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Analysis finds management positions cut more than any other job group
By David Knox
Beacon Journal staff writer
Published on Sunday, May 25, 2008
Solemn-faced men and women uprooted from assembly lines, now standing in unemployment lines — that's the traditional portrait of laid-off workers.
It's no longer an accurate picture of the jobless in 21st-century Ohio and in the nation.
That's because the biggest losses aren't among production workers anymore.
Today more jobs of bosses — from chief executives to supervisors on the shop floor — have been wiped out than those of any other occupational group, according to a Beacon Journal analysis of U.S. Bureau of Labor Statistics data.
Consider the numbers:
• More than 163,000 management jobs of all types were eliminated in Ohio from 2000 through last year.
• The loss is a 27 percent decline — meaning more than one in four of all management positions in the state have disappeared in less than a decade.
• That total is nearly 40 percent of all jobs lost — by far the most for any occupational group. Production jobs — the next hardest-hit category — make up less than 30 percent of all jobs gone.
• The promise of advanced-technology jobs failed to materialize: Employment in high-tech industries has declined substantially, both in Ohio and nationwide, since 2000.
The immediate impact of so many management jobs vanishing goes beyond the raw counts because these positions typically pay far better — the average Please see Management A6
pay is nearly $67,000 a year — than most occupations.
Jobs aren't returning
But the long-range effects may be even worse because losses in the manager ranks are probably permanent; they represent a radical change in the way businesses handle economic downturns — not just in Ohio, but across the United States.
The traditional response to recessions was to limit layoffs to production workers and other front-line staff, who would be brought back when good times returned.
''You never saw furloughs of management like you saw for line workers,'' said John A. Challenger, head of Challenger, Gray & Christmas Inc., the nation's oldest and largest outplacement consulting firm.
Challenger said more companies today consider economic slowdowns as opportunities ''to delayer their organization — to cut the number of layers of management from top to bottom.''
The national job numbers support Challenger's judgment: Since 2000, total management positions in the U.S. have fallen by 1.6 million — a nearly 12 percent decline, according to the Beacon Journal analysis.
Challenger argued that technology encourages the trend by providing ways for fewer managers to monitor more workers.
''There are so many more tools to measure output and productivity,'' he said. ''Rather than have someone watch over employees to make sure they're on time and working, the company sets the goals and measures performance.''
As a result, companies are squeezing out middle managers who are seen as no longer needed. Some employers hire companies like Challenger's to help find new jobs for displaced workers.
For many, it's the end of their careers in management.
''We're seeing large numbers of managers who become self-employed consultants of one kind or another,'' Challenger said. ''When they don't find a job at another company — perhaps because of this delayering — more people become consultants today . . . either by working for one of the growing consulting firms or becoming self-employed.
''Inevitably, they've stopped managing.''
'Jobless' recovery
The permanent loss of so many management jobs may help explain why the recovery from the last recession, in 2001, generated so few jobs compared to earlier boom cycles.
From 2000 through last year, the number of jobs nationwide increased only about 4 percent, averaging under a million new jobs annually. In the 1990s, the average annual increase was double that, resulting in an overall 20 percent increase in employment.
Ohio's Rust Belt economy did worse, but the pattern was the same. The state saw strong job growth after the recessions in the early 1980s and 1990s, but never recovered the jobs lost in the 2001 recession.
Today, Ohio has 200,000 fewer jobs than it did eight years ago.
Keith Ewald, chief of the Ohio State Bureau of Labor Market Information, agreed that many of those jobs are lost forever.
''There has certainly been restructuring in Ohio where jobs are just permanently gone across the totality of the organizations,'' said Ewald, whose bureau works with the U.S. Bureau of Labor Statistics to collect data tracking the economy. ''I think there is generally a policy — whether you call it delayering or more of a leveling of the classifications in an organization.''
The fact that many of the eliminated management jobs paid so well also might explain another economic trend that has puzzled one local economist: Why family incomes are declining in many of the most affluent Ohio communities.
George Zeller, who specializes in analyzing economic data for Cuyahoga County and other local government policymakers in Northeast Ohio, has used Ohio income tax data to track household incomes at the school-district level since the mid-1980s.
Of the 612 school districts in the state, only 52 show an increase in median income, adjusted for inflation, between 2000 and 2006, the latest year with data available.
Incomes in all but two of the 62 school districts in the five-county Akron-Canton area declined. The exceptions were Revere in Summit County and Highland in Medina County.
