Monday, May 22, 2000
Weighing future of work force
Expert: Type of laborers, business culture key
Edward E. Potter is president of the Employment Policy Foundation, a non-profit economic research foundation based in Washington, D.C. He came to Cincinnati recently to speak to local executives about future workforce issues. He was interviewed by Enquirer reporter John Eckberg:
Question: Do you see any national legislation on the horizon that will have an immediate impact on the workplace or working world?
Answer: Until recently, I was not really aware that Congress was considering reform of bankruptcy laws. While there is no workplace provision in there, it turns out that what happens in bankruptcy actually affects the dynamism of the workplace. One of the keystones of the U.S. economy is what I call the entrepreneurial culture.
In contrast to almost every other country in the world, you and I as individuals can take 15 minutes and have an incorporation. You don't need a lawyer, and so far, we have not placed a high penalty on company failure.
A man or woman has a great idea. The idea flourishes for a while and then fails. We essentially don't create a stigma. The United States allows you to start fresh, to resolve your debts and move on. Congress has a piece of legislation that would create higher liability for failed businesses.
If one thinks about statistics on the number of Americans each year who are starting new businesses, the pending policies can serve as a brake on that.
If a policy creates a brake on the creation of new businesses, you are creating a brake on the development of new workplaces.
Eleven out of 100 people create a new business each year and to contrast that, in Germany, it's three out of 100 people. The highest European Union country, it's four (of 100 people). We're entrepreneurial in the sense that we have an idea, we act upon it.
It is partly our immigration heritage. People came to America to do better. Unlike Europe, we don't create a social safety net that makes people comfortable when they are laid off. We create some infrastructure, but because it is not a rich one, we create incentives for people to find another job.
Or to start their own business.
Q: Why are you in Cincinnati?
A: Federated Department Stores has asked me to do a briefing for the local business community on what I see are the critical trends of the 21st century. To talk about those trends, I have to talk about the entrepreneurial culture of this country.
Q: When you look at the early 21st century, you're looking at children of the 1980s, possibly 1970s, who are buying a house, maybe their second house, raising families, joining the workplace, starting a career — what are expectations of that generation and how are those workers different from workers born in the 1940s, 1950s and 1960s?
A: They really are different. For one thing, there's polling that shows that Gen-Xers expect to retire earlier than baby boomers. ...
Q: Will they be whining as they retire? What a whiny group of people.
A: Well, baby boomers whine in their own special way.
Anyhow, Gen-Xers expect to be retiring earlier, which has all sorts of implications for our tight labor market. That's why this Social Security reform was pretty important. Boomers expect to work past 65.
Another big difference is Gen-Xers expect to hold multiple jobs. Their view is that they are going to hold between 18 and 30 jobs before they're retired.
Baby boomers expect to hold two, three or four, that is, we expected great job stability. The younger worker today doesn't expect the same job, same employer and expects an ongoing skill improvement process.
They are not troubled by the prospect of working for an employer for six months and leaving if it doesn't work out. They are not uncomfortable with that. Keep in mind that this is essentially a country of small business.
Q: Why do you say that?
A: More than a majority of companies have 50 or less employees, so that's a lot of small businesses. Then the Fortune 500 account for 24 percent of the jobs. We have a huge number of self-employed people — about 7 percent of the work force.
Q: What are some of the other trends you see happening in the workplace in the not-so-distant future?
A: The first is the tight labor market and the issues of recruiting and retention of employees and the need for workers to upgrade skills and for employers to want to train workers and create an environment where workers want to stay.
This is where immigration policy becomes very important. Half of all job growth in the United States in the 1990s was filled by immigrants. They filled two important niches.
They work in the boiler rooms, doing the jobs that Americans no longer want to do, and that's a huge number of people. At the top end, they are fulfilling skill shortage needs.
We did a survey of 1,000 companies who are the biggest employers of skilled immigrants and found 34 percent of companies go where they need to go in the world to find the talent if they can't get it here.
Trend number two is mergers, acquisitions and downsizings. In the past century, we've had seven waves of mergers and acquisitions. The current wave both in terms of quantity and dollar value is twice as big as any other point in our history.
That is not going to end. Built-in global competition means that for businesses to compete, they are constantly going to be restructuring and adapting to new markets. You're already seeing that one side of the company is downsizing and on the other side they are upsizing.
This is where Gen-Xers will do better. We boomers don't do so well with keeping up with the pace of all that. How much energy do you want to expend on learning new stuff and learning new skills and knowing that in reality, you just can't do it as fast.
Q: The merger curve — is it increasing in velocity? Slowing?
A: The chart I can show you is going like this (arm shoots to ceiling). There has to be a plateau unless there is a worldwide recession. We're talking about trillions of dollars that are being shuffled around. Policymakers respond to all this anxiety and how policymakers think could be an inhibitor to what is, essentially, good.
I've not seen any surveys that compare and contrast anxiety between older and younger workers, but the big difference you see today is that where the anxiety was at the blue-collar level, beginning in the 1980s, white-collar workers were affected as well.
The third trend is women in the workplace. Participation rates of married women are just as high as single women. Just under 70 percent. We now have 42 percent of all families with dual earners in the work force.
Over the last decade, it has leveled off and this creates stress on the amount of time that families have to deal with their own infrastructure. People have less time overall to take Johnny to baseball and Jane to wherever. There needs to be workplace flexibility. Employers need to come up with family-friendly policies.
One family-friendly policy employers could adopt is telecommuting. A 1999 poll from Wirthlin Worldwide looked at employee/employer commitment. The questions are how committed are you to your employer and how committed is your employer to you: 65 percent said very committed but that they believed their employer was only committed to them at 35 percent.
If you ask the very same question of a person allowed to telecommute: 78 percent are very committed, and they believe their employer is committed to them at 56 percent.
You've improved the relative relationships dramatically by just doing one thing.
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