between manpower and economic policy, manpower and education, manpower and income-transfer policies, manpower and regional development. While some ties exist and others are slowly being fashioned, the burden of this analysis is to emphasize the need for accelerated efforts. T o be effective, manpower policy must raise the awareness of all groups in society to the importance of human resources. Only with deeper understanding of the relation between preparation for work and opportunities to pursue personal and societal objectives will optimal manpower development and utilization be more nearly achieved.

1 7 Manpower Policy in the 1980s

Manpower policy is sometimes viewed as an unnecessary extension of government into the economy which results in the expenditure of large sums with little useful social output. Former Deputy Secretary of the Treasury Charls E. Walker, one of the foremost manpower critics in the early 1970s, insisted that the national unemployment rate had been reduced only a few tenths of one percent as a result of an expenditure of $40 billion. No knowledgeable person at that time was able to substantiate the $40 billion figure—the correct amount was probably closer to half that sum, or less. But by the end of 1978 the cumulative expenditures for manpower since the Manpower Development and Training Act was passed in 1962 were in the $80 billion range. While it is not unreasonable to use the changes in the unemployment rate as one criterion for assessing the success of the manpower programs, sole reliance on this measure is questionable from the viewpoint of both economics and politics. A more sensible way to establish the framework for the present analysis is to describe the principal

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goals that Congress sought to accomplish with the successive authorizations and appropriations for manpower programs in the decade and a half between 1962 and 1978. These objectives can be quickly identified. The largest sum has been spent on public service employment, which has provided work for the unemployed, the largest proportion of whom had lost their jobs as a result of the severe recession in the fall of 1974, from which the nation still had not fully recovered in 1978. Next in importance are the sums that have provided one or another type of work experience for large numbers of the hard-to-employ, many of whom have had little or no effective attachment to the labor force. The Neighborhood Youth Corps (NYC) could be classified under work experience or training; but my preference is not to include NYC in the latter category, since it is difficult to find evidence that much serious training is being carried out. Many critics contend, with some justification, that a great many of the youth programs have been so poorly planned and supervised that they have had a dysfunctional impact on young people, teaching them how to be paid for work that they do not perform. Institutional and on-the-job training represent the third important category of manpower expenditures. While some training programs have been well structured and well run and have provided the trainees with useful and marketable skills—for example, in licensed practical nursing or in auto mechanics—most training has been of such short duration (four months) that the principal gains to the clients have been the allowances and the work orientation they receive. The fourth category of expenditures is appropriations for labor market services, particularly for operating the Federal-State Employment Service, which offers assistance to job seekers via testing, counseling, and, above all, placement services. If Charls Walker's criterion for judging the efficacy of manpower programs is too restrictive, what alternative standards are suggested by this summary of the objectives of congressional legislation? The simplest measures would be the following: income earned in publicsector jobs by previously unemployed persons, perhaps adjusted for the value of the output for which they are responsible and further adjusted for the reduction in transfer payments; income received by inschool and out-of-school youth who have participated in NYC, adjusted by the reduction in crime and delinquent acts that these youth would have engaged in if they had not received public monies; and income earned by participants in work-experience programs, often in lieu of other types of income transfers. For all of these groups, the degree of attachment to the labor force as a result of program participation should also be considered. And finally, the improvements in employability and income that have resulted from newly acquired skills must be gauged.

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One conclusion is certain. Manpower programs put a lot of money into the hands of the poor and the near-poor. There is also evidence that suggests that those who have had the opportunity to enter and complete a serious course of training have shown important gains in their later employment and income. Whether there has been much of a payoff for those in work-experience programs, other than the income received while in trainee status, is less clear. Some probably have been helped to become attached to the labor force. The primitive state of evaluation studies does not justify, in my opinion, any firmer judgments than those just sketched. But I have no reason to believe that expenditures for manpower would show a lower rate of productivity than increased governmental expenditures for education, health, or criminal justice. One can make a good case, due to the large amounts of transfer income going to individuals and families at the lower end of the distribution, that manpower expenditures have been more socially productive than other expenditures. But my interest here is with the future, not the past. One way to gain perspective on the directions manpower policy is likely to take in the decade ahead is to catalogue its current uses. A further means is to identify potential commitments that are likely to make future demands on policy. And a final way is to analyze the scope and limits of manpower policy in terms of macroeconomic strategy, the budgetary outlook, and the pressures and constraints on social reform.

Present Commitments Congress, in revising the Comprehensive Employment Training Act (CETA) in 1978, called for manpower programs to accomplish the following: To provide skill training for individuals who are encountering difficulties in securing employment, and, to a lesser extent, to offer opportunities for those able to advance into better-paying jobs and careers only through additional training. T o provide public service employment for individuals from lowincome families who have been out of work for fifteen weeks or who are on the welfare rolls. The hope is that many of these individuals, after acquiring a work record and experience for a year or so, will be able to make the transition to a regular job in the private or public sector. To offer residential and nonresidential training (Job Corps Centers) to selected groups of seriously disadvantaged young people who require remedial education, socialization, and skill training to im-

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prove their employability in order to compete successfully for work. T o implement a variety of manpower programs, other than those subsumed under the Job Corps Centers, directed to youth—in school and out of school, urban and rural—aimed at improving their employability and employment by providing training opportunities, as well as part-time work and full-time employment. This outline of the principal titles of the current C E T A legislation establishes several broad objectives: T o provide opportunities for a wide range of individuals, focused on but not limited to low-income persons, to secure training that could improve their employability. T o provide opportunities for persons unemployed because of cyclical contractions or structural conditions, as well as persons on welfare, to obtain public service jobs in the expectation that through such employment they will later be better able to obtain regular jobs. T o provide opportunities for targeted groups such as American Indians, migrants, and youth to obtain a range of manpower services to assist them in getting and holding regular jobs. Until the C E T A reauthorization of 1978, a large disparity existed between the eligibility criteria that Congress had stipulated for participation in these programs and the sums it had allocated to provide training and employment opportunities. A few figures will make this clear. The number of unemployed at any one point during 1977 was about 7 million, and the total number who were out of work during the course of the year exceeded 20 million. Adults on welfare who were presumably employable (on Aid to Dependent Children and food stamps) numbered 2 million. The number of American Indians who were unemployed or underemployed added to the number of migrants who had need for manpower services exceeded one-half million. And the urban and rural youth and young adults between the ages of 16 and 22 who were unemployed or underemployed, or who could have profited from additional training, numbered more than 2 million. In contrast to these substantial numbers of potential claimants, Fiscal 1978 appropriations provided a total of only 725,000 public service jobs, and training opportunities (of six months' duration) for about 1.5 million. The one inescapable conclusion is that the impact of manpower programs on the eligible pool will be modest.

Manpower Policy in the 1980s

Prospective Commitments The Carter administration has signaled to Congress and the public that a major aspect of its projected welfare reform is to divide the present pool into two parts—the employables and the nonemployables— and to require employables, under threat of losing benefits, to accept either full-time or part-time jobs, depending on their circumstances. Preferably, these jobs will be in the private sector, but if not, then in the public sector. The original welfare proposal asked that 1.4 million public service jobs be made available to persons on the welfare rolls. For the most part these public service jobs will carry a wage at or close to the minimum, and families that continue to require supplementation will be better off if their wage-earning member gets a job in the private sector; this will encourage those in public-sector jobs to move to employment in the regular economy. The earlier versions of the Humphrey-Hawkins full employment bill —not the last, which gained the support of the Carter administration —represented a second commitment. The earlier drafts contained a provision for the federal government, in the event of a shortfall in jobs in the regular economy, to create additional employment opportunities in the public sector to assure that all w h o were able and willing to work would be able to do so. In the bill that Congress passed this jobcreation proposal is missing. The act is limited to improving the planning process aimed at job creation without committing the federal government explicitly to take up the slack if large numbers of individuals remain without work. Even with Congress avoiding an explicit job-creation commitment, the thrust of the legislation is in the direction of such a commitment even if it is to be delayed. The 1977 Youth Employment Demonstration Projects Act is a third new commitment: the creation of several hundred thousand employment opportunities, largely in the not-for-profit sector (government and nonprofit institutions), aimed at absorbing large numbers of unemployed youth who reside in the inner cities. The legislation had been on the books for only a few months when some of the watchdogs of the federal budget, officials at the Office of Management and Budget (OMB), recommended that the new youth title of CETA be eliminated and that additional funding available for youth in the future be disbursed through other manpower programs. While O M B lost on eliminating the specific youth title, it won on limiting the appropriation request for 1979 to the pre-existing levels, despite President Carter's acknowledgement in his December 28, 1977, television review of his first year in the White House that the issue of youth unemployment

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was predominant in discussions at the meeting of heads of state in London in M a y 1977. President Carter added that the challenge of reducing the unemployment rate for black youth continued to baffle him. Given the continuing high rates of unemployment not only among black youth but among black adults as well, and the often reported criticism by moderate black leaders of the inadequacies of the administration's urban policy, the leadership of the Democratic party will remain under pressure to support a large federal program of job creation for unemployed and underemployed blacks. The conflict is becoming ever more severe between the long-established U.S. leadership in reducing trade barriers among nations and the growing number of U . S . employers and trade unions pleading for a reversal of that policy on the grounds that imports from abroad are eroding both jobs and profits. Foreigners are capturing our markets with goods that have been produced by workers whose pay is less than one-quarter of our domestic wages, and in many cases foreign governments are subsidizing their exporters to assist them in capturing our markets. Since 1962, we have had on the books the Trade Adjustment Act (and later amendments), which stipulates that the federal government can assist employers and workers who suffer damage as a result of unfair trade practices. Included are various manpower programs providing access to training and mobility allowances for workers who have lost their jobs. The adjustment measures in the act do not come into play until complex administrative determinations are made by different Washington agencies; from 1969 through 1975, the total number of workers assisted was relatively small, approximately 35,000, and the amount of assistance per worker was relatively modest. The odds are strong, however, that if trade among the advanced industrial nations is not to become seriously constricted by a retreat to protectionism, the adjustment mechanism will have to be broadened and deepened. At minimum, one must anticipate that the federal government will grant workers adjudged to be injured by trade policy easier access to training and special consideration with respect to public service employment. This a fourth likely expansion of federal effort in the years ahead. A fifth likely area of greater commitment is job-creation efforts directed to easing the work and income problems facing hard-to-employ groups such as older persons, the disabled, released mental hospital patients, ex-drug addicts and ex-offenders. "Operation Mainstream," dating back to 1963, was a program directed originally to older unemployed coal miners in Kentucky who had little or no prospect of returning to the pits, but who, instead of drawing income transfers, were afforded an opportunity to be employed on publicly funded out-

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door jobs. A few years ago, several federal agencies, with the U.S. Department of Labor in the lead, underwrote, via a nonprofit organization—The Manpower Demonstration Research Corporation—a pioneer effort that goes under the name Supported W o r k . It is a graded work program aimed at providing work and income for hardto-employ persons as a first step to linking them to the regular labor market. Sheltered workshops, primarily under philanthropic auspices, have over many decades also provided employment opportunities for many small groups of disabled persons.

