Job Picture Still Rosy as Hiring Gets Creative

COLUMBUS, Ohio — Telemarketers phone households here not to sell people anything but to hire them. In Cincinnati, Manpower Inc. makes the rounds of retirement homes in search of workers for Procter & Gamble. And in Florida, the state labor department helps staff-strapped nightclubs by placing help-wanted ads for strippers.

Welcome to the Great American Job Experiment, a grand attempt to let a larger fraction of Americans work than at any time since the booming 1960s--without creating the same kind of wage-driven inflation and disastrous stagnation that followed in the 1970s.

Recent hints that the attempt is growing desperate have given official Washington a bad case of nerves. Just last week the Federal Reserve raised interest rates for a second time this summer amid what it fears are pressures to drive up wages and prices.

But there is no nervousness in this white-hot Ohio city, whose 2.9% unemployment rate is one-third lower even than the 4.3% national rate, the lowest in a generation. Nor is there much evidence of the Fed’s greatest fear: sharply rising wages that force offsetting price hikes and ultimately consume the prosperity that made those wages possible.

“People try to find a cloud in the silver lining, but it’s pretty hard,” said Stephen L. Mangum, a labor economist at Ohio State University’s business school. “We’re doing wonderfully.”

Indeed, a job seeker could come to love a city like this, where the place mats at McDonald’s are employment applications and companies such as Honda and Nationwide Insurance wrestle each other to hire you.

“Recruiting changes when everybody who wants a job already has one,” said Ernest L. Sullivan, national staffing manager for Bank One Corp., which has 10,000 employees here. “I won’t say it’s stealing, but it’s all about getting people from other employers.”

By now, 8 1/2 years into the 1990s boom, almost every corner of the country has enjoyed strong economic growth and declining unemployment. But the effects have been muffled in places such as Los Angeles and New York, where the good times arrived late and a growing demand for workers has been matched by a ballooning supply of immigrants.

Where the effects are crystal clear is in cities dotted across the South and Midwest, where population growth has not matched economic growth and the spoils go to those who are already there.

“It’s not that Los Angeles County [with a 5.5% jobless rate] is doing poorly,” said Bruce G. Smith, an economist at the California Department of Finance. “It’s just that the benefits aren’t concentrated. Southern California is wide open, while some of these areas with low unemployment are hard to move to or are places, such as these Midwestern cities, where people don’t want to live.”

To be sure, not everything is sunny in Columbus. But what problems exist are not the kind that should keep job seekers from wanting to live there. Most involve employers that can’t hire people fast enough or retain them long enough to keep up with the feverish pace of business.

M/I Schottenstein Inc., the region’s biggest home builder, for example, has 100 house foundations dug and poured but not enough carpenters to build anything on them, said Phillip G. Creek, the firm’s senior vice president.

Core Materials Corp., which makes plastic parts for car interiors, has a new contract with Volvo but is spending the profits on overtime because the workers hired to fill the contract are quitting almost as fast as they’re hired.

Nor are companies leaving Columbus for places with more workers.

“There’s a fear that we’ll lose companies because we don’t have the work force,” said Chamber of Commerce President Sally A. Jackson. “But we haven’t seen it.”

And more surprising still, tight labor conditions have yet to trigger the trouble that policymakers at the Federal Reserve have been preparing for: a sudden jump in wages like the one that helped destroy the boom of the 1960s.

While analysts have been left dumbstruck by the fact wages nationally are rising at only 3% or 4% in the face of such low unemployment, there is evidence of an even more astounding trend in Columbus: For some categories of workers, wages are not even keeping up with inflation.

According to government statistics, for example, inflation-adjusted earnings in Columbus’ trucking and warehousing industry, a major employer, actually fell 4 cents an hour to $16.52 between June of 1998 and last June. Hourly earnings also lost ground at the region’s supermarkets, which might be expected to pay more to compete with fast-food restaurants and others for entry-level workers.

“Even a year ago, I would have told you the laws of supply and demand require wages in central Ohio to start shooting up, but that hasn’t happened,” said Michael F. Bryan, an economist at the Federal Reserve Bank of Cleveland. “It makes you a little humble about how much you really understand.”

The absence of sharply higher wages is crucial. Tight labor markets’ greatest threat is that they spawn a destructive spiral in which companies raise prices to pay bigger wage bills and workers demand still higher wages to cover the higher prices.

Ultimately, the forces that disrupt the balance and end the nation’s great experiment may prove to be less obvious or direct than rocketing wages. Recent events in Columbus and the nation’s other tight labor markets offer some hints.

They may take the form of increasingly cumbersome efforts to fill jobs. Florida aided nightclubs this summer by advertising for strippers.

A labor department ad in the Palm Beach Post offered job seekers $11 an hour to “perform modern and acrobatic dances, coordinating body movements to musical accompaniment.” Wayne Segal, a department spokesman, said that the state was not hiring the strippers--only helping clubs meet a requirement that employers seek U.S. workers before hiring immigrants.

Another risk involves recruiting of college and technical school students before they graduate. That could provide firms with good employees in the short haul but ultimately leave the country with a less-educated work force.

“A lot of companies are making offers when students are only part way through their programs and they’re leaving,” said Galen H. Graham, president of DeVry Institute of Technology, a 3,000-student school in Columbus.

Finally, the forces could be subtle ones that erode companies’ efficiency and exhaust the supply of even the 70- and 80-year-olds who Rick Myett, a Manpower executive, says now work at Procter & Gamble plants in Cincinnati.

Long growth and low unemployment are even fostering tolerance and diversity in the work force.

At Whirlpool Corp.’s air conditioner plant in La Vergne, Tenn., Muslim employees are now being permitted to maintain rigorous religious practices on the job. And staffing service firms are trying to hire more disabled people.

“Growth has done more for social diversity than a century of legislation could have,” Mangum said.

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The Mystery of the Booming ‘90s

The economic boom of the 1990s is now only six months shorter than the boom of the 1960s, the longest ever. In both periods, unemployment declined substantially. But while prices and wages turned sharply upward during the ‘60s, they still appear under control in the 90’s. Comparing the two nine-year periods, beginning in 1961 and 1991;

Unemployment:

Annual average

Consumer prices:

% change in year-end index

Hourly wages:

% change in yearly average

(year in decade)

* Through July 1999

** For 12 months ending in July 1999

Source: Bureau of Labor Statistics