Staircases or Treadmills?: Labor Market Intermediaries and Economic Opportunity in a Changing Economy

Chapter Two

Chapter Two The Old and New Economies: A Comparison of Milwaukee and Silicon Valley Most workers, especially those in the lower tiers of the labor market, search for employment opportunities within the area accessible by daily commute. Similarly, employers search for employees to fill job openings primarily from within regional labor markets. Clearly there are exceptions to this, at both the upper and lower ends of the labor market, and some intermediaries may recruit on a national or even international scale (for example, headhunters for skilled positions or labor brokers for seasonal or migrant farmworkers). Nonetheless, most job matching happens within regional labor markets. As a result, the characteristics of most intermediaries, including the local offices of multinational temporary help agencies, are fundamentally shaped by the economic sectors, demographics, and institutional processes of the regional labor markets in which they operate. Our selection of Milwaukee and Silicon Valley as the two regions to compare in our analysis was based on a supposition that there would be important differences between these two regions in the scale and type of intermediary activities. We saw Silicon Valley as the prototypical “new economy” region, driven by rapid innovation, technological change, and global competition, with open labor markets in which large sectors of the workforce move frequently from job to job (Benner 2002; Saxenian 1994). We saw Milwaukee, on the other hand, as a prototypical “old economy” region, comparable to many cities in the Midwest and Northeast that experienced a painful period of economic restructuring during the crisis in the dominant industrial manufacturing sectors in the 1980s yet showed signs of economic vitality in the 1990s (Center on Wisconsin Strategy 2002). The purpose of this chapter is to describe the general context of our study, highlighting the nature of the labor markets and providing a broad overview of the intermediaries in these two regions. Our discussion is divided into three sections. We first present an analysis of the labor market in each region, including demographic characteristics of the population, trends in employment and unemployment, the sectoral composition of employment, wage trends, occupational structure, and occupational wage levels. We then turn to an examination of labor market volatility in both regions. Here we look at indicators of job stability, number of jobs held, job duration, and income mobility. Finally, we provide an overview of the landscape of public, private, and membershipbased intermediaries in each region. In all three arenas, we find significant differences between the two regions that we might expect to affect the nature of intermediary activity. Broadly, these differences support the characterization of Silicon Valley as a region with higher levels of volatility and more rapid change. And as we will see in subsequent chapters, these regional differences are reflected in differences in intermediary use, although sometimes in unexpected ways. However, Milwaukee has also experienced “new economy”–style change and volatility, albeit expressed through the restructuring of older traditional industries. Despite different economic and demographic dynamics in each region, we uncover many similarities in the operations of labor market intermediaries. This suggests that many of the conclusions we draw from this study may be applicable in other regions as well. The Labor Force and Industrial Structure of Milwaukee and Silicon Valley Demographics The total populations of our two regions (as measured by the Milwaukee and San Jose metropolitan statistical areas [MSAs]) are roughly similar, though Silicon Valley grew much faster in the 1990s. Silicon Valley also has a somewhat younger distribution of the working-age population, and the population has a significantly higher level of educational achievement: table 2.1 shows that in 2000 more than THE OLD AND NEW ECONOMIES 25 26 STAIRCASES OR TREADMILLS? Table 2.1 Demographic Characteristics of Milwaukee and Silicon Valley, 1990 and 2000 Milwaukee Silicon Valley 1990 2000 1990 2000 Total population 1,432,149 1,500,741 1,504,400 1,709,500 Gender Male 48.1% 48.5% 50.7% 50.9% Female 51.9 51.5 49.3 49.1 Age 19 or younger 29.2 29.1 27.3 27.3 20 to 24 7.2 6.3 8.5 6.7 25 to 34 17.8 13.8 21.2 17.8 35 to 44 15.2 16.3 16.2 17.6 45 to 59 14.1 18.2 14.8 17.6 60 or older 16.8 16.2 12.1 13.0 Education Completed...