Middle Class Job Losses Batter Economy

Associated Press | January 2 2006 | Associated Press and Vicki Smith

[ventana]

AP Middle-Class Job Losses Batter Workforce Sunday January 1, 8:53 pm ET By Kathy Barks Hoffman, Associated Press Writer Middle-Class Job Losses Batter Workforce As Companies Slash Payrolls, Send Jobs Overseas

LANSING, Mich. (AP) -- Thirty years ago, Dan Fairbanks looked at the jobs he could get with his college degree and what he could make working the line at General Motors Corp., and decided the GM job looked better.

He still thinks he made the right choice. But with GM planning to end production of the Chevrolet SSR and shut down the Lansing Craft Centre where he works sometime in mid-2006, Fairbanks faces an uncertain future.

"Back when I hired in at General Motors 30 years ago, it seemed like a good, secure job," said Fairbanks, president since June of UAW Local 1618. Since then, "I've seen good times and I've seen bad times. This qualifies as a bad time, in more ways than one."

Many of the country's manufacturing workers are caught in a worldwide economic shift that is forcing companies to slash payrolls or send jobs elsewhere, leaving workers to wonder if their way of life is disappearing.

The trend in the manufacturing sector toward lower pay, fewer benefits and fewer jobs is alarming many of them.

"They end up paying more of their health care and they end up with lousier pensions -- if they keep one at all," says Michigan AFL-CIO President Mark Gaffney. As wages and benefits drop, "it's the working class that's paying the price."

West Virginia steelworkers are all too familiar with the problem. The former Weirton Steel Corp., which 20 years ago had some 13,000 employees, today has just 1,300 union workers left on the job.

The steel mill has changed hands twice in two years, and just last month, Mittal Steel Co. told the Independent Steelworkers Union it would permanently cut the jobs of 800 people who'd been laid off since summer.

Larry Keister, 50, of Weirton, W.Va., has 31 years in the mill that his father and brothers all joined. His son tried, but got laid off quickly.

"I'm too old to go back to school. I've worked there all my life," says Keister, who drives a buggy in the tin mill. "I went there straight out of high school. It's all I know."

Though Keister is safe for now from layoffs, he wonders what will happen to the hundreds of friends and co-workers who will be jobless by the end of January.M

Gary Colflesh, 56, of Bloomingdale, Ohio, said there are few jobs in nearby Ohio or Pennsylvania for workers to move to.

"They're destroying the working class. Why can't people see this?" asked the 38-year veteran. "Anybody who works in manufacturing has no future in this country, unless you want to work for wages they get in China."

Abby Abdo, 52, of Weirton, said workers once believed that if they accepted pay cuts and shunned strikes, they would keep their jobs. Not anymore.

"Once they get what they want, they kick us to the curb," he said. "There's no guarantee anymore. No pensions. No health care. No job security. We have none of those things anymore."

Fairbanks of the Lansing GM plant said the changes are going to force a lot of people to retrench to deal with the new economic reality. For some, it will make it harder to send their children to college or be able to retire when they want. For others, it will mean giving up some of the trappings a comfortable income can bring.

"You're going to see lake property, you're going to see boats, you're going to see motorcycles hit the market," he said. "People get rid of the toys."

Economists agree the outlook is changing for workers who moved from high school to good-paying factory jobs two and three decades ago, or for those seeking that lifestyle now.

"It was possible for people with a high school education to get a job that paid $75,000 to $100,000 and six weeks of paid vacation. Those jobs are disappearing," says Patrick Anderson of Anderson Economic Group in East Lansing, Mich. "The ... low-skill, upper-middle-class way of life is in danger."

General Motors Corp. has announced that it plans to cut 30,000 hourly jobs by 2008. Ford Motor Co. is scheduled to announce plant closings and layoffs in January that could affect at least 15,000 workers in the United States and Mexico, analysts say, and is cutting thousands from its white-collar work force.

GM and Ford have won concessions from the United Auto Workers that will require active and retired workers to pick up more of their health care costs, and DaimlerChrysler AG is seeking similar concessions.