The Scope and Limits of Manpower Policy In the years that have passed since the passage of the Manpower Training and Development Act of 1962, the annual federal appropriations for manpower programs have increased from around $52 million to approximately $13 billion in Fiscal 1978, or by more than 250 times. The principal rationale for this steady expansion is that manpower training offers opportunities for different groups of disadvantaged citizens to improve their skills and thereby position themselves better to get and hold jobs that will enable them to support themselves and their families. But some training-related issues remain unsettled, despite a federal effort of sixteen years. In the face of a shortfall in job opportunities, how far can one rely on expanded training before one simply changes the position of people in the queue? Those who receive the training are likely to move farther to the front of the line of job seekers. But, assuming that good training in a reasonably balanced labor market can result in substantial gains in employment and income for those who go through the programs, who should be eligible to participate in such a costly public program? Congress has until recently preferred to establish broad eligibility criteria, with the inevitable result that the operating agencies have sought to divide the limited funds among the largest number of eligibles, thereby insuring that most people will receive little serious training and will therefore be unlikely to enjoy significant posttraining benefits. Other difficulties persist. Employers are clearly unable or unwilling to participate in on-the-job training during a period when they are forced to reduce their work force because of a fall-off in business. And even in a strong labor market, many who go through institutional training often experience difficulties in finding training-related jobs. Still further difficulties in the design and implementation of an effective training component as part of a national manpower policy grow out of the inadequate educational preparation of many who are most

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in need of skill training. Until poorly educated persons have an opportunity to bring their reading and calculating skills up to a minimum level, they are not likely to be able to enter into serious training. But such remedial efforts present serious problems from the vantage of both cost and motivation of potential trainees. It is much easier to assert that training can improve the operations of a modern labor market, provide opportunities for disadvantaged persons, improve their employability and income, and contribute to the moderation of inflationary pressures by enlarging the pool of skills, than to design and implement such an effort in an economy characterized by cyclical fluctuations. Employers operate under trade union contracts that affect hiring and firing, and congressmen, looking for public approval, seek to spread their limited appropriations over the largest possible number of voters. Similar tensions exist between generalizations about the virtues of governmental job-creation efforts and the implementation of several programs that could contribute significantly to easing the nation's unemployment problem. Most people, conservative and liberal alike, have a prejudice in favor of providing opportunities for the unemployed to work rather than having them rely on income transfers. Public service employment (PSE), which first appeared or more correctly reappeared in 1971, had reached by 1978 its goal of 725,000 jobs. In an economy with more than 90 million jobs, PSE, while attractive on its face, cannot provide a broad solution to job creation. A short list of the difficulties includes the following: W h o among the large number of potential claimants for jobs—from better-educated youth to seriously disadvantaged adults with family responsibilities—should have priority claims on the positions which government creates? If such jobs are created, as they will be, in areas of substantial unemployment, what prospects are there to move these persons on public service jobs into the regular economy at the end of one year or so? And if such persons cannot be moved into regular employment, does this imply that the federally supported jobs will have to be a permanent addition to the local government payroll? And if continued federal financing is not available, what point is there in dropping the ex-PSE jobholder back into the pool of the unemployed? Furthermore, what wages should be paid to those who hold PSE jobs? Currently the figure is considerably above the minimum wage— about 50 percent—but the Carter administration's welfare reform package proposes a wage not much higher than the minimum. Many prime sponsors have exercised their right to supplement the $10,000 ceiling for federal funds, which means that some PSE jobs have carried an annual wage of up to $15,000 or even higher. If PSE job creation expands during cyclical downturns—which oc-

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curred in 1974-75—then there is conflict between the pressures on certain governmental units to cut back their work forces and the pressures on the federal government to allot f u n d s to hire the newly or chronically unemployed. A n d if local governmental units use federal funds to ease their financial troubles and retain employees w h o m they might otherwise have fired, to what extent is this a substitution of federal for local tax m o n e y with no net job creation? The complexities surrounding public service employment include such additional matters as the value of the output produced by the jobholders; the a m o u n t of additional funding per position required to assure proper tools, materials, and supervision; the creation of a potential political bloc of PSE incumbents w h o will lobby against any cutback in the program (it took W o r l d W a r II to permit the liquidation of WPA); the lack of promise that public service employment, without remedial education and skill training, holds for the seriously disadvantaged to be able to make the transition to regular jobs; the opposition of municipal unions to the creation of two rates of pay for similar w o r k (in the event that PSE jobs are paid below the regular Civil Service scale, as the administration proposes for employable welfare claimants); and still other troublesome questions. A cautious reassessment is that the political forces pressuring for an expansion of m a n p o w e r training and public service employment are potent; but serious questions remain about the efficacy of government-sponsored training and job creation. This will be neither the first nor the last time that the American public will be forced to make new and important decisions in the face of continuing uncertainty. No one w h o was present when m a n p o w e r policy was b o r n in the early 1960s would have been in a position to predict what its contours would be in the late 1970s. This should be a warning that similar difficulties are n o w faced b y the investigator w h o seeks to discern the shape of things to come, even if a foreshortened future of the mid1980s is used as the cutoff date. In the belief that an intimate acquaintance with the evolution of m a n p o w e r policy m a y provide the best—if admittedly a still inadequate—basis for guessing the contours a n d convolutions that lie ahead, I would point the following directions in which national manpower policy appears to be headed: A continuing, if moderate, rise in the level of federal financing for m a n p o w e r training and some cutback in public service employment. A basic reliance on the heavily decentralized present system for the delivery of m a n p o w e r services through prime sponsors and their subcontractors, including community-based organizations. A heightened effort at both federal and local levels to engage large

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and small employers (and trade unions) to play a more active role in the use of manpower funds, with an aim of linking training more closely to job placement in the private sector. A willingness on the part of Congress to target manpower funds more narrowly on the most seriously disadvantaged. A hesitancy to reduce the flow of CETA funds to local governments under severe financial and economic pressure, such as the cities with eroding economies, high social costs, and sliding tax bases. A growing perception that much of the social output obtained from the employment of public service workers, while beneficial, would not be able to command local tax dollars if federal financing were withdrawn. Substantial difficulties in establishing a two-tier wage system in the public sector, in which PSE workers would be paid considerably less than regularly employed civil servants for performing the same tasks. A growing recognition that the early enthusiasm of the supporters of a full employment policy that uses public service employment as the balancing wheel for shortfalls in regular jobs is not practical, given the continuing high rates of unemployment and the ratchet effect of job expansion, which brings many new workers into the labor market. Increasing concern with efforts to regulate the number of "illegal immigrants," whose numbers increase in response to the strengthening of the U.S. labor market. A greater appreciation of the considerable options, other than holding a regular job, that many people have to obtain income. There are many sources of income transfer—governmental, employer, family— as well as such alternatives as engaging in illegal work. Since the total of such alternative sources equals about one out of every three dollars of earned income, it will prove not only difficult but probably impossible to divide the population into employables and nonemployables, as the welfare reform proposal contemplates. In sum, manpower policy in the next decade must increasingly address the basic challenge on the employment front: broadening opportunities for disadvantaged groups to compete for the meaningful, good jobs in our economy. Broadening access to any type of job, since income-transfer alternatives will continue to exist, will not be enough. It is to be hoped that manpower policy will be shaped increasingly to meet this need for equity in the labor market.

Politics of Employment As long as the market brought a b o u t a reasonable balance between jobs and job seekers—that is u p to the Great Depression of the 1930s—it w a s understandable that economists paid little attention to a n y t h i n g other than the allocative mechanism that was the heart of their discipline. But the fact that they continue to slight the social and the political aspects a half-century later attests to the dead hand of the past, reinforced b y their discomfort with introducing qualitative factors into their increasingly mathematical models. But to omit politics f r o m considerations of employment policy is to stage Hamlet without the Prince.

1 8 Jobs and Votes

Politics and economics have been intertwined since the founding of the Republic. The slave was defined by the Constitution to be threefifths of a man for purposes of representation. Throughout the past two hundred years, the federal government has become increasingly active in matters of international trade and money. State governments played a critical role in economic development; for example, New York State built the Erie Canal. The U . S . Army played a major role in the pacification of the West, which was the precondition for largescale settlement and expansion of employment. And finally, the struggle over the tariff dominated much of nineteenth-century political life. Despite these close linkages between politics and economics from the earliest days of the Republic, the prevailing ideology and, to a large extent, practice during the period of rapid industrialization, circa 1865 to 1929, was to separate the two. Only with the Great Depression of the 1930s, World War II, and the post-World W a r II Keynesian revolution were the two, if not reunited, at least back on speaking terms.

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By the mid-1960s, most macroeconomists, especially those in the Kennedy-Johnson circle, were proclaiming their success in running the economy at or close to the optimum level. They called it "fine-tuning." But the self-congratulatory mood was shortlived: By the late 1960s, inflationary pressures were taking over, and it became clear that even a belated excess profits tax would not be able to reverse the upward climb of prices. With the election of Richard Nixon, a serious effort was initiated to stem inflationary pressures through a tight money policy, reinforced by an effort to hold down federal expenditures. But Arthur F. Burns, the former president's counselor, in a speech at Pepperdine College in December 1970, acknowledged that something had gone seriously wrong with the classic remedy that the administration had pursued: Prices continued to go up and unemployment failed to come down. Burns concluded that the market could no longer be relied upon to perform its equilibrating functions, at least not within the time periods during which politicians must act in an impatient democracy. Hence Burns's cautious plea for an incomes policy. This brief recapitulation suggests the magnitude of the gap between the potency of macroeconomics and successful management of the economy. Neither the neo-Keynesian liberals of the post-World W a r II era, nor Burns, the pragmatic former chairman of the Federal Reserve Board, nor the Nobel prize-winning monetarist Milton Friedman, has trustworthy prescriptions for the elected leadership. Constrained deficit spending and easy money are no more an answer than a tight money policy reinforced by efforts to shrink the public sector and to reduce government regulation. It might be wise for economists to realize that they are stuck; and they should decide upon a role as assessors and critics of the nostrums that politicians advance to solve problems that have no solutions, surely not in the short term. At least in that way the economists would do no harm. But my task here is not to delineate a new role for macroeconomics; rather it has the more circumscribed goal of illustrating the political element in the nation's employment policies.

Politics and Jobs The American people do recognize with one part of their consciousness that politics and jobs, surely since the Great Depression, are closely linked, for as the popular saying goes, the electorate votes its pocketbook. Those who are not directly engaged in lobbying or legislation, however, tend to repress their awareness of the intermingling, possibly in respect for the anachronistic ideology that the United

Jobs and Votes States is a free enterprise economy, dominated by the market. T h e five cases summarized below aim to lift the curtain just enough to provide a better view of the stage. T h e first case is the striking dichotomy between the generally conservative voting behavior of the members of Congress from the South and Southwest and their response to legislation that would result in additional economic activity (and jobs) for their district, state, region. Informed persons in Washington used to comment that if Congress appropriated any more funds for Georgia and South Carolina under the promptings of Representative Carl Vinson and Senator Richard Russell, both states were likely to sink into the sea. Hard as it is to believe, the so-called sophisticated northern members of Congress began to react only after the Sunbelt had gained a m a j o r advantage over the older industrialized North. A second case, interesting because of the direct involvement of the private sector, involved the intensive lobbying to prevent Congress from cutting off funds for the development and construction of a supersonic commercial airliner in which Boeing, with headquarters in Seattle, Washington, was the prime contractor. T h e International Association of Machinists joined forces with Boeing to convince C o n gress to keep the project afloat. T h e third case provides an interesting international dimension to the usual domestic infighting for access to federal power that can be translated into more jobs for a particular region, industry, or trade union. Early in the Carter administration, the House of Representatives beat back, if only by a narrow margin, the proposal that a stipulated proportion of all oil imported into the United States had to be imported in American ships. Informed opinion held that the maritime unions were to be paid back for liberal donations to the successful candidates' campaigns, even at the price of further inflating the cost of oil to the American people and adding a discordant note to our trade relationships with other nations. T h e unwillingness of the Congress to agree t o this particular payoff, probably a reflection of its heightened sensitivity since Watergate, is less important than the administration's lobbying for the bill. Clearly, the linkages between politics and jobs are close, so close that they reach the bounds of propriety if not morality. T h e last two cases, one involving the 1977 m a y o r a l t y election in New Y o r k City, the second involving the Philadelphia delegation's activities in Washington in the same month, provide additional insights into the ever closer ties between politics and jobs. In the mayoral election in New Y o r k City, one of the leading contenders, strongly supported by the construction unions, came out in favor of W e s t w a y — t h e rehabilitation of the auto route into the city along the Hudson River. M a r i o C u o m o made no effort to disguise the reasons for his support: He emphasized that W e s t w a y would create a

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great number of new jobs for construction workers who had suffered high unemployment during the past several years. The Philadelphia story is more complex. Reacting to the news from the Department of the Navy that the repair work on the S.S. Saratoga might be done at Newport News, Virginia, rather than, as originally promised in a speech by the Vice President, at the Philadelphia Navy Yard, the Congressional delegation from the City of Brotherly Love mounted a major effort to reverse this plan. In their first volley the delegation emphasized that, promises aside, the much higher unemployment rate in Philadelphia required that the repair work be carried out in their community. Questions of capacity, cost, timing were brushed aside as of little importance.

