BP Labor 2010

Volume 20, Number 3 Fall 2010/Winter 2011

Volume 20, Number 3 Fall 2010/Winter 2011

President, The University of MemphisDr. Shirley Raines

Dean, Fogelman College of Business & EconomicsDr. Rajiv Grover

Director, Sparks Bureau of Business and Economic ResearchDr. John E. Gnuschke

Assistant Director, Sparks Bureau of Business and Economic ResearchDr. Lee Grehan

Copy EditorShirley Stanphill

Editor, Layout, Design, and Graphics/Research Associate IIStephen Smith

Contributing EditorsDr. John E. GnuschkeDr. Jeff WallaceB. Lewis AlvaradoRyan Hanson

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Business Perspectives 1Fall 2010/Winter 2011

CONTENTS2

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The Labor Market & Economic Recoveryby John E. Gnuschke, PhD, Dr. Jeff Wallace, PhD, and Stephen Smith

Strengthening Tennessee’s Workforce in Tough Economic Times: How Has Tennessee Been Able to Maintain a Positive Business Climate in Spite of the Decline in the Economy?by James G. Neeley and Susan K. Cowden (with special thanks to Jeff Hentschel)

Will the “Great Hangover” Last More Than the Day After Graduation for This Year's College Graduates?by Ioana Sofi a Pacurar and Jay K. Walker

The Broken Psychological Contract: Job Insecurity and Copingby Courtney Keim and Amy Wilkinson

Green Jobs Don’t Grow on Treesby Juliann Waits, PhD, Jeff Wallace, PhD, and Stephen Smith

Career Counseling for Today’s Labor Forceby Katie Henderson and Lauren Dalton

National & Regional Economies

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John E. Gnuschke, PhD, Director,

Jeff Wallace, PhD, Research Associate Professor of Applied Economic Research

and

Stephen Smith, Research Associate II/Editor,

Sparks Bureau of Business and Economic Research,

The University of MemphisBusiness Perspectives2 Fall 2010/Winter 2011

Business Perspectives 3Fall 2010/Winter 2011 Business Perspectives 3Fall 2010/Winter 2011

IntroductionOn September 20, 2010, the National Bureau of Economic Research (NBER)

announced that the longest recession since World War II actually ended in June 2009 (“Business Cycle Dating Committee, National Bureau of Economic Research”). Unfortunately, those who lost their jobs and could not fi nd work could not relate to this “positive” news. Although much of the economy is showing signs of recovery, the labor market continues to struggle.


Business Perspectives4 Fall 2010/Winter 2011

Recessions and the Labor Market

Traditionally, recessions have been defi ned by a period of gross domestic product (GDP) decline (or shrinkage) of at least six months (two quarters). More recently, the defi nition of a recession has been expanded. According to the National Bureau of Economic Research, “A recession is a period of fall-ing economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales” (“Business Cycle Dating Committee, National Bureau of Eco-nomic Research” Sept. 20, 2010). While this expanded defi ni-tion includes fl uctuations in employment, employment is only one of the many criteria considered, and GDP is still the pri-mary driver.

To reconcile how the NBER can declare the latest recession to have ended but still have unemployment remaining so high, the NBER states, “A recession is a period between a peak and a trough, and an expansion is a period between a trough and a peak”(www.nber.org/cycles/recessions.html). In declaring that the end of the latest recession occurred back in June 2009, the NBER is only saying that the latest business cycle reached its bottom and economic activity is expanding from the trough (the bottom of the cycle). The NBER is not saying that the na-tion’s economy has fully recovered. In fact, it will take many more months (maybe even years) before the labor market fully

Sources: U.S. Bureau of Econmoic Analysis and U.S. Bureau of Labor Statistics.

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Chart 1. U.S. Real GDP ($Billions) and Employment (000), 2000: Q1–2010: Q3

recovers. So, while the latest recession may be over, unemploy-ment rates are remaining at or near 10.0 percent nationwide.

Employment is a lagging indicator. As shown in Chart 1, the relationship between GDP and employment is relatively close, but employment reduction and growth lag behind GDP. This scenario is particularly clear in the latest recession, where real GDP began its rebound in the third quarter of 2009, yet em-ployment continued falling through the fi rst quarter of 2010.

By comparison, the 2000–2001 recession was mild com-pared to the 2007: Q4–2009: Q2 recession. After the end of that period, it took over four years before employment recovered to prior peaks. Both GDP and employment fell substantially far-ther in this recession, and it may take longer to fully recover. So, while the latest economic recession offi cially ended in June 2009 and the recession in the labor market lasted until Febru-ary 2010, employment levels may not return to prior levels for years.

Cyclical Fluctuations and Structural Issues

Still, it must be understood that the labor market fl uctua-tions during and following a recession are primarily cyclical. Cyclical refers to short-term or reversible issues that usually re-solve themselves. When economic activity declines, businesses will slowly trim their labor force. When economic activity im-proves, businesses will slowly increase their labor force. This phase of a recession is seen as self-correcting. As Richard Eb-erling states, unemployment is a “necessary and healthy part of


an economic recovery process that follows the bursting of the bubbles of an economic boom” (“Unemployment Trends and Economic Recovery” 2008).

Brad DeLong offers the following insights into the work-ings of this cycle:

a. businesses will tend to “hoard labor” in recessions, keeping useful workers around and on the payroll even when there is temporarily nothing for them to do;

b. businesses will cut back hours when unemployment rises, reducing output more than proportionately be-cause total hours worked will fall by more than total bodies employed;

c. plant and equipment will run less effi ciently when hours are artifi cially shortened; and

d. some workers who lose their jobs won’t show up in the unemployment statistics, choosing instead to retire or drop out of the labor force. (“The Jobless Recovery Has Begun” 2010)

During an economic recovery, businesses are slow to rehire, wary of insuffi cient sales to cover growth in their work force.

By contrast, structural changes are not self-correcting. Structural is-sues include the permanent elimina-tion of jobs, thus forcing workers to move to new industries or sectors. In addition to the elimination of tra-ditional job opportunities, structural changes may also include outsourcing jobs to other companies either within or outside the U.S. to cut costs. Anoth-er example of structural change may include the utilization of contingent

workers (i.e., independent or private contractors and temporary workers) (Levine 2005).

Another outcome of structural change may be that job skills and labor market experiences do not match the requirements of new job opportunities. Long-term structural unemployment rates increase as the duration of unemployment rises. Reducing long-term structural un-employment rates is diffi cult and requires massive investments in education and training. Structural unemployment rates are immune to

an economic recovery and will not be reduced by the creation of new job opportunities.

Unemployment and Underemployment

The U.S. Bureau of Labor Statistics defi nes unemployment as the following:

Persons are classifi ed as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Persons who were not working and were waiting to be recalled to a job from which they had been temporarily laid off are also included as unemployed. Receiving benefi ts from the Unemploy-ment Insurance (UI) program has no bearing on whether a person is classifi ed as unemployed. (“Unemployment” 2010)

Thus, unemployment means that a person does not have a job, is actively looking for work, and is available for work.

Chart 2. Last Four Recessions: Employment Peak to Recovery

Chart 3. Duration of Last Four Recessions Until Recovery


Map 1. Persons Unemployed 15 Weeks or Longer As a Percentage of the Civilian Labor Force (U1), U.S., Fourth Quarter 2009 Through Third Quarter 2010 Averages

The defi nition for underemployment is more complex. The U.S. Bureau of Labor Statistics (BLS) has multiple variations of the defi nition of unem-ployment. Typically, the BLS classifi es underem-ployment as U-6, which includes the following: “total unemployed, plus all marginally attached workers, plus total employed part time for eco-nomic reasons, as a percent of the civilian labor force plus all marginally attached workers” (2010). In essence, one underemployed is an employee who is overqualifi ed for the position he or she holds, is earning less than was previously earning, is work-ing part time when he or she desires full-time em-ployment, or is a person who is not in the labor force (or part of the labor force reserve) who de-sires employment.

Underemployment also has an obvious nega-tive impact on the economy. According to Husana Haq, the underemployed typically earn much less than the fully employed, which costs the economy “hundreds of millions of dollars every month”

Chart 4. Alternative Measures of Labor Underutilization, U.S., Fourth Quarter 2009 Through Third Quarter 2010 Averages (%)


Map 2. Total Unemployed, Plus All Marginally Attached Workers, Plus Total Employed Part time for Economic Reasons As a Percentage of the Civilian Labor Force, Plus all Marginally Attached Workers (U-6), U.S., Fourth Quarter 2009 Through Third Quarter 2010 Averages

(“Unemployment Rate: 9.7 Percent. Underemployment: Far Higher” 2010).

What Can Be Expected?

Once the economy rebounds, as employment increases and unemployment rates decline, the future for the U.S. job market will be more certain. Even though the economy has shown signs of a recovery, unemployment rates continue to remain high and cannot be expected to fall until the recovery is well underway. A family’s economic wellbeing is measured by income (Acs 2008, 2). A lack of employment and income opportunities reduces a family’s ability to consume goods and services. Logically, if un-employment rates continue to be high and the duration of un-employment gets longer and longer, the negative impact of the recession and the risk of a double dip increases (Fox 2009). In-deed, during this recovery period, Americans “will save more, spend in closer proportion to their income and increase their borrowing more slowly, or decrease it outright in the coming years,” which will lead to “slow consumer spending and overall

Long-term structural unemployment

rates increase as the duration of

unemployment rises. Reducing long-

term structural unemployment rates

is diffi cult and requires massive

investments in education and training.

Structural unemployment rates are

immune to an economic recovery and

will not be reduced by the creation of

new job opportunities.


John E. Gnuschke, PhD

Dr. John E. Gnuschke is Director of the Bureau of Business and Economic Research and the Center for Manpower Stud-ies and Professor of Economics at the University of Memphis. The Bureau and the Center are the applied business, eco-nomic, and labor market research divisions of the Fogelman College of Business and Economics. The divisions support the research and publication efforts of faculty members and interact with other research organizations, government agencies, and the business community. The Bureau and the Center rank among the top applied research divisions in the nation with approximately $3.0 million in research contracts. Dr. Gnuschke also serves as the Director of the Applied Information Technology Center and is Co-Director of the Center for Real Estate Research.

Dr. Gnuschke received his PhD and MA degrees from the University of Missouri at Columbia and his BS from Utah State University. His areas of expertise include market assessments, survey research, impact studies, revenue and cost estimates, labor market studies, and competitor analyses. As a widely recognized leader in his profession, he serves on numerous local, state, and national committees and boards. He has served as president of the national Association for University Business and Economic Research (AUBER). He works closely with community leaders and organizations throughout the Mid-South. In addition to his academic and contract research activities, Dr. Gnuschke has over 25 years of experience as a private consultant to major business, legal, fi nancial, and government organizations.

References

Acs, Gregory. “Unemployment and Income in a Recession.” Urban Institute Recession and Recovery Series 1 (Decem-ber 2008): 1-2.

DeLong, Brad. 2009. “The Jobless Recovery Has Begun.” The Week.com July 20. n. pag. http://theweek.com/bullpen/ column/98770/The_jobless_recovery_has_begun (ac-cessed June 30, 2010).

deWolf, Mark, and Katherine Klemmer. “Job Openings, Hires, and Separations Fall During the Recession.” Monthly Labor Review (May 2010): 36–44.

Eberling, Richard M. 2008. “Unemployment Trends and Economic Recovery.” American Institute for Economic Research, December 19. http://69.94.27.64/research/briefs/898-unemployment-trends-and-economic- recovery (accessed May 20, 2010).

Emmons, Bill. “Economic Hangover: Recovery Is Likely to be Prolonged, Painful.” The Regional Economist, April 2010, 5–9.

