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Volume 20, Number 3 Fall 2010/Winter 2011

Volume 20, Number 3 Fall 2010/Winter 2011

President, The University of Memphis
Dr. Shirley Raines

Dean, Fogelman College of Business & Economics
Dr. Rajiv Grover

Director, Sparks Bureau of Business and Economic Research
Dr. John E. Gnuschke

Assistant Director, Sparks Bureau of Business and Economic Research
Dr. Lee Grehan

Copy Editor
Shirley Stanphill

Editor, Layout, Design, and Graphics/Research Associate II
Stephen Smith

Contributing Editors
Dr. John E. Gnuschke
Dr. Jeff Wallace
B. Lewis Alvarado
Ryan Hanson

Business Perspectives is a publication of the Sparks Bureau of Business and Business Perspectives does not accept unsolicited material. Articles may
Economic Research (SBBER), Fogelman College of Business & Economics, be reprinted or reproduced by permission of the editor and if the source is
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Equal Opportunity/Affirmative Action University. Memphis, TN 38152-3130
The Labor Market & Economic Recovery
2 by John E. Gnuschke, PhD, Dr. Jeff Wallace, PhD, and Stephen Smith

Strengthening Tennessee’s Workforce in Tough Economic Times: How Has Tennessee Been Able to
10 Maintain a Positive Business Climate in Spite of the Decline in the Economy?
by James G. Neeley and Susan K. Cowden (with special thanks to Jeff Hentschel)

Will the “Great Hangover” Last More Than the Day After Graduation for This Year's College
16 Graduates?
by Ioana Sofia Pacurar and Jay K. Walker

The Broken Psychological Contract: Job Insecurity and Coping
22 by Courtney Keim and Amy Wilkinson

Green Jobs Don’t Grow on Trees
28 by Juliann Waits, PhD, Jeff Wallace, PhD, and Stephen Smith

Career Counseling for Today’s Labor Force
34 by Katie Henderson and Lauren Dalton

National & Regional Economies

Fall 2010/Winter 2011 Business Perspectives 1
John E. Gnuschke, PhD, Director,
Jeff Wallace, PhD, Research Associate Professor of Applied Economic Research
Stephen Smith, Research Associate II/Editor,
Sparks Bureau of Business and Economic Research,
The University of Memphis
2 Business
B si
Bu sine
n sss Perspectives
ne Perrsp
ve Fall
F lll 2010/Winter
Fa 201
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er 2011
On September 20, 2010, the National Bureau of Economic Research (NBER)
announced that the longest recession since World War II actually ended in
June 2009 (“Business Cycle Dating Committee, National Bureau of Economic
Research”). Unfortunately, those who lost their jobs and could not find work
could not relate to this “positive” news. Although much of the economy is
showing signs of recovery, the labor market continues to struggle.

Fall 2010/Winter 2011 Business Perspectives 3
recovers. So, while the latest recession may be over, unemploy-
ment rates are remaining at or near 10.0 percent nationwide.
Recessions and the Labor Market
Employment is a lagging indicator. As shown in Chart 1, the
Traditionally, recessions have been defined by a period
relationship between GDP and employment is relatively close,
of gross domestic product (GDP) decline (or shrinkage) of at
but employment reduction and growth lag behind GDP. This
least six months (two quarters). More recently, the definition
scenario is particularly clear in the latest recession, where real
of a recession has been expanded. According to the National
GDP began its rebound in the third quarter of 2009, yet em-
Bureau of Economic Research, “A recession is a period of fall-
ployment continued falling through the first quarter of 2010.
ing economic activity spread across the economy, lasting more
than a few months, normally visible in real GDP, real income, By comparison, the 2000–2001 recession was mild com-
employment, industrial production, and wholesale-retail sales” pared to the 2007: Q4–2009: Q2 recession. After the end of that
(“Business Cycle Dating Committee, National Bureau of Eco- period, it took over four years before employment recovered to
nomic Research” Sept. 20, 2010). While this expanded defini- prior peaks. Both GDP and employment fell substantially far-
tion includes fluctuations in employment, employment is only ther in this recession, and it may take longer to fully recover.
one of the many criteria considered, and GDP is still the pri- So, while the latest economic recession officially ended in June
mary driver. 2009 and the recession in the labor market lasted until Febru-
ary 2010, employment levels may not return to prior levels for
To reconcile how the NBER can declare the latest recession
to have ended but still have unemployment remaining so high,
the NBER states, “A recession is a period between a peak and a
trough, and an expansion is a period between a trough and a Cyclical Fluctuations and Structural Issues
peak”( In declaring that
the end of the latest recession occurred back in June 2009, the Still, it must be understood that the labor market fluctua-
NBER is only saying that the latest business cycle reached its tions during and following a recession are primarily cyclical.
bottom and economic activity is expanding from the trough Cyclical refers to short-term or reversible issues that usually re-
(the bottom of the cycle). The NBER is not saying that the na- solve themselves. When economic activity declines, businesses
tion’s economy has fully recovered. In fact, it will take many will slowly trim their labor force. When economic activity im-
more months (maybe even years) before the labor market fully proves, businesses will slowly increase their labor force. This
phase of a recession is seen as self-correcting. As Richard Eb-
erling states, unemployment is a “necessary and healthy part of

Chart 1. U.S. Real GDP ($Billions) and Employment (000), 2000: Q1–2010: Q3
$13,500 141,000
Real GDP

Employment 139,000
Total Employment (000)
Real GDP ($Billions)




$11,000 127,000
200 : Q2
200 : Q3
201 : Q4
201 : Q1
201 : Q2
200 : Q1
200 : Q2
200 : Q3
200 : Q4
200 : Q1
200 : Q4
200 : Q1
200 : Q2
200 : Q3
200 : Q4
200 : Q3
200 : Q4
200 : Q1
200 : Q2
200 : Q3
200 : Q2
200 : Q3
200 : Q4
200 : Q1
200 : Q2
200 : Q1
200 : Q2
200 : Q3
200 : Q4
200 : Q1
200 : Q2
200 : Q3
200 : Q4
200 : Q1
200 : Q1
200 : Q2
200 : Q3
200 : Q4
200 : Q1
200 : Q2
200 : Q3
200 : Q4

0: Q

Sources: U.S. Bureau of Econmoic Analysis and U.S. Bureau of Labor Statistics.

4 Business Perspectives Fall 2010/Winter 2011
Chart 2. Last Four Recessions: Employment Peak to Recovery workers (i.e., independent or private
contractors and temporary workers)
(Levine 2005).
Another outcome of structural
change may be that job skills and
labor market experiences do not
match the requirements of new job
opportunities. Long-term structural
unemployment rates increase as the
duration of unemployment rises.
Reducing long-term structural un-
employment rates is difficult and
requires massive investments in
education and training. Structural
an economic recovery process that follows the bursting of the unemployment rates are immune to
bubbles of an economic boom” (“Unemployment Trends and an economic recovery and will not be reduced by the creation
Economic Recovery” 2008). of new job opportunities.
Brad DeLong offers the following insights into the work-
ings of this cycle: Unemployment and Underemployment
a. businesses will tend to “hoard labor” in recessions, The U.S. Bureau of Labor Statistics defines unemployment
keeping useful workers around and on the payroll even as the following:
when there is temporarily nothing for them to do;
Persons are classified as unemployed if they do not have
b. businesses will cut back hours when unemployment a job, have actively looked for work in the prior 4 weeks,
rises, reducing output more than proportionately be- and are currently available for work. Persons who were
cause total hours worked will fall by more than total not working and were waiting to be recalled to a job from
bodies employed; which they had been temporarily laid off are also included
c. plant and equipment will run less efficiently when as unemployed. Receiving benefits from the Unemploy-
hours are artificially shortened; and ment Insurance (UI) program has no bearing on whether
a person is classified as unemployed. (“Unemployment”
d. some workers who lose their jobs won’t show up in the
unemployment statistics, choosing instead to retire or
drop out of the labor force. (“The Jobless Recovery Has Thus, unemployment means that a person does not have a job,
Begun” 2010) is actively looking for work, and is available for work.
During an economic recovery, businesses are slow to rehire,
wary of insufficient sales to cover
growth in their work force. Chart 3. Duration of Last Four Recessions Until Recovery
By contrast, structural changes
are not self-correcting. Structural is-
sues include the permanent elimina-
tion of jobs, thus forcing workers to
move to new industries or sectors.
In addition to the elimination of tra-
ditional job opportunities, structural
changes may also include outsourcing
jobs to other companies either within
or outside the U.S. to cut costs. Anoth-
er example of structural change may
include the utilization of contingent

Fall 2010/Winter 2011 Business Perspectives 5
Chart 4. Alternative Measures of Labor Underutilization, U.S., The definition for underemployment is more
Fourth Quarter 2009 Through Third Quarter complex. The U.S. Bureau of Labor Statistics (BLS)
2010 Averages (%) has multiple variations of the definition of unem-
ployment. Typically, the BLS classifies underem-
ployment as U-6, which includes the following:
“total unemployed, plus all marginally attached
workers, plus total employed part time for eco-
nomic reasons, as a percent of the civilian labor
force plus all marginally attached workers” (2010).
In essence, one underemployed is an employee who
is overqualified for the position he or she holds, is
earning less than was previously earning, is work-
ing part time when he or she desires full-time em-
ployment, or is a person who is not in the labor
force (or part of the labor force reserve) who de-
sires employment.
Underemployment also has an obvious nega-
tive impact on the economy. According to Husana
Haq, the underemployed typically earn much less
than the fully employed, which costs the economy
“hundreds of millions of dollars every month”

Map 1. Persons Unemployed 15 Weeks or Longer As a Percentage of the Civilian Labor Force (U1), U.S.,
Fourth Quarter 2009 Through Third Quarter 2010 Averages

6 Business Perspectives Fall 2010/Winter 2011
(“Unemployment Rate: 9.7 Percent. Underemployment: Far
Higher” 2010). Long-term structural unemployment
rates increase as the duration of
What Can Be Expected? unemployment rises. Reducing long-
Once the economy rebounds, as employment increases and
unemployment rates decline, the future for the U.S. job market term structural unemployment rates
will be more certain. Even though the economy has shown signs is difficult and requires massive
of a recovery, unemployment rates continue to remain high and
cannot be expected to fall until the recovery is well underway. A investments in education and training.
family’s economic wellbeing is measured by income (Acs 2008, Structural unemployment rates are
2). A lack of employment and income opportunities reduces a
family’s ability to consume goods and services. Logically, if un- immune to an economic recovery and
employment rates continue to be high and the duration of un-
employment gets longer and longer, the negative impact of the will not be reduced by the creation of
recession and the risk of a double dip increases (Fox 2009). In- new job opportunities.
deed, during this recovery period, Americans “will save more,
spend in closer proportion to their income and increase their
borrowing more slowly, or decrease it outright in the coming
years,” which will lead to “slow consumer spending and overall

Map 2. Total Unemployed, Plus All Marginally Attached Workers, Plus Total Employed Part time for Economic Reasons
As a Percentage of the Civilian Labor Force, Plus all Marginally Attached Workers (U-6), U.S., Fourth Quarter
2009 Through Third Quarter 2010 Averages

