Job Security May Be Getting Too Expensive
Morton Bahr, the leader of the Communications Workers of America, which represents 150,000 of American Telephone & Telegraph’s employees, says he would like to go back to the way things were before the AT&T; breakup, when a job with Ma Bell was a job for life.
Bahr’s nostalgia is understandable. AT&T;, of course, has just declared that it will cut its work force by 27,400--16,500 of them members of Bahr’s union. It announced the job cuts on the same day last week that International Business Machines said that 10,000 of its people would be taking early retirement as part of the computer giant’s continuing efforts to shrink employee rolls while retaining, at least formally, its no-layoff policy.
The news came as a shock to many people. Not only were the announcements poorly timed--Ebenezer Scrooge might have handled it better--but the companies involved were looked upon as model employers, offering job security and good benefits. Each is the leader in its field, neither is really hard-pressed by foreign competition. If AT&T; and IBM can’t keep people working, who can?
Small companies can, companies with fewer than 100 employees. Those are the companies, according to Dun & Bradstreet’s survey of 5,000 business firms, that are adding about 2 million jobs in the U.S. economy this year.
Small Firms Creating Jobs
U.S. business as a whole will create slightly more than 3 million jobs this year, but the largest companies--those employing more than 25,000--will add almost no jobs. It’s pretty much the same story every year: The smaller outfits make the U.S. economy a veritable job machine, but the big companies create almost no new employment.
In one sense, that’s not as bad as it sounds. If the big companies seem always to be eliminating jobs in order to get their costs down, their activities spawn jobs elsewhere. Roughly 250,000 new businesses will be created in the U.S. economy this year (while about 60,000 firms go out of business). Many such businesses, says Dun & Bradstreet’s chief economist, Joseph Duncan, consist of people starting a company to supply on contract for their old employers the same goods or services they used to render for wages--handling job-shop parts manufacturing, say, or job-shop product marketing.
But that’s just the point of Bahr’s lament. There may be jobs in those entrepreneurial firms, but there’s precious little job security and the benefits aren’t a patch on those at the big company. Why can’t we have stable big companies paying higher wages and bigger benefits in this country like they have in Europe and Japan? Because the American public doesn’t want to pay for them.
Paying for Security
Not that any country offers a free lunch. Europe pays for higher job security in its big companies with slower growth and higher unemployment in its economies, which it pays for in turn by funding higher social benefits with higher taxes. Japan, in a much more tightly organized society, has lifetime employment for males, but retirement is at 55, with no social security.
But here, millions of customers don’t want to pay more for a telephone so that 300,000 telephone company employees can have better benefits. It’s part of the American habit of suspecting that the bigger the institution, the slower the wits--an impression that AT&T; has done nothing to dispel since the breakup of the Bell System in 1984.
Like some corporate Casey at the Bat, the company, which is still a giant at $35 billion in revenue, has been threatening to sweep the bases in telecommunications and computers but striking out instead. It has been roughed up by smaller firms in the market for telecommunications equipment, and its efforts in the computer business have been a dismal and costly failure.
Now AT&T; says it is going to work toward inventing ways for computers to communicate with each other. IBM, the colossus of the field with $55 billion in revenue, says it will be doing the same thing. But data-processing customers have been begging for such capability for years. And so far one of the only companies to answer the customers’ demands is Digital Equipment Corp., which is roughly one-fourth the size of AT&T; and one-sixth the size of IBM.
Sure, the computer business has been in a slump, and sure, it’s a tough field. But where was AT&T;’s army of corporate planners, or IBM’s? Maybe if they had listened to the customers, as Digital seems to have, they wouldn’t be shoving people into early retirement or unemployment.
Meanwhile, rough early projections say that U.S. business will create almost 2.5 million jobs next year. Once again, 75% of them will be in companies employing fewer than 500 people, and it will be another year of zero job growth at the big companies.
The moral? What should one tell the youngsters about the world of work? Tell them to always go for the small company that offers opportunity rather than the big outfit that seems to offer security.