Fox, Justin. 2009. “Why the Economic Recovery May Be Disap-pointing.” Time.com May 5. n. pag. http://www.time.com/time/business/article/0,8599,1895832,00.html (accessed May 20, 2010).

Groshen, Erica L., and Simon Potter. “Has Structural Change Contributed to a Jobless Recovery?” Current Issues in Eco-nomics and Finance 9.8 (2003): 1–7.

economic growth unless other sources of demand materialize” (Emmons 2010, 9).

College graduates and young adults entering the job mar-ket are facing more diffi culties now than in the past. As these individuals enter the job market, they may be forced to accept jobs at lower wages, which impacts future earnings for up to a decade (Nouguchi 2010). Since jobs are scarce, salaries are driven down (Murray 2009). In addition, Nouguchi notes that since these same young adults settle for less, they will be prone to “hoard” jobs, meaning they will remain in positions poorly matched for their skills and abilities (“Finding a Job is Hard for Even the Most Educated” 2010). In other words, the newly employed may settle for underemployment rather than face the prospect of unemployment in a weak labor market.

Conclusion

Employment, unemployment, and underemployment are among the most important and yet most diffi cult to understand concepts in economics. As Bruce Nussbaum rightly notes, we have a faith-based economy; we “believe deeply in education, innovation, risk-taking, and plain hard work as the way to a better life” (“Where Are the Jobs?” 2004). The economy is inter-connected with the true backbone of consumerism: the Ameri-can worker. Is the economy improving? Economic indicators—including employment—are clearly showing signs of recovery. The United States was built on the hard work and fl exibility of the labor force. The future of the economy will be determined by the willingness of workers to adapt to new conditions in the labor market. ●


Jeff Wallace, PhD

Dr. Jeff Wallace is an Economist and Research Associate Professor of Applied Economic Research at the Sparks Bureau of Business and Economic Research at the University of Memphis. He has been in this position since 1994.

Dr. Wallace specializes in economic impact studies, having most recently completed an economic impact study of the University of Tennessee’s College of Pharmacy (2006–2007), a study of the economic impact of Baptist Memorial Health Care Corporation (2005), and the economic impact of Memphis International Airport (2005).

Dr. Wallace also has substantial experience in tax revenue forecasting, government fi scal analysis, survey research, labor market analysis, product-market pricing analysis, state labor training program evaluation, and other state and local government program evaluations.

Stephen Smith

Stephen Smith serves as both Research Associate II and Editor at the Sparks Bureau of Business and Economic Research at the University of Memphis. He has been with the Bureau since 1994. Mr. Smith earned a MA in English from the Uni-versity of Memphis. Currently, he is completing his doctoral studies in English with a major in Professional Writing. His study and professional backgrounds include classical rhetoric, rhetoric of science, visual rhetoric, technical communi-cation, and layout and design.

Haq, Husana. 2010. “Unemployment Rate: 9.7 Percent. Un-deremployment: Far Higher.” Christian Science Monitor March 5. n. pag. http://www.csmonitor.com/Business/ 2010/0305/Unemployment-rate-9.7-percent.-Underem-ployment-far-higher (accessed June 11, 2010).

Jacobe, Dennis. 2010. “Focus on Education May Reduce Underemployment: Right Now, Better-Educated Ameri-cans Are More Likely to Get Full-Time Work.” Gallup.com, March 26. n. pag. http://www.gallup.com/poll/126995/ focus-education-may-reduce-underemployment.aspx (accessed June 7, 2010).

Kiviat, Barbara. 2010 “The Workforce: Where Will the New Jobs Come From?” Time.com March 19. n. pag. http://www.time.com/time/nation/article/0,8599,1973135,00.html (accessed May 20, 2010).

Levine, Linda. 2005. “Unemployment Through Layoffs: What Are the Underlying Reasons?” Cornell University ILR School April 25 n. pag.

“Memphians Brace for End of Jobless Benefi ts.” WREG.com December 1, 2010. http://www.wreg.com/wreg-memphis-jobless-benefi ts,0,7397689.story (accessed December 1, 2010).

Murray, Sara. 2009. “The Curse of the Class of 2009.” Wall Street Journal May 9. n. pag. http://online.wsj.com/article/SB124181970915002009.html (accessed July 26, 2010).

Nardelli, Bob. “Job Creation: Enlist the Experts.” Bloomberg Businessweek, April 5, 2010, 88.

National Bureau of Economic Research. 2010. “Business Cycle Dating Committee, National Bureau of Economic Research.” September 20. n. pag. http://www.nber.org/ cycles/sept2010.html (accessed October 10, 2010).

Nouguchi, Yuki. 2010. “Finding a Job is Hard for Even the Most Educated.” NPR.org March 29. n. pag. http://www.npr.org/templates/story/story.php?storyId=125223926 (accessed May 25, 2010).

Nussbaum, Bruce. 2004. “Where Are the Jobs?” Bloomberg Businessweek, March 22. n. pag. http://www.businessweek.com/magazine/content/04_12/b3875601.htm (accessed July 16, 2010).

U.S. Bureau of Labor Statistics. 2010. “Alternative Measures of Labor Underutilization for States, Fourth Quarter of 2009 through Third Quarter of 2010 Averages.” Local Area Unemployment Statistics October 29 n. pag. http://www.bls.gov/lau/stalt.htm (accessed October 29, 2010).

---. 2010. “Unemployment.” Labor Force Statistics from the Current Population Survey December 17. n. pag. http://www.bls.gov/cps/lfcharacteristics.htm#unemp (accessed December 17, 2010).


(Special thanks to Jeff Hentschel, Communications Director, Tennessee Department of Workforce Development)

by

James G. Neeley, Commissioner, and

Susan K. Cowden, Administrator, Division of Workforce Development,

Tennessee Department of Workforce Development



H o w H a s T e n n e s s e e B e e n A b l e t o M a i n t a i nH o w H a s T e n n e s s e e B e e n A b l e t o M a i n t a i na P o s i t i v e B u s i n e s s C l i m a t e i n S p i t e o fa P o s i t i v e B u s i n e s s C l i m a t e i n S p i t e o f

t h e D e c l i n e i n t h e E c o n o m y ?t h e D e c l i n e i n t h e E c o n o m y ?Business Perspectives 11Fall 2010/Winter 2011


T he Division of Workforce Development within the Ten-nessee Department of Labor and Workforce Develop-ment is focused on retraining individuals who have

lost jobs so that they may be poised for quick re-entry into the workforce upon full economic recovery. The Division recently received high honors from the United States Department of La-bor and was ranked fourth in the nation in attainment of estab-lished performance measures such as job entry, job retention, and average wages for those exiting the program. For this effort, Tennessee will receive a $1 million incentive award to advance the governor’s vision for workforce development throughout the state.

Through state and local partnerships, Tennessee Career Centers provide training for individuals and businesses that improve the quality of the workforce and ultimately create new jobs. Due to the state of the current economy, this description has expanded, and programs are now charged with supporting economic recovery. This is accomplished by providing those losing jobs with the skills they need to get the jobs of the future.

An annual report on usage of the Tennessee Career Centers clearly articulates the downturn in the economy. In 2007, the total number of job-seeker visits to all of the Career Centers in the state just exceeded 400,000. In 2009, this total number jumped to a staggering 1,018,319. In turn, in 2007, more than 7,500 Tennessee employers placed job orders to fi ll vacancies in their companies, while in 2009, this number dropped to fewer than 4,500 employers. In spite of these realities, hundreds of thousands of Tennesseans are receiving much needed services that will continue to put the state on the road to economic re-covery.

Since March 2009, Tennessee’s unemployment rate has fl uctuated between 10 and 11 percent, refl ecting almost double digits from prior years and challenging the state’s approach to delivering workforce training services. According to recent em-ployment forecasts, it appears that these new statistics may be the norm for several years to come. In this economy, how do the state’s workforce training programs respond in a way that continues to create a positive business climate?

The Tennessee Department of Labor and Workforce Devel-opment operates programs throughout the 13 Local Workforce Investment Areas (LWIA) that provide summer job training programs for disadvantaged youth, target unemployed individ-uals in extremely high unemployment counties, and upgrade the skills of the transitioning workforce in a way that prepares them for the jobs of the future.

Summer Jobs for Disadvantaged Youth

As part of the American Recovery and Reinvestment Act of 2009, Tennessee was provided additional funding to increase the numbers of dislocated workers entering training and to provide summer jobs to disadvantaged youth. From June to August 2009, more than 13,000 economically-disadvantaged youth had the opportunity to earn and learn as part of the Summer Youth Employment Program. The double-digit unem-ployment fi gures for the total population pale in comparison to the unemployment fi gures for youth aged 14 to 24, a group that is facing more than 40 percent unemployment in this diffi cult economy.

For the fi rst time since 1999, summer jobs were made available, and for the fi rst time ever, jobs were allowed in the private sector. Participating employers included the Memphis Commercial Appeal, First Bank of Tennessee, and Hospital Cor-poration of America. “The Commercial Appeal Summer Youth Employment Program gives students exposure to a profes-sional work environment, positive role models, and the daily operations of a historic pillar of the Memphis corporate com-munity that would be otherwise unattainable for many of these students,” said Eunice Johnson, Human Resources Director, Memphis Commercial Appeal.

Economic Recovery inExtremely High Unemployment Counties

In addition to the tremendous needs of Tennessee youth, it became apparent that many Tennessee counties would experi-ence unemployment fi gures in excess of 20 percent. When we refl ect on what is now being referred to as the “Great Recession,” one Tennessee county actually entered into a “Great Depres-sion.” In Perry County (Linden, Tennessee), the unemployment rate hit a staggering 27 percent last summer. The state became aware that a new approach to delivering services had to be im-plemented in order to prop up the economy and avoid further economic disaster for this community. In partnership with the Tennessee Department of Human Services, the Workforce De-velopment Division created a program to provide government-subsidized employment in the private sector to more than 500 unemployed adults and youth. Through September 2010, an Emergency Grant intended to prevent unemployed individuals from falling further below the poverty level was in place to en-sure that these Tennessee citizens would have a paycheck and that many local businesses would continue to operate. Since the program started last year, it has been expanded to include four other Tennessee counties—Lauderdale, Hancock, Smith, and Marshall—serving more than 1,000 unemployed individuals.


Map 1. Tennessee Local Workforce Investment Areas

Retraining Dislocated Workers

In those counties with unemployment rates of 10 to 15 per-cent, Career Center staff explain training services as individu-als apply for Unemployment Insurance (UI). These workers are usually transitioning from one job to another and if they have transferable skills, the Center staff immediately attempts to as-sist with re-employment. Many individuals need some type of retraining, and they are encouraged to pursue careers in indus-tries with worker shortages, such as information technology, health care, clean energy, and the skilled trades. The one thing these industries have in common is that they all have highly skilled jobs.

Workforce Development programs have increased training opportunities by 30 percent with Recovery Act funds so that workers are ready when the economy makes a full recovery. As we have moved from the industrial age to the information age, the skills required to obtain a job have drastically shifted. Over the past 50 years, the number of jobs requiring some type of degree has remained constant at 20 percent. The major change has been in the number of “unskilled” jobs. In the 1950s, these jobs represented more than 60 percent of the total, but now they represent less than 12 percent. The number of jobs requir-ing some type of skilled training beyond high school has grown from less than 20 percent to more than 60 percent.

Bringing New Jobs to the State

Even in this economy, the governor and economic develop-ment offi cials have made great strides in recruiting new jobs to the state. Several examples include the newly-announced $1 billion investment by Hemlock Semiconductor in Clarksville, Wacker Chemie in Cleveland, and the new Volkswagen plant in Chattanooga, bringing in over 4,000 new jobs. With the advent

of these companies and others, transitioning workers must be provided with the technical training needed for these jobs of the future.