Fall 2010/Winter 2011 Business Perspectives 7
economic growth unless other sources of demand materialize” References
(Emmons 2010, 9).
Acs, Gregory. “Unemployment and Income in a Recession.”
College graduates and young adults entering the job mar- Urban Institute Recession and Recovery Series 1 (Decem-
ket are facing more difficulties now than in the past. As these ber 2008): 1-2.
individuals enter the job market, they may be forced to accept
DeLong, Brad. 2009. “The Jobless Recovery Has Begun.” The
jobs at lower wages, which impacts future earnings for up to July 20. n. pag.
a decade (Nouguchi 2010). Since jobs are scarce, salaries are
column/98770/The_jobless_recovery_has_begun (ac-
driven down (Murray 2009). In addition, Nouguchi notes that
cessed June 30, 2010).
since these same young adults settle for less, they will be prone
to “hoard” jobs, meaning they will remain in positions poorly deWolf, Mark, and Katherine Klemmer. “Job Openings, Hires,
matched for their skills and abilities (“Finding a Job is Hard and Separations Fall During the Recession.” Monthly
for Even the Most Educated” 2010). In other words, the newly Labor Review (May 2010): 36–44.
employed may settle for underemployment rather than face the Eberling, Richard M. 2008. “Unemployment Trends and
prospect of unemployment in a weak labor market. Economic Recovery.” American Institute for Economic
Research, December 19.
Conclusion recovery (accessed May 20, 2010).
Employment, unemployment, and underemployment are Emmons, Bill. “Economic Hangover: Recovery Is Likely to be
among the most important and yet most difficult to understand Prolonged, Painful.” The Regional Economist, April 2010,
concepts in economics. As Bruce Nussbaum rightly notes, we 5–9.
have a faith-based economy; we “believe deeply in education,
innovation, risk-taking, and plain hard work as the way to a Fox, Justin. 2009. “Why the Economic Recovery May Be Disap-
better life” (“Where Are the Jobs?” 2004). The economy is inter- pointing.” May 5. n. pag.
connected with the true backbone of consumerism: the Ameri- time/business/article/0,8599,1895832,00.html (accessed
can worker. Is the economy improving? Economic indicators— May 20, 2010).
including employment—are clearly showing signs of recovery. Groshen, Erica L., and Simon Potter. “Has Structural Change
The United States was built on the hard work and flexibility of Contributed to a Jobless Recovery?” Current Issues in Eco-
the labor force. The future of the economy will be determined nomics and Finance 9.8 (2003): 1–7.
by the willingness of workers to adapt to new conditions in the
labor market. ●

John E. Gnuschke, PhD
Dr. John E. Gnuschke is Director of the Bureau of Business and Economic Research and the Center for Manpower Stud-
ies and Professor of Economics at the University of Memphis. The Bureau and the Center are the applied business, eco-
nomic, and labor market research divisions of the Fogelman College of Business and Economics. The divisions support
the research and publication efforts of faculty members and interact with other research organizations, government
agencies, and the business community. The Bureau and the Center rank among the top applied research divisions in the
nation with approximately $3.0 million in research contracts. Dr. Gnuschke also serves as the Director of the Applied
Information Technology Center and is Co-Director of the Center for Real Estate Research.
Dr. Gnuschke received his PhD and MA degrees from the University of Missouri at Columbia and his BS from Utah
State University. His areas of expertise include market assessments, survey research, impact studies, revenue and cost
estimates, labor market studies, and competitor analyses. As a widely recognized leader in his profession, he serves on
numerous local, state, and national committees and boards. He has served as president of the national Association for
University Business and Economic Research (AUBER). He works closely with community leaders and organizations
throughout the Mid-South. In addition to his academic and contract research activities, Dr. Gnuschke has over 25 years
of experience as a private consultant to major business, legal, financial, and government organizations.

8 Business Perspectives Fall 2010/Winter 2011
Haq, Husana. 2010. “Unemployment Rate: 9.7 Percent. Un- Nardelli, Bob. “Job Creation: Enlist the Experts.” Bloomberg
deremployment: Far Higher.” Christian Science Monitor Businessweek, April 5, 2010, 88.
March 5. n. pag. National Bureau of Economic Research. 2010. “Business
2010/0305/Unemployment-rate-9.7-percent.-Underem- Cycle Dating Committee, National Bureau of Economic
ployment-far-higher (accessed June 11, 2010). Research.” September 20. n. pag.
Jacobe, Dennis. 2010. “Focus on Education May Reduce cycles/sept2010.html (accessed October 10, 2010).
Underemployment: Right Now, Better-Educated Ameri- Nouguchi, Yuki. 2010. “Finding a Job is Hard for Even the Most
cans Are More Likely to Get Full-Time Work.”, Educated.” March 29. n. pag.
March 26. n. pag. templates/story/story.php?storyId=125223926 (accessed
focus-education-may-reduce-underemployment.aspx May 25, 2010).
(accessed June 7, 2010).
Nussbaum, Bruce. 2004. “Where Are the Jobs?” Bloomberg
Kiviat, Barbara. 2010 “The Workforce: Where Will the New Businessweek, March 22. n. pag. http://www.businessweek.
Jobs Come From?” March 19. n. pag. http:// com/magazine/content/04_12/b3875601.htm (accessed,8599,1973135,00. July 16, 2010).
html (accessed May 20, 2010).
U.S. Bureau of Labor Statistics. 2010. “Alternative Measures
Levine, Linda. 2005. “Unemployment Through Layoffs: What of Labor Underutilization for States, Fourth Quarter of
Are the Underlying Reasons?” Cornell University ILR 2009 through Third Quarter of 2010 Averages.” Local Area
School April 25 n. pag. Unemployment Statistics October 29 n. pag. http://www.
“Memphians Brace for End of Jobless Benefits.” (accessed October 29, 2010).
December 1, 2010. ---. 2010. “Unemployment.” Labor Force Statistics from the
jobless-benefits,0,7397689.story (accessed December 1, Current Population Survey December 17. n. pag. http://
2010). (accessed
Murray, Sara. 2009. “The Curse of the Class of 2009.” Wall December 17, 2010).
Street Journal May 9. n. pag.
SB124181970915002009.html (accessed July 26, 2010).

Jeff Wallace, PhD
Dr. Jeff Wallace is an Economist and Research Associate Professor of Applied Economic Research at the Sparks Bureau of
Business and Economic Research at the University of Memphis. He has been in this position since 1994.
Dr. Wallace specializes in economic impact studies, having most recently completed an economic impact study of the
University of Tennessee’s College of Pharmacy (2006–2007), a study of the economic impact of Baptist Memorial Health
Care Corporation (2005), and the economic impact of Memphis International Airport (2005).
Dr. Wallace also has substantial experience in tax revenue forecasting, government fiscal analysis, survey research, labor
market analysis, product-market pricing analysis, state labor training program evaluation, and other state and local
government program evaluations.

Stephen Smith
Stephen Smith serves as both Research Associate II and Editor at the Sparks Bureau of Business and Economic Research
at the University of Memphis. He has been with the Bureau since 1994. Mr. Smith earned a MA in English from the Uni-
versity of Memphis. Currently, he is completing his doctoral studies in English with a major in Professional Writing. His
study and professional backgrounds include classical rhetoric, rhetoric of science, visual rhetoric, technical communi-
cation, and layout and design.
Fall 2010/Winter 2011 Business Perspectives 9
James G. Neeley, Commissioner, and
Susan K. Cowden, Administrator, Division of Workforce Development,
Tennessee Department of Workforce Development
(Special thanks to Jeff Hentschel, Communications Director, Tennessee Department of Workforce Development)
10 Business Perspectives Fall 2010/Winter 2011
How Has Tennessee Been Able to Maintain
a P o s i t i v e B u s i n e s s C l i m at e i n S p i t e o f
the Decline in the Economy?
Fall 2010/Winter 2011 Business Perspectives 11
T Summer Jobs for Disadvantaged Youth
he Division of Workforce Development within the Ten-
nessee Department of Labor and Workforce Develop-
As part of the American Recovery and Reinvestment Act of
ment is focused on retraining individuals who have
2009, Tennessee was provided additional funding to increase
lost jobs so that they may be poised for quick re-entry into the
the numbers of dislocated workers entering training and to
workforce upon full economic recovery. The Division recently
provide summer jobs to disadvantaged youth. From June to
received high honors from the United States Department of La-
August 2009, more than 13,000 economically-disadvantaged
bor and was ranked fourth in the nation in attainment of estab-
youth had the opportunity to earn and learn as part of the
lished performance measures such as job entry, job retention,
Summer Youth Employment Program. The double-digit unem-
and average wages for those exiting the program. For this effort,
ployment figures for the total population pale in comparison to
Tennessee will receive a $1 million incentive award to advance
the unemployment figures for youth aged 14 to 24, a group that
the governor’s vision for workforce development throughout
is facing more than 40 percent unemployment in this difficult
the state.
Through state and local partnerships, Tennessee Career
For the first time since 1999, summer jobs were made
Centers provide training for individuals and businesses that
available, and for the first time ever, jobs were allowed in the
improve the quality of the workforce and ultimately create new
private sector. Participating employers included the Memphis
jobs. Due to the state of the current economy, this description
Commercial Appeal, First Bank of Tennessee, and Hospital Cor-
has expanded, and programs are now charged with supporting
poration of America. “The Commercial Appeal Summer Youth
economic recovery. This is accomplished by providing those
Employment Program gives students exposure to a profes-
losing jobs with the skills they need to get the jobs of the future.
sional work environment, positive role models, and the daily
An annual report on usage of the Tennessee Career Centers operations of a historic pillar of the Memphis corporate com-
clearly articulates the downturn in the economy. In 2007, the munity that would be otherwise unattainable for many of these
total number of job-seeker visits to all of the Career Centers students,” said Eunice Johnson, Human Resources Director,
in the state just exceeded 400,000. In 2009, this total number Memphis Commercial Appeal.
jumped to a staggering 1,018,319. In turn, in 2007, more than
7,500 Tennessee employers placed job orders to fill vacancies in
their companies, while in 2009, this number dropped to fewer Economic Recovery in
than 4,500 employers. In spite of these realities, hundreds of Extremely High Unemployment Counties
thousands of Tennesseans are receiving much needed services
In addition to the tremendous needs of Tennessee youth, it
that will continue to put the state on the road to economic re-
became apparent that many Tennessee counties would experi-
ence unemployment figures in excess of 20 percent. When we
Since March 2009, Tennessee’s unemployment rate has reflect on what is now being referred to as the “Great Recession,”
fluctuated between 10 and 11 percent, reflecting almost double one Tennessee county actually entered into a “Great Depres-
digits from prior years and challenging the state’s approach to sion.” In Perry County (Linden, Tennessee), the unemployment
delivering workforce training services. According to recent em- rate hit a staggering 27 percent last summer. The state became
ployment forecasts, it appears that these new statistics may be aware that a new approach to delivering services had to be im-
the norm for several years to come. In this economy, how do plemented in order to prop up the economy and avoid further
the state’s workforce training programs respond in a way that economic disaster for this community. In partnership with the
continues to create a positive business climate? Tennessee Department of Human Services, the Workforce De-
The Tennessee Department of Labor and Workforce Devel- velopment Division created a program to provide government-
opment operates programs throughout the 13 Local Workforce subsidized employment in the private sector to more than 500
Investment Areas (LWIA) that provide summer job training unemployed adults and youth. Through September 2010, an
programs for disadvantaged youth, target unemployed individ- Emergency Grant intended to prevent unemployed individuals
uals in extremely high unemployment counties, and upgrade from falling further below the poverty level was in place to en-
the skills of the transitioning workforce in a way that prepares sure that these Tennessee citizens would have a paycheck and
them for the jobs of the future. that many local businesses would continue to operate. Since the
program started last year, it has been expanded to include four
other Tennessee counties—Lauderdale, Hancock, Smith, and
Marshall—serving more than 1,000 unemployed individuals.

