The Paper industry

1991 to 386 in 1995.'° Thirty-seven new projects are being
planned for 1996-98, although they are smaller in size." Be-
cause recycling facilities handle a variety of recyclable mate-
tials, the employment impact of paper recycling, as opposed
to metal or plastic recycling, is unknown.

While material recovery facilities originally were concen-
trated in the Northeast, increasing paper demands have resulted
in a nearly even distribution of these processing centers
throughout the country.’? Consequently, hiring is no longer
restricted to urban environments. Municipal governments
throughout the country are experiencing increased demands
for haulers and sorters, especially as public ownership of pro-
cessing facilities has increased since 1995.!> Networks to col-
lect, sort, and resell paper are continuing to expand.

Factors behind employment trends

As we have seen, employment growth in paper manufacturing
is cyclical, and has failed to return to previous peaks during
recent recoveries. In contrast, the numbers of jobs in the other
paper-related industries have grown in recent years. This sec-
tion explores some factors behind these differing trends—the
increasing demand for paper products in general, and for those
with recycled content in particular, and productivity gains from
new equipment installed, in part, to use wastepaper instead of
wood and to meet new environmental standards.

| Chan 3. mao consumption of paper,
1965-96

Pounds
800

750 |

700 |-

n L L L L L

400
1965 1970 1975 1980 1985 1990 1995
SOURCE: American Forest and Paper Association.

36 Monthly Labor Review September 1997

‘Wends in the consumption of paper,
1966-95

Thousands of
short tons

35

30

Printing and writing paper,

15

10

L L L n L n L 1

t)
1966 1970 1974 1978 1982 1986 1990 1995
SOURCE: American Forest and Paper Association.

Changes in domestic demand for paper are primarily tied
tochanges in population and income growth. Increases in U.S.
population and income were particularly strong between 1940
and 1970, followed by growth that was more subdued. While
real economic growth has slowed, the information industry has
transformed both our home and work lives, also stimulating
greater per capita consumption of paper.

Growth in per capita consumption of paper has been aver-
aging 2 percent a year over the last decade, with reductions in
consumption coinciding with recessionary periods. (See chart
3.) Per capita consumption hit its peak in 1994, at 734.5
pounds, nearly 100 pounds more than in 1985. Consumption
fell in 1995 and through 1996, as higher paper prices encour-
aged more efficient use. Between 1966 and 1996, consump-
tion of paper (excluding paperboard) almost doubled."

Growth linked to computers. Contrary to speculation that com-
puters would transform the American workplace into a
paperless environment, the opposite result has occurred. The
increased availability of photocopiers, fax machines, and com-
puters has resulted in a dramatic increase in the use of “office
paper” over the last two decades. (See chart 4.) While the
U.S. population grew 16 percent from 1972 to 1987, copier
paper waste increased by 150 percent and other office paper
waste by 87 percent.'5 This growing use is correlated with


Indexes of output and hours in pulp, paper, and paperboard mills, 1966-95

Index
(1987 = 100)
140

Index
(1987 = 100)

Output per hour

L L L L n 1 L L

140

120

100

1 n L L _ L i

40
1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994
NOTE: Reflects the mills that manufacture the raw input for paper items produced by other components of paper manufacturing.

New equipment and productivity. The growth in the demand
for paper has led to large gains in output and has prevented
steep job losses in manufacturing following the introduction
of less labor-intensive equipment. Expenditures on new plant
and equipment by establishments involved in the manufacture
of paper products peaked in 1990 and remain higher than ex-
penditures in the 1980s, as capital improvements have increased
over the last decade. (See table 4.) Measured in real terms,
average dollar expenditures for new capital in the period 1989-
94 also are slightly higher than in the prior 5-year period, with
1989 and 1990 standing out as the strongest years for new
investments. Aithough the number of machines installed or
rebuilt has been declining since 1988, there has been new
growth in recycling equipment. Because recycling mills can
be installed on a smaller scale and at a lower capital cost per
ton of output than can virgin pulp mills, these facilities could
better support incremental expansions in the industry, espe-
cially following a period of capital stock replenishment.” De-
mands for a cleaner environment also have contributed to more
rapid replacement of equipment in the industry, likely improv-
ing productive efficiency.