Governor Bredesen formed the Tennessee Jobs Cabinet un-der Executive Order Six soon after taking offi ce in 2003. Now, seven years later, the state is realizing the tremendous outcome of this initiative, having for the fi fth year in a row just been ranked in the top fi ve states in the nation as best business loca-tion according to Site Selection magazine, one of the nation’s premier economic development publications. The editor, Mark Arend, says of Governor Bredesen: “His understanding of the business world and government’s role therein is readily appar-ent.” (To view the complete rankings, visit www.siteselection.com.)

While jobs in the manufacturing sector have shown a de-cline in Tennessee over the past decade, the state has contin-ued to focus on preventing layoffs when possible and attracting businesses to the state that will allow for the transition of the workforce. How has Tennessee been able to maintain such a positive business climate as evidenced by the recent rankings?

One of the founding principles of the Jobs Cabinet was to bring together all of the key leaders throughout state gov-ernment to create a desirable economic development climate and cut through the red tape that often becomes a barrier to recruitment and retention.

One of the departments that has been instrumental in as-sisting the Department of Economic Development, the lead agency in the Jobs Cabinet, is the Tennessee Department of La-bor and Workforce Development. Through the development of the Fast Track initiative, companies are able to inquire about relocation and receive a multi-departmental proposal within a few days. This initiative gives Tennessee an edge when compet-ing with other states.


The following describes some of the innovative programs offered by the state that give Tennessee a competitive edge in recruiting new businesses, retaining existing industry, and en-couraging growth within local economies:

On-the-Job Training

As mentioned previously, the Department of Labor and Workforce Development has partnered with Eco-nomic and Community Development on more than 150 proposals through the governor’s Fast Track initiative. These proposals have resulted in more than $12 million in on-the-job training commitments for the recruitment of new industry or the expansion of existing Tennessee businesses. The program combines 12 state departments and entities as well as TVA, the Department of Revenue, and local government to provide responses to interested employers within 72 hours of contact by the employer.

“This program provides reimbursement to em-ployers who provide on-the-job training to newly hired employees who do not have all of the skills necessary to perform their new jobs,” said Sterling Van Der Spuy, Direc-tor of Employer Services for the department. “After a train-ing plan is developed and completed and the individual is moved from subsidized to unsubsidized employment, the employer may receive reimbursement of up to 50 percent of the wages paid during the training period.” Employ-ers should note that it is prohibited to provide on-the-job training in situations where workers are being displaced in another region or part of the country.

Incumbent Worker Training Program

This program was designed to assist existing busi-nesses with the training costs necessary to remain com-petitive. “In the seven years since its inception, the Depart-

ment of Labor and Workforce Development has provided grant funding of more than $13 million that has provided training to more than 46,000 existing employees,” said Van Der Spuy. The program’s goal is to strengthen busi-nesses through employee skill upgrades and help prevent companies from having to relocate to other states or close completely. The program has resulted in the prevention of more than 220 company relocations while saving more than 14,000 existing jobs within the state.

The program is administered through the state’s 13 Local Workforce Investment Areas (LWIAs), and the cur-rent program year is from July 1 through June 30 of the following year. For additional information, interested em-ployers should contact their LWIA or visit the department’s website at www.state.tn.us/labor-wfd.

Investment in Rural Economic Development

One of the state’s priorities for the next several years is to expand economic opportunities to the rural areas that have seen a decline in manufacturing jobs. According to Economic and Community Development, the state has seen the creation of more than 103,000 jobs since 2003. With the attraction of the Nissan North American Headquarters to Cool Springs, includ-ing the development of their electric car in Smryna, the eco-nomic forecast for Tennessee is strong, but we will need to fo-cus on rural economic development. As evidenced by the map overview of the Incumbent Worker Training grants awarded across the state, the Department of Labor and Workforce De-velopment is playing a substantial role in advancing the attain-ment of this goal. ●

Chart 2. Incumbent Worker Training, Funds Awarded by Year, 2003–2009

Chart 1. Incumbent Worker Training, Trainees by Year, 2003–2009


Susan Cowden, Administrator, Division of Workforce Development

Susan Cowden serves as Administrator for the Division of Workforce Development, having previously served as Director of Em-ployment and Training for the department. She has 20 years of leadership experience, operating workforce development and wel-fare reform programs that serve job seekers and employers. She was Director of Family Assistance for the Tennessee Department of Human Services with responsibility for Medicaid, TennCare, Food Stamps, Families First, and Electronic Benefi t Transfer. She has local experience, having served as Program Director for the Nashville Career Advancement Center in Nashville and Regional Manager for local workforce area four in East Tennessee.

Susan attended Vanderbilt University and holds a bachelor’s degree from the University of Tennessee, Knoxville. She is a graduate of the Tennessee Government Executive Institute, Class of 2002, was elected to the Steering Committee, and served as Vice Chair in 2003.

James G. Neeley, Commissioner, Tennessee Department of Labor & Workforce Development

Governor Phil Bredesen appointed James G. Neeley Commissioner for the Tennessee Department of Labor and Workforce Devel-opment when he took offi ce in 2003. Commissioner Neeley has extensive knowledge of state regulations in Workers’ Compensa-tion, Unemployment Insurance, Safety and Workforce Development.

Neeley is also a key player in the Governor’s Jobs Cabinet. He traveled across the state with Governor Bredesen for a series ofroundtable meetings with local business, government and workers to develop ways to bring new business to Tennessee.

In 2004, Neeley won the prestigious Eagle Award from the National Association of State Workforce Agencies. The Award honors individuals who soar to new heights in their efforts to serve employers and workers in the United States.

In 2005, Neeley was honored with another prestigious award nominated by the Tennessee Department of Education. He received the Distinguished Service Individual Award from the National Association of State Directors of Career Technical Education Con-sortium. Neeley received the award for his decades of service to improve opportunities for all Tennesseans including his service on the executive committee for Education Edge.

In 2006, Neeley was named Carroll Countian of the Year by the Carroll County Chamber of Commerce, and in 2007, he was hon-ored as the Fred Harris Professional of the Year by the Tennessee Industrial Development Council. Throughout his career, Neeleyhas served on various state, federal, local and regional boards and commissions.

LWIAIncumbent Worker

Grants Awarded LWIAIncumbent Worker



Grants Awarded

1 45 5 47 8 77 11 70

2 38 6 27 9 38 12 29

3 24 7 30 10 67 13 26

4 100

Map 2. Tennessee Local Workforce Investment Areas, 2003–2009


Will the “Great Hangover” Last More

Than the Day After Graduation for

This Year's College Graduates? byby

Ioana Sofi a Pacurar and Jay K. Walker,

Ioana Sofi a Pacurar and Jay K. Walker,

Sparks Bureau of Business and Economic Research

Sparks Bureau of Business and Economic Research

The University of Memphis



TT he recent recession has been referred to as the “Great Hangover” after the roaring times and subsequent col-lapse of the housing bubble only a few years ago. For

recent graduates, the impact could linger on well past when the recession is over (if some recent economic research is to be believed). Graduating into the labor market during a reces-sion can make obtaining a job more diffi cult initially out of college, or it can result in graduates landing a position at a pay rate below what might be commanded in a regular hiring year. What is less evident is to what extent the economic context of the initial career placement of newly minted graduates matters in determining their long-term success and earnings potential.

Lisa Kahn, a labor economist at Yale University, suggest-ed in a 2010 Labour Economics article that graduating from college in a bad economy has persistent negative wage effects lasting far beyond when initially hired. Her results show nega-tive wage impacts could persist well into the second decade of one’s career. Using data from the National Longitudinal Sur-

vey of Youth between 1979 and 1989, Kahn fi nds that students graduating in worse national and state economic conditions begin in lower level occupations, have slightly higher tenure in those occupations, and possess more years of schooling.

A number of theories can potentially explain why the eco-nomic environment at the time of graduation has long-term effects on the income and job quality an individual could at-tain later in his career. One possibility is that in a recession, low levels of fi rm-specifi c human capital might cause work-ers to accumulate less job knowledge and training or suffer from depreciation of skills, which would translate into lower wages. Models by Gibbons and Waldman (2006) and Lazear (2003) suggest that even in the absence of fi rm-specifi c hu-


man capital, initial conditions can be important for long-term labor market outcomes because of the impact on task-, fi rm-, or sector-specifi c skill development. Moreover, individual tastes and attitudes toward performance (work ethics, drive to succeed, etc.) may evolve based upon their experiences and work environment (Rayo and Becker 2005). In the Gibbons and Waldman (2006) model, for example, employees develop "task specifi c human capital"; those hired under favorable economic conditions are initially given higher value tasks and thus devel-op more valuable human capital that persists throughout their careers. Similar persistent negative effects are observed when the job market takes initial job placement as a signal of ability and fails to compensate for the "bad luck" associated with mar-ket conditions. Models where search is costly either for fi rms or for employees lead to frictions where initial jobs are likely to affect long-term opportunities. Models where incumbent fi rms have useful private information (Akerlof 1970; Waldman 1984) concerning an employee’s productivity or where there are lim-its to long-term commitment (Tervio 2009), possibly due to high unemployment, have similar negative implications.

Analyzing labor market outcomes as a function of econom-ic conditions in the year a student graduates is not straight-forward. Students may take into account national and local unemployment rates and economic conditions when choosing time and place of college graduation, which may confound the relationship. Potential tenure or work experience might also be endogenous to (determined at the same time as) current labor market conditions. After controlling for the endogeneity issues by taking into account year of birth and local economic con-ditions, Kahn (2010) fi nds that in response to a one percent-age point increase in the national rate of unemployment, the post graduation wage rate will drop by 5.9 percent (Chart 1). Although this impact does decline with time, at 15 years after graduation for each percentage point increase in the national unemployment rate at graduation, individuals should still, on average, expect 2.6 percent lower wages. This negative wage impact at 15 years post-graduation is statistically signifi cant only at the 10.0 percent level, but the reported wage impact at 10 years post-graduation of -3.8 percent per percentage point increase in the unemployment rate at graduation is strongly signifi cant at the 1.0 percent level.

Oreopoulos, van Wachter, and Heisz (2008) cover many of the same topics Kahn discussed. Oreopoulos et al. are of inter-est in that they employ a Canadian data set covering the pe-riod from 1982 to 1999 and fi nd similar results as Kahn (2010). Oreopoulos et al. fi nd the same initial negative effects over time of graduating in a recession and further claim that the nega-tive effect of graduating in the midst of a typical recession may differ according to the decile of the net present value of a stu-

dent's expected income over the fi rst 10 years of his or her ca-reer (Chart 2). Notably, individuals who have lower expected earnings when graduating from college will be more negatively affected in terms of decreased earnings potential from gradu-ating in periods with higher unemployment. Since prior earn-ings can translate into future earnings potential, individuals may be relegated throughout their careers to lower earnings if they graduate into occupations with lower expected earnings. These lower expected earnings arguably raise the stakes of an individual student's choice of college major according to the economic climate at graduation.

Oreopoulos et al.'s (2008) baseline model estimates the impact on income of graduating in a recession for graduates according to years of experience past college, which allows for comparison with Kahn's fi ndings. The initial negative impact of an additional one percentage point increase in unemploy-ment for someone just graduating college was a decrease of 2.1 percent in wages. The negative impact of a higher unemploy-ment rate lessened, although remained signifi cant in year fi ve post-graduation at a 0.6 percent decline per additional percent-age point of unemployment upon graduation from college. The effect of economic climate at graduation from college becomes statistically insignifi cant at six years or more experience be-yond graduation.

