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The emphasis on reducing payroll costs may have led some managers to define jobs more nar- rowly and make them even more routine to employ less-skilled, lower cost workers or to substitute capital equipment for labor (i.e., low-road behavior) (Appelbaum et al., 2000). Throughout the economy, the number of unskilled, entry-level jobs, such as shipping and receiving, proliferated during the economic expansion of the late 1990s (Wright & Dwyer, 1999). Surprisingly, at the same time that there has been downgrading in the skill requirements of many entry-level jobs, other studies have found that manufacturing employment has shifted toward higher skilled jobs. Higher skilled manufacturing jobs are becoming increasing complex—due in large part to the introduction of new workplace practices that emphasize decision making, problem solving, and teamwork as well as to the growing use of computer technologies—and workers are now expected to take on increased responsibilities (Cappelli & O’Shaughnessey, 1993; Teixeira, 1998). These two find- ings—an increase in entry-level and higher skilled jobs—do not necessarily contradict each other. Instead, they support the hypothesis that the distribution in job growth during the 1990s recovery was bipolar—weighted heavily on the bottom and top ends of the spectrum (Wright & Dwyer,

  • 1998)

    . It may be that the jobs that link the two ends—the “bridge” jobs—are missing (Jenkins,

  • 1999)


The breakdown of career ladders within a given company is reinforced by the fact that manufac- turers continue to lose some of their best employees to customers and competitors. Poaching of quality workers reduces incentives to make investments in individual workers through training. American firms have long held the reputation for investing less in skills training than many of their foreign competitors (Appelbaum & Batt, 1994; Dertouzos, Solow, & Lester, 1989; Lynch & Black, 1998; MacDuffie & Kochan, 1995). Small manufacturers in particular appear to invest little in training their workforce. Luria (1996) noted that where the typical large company “spends about 2 percent of payroll on training shop workers in its large plants, the training investment in a typical small-plant employee is less than 0.5% of payroll” (p. 12). Employers may claim that the tasks per- formed are either not dangerous or not unique enough to warrant training, but the underlying rea- sons relate to their inability to capture a return on their investment (Weber, 1999a). As responsibility for product and process control is shifted downward to lower tiers of the supply chain, it will become more difficult to maintain quality and other performance goals vital to the success of business without high performance work systems backed by investments in the training of current employees.


How do corporate restructuring and workforce change affect economic development activities? Most economic development programs were crafted during the era of deindustrialization when retention and attraction of any job was necessarily the objective. In periods of long-run employ- ment growth, however, alternative goals are necessary. Flexible staffing arrangements, flatter career ladders, reduced training, and skilled worker shortages mean that job creation no longer can be regarded as the primary measure of successful business development. Instead, economic devel- opment programs must help firms in moving toward high performance work systems that provide more stable, higher quality jobs.

Local economies will be unable to sustain high growth rates unless firms invest in new technolo- gies, implement innovative workforce systems, and undertake skill development of their employ- ees. These activities require a coordinated economic and workforce development system that is responsive to the needs of both firms and workers (Giloth, 1998; Harrison & Weiss, 1998a, 1998b).

Conventional urban economic development strategies—for example, low-interest loans, prop- erty tax abatements, and brownfield redevelopment—are geared almost exclusively toward meet- ing the “bricks and mortar” needs of businesses despite evidence that a key factor in business location decisions is the availability of qualified labor. Rural development policy has also tended to focus on infrastructure, credit, and business assistance (McGranahan, 1998). Human capital


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