Rethinking Urban Policy Urban Development in an Advanced Economy (1983) / Chapter Skim
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6 Investing in the Future of the Urban Labor Force
6 Investing in the Future of the Urban Labor Force
Pages 97-134
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From page 97... ...
While the importation of labor for the new jobs and the out-migration of workers who lose "old" jobs are always possibilities, the slower national rate of growth for traditional manufacturing means that the redundant blue-collar workers will not have the same opportunities for migration that once were commonplace. The recent recession has had a powerful reinforcing effect on structural change.
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From page 98... ...
(Congressional Budget Office, 1 982a:8)
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From page 99... ...
CIncludes doctors' and dentists' services, hospitals, and other health-service industries. SOURCE: Congressional Budget Office (1982a)
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From page 100... ...
, and advanced instruments, respectively. Even with the end of the recession, many cities where declining industries are concentrated will continue to face long-term structural unemployment.
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From page 101... ...
Redundant Labor Estimates of the size of the structural unemployment problem (Table 10) suggest that as of January 1983, depending on the definition used, the number of dislocated workers could vary from 100,000 1 percent of the unemployed to over 2 million—about 20 percent of the unem
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From page 102... ...
. Probably a practical estimate for policy-making purposes is 800,000-1,000,000, accounting for most of the workers affected by mass layoffs and plant closings (Congressional Budget Of fire, 1 982a:4 11.
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From page 103... ...
SOURCE: Congressional Budget Office (1982a)
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From page 104... ...
It includes the education and training of young people, particularly disadvantaged urban minorities and the poor, for entrance into and advancement in the economic mainstream.3 The shift in the economy toward service jobs should signal a need for a reorientation of the local educational system to equip more students for entry into that market. Even in such blue-collar industries as transportation and distribution, traditional manual jobs are being replaced by mechanization and computer-assisted systems.
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From page 105... ...
LABOR MARKET POLICY OPTIONS The National Market Approach There are strong differences of opinion about the way labor markets work and how policy should address their imperfections. One view tends to rely on the "natural" operation of the economy to produce, over time, the adjustments that will be needed in the labor forces of metropolitan areas.
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From page 106... ...
The Local Market Approach Appealing as national market theory is, we feel it overlooks some important aspects of labor market operation and is therefore not a fully satisfactory basis for policy. First, the labor market is not a completely integrated national market but a series of related, but also segmented, urban labor markets (Berry, 19641.
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From page 107... ...
Thus general background conditions influence the flows of workers between local labor markets. The important consideration seems to be how well the national economy is doing compared with the local economy (G.
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From page 108... ...
Net migration is almost always the result of a small imbalance between much larger gross flows and therefore is subject to rapid reversal in response to changes in the external environment. Two observations are important to our understanding of the dynamics of labor migration.
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From page 109... ...
What is clear from the empirical tests of market theory is that we cannot reliably forecast the results of policy essentially based on it. This brief discussion of the contrast between theories of how labor markets function and the empirical evidence of how they actually seem to function underscores the difficulty of devising policies to deal with the problem in simple terms, such as placing the principal emphasis in urban policy on worker mobility as proposed by the President's Commission for a National Agenda for the Eighties (1980)
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From page 110... ...
Moreover, many of the lost jobs have simply been terminated; they cannot be followed to some new location. The result is that such places experience a period of dual development in their labor markets:
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From page 111... ...
In this light, urban labor market strategies can be grouped under two headings: mobility strategies and human investment strategies. These strategies are not mutually exclusive; they reinforce each other.
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From page 112... ...
In addition, workers may need counseling and retraining to enable them to use basic skills or abilities in a related but different occupation and a new work or community environment. Intermarket Job Information Since we already have a sizable redundant labor force that has little prospect of returning to jobs held before the recession, a first step in a worker mobility strategy might be to establish a national job information and displaced worker relocation program.
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From page 113... ...
Given the diversity in urban labor markets, intermarket information clearly is needed if a higher rate of geographic mobility among structurally unemployed workers is to be achieved. Job market information for the unemployed average-wage and low-wage worker is normally very poor and highly restricted in its geographic extent (G.
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From page 114... ...
to collect unemployment insurance. As a condition for unemployment benefits, they must look for work in the local labor market.
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From page 115... ...
The CMC's key function is to minimize the costs of matching employers and workers from dispersed and heterogeneous local labor markets. The costs of searching and finding jobs have been minimized through the use of computer technology.
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From page 116... ...
Such a program should be cost-effective. The Congressional Budget Office has estimated that weekly unemployment benefits average $160, while a combination of job search assistance and relocation subsidies cost less than $100 per dislocated worker in most situations (Table 114.
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From page 117... ...
bAssumes 10 percent of trainees in community colleges, 45 percent in vocational education, and 45 percent in subsidized on-thejob training. SOURCE: Congressional Budget Office (1982a)
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From page 118... ...
The benefits to the nation in income gains from increased mobility could conceivably offset some of the cost. Federal assumption of full welfare costs would place responsibility with the level of government with most power to cope with the basic economic forces that affect those costs, freeing the resources of state and local governments for more basic and traditional services, such as education.