The studies that have looked at the impact of starting a career in a bad economy disagree when it comes to the magni-tude and duration of the estimated negative wage effects, pos-sibly because they focus on correcting for the endogeneity of graduation time and location. Mansour (2009) points out that such analyses could suffer from bias via employers’ ability to

Chart 1. Percentage Wage Impact from an Additional Percentage of Unemployment at Time of Graduation


positively select candidates. During periods of high unemploy-ment, the number of candidates in the labor market is higher than the number of available jobs. Consequently, high ability workers might apply for jobs for which they are overqualifi ed or would not otherwise apply (Okun 1973). Sum, McLaughlin, Palma, Motroni, and Khatiwada (2008) estimate that young college graduates working in jobs that do not require a college degree will, on average, earn 30.0 to 35.0 percent less per year than their counterparts employed in jobs that require a col-lege degree. When there is excess labor supply, fi rms observe the productive abilities of young candidates (as signaled by their majors, internships, etc.) and hire the most productive workers available. The result is a misallocation of high abil-ity workers to lower quality jobs, which could explain why the mean productive ability of newly hired workers in a recession is higher than among workers hired during better economic conditions (McLaughlin and Bils 2001). Not controlling for this effect might underestimate the true impact of recessions on career outcomes and severely diminish its persistence over time (Mansour 2009). After including Armed Forces Qualifi ca-tion Test scores as measures of ability in his regressions using NLSY79 data, Mansour (2009) shows that a 1.0 percent increase in the unemployment rate at graduation reduces wages by 5.0 percent, and this effect does not converge to zero after 12 to 15 years in the labor market.

What is immediately certain is that the class of 2010 will be entering a labor market with the highest unemployment in at least a quarter of a century. Data from the Bureau of Labor

Statistics indicate that the unemployment rates for both col-lege graduates and non-graduates younger than 25 are nearly double their pre-recession levels. Put differently, since the start of the recession, the portion of the labor force aged 16 to 24 has contracted by 1.1 million workers, while an additional 1.2 mil-lion 16- to 24-year-olds have become disconnected from both formal schooling and work. It follows that the labor force con-taining graduates has expanded by 8.0 to 10.0 percent, while the number of jobs has decreased markedly due to the eco-nomic climate.

For those who do graduate, the prospects are even more in question.1 College graduates make signifi cant investments in their education and, therefore, exhibit strong labor force attach-ment rates. Their labor force participation (measured as the share of the population that is either employed or actively seek-ing employment) averages 92.6 percent over the last business cycle (between 2000 and 2007). However, they face particularly high unemployment: the 12-month unemployment rate jumps from 5.4 percent in 2007 to an average of 9.0 percent between April 2009 and March 2010.

Although the current scenario may appear bleak on the surface, one should not be completely averse to entering the job market at this stage. While there could be long-run negative ef-fects of graduating in a recession, individual students can cope with less optimistic labor markets in a variety of ways and a poor economy is no guarantee of an individual graduate's poor labor market results. Factoring local and national unemploy-ment rates into an individual's decision to graduate or being open to moving geographically to a location that is less affected by the recession could negate some negative labor market ef-fects. Oreopoulos et al. (2008) document that the unemploy-ment rate at job entry by diminishing the worker's starting wage signifi cantly increases the probability of job separation. A more recent paper by Bachmann, Bauer, and David (2010) focuses entirely on how increased job mobility is able to partly reverse earnings losses experienced due to economic down-turns. The analysis suggests that the labor market entrants earning less than the average starting wage are more likely to change jobs, directly or indirectly. In turn, the job transitions tend to reduce the effects of entry conditions, implying that job

1A complimentary study (Stevens 2008) investigates how the macro-economic environment at entry into the labor market affects low- and medium-skilled workers’ wages over the lifecycle. The author concludes that the labor market outcomes of less skilled workers are not very vulner-able to the economic conditions at the start of the career. She uses detailed German employment data including males born between 1965–1977 who fi nish general and intermediate secondary school and shows that entering the labor market in a recession (with 9.0 percent versus 4.0 percent unem-ployment) implies 3.0–6.0 percent lower wages in the fi rst four years of one’s career, but these negative effects diminish over the next three years.

Chart 2. By Decile of Expected Earnings, Percent Change in Present Value of Earnings from Graduating in a

Recession During 10 Years After College Graduation


mobility operates as an adjustment mechanism that reduces the effect of the initial wage differences between workers.

Arguments persist for continuing one’s education and ven-turing into graduate school, for choosing majors with higher earnings potential, and for enhanced networking to improve expected earnings beyond graduation. Job scarcity lowers the opportunity cost of accumulating more schooling and induces individuals to postpone entry in the labor market. Kahn (2010) argues that the higher the national unemployment rate, the more likely students will remain in school and will continue their education. As shown in Chart 3, recent data from the Bu-reau of Labor Statistics show that education pays in higher earnings and lower unemployment rates. As education levels increase, a college graduate with a bachelor’s degree faced an average unemployment rate of 5.2 percent in 2009, while an individual holding less than a high school diploma faced a job market segment characterized by almost 15.0 percent unem-ployment. Moreover, a bachelor’s degree brought home, on av-erage, $1,025 per week in 2009, while less than a high school diploma only paid, on average, $454 in weekly earnings. Ac-cording to a recent Web article by Jacobe (2010), Chief Econo-mist at Gallup, those without a high school diploma face a 36.2 percent underemployment rate,2 are three times more likely to be underemployed than those having a college degree, and are four times more likely to be underemployed than those who have done some postgraduate work.

2Gallup classifi es Americans as underemployed if they are unemployed or working part time but wanting to work full time.

Chart 3. Weekly Median Earnings and Unemployment Rates by Education Level, 2009

With such stark differences in outcomes for individuals with differing education levels, some students might be choos-ing to stay in school rather than face a decreased present value of earnings. In a recent New York Times article, Rebecca Ruiz (2010) notes that the number of people registering to take the Law School Admissions Test hit an all-time high in 2009, up 20.0 percent from 2008. She also states that the number of Americans taking the Graduate Record Examination (GRE) rose 13.0 percent compared to the previous year with 670,000 test takers, which is a sharp reversal from 2008 when examina-tions were down 2.0 percent in spite of the recession already being underway.

As heads clear and hangovers recede for this year’s gradu-ating classes, will the “Great Hangover” continue to cause prob-lems for young graduates? Based on the previously discussed research, it appears that could be the case. Candidates should weigh their options carefully prior to choosing to enter the la-bor market, as this year’s economic climate could have lasting effects on their career and earnings. The evidence offered for larger decreased earnings for graduates with lower expected earnings potential places extra emphasis on choice of major and the type of hat that graduates choose to wear, in that higher earnings potential career paths seem to have higher expected earnings even in the face of a recession. Continued education in general seems to improve labor market outcomes and increase expected earnings, but individuals should be selective in their choices of academic degrees to obtain. Although an individual can succeed or fail in any economic climate, sometimes a little luck along with some GDP growth never hurts. ●


References

Akerlof, George A. "The Market for Lemons: Quality Uncer-tainty and the Market Mechanism." Quarterly Journal of Economics 84.3 (1970): 488–500.

Bachmann, Ronald, Thomas K. Bauer, and Peggy David. 2010. “Labor Market Entry Conditions, Wages and Job Mobility.” IZA Discussion Paper No. 4965. http://ftp.iza.org/dp4965.pdf.

Bivens, Josh, Kathryn A. Eduards, Alexander Herter-Fernan-dez, and Anna Turner. May 11, 2010. “The Class of 2010: Economic Prospects for Young Adults in the Recession.” Economic Policy Institute. Briefi ng Paper #265.

Gibbons, Robert, and Michael Waldman. "Enriching a Theory of Wage and Promotion Dynamics Inside Firms." Journal of Labor Economics 24.1 (2006): 59–107.

Jacobe, Dennis. March 26, 2010. "Focus on Education May Reduce Underemployment." http://www.gallup.com/poll/ 126995/focus-education-may-reduce-underemployment.aspx (accessed June 16, 2010).

Kahn, Lisa B. "The Long-Term Labor Market Consequences of Graduating from College in a Bad Economy." Labour Economics 17.2 (2010): 303-316.

Lazear, Edward P. May 2003. "Firm-Specifi c Human Capital: A Skill-Weights Approach." NBER Working Paper No. 9679. http://www.nber.com/papers/w9679.

McLaughlin, Kenneth J. and Mark Bils. “Interindustry Mobil-ity and the Cyclical Upgrading of Labor.” Journal of Labor Economics 19.1 (2001): 94–135.

Mansour, Hani. 2009. “Essays on Wage Dynamics of Young Workers.” PhD diss., University of California, Santa Bar-bara.

Okun, Arthur. “Upward Mobility in a High Pressure Economy.” Brookings Papers on Economic Activity 1 (1973): 207–252.

Oreopoulos, Philip, Till von Wachter, and Andrew Heisz. July 2008. "The Short- and Long-Term Career Effects of Grad-uating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates." IZA Discussion Paper No. 3578. http://ftp.iza.org/dp3578.pdf.

Oyer, Paul. "Initial Labor Market Conditions and Long-Term Outcomes for Economists." The Journal of Economic Per-spectives 20.3 (2006): 143–160.

Rayo, Luis, and Gary Becker. "Evolutionary Effi ciency and Happiness." Journal of Poltical Economy 115.2 (2007): 302–337.

Ruiz, Rebecca R. "Recession Spurs Interest in Graduate, Law Schools." New York Times, January 10, 2010.

Stevens, Katrien. 2008. “Adverse Economic Conditions at La-bor Market Entry: Permanent Scars or Rapid Catch-Up?”

Sum, Andrew, Joseph McLaughlin, Shelia Palma, Jacqui Mo-troni, and Ishwar Khatiwada. 2008. “Out With the Young and in With the Old: U.S. Labor Markets 2000–2008 and the Case for Immediate Jobs Creation Program for Teens and Young Adults.” Boston, MA: Center for Labor Market Studies.

Tervio, Marko "Superstars and Mediocrities: Market Failure in the Discovery of Talent." The Review of Economic Studies 76.2 (2009): 829–850.

Waldman, Michael. "Job Assignments, Signaling, and Effi cien-cy." RAND Journal of Economics 15.2 (1984): 255–267.

Jay K. Walker

Jay Walker is a PhD Candidate in Economics at the University of Memphis. His fi elds of interest include Applied Microeconomics, Public Economics, and Labor Economics. He is currently employed in the role of Research Associate at the Sparks Bureau of Busi-ness and Economic Research at the University of Memphis following two years serving as the Nathan Associates Research Fellow at their local offi ce.

Ioana Sofi a Pacurar

Ms. Pacurar received her BD in Economic Studies from the University of Babes-Bolyai, Cluj Napoca, Romania, and pursued ad-vanced studies in European trade and law. Sofi a obtained a MS in Statistics, Operations, and Management Science from the University of Tennessee, Knoxville. While a graduate student at the University of Tennessee, she taught and was involved in devel-oping teaching materials for intermediate to advanced classes in Lean Operations and developed simulations for the Executive Education Program. She obtained a Graduate Certifi cate in Applied Statistical Strategies in May 2004.

Ms. Pacurar is currently a PhD Candidate in Economics at the University of Memphis. Her interests lie in the area of applied mi-croeconomics with a focus in the economics of health and aging as well as econometric strategies of program evaluation.

Business Perspectives22 Fall 2010/Winter 2011Business Perspectives22 Fall 2010/Winter 2011


Introduction

Recently, many employees have lost their jobs or become fearful about losing the job they currently hold. Their fears may be well founded. During times of economic re-cession, the restructuring of organizations is prominent (Hartley et al. 1991, 3), which can result in severe organizational changes that include: the shifting of resources, movement of entire companies, elimination of certain jobs, and even company clo-sures (Hartley et al. 1991, 4; Sverke and Hellgren 2002, 25). These factors have a direct effect on the labor market.