The increased use of recycling equipment also carries pro-
ductive efficiencies, compared with the use of wood fiber.
Most grades of recycled paper appear to use less energy in

production and produce less air pollution, although some grades
require more purchased electricity.* According to one study,
recycling 1 ton of materials in a typical curbside recycling pro-
gram can save at least $183 worth of electricity, after deduct-
ing the cost of transportation to collect the materials.” Many
types of paper are produced less expensively using recycled
content, while most use some virgin fiber.”

Furthermore, using recovered paper can provide more flex-
ibility in production. Imbalances in the supply of wood pulp
are easily corrected for if manufacturers have the ability to
substitute recovered paper. While recovered paper has a lim-
ited number of “lives” and is used in small quantities in most
products, it can be recycled 5 to 8 times. As a result, manufac-
turers are using more of this resource. Use of recycled paper is
forecast to increase as mill capacity for recovered pulp more
than doubles between 1994 and 1998.*' Lower energy costs,
lower raw material costs, and lower labor costs per ton of out-
put have resulted in a more efficient industry.

An increasing amount of output was produced in mills, with
hours worked declining, between 1966 and 1995. (See chart
5.) Thus, labor productivity, as measured by output per hour,
more than doubled over this period; the gains were not steady,
but foiiowed business cycie movements. Productivity gains
over the period in pulp, paper, and paperboard mills were

Monthly Labor Review September 1997 39


Employment in paper manufacturing and distribution, 1972-96

Distribution Annual average employment, in thousands Manufacturing
300 710
Manufacturing + 700
250 690
680
200 670
660
150 650
va

~~ Distribution = 640

L 1 i 1 _t. i i 1 i 4. 1 1 it

00 630
1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996

FEES Employment In privately owned sanitary services and scrap material distribution, annual
averages, 1972-96

Jobs in Jobs in
thousands thousands
180 180
160 | 160
140 - | 140
120 F 4 120
100 F | 100

Scrap material
80 + 74 80
60} _ +60
Sanitary services
407. + 40
n 1 1 1 A 1 1 L A ! 1 1 1

20
1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996

Monthly Labor Review September 1997 35


tremendous growth in production output of printing and writ-
ing paper, the type of paper that is used in printers and fax
machines. Since 1982, production of printing and writing pa-
per has increased by 60 percent. While the use of electronic
mail has displaced some paper usage, conventional wisdom
among paper industry forecasters is that “for every ton of pa-
per displaced by computers, there is more than one ton of new
demand generated.”"®

Newspaper and book sales. While much of the growth in pa-
per consumption is generated in the business sector, such as in
direct-mail advertising, households also are large consumers,
and many products are used by both home and office. News-
papers are a Jarge consumption item for both, accounting for
about 25 percent of all paper consumed in the United States
(excluding paperboard).'’ Despite the growing popularity of
the Internet, 1995 readership of daily newspapers outpaced
levels recorded in the 1989-94 period, following a period of
decline between 1970 and 1989.'® The percent of American
adults reading a Sunday newspaper also posted a record high
in 1995, compared with the 1970-94 period. Clearly, news-
Papers are a popular medium, and newspaper advertising is
more popular than any other form of advertising. Newspapers
received 22.4 percent of all advertising dollars in 1995—more
than broadcast TV and direct mail, with print-related advertis-
ing dominating over other media."

Not only is newspaper circulation healthy, but book sales
also are holding their own. Adults purchased 1 billion books
in 1995, compared with 776 million in 1991, with most of the
increase occurring between 1991 and 1994. While most
Americans report reading less, book sales have continued to
grow. The Internet may be a substitute for some printed me-
dia, but its use also has encouraged sales, with books repre-
senting the commodity most frequently sold on the web after
computer software. Not surprisingly, computer-related books
are an increasing share of total sales, accounting for an addi-
tional 13 million books sold between 1991 and 1995.2!

