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See Also

See Also in This Set

Airline industry

Automobile industry

Business and the economy in the United States

Demographics of the United States

Immigration to the United States

Income and wages in the United States

Recession of 1990-1991

The 1990s in America

Employment in the United States

by Paul B. Trescott

Definition The proportion of the total population deriving its means of support from wages or salaries

After a brief and mild recession in 1990-1991, employment increased steadily through the decade. This provided the basis for the steady increase in production and for the rise in per capita real incomes and consumption.

In 1990, about 119 million Americans were employed. By the end of that year, the economy was slipping into recession. The average annual unemployment rate rose from 5.3 percent in 1989 to 6.8 percent in 1991 and 7.5 percent in 1992. Because population and labor force grew, and because labor productivity increased, to prevent an increase in unemployment would have required production to grow at a rate of at least 2 to 3 percent per year. With prices rising about 2 percent per year, aggregate demand would have needed to expand at least 5 percent per year to maintain the near full employment of 1989. However, aggregate demand (as measured by nominal gross domestic product) increased only about 3 percent from 1990 to 1991, so unemployment increased. Demand rebounded vigorously in 1992 and production increased, but unemployment was still high. From that point, a sustained rise in demand increased employment steadily, until by 1999 133 million people held jobs and the unemployment rate was only 4.2 percent, the lowest annual rate since 1969.

About two-thirds of working-age adults were in the labor force. The participation rate among males declined slightly, from 76.4 percent in 1990 to 74.7 percent in 1999, but this was offset by an increase of women workers from 57.5 to 60 percent, the latter an all-time high to that point.

The educational level of workers moved steadily upward. In 1992, 12.6 percent of workers were high school dropouts. By 2000, the proportion had dropped to 10.4 percent. Over the same period, the proportion with some college education rose from 25.4 to 27.7 percent, and the proportion of college graduates rose from 26.4 to 30.5 percent.

Sector Employment

The sector changes in employment reflected a race between rising output and rising labor productivity. In agriculture, for instance, employment remained essentially unchanged, while output grew by 28 percent—all arising from higher productivity. Employment in manufacturing declined by about 2 percent between 1990 and 1999. Manufacturing output expanded by an impressive 46 percent. However, labor productivity increased just about as much, so the sector did not require more workers.

The vast and diverse service sector was the area of vigorous job growth, with the exception of the decline in federal government civilian employment. Although government statisticians pretend to measure output and labor productivity in various services, when there is no physical product these estimates cannot be very precise: For example, how to measure the quantity of physicians’ services, when major technological changes in such matters as eye surgery and joint replacement are observed? Still, no one can dispute the large expansion in employment in the medical sector.

Globalization

The decade witnessed a rising tide of complaints directed at supposed job loss resulting from import competition or from companies “shipping jobs overseas.” There can be no doubt that some U.S. industries, such as shoes and textiles, lost market share and employment to imports. Considering the low unemployment rates during most of the decade, displaced workers seem to have found jobs elsewhere. In his review of Thomas L. Friedman’s The World Is Flat (2005) in the Journal of Economic Literature, Edward E. Leamer concluded that “though there is a great deal of fuss in the media about the movement of U.S. service jobs to India, the number of U.S. workers affected by outsourcing surely remains low.” When American companies are able to reduce costs by outsourcing, they are likely to expand output and thus create more domestic jobs. Critics neglected the reverse flow of jobs, as for instance when foreign automakers set up factories in the United States.

tbl_1990-Employment.tif

After 1996, foreign-born workers accounted for about half of the total growth of the U.S. labor force. Critics argued that low-skilled workers from Mexico, many of them unauthorized, were taking jobs away from Americans. Examination of the kinds of jobs taken by immigrants, however, indicated that many immigrants were performing tasks that Americans would not or could not do. These involved low-income, strenuous “stoop labor” jobs on farms and in domestic service. At the high end of the income scale, employers seeking scientists and engineers could not find enough suitably trained Americans. The number of U.S. medical schools declined from 124 in 1990 to 118 in 2000, and the number of medical degrees conferred in 2000 was only 1 percent larger than in 1990. Not surprisingly, by year 2000 about one-fourth of physicians were foreign-born.

Impact

The 1990’s were a good period for job growth. After the recession of 1990-1991, production and employment expanded rapidly, so unemployment ended the decade at a very low level. Employment in manufacturing failed to grow, but the reason lay in rapid productivity increase rather than deindustrialization and globalization. The service sectors were the basis for the most vigorous expansion of employment.

Further Reading

1 

Ehrenberg, Ronald G., and Robert S. Smith. Modern Labor Economics: Theory and Public Policy. 8th ed. New York: Pearson/Addison Wesley, 2003. This college-level text deals comprehensively with relationships among production, employment, and wages.

2 

Leamer, Edward E. “A Flat World, a Level Playing Field, a Small World After All, or None of the Above? A Review of Thomas L. Friedman’s The World Is Flat.” Journal of Economic Literature 45, no. 1 (March, 2007): 83-126. A witty and insightful survey that deflates much of the hysteria about negative effects of globalization on the U.S. job market.

3 

Sharp, Ansel M., Charles A. Register, and Paul W. Grimes. Economics of Social Issues. 17th ed. Boston: McGraw-Hill/Irwin, 2006. Chapter 11 illustrates how unemployment responds to changes in aggregate demand and aggregate supply.

Citation Types

Type
Format
MLA 9th
Trescott, Paul B. "Employment In The United States." The 1990s in America, edited by Milton Berman, Salem Press, 2009. Salem Online, online.salempress.com/articleDetails.do?articleName=1990_1193.
APA 7th
Trescott, P. B. (2009). Employment in the United States. In M. Berman (Ed.), The 1990s in America. Salem Press. online.salempress.com.
CMOS 17th
Trescott, Paul B. "Employment In The United States." Edited by Milton Berman. The 1990s in America. Hackensack: Salem Press, 2009. Accessed October 22, 2025. online.salempress.com.