Economic Report of the President 1994 - The American Presidency ...

consistent with the past. Since 1980, the average rate ofreallocation has also been 0.9 percent per year.How are we to reconcile what we know to be major changes inthe industrial composition of employment (such as those due to defensecutbacks) with the fact that there has been no apparent increasein the rate of industrial change? Evidently the economy istypically experiencing significant changes in its structure. Just ashorseshoes gave way to tires and mechanical adding machines gaveway to electronic calculators, industries today continue to grow anddie.If job instability is increasing, it does not appear to be becauseof changes in the volatility of firm size or industry demand. If thereare significant changes in job stability, apparently they are happeningat the individual level. If individuals' attachments to theirjobs are becoming more tenuous, we should observe a drop in thelength of time workers spend with each employer, and an increasein the probability that a worker will leave his or her firm in anygiven year. But analysis of the Current Population Survey showsthe fraction of workers holding jobs for 8 years or more to havebeen 30 percent in 1979, and 31 percent in 1983, 1987, and 1991.A constant fraction of workers holding long-term jobs might hidechanges in the experience of individuals. For example, older workersare more likely than young workers to stay with the same employer.The aging of the work force might therefore have broughtabout an increase in average job tenure, even if individuals at anyparticular age were experiencing greater job instability. Two studiesthat have attempted to examine this question provide mixedevidence. Both find that employment for nonwhites and collegegraduates has become less stable, but both also find that employmentstability for some groups has increased. No strong trend towardincreasing overall instability can be found in either study. Itis impossible to rule out increasing overall instability on the basisof these studies, but if there has been an increase it is either toorecent or too subtle to be reflected in the aggregate tenure statisticsdiscussed in the previous paragraph.Whether or not job security is decreasing, two things are clear.First, there has aiways been a great deal of instability in the U.S.labor market. Second, there is no question that there is a perceptionthat job security is decreasing. This may be due entirely to thenormal increase in job losses during the recent recession, to mediaaccounts of mass layoffs at companies that used to offer unusuallystable jobs, or to increases in job instability that simply are not reflectedin aggregate statistics. Alternatively, a constant rate of jobloss combined with greater income inequality has meant an increasein income (as opposed to employment) insecurity.126