Furthermore, an increasing standard of living is associated

with greater paper usage, as consumption of most products
involves some paper content in packaging, labeling, and ad-
vertising. Increased consumption is not limited to our bor-
ders; as economies develop abroad, worldwide consumption
of paper has increased.

A growing foreign market. The market for paper is growing
throughout the world, causing U.S. paper exports to more than
double between 1985 and 1996.” Growth in exports of re-
covered paper and printing and writing papers has been espe-
cially healthy.* Exports, in dollars, rose from 6 billion in
1991 to 10 billion in 1996, as tonnage increased by 45 per-
cent. (See table 2.) This burgeoning demand has insulated
paper industry workers from further layoffs.

Much of U.S. trade is with our partners in the North Ameri-
can Free Trade Agreement (NAFTA); 39 to 45 percent of our
exports are sent to Canada and Mexico.% In 1994, the first
full year after implementation of NAFTA, U.S. paper exports to
those two countries increased by a combined 15.5 percent, on
a tonnage basis. Exports to Mexico increased 33 percent be-
tween 1993 and 1996, and those to Canada, by 50 percent.”
However, despite this rapid growth, the share of all paper ex-
ports sent to our NAFTA partners has remained relatively stable
due to increased demand from other trading partners. Exports
to the emerging markets—which are among the fastest grow-
ing economies—more than doubled between 1991 and 1996,
and represented 8.4 percent of the total market for U.S. pro-
ducers in 1996, nearly equal to paper exports to Japan. (See
table 3.)

Exports that are correlated with economic growth abroad
have stimulated expansion of the U.S. paper industry. More
than 50 percent of the industry’s growth between 1989 and
1995 was due to this factor. Between 1990 and 1996, an
average 11 percent of production was devoted to exports, com-
pared with 6 percent in 1985. According to the American For-
est and Paper Association, about 16 percent of total U.S. pro-
duction went overseas in 1995, and approximately 42 percent
of new capacity in the industry made products for export mar-

Percent distribution of paper and paperboard exports to major markets, 1991-96
Percent of total exports)

Market 1991 1992 1993, 1994 1995 1996
25.9 26.0 27.2 268 26.4 26.8
15.7 166 178 132 178
418 43.8 446 39.3 446
8.4 92 88 94 84
499 47.0 488 513 470
$6,525,643 $6,683,162 $7,711,798 $9,288,199 $10,293,752

Monthly Labor Review September 1997 37


The Paper industry

greater, on average (4.5 percent per year), than in paper indus-
try components that used the output of these mills (folding
paperboard boxes, 2.6 percent; corrugated solid fiber boxes,
3.8 percent; paper and plastic bags, 1.2 percent).

THE CONFLUENCE OF CONSUMER PARTICIPATION in recycling, im-
provements in technology, increased consumption of paper
products, and liberalization of trade have had an enormous
influence on employment in paper-related industries. Tech-
nological changes, while costly, have facilitated increased out-
put of recycled products as improvements in efficiency and
output quality are attained. oD

Footnotes

' “1996 Statistics. Data through 1995” (American Forest and Paper As-
sociation, November 1996), p. 2.

2 Employment data are from the Current Employment Statistics survey
and appear in various issues of Employment, Hours, and Earnings. Data are
expressed in annual averages unless otherwise noted,

* See Paper Task Force Report (at p. 172), a voluntary, private-sector
initiative sponsored by the Environmental Defense Fund, which developed
recommendations for purchasing paper that reduce environmental impact
while meeting business needs.

+ American Museum of Papermaking.

5 Technology and Labor in Pulp, Paper, Paperboard, and Selected Con-
verted Industries, Bulletin 2443 (Bureau of Labor Statistics, June 1994), p. 3.

© Using recycled newspapers from an average residential recycling pro-
gram saved 11.4 million BTU per ton of material compared to using virgin
materials, according to The Role of Recycling in Integrated Solid Waste Man-
agement to the Year 2000 (Stamford, Ct, Franklin Associates, Lad. for Keep
America Beautiful, Inc., September 1994), pp. 6-12, appendix I-49.