Based upon the information in Chart 1, unemployment rates began to rise in 2008, coinciding with the beginning of the Great Recession that began in December 2007 (Isidore 2008). Chart 1 also shows a signifi cant jump in the unemployment rate of 3.5 percent in 2009, which indicates the severity and signifi cant duration of the current crises. In fact, the economy has not been so damaged since the Great Depression, and most economists see no end to this recession in the near future, in-dicating unemployment rates will most likely increase or stay elevated for some time (Isidore 2009). An elevated unemploy-ment rate almost certainly affects the labor market in that both employees and employers are likely to have negative experienc-es during tough economic times. These negative reactions can compromise the delicate balance that exists between an em-ployee’s hard work and efforts and an employer’s offerings of security and pay, which can be thought of as the “psychological contract” that exists between employees and employers in an organization. This article examines the psychological contract and the resulting consequences of the contract being broken (job insecurity) and offers suggestions for lowering workers’ job insecurity, especially during times of organizational change.

The Psychological ContractThe Psychological Contract

A psychological contract includes the expectations between the employee and employer above and beyond any formal con-tract, which incorporates the beliefs, values, and aspirations

of both the employee and the employer (Smithson and Lewis 2000, 681). The psychological contract is based on the belief that “hard work, security and reciprocity are linked” (Smithson and Lewis 2000, 681). From an employee’s perspective, the psy-chological contract guarantees job security, fair wages, benefi ts, and a sense of self-worth for doing a job well. The employer obtains and retains dedicated workers who perform their jobs well, are satisfi ed in their jobs, and are committed to the orga-nization. The subjective and time-sensitive psychological con-tract varies in changing economies or social contexts (Smith-son and Lewis 2000, 682). Therefore, an organization that has a strong and vibrant psychological contract with its employees may fi nd that the contract needs to be renegotiated as the econ-omy changes. Also, because of its subjectivity, employees may feel that the psychological contract with their employer is being threatened even when no real objective threat exists (e.g., orga-nizational restructuring, merger with another company, etc.).

Balance is an important part of the psychological contract. An employee must feel that his or her efforts are balanced by what the organization offers (De Witte et al. 2008, 88). If the employee senses an imbalance, the employee feels the psycho-

logical contract is broken, which can lead to negative effects (De Witte et al. 2008, 88). These neg-ative effects include but are not limited to an employee feeling insecure in his or her job, which is a topic that has received much attention in organizational re-search.

Job InsecurityJob Insecurity

Job insecurity (the overall apprehension about the con-tinuance of one’s job) is a sub-jective phenomenon. Two work-ers in the same job in the same organization can experience different levels of job insecurity. Job insecurity can lead to nega-tive effects on an employee’s health and well-being. Studies have shown job insecurity be-

ing related to psychosomatic complaints, depression, nervous-ness, fear, sadness, and guilt, which are all considered to be manifestations of poor mental health (van Vuuren et al. 1991). Also, job insecurity has been shown to be related to critical job-related variables, including job performance, job satisfaction,

Chart 1. U.S. Unemployment Rates, 2000-2010Chart 1. U.S. Unemployment Rates, 2000-2010


trust, job involvement, organizational commitment, and turn-over intentions (Cheng and Chan 2008; Sverke, Hellgren, and Näswall 2002; van Vuuren et al. 1991).

There have been numerous studies that have looked at the potential precursors to job insecurity. Research has shown that employees who work in temporary jobs, part-time jobs, or blue-collar positions, and who report a lack of communica-tion within their organization or who work in an organization experiencing organizational changes are more likely to report high levels of job insecurity. Other precursors to job insecu-rity include a worker experiencing role ambiguity and/or role confl ict. Role ambiguity occurs when an individual does not know his or her responsibilities and goals for the job (Sawyer 1992), while role confl ict occurs when workers experience de-mands from various sources, resulting in increased uncertain-ty (Ameen et al. 1995). Workers experiencing role ambiguity or role confl ict simply do not know what their obligations are to their employer. In these situations, workers may become anx-ious because they are unable to fulfi ll their psychological con-tract with their employer, resulting in feeling insecure about their job (Ashford, Lee, and Bobko 1989, 806).

Many of these factors are beyond the control of organiza-tions. An organization may not be able to turn every part-time worker into a full-time worker, make every temporary job per-manent, convert every blue-collar job into a white-collar posi-tion, or be invincible to economic crises. But, these limitations do not mean organizations are powerless in their ability to stave off job insecurity in workers. In fact, organizational re-search offers suggestions for ways in which job insecurity in employees can be lowered.

Lowering Job Insecurity in WorkersLowering Job Insecurity in Workers

Job insecurity may be lowered by strengthening the psy-chological contract with employees. The key to this strength-ening is communication. Kinnunen and Natti (1994, 316) note that providing adequate information to employees can reduce job insecurity. Petzall, Parker, and Stoeberl (2000, 601) suggest that an open dialogue between employers and employees can help stave off the negative effects a recession brings by building trust. It is important for employers to communicate the fair-ness of organizational decisions and processes because “it is not necessarily what really happens but rather what the work-ers perceive as happening that will dictate their reactions to management’s actions” (Petzall, Parker and Stoeberl 2000, 601, emphasis added). Since job insecurity is a subjective phenom-enon, it is important for workers to perceive that the balance between their efforts and the offerings of the organization are set fairly.

Also, both role ambiguity and role confl ict (which can both lead to increased levels of job insecurity) can be lessened by an increase in communication between employers and employees. Organizations should be sure that their workers have adequate amounts of information, including knowing what their jobs en-tail, understanding what is expected of them, and giving them the control they need to do their jobs, especially in ambiguous or transitional settings that occur all too often during times of economic uncertainty.

Increasing Organizational CommunicationIncreasing Organizational Communication

How can organizations increase communication with their employees, especially during times of economic uncertainty when changes inevitably occur? Lewis, Schmisseur, Stephens, and Weir (2006, 120) systematically analyzed bestselling books on communicating during organizational change and identi-fi ed strategies and tactics employers can use to help increase the fl ow of information.

Lewis et al. offer general strategies for communicating and dealing with major changes in an organization (2006, 120–122). The fi rst strategy involves emphasizing participa-tion and empowerment by making workers feel they are part of the change process. Here, leadership in an organization should encourage autonomy and ownership in their workforce. The authors also encourage the use of organizational culture as a tool to enable change, which can be achieved by creating an en-vironment open to new ideas, sharing those ideas freely, and ensuring the workforce is prepared for potential changes. Also, Lewis et al. suggest emphasizing the purpose and vision of the organization and how the resulting changes are part of that vi-sion, accomplished by having leadership consistently link orga-nizational decisions to the overall purpose of the organization. Linking decisions to the overall organizational mission allows employees to understand the organization’s direction and how they as employees help the organization meet its goals. Finally, the authors suggest emphasizing communication, which is vi-tal to successful problem solving and organizational change (Lewis et al. 2006, 122). Communication can take many forms, including face-to-face meetings, questionnaires or surveys, or focus groups. It is important that leadership keep open lines of communication with employees at all levels.

The authors also identify specifi c strategies to emphasize and increase communication in an organization (Lewis et al. 2006, 123–128). The fi rst strategy is to ask for input from work-ers, which includes listening to those who give their opinions, fostering an environment where workers feel open to voicing their opinions and concerns, and encouraging feedback from


various perspectives. A second way to increase communication is to use the informal networks of key employees to disseminate information and deal with any resistance encountered. The au-thors warn to not underestimate the importance of “front-line” supervisors, middle management, and other employees in get-ting information out to all employees. These leaders have infor-mal networks and relationships that can help ensure informa-tion gets to those who need it.

Also, Lewis et al. suggest that companies disseminate in-formation to all important members of their organization as soon as possible using as many methods as are plausible. The repetition of information can help ensure important informa-tion is seen as such. Information should be open and honest, even if it could be considered negative. The authors point out that “any information, even negative information, about change can help alleviate anxiety and reduce some negative reactions to change” (Lewis et al. 2006, 131). Organizations should also be sure to manage both the style and content of communication. The authors suggest the use of appropriate and clear language, specifi city, and getting straight to the point. Also, being moti-vational, e.g., rewarding employees who support any changes to the organization, can help all employees embrace the change

that is occurring and foster a positive organizational change culture.

The authors suggest formulating and following a commu-nication plan. These plans vary in their intensity and design depending upon which strategy an organization follows, but the main point is to be organized and intentional in communi-cating with employees. And lastly, organizations should create and communicate their vision, where appropriate. If commu-nicating with employees can best be described visually, then the organization should do so. But, be sure any visual commu-nication is unambiguous, relevant, and simple. For example, an organization can use newsletters, posters, and stories to help employees understand the vision of the organization in the midst of signifi cant change, as cited by Lewis et al. (2006, 128).

Conclusion

Clearly, job insecurity is abundant among the labor force today. As the economy struggles to recover and unemployment rates stay elevated, workers continue to feel insecure in the continuation of their employment. However, the amount of job insecurity an employee feels varies from person to person be-cause job insecurity is a subjective phenomenon, the result of an imbalance in the psychological contract between employee and employer. Communication is the key to restoring balance and lowering job insecurity among workers, especially in times of change and uncertainty. Effective organizational commu-nication should involve giving direction, promoting participa-tion, emphasizing purpose and vision, and ensuring fairness within the organization. This article offers specifi c steps or strategies in effectively disseminating information in an orga-nization, including asking for and using employee input, devel-oping and following a plan of action, using employee networks, and rewarding those employees who embrace and utilize the information given. Increasing organizational communication effectively through these techniques will strengthen the psy-chological contract between employee and employer and most likely decrease job insecurity within the company. Thus, even during rough economic times, organizations can continue to reassure and engage their workforce and in return have moti-vated, dedicated, and productive employees. ●

General Strategies for Communication and

Introduction of Change

General strategies for dealing with major change:• Emphasize participation and empowerment• Create a change culture• Emphasize purpose and vision• Emphasize communication

Specifi c ways to increase communication:• Ask for input • Use informal networks • Disseminate information • Manage the style and content of communication• Be motivational• Formulate and follow a communication plan• Create and communicate vision

Source: Laurie K. Lewis, Amy M. Schmisseur, Keri K. Ste-phens, and Kathleen E. Weir. “Advice on Commu-nicating During Organizational Change.” Journal of Business Communication 43.2 (2006): 113–137.


ReferencesReferences

Ameen, Elsie C., Cynthia Jackson, William R. Pasewark, and Jer-ry R. Strawser. “An Empirical Investigation of the Anteced-ents and Consequences of Job Insecurity on the Turnover Intentions of Academic Accountants.” Issues in Accounting Education 10. 1 (1995): 65–82.

Ashford, Susan J., Cynthia Lee, and Philip Bobko. 1989. “Con-tent, Causes and Consequences of Job Insecurity: A Theo-ry-based Measure and Substantive Test.” Academy of Man-agement Journal 22 (1989): 803–829.

Cheng, Grand H.L., and Darius K.-S. Chan. “Who Suffers More from Job Insecurity? A Meta-Analytic Review.” Applied Psy-chology: An International Review, 57.2 (2008): 272–303.

De Witte, Hans, Magnus Sverke, Joris Van Ruysseveldt, Sjo-erd Goslinga, Antonio Chirumbolo, Johnny Hellgren, and Katharina Näswall. “Job Insecurity, Union Support and In-tentions to Resign Membership: A Psychological Contract Perspective.” European Journal of Industrial Relations 14 (2008): 85–103.

Hartley, Jean, Dan Jacobson, Bert Klandermans, and Tinka van Vuuren. Job Insecurity: Coping with Jobs at Risk. Newbury Park, CA: Sage, 1991.

Isidore, Chris. 2008. “It’s Offi cial: Recession Since Dec. ’07.” CNNMoney.com, December 1. http://money.cnn.com/2008/ 12/01/news/economy/recession/index.htm (accessed Au-gust 5, 2010.)

