See also Business and the economy in Canada;
Demographics of Canada; Income and wages in
Canada; North American Free Trade Agreement
(NAFTA); Recession of 1990-1991; Women in the
workforce.
Employment in the United
States
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 ba-
sis for the steady increase in production and for the rise in
per capita real incomes and consumption.
In 1990, about 119 million Americans were em-
ployed. By the end of that year, the economy was slip-
ping into recession. The average annual unemploy-
ment 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 un-
employment 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 de-
mand would have needed to expand at least 5 per-
cent 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 unemploy-
ment increased. Demand rebounded vigorously in
1992 and production increased, but unemployment
was still high. From that point, a sustained rise in de-
mand increased employment steadily, until by 1999
133 million people held jobs and the unemploy-
ment 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 employ-
ment reflected a race between rising output and ris-
ing labor productivity. In agriculture, for instance,
employment remained essentially unchanged, while
output grew by 28 percent—all arising from higher
productivity. Employment in manufacturing de-
clined 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 employ-
ment. Although government statisticians pretend
to measure output and labor productivity in various
services, when there is no physical product these es-
timates 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 employ-
ment 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 “ship-
ping jobs overseas.” There can be no doubt that
some U.S. industries, such as shoes and textiles, lost
market share and employment to imports. Con-
sidering the low unemployment rates during most of
the decade, displaced workers seem to have found
jobs elsewhere. In his review of Thomas L. Fried-
man’sThe World Is Flat(2005) in theJournal of Eco-
nomic 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 in-
stance when foreign automakers set up factories in
the United States.
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,312 Employment in the United States The Nineties in America