Greenspan Sees Job Insecurity on the Increase

The rapidly changing economy has raised worries about job losses among U.S. workers, even though the labor market is extremely tight, Federal Reserve Chairman Alan Greenspan said Tuesday.

“The rapidity of change in our capital assets, the infrastructure with which all workers must interface day by day, has clearly raised the level of anxiety and insecurity in the work force,” Greenspan told the American Council on Education.

His speech, which stressed the increasing value to workers of higher education, elaborated on a theme the Fed chief has raised in previous public appearances--how the information age has reshaped the economy and the American work force.

In the past, Greenspan has suggested that rising job insecurity may be one reason inflation has remained so tame despite a very tight labor market.

But Greenspan did not discuss the labor market conditions within the context of the near-term inflation or economic outlook, nor did he refer at all to U.S. monetary policy.

He is expected to address those issues in detail next Tuesday and Wednesday, when he appears on Capitol Hill to deliver the Fed’s twice-yearly report on the economy.

In his speech to the education group, Greenspan referred to a study from the private firm International Survey Research, which showed that in the depths of a U.S. recession in 1981, 12% of workers feared losing their jobs.

Remarkably, he said, the same research showed that fear of job losses has escalated, not fallen, in the robust economy of the late 1990s.

“In today’s tightest labor market in two generations, the same organization has recently found 37% concerned about job loss,” he said.

While emphasizing the importance of higher education to today’s economy, Greenspan said it was crucial that universities maintain a commitment to liberal arts as well as science and technology.

The Federal Reserve left U.S. interest rates unchanged at its most recent meeting Feb. 2-3 after three rapid-fire rate cuts in late 1998 aimed at protecting the economy from financial turmoil abroad.

With the U.S. economy roaring ahead despite problems elsewhere in the world, some players in U.S. financial markets have begun to worry that the Fed might raise interest rates at some point to slow down the economy. But an extremely low U.S. inflation rate and continued instability in the world economy were seen by other analysts as weakening the case for higher rates.