Isidore, Chris. 2009. “The Great Recession.” CNNMoney.com. March 25. http://money.cnn.com/2009/03/25/news/econo-my/depression_comparisons/index.htm (accessed August 5, 2010).

King, James E. “White-Collar Reactions to Job Insecurity and the Role of the Psychological Contract: Implications for Human Resource Management.” Human Resource Manage-ment 39.1 (2000): 79–92.

Kinnunen, Ulla, and Jouko Nätti. “Job Insecurity in Finland: Antecedents and Consequences.” European Work and Or-ganizational Behavior 4 (1994): 297–321.

Lewis, Laurie K., Amy M. Schmisseur, Keri K. Stephens, and Kathleen E. Weir. “Advice on Communicating During Or-ganizational Change.” Journal of Business Communication 43.2 (2006): 113–137.

Petzall, Barbara J., Gerald E. Parker, and Philipp A. Stoeberl. “Another Side to Downsizing: Survivors’ Behavior and Self-affi rmation.” Journal of Business and Psychology 14 (2000): 593–603.

Sawyer, John E. 1992. “Goal and Process Clarity: Specifi cation of Multiple Constructs of Role Ambiguity and a Structural Equation Model of Their Antecedents and Consequences.” Journal of Applied Psychology 77(1992): 130–142.

Smithson, Janet, and Suzan Lewis. “Is Job Insecurity Chang-ing the Psychological Contract?” Personnel Review, 29.6 (2000): 680–682.

Sverke, Magnus, and Johnny Hellgren. “The Nature of Job In-security: Understanding Employment Uncertainty on the Brink of a New Millennium.” Applied Psychology: An Inter-national Review 51.1 (2002): 25.

Sverke, Magnus, Johnny Hellgren, and Katharina Näswall. “No Security: A Meta-Analysis and Review of Job Insecurity and Its Consequences.” Journal of Occupational Health Psy-chology 7.3 (2002): 242–264.

van Vuuren, Tinka, Bert Klandermans, Dan Jacobson, and Jean Hartley. 1991. “Employees’ Reactions to Job Insecurity.” In Job Insecurity: Coping with Jobs at Risk, ed. Jean Hartley, Dan Jacobson, Bert Klandermans, and Tinka van Vuuren. (Newbury Park, CA: Sage, 1991), 79–103.

Courtney KeimCourtney Keim

Mrs. Keim received her BA in Psychology from Christian Brothers University and her MS in Psychology from the University of Memphis. She is currently a doctoral student in Experimental Psychology at the University of Memphis, with a concentration in Industrial and Organizational Psychology. Her research interests include occupational health and safety, with an emphasis on stress in the workplace.

Amy WilkinsonAmy Wilkinson

Ms. Wilkinson received her bachelor’s degree in Accountancy from the University of Memphis in December 2009, graduating Magna Cum Laude. Currently, she is pursuing a master of science degree in Accountancy at the University of Memphis and will graduate in May 2011. She is a member of the local chapter of Beta Alpha Psi and is actively pursuing her CPA license.


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Southwest Tennessee Community College ,Southwest Tennessee Community College ,

Jeff Wallace , PhD, Jeff Wallace , PhD,

Economist and Research Associate Professor ofEconomist and Research Associate Professor of

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Stephen Smith,Stephen Smith,

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The University of MemphisThe University of MemphisBusiness Perspectives 29Fall 2010/Winter 2011


As the fragile U.S. economy attempts to recover from one of the harshest recessions in history, many are touting green jobs as the best source of new jobs. In fact, national recognition of the need for a green employment sector started

with the Energy Independence and Security Act, which passed in December 2007 and which incorporated the Green Jobs Act of 2007. The Green Jobs Act authorized “up to $125 million in funding to establish national and state job training programs, administered by the U.S. Department of Labor, to help address job shortages that are impairing growth in green industries, such as energy effi cient buildings and construction, renewable electric power, energy effi cient vehicles, and biofuels develop-ment” (“House Committee Passes Solis' Green Jobs Act” 2007). On January 8, 2010, President Barack Obama followed up on his campaign commitment to green jobs by announcing $2.3 billion in tax credits for the clean energy manufacturing sec-tor in the hopes of creating 17,000 jobs (Pepitone 2010). This funding comes from the $787 billion American Reinvestment and Recovery Act and has been awarded to 183 projects in 43 states (Pepitone 2010).

As positive sounding as these announcements are, the big-gest problem concerning green jobs seems to be that of defi ni-tion. What exactly is a green job? Defi nitions vary according to their individual sources, and most are merely circular defi ni-tions that recycle the term “green” more than offering any sub-stantial understanding. The Bureau of Labor Statistics defi nes green jobs as either:

A. Jobs in businesses that produce goods or provide services that benefi t the environment or conserve natural resources.

B. Jobs in which workers’ duties involve making their establishment’s production processes more envi-ronmentally friendly or use fewer natural resourc-es. (“Measuring Green Jobs”)

However, in its September 2008 report entitled Green Jobs: Towards Decent Work in a Sustainable, Low-Carbon World, the United Nations Environment Programme identifi ed a green economy and green jobs as follows:

In an ideal state of affairs, a green economy is one that does not generate pollution or waste and is hyper-effi cient in its use of energy, water, and materials. Using this green uto-pia as a yardstick would mean that currently there are few, if any, green jobs. A more realistic, pragmatic approach is process-oriented rather than fi xated on an ideal yet elusive end-state. In other words, green jobs are those that contrib-ute appreciably to maintaining or restoring environmental

quality and avoiding future damage to the Earth’s ecosys-tems.

We defi ne green jobs as positions in agriculture, man-ufacturing, construction, installation, and maintenance, as well as scientifi c and technical, administrative, and service-related activities that contribute substantially to preserving or restoring environmental quality. Specifi cally, but not exclusively, this includes jobs that help to protect and restore ecosystems and biodiversity; reduce energy, materials, and water consumption through high-effi ciency and avoidance strategies; decarbonize the economy; and minimize or altogether avoid generation of all forms of waste and pollution. But green jobs, as we argue below, also need to be good jobs that meet longstanding demands and goals of the labor movement, i.e., adequate wages, safe working conditions, and worker rights, including the right to organize labor unions. (35–36)

Ironically, the United Nations Environment Programme’s insistence on jobs that “reduce energy,” that implement “high-effi ciency and avoidance strategies,” as well as “decarbonize the economy” actually eliminates the United States’ call for corn-based ethanol as a cornerstone of its green plan. In fact, Al Gore admits that the current U.S. policy of corn-based ethanol use is “not a good policy” (Wynn 2010). As earlier critics pointed out, Gore agrees that the U.S. ethanol industry consumed “about 41 percent of the U.S. corn crop” in 2010, which equals about 15 percent of the global corn crop (Wynn 2010). Such consump-tion adversely impacts food prices. Additionally, the means to produce corn-based ethanol is far more costly than the actual end benefi ts achieved from using corn-based ethanol (Meigs 2009). Therefore, corn-based ethanol as currently envisioned and utilized cannot be included as a green endeavor.

Still, the U.S. government, lobbyists, and the public demand green jobs. One question about this demand is, “How high tech or advanced should these green jobs be?” According to Anthony K. "Van" Jones, former Special Advisor for Green Jobs, Enter-prise, and Innovation at the White House Council on Environ-mental Quality, not very. The most high-tech piece of equip-ment would be a simple caulk gun, which would allow former blue-collar employees who have been laid off to be rehired in these green jobs (Mufson 2008). Also, the Green Economy Task Force in Philadelphia, Pennsylvania, has set out to create 15,000 green jobs by 2015, with the target green employee holding anything from a GED to a PhD, but the true target is for those employees closer to the GED rank (Mastrull 2009).

Unfortunately, lower wage is often associated with lower education and lower skill, which is in contrast to the past de-mand for high-tech jobs. Further, such a simplistic solution is also the downfall of the idea of green jobs to some critics. In


fact, the so-called green jobs are simply a relabeling of blue-collar jobs (Schoeff 2009), an almost robbing-Peter-to-pay-Paul scenario. At best, the turn to green jobs is currently a grandiose idea with more style than substance. There must be a better defi nition for green jobs and a better developed plan for creating and implementing these jobs.

Additionally, “green” has a different meaning when dis-cussed in the context of the economy. Economically, green in-cludes costs, return on investment, and practicality. Therefore, we also argue that in the current job crisis, green jobs should have an additional meaning. Perhaps the only item that should be emphasized more in the United Nations Environment Pro-gramme’s defi nition that is usually associated with green issues is the sustainability factor. Now, we do not mean sustainability in regard to natural resources (such meaning is already estab-lished in the above defi nition). We suggest that sustainability should relate to both the market value and availability of such jobs. In other words, green jobs should sustain the workers within this specifi c sector, both in wages and in longevity.

Economic sustainability should also mean no taxpayer subsidies to support such employment. Regrettably, with the slow economic recovery in the U.S. and the proposed increase in federal taxes on petroleum to reduce government debt, the environment and long-term economic employment in sustain-able technologies look mixed. The “Cash for Caulkers” program mentioned above (which is the Home Star Energy Retrofi t Act of 2010, or H.R. 5019) would provide $6 billion in taxpayer-funded subsidies to pay for items such as rebates to consum-ers for improving the energy effi ciency of their homes via the installation of energy-effi cient windows and doors, better in-sulation, and caulking (Pelosi n.d.). While the program has all the right “green” catch phrases, in reality it would simply create government-funded jobs (such as the caulking jobs) that will

end once the program ends. Because these jobs are not eco-nomically sustainable without government subsidies, we would be forced to exclude them from our defi nition of green jobs.

From the standpoint of the local economy, federal stimulus dollars have trickled down to the University of Memphis, South-west Tennessee Community College, and other local colleges in the form of educational training in maintenance, engineering, and manufacturing of sustainable technologies such as solar panel and biofuel production. However, there are few jobs avail-able for graduates of these programs in the Mid-South. It is not a matter of whether students can be educated and trained for a career in green jobs, but rather a problem with the lack of green jobs once the students graduate. Capital or stimulus for small businesses with new sustainable products for design or manu-facturing is defi cient. Although President Obama would like to see educational institutions graduate students who can com-pete with other countries in science, technology, engineering, and math, there are few new green jobs and a lack of funding for these future sustainable technology innovators. Funding of-ten comes in the form of educational support for designs and not for employment.

One such example is the EPA's 2011 P3: People, Prosper-ity, and the Planet program. Through this hands-on design competition, student teams and their faculty advisors receive $15,000 grants to design scientifi c, technical, and policy solu-tions to sustainability challenges around the world. The EPA will choose the P3 award winners who may receive an addi-tional grant of up to $90,000 to further develop their designs, implement them in the fi eld, and take them to the marketplace. On the surface, such a program sounds like a great educational/design opportunity, but there are no guarantees of future fund-ing or employment for the students, and future funding and employment are the main purposes of higher education.

Economically, green includes costs, return on investment, and practicality. Therefore, we also argue that in the current job crisis, green jobs should have an additional meaning. Perhaps the only item that should be emphasized more in the United Nations Environment Programme’s defi nition that is usually associated with green issues is the sustainability factor. Now, we do not mean sustainability in regard to natural resources (such meaning is already established in the above defi nition). We suggest that sustainability should relate to both the market value and availability of such jobs. In other words, green jobs should sustain the workers within this specifi c sector, both in wages and in longevity.


In his proposal for passing the stimulus package, President Barack Obama states, "The jobs we create will be in businesses large and small across a wide range of industries. And they'll be the kind of jobs that don't just put people to work in the short term, but position our economy to lead the world in the long term" (Bacon 2009). Policymakers also predicted that many of the new jobs would be so-called green jobs, involving such tasks as retrofi tting buildings. This initiative refl ects a desire to use some of the stimulus money for innovative projects rather than for improving current infrastructure such as roads (Bacon 2009). However, the largest number of jobs added would be in construction and manufacturing, with more than 678,000 of the new positions being created by public works projects such as road building—a direct contradiction to the policymakers’ statement. And, most certainly, 17,000 new green jobs are but a small fraction of the overall four million jobs the government hoped to add to the economy by 2010 (Bacon 2009).

