Myth Three

New and better jobs are being created to replace those lost to downsizing.


While there is no doubt that new jobs have been created over the past four years, these jobs aren’t the salvation the Clinton administration had hoped. Had it not been for manic downsizing, the economy might have produced 12 million new jobs–not 8.5 million–since 1993. As Brian Wesbury, chief economist for Congress’ Joint Economic Committee, notes, “In the three recoveries that have lasted this long since World War II, job growth was a lot stronger.”

Moreover, many of the “new” jobs aren’t new at all; they are merely recycled jobs created from tasks left by laid-off employees.

The majority of jobs that were created are entry-level positions. With the passing of long-term job security, these jobs will probably never mature into high-paying positions. The Clinton administration has yet to produce conclusive evidence that the long-term stagnation of the average U.S. wage has reversed. The Economic Policy Institute reports that, even in the “professional specialty” job category, median wages actually declined by 1 percent from 1994 to 1995.

There are those who ditto the Rush Limbaugh theory that layoffs force Americans to become successful entrepreneurs, and who proclaim a layoff to be the best thing that could ever happen to corporate “bureaucrats.” Linda Anderson, founder of Big Blue Alumni International, a news and information resource for ex-IBMers, says otherwise. Anderson, who works with thousands of laid-off IBM employees, sees a disturbing trend among those who have struck out on their own. As contract employees, they do not receive vacations, medical benefits, bonuses, or the advantages of internal corporate programs. Many are forced to work for contracting agencies — a type of middleman for employees — driving their wages even lower. Says Linda Anderson, “We have created a second-class workforce that is silent and huge. It is good for big business and piss-poor for the worker.”