O.K., Back To WorkBy
Arnold Bennett has a job. Not headline-making news, perhaps, but it is significant enough. In April, Bennett and his family left an unpromising future in Florida to return to his native New England. Come September, the 30-year-old found work with Cabletron Systems Inc., a maker of computer networking equipment in Rochester, N.H. Bennett now makes about $32,000 a year supporting Cabletron's outside sales reps. "The opportunities, long-term, are incredible," he says.
Bennett is one of the more than 1,500 workers Cabletron has hired in the past year. The company, which has seen sales increase tenfold in the past five years, to $600 million, is still adding workers at the rate of three to four a day. Its hires, predominantly white-collar, college-educated employees, earn an average of $28,000 a year.
SMALL WORLD. It is companies such as Cabletron--small-to-midsize, rapidly growing exploiters of new technologies and niche markets--that are driving job growth today. Many have been expanding aggressively, while such corporate giants as IBM, Philip Morris, and RJR brutally slash payrolls. On Dec. 8, Xerox Corp. became the latest, announcing a restructuring that will pare 10,000 of its 97,500 workers. "It has been the smaller, entrepreneurial companies like ourselves that have been doing the hiring," says Wayne LoCurto, president and chief executive of Actmedia Inc., a division of Heritage Media Corp. that creates ads for grocery carts. For two years, LoCurto has been bringing a few people a month into his growing company, which now employs 550.
Such job growth helps explain why the U.S. added 208,000 new jobs in November, and why more than 1.8 million workers have joined the nation's payrolls in the past year (chart). Gains came across a broad range of industries--everything from construction to health care to financial services (table). Even the battered manufacturing sector gained 30,000 new jobs.
So much for the jobless recovery. Growth and low inflation have been hallmarks of the U.S. economy for nearly two years. The missing ingredient: employment. It was improving, but too slowly to boost confidence. The November report shows that healthy consumer demand and lean inventories finally are bringing large numbers of Americans back to work. "This is the first good set of data I've seen in a long, long time," says Janet Norwood, an Urban Institute economist and former Bureau of Labor Sta-tistics commissioner.
There are weak spots, certainly. The defense industry still is getting hammered, with aircraft and instrument makers shedding 115,000 jobs in the past year. Most economists believe the defense shakeout, which has eliminated 340,000 jobs since 1988, still has two or three years to go. Tax hikes in 1994, moreover, could dampen spending in other industries, and small companies fear that President Clinton's health-care plan will short-circuit growth.
But even California, where defense cuts have sliced deepest, is coming back. Housing starts and retail sales are up, and biotechnology and software companies in Silicon Valley have taken up slack from the missile makers down south. Sybase Inc., an Emeryville (Calif.) software house, is adding more than 100 workers a month. Biotech startup Therapeutics, in Mountain View, is doubling its work force, to 85 people.
Strong hiring by these employers, coupled with the turnaround in interest-rate-sensitive industries such as homebuilding and furniture and appliance manufacturing, should keep the job market humming into next year. Even the Motor City, reversing years of job losses, is hiring again. Since mid-1992, Chrysler Corp. has called back 2,700 laid-off factory hands and hired 4,400 new ones, such as the 110 workers added in early December to build V-10 truck engines in a factory in suburban Detroit.Detroit? Jobs? That's no contradiction. "I think you've got a steady increase in manufacturing employment," says Kemper Financial Services Inc. economist John Silvia. "I don't think the last couple of months were just a blip." One blue-collar indicator: Cintas Corp., a Cincinnati-based uniform maker that rents more than 1 million outfits at a time, says its existing customers have increased employment by about 1.5% in the last year.
True, most job creation remains in the service sector. But these new workers aren't all minimum-wage burger-flippers. Teleretailer CUC International Inc. is hiring sales and service people for entry-level jobs paying from $30,000 to $50,000. Denver-based Janus Funds, where managed assets have soared almost 50% since 1992, to $22 billion, has seen employment increase 41%. Many new hires come with knowledge about computers and telecommunications, the backbone of any modern-day finance company.
Ditto at The Principal Group. The financial-services outfit added 600 hires this year. High in demand: new college grads, who earn $26,000 as management trainees. A Dec. 5 survey by the Collegiate Employment Research Institute at Michigan State University found employers planning a 1.1% increase in college hiring in the next 12 months--the first uptick in four years.
Smaller employers are feeding on the restructuring of Corporate America, many of them hiring seasoned workers laid off by bigger companies. Gene Banucci's seven-year-old Advanced Technology Materials Inc. in Danbury, Conn., designs semiconductors made from diamonds. It is work custom-made for engineers let go from IBM's nearby research labs. Banucci pays less than Big Blue. But he offers a looser environment, stock options, and the chance to spin an idea into a new venture. "It's a challenge and an opportunity," says Banucci. He is adding 12 employees a year--one-third of them from IBM.
TRUCKS AND TUBES. It isn't just the technological transformation of America that is boosting employment. Old-line industries, pared to the bone in recent years, are seeing resources strained by orders for big-ticket items. Zenith Electronics Corp. recently added a new production line to its Illinois television-tube plant, boosting hourly employment nearly 10%. One stimulus of demand: the North American Free Trade Agreement, which removes duties on U.S.-made tubes for TVs made in Mexico.
Another old-line company, Caterpillar Inc., is adding 670 factory workers, about half of them recalled from earlier layoffs. Many will earn $17 an hour, with full health benefits. Caterpillar has been running 10%-plus overtime levels in recent months to keep pace with surging orders for heavy-truck engines. "That's much more than is reasonable," says human services Vice-President Wayne M. Zimmerman. Indeed, the average national workweek of 41.7 hours is the highest it has been since World War II.
That's one reason the hiring boom likely will continue. Want more? Continuing low interest rates and higher consumer demand. Many companies already have aggressive hiring plans for 1994. If the world economy finally gets going, kicking U.S. exports into gear, look for solid employment for a long time to come.
HOTBEDS OF JOB GROWTH Increase in employment since Nov., 1992 CONSTRUCTION 4.2% Low rates have kicked off a boom in housing, creating nearly 200,000 jobs. Related industries such as appliances and furniture also are hot. AUTOS AND TRUCKS 4.0% Detroit is building them, repair shops are fixing them, and attendants are parking them. Employment is up by 154,000. HEALTH CARE 3.7% Over 300,000 new jobs in 1993. Hiring should continue as the population ages, though health reform may change the mix of jobs. FINANCIAL SERVICES 2.8% Mutual-fund managers are finding work again. So are mortgage brokers. The result: 90,000 new jobs. TEMPORARY SERVICES 19.1% Personnel-service companies have hired nearly 350,000 since last November as manufacturers and service companies rely more on temps. DATA: BUREAU OF LABOR STATISTICS, BUSINESS WEEK
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