In December 2009, U.S. News and World Report released its 50 best careers list for 2010. This list included a few green jobs such as environmental science and environmental engineering technician. However, these technical careers have broad catego-ries, defi nitions, and implications for the employee. “In the sci-ence and technology fi eld, jobs range from network architect to meteorologist. This category includes the fastest-growing oc-cupation—with a 72 percent growth rate that far outstrips the 10 percent average across careers—of biomedical engineer” (Wolgemuth 2009). Perhaps we should be training more stu-dents in biomedical engineering than in sustainable technolo-gies.

Traditionally in a time of economic uncertainty, consum-ers return to what they know and continue to support the in-effi cient and highly unsustainable usage patterns of the past. Only a few months ago, the BP Oil disaster had our complete attention, and yet we drive our cars just as much as we did pre-viously because there appears to be no readily available and af-fordable alternative. Affordability is the key. If the cost is too

high, the public will reject any such innovation. Following the most basic economic principles, innovation can only come from public appeal and demand for new sustainable products. For example, renewable energy has a higher price tag than does fossil fuel. Without consumer demand and, more importantly, government intervention, green energy cannot begin to reach its job creation potential (Fletcher 2010).

So, what does this mean for green jobs? Until there is a bet-ter and more realistic defi nition and plan, the potential for true sustainable green jobs will be beyond our reach. ●

References

Bacon, Jr., Perry. “Obama: 4 Million New Jobs by 2010.” Washington Post, January 11, 2009. http://www.post-gazette.com/pg/09011/941119-176.stm#ixzz15e3pxhsg (accessed November 30, 2010).

Bureau of Labor Statistics. “Measuring Green Jobs.” Green Jobs, November 10, 2010. http://www.bls.gov/green/ (accessed December 10, 2010).

Environmental Protection Agency. “P3: People, Prosperity and the Planet Student Design Competition for Sustainability, 2010.” http://www.epa.gov/P3/ (accessed December 10, 2010).

Fletcher, Michael A. “Retrained for Green Jobs, But Still Waiting on Work.” Washington Post, November 22, 2010. http://www.washingtonpost.com/wp-dyn/content/article/ 2010/11/22/ AR2010112207583.html (accessed November 30, 2010).

“House Committee Passes Solis' Green Jobs Act: Bill Will Prepare Workers for ‘Green Collar Jobs’ to Fight Global Warming.” June 27, 2007. http://solis.house.gov/list/press/ca32_solis/wida6/greenjobscomm.shtml (accessed November 30, 2010).

Economic sustainability should also mean no taxpayer subsidies to support such employment. Regrettably, with the slow economic recovery in the U.S. and the proposed increase in federal taxes on petroleum to reduce government debt, the environment and long-term economic employment in sustainable technologies look mixed.


Juliann Waits, PhD

Dr. Juliann Waits is an Assistant Professor of Natural Sciences at Southwest Tennessee Community College (STCC)and is an active member of the STCC Green Committee. She is an Adjunct Professor with the Department of Biology in the Ecological Research Center at the University of Memphis. She has substantial experience in environmental and evolutionary ecology, population genetics, and biostatistics. She received her PhD in Environmental and Evolu-tionary Ecology from the University of Louisiana—Lafayette in 2002.

Jeff Wallace, PhD

Dr. Jeff Wallace is an Economist and Research Associate Professor of Applied Economic Research at the Sparks Bu-reau of Business and Economic Research at the University of Memphis. He has been in this position since 1994.

Dr. Wallace specializes in economic impact studies, having most recently completed an economic impact study of the University of Tennessee’s College of Pharmacy (2006–2007), a study of the economic impact of Baptist Memorial Health Care Corporation (2005), and the economic impact of Memphis International Airport (2005).

Dr. Wallace also has substantial experience in tax revenue forecasting, government fi scal analysis, survey research, labor market analysis, product-market pricing analysis, state labor training program evaluation, and other state and local government program evaluations.

Stephen Smith

Stephen Smith serves as both Research Associate II and Editor at the Sparks Bureau of Business and Economic Re-search at the University of Memphis. He has been with the Bureau since 1994. Mr. Smith earned a MA in English from the University of Memphis. Currently, he is completing his doctoral studies in English with a major in Professional Writing. His study and professional backgrounds include classical rhetoric, rhetoric of science, visual rhetoric, tech-nical communication, and layout and design.

Mastrull, Diane. “Creating a Lasting Green Economy; Leanne Krueger-Braneky's Goal Is to Create Jobs That Pay Well and Are Long-Term.” The Philadelphia Inquirer, May 3, 2009. http://www.istockanalyst.com/article/viewiStockNews/articleid/3215521 (accessed November 10, 2010.).

Meigs, James B. “The Ethanol Fallacy: Op-Ed.” Popular Mechanics, December 18, 2009. Accessed November 22, 2010. http://www.popularmechanics.com/cars/alternative-fuel/biofuels/4237539.

Mufson, Steven. “The Green Machine: Promoting the Future, Van Jones Has No Shortage of Energy.” Washington Post, December 9, 2008. http://www.washingtonpost.com/wp-dyn/content/article/2008/12/08/AR2008120803569_pf.html (accessed November 10, 2010).

Pelosi, Nancy. “Home Star Jobs.” Current Legislation, n.d. http://www.speaker.gov/newsroom/legislation?id=0372 (accessed December 10, 2009).

Pepitone, Julianne. “Obama Unveils $2.3 Billion for Clean Energy Jobs.” CNNMoney.com, January 8, 2010. http://

money.cnn.com/2010/01/08/news/economy/green_manufacturing_jobs/ index.htm (accessed November 10, 2010).

Schoeff, Jr., Mark. “Critics Take Less than Rosy View of Push for Green Jobs.” Workforce Management, May 18, 2009. http://www.allbusiness.com/government/government-bodies-offi ces/12347805-1.html (accessed November 10, 2010).

United Nations Environment Programme. Green Jobs: Towards Decent Work in a Sustainable, Low-Carbon World. Washington, DC: Worldwatch Institute, 2008.

Wolgemuth, Liz. “America's Best Careers 2010: Science and Technology.” U.S. News and World Report, December 28, 2009. http://money.usnews.com/money/careers/articles/ 2009/12/28/the-50-best-careers-of-2010.html (accessed November 18, 2010).

Wynn, Gerard. “U.S. Corn-Based Ethanol ‘Was Not a Good Policy’ – Gore.” Reuters, November 22, 2010. http://af.reuters.com/article/energyOilNews/ idAFLDE6AL0YT20101122?sp=true (accessed November 22, 2010).


II n the current fragile economy, jobs have been scarce for many with little relief in sight. Anxiety and depression have been symptoms of people who are pressured to fi nd

sources of income in order to survive in this suffering fi nan-cial market. Seeking help may seem impossible for the unem-ployed; however, the one job searching tool many people do not consider may be the very thing that pulls them out of this job-less hole: career counseling.

According to Vernon G. Zunker, author of Career Counsel-ing: A Holistic Approach, career counseling includes

. . . all counseling activities associated with career choice over a life span. Career counseling also includes counsel-

ing activities associated with work maladjustment, stress reduction, mental health concerns, and developmental programs that enhance work skills, interpersonal relation-ships, adaptability, fl exibility, and other developmental programs that lead to self-agency. (2006)

When all these values are considered within this therapeutic realm, the impact is intensely positive on society as a whole and especially the workforce.

Career counseling not only reaches people on a cognitive level where they can explore and process their emotions, but it also was created to address the main problem: to help people fi nd employment. This type of counseling has been aiding peo-



ple since the early 1900s and has continued to be successful in the twenty-fi rst century.

Zunker goes on to explain that career counseling was “cre-ated to meet the needs of a society during the shift from rural to urban living in the industrial age and has expanded its focus during other transitional periods of changes in how and where we work and live” (2006). Thus, career counseling helps people fi nd appropriate jobs that will benefi t them. By discovering a successful job, the potential employee in return will prosper the employer as a result of the positive attitude displayed by the employee. Even though jobs are scarce at this time, career coun-seling still allows the counselor and/or therapist to research

different types of employment for the client, coming as close as means allow to locating a job that best suits the client in this current, delicate job market.

It is no surprise that the economy has impacted the job market. But, just how has it affected it? The unemployment rate for Tennessee as of May 2010 was 10.4 percent, compared to the national rate of 9.7 percent (Bureau of Labor Statistics 2010). What are currently unemployed or potentially future unem-ployed individuals doing to secure employment? One possible service being sought is career counseling offered through most career centers and community agencies, where these individu-als focus on career exploration.

by Katie Henderson

andLauren Dalton,

Sparks Bureau of Business and Economic Research,




Career exploration is a lifelong process. It can be voluntary or involuntary; however, there are some life events that require us to reconsider our careers, much like today’s economic situ-ation. Career exploration might involve some uncertainty and/or negative emotions (Zikic and Hall 2009). According to Hol-land’s theory of occupational psychology, occupational inter-ests are direct expressions of personality, and individuals seek environments that allow them to express their interests (1997).

Because of economic situations, for some individuals, ca-reer exploration through career counseling is implemented for fi nding any job rather than new career paths or options. For various reasons, many people do not have the luxury of choos-ing different career paths (Wilson 1996). For example, lack of specifi c experience, skills, or educational requirements can hinder one’s capability in switching occupations. However, at-tending career counseling can aid their situations.

Career counseling is not required when attending Career Centers in Tennessee, but it is highly recommended for indi-viduals seeking services. Often individuals see career counsel-ing as a “problem-solving tool.” “Some people are in such shock [from losing their job] that they are looking for resolution any-where,” says Rebecca Thomas, a career coach with the Nashville Career Advancement Center (NCAC). Career counseling serves as a means to clarify diffi cult decisions during transitional times and helps individuals adapt. Fred Frazier, another career coach with the NCAC, says people are often looking for options to determine if they need a new job/career or to educate/train themselves for current or future opportunities because their current economic status will not allow them to make a change due to the unstable job market.

Some people see career counseling and exploration as a mode of survival as opposed to self-discovery (Zikic and Hall 2009). These people need a job—any job—and fast; career counseling explores that strength. One career coach with NCAC, Rebecca Thomas, said that many of the customers coming into her career center are willing to take drastic pay cuts if neces-sary to become re-employed. Additionally, many of her clients have fears of being too old to get trained or hired.

The greatest strength of career counseling lies in its origin and evolution: a reaction to the social and economic changes that occurred in the late nineteenth and early twentieth centu-ries (Tang 2003). This fi eld has grown and adapted over time to encompass a multitude of services, which are available through various outlets, including career development centers on col-lege campuses, guidance departments in schools, business and organizational settings, and community agencies (Tang, 2003). Most of these services are available at no cost to the individuals seeking them. Career counseling, in addition to other services, has made education and training available to those who need

them most (Tang 2003). Guin Tyus of NCAC states the main goal behind their career center services is “preparing the cus-tomer to respond to the current labor market demands and to market themselves to potential employers, and preparing a skilled workforce to meet the current economic needs of the local area.” E.L. Herr (2001) states

. . . vocational or career guidance and counseling and other career development practices have been seen as making access to education and training opportunities; educa-tional reform; economic effi ciency; creating human capi-tal; matching persons and occupational opportunities; re-habilitating those on the margins of society by providing support and direction to their career development; and helping by providing support and direction to their career development; and helping a person fi nd dignity, purpose in, and adjustment to work. (202)

Career counseling is not a required service in Tennessee Ca-reers Centers, but it is clearly benefi cial to the individual seek-ing it, especially in an economic crisis.

