December 1999, Vol. 122, No. 12
Book reviews from past issues
Who’s Not Working and Why: Employment, Cognitive Skills, Wages and the Changing U.S. Labor Market. By Frederic L. Pryor and David L. Schaffer. New York, Cambridge University Press, 1999, 300 pp.
Who’s Not Working and Why is the result of research by Frederic L. Pryor and David L. Schaffer. The book is the authors’ presentation of a new explanation for a troubling phenomenon from 1970 to 1996—joblessness. Although the authors presented the book as a more general explanation of labor market changes, the book focused more specifically on joblessness, which they considered the most significant transformation. They were especially concerned with the increased joblessness of poorly educated prime-age men, downward occupational mobility, the increased rate of return to a college education, and increased wage inequality throughout the labor market. The authors believed that these trends, which were considered disturbing, were primarily caused by the increased labor force participation rate of women with at least a high-school diploma, skill-biased technological change, and the increased average level of education of the population.
Pryor and Schaffer explained how their data provided part of the reason that their conclusions were different from other studies on joblessness. Their sources of information were Current Population Survey (CPS) data from 1970 and 1996 and National Adult Literacy Survey (NALS) data from 1992. The CPS data enabled them to monitor education, employment, and wages in specific occupations for the entire period. Having data available on specific occupations helped the reader to see how changes differed across occupations. The NALS data enabled the authors to look at individuals’ cognitive skills independent of their education or occupation and to show how these skills impacted the probability of employment, downward occupational mobility, and wages.
This book's abundance of data on detailed occupations also explained the different results. Chapter 3 presented the concept of education intensity that the authors used to group detailed occupations into four broad categories. This helped them explore the increased joblessness of poorly educated prime-age men. Using CPS data, they showed how jobs requiring a relatively low level of education had increased faster than the number of less-educated workers, while jobs requiring a relatively high level of education had increased more slowly than the number of more-educated workers. This led to downward occupational mobility and eventual joblessness for lower-educated workers. Workers who were displaced from a higher tier and employed in a lower one had lower levels of functional literacy than workers who were not displaced. They used the definition of functional literacy from the NALS to measure cognitive skills. This is how they proved that cognitive skills took a role in the turnover process.
Finally, the analytical approach also accounted for the different results. Unlike other researchers who had employed single methods such as standard regression analysis to justify arguments, Pryor and Schaffer used two less familiar techniques along with regression analysis. In Chapter 4, a technique is used to separate employment changes into aggregate versus structural changes and showed the impact of these changes on the displacement of men with women between 1971 and 1987. In Chapter 6, a different technique is used to separate the changes in wage inequality into changes between various categories and those within particular categories. This is necessary because different factors affected changes in different parts of the wage distribution. This technique enabled the authors to show that in the highest education occupations, most of the increased wage inequality could be explained by increased inequality between the occupations themselves. Causes for this broadened inequality were the excessive demand for lawyers and health care workers and the entrance of women with high cognitive skills into occupations at wages lower than those of the men they displaced.
Toward the book’s end, Pryor and Schaffer examined the following five popular theories about joblessness: technological change, structural changes in production and productivity, imports from low-wage nations, immigration, and the spatial mismatch of people and jobs. Through empirical analysis they attempted to show that these popular theories were of little importance. Although the authors were successful in offering some new causal factors for joblessness, they were less successful in proving that these new causal factors were more important than the five popular theories about joblessness. However, the authors were able to provide researchers studying joblessness with some new theories to consider in addition to the existing ones.
Office of Employment
and Unemployment Statistics
Bureau of Labor Statistics
The Public Employment Service in the United States. By the Organization for Economic Co-operation and Development, OECD Washington Center, Washington, 1999, 228 pp. $36, paperback.
In 1832, Alexis de Tocqueville published his seminal work, Democracy in America, which described American customs and the role of government in the United States. There is a distant kinship between Tocqueville’s study and the Organization for Economic Co-operation and Development’s (OECD) recent study entitled, The Public Employment Service in the United States. Their similarity lies in that both studies competently tangle with the complexity of American federalism. As Tocqueville’s discourse remains a discerning portrait of America during the Age of Jackson, the OECD’s report may become an enduring portrait of employment policy during the Age of Clinton.