Employment Policy Concern with the expansion of employment has long helped to shape U.S. politics, and the linkage between the two is now closer than ever. To elaborate this thesis, attention will be directed to five aspects of the current political scene, each one of which suggests that Americans increasingly see the political arena, rather than the marketplace, as the locale where their job aspirations can be realized. Shortly after President Carter took office, he decided that half of his stimulus package of $20 billion would be directed to manpower programs, specifically to providing public service employment for large numbers of persons who could not find jobs in the private economy. This was the first time since the Great Depression of the 1930s that the federal government had moved strongly to create jobs for the unemployed. To the extent that the short-run objective has been to get people quickly on the payroll, albeit the public payroll, it is hard to find much slippage. True, Congress and some nervous academicians have worried aloud about whether the enlarged spending by the federal government may fail to produce significant job expansion because of "displacement"—that is, federal dollars taking the place of state or local dollars—but this fear was exaggerated, as the Brookings Institution's 1978 interim report on Public Service Employment for the National Commission for Manpower Policy revealed. But other questions remain. For instance, what are the characteristics of the individuals placed in PSE jobs? Do they in fact represent hard-to-place persons? And if they do, will such individuals, at the end of a year or even two years, be able to move into regular jobs? And if many hard-pressed communities are using CETA funds to pro-

Jobs and Votes vide essential services, what prospect is there that the federal government, even in an upbeat e c o n o m y , will extract itself from a funding mechanism that has many of the characteristics of revenue sharing? O n the second m a j o r front, an increasing number of sectors in American industry and labor are descending on Washington to plead for governmental intervention to reduce or stei.i the flow of imports with which these industries compete. T h e ostensible ground on which they seek relief is unfair trade practices by foreign exporters, who, they claim, are not abiding by the rules of G A T T . A n d in some cases, they can b a c k their charges with hard facts. But often, the loss of profits and jobs that they seek to avoid reflects not unfair trade practices by foreigners but rather poor management, technological obsolescence, and other handicapping behavior by U . S . manufacturers. But in the context of this analysis, it is not necessary to sort out valid from spurious claims. T h e incontrovertible fact is that ever more employers and trade unions are seeking the intervention of the federal government to slow and stop foreign imports as the only w a y to assure their economic survival. Although the federal government intervened in the j o b market by administrative action on behalf of minorities as early as 1942, it was not until the Civil Rights Act of 1964 that such efforts had the support of legislation. T h e act outlawed discrimination in employment on the grounds of race, sex, or ethnic origin. T h e early enforcement action was centered on assisting minorities, particularly blacks. But in response to the political action of various women's groups, the scope of enforcement was broadened in the early 1970s to include women as well. Although there are neoclassical economists, mostly belonging to the Chicago school, who believe that the competitive market assures that discrimination against minorities is costly to the white discriminators, the long-suffering blacks sensibly ignored these classroom proofs in favor of legal redress. A n d women, also long-term victims of employment discrimination, are seeking to change the market rather than to rely on its purportedly even-handed justice. In the last decade, more and more groups have sought the protection of the law to enhance their access to j o b s and to desirable careers. Both older and disabled persons have succeeded in getting legislation passed on their behalf. T h e problem that all of these groups—blacks, Chicanos and other minorities, women, the disabled, and older persons—now confront is that in total they represent a majority of the population, even a majority of the labor force. Hence affirmative action on behalf of one group, because of its extension to all groups, is unlikely to alter materially the job and career opportunities of any one group, particularly in the short run.

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The plight of some of these disadvantaged groups has worsened since 1969 due to the uneven performance of the economy, especially the uneven growth of jobs and income. In periods of recession there is a head-on collision between the security provisions characteristic of most employment contracts and the goal of enhancing labor market protection for disadvantaged groups. Since members of handicapped groups frequently belong to the most recently hired, they are vulnerable, in the absence of special protection, to discharge in periods of declining employment. The courts, cognizant of the conflict in rights between affirmative action on behalf of minorities and seniority rules characteristic of unionized (and often nonunionized) employment arrangements, have sought a middle road, recognizing that minorities will never be able to improve their condition unless they have some protection against discharge in periods of recession. But there are further difficulties with affirmative action, arising out of the claims of inequitable treatment on the part of workers who are passed over for employment, training, and promotion, although better qualified, because they do not belong to a "protected" group. Increasing numbers of such workers are bringing suit based on "reverse discrimination," claiming that they are being treated inequitably in the nation's effort to improve the position of members who have long suffered discrimination. The courts have spoken with various voices on this issue and the issue is likely to reappear in one or another guise for years to come. One more illustration of how employment issues have moved to the center of the political stage has been the long controversy over Humphrey-Hawkins. In 1975, Arthur Burns called upon the federal government to act as the employer of last resort, offering a job to every unemployed person at a wage 10 percent below the statutory minimum. His proposal was brushed aside by the leaders of organized labor as not even worthy of discussion, although the late Senator Humphrey had a good word to say on its behalf. T h e senator appreciated Burns's acknowledgment that government had a role to play in compensating for the shortfall in jobs. In the intervening years, various interest groups and concerned members of Congress have worked hard to find a basis for consensus. As of early 1978, Secretary of Labor Ray Marshall defined the political goal as a process of moving toward full employment in a series of stages which involve the setting of a target for 1983, improved coordination among the administration, the Federal Reserve Board, and Congress; and the design of policies aimed at contributing to the expansion of employment in the private sector with the public sector responsible for picking up the slack. But the price of this consensus is the absence of specific provisions for job creation.

Jobs and Votes 185 The Political Economy of Jobs The changing values of the American public have inevitably been reflected in the work place. By extension, I would claim that the United States has now reached a point in the evolution of political democracy at which the public looks increasingly to government to see that every citizen who is able and willing to work has the opportunity to do so. The federal government may not yet be in a position to guarantee every citizen a "right" to a job, but it is increasingly clear that we are moving down that road. Secondly, the evidence is overwhelming that the black minority, after suffering pain and exploitation for almost 350 years, and other minorities such as American Indians and Chicanos characterized also by long periods of abuse and neglect, are pressing hard for their basic rights not only in the political arena but in the economic arena as well. This two-front attack is best expressed by President Kennedy's comment that a black person who gains permission to eat at a desegregated counter is not better off unless he can afford to pay for the cup of coffee. The case of discrimination against women, spelled out in arbitrary restrictions on the exercise of their political, economic, and personal rights, is more complex because most of the women have suffered at the hands of their fathers, brothers, and sons. But these restrictions are falling rapidly. If the Equal Rights Amendment is passed, or even if it fails, the principal source of continuing discrimination against women will remain in the thought-ways and folk-ways of the culture. One or two more generations of leaders will have to exit from the seats of power before the remaining discriminatory patterns are obliterated. A phenomenon that has not been fully appreciated, although Alice Rivlin and a few other analysts have called attention to it, is that equity for the individual can lead to worsening the relative position of certain groups. College and professionally educated white women are likely to marry white men of similar educational achievement, and the two may well earn an initial family income of $50,000 or more. T o the extent that more and more white women pursue professional careers, the gap in family income between whites and blacks is likely to widen. Another development underscored by recent events is that the growing desire of excluded Americans to participate in paid employment is resulting in a ratchet effect, in which even large gains in jobs (almost four million in 1977) are resulting in only slightly smaller increases in the numbers in the labor force, thereby preventing a rapid decline in the number of unemployed. The number of potential job seekers is not the counted six million unemployed but more than three

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times that number, if one takes into consideration those working part time who want full-time work; those who have become so discouraged that they have ceased to look for work; those subject to compulsory retirement who would prefer to work; the millions of employables on income-transfer programs who would welcome or should be encouraged to work; the physically handicapped who would welcome the opportunity to work; young people who remain on the school rolls because they know that there are no jobs available for them; and the largest group of all, women at home, many of whom would welcome the opportunity to get a job. T o the extent that this swollen estimate is a correct reflection of reality, it becomes obvious that the problem of jobs will not be quickly or satisfactorily resolved. Since updated figures suggest that not fewer than one out of every three jobs in the United States is in the not-for-profit sector, the American economy cannot be captured by a model restricted to the competitive economy. Unfortunately we do not possess an adequate theory of how the complementary sectors, private, nonprofit, and public, interact with one another, either with respect to job creation or with respect to wages. This shortcoming of the state of macrotheory and manpower theory in a pluralistic economy must be accepted as a fact in all efforts to improve the rate of job creation, especially of good jobs that yield useful output. This implies that the United States will debate employment policy in the political arena for a long time to come, and, as a result of such debates, actions, and feedback, we will slowly improve our understanding of both how to achieve the objective of full employment and how to design politics that will advance us on the road to that goal without taking unnecessary risks. One conclusion emerges with great sharpness. Politics will continue to dominate the employment scene in the future, even more so than it has in the past.

1 9 New Frontiers of Equal Employment Opportunity

An ironic twist marked the first major push toward equal employment opportunity. In 1963, when Congress was debating President Kennedy's Civil Rights bill, Judge Howard Smith of Virginia, chairman of the House Rules Committee, thought he could insure its defeat by proposing the inclusion of the word "sex" in the text. He was quite surprised to find out that his colleagues were ready to outlaw both racial and sex discrimination. Further administrative action to prevent discrimination against women, however, was delayed until the early 1970s. Blacks, too, received little help from government until about five years ago. The principal gains for minorities in the 1960s resulted primarily from presidential leadership, which stimulated the organization of the National Alliance of Businessmen, and by the tightening of the labor market, not through direct governmental action. Congress has since expanded the scope of its efforts to interdict discrimination against the elderly, the disabled, and other disadvantaged

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groups. Antidiscrimination laws now apply to almost all persons in the labor force except white males from 25 to 45 years of age. One consequence of putting this elaborate structure into place—including the staffing of multiple enforcement agencies—has been the emergence of a strong countermovement, led by individuals and groups who believe they are vulnerable to reverse discrimination as a direct result of these governmental actions. This development should not be surprising, since it conforms to the normal processes of social change: T h e secondary consequences of governmental intervention just cannot be foreseen. During the period since the passage of the Civil Rights Act, the U . S . economy has been changing its course. In the sixties, expansion was the order of the day; in the seventies, there have been several years of recession. Despite the substantial creation of new jobs—almost four million in 1977—high unemployment rates persist. But the crux of the employment problem is and will be not simply jobs, but good jobs. The last two decades saw a national effort to provide general employment opportunities for minorities and women in a wide range of industries; the 1980s are likely to see this effort concentrated on broadening access to good jobs and meaningful careers. With more than $50 billion available in transfer monies, excluding Social Security payments, a great many individuals are hesitant to accept what they consider a lousy job—one that pays the minimum wage, provides no training, and offers no prospect for advancement. The reason that an unemployed person can exercise a choice even in the absence of qualifying for transfer income is the existence of a large off-the-books, illicit and illegal economy, which offers work and earnings under what many consider to be more favorable conditions. The size of this "irregular economy" has never been subject to careful measurement, but 7 to 10 percent of the gross national product, or a total in the $150 to $200 billion range, is a reasonable first approximation. True, of those who seek income in the irregular economy, many have to spend time in prison, but the odds against being caught, convicted, and confined are favorable. In the forefront of the struggle for equitable access to better jobs in our economy are increasing numbers of women who seek careers. The extent to which women are competing for professional and managerial positions is reflected in increased female enrollments in professional schools—law, business, medicine. There is a feedback mechanism that works between the labor market and the occupational preparation of different groups, often with a lag but still potent. When young women in college began to recognize in the late 1960s the difficulties that newly graduated teachers were experiencing finding positions, many shifted their majors to other fields