Tennessee ranks in the top percentile in retraining work-ers. The state is ranked fourth nationally overall and third na-tionally for adults employed after training programs offered through Workforce Investment Act (WIA) programs. It also ranks in the top eleven percent nationally in employment rate and retention of jobs.

The changing economy not only affects workers, but also career counselors. Change in occupational structure and labor demands creates diffi culties in job classifi cations and clusters. Jobs are changing requirements and desired traits and skills, which poses a problem for counselors trying to assist individu-als in their job seeking (Tang 2003). Jobs are moving from ag-riculture and industry to information-savvy positions. Kathy Parker, career coach with NCAC states she has noticed a change in employers delaying hiring decisions since the economy changed course.

The globalization of the U.S. economy has created some larger issues. Companies are constantly looking to reduce costs by downsizing or relocating outside the U.S. for more cost- ef-fi cient labor. The threat of disappearing jobs due to relocation and downsizing makes it extremely diffi cult for workers to de-velop and maintain work stability (Tang 2003). Recently in La Vergne, Tennessee, 457 jobs were eliminated at a compact disc and DVD maker distribution center due to the loss of a major contract—about half of the company’s current workforce (Wil-liams 2010). The unfortunate downsizing of the distribution center is just one example of the all too common cutbacks with which this county is becoming familiar.

Business Perspectives 37Fall 2010/Winter 2011 B i P ti 37F ll 2010/Wi t 2011

Katherine Henderson

Ms. Henderson is a Research Assistant at the Sparks Bureau of Business and Economic Research (SBBER). She received her Bachelor of Professional Studies with a concentration in Organizational Leadership at the University of Memphis in 2009. She received a Master of Science in Leadership and Policy Studies, with a concentration in Student Personnel at the University of Memphis in December 2010. She has experience in research, teaching, administration, and student services. Ms. Henderson is currently responsible for the coordination, research, and management of various projects for the SBBER, including programs associated with Tennessee Career Centers.

Lauren Dalton

Ms. Dalton is a Graduate Research Assistant for the Sparks Bureau of Business and Economic Research (SBBER). She has been attending the University of Memphis since 2005, where she graduated with her Bachelor of Arts in Psychology with a minor in Sociology in December 2008. Ms. Dalton will earn her Master of Science in Clinical Mental Health Counsel-ing in the University of Memphis’ Counseling, Educational Psychology, and Research Education program in December 2011. From there, she plans to pursue her PhD in Counseling Psychology. Ms. Dalton aspires to run her own counseling practice in hopes of providing ethical mental health services.

Unfortunately, the government is making it even harder for those already unemployed to receive additional aid. Congress rejected a bill that would have provided more money for the long-term unemployed. Part of this $140 billion bill package was unemployment benefi ts. Killing the bill is just one more setback for the 9.7 percent of unemployed Americans. However, there remain multiple facilities and programs lending services to aid the unemployed during these diffi cult economic times; career counseling continues to prove itself as a successful out-let.

Through the information provided, career counseling may not be the ultimate “fi x” to the overall unemployment issue, but it certainly aids in guiding the unemployed population in the right direction in today’s workforce. From helping to construct and write resumes to individual or group counseling, career counseling offers several resources that are necessary to take advantage of during a job or career drought. Patrons of these services usually benefi t in one way or another, and the pro-jected prognosis for career counseling continuing to fl ourish is excellent. ●

References

Bureau of Labor and Statistics. “Southeast–Laborforce Statis-tics.” http://www.bls.gov/xg_shells/ro4xg02.htm (accessed July 1, 2010).

Frazier, Fred. Personal Communication, July 7, 2010.

Herr, E.L. “Career Development and Its Practice: A Historical Perspective.” Career Development Quarterly 49.3 (2001): 196–211.

Holland, J.L. Making Vocational Choices: A Theory of Careers (3rd ed.). Upper Saddle River, NJ: Prentice Hall, 1997.

Parker, Kathy. Personal Communication. 30 June 2010.

“Senate Blocks Aid to America’s Jobless.” Bristol Herald Courier, June 17, 2010.

Tang, M. “Career Counseling in the Future: Constructing, Col-laborating, Advocating.” Career Development Quarterly 52.1 (2003): 61–69.

Thomas, Rebecca. Personal Communication, July 17, 2010.

“TN Ranks in Top Percentile of Successful Re-Employment of Retrained Workers.” Oneida-Independent Herald, June 17, 2010.

Tyus, Guin. Personal Communication, June 30, 2010.

Williams, III, G.C. “Cinram to Lay Off 457 in La Vergne.” The Tennessean, June 12, 2010.

Wilson, W.J. When Work Disappears: The World of the New Ur-ban Poor. New York, NY: Random House, 1996.

Zikic, J., and D.T. Hall. “Toward a More Complex View of Career Exploration.” Career Development Quarterly 58.2 (2009): 181–191.

Zunker, V.G. Career Counseling: A Holistic Approach. Belmont, NY: Thompson, 2006.


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National Unleaded Average Retail Gasoline Prices

Regular Mid Premium Diesel

December 21, 2010, Average $2.98 $3.17 $3.28 $3.26



November 21, 2010, Average $2.88 $3.05 $3.16 $3.19


Source: Daily Fuel Gauge, AAA.com, http://www.fuelgaugereport.com/.

Memphis, Tennessee, Unleaded Average Retail Gasoline Prices

Regular Mid Premium Diesel




November 21, 2010, Average $2.67 $2.83 $2.96 $3.00


Source: Daily Fuel Gauge, AAA.com, http://www.fuelgaugereport.com/TNmetro.asp.

National Economic Indicators

November 2009 September 2010 October 2010 November 2010 Percent Change

Consumer Confi dence1 50.6 48.6 49.9 54.1 +6.9

ISM Manufacturing Index2 53.6 54.4 56.9 56.6 +5.6

Consumer Price Index (USA City Average forAll Urban Consumers) 3* 216.3 218.4 218.7 218.8 +1.2

Retail and Food Services Sales4 ($ Millions) 351,764 369,440 375,571 378,706 +7.7

30-Year Mortgage Rate5 4.88 4.35 4.23 4.30 -11.9

Housing Starts (000)6 579 588 519 — —

*Not seasonally adjusted.P=Preliminary estimate.1The Conference Board, www.conference-board.org.2Institute of Supply Management (ISM) Manufacturing Report on Business.3Bureau of Labor Statistics.4Economic Indicators.Gov-Economics and Statistics Administrations, www.economicindicators.gov/.5The Board of Governors of the Federal Reserve System, The Federal Reserve Bank, St. Louis, Missouri. All monthly 30-year mortgage statistics in this table are reported for the third weekly observation for each month.6The Board of Governors of the Federal Reserve System, The Federal Reserve Bank, St. Louis, Missouri.


Consumer Confi dence Index, November 2009–December 2010


Unemployment Rates, U.S., Tennessee, and Memphis MSA,* Seasonally Adjusted, November 2009–November 2010

Interest Rates, November 2009 and October and November 2010

November2009

October2010

November2010 Difference

3-Month Treasury Bill 0.19 0.13 0.14 -0.05

6-Month Treasury Bill 0.15 0.18 0.18 0.03

10-Year Treasury Bill 3.40 2.54 2.76 -0.64

30-Year Treasury Bill 4.31 3.87 4.19 -0.12

Effective Fed Funds 0.12 0.18 0.18 0.06

Bank Prime Rate 3.25 3.25 3.25 0.00

AAA Corporate Bond 5.19 4.68 4.87 -0.32

30-Year Mortgage 4.88 4.23 4.30 -0.58

Source: St. Louis Federal Reserve Bank.

S&P 500 Index, Adjusted Close,*September 20, 2010–December 21, 2010



National and Regional Unadjusted Housing Permits Issued,October 2009 and August 2010–October 2010

October2009

August2010

September2010

October2010

Percent ChangeOctober 2009–October 2010

United States 46,525 53,191 47,099 44,043 - 5.3

Alabama 725 623 738 806 -11.2

Arkansas 588 845 522 360 -38.8

Georgia 1,328 1,382 1,156 928 -30.1

Kentucky 574 640 540 734 27.9

Louisiana 1,016 921 965 977 - 3.8

Mississippi 389 480 383 353 - 9.3

Missouri 707 886 807 653 -7.6

Tennessee 1,200 1,677 1,249 931 -22.4

Memphis MSA 144 257 131 156 8.3

Source: U.S. Census Bureau.

National and Regional Unemployment Rates, Seasonally Adjusted,November 2009 and September 2010–November 2010

November2009

September2010

October2010

November2010P

Percent ChangeNovember 2009–November 2010

United States 10.0 9.6 9.6 9.8 - 2.0

Alabama 10.9 8.9 8.9 9.0 -17.4

Arkansas 7.6 7.7 7.8 7.9 3.9

Georgia 10.2 9.9 9.8 10.1 - 1.0

Kentucky 10.7 10.1 10.0 10.2 - 4.7

Louisiana 7.3 7.8 8.1 8.2 12.3

Mississippi 10.4 9.8 9.7 9.9 - 4.8

Missouri 9.6 9.3 9.4 9.4 - 2.1

Tennessee 10.7 9.4 9.4 9.4 -12.1

Memphis MSA* 10.3 9.5 9.5 — —

*Not seasonally adjusted.P=Preliminary.

Source: U.S. Census Bureau, U.S. Bureau of Labor Statistics.

U.S. Total Nonfarm Employment, All Employees (000), November 2009–November 2010


Total Privately-Owned Residential Building Permits Issued, Memphis MSA,October 2009, and Percent Change, October 2009–2010

Unemployment Rates, Memphis MSA, October 2009 and September and October 2010

Crittenden County, ARPermits Issued: 6Percent Change: -14.3%

DeSoto County, MSPermits Issued: 34Percent Change: -17.1%

Tate County, MSPermits Issued: 4 Percent Change: 42.9%

Shelby County, TNPermits Issued: 97Percent Change: 76.4%

Fayette County, TNPermits Issued: 7Percent Change: -61.1%

Tipton County, TNPermits Issued: 6Percent Change: -40.0%

Marshall County, MSPermits Issued: 2Percent Change: 60.0%

Tunica County, MSPermitsIssued: 0PercentChange: -100.0%

Tipton County, TNOctober 2009:September 2010:October 2010:

12.210.210.4

Fayette County, TNOctober 2009:September 2010:October 2010:

11.69.8

10.2

Shelby County, TNOctober 2009:September 2010:October 2010:

10.69.79.8

Crittenden County, AROctober 2009:September 2010:October 2010:

9.310.29.4

DeSoto County, MSOctober 2009:September 2010:October 2010:

7.07.17.0

Marshall County, MSOctober 2009:September 2010:October 2010:

10.910.911.0

Tate County, MSOctober 2009:September 2010:October 2010:

10.710.29.8

Tunica County, MSOctober 2009:September 2010:October 2010:

12.914.413.6


One of the nation’s largest and most respected business research bureaus, the Sparks Bureau of Business and Economic Research:

• Provides information and assistance to the local area on economic trends, economic data, employment and unemployment, and tax revenues and projections.

• Conducts research on broad areas of economic impact and development and major community issues, as well as manpower, employment, information technology, GIS, real estate, and

training program development and evaluation.

For more information about the Bureau and any of the material described in this publication, call (901) 678-2281 or visit our Web site at http://sbber.memphis.edu/home.html.

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The University of Memphis is one of 45 institutions in the Tennessee Board of Regents system, the sixth largest system of higher education in the nation. The TBR is the governing board for this system which is comprised of 6 universities, 13 two-year institutions, and 26 area technology centers. The TBR system enrolls more than 80.0 percent of all Tennessee students attending public institutions of higher education.

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