The OECD,2 a Paris-based agency chartered to promote policies of economic and employment expansion in the United States and the 28 other member countries, is abundantly qualified to analyze the public employment service system—a delivery system which in the United States is dubbed "workforce development," referring to employment and training programs. The report is the 18th study in a series of OECD country reviews. The U.S. study was presented to the OECD’s Employment, Labor and Social Affairs Committee in October 1998, and is published under the aegis of the OECD’s Secretary General.
The study is learned and comprehensive. The report’s principal authors, Robert Fay and Douglas Lippoldt, analyze Federal policies and evaluation results, examine street-level execution of programs, and provide trenchant commentaries. The study is anchored by findings drawn from implementation reviews conducted in Connecticut and Wisconsin. Throughout the narrative, the authors compare and contrast program services, delivery structures, and performance outcomes nationally and in the two study States.
The study is divided into eight chapters, each zeroing in on pivotal workforce development initiatives supported by a hearty supply of instructive tables and explanatory inserts. The chapters carefully dissect aspects of the American system including labor exchange services, labeled "job brokering," One-stop systems and self-service strategies, administration of unemployment benefits, job search assistance approaches, referred to as "active labor market policies," training services, and welfare reform.
The narrative contains a perceptive description of the decentralized approach to workforce development administration that sometimes forms the crosscurrents of Federal, State and local policy, implementation, and oversight. Given the complexity of American federalism, this was a formidable task, and the authors produced an exceptionally thorough depiction of the American workforce development scene. Among other attributes, it is the only study I have reviewed that arrays estimates of staffing at government levels according to fund sources, agency structures, and workloads. Moreover, the study contains deft observations, some being:
• A massive restructuring of the U.S. workforce delivery system is underway. Under the One-stop moniker, a national network of local centers linked by computer system is being knit together to unify services and providers at common access points. According to the study, while the creation of One-stop centers appears to make intuitive sense, the use of special grant funds to nurture their growth may raise a long-term survival issue.
• Public labor exchange services have been modestly funded and garner a smaller market share in comparison with many OECD countries, conditions that have contributed to an increase in self-accessed services. If labor exchange services are to be the only universal public policy instrument supporting jobseekers, the study suggests that the United States may need to consider more active job matching approaches.
• The use of centralized telephone units to administer unemployment insurance claims has, in some instances, led to insufficient job search enforcement and, among other things, may result in a failure to identify jobseekers who need extra job-finding services.
• The United States is one of the few OECD countries that has implemented a profiling model to identify jobseekers at risk of long-term unemployment. The study observes that early evaluations indicated that the profiling initiative has produced modest results in reducing unemployment duration, and that additional evaluations should consider whether there is a set of job search services that work better than others.
• Evidence on the outcomes of government-sponsored training programs is mixed. Citing U.S. studies, the authors suggest that classroom training does not appear to help target groups, while on-the-job training does appear to be effective.
• A tenet of welfare reform is the work-first approach, rather than the use of training programs. The study points out that many who leave welfare will continue to need support services and, in the event of an economic downturn, the safety net for families could be eroded.
The authors perhaps wisely chose not to insert a section on implementation of the Workforce Investment Act (WIA) of 1998 which was enacted subsequent to the drafting of the initial findings. The section may have been too speculative. Even so, the OECD study is often prophetic in analyzing the very workforce development initiatives placed in the WIA. Public support for the One-stop system led to the WIA’s reliance on it for the delivery of services. In due course, the One-stop moniker may become as American as corn on the cob. As well, under WIA, a further shift in the Federal-State balance is likely as local officials are delegated responsibility to administer One-stop centers and most workforce development funds.
The OECD study offers the reader a bountiful journey. It mines the rich holdings of U.S. workforce development evaluations and provides a balanced set of timely analyses and commentaries that may guide policymakers and program practitioners.
Employment and Training
U.S. Department of Labor
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