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From page 119... ...
Workers in industries that are being phased out, even if they possess basic skills and good work habits, need retraining, whether they migrate in search of work or seek other local employment. Retraining and adult education programs are also needed, particularly if current tendencies toward a dual labor market persist, so that workers can gain the knowledge and credentials necessary to enter more rewarding careers and to move from the secondary to the primary market.
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From page 120... ...
Reducing the skills required to perform certain jobs by introducing new technology may produce short-term gains in productivity at the expense of serious long-term competitive advantages for both the firm and its employees. To the firm it can mean a loss in the adaptability of its work force and greater vulnerability to changes in the external environment the labor market, product changes, technological advances.
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From page 121... ...
At least while there is a high rate of unemployment, employers are unwilling to hire functional illiterates or school dropouts (Prial, 19821.~2 Even when they are hired, job retention rates are particularly low for untrained young minority workers (Congressional Budget Office, 19821. This ultimately results in high rates of welfare dependency, low rates of participation in the labor market, and participation in the underground economy (K.
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From page 122... ...
Many disadvantaged people need help in entering the labor market and in staying in it. Programs that integrate formal education for the disadvantaged with labor force entry programs appear to be more effective than those that leave people to their own devices to find jobs (Congressional Budget Office, 1982a)
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From page 123... ...
Other forms of business involvement with schools are being tried in a number of cities. These include on-site training involving the use of corporate classrooms for study of "nonschool" subjects, working with educators to establish career high schools, and establishing summer youth employment programs, academic and work-based scholarships, career workshops and seminars, and private industry councils to operate federally funded training programs.
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From page 124... ...
Despite its relatively high cost per enrollee, the success of that program appears to have built a bipartisan consensus in favor of maintaining it as an important direct federal responsibility for training disadvantaged people and placing them in jobs (Congressional Budget Office, 1982b)
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From page 125... ...
Since industry tends to be reluctant to provide basic skill training but has increasingly recognized the need for it, the creation of an industry-supported fund, perhaps channeled through a community foundation, might be an effective device for developing industry financial support for the better preparation of young workers and for concentrating those resources where they are most likely to be effective. In addition to support for basic education, such a fund might assist in supporting, jointly with public funds, a system of postsecondary training vouchers.
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From page 126... ...
Keeping the Skills and Knowledge of Workers Up to Date We can no longer assume that a high school graduate who does not go to college or some other postsecondary educational program will need no further basic or special training apart from that received on the job. Success in the labor markets of an advanced economy will increasingly entail continuous education as part of a worker's life.
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From page 127... ...
A preventive strategy essentially consists of foreseeing the decline of employment in an industry and preparing workers through retraining programs for other types of jobs, preferably new jobs in the same labor market. Such a program has been used, with some reports of success, in West Gerrnany(NationalResearch Council, 1982b:19;Wolman, 1982:1131.
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From page 128... ...
The advantage of such an approach is that it tends to increase the security of workers, allowing technological progress to occur in their industry without unreasonable labor resistance. It gives workers more bargaining power in the labor market and more control over their own careers.
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From page 129... ...
We need to shift from the traditional approach of the nineteenth century which saw labor as a "cost," to the approach which so far only the Japanese have taken, the approach of seeing labor as a "resource" and therefore, as a "profit center" rather than a "cost center." There is a need to organize the human resource around continuous learning and continuous training. The Role of Higher Education If the public school system is the foundation for human resources investment strategies, the urban universities and community colleges are the capstone.
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From page 130... ...
Thus, many universities will consider themselves as institutions that coincidentally are located in urban settings, while others will characterize themselves as urban universities with a primary interest in addressing the higher education needs of the local population (Brown, 19821. Community colleges and postsecondary technical schools have generally been more aggressive in relating their programs to local labor markets.
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From page 131... ...
From a programmatic point of view, there is also a need, both in urban universities and in the traditionally black colleges, to provide and promote educational programs geared to the disadvanta~cl Tl~ :~1 _1_ _r 1 ~c~ _ 111~ villa UrULld1 rOle Of uroan unlvers1nes in a human resources strategy is fostering change in the urban school system. The universities have a vested interest in the quality of primary and secondary education; if its quality is high, they can dispense with remedial programs.
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From page 132... ...
To do so, however, urban universities would have to accept the obligation to provide continuing degree and nondegree education for professionals and to ensure that the quality of these programs matches or exceeds that which industry can provide alone. Universities may also have to be more flexible in allowing industry a sufficient say in the content and methods of instruction for special courses and programs.
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From page 133... ...
Second, we have recommended that substantial investments be made in maintaining knowledge and skills and in retraining dislocated workers. Redundancy planning should become a regular function of national, state, and urban governments working in combination with industries, universities, and schools.
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From page 134... ...
Urban universities are in a position that allows them to be catalysts in bringing together the public and private parties necessary to make investment strategies work. Urban universities are also in a position to offer both moral and intellectual leadership in restructuring urban educational systems, in rethinking their own role in preparing minority youth for the new world of work, and in continuously refreshing the knowledge of the professional labor force.
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