Americans May Face Leaner Workplaces for Years

By the time Kelley Krostoski was laid off from her job as a management consultant this past February, she assumed that she'd be able to find another position closer to her Oregon home, perhaps even something that would not require her to travel.

Ten months later, her initial optimism has given way to resignation. She landed another gig in September as a consultant that required her to take an 11 percent wage cut. She still travels up to three months a year, though that's better than the six months a year spent on the road at her previous job. Overall, Krostoski says she's relieved. "There aren't many jobs in Oregon," she says, noting the state's 11.3 percent unemployment rate. "I [know] folks who have been looking for a job for a year or more."

In the current economy, many Americans have had to lower their expectations for their career and work lives. Like Krostoski, they've taken pay cuts to secure new jobs. They've postponed retirement to help struggling family members, and millions of Americans remain underemployed, working part-time or low-wage jobs to pay the bills. "There's a reluctance to settle," says Andrew Gledhill, an economist with Moody's "In these once-in-a-generation types of recessions, you don't have a choice."

This lack of choice for the jobless is creating huge policy headaches within the federal government, particularly since the national unemployment rate just hit 10 percent. President Obama held a jobs summit in Washington, D.C., on Thursday to talk about everything from creating green jobs to retraining workers. House Republican Leader John Boehner held a competing summit to advocate for payroll tax cuts, and everyone, from economists to policy wonks, has been debating the merits of producing new jobs through additional stimulus money, tax cuts, and the creation of a public job corps. "I think there is growing political will to do something," says Jeff Madrick, a senior fellow at The New School's Schwartz Center for Economic Policy Analysis. "The president has to make the economy work again for everybody."

In this desperate climate, even the merits of extending unemployment insurance are up for discussion, particularly with the country's rising deficit. Benefits are set to expire in January for 1 million people, according to the National Employment Law Project. A new paper by a Columbia University economist, Till von Wachter, argues that extending unemployment insurance over long periods of time doesn't actually help people find better jobs. "Giving someone 18 months of unemployment insurance versus 12 months doesn't make a difference," von Wachter says. At some point, he argues, people have to "bite the bullet" and resettle into the new economy in any way they can.

When economists point to a definitive end to the recession, which they're now predicting will happen in the latter half of 2010, Americans should not expect their careers to return to prerecession levels. The workplace could be a leaner and meaner place for at least the next generation. Laid-off workers who have returned to new jobs have taken steep pay cuts, some of which could take years, if not longer, to recover from. There's no indication that sectors such as construction or manufacturing will return with great force, and the lifestyle of the white-collar, middle-management worker may be permanently altered, says MIT economist David Autor, who predicts the growth of both high- and low-skilled jobs. According to Autor, high-level professionals will continue to work in law, medicine, engineering, and the sciences, while low-skill workers will clean houses, drive trucks, or wait tables, performing the types of service jobs that cannot be automated. "These are not the jobs you would dream your children would do," he says. "What's missing is the middle. The notion of working your way up is harder to picture."

All this makes the signs of mild economic recovery less comforting for the unemployed, and for anyone concerned about losing his or her job. Sure, companies have started hiring temporary workers, and there's been a small increase lately in manufacturing activity, but these are not immediate signs of relief. And asking people to bite the bullet and suck it up may not go over well, especially for job seekers searching for the tangible: the routine of a reliable paycheck and a steady workplace.

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