The American Workplace

Throughout most of the 1990s the number of people in the United States who were unemployed or working (either part- or full-time) and the number who were actively looking for a job increased. The economy was pressured to produce more jobs. At the same time, domestic jobs were lost as multinational companies restructured their global operations and as competition from other countries intensified. The responses of American companies to these changes included:

• Greater use of technologically advanced machinery designed to replace human workers
• Greater pressure on workers to limit wage and benefit demands (especially for new entrants into the job market), or to "give back" already existing benefits
• Management programs designed to accomplish more per worker so that the economy could remain competitive with international economies (which often have considerably lower standards of living)
• Employee reductions through layoffs or early retirement
• Increased attempts to become part of an international economy and, conversely, increased efforts by the federal government to restrict imports so as to increase demand for American-made goods

Downsizing the labor force to become more competitive in the international market became the management style of many companies in the late 1980s and early 1990s. Many firms laid off older workers, whose earnings were generally larger than their younger counterparts, in an effort to cut expenses. Many of these laid-off workers, however, returned to work (often with their former employers) as contract workers. This allowed companies to save money that was formerly earmarked for health or retirement benefits to the salaried employees.

However, a booming U.S. economy in the mid-to-late 1990s led to the creation of hundreds of thousands of new jobs. This in turn created a demand for skilled and low-skilled workers. Recent college graduates who had several job opportunities could receive a signing bonus for accepting one company's offer over another. Furthermore, contract negotiations involving established employees could revisit the issue of wage increases (which had not been a priority earlier in the decade).

According to data from the U.S. Bureau of Labor Statistics (BLS), the average unemployment rate gradually declined throughout the 1990s from a decade-high 7.5% in 1992 to 4% in 2000. However, a weakening economy boosted the average unemployment rate to 4.7% in 2001. The September 11, 2001, terrorist attacks in New York City and Washington, D.C., further affected the weakening economy and unemployment rates. The unemployment rates remained elevated during 2002 (5.8%) and 2003 (6%), then declined in 2004 (5.5%) and 2005 (5.1%). (See Table 2.1.) By January 2006 the unemployment rate had returned to the 2001 level of 4.7%.