| Taking labor
as a factor of production, we can say that the
average wage rate for a particular profession
indicates the earnings of an average worker in
a particular economy, at a certain point in time.
The demand for labor is dependent on a country’s
needs for skills to produce numerous goods, either
for home use or export abroad. The supply of labor
is determined by the size of the working population
and the absence or presence of physical, legal
or political barriers to prevent the entry of
overseas workers into a country’s economy.
Productivity of the workforce is also influenced
by the level of training and technology available
in the country.
THE U.S. PERSPECTIVE:
Let us now look at the state of the U.S economy
vis-à-vis the events of September 11, 2001
and thereafter. The U.S economy had already been
in decline during the first half of 2001. In fact,
unemployment was gradually rising from a thirty-year
low of 3.9% in October of 2000. The events of
September 11 only served to move the economy into
a more serious and lengthy recession. In addition
to the terrible loss of life and property, there
has been a lingering effect on the job market.
The bubble of impenetrable security had burst.
America was wounded and shocked. Americans not
only feared for their own security; they began
to look with suspicion on their fellow workers
from abroad. More than a handful of countries
were subject to registering their identities and
movements with Homeland Security and other agencies.
U.S tolerance for immigrant workers began to wear
thin in some places.
Thousands of foreign workers began to find America
an unfriendly place- some of them choosing to
return to their native lands after decades of
working in America. They could not bear to live
under the shadow of constant surveillance and
distrust. And what of the intended immigrant workers?
For those living in poorer countries, America
is the ultimate Utopia- the land of milk and honey.
So it was most disconcerting for thousands of
people all over the world to have their hopes
of going to America dashed by this single but
tumultuous event.
In July 2002, there were 8.3 million unemployed
Americans. To provide relief, in March 2002, President
Bush signed the Recession Relief package, which
included an extension of unemployment benefits
for a minimum of 13 weeks. But the results were
far too inadequate, with many unemployed workers
still looking for jobs at the end of this period.
The unemployment rate in July 2002 was 5.9%,
near a seven-year high. In New York, the situation
was even worse. The New York State unemployment
rate was 6.0% in July 2002, while the New York
City rate was 7.7% - both among the highest in
the country. Job growth in the state and the nation
continues to be undermined by the national recession
and the economic fallout from the events of September
11. New York jobless claims amount to 203,761
for the week ended 24 July 2004. (Source: U.S
Labor Market Statistics http: www.doleta.gov)
The unemployment rate was 5.6% in July 2004, and
has remained greatly unchanged since December
2003. There were 8.2 million unemployed persons.
Sector wise unemployment also was relatively stable.
(Source: Employment Situation Summary http: www.bls.gov/news.release/empsit.nr0.htm)
The airline industry was the most hit, with a
20% job cut across the industry post 9/11.
Employment in law enforcement and security however
increased. Between 50,000 to 60,000 additional
workers were hired at Airports across the U.S.-
from baggage handlers to security guards. The
insurance, real estate, finance and travel and
tourism industries also suffered. Information
Technology firms hiring overseas workers reduced
hiring 50 percent.
The list of job cuts was starting to get lengthy
prior to the September 11 tragedy. In the wake
of the World Trade Center and Pentagon attacks,
the layoff list continued to grow at an even faster
rate. Some of the top names in American and international
business earned a place on the lay-off list including
IBM, Nokia, Charles Schwab, Mitsubishi, Motorola
and Sprint. Bankruptcy filings also read like
a corporate "Who's Who" list - U.S.
Airways, Kmart, Polaroid, Enron, Global Crossing,
and Adelphi Communications. The long list of companies
that filed for bankruptcy in 2002 crossed a wide
spectrum of industries.
FUTURE OUTLOOK:
Despite today's gloomy job market, there is some
hope for the future. The Bureau of Labor Statistics
projects an increase of 15% in total employment
between 2000 and 2010. This means an increase
in over 20 million jobs. The fastest growing sectors
are Professional and Related Occupations and Service
Occupations. Eight out of the ten fastest growing
occupations are computer related.
There are still good companies to work for. Some
of the largest corporations are stable and continuing
to grow, while small employers can offer excellent
employment opportunities. According to the U.S.
Small Business Administration, over 99% of the
country’s employers are small businesses
and they employ more than half of the private
workforce. Some of these small firms may be in
a better position to hire during a down market,
because some might have a business plan so compelling
that they can succeed despite the overall economic
slump. While others may be operating in a rapidly
growing niche, which is prospering despite a general
recession.
Source: After 9/11: The Job Market (http: jobsearch.about.com)
THE GLOBAL PERSECTIVE:
On a wider, worldwide scale, as more countries
move under the banner of WTO, new challenges emerge
for the labor market and the economy. Protectionism
vs. Free Trade is one of the quandaries for poorer
nations that need to stabilize their economies.
Will cheap labor available in South Asia displace
the workers in the USA? Will multinationals close
up in US and relocate to cheaper countries? It
is already happening, as many corporations have
outsourced their factories, e.g. Nike, finding
alternative sources of cheap labor in countries
where the work laws are a lot less stringent than
in the USA. A recent example is that of some Silicon
Valley firms that have chose to relocate some
I.T facilities to Bangalore in India.
The availability of worldwide jobs via the Internet,
issuance of work visas and permits, comparison
of pay-scales online and the establishment of
free trade zones have all served to reduce the
entry barriers of the labor market. Under the
name of competition and free trade, local talent
is being exported.
It has been researched that job reallocation
is a constant feature of the U.S market. In fact
it is so pervasive that 1 in 5 workers are affected
by it on a yearly basis. The reduction in jobs
can be Industry Specific, as in layoffs in a particular
sector, or as a result of a technological improvement
that makes obsolete previous skills. On the other
hand, if the reduction in job opportunities is
brought about by lacklustre demand , or a rise
in interest rates eating into the profit pies
of the corporations that then reduce the workforce,
the effects are more widespread and more acutely
felt.
There has also been a job reallocation across
industries, where for example, a rise in the price
of oil has contributed to growth of jobs in the
petroleum and fuel sector, while at the same time
contributing to a fall in the job opportunities
in the automotive industry. The responsiveness
of a particular industry to a change in exchange
rates would depend on its level of exports abroad.
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