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where the occupational prospects were brighter. But the labor market is not the only potent factor leading to change. Successful efforts to lower the discriminatory barriers against previously handicapped groups—blacks, women, the disabled—often result in people developing new occupational goals and pursuing them energetically. The pressure for improved access to good jobs can only mount; each victory leads to a further raising of expectations. There is no returning to the "good old times," good for those who had long had the inside track. Changes in the preferred sector of the labor force—white males— are also occurring rapidly. The tremendous increase in the numbers of young white workers has abated. The curve is showing a bulge in the age-group 25 to 34; somewhat later it will appear in the 35-to-44 age bracket. Consequently, in the next decade or two there will be severe crowding in the lower ranks of management. Not only will there be acute competition among white males, but ever larger numbers of blacks and women will be added to the pool of competitors. Some people expected the Supreme Court's decision in favor of Bakke to take off some of this pressure. I believe, however, that no court can stop or even significantly slow the drive to eliminate all forms of discrimination in the employment arena. In fact, there probably will be an acceleration of pressures to push ahead coming from the self-interested groups whose consciousnesses have been raised; from a bureaucracy committed to broadening the beachheads; and especially from the steadily increasing numbers of educated blacks and women who are ready and eager to compete for the better jobs. In many key sectors of the economy, women represent between one-third and two-thirds of all employees, yet they account for only a few percent of senior management. A knowledgeable officer of a major communications company told me recently that women and minorities in his organization account for approximately 20 out of the top 1,500 management positions. Surely it will not be long before the administrative and judicial authorities will view such a ratio as prima facie evidence of discrimination. The National Broadcasting Company recently settled a class action suit out of court for $2 million, a suit brought b y a group of women employees who had no difficulty in proving that they had been routinely overlooked when the company made assignments leading to higher positions. Those in the secretarial pool were passed over, while young male pages, with no better qualifications, were advanced whenever openings became available. Many employers are also likely to overlook the changing qualifications of many blacks whom they are hiring today. Members of all minority groups are likely to be better educated and to possess a greater

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degree of professional or technical training than in the past. An employer who overlooks these changing realities will be vulnerable if his personnel practices are challenged from within or without. The only safe policy for employers to follow in the future is to consider everyone who is hired into any opening position to be in the pool of potential promotables. T h e burden of proof will be on the employer to argue that a given group would not provide candidates for more desirable jobs that open up. Most large corporations know much less than they ought to know about what happens to their employees as they move through the organization. Many who rise to the top of major organizations have proved to themselves that they understand the personnel scene better than anyone else, as evidenced by their emergence at the top. Accordingly, they look with skepticism on those who advocate more manpower planning. But in the absence of adequate planning, much essential knowledge of the gate-keeping jobs is likely to remain submerged. In the military, where career planning has long been utilized, every young officer has known that he must serve abroad, often in a combat post, if he wishes to move toward the top. A large organization needs to model its manpower flows to understand the different ways in which people tended to move in the past from lower through middle to higher levels. Until such modeling is undertaken and the results are appraised, it will be difficult to determine whether the adage about being in the right place at the right time is correct. If it is, then many capable persons clearly must be in the wrong place, and sooner or later, they are likely to complain and, conceivably, bring suit. Every large organization should also have a strong incentive to establish an assignment procedure that is as open as possible—in posting positions, in stipulating who talks to whom, in regularizing the procedures to govern the assessment of qualifications, and in still other steps aimed at encouraging people to express a desire to compete for new and better jobs. Many managers are loath to move in this direction, because, among other reasons, they fear that they will contribute to the raising of expectations; many more employees will compete for new positions. Hence many will be disappointed, which will damage morale. But a recognition that only a small number of insiders determine who will be moved up and who will be left behind, with no clear-cut understanding of the criteria that they use, is not likely to contribute to morale either. A critical dimension of every career development approach is the training structure and the ways in which people gain access to it. T w o illustrations: from the mid-fifties to the mid-sixties, I participated in a special course aimed at promising managers of research and develop-

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ment in one of the nation's largest chemical companies. Over the decade I was exposed to small groups that included, all told, about a thousand persons. Of this number, two were women! I would argue that here is prima facie evidence of discrimination that the administrative agencies and the courts are not likely to ignore, especially if the plaintiffs make clear that selection for training is a critical checkpoint in an assignment to a better position. Several years ago, an article in the Columbia Law Review referred to a case in which a black manager of the Ford Motor Company, who had been dismissed on the grounds of being ineffective, won a suit because he was able to prove that he had had poor supervision and had not been properly trained. Closely related, but distinct, is the evaluation process that intersects each stage of the personnel process—assignment, training, and promotion. Evaluation, in my view, is inherently flawed by the implicit competition between the evaluator and the person being evaluated. During the earlier stages of my academic career, I was struck by the fact that my relations were easier with senior than with junior faculty. The older faculty were not threatened by me; the younger members were. Although it is extremely difficult, perhaps impossible, to design and implement an effective evaluation system, evaluation should not be ignored. At minimum, management should make a serious effort to systematize its evaluation procedures, document them, and audit them. A management that is challenged should at least be able to demonstrate that it has made and is continuing to make a serious effort to reduce the arbitrariness inherent in evaluations. Evaluations involve judgments not only about work performed but also about the potential of individuals to perform work of a more difficult nature. Recalling the Peter Principle, one must consider the added difficulties introduced by the evaluation of potential. AT&T and a few other large corporations have moved to introduce an assessment-center approach to broaden and deepen judgments about a person's potential. I have long been cautious, however, about how far this Office of Strategic Services-type procedure can be adapted to corporate life, in which the test of success hinges so greatly on the ability of the individual to play the game rather than to get things done on his own. But the value of an assessment center or a similar approach is that it attests to the seriousness of the effort that the company is making to introduce an objective dimension into its evaluative procedures. The military has long distinguished between "fully" qualified and "best" qualified, a differentiation that lies at the heart of moving minorities more rapidly into the higher ranks. Nobody should be promoted, in my view, who is not judged competent to perform at the level at which he or she is to be assigned. To do otherwise makes no

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sense for the individual, the disadvantaged group, or the company. But it does make sense to select minorities who are fully qualified for preference in promotion. There is no other way to achieve an improved balance in the higher ranks. Moreover, the justification for such a procedure lies not only in reducing past discrimination, but also in recognizing that judgments about the "best" qualified are likely to be more subjective than those about the "fully" qualified who represent a larger grid. Under the direction of General Eisenhower, I spent eight years studying selection. I came to one simple conclusion: selection is a fragile tool, and the only valid test is how a person performs.1 Even educational qualifications provide, at best, only a rough differentiation. The Supreme Court ruled in Griggs v. Duke Power that educational requirements must be job-related. And Ivar Berg has demonstrated that in many instances education is a faulty screener.2 Finally, a brief comment about equal worth. I have looked at a lower court case in which the court was correct, in my opinion, to argue that equal qualifications aside, market realities must be taken into account to establish relative wage scales. The fact that a company hires at different salaries college and graduate students who have had equal periods of training is not, on its face, discriminatory. However, free markets are often nonexistent, or are manipulated by those who hold decision-making power. So a reliance on the market can be inherently discriminatory and often cannot be used as a criterion of worth. I have been a member of a university faculty long enough to know that the long-time discrimination against women has been reflected in, among other behavior, underpaying them. The basic attitude of administrators has been that a woman is lucky to have an appointment, twice as lucky if she has tenure; there is no need to pay her at her real worth because she is likely to be married to a man who has a relatively high income. We should eliminate sex-labeling of jobs as quickly as possible. But I doubt if the progress will be very quick without major outreach and training assistance such as the YWCA project in Boston which seeks to open good blue-collar jobs to women. The facts that many women are heads of households—more than seven million—and that many families with only one earner are hard pressed to extricate themselves from poverty are not given enough attention. Consider these figures: In 1976, average family income was 35 percent higher in two-worker than in one-worker households. The payoffs from redressing wage discrimination against women will not accrue only to women. In a report published in 1977, my colleagues and I argued that career women may turn out to have a major positive influence on the revival of our large cities because of their need to work in a large labor market (see chapter 3). Once the mo-

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mentum increases, the proportion of women pursuing professional education will further increase and will fuel this revival. 3 Although it has long been assumed that the United States has followed a practice of paying people for the value of the work which they perform, I would contend that the issue has never been that clear-cut. Due to ingrained discrimination against women and minorities as well as a sensitivity to the needs of male heads of households, the principle of equal worth has been more respected in theory than in practice. But the subject will be high on the nation's agenda of unresolved issues in the period immediately ahead. This is how I read the present status and the future prospects for efforts directed at reducing discrimination in employment: Equal Employment Opportunity laws are here to stay. The national commitment to reducing discrimination may go through periods of intensive or slackened efforts, depending on political conditions, but the movement will not disappear. Management must remain alert to the changing composition of its internal and external labor pools. With the number of qualified persons from previously underrepresented groups growing rapidly, the pressure is on management to reflect this fact in promoting such individuals into the higher ranks. As a result of the termination of the draft and the increased costs and lower returns of college education, fewer men are attending college. On the other hand, women may believe increasingly that their best chance to get ahead is to acquire higher degrees. Large organizations need to exercise more centralized control over the career development of their managerial personnel, particularly with respect to assignments, training, and promotions. Special attention should be paid to removing barriers that have blocked various groups from the ladder that carries people to higher levels. The evaluation process, which plays such a critical role in selecting people for promotion, must be upgraded to reduce the excessively subjective elements, even if these elements cannot be totally eliminated. Most women are not being paid their true worth. Women's jobs must be reassessed to ensure greater equity. At the very least, a minimum salary should be attached to jobs at different levels which would still permit room for merit increases. And management must accept the fact that if the previously underrepresented groups are to be moved more quickly into the higher ranks, their salaries will inevitably increase faster than the average. Admittedly, the EEO structure—including three levels of government and until recently multiple agencies at the federal level—is unwieldy. T o make matters worse, employers who are seeking to meet

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certain negotiated targets and goals are being hauled into court by members of the dominant group, usually white males, who claim that they are being victimized by reverse discrimination. Such a setting is aggravating at best and dysfunctional at worst. But in the absence of a major push on the EEO front, millions of Americans, particularly members of minority groups and women, would have waited indefinitely for more equal treatment in the workplace. Prejudice against them ran so deep that most employers and male workers assumed that the long-established patterns were sensible and sound, if for no other reason than that they had become so firmly entrenched. There is no way to change basic institutions and behavioral patterns without causing disturbance and distress. The critical issue is whether the gains from change will outweigh the costs of unsettlement. I believe they will. Any organization that faces the challenge of looking with new and critical eyes on its accustomed ways of conducting its personnel operations will be certain to find significant ways to improve its procedures that not only will be more equitable for its employees but also will be more efficient for meeting its organizational goals. A wise management will therefore respond positively when forced by outside pressures to reconsider its ways of operating in light of newly defined public goals. More than a decade ago I wrote The Troublesome Presence: American Democracy and the Negro, which traced the depth of prejudice against black men and black women that has been part of our national experience from the early 1600s. Clearly, such deeply ingrained behavior can be modified only with time, only through a sustained national effort. We have now made the commitment, but we still have a long way to go. The problem of employment discrimination against women is less intractable, but by no means easy to resolve. It is worth noting that women did not get the right to vote in the United States until 1920, an event that I recall because of the disagreements between my parents. My mother, a born egalitarian, held that granting women the vote was a long-delayed rectification of an outrageous violation of the rights of half the population; my father questioned whether it would contribute much to elevating the standards of political life and performance. These observations about our history are reminders that while the law and the market are potent forces that can help to change behavior, history is a powerful, often inertial force that cannot be ignored any more than it should be used as an excuse for inaction. A wise people will act to change its institutions without destroying them in order to better realize its new goals—which themselves are the products of history.