7 “What's the Outlook for Paper?” Biocycle, June 96, pp. 78-80.

* sic 261 manufactures pulp, sic 262 manufactures paper, and sic 263
produces paperboard. sic 265 produces paperboard containers and boxes
from purchased paperboard. sic 267 produces various forms of converted
paper products, such as sanitary paper products, paper and plastic bags, coated
laminated paper, and others, from purchased paper and .

° Recycling is a large component of sic 5093, but this category includes
metals and minerals as well as other scrap materials.

‘© “sar Growth was substantial in 1995,” World Wastes, February 1996,
ps

4 “Materials recovery facilities: A 1996 Update,” Biocycle, August 1996,
pp. 83-84

" Ibid, p. 83.

» Ibid, p. 84.

4 1996 Statistics. Data through 1995”; and monthly statistical sum-
maries of the American Forest and Paper Association.

'S Source Reduction. It's a Bare Necessity, (North Carolina Recycling
Association and North Carolina Office of Waste Reduction, 1995), p. 46.

6 pisi Long-Term Pulp and Paper Review (Bedford, Ma, Resource Infor-
mation Systems, Inc., July 1995), p. 52.

1 According to “1996 Statistics,” production of newsprint is also grow-
ing. In 1980, we produced approximately 40 percent of newsprint consumed,
while today we are producing over one-half.

40 Monthly Labor Review September 1997

8 More efficient use of paper by publishers may explain growing circu-
lation coincident to reductions in the tonnage of newsprint consumed.

8 According to data compiled by McCann-Erickson, a prominent re-
search and information consulting firm in the advertising industry, the print-
related share of advertising expenditures has ranged from 56.5 percent in
1980 to 57.2 percent in 1994,

> * In so Many Words; How Technology Reshapes the Reading Habit,”
American Demographics, March 1997.

Ibid.

22 “1996 Statistics,” p. 2; and U.S. Department of Commerce, National
Trade Data Bank.

% “Global Growth in U.S. Pulp and Paper Exports,” American Paper-
maker, June 1995; and “1995 Statistics,” p. 81.

% “95 another banner year for exports,” Journal of Commerce Special
Report , Mar. 11, 1996.

2 Measured by product value, not tons. Data are from U.S. Department
of Commerce, National Trade Data Bank.

% “Exports Fuel Paper Firms’ Sales,” Investors Business Daily, Mar.
15, 1995, p. A3.

® “Global Growth in U.S. Pulp and Paper Exports," American Paper-
maker, June 1995, pp. 43-49.

TM Market barriers should be gradually reduced over this period as the
result of the General Agreement on Tariffs and Trade (most recently, the
Uruguay Round), NAFTA, , and the USA-Japan Paper Agreement.

® According to the U.S. Environmental Protection Agency, paper and
paper products accounted for 37.6 percent of landfill waste in 1993,

% See the 1995 and 1996 data summaries of the American Forest and
Paper Association, p. 57.

3! The most important uses for recycled paperboard are folding cartons,
corrugated containers, paper tubes, wallboard facings, book covers and bind-
ers, and insulation board. See “Recycled paperboard: market pricing reacts
to weaker demand and lower wastepaper costs,” Pulp and Paper, vol. 70, no.
6 p. 13.

» The Environmental Defense Fund developed a task force including
institutions such as Duke University, Johnson & Johnson, NationsBank Cor-
poration, McDonald's, the Prudential Insurance Co., and Time, Inc., which
together purchase more than $1 billion in printing and writing papers and
share the common goal of finding ways to use environmentally preferable

per.

33 “Buying Recycled: Investing Dollars to Close the Loop,” World
Wastes, January 1994, p. 38.

TM “Banner Year for Paper Recovery at U.S. Mills,” Biocycle, August
1997, p.11.

35 Published since 1960, Biocycle is a prominent magazine on composting
and recycling.

% “1995 Statistics. Data through 1994" (American Forest and Paper
Association, September 1995), p. 66

» Paper Task Force Report.

% Paper Task Force Report, table A-1-A-5. Most grades show a sig-
nificant savings in energy used in production compared to virgin manufac-
turing processes.