12 Business Perspectives Fall 2010/Winter 2011
Map 1. Tennessee Local Workforce Investment Areas

Retraining Dislocated Workers of these companies and others, transitioning workers must be
provided with the technical training needed for these jobs of
In those counties with unemployment rates of 10 to 15 per-
the future.
cent, Career Center staff explain training services as individu-
als apply for Unemployment Insurance (UI). These workers are Governor Bredesen formed the Tennessee Jobs Cabinet un-
usually transitioning from one job to another and if they have der Executive Order Six soon after taking office in 2003. Now,
transferable skills, the Center staff immediately attempts to as- seven years later, the state is realizing the tremendous outcome
sist with re-employment. Many individuals need some type of of this initiative, having for the fifth year in a row just been
retraining, and they are encouraged to pursue careers in indus- ranked in the top five states in the nation as best business loca-
tries with worker shortages, such as information technology, tion according to Site Selection magazine, one of the nation’s
health care, clean energy, and the skilled trades. The one thing premier economic development publications. The editor, Mark
these industries have in common is that they all have highly Arend, says of Governor Bredesen: “His understanding of the
skilled jobs. business world and government’s role therein is readily appar-
ent.” (To view the complete rankings, visit www.siteselection.
Workforce Development programs have increased training
opportunities by 30 percent with Recovery Act funds so that
workers are ready when the economy makes a full recovery. As While jobs in the manufacturing sector have shown a de-
we have moved from the industrial age to the information age, cline in Tennessee over the past decade, the state has contin-
the skills required to obtain a job have drastically shifted. Over ued to focus on preventing layoffs when possible and attracting
the past 50 years, the number of jobs requiring some type of businesses to the state that will allow for the transition of the
degree has remained constant at 20 percent. The major change workforce. How has Tennessee been able to maintain such a
has been in the number of “unskilled” jobs. In the 1950s, these positive business climate as evidenced by the recent rankings?
jobs represented more than 60 percent of the total, but now One of the founding principles of the Jobs Cabinet was
they represent less than 12 percent. The number of jobs requir- to bring together all of the key leaders throughout state gov-
ing some type of skilled training beyond high school has grown ernment to create a desirable economic development climate
from less than 20 percent to more than 60 percent. and cut through the red tape that often becomes a barrier to
recruitment and retention.
Bringing New Jobs to the State One of the departments that has been instrumental in as-
sisting the Department of Economic Development, the lead
Even in this economy, the governor and economic develop- agency in the Jobs Cabinet, is the Tennessee Department of La-
ment officials have made great strides in recruiting new jobs bor and Workforce Development. Through the development of
to the state. Several examples include the newly-announced $1 the Fast Track initiative, companies are able to inquire about
billion investment by Hemlock Semiconductor in Clarksville, relocation and receive a multi-departmental proposal within a
Wacker Chemie in Cleveland, and the new Volkswagen plant in few days. This initiative gives Tennessee an edge when compet-
Chattanooga, bringing in over 4,000 new jobs. With the advent ing with other states.

Fall 2010/Winter 2011 Business Perspectives 13
ment of Labor and Workforce Development has provided
Chart 1. Incumbent Worker Training, Trainees by Year,
grant funding of more than $13 million that has provided
training to more than 46,000 existing employees,” said
Van Der Spuy. The program’s goal is to strengthen busi-
nesses through employee skill upgrades and help prevent
companies from having to relocate to other states or close
completely. The program has resulted in the prevention
of more than 220 company relocations while saving more
than 14,000 existing jobs within the state.
The program is administered through the state’s 13
Local Workforce Investment Areas (LWIAs), and the cur-
rent program year is from July 1 through June 30 of the
following year. For additional information, interested em-
ployers should contact their LWIA or visit the department’s
The following describes some of the innovative programs website at
offered by the state that give Tennessee a competitive edge in
recruiting new businesses, retaining existing industry, and en-
couraging growth within local economies:

Chart 2. Incumbent Worker Training, Funds Awarded by Year,
On-the-Job Training 2003–2009
As mentioned previously, the Department of Labor
and Workforce Development has partnered with Eco-
nomic and Community Development on more than 150
proposals through the governor’s Fast Track initiative.
These proposals have resulted in more than $12 million
in on-the-job training commitments for the recruitment
of new industry or the expansion of existing Tennessee
businesses. The program combines 12 state departments
and entities as well as TVA, the Department of Revenue,
and local government to provide responses to interested
employers within 72 hours of contact by the employer.
“This program provides reimbursement to em-
ployers who provide on-the-job training to newly hired Investment in Rural Economic Development
employees who do not have all of the skills necessary to
One of the state’s priorities for the next several years is to
perform their new jobs,” said Sterling Van Der Spuy, Direc-
expand economic opportunities to the rural areas that have
tor of Employer Services for the department. “After a train-
seen a decline in manufacturing jobs. According to Economic
ing plan is developed and completed and the individual is
and Community Development, the state has seen the creation
moved from subsidized to unsubsidized employment, the
of more than 103,000 jobs since 2003. With the attraction of the
employer may receive reimbursement of up to 50 percent
Nissan North American Headquarters to Cool Springs, includ-
of the wages paid during the training period.” Employ-
ing the development of their electric car in Smryna, the eco-
ers should note that it is prohibited to provide on-the-job
nomic forecast for Tennessee is strong, but we will need to fo-
training in situations where workers are being displaced in
cus on rural economic development. As evidenced by the map
another region or part of the country.
overview of the Incumbent Worker Training grants awarded
across the state, the Department of Labor and Workforce De-
Incumbent Worker Training Program velopment is playing a substantial role in advancing the attain-
This program was designed to assist existing busi- ment of this goal. ●
nesses with the training costs necessary to remain com-
petitive. “In the seven years since its inception, the Depart-
14 Business Perspectives Fall 2010/Winter 2011
Map 2. Tennessee Local Workforce Investment Areas, 2003–2009

Incumbent Worker Incumbent Worker Incumbent Worker Incumbent Worker
LWIA Grants Awarded LWIA Grants Awarded LWIA Grants Awarded LWIA Grants Awarded
1 45 5 47 8 77 11 70
2 38 6 27 9 38 12 29
3 24 7 30 10 67 13 26
4 100

James G. Neeley, Commissioner, Tennessee Department of Labor & Workforce Development
Governor Phil Bredesen appointed James G. Neeley Commissioner for the Tennessee Department of Labor and Workforce Devel-
opment when he took office in 2003. Commissioner Neeley has extensive knowledge of state regulations in Workers’ Compensa-
tion, Unemployment Insurance, Safety and Workforce Development.
Neeley is also a key player in the Governor’s Jobs Cabinet. He traveled across the state with Governor Bredesen for a series of
roundtable meetings with local business, government and workers to develop ways to bring new business to Tennessee.
In 2004, Neeley won the prestigious Eagle Award from the National Association of State Workforce Agencies. The Award honors
individuals who soar to new heights in their efforts to serve employers and workers in the United States.
In 2005, Neeley was honored with another prestigious award nominated by the Tennessee Department of Education. He received
the Distinguished Service Individual Award from the National Association of State Directors of Career Technical Education Con-
sortium. Neeley received the award for his decades of service to improve opportunities for all Tennesseans including his service
on the executive committee for Education Edge.
In 2006, Neeley was named Carroll Countian of the Year by the Carroll County Chamber of Commerce, and in 2007, he was hon-
ored as the Fred Harris Professional of the Year by the Tennessee Industrial Development Council. Throughout his career, Neeley
has served on various state, federal, local and regional boards and commissions.