Zeller said the downward trend was unusual, because during the recoveries of the 1980s and 1990s ''there was income growth all over the place.''
After the 2001 recession, he said, ''it didn't surprise anybody when the incomes were down in Cleveland or Youngstown, but they went down in Hudson and a lot of other high-income areas.''
''That's very much an anomaly,'' Zeller said. ''We never saw that before.''
Because many workers with high-paying management jobs live in more affluent communities, Zeller said, the loss of those jobs ''certainly would be a contributing factor'' explaining why incomes are down in those areas.
Where are new jobs?
Some economists contend businesses should shed outmoded jobs, arguing leaner and more efficient is always better.
But where are the jobs to replace those lost?
The most common answer offered by business and government officials is high-technology industries and services.
That's certainly the hope showcased on the Ohio Department of Job and Family Services Web site featuring ''high-demand, high-wage and high-technology industries in Ohio.''
The problem is that less than a quarter of the 197 industries listed as ''high-wage'' — defined as those paying more than a modest $30,000 in 2006 — are among those in ''high-demand.''
Most of the 40 high-tech industries listed on the site are high paying. But few were hiring.
In fact, most got rid of workers.
A Beacon Journal tabulation found Ohio had a net loss of more than 71,000 jobs in those high-tech industries from 2000 through 2006 — a 13 percent decline.
The loss of high-tech jobs isn't limited to Rust Belt states like Ohio. Nationwide over the same years, more than 700,000 jobs disappeared — a 6 percent drop — in sectors identified by the U.S. Bureau of Labor Statistics and the National Science Foundation as ''high-technology industries.''
The decline doesn't come as a surprise to Norman Matloff, a professor of computer science at the University of California, Davis.
''It's certainly consistent with what I've seen,'' said Mat-loff, an outspoken critic of the federal H-1B program, which allows businesses to hire foreign guest workers in high-tech fields if there aren't enough U.S. citizens able to do the work.
Matloff said what is in short supply is jobs, not workers.
''The industry continues to claim it has a shortage of engineers, and yet the starting salaries have been flat or falling, once you count for inflation,'' he said. ''There's just no spinning that.''
Matloff disputed the idea that technology has allowed businesses to thin their managerial ranks.
''I think that's an excuse,'' he said. ''There are tools like that, but they are of very limited use.''
Matloff argued that the decline in management jobs was part of a more general drive by businesses to hold down labor costs by cutting employees overall and finding cheaper workers, either through the H-1B program or overseas.
''I think they're just making people work harder,'' he said.
'Losing proposition'
But cutting payrolls is the wrong way to compete in the global economy, according to Alan Tonelson, a researcher with the United States Business & Industry Council, a Washington-based advocacy group representing medium and small manufacturers.
''It's ultimately a losing proposition,'' he said.
Tonelson argues in his book, Race to the Bottom, that no amount of labor-saving technology can offset the low wages, huge pools of workers and lower overall capital costs in China, India and other Third World nations.
''We will never be able to compete with them simply by cost-cutting,'' he said.
Tonelson said his research shows that in the past decade, imports have gained a larger share of the U.S. home market, even in high-tech and capital-intensive industries such as computers, aircraft and large-machinery manufacturing, where the United States is supposed to have an advantage.
All but five of 114 industries Tonelson studied saw increases in ''import penetration,'' as measured in the dollar value of products purchased in the United States but made overseas. Overall market share captured by imports in these industries increased by more than half, from 21 percent in 1997 to nearly 34 percent in 2006.
Free trade agreements, beginning with NAFTA in 1994, have fueled the surge in imports, Tonelson said, by ''sending jobs, production and, increasingly, research and development overseas.''
Tonelson acknowledged that some U.S. manufacturers, such as Caterpillar, the Illinois maker of earthmoving equipment, ''have managed to keep their employment levels pretty high by cutting wages.''
''They're introducing two-tier wage systems — a lot of workers are making $10 to $14 an hour'' at jobs that had paid double that or more.
But he argued that in the longer run, those shrinking blue-collar paychecks carry a cost that can't be measured in dollars.
''The middle class will be gutted,'' he said. ''The division of the country into a relatively small number of high-income earners and a much larger pool of working poor will greatly accelerate.
''In other words, the social profile of the United States will start to resemble that of Third World countries.''
David Knox can be reached at 330-996-3532 or dknox@thebeaconjournal.com
Solemn-faced men and women uprooted from assembly lines, now standing in unemployment lines — that's the traditional portrait of laid-off workers.