> According to “Advantage Recycle: Assessing the Full Costs and Ben-
efits of Curbside Recycling,” a report by the Environmental Defense Fund,
31 percent of the savings was attributable to newspaper versus other recy-
clable products.

“ See Paper Task Force Report, ch. 3, p. 68. Refers to linerboard, corru-
gating medium, newsprint, specialty uncoated printing and writing paper,
among others. However, unsorted office paper is an example of one type
which is more costly to produce using recycled pulp.

«| “What's the Outlook for Paper?” Biocycle, June 1996, vol. 37, no. 6,
pp. 78-80,



The Paper Industry

Cynthia Engel

Cynthia Engel is an
economist in the
Office of Employ-
ment and Unem-
ployment Analysis,
Bureau of Labor
Statistics.

Taking note

of the paper industry

Consumer participation in recycling, improvements

in technology, increased consumption of paper products,
and liberalization of international trade together

have had an enormous influence on employment

in paper-related industries

aper is an indispensable component in the

production, packaging, and delivery of a

wide variety of products used daily by most
Americans. For many it begins with breakfast.
Most of us would be lost without our newspaper,
coffee filters, napkins, cereal boxes, and milk and
juice cartons. In some cases, our entire breakfast
is baked, sold, reheated, and served in its original
paperboard box.

Americans consume more paper than do the citi-
zens of most countries. Compared with the 1994
world average of 97 pounds, the U.S. per capita
consumption of paper is more than 700 pounds, ap-
proximately 2 pounds per person per day. Per capita
consumption of paper products in the United States
has grown 43 percent since 1980.!

Steady increases in paper consumption have had
divergent impacts on employment in manufactur-
ing production, in wholesale trade distribution, and
in recycling collection. Employment in paper manu-
facturing, which historically has been volatile, has
fluctuated less in recent years. Employment gains
have been elusive, however, and 16,000 jobs have
been lost, on net, since 1990.2 At the same time,
employment in recycling collection and paper dis-
tribution reflects a steady and increasing rate of
growth. Increases in these jobs in recent history
have far outweighed employment declines in paper
manufacturing.

Employment is driven in part by changing regu-
lations and consumer demands. New government
regulations and an environmentally conscious popu-

32 Monthly Labor Review September 1997

lation have required industry to use more recycled
waste and to produce fewer contaminants in pro-
duction. These changes have led to costly, but nec-
essary, investments in new equipment. Improve-
ments have been implemented with state-of-the-art
technology, resulting in less labor-intensive employ-
ment. While increased productivity within paper
manufacturing has allowed output to grow even in
times when employment has not, recycling and ex-
ports have buoyed employment in the paper-related
industries.

This article examines the changing market for
paper, including the demand for recycled products
and exports, and its effect on employment trends.

Types of paper

Paper manufacturers produce both paper and pa-
perboard products. The designation “paper indus-
try” generally refers to the production of both prod-
ucts. Paperboard is used to make items for the pack-
aging of products, such as cardboard boxes, ship-
ping containers for produce, and appliance contain-
ers. “Paper” may also identify the subgroup of prod-
ucts that excludes paperboard, such as newspaper,
catalog paper, bond paper, tissue paper, and com-
puter paper. In this article, the term will be used to
identify the broader group, including both paper and
paperboard products.

Paper products are classified according to con-
tent. Products with recycled content contain vari-
ous amounts of recycled paper, with the balance


The Paper Industry

Exports of paper and paperboard
to emerging markets, 1991-96

[Thousands of dottars}

Market | 1991 | 1992 | 1993 | 1994 | 1995 | 1996

Toiai ..... | $377,280 | $403, 122 | $382,596 | $529,568 | $842,337 | $898,977
148,791] 150,638] 115,153] 154,155] 242,979] 248,483
422,370] 131,812| 129,538] 191,931] 296,490] 16,163
56,879| 64,265| 70,416| 105,266] 197,197] 245,409
40,767| 40,966] 43,436) 55,812| 99,576) 101,857
6126) 5,811) 12,154) 9,208) 42,946) 41,475
3,547 9,630| 11,901] 13,196] 23,809/ 45,590