2 0 The Pursuit of Equity: Mirage or Reality?

Although the criteria by which to measure relative change in a dynamic world are not clear, I would argue that the past fifty-year period witnessed major changes in the United States, perhaps greater in magnitude and quality than in any other half-century in our history. According to my estimate of the length of the Vietnam War, the United States has been engaged in active warfare during one out of every four years since 1927. And in the same period the United States has had compulsory military service for three out of every five years. T h e world is in the fourth decade of the nuclear age, and it is well to remember that we can be annihilated at any moment if a few officials decide to press a particular button. The country suffered a blistering ten-year depression, during which the unemployment rate never declined below 10 percent and for most of these years was more than 15 percent. But the last fifty years also saw the largest sustained period of economic expansion (minor recessions aside), which lasted from 1940 to 1970.

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Finally, the United States is in the midst of two long-term revolutions that will greatly alter the positions of blacks and women, and in the process will radically change the basic structure and functioning of American society. And we are experiencing the second stage of a large-scale redistribution of the American people from city to suburb, and now from metropolitan region to less populated, exurban areas. There is no need to inspect each, much less all, of these developments to set the background for a review of the pursuit of equity. One observation, however, stands out: A gap tends to develop between changes in ideas and changes in reality. This gap was of great interest to John Maynard Keynes because, in his view, it accounts for most of the shortcomings in public policy. Two illustrations testify to the difficulty our ideas have keeping in step with our changing reality. W e continue to look upon the nuclear family as the norm—a family in which the male head of household is the breadwinner and his wife is responsible for keeping house and rearing children. But this classic family is representative of only one out of twenty households. Even if the definition is relaxed to permit the wife to be a part- or full-time worker, the modified nuclear family accounts for only one out of every six households. Consider the second illustration. W e continue to talk about our economy as a private enterprise system. The advisors of Kennedy, Johnson, Nixon, Ford, and Carter have repeatedly stressed the same point: Five out of every six jobs are in the private sector, ergo ours is a private enterprise system. But using dollar flows, one finds that between one out of every three and two out of every five jobs are in the not-for-profit sector, paid for by the expenditures of government or of nonprofit institutions (see chapter 1). The appropriate term for the U.S. economy is not "private enterprise" but "pluralistic," in which the profit, nonprofit, and governmental sectors have complementary roles. Imagine a strong private automobile industry without public highways! But a growing chasm between realities and ideas is not the only characteristic of our economy and society. One can also identify important contradictions in the ideas themselves. These contradictions are especially visible in the American concept of equity, a concept deeply rooted in our experience, evidenced by the way we speak and think. Consider the hold on the American imagination of the tales from real life of persons who made it from "rags to riches." This is surely the only developed country in which a person identifies himself or herself not in terms of belonging to a social or occupational class, but as a $25,000-a-year person. And as a father of three, I recall that the first words out of the mouth of each of my offspring were not " m o m " or "dad" but "it isn't fair." If youngsters of two years of age

The Pursuit of Equity: Mirage or Reality?

are concerned with what is or is not fair, the pursuit of equity must be deeply ingrained! In a broad context, the American people, having made an early commitment to political democracy (at first excluding women, blacks, and even the poor), have slowly been expanding this commitment to include all adults. T h e scope is also expanding from the political arena to the work place, the community, and still other spheres.

Ten Presidents A closer look at the ways in which the United States has struggled during the past fifty years to advance along the path of equity can yield several important insights. A first approach is to place the ten Presidents from Coolidge to Carter into five subgroups for the purpose of distinguishing the hallmarks of their respective administrations. Although Calvin Coolidge was a taciturn man, he was the author of the observation that "the business of America is business." His Secretary of the Treasury, Andrew W . Mellon, who also served his successor, Herbert Hoover, had a more startling comment to his credit: "a depression is a period when wealth returns to its rightful owners." In 1932, almost three years into the Great Depression, the Executive Council of the American Federation of Labor, under the leadership of William Green, opposed the introduction of unemployment insurance under governmental auspices, arguing that such benefits should be negotiated between management and labor within the context of collective bargaining. So Coolidge, Hoover, the leaders of organized labor, and for that matter, most Americans, continued to look upon the market, as late as 1932, as the principal arena within which people could seek and gain their fortune through hard work, perhaps combined with luck. They had an overriding faith in the long-term effectiveness, efficiency, and equity of market arrangements even in the face of the debacle that confronted them with evidence to the contrary. But the landslide election of Franklin Delano Roosevelt in 1932 was positive proof that the American people were ready for change, even large-scale change, in their economy and society. It is my view that the nation preferred a policy of significant change only once in the last half-century, during this first administration of FDR. Only a broad consensus made it possible for the New Deal to be established and to flourish. This consensus resulted in the placement of a net under the American people that assured that government would provide them with

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jobs or income in the event that the private sector suffered a serious shortfall of employment. Public support enabled the federal government to assist a stricken industry such as agriculture and to provide special supports for the impoverished South. In 1935 the Social Security System was established. In retrospect, many have found this last effort deficient because it failed to include national health insurance, but one can argue with equal cogency that the nation is better off, surely not worse off, by virtue of this omission.1 The New Deal also introduced major changes in the way government interfaced with private-sector interests—both business and labor. Under Coolidge and Hoover, Governor Benjamin Strong of the Federal Reserve Bank of New York was the principal architect of the nation's monetary policy. But the locus of decisionmaking shifted to Washington when FDR was elected. From that time on, key decisions on monetary and economic policy were made in the White House, the Treasury, or the Federal Reserve Board, but no longer in New York. The federal government intervened through new labor legislation to facilitate the growth of trade union membership by restricting the actions open to management to thwart organizational drives. Many managements resorted to strong-arm methods, goons, and, in the early days of unionization in the Detroit auto shops, even murder. The New York Times on May 31, 1937, published an undoctored photograph of workers in Chicago being shot in the back while fleeing the police during a strike at Republic Steel. Even though the New Deal saw more substantial gains in the pursuit of equity than any other four-year period, before or after, the Decoration Day Massacre in Chicago marked the year when Roosevelt's mandate ran out. Economic troubles, his misguided attempt to stack the Supreme Court, and the gathering clouds of war put an end to large-scale reform. The remaining eight years of Roosevelt's presidency proved, as far as domestic reforms were concerned, to be largely unproductive. Mobilization and war dominated the national scene. The third grouping consists of Truman, Eisenhower, and Kennedy, who, although they differed from one another in personality and philosophy, were basically conservative and occupied the White House during a period in which the country yearned to "return to normalcy," even though its yearnings were often frustrated by events beyond its control. Support for this interpretation can be found in the emasculation, even before it was enacted, of the Employment Act of 1946. Congress rejected out of hand President Truman's proposal for national health insurance. The passage of the Taft-Hartley Act in 1947, more than any other action, signaled the strength of the new conservatism. Eisenhower's selection of George M. Humphrey for Secretary of the Treasury made it possible for Arthur F. Burns, the chairman of the Council

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of Economic Advisors, to play the role of reformer. And Eisenhower's own testimony is to the effect that his greatest political blunder was appointing Earl Warren Chief Justice of the Supreme Court. There are those who explain Kennedy's conservatism by the narrowness of his victory, but I read the record differently. O n every domestic front—unemployment, minorities, taxes—his propensity was to move with circumspection, if at all. His address at Yale University in June 1962 confirms this interpretation: Kennedy advanced the philosophy that economic policy did not involve issues of value; it was simply a matter of getting technicians to agree on adjusting the proper fiscal or monetary levers. Additional evidence of the innate conservatism of Kennedy can be found in his draft of the civil rights bill of 1963, which did not contain a section on employment discrimination. This section was added to the bill by skillful legislators, among whom Senator Joseph Clark of Pennsylvania took the lead. And to give credit where credit is due, one must again recall the unwitting contribution of Judge Howard L. Smith of Virginia, who added sex to race in the hope and expectation of killing the bill. He could not imagine that his colleagues would use the power of the law to prohibit discrimination against women. The first two years (1964-1966) of the incumbency of President Johnson, covering the unexpired term of Kennedy and the first year following Johnson's overwhelming electoral victory, represent the closest approximation to the early years of the New Deal—an activist President with a supportive Congress. But the American people in the mid-1960s had not been tempered by a devastating experience such as the Great Depression. Thus, their support for innovation was constrained. They would follow Johnson, but only to the extent that he could pull them along. Johnson's ability to work his political will was remarkable, considering that he succeeded in having innovative legislation passed in education, health, welfare, housing, manpower, and other critical areas. But once again, as in the case of Roosevelt, the resources required for war pushed social reform off the stage. There are good reasons to group Nixon, Ford, and Carter in his first two years in the same category. These three Presidents have confronted a markedly similar range of intractable problems, including in particular unchecked inflationary pressures, excessively high unemployment, unresolved urban problems, and a mounting dependency on foreign sources of energy. While there are economists who are convinced that they know what is required to put things right, I am not persuaded that, if these economists were given their way, conditions would improve. They might well deteriorate. From this skeptical vantage, I see no more merit in the contentions of those who argue that unemployment must be attacked first and inflation second than of those who argue the reverse. I am reasonably certain, among other

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reasons because of the international constraints under which U.S. policy must be shaped, that no one has a prescription that will assure sustained high-level growth. The United States has tried repeatedly in the last two years to encourage Germany and Japan to adopt a more expansionary policy, but so far with little success. Until they do, there is relatively little room left for the United States to maneuver. All three of these Presidents have believed that business is subject to too many rules and regulations and that expansion could be speeded if governmental interference were reduced. And Congress, for the most part, agrees. Yet progress proceeds at a snail's pace. Moreover, if one is not enamored with the Chicago school of economics, one has reason to question just how much payoff deregulation would have, even if vigorously pursued. These last Presidents, each one of whom has affirmed repeatedly his belief in the desirability of balancing the budget, if not in the current year then in the near future, have all become caught up in a chimerical exercise. The federal budget remains in deficit; the size of the budget has now passed the half-trillion mark, up from Nixon's budget of about $200 billion in 1970. One more illustration: These Presidents, each in his own way, have sought to increase the efficiency and effectiveness with which we spend federal dollars for health and welfare. Nixon had a radical plan for welfare reform, which in the end was scuttled by a coalition of southern conservatives and northern liberals. Carter has a new version of welfare reform, which probably will not survive the attacks that are beginning to be launched against it. Despite the more than $200 billion of federal expenditures for income transfers for health and welfare, the administration, the Congress, and the American people remain deeply frustrated by the shortcomings that characterize delivery of services to the sick and the needy.

Three Major Trends This schematic reconstruction of our recent history yields three major findings. The first is that the active pursuit of equity occurred during no more than six out of the last fifty years—FDR's first four years in the White House (1933-1937), and Johnson's first two years (19641966). There are those who might argue that my preoccupation with federal action distorts the picture, since equity can be actively pursued in other sectors. But it is hard to brush aside the observation that a democracy intent on the pursuit of equity must rely on its most potent instrument—national legislation. Hence this ineluctable conclusion.

The Pursuit

of Equity:

Mirage

or

Reality?

