Unemployment rates do not tell the story about deindustrialization. I'm using an extraction from the CPS data set that shows that as much as a quarter of the increase in wage variance at the state level in the 1980s can be explained by deindustrialization. Preliminary evidence from the NLSY suggests that this increased variance is largely caused by increasingly divergent permanent wage paths (i.e., wage-experience profiles). There is also research (I think by Ann Huff Stevens) showing that workers who involuntarily lose their jobs from plant closings take something like a ten percent permanent wage cut. I imagine deindustrialized cities would be great places for a service sector boom, because you have all these skilled people willing to work for much lower wages. Pittsburgh may look rosy, but have any of y'all spent time in Detroit lately? Cheers, Tavis On Wed, 30 Apr 1997, Louis Proyect wrote: > Gary McLennan: > > > A leading > >right wing economist Terry McCrann has argued that the layoffs were > >necessary and that anyway, like in USA, the sacked workers would get jobs in > >the service industries. He claims that unemployment in the former American > >steel towns is now 3-4%. He writes > > > >"The old industrial jobs that were destroyed have been replaced with better, > >more sustainable and more meaningful jobs in service industries. This was > >possible only because of the enormous flexibility of the American economy" > > > > Is he correct in this? What has happened over the American rust belt? A > >comment on this plus data would be greatly appreciated. > > > > > Louis P.: > > This seems like a question that Doug can supply the most meaningful answer > to, but I will say something based on impressions from the mass media. A > city like Pittsburgh, Pennsylvania is offered up as an example of one that > has made the transition from the rust belt--it was a major producer of > steel--to service industries. There is no question that Pittsburgh has seen > a steady increase in jobs in the financial services, etc. The problem is > that a 35 year old steelworker with 15 years experience in a foundry is not > likely to get a job programming financial applications, nor a job answering > area code 800 phone calls to tell people their current balance. Those jobs > will go to recent high-school graduates. I suspect that the tens of > thousands of steelworkers who lost their jobs in the 70s and 80s are working > at Walmart, Sears, etc. for $8 to $10 an hour. If Doug can't come up with > some statistics on this, I might take a trip over to the library and do some > digging myself since the question has a bearing on American politics as well > as Australian politics. This has to do with Clinton's claim that the > American economy is healthy. While the stock-market is booming, I sense that > there is much misery in the "rust belt" no matter the unemployment rate. > > > >
