State’s Boom Brings More Job Insecurity, Study Says

Documenting a dark side to California’s economic resurgence this decade, a new report argues that the state’s technology-driven boom has brought increasing economic insecurity for most workers.

The report, being released today by two liberal groups and with tacit support of key California legislators, details how California’s economy has emerged in recent years as a preeminent force in the new information-technology economy.

But the 90-page report argues that the transformation has carried with it hidden costs, including a dramatic increase in temporary-help jobs, widening income disparity and generally shorter tenure and longer periods of unemployment for most workers.

“The negative flaws of the new economy are broad and substantial, “ said co-author Bob Brownstein, policy director at San Jose-based Working Partnerships USA. The Economic Policy Institute in Washington also worked on the report, which was funded by the Ford Foundation and two San Francisco-based groups, the Tides Foundation and the Solidago Foundation.

The report repeats familiar criticisms of the new economy and its reliance on temporary, part-time and contract workers, but goes on to note that California’s technology-based economy makes the state’s workers especially vulnerable to volatility.

Using government and private research material, they cite statistics that they say points to the increased volatility and insecurity in employment for most working people, including those in the high-tech industry.

The report states that the average duration of unemployment in California in the ‘90s has risen to 17 weeks from 13.1 in the ‘70s. Unemployment insurance, the authors argue, should cover part-time, temporary and contract workers.

The report says another contributing factor to the volatility is the growing share of jobs being created by small firms, where employment is inherently less secure than in large firms. The report found that the temporary-help industry has been the leading job producer in the state in the last five years, with about 180,000 new jobs--more than software and electronics manufacturing combined.

The report recommends a series of broad policy reforms to help workers cope with their increased vulnerability. They range from portable health benefits and pensions that would follow employees from job to job, to better job training paid for by California businesses.

Among the advisors to the report were Antonio Villaraigosa (D-Los Angeles), speaker of California’s Assembly, and John Burton (D-San Francisco), president pro tem of the California Senate.

The report comes when many economists and policymakers are hailing the new, more productive high-tech economy as the basis for the nation’s sustained strong growth with unusually low unemployment and inflation.

In the last couple of years, unemployment rates of minorities and less-educated workers have dropped noticeably, and the inflation-adjusted incomes of the working poor have risen after years of declining, although their wages remain far behind.

Indeed, some business-sponsored groups dismissed the report as unsupported. Allan Zaremberg, president of the California Chamber of Commerce, said he disagreed that workers face greater employment insecurity. “It’s hard to believe. We do a lot of polling, and in the early ‘90s, job security was the No. 1 issue,” said Zaremberg after seeing a two-page summary of the report. “Now what shows up is education. Job security is barely a blip in terms of major issues facing the public.”

The report says the new economy’s need for greater work skills has been particularly hard on Latinos and African Americans, largely because of their lower education levels. The report cites a steadily growing gap between those groups and white workers over the past decade.

For the same reason, the new economy also cuts into the earnings of older workers, who may require extensive retraining to find new jobs. Citing a recent University of California study, the report said earnings growth for high-tech professionals and managers stagnated after about 20 years of experience and began to decline after 24 years.