The second lesson is that once the federal government intervenes, especially if it does so in a big way, it is difficult for it to disengage at a later date. True, the Supreme Court in the mid-1930s put an unceremonious end to the National Recovery Act, but it upheld most of the New Deal legislation. Forty years after the New Deal, the federal government is still engaged in agricultural price supports, regulating the securities markets, communications, energy, interpreting what employers may and may not do to thwart union organization (Taft-Hartley left most of the earlier labor legislation intact), raising minimum wages, strengthening the Social Security System, and extending and improving the reach of other legislation instituted in the 1930s. The third point is closely linked to the difficulties of the government's disengaging itself once it has committed resources to accomplishing a particular social goal. The cumulative result of its deeper involvement over a broad front leads to new problems that need new solutions. Many economists see a connection between the accelerated efforts of the federal government to expand social welfare since the mid-1960s and the "stagflation" that has characterized the U.S. economy during most of the 1970s; the linkage between the two is an ever larger deficit. And the solutions remain elusive.

Specific Goals So far this discussion has focused primarily on the political structure within which the United States has addressed, with only periodic enthusiasm, the pursuit of equity. It is time to inspect more closely what the nation has been able to accomplish in a selected number of priority areas. The federal government alone is currently transferring more than $200 billion annually of income from one group of citizens to another, with the majority both contributing taxes to support the transfers and also being the beneficiaries of the transfers. All the taxes used to support welfare, Medicaid, Medicare, food stamps, unemployment insurance, housing allowances, and old age benefits have led within a single decade to the substantial elimination of "income" poverty, a primary objective of LBJ's war on poverty. Not all families now receive sufficient transfer income in dollars and in kind to lift them out of poverty, but as Robert Lampman has demonstrated, the elimination of income poverty is within $10 billion of being reached. 2 Clearly there are many stigmas associated with poverty other than low income, such as the quality of life in the community in which the poor live—consider the South Bronx, where family disorganization,

201

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poor schools, neighborhood crime and violence, and many more negatives are pervasive. But this reminder does not negate the significant gains achieved by raising the income available to the poor. Medicare and Medicaid have been severely criticized before and after they were enacted; they have contributed mightily to the cost inflation of health care that still shows little sign of leveling off. But one must also recognize that these two pieces of legislation, aimed both at relieving middle-class families of the threat of bankruptcy as a result of serious illness and at expanding the access of the poor to health care, have largely accomplished their goals. True, now that these achievements are behind us, new health problems have moved to the foreground: the inflation of costs; the significant number of people who remain medically indigent; the shortcomings of health care with respect to quality; and continuing gross inequities in the distribution of health care services. Some observers believe that all of these problems would disappear if national health insurance were enacted, but others, including myself, are convinced that NHI would create more new problems than it would solve. One of the most constructive forms of social legislation since World W a r II was the GI Bill of Rights, which enabled millions of young veterans to reopen their occupational choice, pursue additional formal education or specialized training, and prepare themselves for careers to which, in the absence of governmental support, they could never have aspired. So far so good. But that same legislation also provided liberal terms under which veterans were able to obtain mortgages with only small down payments. This encouraged suburbanization, which in turn contributed heavily to undermining the nation's older cities. Once again, advances on one front have been the cause or the concomitant of serious new problems on other fronts. The fourth illustration relates to equal opportunity and affirmative action. No one who has followed developments since the passage of the Civil Rights Act of 1964 will question that the new federal legislation and the implementing administrative actions have opened opportunities to racial and ethnic minorities and to women. Yet discrimination is still deeply entrenched in the labor market in 1978. O n e could still conclude that many more blacks, Chicanos, and women are better positioned than previously to pursue attractive careers and move into desirable positions. But new problems have arisen. The broadening of rights for formerly underserved groups has jeopardized, on occasion, the rights of other groups. Witness the conflict between affirmative action goals and seniority provisions under collective bargaining. These four examples of the pursuit of equity—enlarged income transfers to the poor and the near poor, broadened access to health care services, greater educational and training opportunities for veterans, and intensified efforts to reduce and eliminate discrimination in

The Pursuit of Equity: Mirage or Reality?

the labor market—have been substantially successful. To conclude, as the neoconservatives are wont to do, that government never succeeds in accomplishing any useful reforms, is as far wide of the mark as to fail to recognize that all interventions, even when successful in solving certain problems, are likely to create new ones.

Unanticipated Progress This historical reconstruction of the nation's pursuit of equity has dealt solely with national actions as promoted by successive Presidents and Congresses. Attention has centered on deliberate societal intervention aimed at altering the opportunities facing different groups of American citizens. Another type of step toward equity is worth examining: policies and programs that, in conception, were unconcerned with the pursuit of equity, but that resulted in improving the welfare of the disadvantaged. The first case involves the delayed consequences of the Immigration Act of 1924, which was passed to preserve the "purity" of the American people by restricting the numbers of undesirable immigrants entering the United States. The act also sought to protect the American worker from competition by newcomers. Those who promoted this restrictive action had not the slightest desire to contribute to the economic and political advance of black citizens; but that was the longterm outcome. After one and a half decades of restricted immigration, blacks represented one of the three untapped labor pools (the others were the unemployed and women) available to the nation as it mobilized in 1940-1941. The continued impoverishment of the blacks up to World War II—at which late date 80 percent were still confined to the South, where most eked out a living as tenant farmers—might well have continued for several additional decades had the wartime economy not needed their labor, a need directly related to the earlier slowdown in immigration. The war and postwar years facilitated one of the greatest internal migrations in the nation's history, and while many of the black migrants failed to make it in the North and West, the overwhelming majority significantly bettered their positions, which presaged further improvement in the life chances of their children. In essence, the unconscionably long-delayed emancipation of American blacks was speeded greatly by the nation's determination to rid the world of Fascism. A second case of unplanned contribution to the broadening of equity resulted from improvements in the technology of birth control, including abortion. For the first time, women in every social class have gained some measure of control over their own lives by being able to

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Employment

determine the number and spacing of their children. Once women had a choice, the birth rate entered a rapid period of decline, except during the postwar bulge era. This decline has reached the point at which the real income of many families has increased substantially as a result of both the earnings of a second wage-earner (the wife) and the smaller number of dependents among whom family income must be distributed. Even women on welfare who receive additional allowances for each additional child have benefited by being able to terminate the pregnancy of an unwanted child. The accelerated transformation of the economy from manufacturing to services, an outstanding characteristic of the post-World W a r II era, greatly increased the opportunities for women to enter paid employment. In the quarter-century between 1950 and 1975, women accounted for three out of every five new workers entering the labor force. Had this transformation not occurred, or had the U.S. economy continued to be centered primarily on manufacturing, no such broadened participation for women in the labor force would have occurred. One more illustration. Much is heard these days of the great advance of the Sunbelt. And the recent progress of the South and Southwest has indeed been impressive. Many interpret these advances in terms of favoritism in the allocation of federal funds, lower wage rates, the antiunion attitudes of local officials, fewer social services for the needy. A potent contribution to the change has been advances in the technology of air conditioning. When I first visited the South in 1933 there was no way of getting through the months of M a y to September except by limiting one's work, if one could, to the hours around sunrise and sundown. During the rest of the day those who could rested in the shade. Air conditioned homes, cars, and workplaces have changed all that, have sped economic growth and multiplied jobs. There is nothing obvious about how developments with respect to immigration policy, involvement in a major war, the technology of birth control, the expansion of service industries and technology are related to equity, but intent is often less important than consequence. In none of the above instances did the nation pursue equity, but the record is unequivocal: Significant unintentional gains stemmed from these developments. This three-pronged approach—an assessment of the national commitment to the pursuit of equity, the record of specific programs aimed at improving equity, and the indirect contribution of other developments that were not focused on the equity issue—yields the following lessons: Critical as the role of government is in altering the terms of work, income, and amenities among different groups in the body politic, one

The Pursuit of Equity: Mirage or Reality?

must be careful not to exaggerate the potency of the President and Congress to change the basic terms of the equation. O n e should remember that some guerrillas in Southeast Asia, with assistance from some college youth, helped force the most powerful of recent Presidents out of office. We should further remember that the security of the United States has come to depend, to an uncomfortable degree, on the actions and reactions of senior government officials in Moscow and sheiks in Saudi Arabia. T h e increasingly constrained ability of the United States to determine and pursue its goals is a lesson as unpalatable as it is real. The second lesson is that only limited gains can be achieved even by successful societal intervention, because each program that is created to enhance equity brings with it, directly or indirectly, consequences that cannot be foreseen, many of which have a deflecting or retarding influence. The third lesson has a positive lilt. Programs that focus on issues far removed from equity may turn out, sooner or later, to speed progress toward equity. One cannot leave this theme without at least brief consideration of a critical dimension that has been glossed over to this point, a dimension that all too frequently escapes attention. I refer to the question of equity for whom—the individual, the family, the group, the generation? The answers are not necessarily the same. T o illustrate: during the past decade, as a response to the women's movement, many professional schools of medicine, law, and business have enlarged their proportion of female students from between 5 and 10 percent to between 25 and 33 percent. Many professionals marry other professionals, and to the extent that they do, the broadened opportunity for women to enter attractive careers is resulting in a worsening of the national family income distribution. Most of these young high-income families are white, and most are from middle- or upper-income backgrounds. Furthermore, it is likely that many medical schools decided to accept more female applicants because they were having trouble finding qualified black male applicants. Greater equity for women has resulted in another negative development. There is a relation between women's growing ability to obtain gainful employment and the loosening of marriage ties. Many women are no longer forced by fear of destitution to put up with a no-good husband. Despite this beneficial result, many marginal marriages are being sundered by a husband's walking out without much thought about how his spouse and children will cope. There are more than seven million female heads of households, most of whom are forced to provide for themselves. And many are unable to extricate themselves from poverty. Children who grow up without a father in the home and with a mother weighed down by the constant struggle of stretch-

205

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206

Employment

ing her limited earnings or welfare payments are likely to suffer permanent damage. The final dimension of the pursuit of equity concerns the limits of government. Three illustrations will provide perspective. Publicity about the Humphrey-Hawkins bill has encouraged the American people to believe that the federal government can provide a useful job for every person able and willing to work. Simply providing jobs for the unemployed who lack work for cyclical or structural reasons—2.5 to 3 million jobs—while difficult to achieve, would be well within the capability of our more than $2 trillion economy. But the number of people who would seek jobs if a guarantee were offered probably exceeds 20 million. And providing that many jobs is beyond the nation's capability, at least in the near and intermediate term. The President and the Secretary of HEW have indicated that while there may be some delay in the administration's formulating a national health insurance proposal, it is still their intention to do so, preferably after they have brought the escalation of health costs under control. There is no basis for believing that a meaningful proposal can be drafted, much less enacted, in the face of the continuing lack of political consensus, the budgetary and tax constraints, particularly in the wake of Proposition 13, and the lack of control mechanisms for effective resource allocation and the delivery of services. Still, some politicians, like Senator Edward M . Kennedy, continue to promise. Total health care expenditures in 1978 were more than $180 billion. Consumers, insurance companies, and government were hard pressed to meet this bill, much less to find the additional resources required to finance a major reconstruction of the entire health care system, which alone could expand the quantity and quality of health care services to the American people. Finally, the nation is in search of an urban policy at the same time that it does not want the environment to deteriorate. And there is little choice but to reduce our dependence on foreign oil. O n e does not need to be expert in the processes of savings and capital accumulation to suspect that the combined requirements encompassed in these objectives far exceed the nation's capability, no matter how hard we t r y — and so far there is little evidence that we are trying very hard—to change our way of life. O f course, some older cities such as Boston and New York are likely to "make it," but an urban policy that aims to revive most of the large and medium-sized cities of the northeast and north central states is a slogan, little more. The capital will not be forthcoming; the capacity is not needed; the people and the markets have begun to shift and will continue to do so. The pursuit of equity cannot be stretched into a political doctrine to assure the economic well-being of all areas and regions of the country from this time forth and forever more.