It's no longer an accurate picture of the jobless in 21st-century Ohio and in the nation.
That's because the biggest losses aren't among production workers anymore.
New century brings fewer jobs to U.S.
Ohio doesn't bounce back after last recession
Ohio manufacturing jobs decline
Mixed picture for Ohio service sector
Ohio's winning and losing occupations
U.S. occupation trends: How jobs counts have changed since 2000 and annual earnings in 2007
Ohio occupation trends: How jobs counts have changed since 2000 and annual earnings in 2007
U.S. job counts for high-technology industry sectors
Ohio job counts for high-technology industry sectors
Today more jobs of bosses — from chief executives to supervisors on the shop floor — have been wiped out than those of any other occupational group, according to a Beacon Journal analysis of U.S. Bureau of Labor Statistics data.
Consider the numbers:
• More than 163,000 management jobs of all types were eliminated in Ohio from 2000 through last year.
• The loss is a 27 percent decline — meaning more than one in four of all management positions in the state have disappeared in less than a decade.
• That total is nearly 40 percent of all jobs lost — by far the most for any occupational group. Production jobs — the next hardest-hit category — make up less than 30 percent of all jobs gone.
• The promise of advanced-technology jobs failed to materialize: Employment in high-tech industries has declined substantially, both in Ohio and nationwide, since 2000.
The immediate impact of so many management jobs vanishing goes beyond the raw counts because these positions typically pay far better — the average Please see Management A6
pay is nearly $67,000 a year — than most occupations.
Jobs aren't returning
But the long-range effects may be even worse because losses in the manager ranks are probably permanent; they represent a radical change in the way businesses handle economic downturns — not just in Ohio, but across the United States.
The traditional response to recessions was to limit layoffs to production workers and other front-line staff, who would be brought back when good times returned.
''You never saw furloughs of management like you saw for line workers,'' said John A. Challenger, head of Challenger, Gray & Christmas Inc., the nation's oldest and largest outplacement consulting firm.
Challenger said more companies today consider economic slowdowns as opportunities ''to delayer their organization — to cut the number of layers of management from top to bottom.''
The national job numbers support Challenger's judgment: Since 2000, total management positions in the U.S. have fallen by 1.6 million — a nearly 12 percent decline, according to the Beacon Journal analysis.
Challenger argued that technology encourages the trend by providing ways for fewer managers to monitor more workers.
''There are so many more tools to measure output and productivity,'' he said. ''Rather than have someone watch over employees to make sure they're on time and working, the company sets the goals and measures performance.''
As a result, companies are squeezing out middle managers who are seen as no longer needed. Some employers hire companies like Challenger's to help find new jobs for displaced workers.
For many, it's the end of their careers in management.
''We're seeing large numbers of managers who become self-employed consultants of one kind or another,'' Challenger said. ''When they don't find a job at another company — perhaps because of this delayering — more people become consultants today . . . either by working for one of the growing consulting firms or becoming self-employed.
''Inevitably, they've stopped managing.''
'Jobless' recovery
The permanent loss of so many management jobs may help explain why the recovery from the last recession, in 2001, generated so few jobs compared to earlier boom cycles.
From 2000 through last year, the number of jobs nationwide increased only about 4 percent, averaging under a million new jobs annually. In the 1990s, the average annual increase was double that, resulting in an overall 20 percent increase in employment.
Ohio's Rust Belt economy did worse, but the pattern was the same. The state saw strong job growth after the recessions in the early 1980s and 1990s, but never recovered the jobs lost in the 2001 recession.
Today, Ohio has 200,000 fewer jobs than it did eight years ago.
Keith Ewald, chief of the Ohio State Bureau of Labor Market Information, agreed that many of those jobs are lost forever.
''There has certainly been restructuring in Ohio where jobs are just permanently gone across the totality of the organizations,'' said Ewald, whose bureau works with the U.S. Bureau of Labor Statistics to collect data tracking the economy. ''I think there is generally a policy — whether you call it delayering or more of a leveling of the classifications in an organization.''
The fact that many of the eliminated management jobs paid so well also might explain another economic trend that has puzzled one local economist: Why family incomes are declining in many of the most affluent Ohio communities.
George Zeller, who specializes in analyzing economic data for Cuyahoga County and other local government policymakers in Northeast Ohio, has used Ohio income tax data to track household incomes at the school-district level since the mid-1980s.
Of the 612 school districts in the state, only 52 show an increase in median income, adjusted for inflation, between 2000 and 2006, the latest year with data available.
