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What The Media Tell Americans About Free Enterprise

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March 1996


Issue Analysis: Media Lay Off New Jobs Story
Networks Report Only One Side of Employment Picture

Most economists argue that layoffs and a certain amount of job insecurity are part of a healthy, competitive economy. Joseph Schumpeter labeled the process of new technologies replacing workers and new companies displacing established companies "creative destruction." While such a competitive economy isn't always pleasant for those who are temporarily out of work, most economists say it undeniably creates a more prosperous economy for all.

But most economists are never interviewed by network news reporters. The result is that, for the most part, viewers are told only about the destructiveness of a competitive economy and not job creation. Media Research Center analysts reviewed every story about employment on network evening news shows (ABC's World News Tonight, CBS Evening News, CNN's World News, and NBC Nightly News) during January and February. Of the 21 stories, 19 focused on corporate layoffs and downsizing. Only two highlighted parts of the economy where jobs are plentiful. And while there were eleven soundbites from politicians, there was only one soundbite from an economist.

Tom Brokaw, on the January 29 Nightly News, expressed the typical tone. Introducing a story about "today's frightening job market," he said, "Job security is a thing of the past now and the way of the future is downsizing and layoffs, even for America's biggest companies. It's making for serious anxiety. A recent poll in New York state shows a third of the workers fearful they or someone in their household will lose their job, and soon. And with good reason. Last year there were more than 400,000 announced layoffs across the country, bringing the three-year total to 1.5 million."

Dan Rather, on the February 22 CBS Evening News, gave a similar diagnosis: "Millions of American workers know it. Despite soaring profits and a record Wall Street, U.S. businesses are still cutting good jobs and barely raising wages." According to Rather, "Republican Pat Buchanan has hit a nerve with his rhetoric about this. He is connecting with real anger and fear in the workplace."

CBS's Wyatt Andrews, on that same broadcast, described "an increasingly anxious middle class, whose dreams of upward mobility have met a downward reality." NBC's Mike Jensen, on the January 4 Nightly News, declared that "as for the future, American companies are locked on a new course. Layoffs and firings are no longer something they do only in a recession. Instead, they're business as usual."

AT&T's announcement that it would lay off 40,000 workers prompted many of the gloomy jobs stories. According to CNN's Kathleen Kennedy, on the January 3 World News, "The latest rounds of corporate cutbacks have left many people fearing that they may be the next to be fired. AT&T announced that it was cutting 40,000 jobs." On January 2 Brokaw announced that "if what happened today to 40,000 workers at AT&T is any kind of barometer of what's ahead, it will be another long, anxious year for the American middle class."

But neither followed up on the AT&T workers. Like almost all of the other reports about the country's job picture, they ignored the parts of the economy which are generating jobs. T.J. Rogers of Cypress Semiconductor, in the March 12 Wall Street Journal, argued that "for the past decade or more, jobs have been migrating to smaller, more nimble, entrepreneurial companies from the Fortune 500 as those companies streamline and lose employment. This trend strengthens our economy, but it has created a short-term fear for their jobs among Americans."

According to Rogers: "What is not publicized is that my company has already hired some of those [laid-off] AT&T people. And our rival, Cirrus Logic, beat us to the punch in starting up a design center in South Carolina to take advantage of hiring those ex-AT&T engineers. The bad news from big companies gets front-page coverage, but the near-immediate absorption of their skilled workers is rarely discussed."

Similarly, economics columnist Robert Samuelson noted in the March 13 Washington Post that most laid-off workers find valuable employment elsewhere. "Among rehired workers," Samuelson wrote, "the Labor Department reports as follows: 27 percent got wages at least 20 percent higher than at their previous jobs; 26 percent got wages up to 20 percent higher; 16 percent suffered a pay loss no greater than 20 percent; and 31 percent suffered pay losses of more than 20 percent.

And American Enterprise Institute economist Herbert Stein pointed out in the March 14 Wall Street Journal that "in 1995, on average, 5.6 percent of the civilian labor force was unemployed. In the previous 20 years the rate had been lower than that in only three years." According to Stein, "The highly publicized layoffs by large corporations were a tiny fraction of the labor force and a small fraction of the number of people who enter or leave employment each year."

Stein also wrote that "concern with insecurity ought to be evident in real behavior." He noted that people didn't change their smoking or drinking behavior until they became seriously concerned with health or their social behavior until they became seriously concerned about crime. "If people were seriously concerned about their economic condition one might expect them to save more, but they don't." He noted that people are not retiring later, a trend that would be expected if workers felt financially insecure.

But good business news is rarely news. Only two network news reports focused on the country's enormous job growth. One was by Wyatt Andrews for the February 6 CBS Evening News. Andrews reported that some companies which laid off workers over the past few years have started rehiring. "The era of layoffs in America is not over," Andrews told viewers, "but there is a countertrend going on. In the latest polls, most American managers now admit they fired too many people...and that growth, including the hiring of new workers, is the only way to survive."

The other was by NBC's Linda Vester on the January 26 Nightly News. "From small machine shops to giant auto plants," Vester reported, "the manufacturing industry is in dire need of the best and the brightest." She said that many manufacturers cannot find enough skilled workers and are even employing headhunters to recruit them. Vester told viewers that "according to one study more than half of America's manufacturers say they're having trouble finding qualified people." She pointed out that people seeking to meet the demand are enrolling at vocational schools. Vester was the only reporter to interview an economist about the country's job picture.

But Vester was an exception. For most of her colleagues, two things still stand in the way of presenting their viewers with an accurate picture of the economy: The overwhelming preference they have for interviewing politicians instead of economists and their obsession with bad -- and only bad -- business news.


Rich Noyes


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