Susan Cowden, Administrator, Division of Workforce Development
Susan Cowden serves as Administrator for the Division of Workforce Development, having previously served as Director of Em-
ployment and Training for the department. She has 20 years of leadership experience, operating workforce development and wel-
fare reform programs that serve job seekers and employers. She was Director of Family Assistance for the Tennessee Department
of Human Services with responsibility for Medicaid, TennCare, Food Stamps, Families First, and Electronic Benefit Transfer. She
has local experience, having served as Program Director for the Nashville Career Advancement Center in Nashville and Regional
Manager for local workforce area four in East Tennessee.
Susan attended Vanderbilt University and holds a bachelor’s degree from the University of Tennessee, Knoxville. She is a graduate
of the Tennessee Government Executive Institute, Class of 2002, was elected to the Steering Committee, and served as Vice Chair
in 2003.
Fall 2010/Winter 2011 Business Perspectives 15
M o r e
L a s t
o v e r ” r
H a n g o n f o
r e a t d u a t i
h e “ G r G r a
i l l t A f t e a t e s ? by
W D ay r a d u
n t h e g e G K. W
a l k er,
Tha C o l l e a n d Jay
e a r ch
e a r ' s P a c ura r
o m i c Re s
Th i s Y I o ana S o fia
e s s a nd E c o n
y o f Me m p h
f B u sin n ive rsit
o eau U
B u r The
Spa rks
16 Business Perspectives Fall 2010/Winter 2011
he recent recession has been referred to as the “Great
Hangover” after the roaring times and subsequent col-
lapse of the housing bubble only a few years ago. For
recent graduates, the impact could linger on well past when
the recession is over (if some recent economic research is to
be believed). Graduating into the labor market during a reces- vey of Youth between 1979 and 1989, Kahn finds that students
sion can make obtaining a job more difficult initially out of graduating in worse national and state economic conditions
college, or it can result in graduates landing a position at a pay begin in lower level occupations, have slightly higher tenure in
rate below what might be commanded in a regular hiring year. those occupations, and possess more years of schooling.
What is less evident is to what extent the economic context of A number of theories can potentially explain why the eco-
the initial career placement of newly minted graduates matters nomic environment at the time of graduation has long-term
in determining their long-term success and earnings potential. effects on the income and job quality an individual could at-
Lisa Kahn, a labor economist at Yale University, suggest- tain later in his career. One possibility is that in a recession,
ed in a 2010 Labour Economics article that graduating from low levels of firm-specific human capital might cause work-
college in a bad economy has persistent negative wage effects ers to accumulate less job knowledge and training or suffer
lasting far beyond when initially hired. Her results show nega- from depreciation of skills, which would translate into lower
tive wage impacts could persist well into the second decade of wages. Models by Gibbons and Waldman (2006) and Lazear
one’s career. Using data from the National Longitudinal Sur- (2003) suggest that even in the absence of firm-specific hu-
Fall 2010/Winter 2011 Business Perspectives 17
man capital, initial conditions can be important for long-term Chart 1. Percentage Wage Impact from an
labor market outcomes because of the impact on task-, firm- Additional Percentage of Unemployment at
, or sector-specific skill development. Moreover, individual Time of Graduation
tastes and attitudes toward performance (work ethics, drive
to succeed, etc.) may evolve based upon their experiences and
work environment (Rayo and Becker 2005). In the Gibbons and
Waldman (2006) model, for example, employees develop "task
specific human capital"; those hired under favorable economic
conditions are initially given higher value tasks and thus devel-
op more valuable human capital that persists throughout their
careers. Similar persistent negative effects are observed when
the job market takes initial job placement as a signal of ability
and fails to compensate for the "bad luck" associated with mar-
ket conditions. Models where search is costly either for firms
or for employees lead to frictions where initial jobs are likely to
affect long-term opportunities. Models where incumbent firms
have useful private information (Akerlof 1970; Waldman 1984)
concerning an employee’s productivity or where there are lim-
its to long-term commitment (Tervio 2009), possibly due to
high unemployment, have similar negative implications.
dent's expected income over the first 10 years of his or her ca-
Analyzing labor market outcomes as a function of econom- reer (Chart 2). Notably, individuals who have lower expected
ic conditions in the year a student graduates is not straight- earnings when graduating from college will be more negatively
forward. Students may take into account national and local affected in terms of decreased earnings potential from gradu-
unemployment rates and economic conditions when choosing ating in periods with higher unemployment. Since prior earn-
time and place of college graduation, which may confound the ings can translate into future earnings potential, individuals
relationship. Potential tenure or work experience might also be may be relegated throughout their careers to lower earnings if
endogenous to (determined at the same time as) current labor they graduate into occupations with lower expected earnings.
market conditions. After controlling for the endogeneity issues These lower expected earnings arguably raise the stakes of an
by taking into account year of birth and local economic con- individual student's choice of college major according to the
ditions, Kahn (2010) finds that in response to a one percent- economic climate at graduation.
age point increase in the national rate of unemployment, the
post graduation wage rate will drop by 5.9 percent (Chart 1). Oreopoulos et al.'s (2008) baseline model estimates the
Although this impact does decline with time, at 15 years after impact on income of graduating in a recession for graduates
graduation for each percentage point increase in the national according to years of experience past college, which allows for
unemployment rate at graduation, individuals should still, on comparison with Kahn's findings. The initial negative impact
average, expect 2.6 percent lower wages. This negative wage of an additional one percentage point increase in unemploy-
impact at 15 years post-graduation is statistically significant ment for someone just graduating college was a decrease of 2.1
only at the 10.0 percent level, but the reported wage impact at percent in wages. The negative impact of a higher unemploy-
10 years post-graduation of -3.8 percent per percentage point ment rate lessened, although remained significant in year five
increase in the unemployment rate at graduation is strongly post-graduation at a 0.6 percent decline per additional percent-
significant at the 1.0 percent level. age point of unemployment upon graduation from college. The
effect of economic climate at graduation from college becomes
Oreopoulos, van Wachter, and Heisz (2008) cover many of statistically insignificant at six years or more experience be-
the same topics Kahn discussed. Oreopoulos et al. are of inter- yond graduation.
est in that they employ a Canadian data set covering the pe-
riod from 1982 to 1999 and find similar results as Kahn (2010). The studies that have looked at the impact of starting a
Oreopoulos et al. find the same initial negative effects over time career in a bad economy disagree when it comes to the magni-
of graduating in a recession and further claim that the nega- tude and duration of the estimated negative wage effects, pos-
tive effect of graduating in the midst of a typical recession may sibly because they focus on correcting for the endogeneity of
differ according to the decile of the net present value of a stu- graduation time and location. Mansour (2009) points out that
such analyses could suffer from bias via employers’ ability to
18 Business Perspectives Fall 2010/Winter 2011
Chart 2. By Decile of Expected Earnings, Percent Change in Statistics indicate that the unemployment rates for both col-
Present Value of Earnings from Graduating in a lege graduates and non-graduates younger than 25 are nearly
Recession During 10 Years After College Graduation double their pre-recession levels. Put differently, since the start
of the recession, the portion of the labor force aged 16 to 24 has
contracted by 1.1 million workers, while an additional 1.2 mil-
lion 16- to 24-year-olds have become disconnected from both
formal schooling and work. It follows that the labor force con-
taining graduates has expanded by 8.0 to 10.0 percent, while
the number of jobs has decreased markedly due to the eco-
nomic climate.
For those who do graduate, the prospects are even more
in question.1 College graduates make significant investments in
their education and, therefore, exhibit strong labor force attach-
ment rates. Their labor force participation (measured as the
share of the population that is either employed or actively seek-
ing employment) averages 92.6 percent over the last business
cycle (between 2000 and 2007). However, they face particularly
high unemployment: the 12-month unemployment rate jumps
from 5.4 percent in 2007 to an average of 9.0 percent between
April 2009 and March 2010.
Although the current scenario may appear bleak on the
positively select candidates. During periods of high unemploy- surface, one should not be completely averse to entering the job
ment, the number of candidates in the labor market is higher market at this stage. While there could be long-run negative ef-
than the number of available jobs. Consequently, high ability fects of graduating in a recession, individual students can cope
workers might apply for jobs for which they are overqualified with less optimistic labor markets in a variety of ways and a
or would not otherwise apply (Okun 1973). Sum, McLaughlin, poor economy is no guarantee of an individual graduate's poor
Palma, Motroni, and Khatiwada (2008) estimate that young labor market results. Factoring local and national unemploy-
college graduates working in jobs that do not require a college ment rates into an individual's decision to graduate or being
degree will, on average, earn 30.0 to 35.0 percent less per year open to moving geographically to a location that is less affected
than their counterparts employed in jobs that require a col- by the recession could negate some negative labor market ef-
lege degree. When there is excess labor supply, firms observe fects. Oreopoulos et al. (2008) document that the unemploy-
the productive abilities of young candidates (as signaled by ment rate at job entry by diminishing the worker's starting
their majors, internships, etc.) and hire the most productive wage significantly increases the probability of job separation.
workers available. The result is a misallocation of high abil- A more recent paper by Bachmann, Bauer, and David (2010)
ity workers to lower quality jobs, which could explain why the focuses entirely on how increased job mobility is able to partly
mean productive ability of newly hired workers in a recession reverse earnings losses experienced due to economic down-
is higher than among workers hired during better economic turns. The analysis suggests that the labor market entrants
conditions (McLaughlin and Bils 2001). Not controlling for earning less than the average starting wage are more likely to
this effect might underestimate the true impact of recessions change jobs, directly or indirectly. In turn, the job transitions
on career outcomes and severely diminish its persistence over tend to reduce the effects of entry conditions, implying that job
time (Mansour 2009). After including Armed Forces Qualifica-
tion Test scores as measures of ability in his regressions using 1
A complimentary study (Stevens 2008) investigates how the macro-
NLSY79 data, Mansour (2009) shows that a 1.0 percent increase economic environment at entry into the labor market affects low- and
in the unemployment rate at graduation reduces wages by 5.0 medium-skilled workers’ wages over the lifecycle. The author concludes
percent, and this effect does not converge to zero after 12 to 15 that the labor market outcomes of less skilled workers are not very vulner-
able to the economic conditions at the start of the career. She uses detailed
years in the labor market.
German employment data including males born between 1965–1977 who
What is immediately certain is that the class of 2010 will finish general and intermediate secondary school and shows that entering
be entering a labor market with the highest unemployment in the labor market in a recession (with 9.0 percent versus 4.0 percent unem-
at least a quarter of a century. Data from the Bureau of Labor ployment) implies 3.0–6.0 percent lower wages in the first four years of
one’s career, but these negative effects diminish over the next three years.
Fall 2010/Winter 2011 Business Perspectives 19
mobility operates as an adjustment mechanism that reduces With such stark differences in outcomes for individuals
the effect of the initial wage differences between workers. with differing education levels, some students might be choos-
Arguments persist for continuing one’s education and ven- ing to stay in school rather than face a decreased present value
turing into graduate school, for choosing majors with higher of earnings. In a recent New York Times article, Rebecca Ruiz
earnings potential, and for enhanced networking to improve (2010) notes that the number of people registering to take
expected earnings beyond graduation. Job scarcity lowers the the Law School Admissions Test hit an all-time high in 2009,
opportunity cost of accumulating more schooling and induces up 20.0 percent from 2008. She also states that the number of
individuals to postpone entry in the labor market. Kahn (2010) Americans taking the Graduate Record Examination (GRE)
argues that the higher the national unemployment rate, the rose 13.0 percent compared to the previous year with 670,000
more likely students will remain in school and will continue test takers, which is a sharp reversal from 2008 when examina-
their education. As shown in Chart 3, recent data from the Bu- tions were down 2.0 percent in spite of the recession already
reau of Labor Statistics show that education pays in higher being underway.
earnings and lower unemployment rates. As education levels As heads clear and hangovers recede for this year’s gradu-
increase, a college graduate with a bachelor’s degree faced an ating classes, will the “Great Hangover” continue to cause prob-
average unemployment rate of 5.2 percent in 2009, while an lems for young graduates? Based on the previously discussed
individual holding less than a high school diploma faced a job research, it appears that could be the case. Candidates should
market segment characterized by almost 15.0 percent unem- weigh their options carefully prior to choosing to enter the la-
ployment. Moreover, a bachelor’s degree brought home, on av- bor market, as this year’s economic climate could have lasting
erage, $1,025 per week in 2009, while less than a high school effects on their career and earnings. The evidence offered for
diploma only paid, on average, $454 in weekly earnings. Ac- larger decreased earnings for graduates with lower expected
cording to a recent Web article by Jacobe (2010), Chief Econo- earnings potential places extra emphasis on choice of major
mist at Gallup, those without a high school diploma face a 36.2 and the type of hat that graduates choose to wear, in that higher
percent underemployment rate,2 are three times more likely to earnings potential career paths seem to have higher expected
be underemployed than those having a college degree, and are earnings even in the face of a recession. Continued education in
four times more likely to be underemployed than those who general seems to improve labor market outcomes and increase
have done some postgraduate work. expected earnings, but individuals should be selective in their
choices of academic degrees to obtain. Although an individual
Gallup classifies Americans as underemployed if they are unemployed or can succeed or fail in any economic climate, sometimes a little
working part time but wanting to work full time. luck along with some GDP growth never hurts. ●

Chart 3. Weekly Median Earnings and Unemployment Rates by Education Level, 2009

20 Business Perspectives Fall 2010/Winter 2011
Akerlof, George A. "The Market for Lemons: Quality Uncer- Okun, Arthur. “Upward Mobility in a High Pressure Economy.”
tainty and the Market Mechanism." Quarterly Journal of Brookings Papers on Economic Activity 1 (1973): 207–252.
Economics 84.3 (1970): 488–500. Oreopoulos, Philip, Till von Wachter, and Andrew Heisz. July
Bachmann, Ronald, Thomas K. Bauer, and Peggy David. 2010. 2008. "The Short- and Long-Term Career Effects of Grad-
“Labor Market Entry Conditions, Wages and Job Mobility.” uating in a Recession: Hysteresis and Heterogeneity in the
IZA Discussion Paper No. 4965. Market for College Graduates." IZA Discussion Paper No.
pdf. 3578.
Bivens, Josh, Kathryn A. Eduards, Alexander Herter-Fernan- Oyer, Paul. "Initial Labor Market Conditions and Long-Term
dez, and Anna Turner. May 11, 2010. “The Class of 2010: Outcomes for Economists." The Journal of Economic Per-
Economic Prospects for Young Adults in the Recession.” spectives 20.3 (2006): 143–160.
Economic Policy Institute. Briefing Paper #265. Rayo, Luis, and Gary Becker. "Evolutionary Efficiency and
Gibbons, Robert, and Michael Waldman. "Enriching a Theory Happiness." Journal of Poltical Economy 115.2 (2007):
of Wage and Promotion Dynamics Inside Firms." Journal 302–337.
of Labor Economics 24.1 (2006): 59–107. Ruiz, Rebecca R. "Recession Spurs Interest in Graduate, Law
Jacobe, Dennis. March 26, 2010. "Focus on Education May Schools." New York Times, January 10, 2010.
Reduce Underemployment." Stevens, Katrien. 2008. “Adverse Economic Conditions at La-
126995/focus-education-may-reduce-underemployment. bor Market Entry: Permanent Scars or Rapid Catch-Up?”
aspx (accessed June 16, 2010).
Sum, Andrew, Joseph McLaughlin, Shelia Palma, Jacqui Mo-
Kahn, Lisa B. "The Long-Term Labor Market Consequences troni, and Ishwar Khatiwada. 2008. “Out With the Young
of Graduating from College in a Bad Economy." Labour and in With the Old: U.S. Labor Markets 2000–2008 and
Economics 17.2 (2010): 303-316. the Case for Immediate Jobs Creation Program for Teens
Lazear, Edward P. May 2003. "Firm-Specific Human Capital: A and Young Adults.” Boston, MA: Center for Labor Market
Skill-Weights Approach." NBER Working Paper No. 9679. Studies. Tervio, Marko "Superstars and Mediocrities: Market Failure in
McLaughlin, Kenneth J. and Mark Bils. “Interindustry Mobil- the Discovery of Talent." The Review of Economic Studies
ity and the Cyclical Upgrading of Labor.” Journal of Labor 76.2 (2009): 829–850.
Economics 19.1 (2001): 94–135. Waldman, Michael. "Job Assignments, Signaling, and Efficien-
Mansour, Hani. 2009. “Essays on Wage Dynamics of Young cy." RAND Journal of Economics 15.2 (1984): 255–267.
Workers.” PhD diss., University of California, Santa Bar-

Ioana Sofia Pacurar
Ms. Pacurar received her BD in Economic Studies from the University of Babes-Bolyai, Cluj Napoca, Romania, and pursued ad-
vanced studies in European trade and law. Sofia obtained a MS in Statistics, Operations, and Management Science from the
University of Tennessee, Knoxville. While a graduate student at the University of Tennessee, she taught and was involved in devel-
oping teaching materials for intermediate to advanced classes in Lean Operations and developed simulations for the Executive
Education Program. She obtained a Graduate Certificate in Applied Statistical Strategies in May 2004.
Ms. Pacurar is currently a PhD Candidate in Economics at the University of Memphis. Her interests lie in the area of applied mi-
croeconomics with a focus in the economics of health and aging as well as econometric strategies of program evaluation.