Incomes in all but two of the 62 school districts in the five-county Akron-Canton area declined. The exceptions were Revere in Summit County and Highland in Medina County.
Zeller said the downward trend was unusual, because during the recoveries of the 1980s and 1990s ''there was income growth all over the place.''
After the 2001 recession, he said, ''it didn't surprise anybody when the incomes were down in Cleveland or Youngstown, but they went down in Hudson and a lot of other high-income areas.''
''That's very much an anomaly,'' Zeller said. ''We never saw that before.''
Because many workers with high-paying management jobs live in more affluent communities, Zeller said, the loss of those jobs ''certainly would be a contributing factor'' explaining why incomes are down in those areas.
Where are new jobs?
Some economists contend businesses should shed outmoded jobs, arguing leaner and more efficient is always better.
But where are the jobs to replace those lost?
The most common answer offered by business and government officials is high-technology industries and services.
That's certainly the hope showcased on the Ohio Department of Job and Family Services Web site featuring ''high-demand, high-wage and high-technology industries in Ohio.''
The problem is that less than a quarter of the 197 industries listed as ''high-wage'' — defined as those paying more than a modest $30,000 in 2006 — are among those in ''high-demand.''
Most of the 40 high-tech industries listed on the site are high paying. But few were hiring.
In fact, most got rid of workers.
A Beacon Journal tabulation found Ohio had a net loss of more than 71,000 jobs in those high-tech industries from 2000 through 2006 — a 13 percent decline.
The loss of high-tech jobs isn't limited to Rust Belt states like Ohio. Nationwide over the same years, more than 700,000 jobs disappeared — a 6 percent drop — in sectors identified by the U.S. Bureau of Labor Statistics and the National Science Foundation as ''high-technology industries.''
The decline doesn't come as a surprise to Norman Matloff, a professor of computer science at the University of California, Davis.
''It's certainly consistent with what I've seen,'' said Mat-loff, an outspoken critic of the federal H-1B program, which allows businesses to hire foreign guest workers in high-tech fields if there aren't enough U.S. citizens able to do the work.
Matloff said what is in short supply is jobs, not workers.
''The industry continues to claim it has a shortage of engineers, and yet the starting salaries have been flat or falling, once you count for inflation,'' he said. ''There's just no spinning that.''
Matloff disputed the idea that technology has allowed businesses to thin their managerial ranks.
''I think that's an excuse,'' he said. ''There are tools like that, but they are of very limited use.''
Matloff argued that the decline in management jobs was part of a more general drive by businesses to hold down labor costs by cutting employees overall and finding cheaper workers, either through the H-1B program or overseas.
''I think they're just making people work harder,'' he said.
'Losing proposition'
But cutting payrolls is the wrong way to compete in the global economy, according to Alan Tonelson, a researcher with the United States Business & Industry Council, a Washington-based advocacy group representing medium and small manufacturers.
''It's ultimately a losing proposition,'' he said.
Tonelson argues in his book, Race to the Bottom, that no amount of labor-saving technology can offset the low wages, huge pools of workers and lower overall capital costs in China, India and other Third World nations.
''We will never be able to compete with them simply by cost-cutting,'' he said.
Tonelson said his research shows that in the past decade, imports have gained a larger share of the U.S. home market, even in high-tech and capital-intensive industries such as computers, aircraft and large-machinery manufacturing, where the United States is supposed to have an advantage.
All but five of 114 industries Tonelson studied saw increases in ''import penetration,'' as measured in the dollar value of products purchased in the United States but made overseas. Overall market share captured by imports in these industries increased by more than half, from 21 percent in 1997 to nearly 34 percent in 2006.
Free trade agreements, beginning with NAFTA in 1994, have fueled the surge in imports, Tonelson said, by ''sending jobs, production and, increasingly, research and development overseas.''
Tonelson acknowledged that some U.S. manufacturers, such as Caterpillar, the Illinois maker of earthmoving equipment, ''have managed to keep their employment levels pretty high by cutting wages.''
''They're introducing two-tier wage systems — a lot of workers are making $10 to $14 an hour'' at jobs that had paid double that or more.
But he argued that in the longer run, those shrinking blue-collar paychecks carry a cost that can't be measured in dollars.
''The middle class will be gutted,'' he said. ''The division of the country into a relatively small number of high-income earners and a much larger pool of working poor will greatly accelerate.
''In other words, the social profile of the United States will start to resemble that of Third World countries.''
David Knox can be reached at 330-996-3532 or dknox@thebeaconjournal.com
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