Publications

Must All Good Things Come to an End? (1999)

During the 1990s the world has witnessed a great deal of economic turmoil, ranging from currency crises in Latin America, Asia and Russia to high unemployment in Europe and a recession in Japan. Simply put, there has not been a lot of good news on the global economic front. In contrast, the U.S. economy, now in the midst of its longest peacetime expansion ever, appears to have weathered the storm quite well. Rapid growth in employment and gross domestic product, and a soaring stock market have kept the public coffers well fed with tax revenues, pushing the federal budget into surplus for the first time in 30 years and putting most states in their best fiscal shape in more than a decade. This economic climate has held good news for most American workers, in both public- and private-sector jobs, but past performance is no guarantee of future returns.

The pundits still project that the U.S. economy will slow significantly during 1999, with job growth headed down and unemployment rates on the rise. Of course, these same experts have predicted the same thing for about 5 years now. Despite poor performance in certain sectors of the U.S. export economy (e.g., agriculture and steel production), economists remain optimistic that the current period of sustained economic growth will end in a soft landing rather than in the crash of a recession. The most recent figures offer evidence of continued rapid economic expansion, but with a trend toward a cooling off in job growth.

Although unemployment dropped to 4.2 percent in March, the lowest rate since 1970, this appears to have been due to a decline in labor force participation rather than an increase in job creation, which actually slowed from an average of about 200,000 new jobs per month to less than 50,000 jobs in March. Economic growth rates remain higher than most economists believe is sustainable, having come in at a blistering 5.6 percent annual rate in the fourth quarter of 1998. Through it all, inflation has remained low and stable, measuring only 1.7 percent during the first quarter of this year, after chalking up an annual rate of just 1.5 percent in 1998. There also is evidence that the global economy is on the road to recovery, beginning with the Asian economies that were hit so hard by a currency crisis and the recession in Japan. However, this recovery is highly fragile, and could collapse if Europe or the United States were to go into a recession.

The bottom line for collective bargaining is that no good thing can last forever, and workers should try to get wage increases locked in before the U.S. economy finally does cool off or an unexpected economic shock finally brings this unprecedented recovery to a sudden end.

Print Version