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Economic Trends


Welfare reforms boost employment

Will welfare reform put more people to work? Skeptics have their doubts, arguing that the U.S. economy has little need for unskilled workers.

But a new study by Macroeconomic Advisers LLC, a St. Louis economic consulting firm, gives grounds for optimism. The firm looked at Illinois, Michigan, Oregon, and Wisconsin, which have had aggressive welfare-to-work programs starting as far back as 1992. In that year, the percentage of adults with jobs--the so-called employment ratio--in the four states was roughly the same as the national average.

By the end of 1996, the employment ratio in the welfare-reform states had jumped to 66.2%, a big step above the national average of 63.4% (chart).

The added workers provided by welfare reform also enabled these four states--which in 1996 had an average unemployment rate of 4.9%, lower than the 5.4% national average--to maintain their strong growth without igniting inflation. The implication is that national welfare reform may help suppress inflation, even at low unemployment rates.BY PETER COYReturn to top

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Workers love to love its companies

Things really are different in Silicon Valley. According to a new survey by International Survey Research Corp. (ISRC), people who work there have unusually high opinions of their companies' management, working conditions, and opportunities for advancement.

The Chicago firm based its conclusions on responses from 17,500 employees working at all levels in Silicon Valley outfits, excluding the travel industry. ISRC found that Silicon Valley employees' opinions were more favorable than the national norm by a statistically significant margin on 15 of 20 key workplace issues, and less favorable on only two (table). Silicon Valley firms ranked worst on work organization, which partly concerns whether there is enough staff for the workload. Staffing is difficult because projects have to be added and dropped on short notice, says ISRC President and CEO John R. Stanek. But Valley employees seem to be enormously self-motivated, says Stanek: "Nobody on earth could make people work as hard as they're working."BY PETER COYReturn to top

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Immigrants don't displace natives

Forget about the theory that says immigrants are pushing native-born Americans out of big cities and their suburbs. It's just not true, according to a statistical analysis of population movements by John D. Hancock, a senior economist at Regional Financial Associates Inc. in West Chester, Pa.

Immigrants do tend to settle in major metropolitan areas. And native-born Americans are indeed moving out of them, into smaller metro areas such as Charlotte, N.C., and Provo, Utah. But Hancock showed that there's no cause-and-effect relationship between foreign immigration into big metro areas and native outmigration from them. Instead, he found, natives tend to leave metro areas that have the biggest populations and the highest jobless rates. Census Bureau data shows there was actually a small net gain of natives in the metro areas that had the most foreign immigration, though not enough to be statistically significant.BY PETER COYReturn to top

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