April 1999, Vol. 122, No. 4
markets and the euro
Perception of job security
Transformed work: workers' views
Précis from past issues
Labor markets and the euroThe European Monetary Union launched a new currencythe euroin January 1999. According to Conference Board economists Robert H. McGuckin and Bart van Ark, the new currency points toward lower exchange risk and greater price transparency among the nations in the European Union. According to their report, Perspectives on a Global Economy: The Euros Impact on European Labor Markets, these changes will lower transaction costs and integrate capital markets across the continent. Lower costs and greater integration should lower the cost of capital, and thus support business expansion.
From the economic policy perspective, the nations of Europe will in some important ways resemble the individual States of this country: both will be constrained to a significant degree to deploying fiscal policies in a monetary environment set by a central authority. To meet their economic goals while facing such a centralized monetary policy, say McGuckin and van Ark, "European national governments may begin placing more emphasis on fiscal policy (for example, tax subsidies and public infrastructure investments)."
From the labor market perspective, some nations may adopt subsidies, looser regulation, wage moderation, and other inducements to business development. According to McGuckin and van Ark, "This process should help abolish many of the rules and regulations currently restricting the expansion of product markets and help moderate labor costs across Europe."
Perception of job securityWorkers perceptions of job insecurity are said to affect a number of economic variables. A typical proposition of this sort is that a rising sense of insecurity is leading to restraint of wage demands on the part of workers. Despite the fact that perceptions of job insecurity are this important, modern labor economics offers little guidance on their measurement, according to NBER Working paper 6908, Worker perceptions of job insecurity in the mid-1990s: Evidence from the Survey of Economic Expectations, by Charles F. Manski and John D. Straub.
While most economists have shunned direct elicitation of worker perceptions, Manski and Straub have mined 3,600 responses to questions on the possibility of job loss, the probability of succeeding in a job search, and the chances of voluntarily quitting asked in the University of Wisconsins Survey of Economic Expectations. The most common responses to the question on the chances one would lose ones job in the next 12 months were 0 percent (1,251 respondents), 5 percent (471), and 10 percent (400), with 1,478 giving some other answer. On the likelihood that a job search would be successful, the most common answers were 50 percent (636), 100 percent (426) and 80 percent (345).
Manski and Straub combined the responses to the first two questions to obtain a composite measure of job insecurity. Expectations of job loss tended to decline as age increased, but so do expectations that a job search would be successful. Thus, the net measure of job insecurity tends not to vary with age. Perceptions of job insecurity also tended to vary little by sex. The perception of insecurity did vary substantially by race, with the subjective probability of job loss among blacks roughly double that of whites. Perceptions of job insecurity tended to decline as educational attainment increased.
Manski and Straub also found that "workers tended to perceive less job insecurity in 1996 and 1997 than they did in 1994 and 1995." This finding echoes our At Issue department of March 1998 that suggested that job insecurity, as proxied by the contingent worker supplement to the Current Population Survey, declined between February 1995 and February 1997. See also "Are Workers More Secure?" Issues in Labor Statistics, Summary 985, May 1998, at http://www.bls.gov/opub/ils/pdf/opbils20.pdf on the Internet.
Transformed work: workers' viewsThe small, but growing, academic literature on workplace transformation has been almost universally based on employer surveys, according to Duane E. Lee and Kirk T. Gifford writing in Industrial Relations. In contrast, their article uses data from the National Longitudinal Survey of Youth (NLSY) to get at how workplace change has affected individual workers, especially in terms of requiring formal training to learn new skills or upgrade old ones. From these data, Lee and Gifford find that about 40 percent of all workers reported at least one change in their workplace during 1993 that required them to learn new job skills. Among those that did report experiencing such a change, the average number of changes was about 2.9.
Where creating work teams, other worksite changes, and new compensation policies were among the changes included in a report, the authors defined the change as "organizational transformation." Using that definition, about 23 percent of all respondents were part of a workplace transformation in 1993. The transformation measures had significant impacts on the probability the worker would receive formal training. However, the marginal impact, while remaining statistically significant, fell sharply when the simultaneous effects of new products, new equipment, and new government regulations were taken into account. Lee and Gifford were surprised by the strength of the relationship with new regulations, and found in further analysis that "new government regulations have an especially large impact on formal training for small establishments and on formal training obtained in a class or seminar setting."
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