The Pursuit of Equity: Mirage or Reality? What conclusions can be reached from the experience of the last half-century? First, the advances in equity have been greater than most people recognize. Witness the increased protection offered by the Social Security System, the substantial reduction in income poverty, and the much improved position of blacks. Witness also the defensible proposition that the economic improvement of blacks between 1940 and today exceeds the gains of any other large minority group within a comparable time period. The continued plight of many blacks stems from more than three centuries of prior neglect, which could be moderated but not overcome within two generations. It is still destructive of body and soul to be poor, but the unemployed no longer are forced to forage for food in garbage cans. And the elderly are no longer beholden to the generosity of their children for room and board. The gains that have been achieved by the pursuit of equity would have been greater if we understood more than we do about the workings of our society and economy. But the sad fact is that our knowledge is limited and will remain limited. As Lester Thurow argued so brilliantly in a 1977 issue of Daedalus, the models with which economists work are inherently flawed because of errors of specification and lack of data. 3 Reality changes more rapidly than analysis can master it. But this is a dilemma with which we must live. Given this obstacle, we dare not use inadequate knowledge as an excuse for nonintervention. What we can and must do is pursue our common goals with a flexibility that enables us to make adjustments as feedback information becomes available and as our understanding of structures and processes is enlarged. The pursuit of equity is not a matter of choice. It is a necessity for a democracy that respects its past and seeks to secure its future. For a democracy, more than any other form of government, must command the loyalty of its members, which can be assured only if the citizenry remains convinced that each individual, weak as well as strong, will have broadened opportunities in the future.

207

Notes Part I People and Jobs 1. The Pluralistic Economy of the United States 1. E. Ginzberg, D. L. Hiestand, and B. G. Reubens, The Pluralistic Economy, (New York: McGraw-Hill, 1965). 2. Η. I. Greenfield, Manpower and the Growth of Producer Services (New York: Columbia University Press, 1967). 3. D. Morse, The Peripheral Worker (New York: Columbia University Press, 1969). 2. Whatever Happened to Ma, Pa. and the Kids? 1. This is the way Roswell McCrea, a former dean at both Columbia and Wharton, once summarized his feelings about the changing family. 2. J. Morgan and G. J. Duncan, eds., Five Thousand American Families: Patterns of Economic Progress, 5 vols. (Ann Arbor: University of Michigan, Institute for Social Research, 1977). 3. Career Women and Urban Revival 1. Academy for Contemporary Problems, Revitalizing the Northeastern Economy, under a research grant from the Office of Economic Research, Economic Development Administration, U.S. Department of Commerce, 1977. 2. T. Stanback, Jr., Suburbanization and the City (Montclair, N.J.: Allenheld Osmun, 1976). 3. Conservation of Human Resources Project, The Corporate Headquarters Complex in New York City (New York: Columbia University, Conservation of Human Resources, 1977).

Notes 210

4. T h e J o b Problem 1. National Commission for Manpower Policy, Second Annual Report to the President and the Congress (Washington, D.C., December 1976). Part II Education and W o r k : Critical Links 5. Minorities and the Urban Labor Force 1. U.S. Department of Labor, Bureau of Labor Statistics, The Job Scene in New York City: Today and Tomorrow, November 8, 1977. 2. Conservation of Human Resources Project, The Corporate Headquarters Complex, p. 13. 3. S. Friedlander, Unemployment in the Urban Core (New York: Praeger, 1972). 4. Ibid. 8 . Sources of Managerial Talent 1. The best sources for data about enrollments in higher education are U.S. Department of Commerce, Bureau of the Census, Current Population Reports, Series P-20. 2. E. F. Morrow, Black Man in the White House (New York: CowardMcCann, 1963). 3. On the question of changing values, see D. Yankelovich, "The Meaning of Work," in J. Rosow, ed., The Worker and the ]ob (Englewood Cliffs, N.J.: Prentice-Hall, 1974). 4. Many other changes are likely to occur when women move increasingly into the higher ranks of management. On the female manager, see W. Goode, "Family Life of the Successful Woman," in E. Ginzberg and A. M. Yohalem, eds., Corporate Lib: Woman's Challenge to Management (Baltimore and London: Johns Hopkins University Press, 1973). 5. For additional perspectives on some of these themes, see E. Ginzberg, The Manpower Connection: Education and Work (Cambridge: Harvard University Press, 1975); and The Human Economy (New York: McGraw-Hill, 1976). See also M. S. Gordon, ed.. Higher Education and the Labor Market, Carnegie Commission on Higher Education (New York: McGraw-Hill, 1973). Part III Manpower Planning and Policy 12. A Shortage of Skilled Workers? 1. "Further Reflections on Wage Controls," Industrial and Labor Relations Review, January 1978. 2. Dixie Sommers, "Occupational Rankings for Men and Women by Earnings," Monthly Labor Review, August 1974. 3. U.S. Department of Labor, Office of Information, Employment and Training Administration, USDL 78-553, News, "Job Bank Openings Highlights: May, 1978."

Notes 14. Youth Unemployment in the United Kingdom: A U.S. Perspective 1. Ε. Ginzberg, Grass on the Slag Heaps: The Story of the Welsh (New York and London: Harper, 1942), pp. 202-203.

Miners

Part IV T h e Politics of Employment 19. New Frontiers of Equal Employment Opportunity 1. E. Ginzberg, The Ineffective Soldier: Lessons for Management and the Nation (New York: Columbia University Press, 1959). 2. I. Berg, Education and jobs: The Great Training Robbery (New York: Praeger, 1970). 3. Conservation of Human Resources Project, The Corporate Headquarters Complex. 20. The Pursuit of Equity: Mirage or Reality? 1. As 1 argued in The Limits of Health Reform (New York: Basic Books, 1977). 2. E. Ginzberg and R. M. Solow, eds., The Great Society (New York: Basic Books, 1974), chap. 4. 3. L. Thurow, "Economics," Daedalus (Fall 1977): 79-94.

211

Acknowledgments Many of the chapters of this book have been altered in minor or major degrees since their initial publication. Permission to publish in revised form has been graciously granted by the following: Prentice-Hall, The Center for Vocational Education—The Ohio State University, Van Nostrand Reinhold Company, Scientific American, Public Welfare, The Wharton Magazine, Journal of College Placement, Advanced Management Journal, New York Affairs, Across the Board, New Jersey Bell, The American Philosophical Society, The Employee Relations Law Journal, and Columbia. Detailed Chapter Chapter Chapter Chapter Chapter

sources of earlier publication are indicated below by chapter. 1: Scientific American 235:25-29 (December 1976). 2: The Wharton Magazine 2:42-47 (Spring 1978). 3: Across the Board 15:24-27 (April 1978). 4: Scientific American 237:43-51 (November 1977). 5: Prepared for "Two World Cities, Paris and New York: Urban Policy for Survival." Conference organized by the French-American Foundation, New York, and its counterpart organization, the Fondation Franco-Americaine, Paris. Published in proceedings of the conference, Survival Strategies, Paris and New York, March 1979. Chapter 6: Journal of College Placement 36:36-39 (Summer 1976), and Seminar Reports, Columbia University 3:37-45 (Fall 1977). Chapter 7: Advanced Management Journal (Fall 1977), pp. 50-60.

Acknowledgments

Chapter 8: Chapter 9: Chapter 10: Chapter 11:

Chapter 12: Chapter 13: Chapter 14:

Chapter 15: Chapter 16:

Chapter 17: Chapter 18: Chapter 19: Chapter 20:

Managers for the Year 2000, ed. William H. Newman (Englewood Cliffs, N.J.: Prentice-Hall, 1978), pp. 67-86. Scientific American (March 1979) presents a reduced version of this chapter. Based on "Human Resources Management in the Canadian Broadcasting Corporation," Toronto, November 2,1977. The Future of Apprenticeship, Report of the Symposium: Focus on Apprenticeship (September 1977). Sponsored by Province of Ontario, Ministry of Colleges and Universities, pp. 17-26. Unpublished report prepared for the General Electric Foundation (August 1978). New York Affairs 4:55-63 (Winter 1977). Keynote Address for "The Prospects for Full Employment for Young People in the 1980s" conference sponsored by the British Youth Council and the International Communication Agency of the United States Embassy, London (May 19,1978). Proceedings to be published in 1979. New Jersey Bell Journal 1:31-38 (Summer 1978). Based on "The Place of Skill Acquisition in National Manpower Policy." The Future of Vocational Education. Papers from the Bicentennial Conference on Vocational Education, Minneapolis, Minnesota (October 10-13,1976), ed. Albert J. Pautler, Jr. (Columbus, Ohio: The Center for Vocational Education, The Ohio State University, 1977), pp. 23-27. Work in America: The Decade Ahead, ed. Clark Kerr and Jerome M. Rosow (Van Nostrand Reinhold Co., April 1979). Proceedings of the American Philosophical Society 122:131-134 (June 1978). The Employee Relations Law Journal 4:24-33 (Summer 1978). University Lecture, Columbia University (November 14,1977), condensed in Columbia (Fall 1978), pp. 28-34.

Index

AT&T, 191 Affirmative action, 183-184, 202 Age Discrimination in Employment Act (1967): amendments (1978), 147 Aid to Families with Dependent Children (AFDC), 53, 131-135 American Federation of Labor, 155, 197 Apprenticeship programs, 114-118, 122-124, 162 Area Development Act (1961), 158 Assessment-centers, 191 Automation, 141-142, 158 Bakke decision, 189 Berg, Ivar, 192 Birth control, 203-204 Birth rate decline, 204 Blacks, 97, 124, 162, 172, 203, 205, 207; discrimination in employment, 183, 185, 189; manpower training

programs, 158-159; in NYC, 49, 5052, 56, 76, 130. See also Minorities Blue-collar jobs, 116, 192 Boeing, 181 Brookings Institution, 182 Burns, Arthur F., 32, 180, 184, 198 Business schools, 79-80, 81-82 CETA, see Comprehensive Employment and Training Act Califano, Joseph, 153 California, 147, 164 Callaghan, James, 141, 144 Canada, 31, 114-118 Carson, Rachel, 100 Carter administration, 199; manpower policy, 29-30, 42-43, 171-172, 182; welfare reform, 53, 171, 200 Cartter, Allen, 90 Chicanos, 183, 185 Cities: decline, 25-26, 47-49, 159, 202,

Index 216

206; urban revival and career women, 26-27, 192-193. See also New York City Civil Rights Act (1964), 146, 159, 183, 187, 199, 202 Clark, J o s e p h s . , 29, 199 Collective bargaining, 155, 197, 202 Colleges and universities, 52, 59-62, 90, 147, 161; graduate glut, 57-65, 89; and managerial labor market, 70-71, 72, 75-77, 84-85; U . K . , 142. See also Business schools

Columbia Law Review, 191

Complementarity principle, 18 Comprehensive Employment and Training Act (1973, 1976, 1978), 30, 42, 160-161, 169-170; and skilled labor shortage, 121, 124, 125 Comprehensive Manpower Act (1970), 30 Conant, James, 145 Concentrated Employment Program, 159 Connecticut, 121, 124-125 Construction sector: apprenticeship programs, 116, 122-123; N Y C , 50, 181-182 Coolidge, Calvin, 197, 198 Corporate sector, 52; and equal employment opportunity, 189-192; human resources utilization, 105113; managerial personnel, 77-78; manpower policies, 162-163; retirement policies, 1 4 7 , 1 5 1 Cuomo, M a r i o , 181

