Domestic deregulation has also intensified the competitive forces in some industries. But, as I outlined in some detail in testimony last month, I believe that job insecurity has played the dominant role. For example, in 1991, at the bottom of the recession, a survey of workers at large firms by International Survey Research Corporation indicated that 25 percent feared being laid off.
In 1996, despite the sharply lower unemployment rate and the tighter labor market, the same survey organization found that 46 percent were fearful of a job layoff. Whatever the reasons for its persistence, job insecurity cannot suppress wage growth indefinitely.