Source: U.S. Department of Commerce.

kets.” Growth in exports has increased profits significantly
for producers in the last couple of years, allowing them to pay
down debt on extensive capital investments made in the late
80s and early 90s. New trade agreements are expected to fur-
ther increase exports to other countries over the next decade.”*

The factors explored thus far have addressed the demand
for all types of paper products. However, undercurrents of a
very different type also resulted in profound changes in the
industry over last few decades: the demand that paper prod-
ucts be made, at least in part, with recycled materials was grow-
ing at the same time that the supply of wastepaper was explod-
ing. Further, there became available new technology that re-
duced the cost of manufacturing from wastepaper below the
cost of a wood-based process for many products. These de-
velopments set the stage for job growth in the collection and
brokerage of wastepaper.

Recycling—a grassroots movement, Support for recycling
arose from citizens’ firm refusals to increase landfill space to
contain waste. Environmentalists and waste managers recog-
nized that the major source of landfill waste was paper prod-
ucts,» and pressured industry and government to support re-
cycling. While industry had recognized recycled paper as a
market niche, increasing demands by the public, coupled with
the prospect of greater profits, ensured expansion of this new
market.

As technology within paper plants was being replaced to
meet cleaner air requirements, the quality of recycled paper
products also was being improved, contributing to consumer
acceptance of recycled goods. Manufacturers developed pro-
cesses to incorporate more recycled content in paper while
retaining its quality, almost doubling their use of recovered
paper between 1985 and 1995.” Perhaps unnoticed by end-
users, consumption of recycled products has soared. Use of
recycled paperboard”! is a prime example, having grown 40
percent since 1990 and accounting for 13 percent of paper-
board consumption in 1995. Consumption of recycled prod-
ucts also has increased through private sector initiatives and
alliances with nonprofit groups.*? Government agencies are

38 Monthly Labor Review September 1997

expanding their consumption of recycled products as well.

Atevery level of government, initiatives have increased the
purchase of recycled paper. In 1986, only 13 States and few
local governments had any “buy-recycled” policy. Currently,
all 50 States, the District of Columbia, and more than 200 lo-
cal governments have recycling initiatives in place. Most com-
mon are general policies favoring recycled products, set-asides
or goals, or a stated price preference for recycled products.
There are a few “recycled-only” programs. At the Federal
level, the President signed an executive order in 1993 requir-
ing agencies to use recycled products, although minimum re-
quirements on recycled content have been eased for some prod-
ucts. This directed consumption will continue to fuel more
investments in research and development to further increase
the quality of recycled products.

A larger, more reliable supply of materials also encourages
manufacturers to incorporate recycled paper in production.
While manufacturers routinely recycle waste from papermak-
ing processes, consumers are more involved in supplying waste
paper, driving the affordability of recycling systems. The inci-
dence of paper recovery is rising, with an all-time high of 44.8
percent collected in 1996 and expectations of increasing re-
covery rates in the future.* According to an annual BioCycle
survey,®> the number of curbside recycling programs increased
from about 1,000 in 1988 to 7,265 in 1994, serving about 41
percent of the population in the latter year.

Mele Paper manutacturing machines i
rebuilt as a percent of 1995 capital stock,
versus capital expenditures by paper and
Paperboard mills, 1983-95
] Expenaiures
Total | Recyc!
machines eccrine | envonmental| Grn plant
Year Instatied | installed | Protection at land
‘of rebut | or rebuitt | mills (millions | (mitions of
(percent) | (percent) | of dollars) dollars)
25 9 $619" -
26 8 721 $7,312
18 5 737 7,950
27 W 1,048 7,950
36 3 1,343 9,009
55 7 1,292 10,809
49 9 1,039 10,067
56 3 572 7211
31 4 403 5,753
43 3 237 6,084
38 4 342 6,273
24 3 226 5,302
20 3 327 4,987
* Data are preliminary.
Nore: Dash indicates data not available.
Source: Sample of the American Forest and Paper Association.
Expenditure data are from the Census Bureau and from the National
Counail of the Paper Industry for Air and Stream Improvement.



made up of mill scraps, which often include virgin fiber. Other
paper products contain only virgin fiber. To extract the cellu-
lose, which makes up less than half of wood fiber,’ lignin and
other substances are removed. The remaining cellulose is then
bleached, beaten, and rinsed, resulting in a pulp to be used for
papermaking.

