The U.S. Labor Market:

Three Key Issues

New Economy versus Old

by Richard Bayer, Ph.d.

The "New Economy" has dissimilarities and similarities to the old economy. Of course, businesses continue to recruit the best employees they can at the most conservative rates, and employees continue to pursue higher salaries, benefits, and good working conditions.  However, Five O'Clock Club research indicates that there are shifts taking place in terms of what business can and must do to have a quality work force, as well as changes in employees' hopes and expectations.

I. The Present Labor Market:
 More than anything else, our present situation is defined by the high demand for quality labor in contrast to the present limited supply.

Such tight conditions in the labor market will continue to force businesses to pay attention to key recruitment and retention practices: enhancing diversity, improving the quality of work—making it a more creative endeavor—sharing profits, decreasing stress, upping security, and offering miscellaneous perks such as dress-down days. The recent Verizon (formerly Bell Atlantic) strike settlement illustrates this as well: the new contract contains provisions for profit sharing and job security in the face of rapid innovation. Employers today want a reputation as an  "employer of choice" to give them an advantage in the labor market and therefore an advantage against competitors.

Employees are realizing a very critical fact in this rapidly changing labor market: the greatest danger to your career is "skill obsolescence." The Five O'Clock Club stresses "Keep up your training!" Business needs more professionals, managers and executives with ever sharper skills. Indeed, the new economy demands higher skills and thus potentially offers high wages. 

Wages in the present economy are increasingly preferred to stock options. There had been a trend to forgo a high wage in exchange for stock options. But this trend ended with the NASDAQ drop earlier this year and the failure of new dot-com businesses. Many have concluded that, "a bird in the hand is worth two in the bush."

Remember that there will be down times for labor, and for YOU. The career conscious person should remain alert, have a rĖsumĖ ready, know the market for his or her services, and get good career coaching. Use the Internet mainly for research. Only 4% of Internet-savvy job hunters actually find jobs on the Internet (according to an online survey by Forrester, 4% found their last job through the Internet, 6% through temp agencies, 23% through newspaper ads, and 40% through referrals. Reported in "Crains New York," 8/28/00, p.15.). Have some humility and don't mar your rĖsumĖ with too many job changes.

II. Ethics Offers Guidance In Chaotic Situations
 In this new environment employers and employees will face new situations and questions about how to treat one another. Power has shifted significantly to labor, but justice and not only power should be considered in relations between business and labor.

For example, when it becomes necessary to terminate an employee, this should be done with dignity. Employers will find that this protects their reputation in a tight labor market, and it protects the morale of existing workers.

Employees should also depart with dignity! You should leave things in good order, be available, and consult for old employer. Remember, in these days of revolving employers, you may want to come back some day in another capacity or area. 

Besides business and labor, I think government will have some role with respect to social justice. The new economy, in which jobs are plentiful and turnover is high, will not by itself end poverty and want. There are still many people with full-time work who live in poverty.  Government has a role in protecting the working poor, as well as in providing a safety net for those hit by this constant churning.

III. The Key To The Future Is Human Capital
 Of course, individuals need to see to their own training! Increasingly, businesses are finding that our public education system is an expensive failure, often producing people lacking in hard and soft skills. This has created an "aftermarket" for educational services that teach phonics to students, provide after school hour tutoring, and the like. Sometimes businesses move the work of education and training in-house. It would seem socially more optimal to improve the quality of public education. A business approach of bringing competition to public education through vouchers, especially for poor families who cannot escape the public education system, will likely be necessary to remedy this situation.

Good luck navigating these new waters, and keep Five O'Clock Club methodology with you at all times!

Richard Bayer is an ethicist and author on labor economics, and the Chief Operating Officer of The Five O'Clock Club.