Thomas Klier, senior economist with the Federal Reserve Bank of Chicago, says the transition for manufacturers toward leaner, lower-cost operations has been going on for some time. But the bankruptcy of the nation's largest auto supplier, Delphi Corp., pushed the issue into the headlines.

Its 34,000 hourly U.S. workers could see their pay cut from $27 an hour to less than half of that, although the company is still trying to work out a compromise unions will support. Workers also could have to pay health care deductibles for the first time and lose their dental and vision care coverage.

Delphi worker Michael Balls of Saginaw, Mich., hears the argument that U.S. companies' costs are too high to compete with plants that pay workers less overseas, but he doesn't buy it.

"I think if Delphi wins, they lose," he says. "If I'm making $9 an hour, I'm not making enough to buy vehicles."

Unfortunately for workers like Balls, the old rules no longer apply in the new global economy, says John Austin, a senior fellow with the Washington-based Brookings Institute.

"We're in a different ball game now," Austin says. "We're going to be shedding a lot of the low-education manufacturing jobs."

Some of those workers are likely to try to move into the growing service sector, Austin says. But he says the transition can be tough, even if the jobs pay as well as the ones they had -- and many don't.

"Pointing out a medical technician job is available if they go back and get a certificate doesn't solve the issue today for those 45-year-olds who are losing their jobs at Delphi," he said.

Dick Posthumus, a partner in an office furniture system manufacturing company in Grand Rapids, Mich., says that "basic, unskilled manufacturing is going to be done in China, India, places like that because we are in a global world, and there's nothing anyone can do about that."

His company, Compatico Inc., buys much of its basic parts from South Korea, Taiwan, Canada and China, where Posthumus has toured plants he says rival modern manufacturing plants in the U.S. But the company still saves its sophisticated parts-making and assembly for its Michigan plant.

"The manufacturing of tomorrow is going to look somewhat different from the manufacturing of yesterday," Posthumus says. "It doesn't mean that we no longer manufacture ... (But) it's going to be a painful adjustment."

Associated Press Writer Vicki Smith in Morgantown, W.Va., contributed to this story.

[Paul Ross]

BTW: China tariff schedules information can be perused, in the following websites:

Asia Pacific Economic Cooperation:

China Council for the Promotion of International Trade:

Many tariffs are at between 9 & 10% but for the industries China is still aggressively pursuing dominance in, expect far higher...blowing off their obligations under the bylaws of the WTO.

[muir_redwoods]

"I fail to perceive the morality of your position."

That is the heart of our disagreement. Unfortunately, I can explain it to you but I cannot understand it for you. If you need it explained, I'm afraid it would be pointless to try.

[Sunnyflorida]

??
I guess there are free traders that want higher taxes. There are also pianists that drink milk. What is the necessary relationship?

I'm a free trader that wants lower, much lower, taxes. Lower taxes will do more for the economy that all the protectionism in the world (since you love the juxtaposition) :) Now I'm not opposed to hammering the Chinese. Maybe restrict the chicom's UN delegation to really restaurants and other sundry efforts - certainly don't give them weapons and send in the CIA to create problems. But the solution for trade barriers is not more barriers.

[durasell]

The thing that is always left unsaid in these discussions is the hard, cold fact that some jobs are not worth as much as they used to be. Just as the price of gold and other commodities rises and falls, so too does the cost of labor.

And while there are no promises in life, some people (incorrectly) feel that if they are willing to work hard and play by the rules that they'll be able to earn a decent living. The idea of a thirty year old hedge fund whiz kid who earns seven figures (with bonus) to blow on fashion models, $10,000 weekend jaunts, and pricey cars creates a moral disonance for them. In their eyes, that's not the way the world is supposed to work.

[Sunnyflorida]

Correction
really restaurants = really bad resturants.

[Sunnyflorida]

Thanks. I know. People seem so defenseless and jealous. If one of the hedgees wants to live like that fine. It's his business, but I know these guys and I would not want to be them.

"Life is unfair." So what? Nobody can tell me making a living 20-50-100-200 years ago was easier. Simpler maybe but not easier. Do people in this country really want to add 10-20% to their Wal-Mart bill? I think not.