Jay K. Walker
Jay Walker is a PhD Candidate in Economics at the University of Memphis. His fields of interest include Applied Microeconomics,
Public Economics, and Labor Economics. He is currently employed in the role of Research Associate at the Sparks Bureau of Busi-
ness and Economic Research at the University of Memphis following two years serving as the Nathan Associates Research Fellow
at their local office.
Fall 2010/Winter 2011 Business Perspectives 21
22 Business Perspectives Fall 2010/Winter 2011
Recently, many employees have lost their jobs or become fearful about losing the
job they currently hold. Their fears may be well founded. During times of economic re-
cession, the restructuring of organizations is prominent (Hartley et al. 1991, 3), which
can result in severe organizational changes that include: the shifting of resources,
movement of entire companies, elimination of certain jobs, and even company clo-
sures (Hartley et al. 1991, 4; Sverke and Hellgren 2002, 25). These factors have a direct
effect on the labor market.
Fall 2010/Winter 2011 Business Perspectives 23
Based upon the information in Chart 1, unemployment of both the employee and the employer (Smithson and Lewis
rates began to rise in 2008, coinciding with the beginning of the 2000, 681). The psychological contract is based on the belief
Great Recession that began in December 2007 (Isidore 2008). that “hard work, security and reciprocity are linked” (Smithson
Chart 1 also shows a significant jump in the unemployment and Lewis 2000, 681). From an employee’s perspective, the psy-
rate of 3.5 percent in 2009, which indicates the severity and chological contract guarantees job security, fair wages, benefits,
significant duration of the current crises. In fact, the economy and a sense of self-worth for doing a job well. The employer
has not been so damaged since the Great Depression, and most obtains and retains dedicated workers who perform their jobs
economists see no end to this recession in the near future, in- well, are satisfied in their jobs, and are committed to the orga-
dicating unemployment rates will most likely increase or stay nization. The subjective and time-sensitive psychological con-
elevated for some time (Isidore 2009). An elevated unemploy- tract varies in changing economies or social contexts (Smith-
ment rate almost certainly affects the labor market in that both son and Lewis 2000, 682). Therefore, an organization that has
employees and employers are likely to have negative experienc- a strong and vibrant psychological contract with its employees
es during tough economic times. These negative reactions can may find that the contract needs to be renegotiated as the econ-
compromise the delicate balance that exists between an em- omy changes. Also, because of its subjectivity, employees may
ployee’s hard work and efforts and an employer’s offerings of feel that the psychological contract with their employer is being
security and pay, which can be thought of as the “psychological threatened even when no real objective threat exists (e.g., orga-
contract” that exists between employees and employers in an nizational restructuring, merger with another company, etc.).
organization. This article examines the psychological contract Balance is an important part of the psychological contract.
and the resulting consequences of the contract being broken An employee must feel that his or her efforts are balanced by
(job insecurity) and offers suggestions for lowering workers’ what the organization offers (De Witte et al. 2008, 88). If the
job insecurity, especially during times of organizational change.
employee senses an imbalance, the employee feels the psycho-
logical contract is broken, which
can lead to negative effects (De
Chart 1. U.S. Unemployment Rates, 2000-2010 Witte et al. 2008, 88). These neg-
ative effects include but are not
limited to an employee feeling
insecure in his or her job, which
is a topic that has received much
attention in organizational re-

Job Insecurity
Job insecurity (the overall
apprehension about the con-
tinuance of one’s job) is a sub-
jective phenomenon. Two work-
ers in the same job in the same
organization can experience
different levels of job insecurity.
Job insecurity can lead to nega-
tive effects on an employee’s
health and well-being. Studies
have shown job insecurity be-
ing related to psychosomatic complaints, depression, nervous-
The Psychological Contract ness, fear, sadness, and guilt, which are all considered to be
manifestations of poor mental health (van Vuuren et al. 1991).
A psychological contract includes the expectations between Also, job insecurity has been shown to be related to critical job-
the employee and employer above and beyond any formal con- related variables, including job performance, job satisfaction,
tract, which incorporates the beliefs, values, and aspirations
24 Business Perspectives Fall 2010/Winter 2011
trust, job involvement, organizational commitment, and turn- Also, both role ambiguity and role conflict (which can both
over intentions (Cheng and Chan 2008; Sverke, Hellgren, and lead to increased levels of job insecurity) can be lessened by an
Näswall 2002; van Vuuren et al. 1991). increase in communication between employers and employees.
There have been numerous studies that have looked at Organizations should be sure that their workers have adequate
the potential precursors to job insecurity. Research has shown amounts of information, including knowing what their jobs en-
that employees who work in temporary jobs, part-time jobs, tail, understanding what is expected of them, and giving them
or blue-collar positions, and who report a lack of communica- the control they need to do their jobs, especially in ambiguous
tion within their organization or who work in an organization or transitional settings that occur all too often during times of
experiencing organizational changes are more likely to report economic uncertainty.
high levels of job insecurity. Other precursors to job insecu-
rity include a worker experiencing role ambiguity and/or role
Increasing Organizational Communication
conflict. Role ambiguity occurs when an individual does not
know his or her responsibilities and goals for the job (Sawyer How can organizations increase communication with their
1992), while role conflict occurs when workers experience de- employees, especially during times of economic uncertainty
mands from various sources, resulting in increased uncertain- when changes inevitably occur? Lewis, Schmisseur, Stephens,
ty (Ameen et al. 1995). Workers experiencing role ambiguity or and Weir (2006, 120) systematically analyzed bestselling books
role conflict simply do not know what their obligations are to on communicating during organizational change and identi-
their employer. In these situations, workers may become anx- fied strategies and tactics employers can use to help increase
ious because they are unable to fulfill their psychological con- the flow of information.
tract with their employer, resulting in feeling insecure about Lewis et al. offer general strategies for communicating
their job (Ashford, Lee, and Bobko 1989, 806). and dealing with major changes in an organization (2006,
Many of these factors are beyond the control of organiza- 120–122). The first strategy involves emphasizing participa-
tions. An organization may not be able to turn every part-time tion and empowerment by making workers feel they are part of
worker into a full-time worker, make every temporary job per- the change process. Here, leadership in an organization should
manent, convert every blue-collar job into a white-collar posi- encourage autonomy and ownership in their workforce. The
tion, or be invincible to economic crises. But, these limitations authors also encourage the use of organizational culture as a
do not mean organizations are powerless in their ability to tool to enable change, which can be achieved by creating an en-
stave off job insecurity in workers. In fact, organizational re- vironment open to new ideas, sharing those ideas freely, and
search offers suggestions for ways in which job insecurity in ensuring the workforce is prepared for potential changes. Also,
employees can be lowered. Lewis et al. suggest emphasizing the purpose and vision of the
organization and how the resulting changes are part of that vi-
sion, accomplished by having leadership consistently link orga-
Lowering Job Insecurity in Workers nizational decisions to the overall purpose of the organization.
Job insecurity may be lowered by strengthening the psy- Linking decisions to the overall organizational mission allows
chological contract with employees. The key to this strength- employees to understand the organization’s direction and how
ening is communication. Kinnunen and Natti (1994, 316) note they as employees help the organization meet its goals. Finally,
that providing adequate information to employees can reduce the authors suggest emphasizing communication, which is vi-
job insecurity. Petzall, Parker, and Stoeberl (2000, 601) suggest tal to successful problem solving and organizational change
that an open dialogue between employers and employees can (Lewis et al. 2006, 122). Communication can take many forms,
help stave off the negative effects a recession brings by building including face-to-face meetings, questionnaires or surveys, or
trust. It is important for employers to communicate the fair- focus groups. It is important that leadership keep open lines of
ness of organizational decisions and processes because “it is communication with employees at all levels.
not necessarily what really happens but rather what the work- The authors also identify specific strategies to emphasize
ers perceive as happening that will dictate their reactions to and increase communication in an organization (Lewis et al.
management’s actions” (Petzall, Parker and Stoeberl 2000, 601, 2006, 123–128). The first strategy is to ask for input from work-
emphasis added). Since job insecurity is a subjective phenom- ers, which includes listening to those who give their opinions,
enon, it is important for workers to perceive that the balance fostering an environment where workers feel open to voicing
between their efforts and the offerings of the organization are their opinions and concerns, and encouraging feedback from
set fairly.

Fall 2010/Winter 2011 Business Perspectives 25
that is occurring and foster a positive organizational change
General Strategies for Communication and culture.

Introduction of Change The authors suggest formulating and following a commu-
nication plan. These plans vary in their intensity and design
depending upon which strategy an organization follows, but
General strategies for dealing with major change: the main point is to be organized and intentional in communi-
• Emphasize participation and empowerment cating with employees. And lastly, organizations should create
• Create a change culture and communicate their vision, where appropriate. If commu-
• Emphasize purpose and vision nicating with employees can best be described visually, then
• Emphasize communication the organization should do so. But, be sure any visual commu-
nication is unambiguous, relevant, and simple. For example, an
Specific ways to increase communication: organization can use newsletters, posters, and stories to help
• Ask for input employees understand the vision of the organization in the
• Use informal networks midst of significant change, as cited by Lewis et al. (2006, 128).
• Disseminate information
• Manage the style and content of communication
• Be motivational Conclusion
• Formulate and follow a communication plan Clearly, job insecurity is abundant among the labor force
• Create and communicate vision today. As the economy struggles to recover and unemployment
rates stay elevated, workers continue to feel insecure in the
Source: Laurie K. Lewis, Amy M. Schmisseur, Keri K. Ste- continuation of their employment. However, the amount of job
phens, and Kathleen E. Weir. “Advice on Commu- insecurity an employee feels varies from person to person be-
nicating During Organizational Change.” Journal of cause job insecurity is a subjective phenomenon, the result of
Business Communication 43.2 (2006): 113–137. an imbalance in the psychological contract between employee
and employer. Communication is the key to restoring balance
and lowering job insecurity among workers, especially in times
various perspectives. A second way to increase communication of change and uncertainty. Effective organizational commu-
is to use the informal networks of key employees to disseminate nication should involve giving direction, promoting participa-
information and deal with any resistance encountered. The au- tion, emphasizing purpose and vision, and ensuring fairness
thors warn to not underestimate the importance of “front-line” within the organization. This article offers specific steps or
supervisors, middle management, and other employees in get- strategies in effectively disseminating information in an orga-
ting information out to all employees. These leaders have infor- nization, including asking for and using employee input, devel-
mal networks and relationships that can help ensure informa- oping and following a plan of action, using employee networks,
tion gets to those who need it. and rewarding those employees who embrace and utilize the
Also, Lewis et al. suggest that companies disseminate in- information given. Increasing organizational communication
formation to all important members of their organization as effectively through these techniques will strengthen the psy-
soon as possible using as many methods as are plausible. The chological contract between employee and employer and most
repetition of information can help ensure important informa- likely decrease job insecurity within the company. Thus, even
tion is seen as such. Information should be open and honest, during rough economic times, organizations can continue to
even if it could be considered negative. The authors point out reassure and engage their workforce and in return have moti-
that “any information, even negative information, about change vated, dedicated, and productive employees. ●
can help alleviate anxiety and reduce some negative reactions
to change” (Lewis et al. 2006, 131). Organizations should also be
sure to manage both the style and content of communication.
The authors suggest the use of appropriate and clear language,
specificity, and getting straight to the point. Also, being moti-
vational, e.g., rewarding employees who support any changes
to the organization, can help all employees embrace the change