Recycling plants must purchase wastepaper rather than
wood, repulp the fiber, and feed the pulp into an ink removal
system. At this point, both virgin and recovered pulp go through
the same processes.‘ The labor requirements for producing
recycled fiber are similar to those for producing virgin fiber,
although total costs of recycling are approximately 20 percent
less.’ Production using recycled paper takes less energy than
production using virgin paper.®

The profitability of recycled products has caused some com-
panies to replace pulp mills with deinking plants and to ex-
pand their use of recovered paper in existing mills. Compa-
nies are increasing domestic recycling capacity, as worldwide
demand for recovered paper is expected to rise to 150 million
tons by the year 2000, up from 110 million tons in 1993.”

Where the jobs are

Paper-related employment is scattered among several indus-
try categories. The largest block of workers is involved in the
manufacture of paper and allied products,* which employs
681,000, down slightly from its peak employment of 697,000
in 1990. The second-largest category of paper-related em-
ployment is in the paper and paper products component of
wholesale trade, where 259,000 are employed in the distribu-
tion of paper products. Not included in the 259,000 are an-
other 130,000 jobs in recycling activities undertaken by scrap
material brokers and dealers, also found in wholesale trade.
While a significant portion of these jobs are directly tied to
paper recycling, others support metal or other material recy-
cling. Scrap material brokers contract with those who actually
collect wastepaper; these companies are primarily found in
the refuse component of sanitary services ( some portion of
156,000 jobs). This list does not exhaust all the remaining jobs
that are hidden among the various categories of the Standard
Industrial Classification structure: those employed in govern-
ment transportation services, and those who produce the new
equipment, chemicals, and processes to be used in the mills.
However, When adding up an abbreviated list of categories,
we find well over 1 million jobs supporting the consumption
and production of paper in the United States.

Employment trends vary widely

Paper manufacturing. Employment has exhibited significant
volatility in paper manufacturing over the last 20 years, with
less fluctuation occurring recently. The growth in global mar-
kets, combined with production processes that require less

human intervention, have contributed to greater stability in
employment. Furthermore, the growth of exports has diversi-
fied the customer base of paper manufacturers.

As the following tabulation shows, recession-related reduc-
tions in the monthly industrial production index and employ-
ment in paper manufacturing reveal that recessions have be-
come far less austere over the last two decades:

Percent change in__
Industrial
Recession production Employment
1973-75 -24 -12
6 4
9 -6
1990-91 .... . 2 2

In the 1973-75 recession, the industrial production index
for paper dropped by 24 percent as employment dropped 12
percent, with employment losses regained by 1978. Subsequent
recessions do not come close to the severity of this decline.
Over the combined recessionary period in the early 1980s,
production dropped by 8 percent, while employment fell by 7
percent. Employment recovered much more slowly than in
the 1975 recession, taking twice as long to reach prerecession
levels. In the 1990-91 recession, the production index in-
creased, as export tonnage grew by 8 percent and employment
fell by 2 percent. Fortunately, exports bolstered demand for
producers, providing some protection from more dramatic
losses.

Although production continues to follow the cyclical pat-
tern of the economy, its vulnerability to domestic recession
has been greatly reduced, and with this reduced vulnerability,
employment has stabilized. (The declining nature of employ-
ment losses during recessions is shown in table 1.) Furthermore,
as increasing amounts of capital are substituted for labor, em-
ployment declines in the current climate are not associated
with reductions in demand.

