The convergence of the recent recession, a secular decline in the rate of growth, and the accelerating structural reorientation of the U.S. economy produced serious employment problems in the late 1970s and early 1980s. Since the mid-1970s, plant closings in large manufacturing firms have eliminated over 900,000 jobs a year, with rates of loss doubling in 1980-82 over the previous two-year period. Perhaps more important than the jobs lost are the number and nature of new employment opportunities created. Between 1976 and 1982 large manufacturing firms replaced jobs lost in closings at the rate of only 9 new jobs for each 10 lost. Further, the industries and geographic regions in which businesses are generating new jobs differ markedly from those losing jobs in plant closings and major layoffs. This mismatch in the loci of growth and decline has resulted in pockets of serious economic distress.
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References
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1. Robert Lawrence, “Is Trade Deindustrializing America? A Medium Term Perspective,”Brookings Papers on Economic Activity, ed. William C. Brainard and George L. Perry (Washington, DC: Brookings Institution, 1983), 1:129-172.
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This higher proportion might in part reflect erosion of expectations of recall on the part of workers laid off as the recession lengthened.
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3. Malcolm R. Lovell, Jr., “A New Approach to Encourage Reemployment” (Paper delivered at the National Issues Forum on Displaced American Workers, Brookings Institution, Washington, DC, 7 Dec. 1983).
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4. Barry Bluestone, “Industrial Dislocation and Its Implications for Public Policy” (Paper delivered at the Third Annual Policy Forum on Employability Development, Washington, DC, 13-14 Sept. 1983).
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5. The articles by Gordus, by Root, and by Fedrau in this issue of The Annals of the American Academy of Political and Social Science discuss the impacts of industrial restructuring and plant closings on workers and communities.
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6. Among the other articles in this issue of The Annals of the American Academy of Political and Social Science, those by Blakely and Shapira and by Hooks discuss the current status of plant-closing legislation in the United States and else-where; see also a recent paper by Bennett Harrison, “Coping with Structural Unemployment by Anticipating It: The International Movement for Corporate Disclosure and Advance Notification of Business Shutdowns” (Delivered at the Thirty-sixth Annual Meeting of the Industrial Relations Research Association, San Francisco, CA, 28 Dec. 1983).
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7. The U.S. Establishment and Enterprise Microdata was developed under the sponsorship of the Small Business Administration; documentation is available from the Office of Advocacy of the Small Business Administration, Washington, DC. Recent analyses indicate that this data set may overstate absolute employment losses due to plant closings, but comparisons across industries and regions should be reliable.
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8. F. M. Sherer, Industrial Market Structure and Economic Performance, 2nd ed. (Chicago: Rand McNally, 1980), p. 103.
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9. Further discussion of such studies can be found in Candee S. Harris, “Icebergs and Business Statistics: A Comparison of Business Failures and Business Dissolutions” (Working paper, Business Microdata Project, Brookings Institution, Oct. 1983).
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10. The job replacement rate is the ratio of the sum of new employment in formations plus the net change in existing establishments to the losses from all dissolutions.
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11. The difference in the pattern of job replacement in the mid-range firms between the two industrial sectors reflects differences in the size composition and competitive aspects of manufacturing and service industries. Greater concentration of production and larger minimum efficient scales of operation push the definition of a “small business” upward in the manufacturing industry. On the other hand, the average size of firms in the service sector is only one-third that in manufacturing, so the mid-range service firms appear to have more in common with the large ones.
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12. The regional distribution of employment in establishments of large firms is almost identical to that in subordinate establishments, varying less than 1 percentage point for any region.
14. See Eileen Appelbaum, “ `High Tech' and the Structural Unemployment of the Eighties” (Paper delivered at the Annual Meeting of the American Economic Association, Washington, DC, 28 Dec. 1981).
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15. Gregory Jacksonet al., Regional Diversity: Growth in the U.S., 1960-1990 (Boston, MA: Auburn Publishing House, 1981).
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16. See Candee S. Harris, Catherine Armington, and Marjorie Odle, “The Formation and Growth of High Technology Firms: A Regional Assessment,”Report to the National Science Foundation (Washington, DC: Brookings Institution, Sept. 1983); and Katharine Bradburyet al., Urban Decline and the Future of American Cities (Washington, DC: Brookings Institution, 1982), pp. 103-104.