26 Business Perspectives Fall 2010/Winter 2011
Ameen, Elsie C., Cynthia Jackson, William R. Pasewark, and Jer- Kinnunen, Ulla, and Jouko Nätti. “Job Insecurity in Finland:
ry R. Strawser. “An Empirical Investigation of the Anteced- Antecedents and Consequences.” European Work and Or-
ents and Consequences of Job Insecurity on the Turnover ganizational Behavior 4 (1994): 297–321.
Intentions of Academic Accountants.” Issues in Accounting Lewis, Laurie K., Amy M. Schmisseur, Keri K. Stephens, and
Education 10. 1 (1995): 65–82. Kathleen E. Weir. “Advice on Communicating During Or-
Ashford, Susan J., Cynthia Lee, and Philip Bobko. 1989. “Con- ganizational Change.” Journal of Business Communication
tent, Causes and Consequences of Job Insecurity: A Theo- 43.2 (2006): 113–137.
ry-based Measure and Substantive Test.” Academy of Man- Petzall, Barbara J., Gerald E. Parker, and Philipp A. Stoeberl.
agement Journal 22 (1989): 803–829. “Another Side to Downsizing: Survivors’ Behavior and Self-
Cheng, Grand H.L., and Darius K.-S. Chan. “Who Suffers More affirmation.” Journal of Business and Psychology 14 (2000):
from Job Insecurity? A Meta-Analytic Review.” Applied Psy- 593–603.
chology: An International Review, 57.2 (2008): 272–303. Sawyer, John E. 1992. “Goal and Process Clarity: Specification
De Witte, Hans, Magnus Sverke, Joris Van Ruysseveldt, Sjo- of Multiple Constructs of Role Ambiguity and a Structural
erd Goslinga, Antonio Chirumbolo, Johnny Hellgren, and Equation Model of Their Antecedents and Consequences.”
Katharina Näswall. “Job Insecurity, Union Support and In- Journal of Applied Psychology 77(1992): 130–142.
tentions to Resign Membership: A Psychological Contract Smithson, Janet, and Suzan Lewis. “Is Job Insecurity Chang-
Perspective.” European Journal of Industrial Relations 14 ing the Psychological Contract?” Personnel Review, 29.6
(2008): 85–103. (2000): 680–682.
Hartley, Jean, Dan Jacobson, Bert Klandermans, and Tinka van Sverke, Magnus, and Johnny Hellgren. “The Nature of Job In-
Vuuren. Job Insecurity: Coping with Jobs at Risk. Newbury security: Understanding Employment Uncertainty on the
Park, CA: Sage, 1991. Brink of a New Millennium.” Applied Psychology: An Inter-
Isidore, Chris. 2008. “It’s Official: Recession Since Dec. ’07.” national Review 51.1 (2002): 25., December 1. Sverke, Magnus, Johnny Hellgren, and Katharina Näswall. “No
12/01/news/economy/recession/index.htm (accessed Au- Security: A Meta-Analysis and Review of Job Insecurity
gust 5, 2010.) and Its Consequences.” Journal of Occupational Health Psy-
Isidore, Chris. 2009. “The Great Recession.” chology 7.3 (2002): 242–264.
March 25. van Vuuren, Tinka, Bert Klandermans, Dan Jacobson, and Jean
my/depression_comparisons/index.htm (accessed August Hartley. 1991. “Employees’ Reactions to Job Insecurity.” In
5, 2010). Job Insecurity: Coping with Jobs at Risk, ed. Jean Hartley,
King, James E. “White-Collar Reactions to Job Insecurity and Dan Jacobson, Bert Klandermans, and Tinka van Vuuren.
the Role of the Psychological Contract: Implications for (Newbury Park, CA: Sage, 1991), 79–103.
Human Resource Management.” Human Resource Manage-
ment 39.1 (2000): 79–92.

Courtney Keim
Mrs. Keim received her BA in Psychology from Christian Brothers University and her MS in Psychology from the University of
Memphis. She is currently a doctoral student in Experimental Psychology at the University of Memphis, with a concentration in
Industrial and Organizational Psychology. Her research interests include occupational health and safety, with an emphasis on
stress in the workplace.

Amy Wilkinson
Ms. Wilkinson received her bachelor’s degree in Accountancy from the University of Memphis in December 2009, graduating
Magna Cum Laude. Currently, she is pursuing a master of science degree in Accountancy at the University of Memphis and will
graduate in May 2011. She is a member of the local chapter of Beta Alpha Psi and is actively pursuing her CPA license.

Fall 2010/Winter 2011 Business Perspectives 27
Photo: Ardfern, courtesy of Wikimedia Commons.

Business Perspectives
Fall 2010/Winter 2011
Juliann Waits, PhD,
Ass istant Professor—Natural Sciences and
Adjunct Professor—Ecological Research Center,
Southwest Tennessee Community College ,
Jeff Wallace , PhD,
Economist and Research Associate Professor of
Applied Economic Research,
Ste phen Smith,
Research Associate I I/Editor,
Sparks Bureau of Business and Economic Research,
The University of Memphis
Fall 2010/Winter 2011 Business Perspectives 29
s the fragile U.S. economy attempts to recover quality and avoiding future damage to the Earth’s ecosys-
from one of the harshest recessions in history, tems.
many are touting green jobs as the best source We define green jobs as positions in agriculture, man-
of new jobs. In fact, national recognition of the ufacturing, construction, installation, and maintenance,
need for a green employment sector started as well as scientific and technical, administrative, and
with the Energy Independence and Security Act, which passed service-related activities that contribute substantially to
in December 2007 and which incorporated the Green Jobs Act preserving or restoring environmental quality. Specifically,
of 2007. The Green Jobs Act authorized “up to $125 million in but not exclusively, this includes jobs that help to protect
funding to establish national and state job training programs, and restore ecosystems and biodiversity; reduce energy,
administered by the U.S. Department of Labor, to help address materials, and water consumption through high-efficiency
job shortages that are impairing growth in green industries, and avoidance strategies; decarbonize the economy; and
such as energy efficient buildings and construction, renewable minimize or altogether avoid generation of all forms of
electric power, energy efficient vehicles, and biofuels develop- waste and pollution. But green jobs, as we argue below,
ment” (“House Committee Passes Solis' Green Jobs Act” 2007). also need to be good jobs that meet longstanding demands
On January 8, 2010, President Barack Obama followed up on and goals of the labor movement, i.e., adequate wages, safe
his campaign commitment to green jobs by announcing $2.3 working conditions, and worker rights, including the right
billion in tax credits for the clean energy manufacturing sec- to organize labor unions. (35–36)
tor in the hopes of creating 17,000 jobs (Pepitone 2010). This
funding comes from the $787 billion American Reinvestment Ironically, the United Nations Environment Programme’s
and Recovery Act and has been awarded to 183 projects in 43 insistence on jobs that “reduce energy,” that implement “high-
states (Pepitone 2010). efficiency and avoidance strategies,” as well as “decarbonize the
economy” actually eliminates the United States’ call for corn-
As positive sounding as these announcements are, the big- based ethanol as a cornerstone of its green plan. In fact, Al Gore
gest problem concerning green jobs seems to be that of defini- admits that the current U.S. policy of corn-based ethanol use is
tion. What exactly is a green job? Definitions vary according to “not a good policy” (Wynn 2010). As earlier critics pointed out,
their individual sources, and most are merely circular defini- Gore agrees that the U.S. ethanol industry consumed “about 41
tions that recycle the term “green” more than offering any sub- percent of the U.S. corn crop” in 2010, which equals about 15
stantial understanding. The Bureau of Labor Statistics defines percent of the global corn crop (Wynn 2010). Such consump-
green jobs as either: tion adversely impacts food prices. Additionally, the means to
A. Jobs in businesses that produce goods or provide produce corn-based ethanol is far more costly than the actual
services that benefit the environment or conserve end benefits achieved from using corn-based ethanol (Meigs
natural resources. 2009). Therefore, corn-based ethanol as currently envisioned
B. Jobs in which workers’ duties involve making their and utilized cannot be included as a green endeavor.
establishment’s production processes more envi- Still, the U.S. government, lobbyists, and the public demand
ronmentally friendly or use fewer natural resourc- green jobs. One question about this demand is, “How high tech
es. (“Measuring Green Jobs”) or advanced should these green jobs be?” According to Anthony
However, in its September 2008 report entitled Green Jobs: K. "Van" Jones, former Special Advisor for Green Jobs, Enter-
Towards Decent Work in a Sustainable, Low-Carbon World, the prise, and Innovation at the White House Council on Environ-
United Nations Environment Programme identified a green mental Quality, not very. The most high-tech piece of equip-
economy and green jobs as follows: ment would be a simple caulk gun, which would allow former
blue-collar employees who have been laid off to be rehired in
In an ideal state of affairs, a green economy is one that does these green jobs (Mufson 2008). Also, the Green Economy Task
not generate pollution or waste and is hyper-efficient in its Force in Philadelphia, Pennsylvania, has set out to create 15,000
use of energy, water, and materials. Using this green uto- green jobs by 2015, with the target green employee holding
pia as a yardstick would mean that currently there are few, anything from a GED to a PhD, but the true target is for those
if any, green jobs. A more realistic, pragmatic approach is employees closer to the GED rank (Mastrull 2009).
process-oriented rather than fixated on an ideal yet elusive
end-state. In other words, green jobs are those that contrib- Unfortunately, lower wage is often associated with lower
ute appreciably to maintaining or restoring environmental education and lower skill, which is in contrast to the past de-
mand for high-tech jobs. Further, such a simplistic solution is
also the downfall of the idea of green jobs to some critics. In
30 Business Perspectives Fall 2010/Winter 2011
fact, the so-called green jobs are simply a relabeling of blue- end once the program ends. Because these jobs are not eco-
collar jobs (Schoeff 2009), an almost robbing-Peter-to-pay- nomically sustainable without government subsidies, we would
Paul scenario. At best, the turn to green jobs is currently a be forced to exclude them from our definition of green jobs.
grandiose idea with more style than substance. There must be From the standpoint of the local economy, federal stimulus
a better definition for green jobs and a better developed plan dollars have trickled down to the University of Memphis, South-
for creating and implementing these jobs. west Tennessee Community College, and other local colleges in
Additionally, “green” has a different meaning when dis- the form of educational training in maintenance, engineering,
cussed in the context of the economy. Economically, green in- and manufacturing of sustainable technologies such as solar
cludes costs, return on investment, and practicality. Therefore, panel and biofuel production. However, there are few jobs avail-
we also argue that in the current job crisis, green jobs should able for graduates of these programs in the Mid-South. It is not
have an additional meaning. Perhaps the only item that should a matter of whether students can be educated and trained for a
be emphasized more in the United Nations Environment Pro- career in green jobs, but rather a problem with the lack of green
gramme’s definition that is usually associated with green issues jobs once the students graduate. Capital or stimulus for small
is the sustainability factor. Now, we do not mean sustainability businesses with new sustainable products for design or manu-
in regard to natural resources (such meaning is already estab- facturing is deficient. Although President Obama would like to
lished in the above definition). We suggest that sustainability see educational institutions graduate students who can com-
should relate to both the market value and availability of such pete with other countries in science, technology, engineering,
jobs. In other words, green jobs should sustain the workers and math, there are few new green jobs and a lack of funding
within this specific sector, both in wages and in longevity. for these future sustainable technology innovators. Funding of-
Economic sustainability should also mean no taxpayer ten comes in the form of educational support for designs and
subsidies to support such employment. Regrettably, with the not for employment.
slow economic recovery in the U.S. and the proposed increase One such example is the EPA's 2011 P3: People, Prosper-
in federal taxes on petroleum to reduce government debt, the ity, and the Planet program. Through this hands-on design
environment and long-term economic employment in sustain- competition, student teams and their faculty advisors receive
able technologies look mixed. The “Cash for Caulkers” program $15,000 grants to design scientific, technical, and policy solu-
mentioned above (which is the Home Star Energy Retrofit Act tions to sustainability challenges around the world. The EPA
of 2010, or H.R. 5019) would provide $6 billion in taxpayer- will choose the P3 award winners who may receive an addi-
funded subsidies to pay for items such as rebates to consum- tional grant of up to $90,000 to further develop their designs,
ers for improving the energy efficiency of their homes via the implement them in the field, and take them to the marketplace.
installation of energy-efficient windows and doors, better in- On the surface, such a program sounds like a great educational/
sulation, and caulking (Pelosi n.d.). While the program has all design opportunity, but there are no guarantees of future fund-
the right “green” catch phrases, in reality it would simply create ing or employment for the students, and future funding and
government-funded jobs (such as the caulking jobs) that will employment are the main purposes of higher education.

Economically, green includes costs, return on investment, and practicality. Therefore, we also
argue that in the current job crisis, green jobs should have an additional meaning. Perhaps the
only item that should be emphasized more in the United Nations Environment Programme’s
definition that is usually associated with green issues
is the sustainability factor. Now, we do not mean
sustainability in regard to natural resources (such
meaning is already established in the above definition).
We suggest that sustainability should relate to both the
market value and availability of such jobs. In other words,
green jobs should sustain the workers within this specific
sector, both in wages and in longevity.
Fall 2010/Winter 2011 Business Perspectives 31
Economic sustainability should also mean no taxpayer subsidies to
support such employment. Regrettably, with the slow economic recovery
in the U.S. and the proposed increase in federal taxes on petroleum
to reduce government debt, the environment and long-term economic
employment in sustainable technologies look mixed.