Daedalus, 207

Decoration D a y Massacre, 198 Demographic factors: and college population growth, 59-60; and managerial labor market, 69-70, 75-76 Department of Defense, 156 Depressed areas, 158 Deregulation, 200 Disabled workers, 157-158, 173, 183, 187, 189 Disadvantaged, the, 158-159, 162, 168, 172-173, 176, 182, 183-184, 187-188 Discrimination and sexism, 8 6 , 1 4 0 , 159, 162-163, 183, 187-194 "Displaced h o m e m a k e r , " 2 1 , 1 1 8 Economic cooperation, international, 143-144 Economic Opportunity Act (1964), 159

Economist, 120

Educational system: and labor market, 139, 141, 162-165, 173-174; and minorities, 50, 55; and state and local governments, 160-161; U . K . , 139,

141. See also Colleges and universities Eisenhower administration, 32, 198-199 Elderly, the, 21-22, 187, 2 0 7 Electronics industry, 156 Emergency Employment Act, 160 Emminger, O t m a r , 141 Employment: illegal, 5 3 - 5 4 , 1 3 7 , 1 4 0 , 188; N Y C , 50, 51; and politics, 180186; part-time/intermittent, 17, 34, 39, 137. See also J o b creation programs; Labor force participation; Labor market; Manpower training programs; Underemployed and potential employables Employment Act (1946), 1 5 6 , 1 9 8 Entrepreneurs, 56, 82-83 Equal employment opportunity, 187194, 202 Equal Rights Amendment, 185 Establishment, threats to, 100-101 Evaluation procedures, 191 Expectational system, 143, 189, 190 Family income, 20-23, 149; and dual careers, 23-24, 27-28, 85, 185, 192, 204 Family structure, changes in, 19-24, 196, 205-206 Federal employees' retirement, 147 Federal-State Employment Service, 168 Female-headed households, 21, 49, 205206 Ford M o t o r C o m p a n y , 99, 191 Forrester, J a y , 49 Freeman, Richard, 5 7 Friedlander, Stanley, 54 Friedman, Milton, 180 Full employment policy, 4 0 , 1 8 4 ; Humphrey-Hawkins bill, 171, 184, 206; job-entitlement programs, 41, 144; N Y C , 129-137 GI Bill of Rights, 202 Gardner, J o h n W . , 100 Georgia, 181 Germany, 114, 141-142, 200 Government sector employment, 3839, 49-50, 78, 95 Great Depression, 155-156 Green, Ernest, 114, 124 Green, William, 197 Greenfield, Harry I., 15

Griggs v. Duke Power, 192

Handicapped, the, 157-158, 1 7 3 , 1 8 3 , 187, 189 "Hard-to-employ," see Disadvantaged, the Hawkins, Augustus F., 40

Index Heads of households, 23; female, 21, 49, 205-206 Health: and retirement age, 149-150 Health care services, 22, 50,157, 202, 206 Health insurance, 21-22. See also Medicare and Medicaid; National health insurance Hiestand, DaleL., 10, 11, 12 Home relief, 131-132, 134-135 Hoover, Herbert, 197, 198 Human capital theory, 58-59 Humphrey, George M., 198 Humphrey, Hubert H., 40, 184 Humphrey-Hawkins bill, 171,184, 206 Immigrants, 82-83,115; illegal, 53-54, 137, 176 Immigration Act (1924), 203 Improving Job Opportunities for Women, 96 Income differentials, 22 Income distribution: and job opportunity, 98,143 "Income" poverty, 201 Income transfers, 155-156,159, 168169, 176, 201; NYC, 131-133, 135, 137; U.K. and U.S., 140 Indians, 185 Inflation, 127, 150, 180, 199 International Association of Machinists, 181 Japan, 200 Job competition, 64, 73, 86,141, 205; U.K., 139 Job Corps Centers, 169 Job creation programs, 29-31, 42-43, 160, 171-173, 182. See also Manpower training programs; Public service employment Job-entitlement programs, 41, 144 Job opportunity: and income distribution, 98, 143 Job promotions, 152, 189-190 Job qualifications: "fully" qualified vs. "best" qualified, 191-192 Job quality, 36-39,149,188, 189 Job seekers, potential, 41-42, 43, 141, 185-186 Jobs, upgrading of, 62-63, 83-84 Johnson administration, 29, 111, 162, 199-200 Kennedy administration, 3 2 , 1 0 0 , 1 8 5 , 199 Kennedy, Edward M., 206 Kentucky, 172 Keynes, John Maynard, 141,196 Kreps, Juanita, 153

Labor force participation, 33-35, 50, 64, 130; potential job seekers, 41-43, 141, 206; professionals and managers, 88-95; and retirement age and workers past sixty-five, 65, 126-127, 149,153-154; U.K. mobility, 139140, 142-143; and upgrading of skilled workers, 116, 124-125; urban minorities, 47-56. See also Job creation programs; Labor market; Manpower training programs Labor market, 37; and educational system, 139, 141, 165, 173-174; and occupational preparation, 188-189; U.K. and U.S. compared, 139, 141. See also Employment; Labor force participation Labor unions, 198; in Germany, 141142; training programs, 116, 123, 126-127, 162-163 Lampman, Robert, 201 Levitan, Sar, 33 Licensing, compulsory, 115 Long, Norton, 27 Low-income families, 21, 24, 51, 141, 201-202, 207 Magnuson Commission, 157 Manpower, underutilization of, 41-43, 141, 206; NYC, 130-134 Manpower and the Growth of Producer Services, 15 Manpower Demonstration Research Corporation, 173 Manpower Development and Training Act (1962), 158 Manpower training programs, 40-44, 134, 164; costs, 167-169; business and labor unions, 162-163; and the disadvantaged, 173-176; federal policy, 156-160; NYC minorities, 55-56; private, nonprofit sector, 161-162; and skilled worker shortage, 124125; state and local policy, 160-161; and unemployment, 167, 170. See also Full employment policy; Job creation programs; Public service employment Manpower shortages: skilled workers, 119-128 Manufacturing sector, 49, 50, 123, 204 Maritime unions, 181 Marshall, Alfred, 140, 142 Marshall, Ray, 30, 40, 54, 114,124, 184 Medicare and Medicaid, 157, 202 Mellon, Andrew W., 197 Military career planning, 190, 191 Minorities, 22, 124-125, 157,163; and affirmative action, 183-184; and business schools, 81-82; and foun-

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Index 218

dations, 161-162; NYC, 50-56,130; as professionals and managers, 64, 73, 85-86, 97; teenage unemployment, 42-43, 130; in urban labor force, 47-56 Mitchell, David J. В., 120 Morgan, James, 22 Morrow, Everett, 82 Morse, Dean, 17 Nader, Ralph, 100 National Alliance of Businessmen, 162, 187 National Broadcasting Company, 189 National Defense Education Act, 60 National health insurance, 157, 198, 202, 206 National Recovery Act, 201 Neighborhood Youth Corps, 168 New Deal, 156,159,160, 197-198, 201 New Hampshire, 121 New York City, 43, 47-56,129-137, 181-182 New York Times, 198 Nixon administration, 30, 32, 111, 180, 199-200 Nonprofit sector, 13-14, 49-50, 78, 161162,171, 186,196 Occupational choice, 58-59, 80 Occupational rehabilitation, 157-158 Office of Management and Budget, 171 Old Age Security and Disability Insurance (OASDI), 131-133 On-the-job training, 162, 168, 173 Operation Mainstream, 172-173 Orientals, 97,124 Overeducated American, The, 57 Part-time and intermittent work, 17, 34, 39, 53, 148 Peripheral Worker, The, 17 Personnel management, 105-113 Philadelphia, 182 Philanthropy, 161-162 Pluralistic economy, 9-18,196 Pluralistic Economy, 10 Politics of employment, 180-184 Poverty, 21, 24, 51,141, 201-202, 207 Private sector employment, 30-31, 3637, 38-39, 196 Productivity, 24 Professionalism vs. authority, 86-87 Professionals, 17, 52, 88-101; and retirement, 149, 150 Proposition 13,164, 206 Prouty, Winston L., 29 Public Employment Program (1971), 30, 42

Public service employment, 29-31, 4243, 50, 135,160,164,168, 174-175, 182 Puerto Ricans, 49-53, 56, 130 Rabi, 1.1., 89 Recession (1974-1975), 31-32, 67,134, 168,184 Republic Steel, 198 Research and development, 89, 94 Retirement, 65, 126-127, 146-154 Reverse discrimination, 184,188 Rivlin, Alice, 185 Roosevelt, Franklin D., I l l , 197-198, 200 Russell, Richard, 181 Schumpeter, Joseph, 100 Science and engineering professions, 96-98 "Second-career" activity, 65, 78-79, 149 "Secondary" workers, 39 Segregation index, 53 Seniority rules vs. affirmative action, 184, 202 Service sector, 116,139; and automation, 141-142; growth of, 14-16, 204 Shultz, George P., 32 Skilled workers, 84, 119-128, 156 Smiddy, Harold, 84 Smith, Adam, 16, 58, 114 Smith, Howard L„ 187,199 Social Security System, 21, 134,148, 150,153, 159,198 South Carolina, 181 Soviet Union, 157 Specialists/generalists, 68, 77-78 Spouses, hiring of, 85 Stagflation; 67, 201 State and local governments, 160-161 Stewart, Malcolm, 145 Strong, Benjamin, 198 "Structurally unemployed," 125 Suburbanization, 26, 202 Sunbelt, 181, 204 Supplemental Security Income (SSI), 131-134 "Supported work," 136,173 Sweden, 139 Switzer, Mary, 157 Taft-Hartley Act (1947), 198, 201 Tax revolts, 164 Thurow, Lester, 207 Trade Adjustment Act (1962), 172 Trade policy, 172, 183 Transfer payments, 21,168, 188, 201; NYC, 53, 131-133,135 Troublesome Presence, 194

Index Truman administration, 157, 198 "Undocumented" workers, 53-54 Underemployed and potential employables, 41-43, 141, 158, 170, 185-186, 206; NYC, 130-134 Unemployment rates, 31, 35-36, 40, 144, 155,199; and apprenticeship programs, 115, 117; and manpower programs, 30-31, 167, 170; minorities, 42-43, 53, 130, 172; NYC, 50, 53,130, 172; U.K. and U.S. youth compared, 138-145 Unemployment insurance (UI), 131133,135,155,197 United Kingdom: skilled worker shortage, 120,121,125; youth unemployment, 138-145

165, 171, 200; and work incentives, 159,171 White-collar jobs, 51, 116, 141 Women: and apprenticeship, 118, 124; and birth control, 203-204; career women and urban revival, 26-27, 192-193; in college and business schools, 81-82; "displaced homemakers," 21, 118; and employment discrimination, 183,185,189, 192; female-headed households, 21, 49, 205-206; in labor force, 16-17, 20, 23-24, 33, 34-35, 39-40, 95,192, 204, 205; as professionals and managers, 64, 73, 85, 95-96, 188-189; and retirement, 148, 150,152; as teachers, 5859, 95; U.K., 139 Women and Minorities in Science and

Vera Institute, 134 Veterans Administration, 158 Veterans' benefits, 156, 202 Vinson, Carl, 181 Vocational training, 161, 163 Voucher proposal, 117

Engineering, 96 Work-experience program, 168-169 Work Incentive program (WIN), 134 Work schedule variations, 65, 154 Works Progress Administration, 160, 175 World War II, 156, 203

Wage subsidies, 136, 143 Wage system, two-tier, 175-176 Walker, Charls E„ 167-168 "War on poverty," 159, 201 Warren, Earl, 199 Weber, Arnold R„ 120 Welfare, 22, 159, 161, 201; NYC, 49, 53,131-133,135; reform, 21, 53,161,

YWCA (Boston), 192 Young people, 152; in labor force, 34, 39; unemployed, 42-43, 116, 171-172 Youth Employment Demonstration Projects Act (1977), 136,171 Youth Entitlement demonstrations, 41, 144 Youth programs, 144, 168

219