While recessionary job losses occurred in paper and pulp
mills, they were small compared with secular losses posted
between 1990 and 1996. Postrecession losses did not reflect
a reduction in demand; rather, they reflected technological
improvements in the papermaking operation. Between the
prerecession peak in 1990 and December of 1996, produc-
tion increased by 12.6 percent, while employment declined
by 1 percent. As computerization became more integral to
production operations, mills became more capital-intensive
and used less labor.

While manufacturing employment is declining overall, ex-
ports are adding jobs in paperboard containers and boxes, as
exports of paperboard increased dramatically between 1990
and 1996. Employment also is increasing in wholesale trade
and in sanitary services, outweighing losses in paper manu-
facturing. Employment trends in paper manufacturing have
been more affected than those in other paper-related indus-

Monthly Labor Review September 1997 33


The Paper Industry

FOGG Recession peaks and troughs In employment in paper manufacturing and related industries, 1973-96
[Numbers in thousands)
March May Change December July ‘Change
1974 1975 1979 1990
706 619 -87 698 673 -25
15 13 -2 7 7 0
188 173 ~15 181 7 4
66 59 7 66 64 2
226 189 -37 212 200 12
212 187 -25 223 215 -8
116 115 a 149 151 2
39 39 CY) 49 50 1
December Change June June Change
1981 1982 1990 1991
26 686 647 39 698 685 -13
261 7 15 -2 14 14 0
262 181 176 5 180 180 0
263 84 60 4 52 51 I
265 202 188 -14 210 206 ~4
267 222 209 -13 242 235 -7
- 511 165 159 4 241 240 “a
Scrap material distribution 6083 - 7 - 1 110 “1
Sanitary services ... 495 82 53 1 114 122 8
Stondard Trough, December
Industrial ine 1996 ‘Change
‘Classification 1991
Paper manutacturing 26 685 679 4
Pulp mills 261 14 12 -2
Paper mill 262 180 160 -20
Paperboard mills 263 51 49 -2
Paperboard containers 265 208 218 12
Miscellaneous converted paper 267 235 240 5
Paper distribution 511 240 261 a
Scrap material distribution 5083 110 129 19
Santtary services .... 495 122 156 34

Nore: Data are based on monthly, seasonally adjusted employment esti-
mates, except in the cases of pulp mills and scrap material, in which employ-
ment does not display measurable seasonality. The peak and trough months

sed in this table are those specific to the paper manufacturing industry but
related to official recessions.
‘Dash indicates data not available.

tries by changes in production methods and technology. In
the other industries, jobs have increased steadily due to in-
creases in recyclable consumption and in demand for paper
products at retail outlets.

Paper-related wholesale trade. Unlike those in paper manu-
facturing, job levels in paper distribution have followed a rela-
tively steady growth pattern. Employment in this category rose
by 136 percent between 1972 and 1996, averaging annual
growth of 6 percent. (See chart 1.) Since the last recession,
employment grew by 9 percent in paper distribution, com-
pared with 8 percent in wholesale trade, and 21,000 jobs were
added between 1991 and 1996. Most of the growth occurred
in the subcomponent, stationery and office supplies, which
distributes computer paper, envelopes, business forms, and
related supplies to an increasingly dispersed population.
Reflecting increased demand for recycled paper are jobs
within the scrap materials subcomponent of wholesale trade.

34 Monthly Labor Review September 1997

Employment by establishments categorized under scrap and
waste materials increased by 11 percent in 1995 as wastepa-
per prices soared, and maintained this gain in the weaker pa-
per market of 1996. Between 1991 and 1996, employment
Tose a moderate 20 percent. (See chart 2.)

Sanitary services. Companies involved in the actual collec-
tion of scrap materials fall within the sanitary services indus-
try. As recovery of recyclable materials has grown, so has
employment in privately owned sanitary services collection.
(Data are not available on employment in government-owned
sanitary services, nor are specific data available on private
sanitary service workers who are involved in paper recovery.)
Employment growth was extremely rapid in the mid-80s, just
as use of recycled paper became popular and was deemed a
revenue-builder. Another growth spurt occurred between 1993
and 1995, when collection efforts were intensifying. The num-
ber of material recovery facilities (MRF) increased from 104 in