In his proposal for passing the stimulus package, President high, the public will reject any such innovation. Following the
Barack Obama states, "The jobs we create will be in businesses most basic economic principles, innovation can only come
large and small across a wide range of industries. And they'll be from public appeal and demand for new sustainable products.
the kind of jobs that don't just put people to work in the short For example, renewable energy has a higher price tag than does
term, but position our economy to lead the world in the long fossil fuel. Without consumer demand and, more importantly,
term" (Bacon 2009). Policymakers also predicted that many government intervention, green energy cannot begin to reach
of the new jobs would be so-called green jobs, involving such its job creation potential (Fletcher 2010).
tasks as retrofitting buildings. This initiative reflects a desire to So, what does this mean for green jobs? Until there is a bet-
use some of the stimulus money for innovative projects rather ter and more realistic definition and plan, the potential for true
than for improving current infrastructure such as roads (Bacon sustainable green jobs will be beyond our reach. ●
2009). However, the largest number of jobs added would be in
construction and manufacturing, with more than 678,000 of
the new positions being created by public works projects such
as road building—a direct contradiction to the policymakers’
statement. And, most certainly, 17,000 new green jobs are but a Bacon, Jr., Perry. “Obama: 4 Million New Jobs by 2010.”
small fraction of the overall four million jobs the government Washington Post, January 11, 2009.
hoped to add to the economy by 2010 (Bacon 2009).
(accessed November 30, 2010).
In December 2009, U.S. News and World Report released its
50 best careers list for 2010. This list included a few green jobs Bureau of Labor Statistics. “Measuring Green Jobs.” Green Jobs,
such as environmental science and environmental engineering November 10, 2010. (accessed
technician. However, these technical careers have broad catego- December 10, 2010).
ries, definitions, and implications for the employee. “In the sci- Environmental Protection Agency. “P3: People, Prosperity and
ence and technology field, jobs range from network architect to the Planet Student Design Competition for Sustainability,
meteorologist. This category includes the fastest-growing oc- 2010.” (accessed December 10,
cupation—with a 72 percent growth rate that far outstrips the 2010).
10 percent average across careers—of biomedical engineer” Fletcher, Michael A. “Retrained for Green Jobs, But Still
(Wolgemuth 2009). Perhaps we should be training more stu- Waiting on Work.” Washington Post, November 22, 2010.
dents in biomedical engineering than in sustainable technolo-
gies. 2010/11/22/ AR2010112207583.html (accessed November
Traditionally in a time of economic uncertainty, consum- 30, 2010).
ers return to what they know and continue to support the in- “House Committee Passes Solis' Green Jobs Act: Bill Will
efficient and highly unsustainable usage patterns of the past. Prepare Workers for ‘Green Collar Jobs’ to Fight Global
Only a few months ago, the BP Oil disaster had our complete Warming.” June 27, 2007.
attention, and yet we drive our cars just as much as we did pre- press/ca32_solis/wida6/greenjobscomm.shtml (accessed
viously because there appears to be no readily available and af- November 30, 2010).
fordable alternative. Affordability is the key. If the cost is too
32 Business Perspectives Fall 2010/Winter 2011
Juliann Waits, PhD
Dr. Juliann Waits is an Assistant Professor of Natural Sciences at Southwest Tennessee Community College (STCC)
and is an active member of the STCC Green Committee. She is an Adjunct Professor with the Department of Biology
in the Ecological Research Center at the University of Memphis. She has substantial experience in environmental
and evolutionary ecology, population genetics, and biostatistics. She received her PhD in Environmental and Evolu-
tionary Ecology from the University of Louisiana—Lafayette in 2002.

Jeff Wallace, PhD
Dr. Jeff Wallace is an Economist and Research Associate Professor of Applied Economic Research at the Sparks Bu-
reau of Business and Economic Research at the University of Memphis. He has been in this position since 1994.
Dr. Wallace specializes in economic impact studies, having most recently completed an economic impact study of
the University of Tennessee’s College of Pharmacy (2006–2007), a study of the economic impact of Baptist Memorial
Health Care Corporation (2005), and the economic impact of Memphis International Airport (2005).
Dr. Wallace also has substantial experience in tax revenue forecasting, government fiscal analysis, survey research,
labor market analysis, product-market pricing analysis, state labor training program evaluation, and other state and
local government program evaluations.

Stephen Smith
Stephen Smith serves as both Research Associate II and Editor at the Sparks Bureau of Business and Economic Re-
search at the University of Memphis. He has been with the Bureau since 1994. Mr. Smith earned a MA in English from
the University of Memphis. Currently, he is completing his doctoral studies in English with a major in Professional
Writing. His study and professional backgrounds include classical rhetoric, rhetoric of science, visual rhetoric, tech-
nical communication, and layout and design.

Mastrull, Diane. “Creating a Lasting Green Economy; Leanne
Krueger-Braneky's Goal Is to Create Jobs That Pay manufacturing_jobs/ index.htm (accessed November 10,
Well and Are Long-Term.” The Philadelphia Inquirer, 2010).
May 3, 2009. Schoeff, Jr., Mark. “Critics Take Less than Rosy View of Push
viewiStockNews/articleid/3215521 (accessed November for Green Jobs.” Workforce Management, May 18, 2009.
10, 2010.).
Meigs, James B. “The Ethanol Fallacy: Op-Ed.” Popular bodies-offices/12347805-1.html (accessed November 10,
Mechanics, December 18, 2009. Accessed November 2010).
22, 2010. United Nations Environment Programme. Green Jobs: Towards
alternative-fuel/biofuels/4237539. Decent Work in a Sustainable, Low-Carbon World.
Mufson, Steven. “The Green Machine: Promoting the Future, Washington, DC: Worldwatch Institute, 2008.
Van Jones Has No Shortage of Energy.” Washington Post, Wolgemuth, Liz. “America's Best Careers 2010: Science and
December 9, 2008. Technology.” U.S. News and World Report, December 28,
wp-dyn/content/article/2008/12/08/AR2008120803569_ 2009.
pf.html (accessed November 10, 2010). 2009/12/28/the-50-best-careers-of-2010.html (accessed
Pelosi, Nancy. “Home Star Jobs.” Current Legislation, n.d. November 18, 2010). Wynn, Gerard. “U.S. Corn-Based Ethanol ‘Was Not a
(accessed December 10, 2009). Good Policy’ – Gore.” Reuters, November 22, 2010.
Pepitone, Julianne. “Obama Unveils $2.3 Billion for Clean
Energy Jobs.”, January 8, 2010. http:// idAFLDE6AL0YT20101122?sp=true (accessed November
22, 2010).
Fall 2010/Winter 2011 Business Perspectives 33
n the current fragile economy, jobs have been scarce for ing activities associated with work maladjustment, stress
many with little relief in sight. Anxiety and depression reduction, mental health concerns, and developmental
have been symptoms of people who are pressured to find programs that enhance work skills, interpersonal relation-
sources of income in order to survive in this suffering finan- ships, adaptability, flexibility, and other developmental
cial market. Seeking help may seem impossible for the unem- programs that lead to self-agency. (2006)
ployed; however, the one job searching tool many people do not When all these values are considered within this therapeutic
consider may be the very thing that pulls them out of this job- realm, the impact is intensely positive on society as a whole and
less hole: career counseling. especially the workforce.
According to Vernon G. Zunker, author of Career Counsel- Career counseling not only reaches people on a cognitive
ing: A Holistic Approach, career counseling includes level where they can explore and process their emotions, but it
. . . all counseling activities associated with career choice also was created to address the main problem: to help people
over a life span. Career counseling also includes counsel- find employment. This type of counseling has been aiding peo-

34 Business Perspectives Fall 2010/Winter 2011
Katie Henderson
Lauren Dalton,
Sparks Bureau of Business
and Economic Research,
The University of Memphis

ple since the early 1900s and has continued to be successful in different types of employment for the client, coming as close
the twenty-first century. as means allow to locating a job that best suits the client in this
Zunker goes on to explain that career counseling was “cre- current, delicate job market.
ated to meet the needs of a society during the shift from rural It is no surprise that the economy has impacted the job
to urban living in the industrial age and has expanded its focus market. But, just how has it affected it? The unemployment rate
during other transitional periods of changes in how and where for Tennessee as of May 2010 was 10.4 percent, compared to the
we work and live” (2006). Thus, career counseling helps people national rate of 9.7 percent (Bureau of Labor Statistics 2010).
find appropriate jobs that will benefit them. By discovering a What are currently unemployed or potentially future unem-
successful job, the potential employee in return will prosper the ployed individuals doing to secure employment? One possible
employer as a result of the positive attitude displayed by the service being sought is career counseling offered through most
employee. Even though jobs are scarce at this time, career coun- career centers and community agencies, where these individu-
seling still allows the counselor and/or therapist to research als focus on career exploration.

Fall 2010/Winter 2011 Business Perspectives 35
Career exploration is a lifelong process. It can be voluntary them most (Tang 2003). Guin Tyus of NCAC states the main
or involuntary; however, there are some life events that require goal behind their career center services is “preparing the cus-
us to reconsider our careers, much like today’s economic situ- tomer to respond to the current labor market demands and
ation. Career exploration might involve some uncertainty and/ to market themselves to potential employers, and preparing a
or negative emotions (Zikic and Hall 2009). According to Hol- skilled workforce to meet the current economic needs of the
land’s theory of occupational psychology, occupational inter- local area.” E.L. Herr (2001) states
ests are direct expressions of personality, and individuals seek . . . vocational or career guidance and counseling and other
environments that allow them to express their interests (1997). career development practices have been seen as making
Because of economic situations, for some individuals, ca- access to education and training opportunities; educa-
reer exploration through career counseling is implemented for tional reform; economic efficiency; creating human capi-
finding any job rather than new career paths or options. For tal; matching persons and occupational opportunities; re-
various reasons, many people do not have the luxury of choos- habilitating those on the margins of society by providing
ing different career paths (Wilson 1996). For example, lack of support and direction to their career development; and
specific experience, skills, or educational requirements can helping by providing support and direction to their career
hinder one’s capability in switching occupations. However, at- development; and helping a person find dignity, purpose
tending career counseling can aid their situations. in, and adjustment to work. (202)
Career counseling is not required when attending Career Career counseling is not a required service in Tennessee Ca-
Centers in Tennessee, but it is highly recommended for indi- reers Centers, but it is clearly beneficial to the individual seek-
viduals seeking services. Often individuals see career counsel- ing it, especially in an economic crisis.
ing as a “problem-solving tool.”“Some people are in such shock Tennessee ranks in the top percentile in retraining work-
[from losing their job] that they are looking for resolution any- ers. The state is ranked fourth nationally overall and third na-
where,” says Rebecca Thomas, a career coach with the Nashville tionally for adults employed after training programs offered
Career Advancement Center (NCAC). Career counseling serves through Workforce Investment Act (WIA) programs. It also
as a means to clarify difficult decisions during transitional ranks in the top eleven percent nationally in employment rate
times and helps individuals adapt. Fred Frazier, another career and retention of jobs.
coach with the NCAC, says people are often looking for options
to determine if they need a new job/career or to educate/train The changing economy not only affects workers, but also
themselves for current or future opportunities because their career counselors. Change in occupational structure and labor
current economic status will not allow them to make a change demands creates difficulties in job classifications and clusters.
due to the unstable job market. Jobs are changing requirements and desired traits and skills,
which poses a problem for counselors trying to assist individu-
Some people see career counseling and exploration as a als in their job seeking (Tang 2003). Jobs are moving from ag-
mode of survival as opposed to self-discovery (Zikic and Hall riculture and industry to information-savvy positions. Kathy
2009). These people need a job—any job—and fast; career Parker, career coach with NCAC states she has noticed a change
counseling explores that strength. One career coach with NCAC, in employers delaying hiring decisions since the economy
Rebecca Thomas, said that many of the customers coming into changed course.
her career center are willing to take drastic pay cuts if neces-
sary to become re-employed. Additionally, many of her clients The globalization of the U.S. economy has created some
have fears of being too old to get trained or hired. larger issues. Companies are constantly looking to reduce costs
by downsizing or relocating outside the U.S. for more cost- ef-
The greatest strength of career counseling lies in its origin ficient labor. The threat of disappearing jobs due to relocation
and evolution: a reaction to the social and economic changes and downsizing makes it extremely difficult for workers to de-
that occurred in the late nineteenth and early twentieth centu- velop and maintain work stability (Tang 2003). Recently in La
ries (Tang 2003). This field has grown and adapted over time to Vergne, Tennessee, 457 jobs were eliminated at a compact disc
encompass a multitude of services, which are available through and DVD maker distribution center due to the loss of a major
various outlets, including career development centers on col- contract—about half of the company’s current workforce (Wil-
lege campuses, guidance departments in schools, business and liams 2010). The unfortunate downsizing of the distribution
organizational settings, and community agencies (Tang, 2003). center is just one example of the all too common cutbacks with
Most of these services are available at no cost to the individuals which this county is becoming familiar.
seeking them. Career counseling, in addition to other services,
has made education and training available to those who need
36 Business Perspectives Fall 2010/Winter 2011
Unfortunately, the government is making it even harder for Through the information provided, career counseling may
those already unemployed to receive additional aid. Congress not be the ultimate “fix” to the overall unemployment issue, but
rejected a bill that would have provided more money for the it certainly aids in guiding the unemployed population in the
long-term unemployed. Part of this $140 billion bill package right direction in today’s workforce. From helping to construct
was unemployment benefits. Killing the bill is just one more and write resumes to individual or group counseling, career
setback for the 9.7 percent of unemployed Americans. However, counseling offers several resources that are necessary to take
there remain multiple facilities and programs lending services advantage of during a job or career drought. Patrons of these
to aid the unemployed during these difficult economic times; services usually benefit in one way or another, and the pro-
career counseling continues to prove itself as a successful out- jected prognosis for career counseling continuing to flourish
let. is excellent. ●

Bureau of Labor and Statistics. “Southeast–Laborforce Statis- Thomas, Rebecca. Personal Communication, July 17, 2010.
tics.” (accessed “TN Ranks in Top Percentile of Successful Re-Employment of
July 1, 2010). Retrained Workers.” Oneida-Independent Herald, June 17,
Frazier, Fred. Personal Communication, July 7, 2010. 2010.
Herr, E.L. “Career Development and Its Practice: A Historical Tyus, Guin. Personal Communication, June 30, 2010.
Perspective.” Career Development Quarterly 49.3 (2001): Williams, III, G.C. “Cinram to Lay Off 457 in La Vergne.” The
196–211. Tennessean, June 12, 2010.
Holland, J.L. Making Vocational Choices: A Theory of Careers Wilson, W.J. When Work Disappears: The World of the New Ur-
(3rd ed.). Upper Saddle River, NJ: Prentice Hall, 1997. ban Poor. New York, NY: Random House, 1996.
Parker, Kathy. Personal Communication. 30 June 2010. Zikic, J., and D.T. Hall. “Toward a More Complex View of Career
“Senate Blocks Aid to America’s Jobless.” Bristol Herald Courier, Exploration.” Career Development Quarterly 58.2 (2009):
June 17, 2010. 181–191.
Tang, M. “Career Counseling in the Future: Constructing, Col- Zunker, V.G. Career Counseling: A Holistic Approach. Belmont,
laborating, Advocating.” Career Development Quarterly NY: Thompson, 2006.
52.1 (2003): 61–69.

Katherine Henderson
Ms. Henderson is a Research Assistant at the Sparks Bureau of Business and Economic Research (SBBER). She received
her Bachelor of Professional Studies with a concentration in Organizational Leadership at the University of Memphis
in 2009. She received a Master of Science in Leadership and Policy Studies, with a concentration in Student Personnel
at the University of Memphis in December 2010. She has experience in research, teaching, administration, and student
services. Ms. Henderson is currently responsible for the coordination, research, and management of various projects for
the SBBER, including programs associated with Tennessee Career Centers.

Lauren Dalton
Ms. Dalton is a Graduate Research Assistant for the Sparks Bureau of Business and Economic Research (SBBER). She has
been attending the University of Memphis since 2005, where she graduated with her Bachelor of Arts in Psychology with
a minor in Sociology in December 2008. Ms. Dalton will earn her Master of Science in Clinical Mental Health Counsel-
ing in the University of Memphis’ Counseling, Educational Psychology, and Research Education program in December
2011. From there, she plans to pursue her PhD in Counseling Psychology. Ms. Dalton aspires to run her own counseling
practice in hopes of providing ethical mental health services.

Fallll 2010/Wi
F 2010/Winter
t 2011 Business
B i P
ti 37
National Economic Indicators

ISM Manufacturing Index

Consumer Price Index (USA City Average for
All Urban Consumers) 3*
November 2009 September 2010


October 2010

November 2010

Percent Change

Retail and Food Services Sales ($ Millions) 351,764 369,440 375,571 378,706 +7.7
30-Year Mortgage Rate 4.88 4.35 4.23 4.30 -11.9
Housing Starts (000) 579 588 519 — —
*Not seasonally adjusted.
=Preliminary estimate.
The Conference Board,
Institute of Supply Management (ISM) Manufacturing Report on Business.
Bureau of Labor Statistics.
Economic Indicators.Gov-Economics and Statistics Administrations,
The Board of Governors of the Federal Reserve System, The Federal Reserve Bank, St. Louis, Missouri. All monthly 30-year mortgage statistics in this table are reported for the third
weekly observation for each month.
The Board of Governors of the Federal Reserve System, The Federal Reserve Bank, St. Louis, Missouri.

Consumer Confidence Index, November 2009–December 2010

National Unleaded Average Retail Gasoline Prices
Regular Mid Premium Diesel
December 21, 2010, Average $2.98 $3.17 $3.28 $3.26
December 20, 2010, Average $2.98 $3.17 $3.28 $3.26
December 14, 2010, Average $2.98 $3.16 $3.28 $3.25
November 21, 2010, Average $2.88 $3.05 $3.16 $3.19
December 21, 2009, Average $2.59 $2.75 $2.85 $2.79
Source: Daily Fuel Gauge,,

Memphis, Tennessee, Unleaded Average Retail Gasoline Prices
Regular Mid Premium Diesel
December 21, 2010, Average $2.83 $2.99 $3.14 $3.10
December 20, 2010, Average $2.82 $2.99 $3.13 $3.09
December 14, 2010, Average $2.83 $3.00 $3.14 $3.07
November 21, 2010, Average $2.67 $2.83 $2.96 $3.00
December 21, 2009, Average $2.43 $2.57 $2.70 $2.68
Source: Daily Fuel Gauge,,

38 Business Perspectives Fall 2010/Winter 2011
S&P 500 Index, Adjusted Close,*September 20, 2010–December 21, 2010

Interest Rates, November 2009 and October and November 2010
November October November
2009 2010 2010 Difference
3-Month Treasury Bill 0.19 0.13 0.14 -0.05
6-Month Treasury Bill 0.15 0.18 0.18 0.03
10-Year Treasury Bill 3.40 2.54 2.76 -0.64
30-Year Treasury Bill 4.31 3.87 4.19 -0.12
Effective Fed Funds 0.12 0.18 0.18 0.06
Bank Prime Rate 3.25 3.25 3.25 0.00
AAA Corporate Bond 5.19 4.68 4.87 -0.32
30-Year Mortgage 4.88 4.23 4.30 -0.58
Source: St. Louis Federal Reserve Bank.

Unemployment Rates, U.S., Tennessee, and Memphis MSA,* Seasonally Adjusted, November 2009–November 2010

Fall 2010/Winter 2011 Business Perspectives 39
National and Regional Unemployment Rates, Seasonally Adjusted,
November 2009 and September 2010–November 2010
Percent Change
November September October November November 2009–
2009 2010 2010 2010P November 2010
United States 10.0 9.6 9.6 9.8 - 2.0
Alabama 10.9 8.9 8.9 9.0 -17.4
Arkansas 7.6 7.7 7.8 7.9 3.9
Georgia 10.2 9.9 9.8 10.1 - 1.0
Kentucky 10.7 10.1 10.0 10.2 - 4.7
Louisiana 7.3 7.8 8.1 8.2 12.3
Mississippi 10.4 9.8 9.7 9.9 - 4.8
Missouri 9.6 9.3 9.4 9.4 - 2.1
Tennessee 10.7 9.4 9.4 9.4 -12.1
Memphis MSA* 10.3 9.5 9.5 — —
*Not seasonally adjusted.
Source: U.S. Census Bureau, U.S. Bureau of Labor Statistics.

U.S. Total Nonfarm Employment, All Employees (000), November 2009–November 2010

National and Regional Unadjusted Housing Permits Issued,
October 2009 and August 2010–October 2010
Percent Change
October August September October October 2009–
2009 2010 2010 2010 October 2010
United States 46,525 53,191 47,099 44,043 - 5.3
Alabama 725 623 738 806 -11.2
Arkansas 588 845 522 360 -38.8
Georgia 1,328 1,382 1,156 928 -30.1
Kentucky 574 640 540 734 27.9
Louisiana 1,016 921 965 977 - 3.8
Mississippi 389 480 383 353 - 9.3
Missouri 707 886 807 653 -7.6
Tennessee 1,200 1,677 1,249 931 -22.4
Memphis MSA 144 257 131 156 8.3
Source: U.S. Census Bureau.

40 Business Perspectives Fall 2010/Winter 2011
Unemployment Rates, Memphis MSA, October 2009 and September and October 2010

Tipton County, TN
October 2009: 12.2
September 2010: 10.2
October 2010: 10.4

Crittenden County, AR
October 2009: 9.3
September 2010: 10.2 Shelby County, TN Fayette County, TN
October 2010: 9.4 October 2009: 10.6 October 2009: 11.6
September 2010: 9.7 September 2010: 9.8
October 2010: 9.8 October 2010: 10.2

DeSoto County, MS
October 2009: 7.0
September 2010: 7.1 Marshall County, MS
October 2010: 7.0 October 2009: 10.9
September 2010: 10.9
October 2010: 11.0
Tate County, MS
Tunica County, MS October 2009: 10.7
October 2009: 12.9 September 2010: 10.2
September 2010: 14.4 October 2010: 9.8
October 2010: 13.6

Total Privately-Owned Residential Building Permits Issued, Memphis MSA,
October 2009, and Percent Change, October 2009–2010

Tipton County, TN
Permits Issued: 6
Percent Change: -40.0%

Crittenden County, AR
Permits Issued: 6
Percent Change: -14.3% Shelby County, TN Fayette County, TN
Permits Issued: 97 Permits Issued: 7
Percent Change: 76.4% Percent Change: -61.1%

DeSoto County, MS
Permits Issued: 34
Percent Change: -17.1%
Marshall County, MS
Permits Issued: 2
Percent Change: 60.0%
Tunica County, MS
Tate County, MS
Permits Issued: 4
Issued: 0
Percent Change: 42.9%
Change: -100.0%

Fall 2010/Winter 2011 Business Perspectives 41
Non-Profit Organization
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Memphis, Tennessee
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The University of Memphis
330 Innovation Drive, Suite 221
Memphis, TN 38152-3130

The University of Memphis, a Tennessee Board of Regents institution, is an Equal Opportunity/Affirmative Action University. It is committed to education of a non-racially identifiable
student body.

The University of Memphis is one of 45 institutions in the Tennessee Board of Regents system, the sixth largest system of higher education in the nation. The TBR is the governing board
for this system which is comprised of 6 universities, 13 two-year institutions, and 26 area technology centers. The TBR system enrolls more than 80.0 percent of all Tennessee students
attending public institutions of higher education.

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One of the nation’s largest and most respected business research bureaus, the Sparks Bureau of Business and Economic Research:
• Provides information and assistance to the local area on economic trends, economic data, employment and unemployment, and tax revenues and projections.
• Conducts research on broad areas of economic impact and development and major community issues, as well as manpower, employment, information technology, GIS, real estate, and
training program development and evaluation.
For more information about the Bureau and any of the material described in this publication, call (901) 678-2281 or visit our Web site at