More people in this country know more about baseball then economics. Its a miracle that things are as good as they are. Econimics is not that complicated; it is so easy to learn. Thomas Sowell and Walter Williams have written excellent books and articles. If this was my blog I would require people to read Sowell before posting on economic topics. Many are marxist and don't know it. Odd very odd.

[Sunnyflorida]

Whoops again. Got to get the "good" eye fixed!

"really bad restaurants"

[Paul Ross]

I guess there are free traders that want higher taxes.

Yes, many of them right here on Free Republic.

There are also pianists that drink milk. What is the necessary relationship?

Likely a corrupt special relationship to aiding and abetting a blindered view of the Chinese imports. Probably because their meal-ticket depends on it. This is precisely the kind of trade corruption that John Jay, George Washington, and Alexander Hamilton feared. We have not out-grown the need to be concerned about this.

But the solution for trade barriers is not more barriers.

Reagan thought much the same way, but when confronted with their real impacts, he decided that he did indeed need reciprocal countering levers. Hence he employed Quotas requiring so much domestic content on certain egregious importers. This shows that he was still able to out-grow his earlier FDR mental framework.

I'm a free trader that wants lower, much lower, taxes.

Good. Here are some older ones for you to chew on, that were only finally reduced in the last two years, and then grudgingly (they still maintain massive non-tariff barriers as well...totally WTO violative and unmitigated):

LISTS OF I/E TARIFF RATE ADJUSTMENT
BY THE STATE COUNCIL OF
PEOPLE'S REPUBLIC OF CHINA

  (Issued by the State Council of the People's Republic of China
on February 1, 1988)

(Although some of these tariffs remain current, many of them have been
superseded by subsequent customs regulations)

 

SUBJECT: CUSTOMS DUTIES

ISSUING-DEPT: STATE COUNCIL OF CHINA

ISSUE-DATE: 02/01/1988

IMPLEMENT-DATE: 02/01/1988

LENGTH: 3170 words

TEXT:

Table 1: Amended List for Import Tariff

	Original Tariff			Present Tariff
Tariff		Import Duty			Import Duty
NO.		Rates(%)			Rates(%)
	Description of Goods			Description of Goods
		Minimum	General		Minimum	General
37.08	Chemical products			Chemical products
	and flash light			and flash light
	materials, of a kind			materials, of a kind
	and in a form suit-			and in a form suit-
	able for use in	25	35	photography
	photography			1. Chemicals for
				developing color
				films and photos	50	70
				2. Others	25	35
40.01	Natural rubber latex			Natural rubber latex
	,whether or not with			,whether or not with
	added synthetic			added synthetic
	rubber latex; pre-			rubber latex; pre-
	vulcanized natural			vulcanized natural
	rubber latex; natur-			rubber latex; natur-
	al rubber, balata,			al rubber, balata,
	gutta-percha and			gutta-percha and
	Similar natural gums			Similar natural gums
	(Adjusted tariff:			(No more adjusted
	40%)	20	30	tariff)	30	40
71.02	Precious and semi-			Precious and semi-
	precious stones,			precious stones,
	unworked, cut or			unworked,cut or
	otherwise worked,			otherwise worked,
	but not mounted, set			but not mounted, set
	or strung (except			or strung (except
	ungraded stones			ungraded stones
	temporarily strung			temporarily sturng
	for convenience of			for convenience of
	transport):			transport):
	2. Other diamonds:			2. Other diamonds:
	(i) uncut and			(i) uncut and	20	30
	unpolished	40	50	unpolished
	(ii) others	70	90	(ii) others	50	70
	3.Jadeite:			3.Jadeite:	20	30
	(1)uncutand	40	50	(i)uncut and	20	30
	unpolished			unpolished
	(ii)others	70	90	(ii)others
	4.Others:			4.Others:
	(i)uncut and	40	50	(i)uncut and	20	30
	unpolished			unpolished
	(ii)others	70	90	(ii)others	50	70
71.03	Sythetic or			Sythetic or
	reconstructed			reconstructed
	precious or			precious or semi-
	semi-percious stones,			precious tones,
	unworked, cut or			unworked, cut or
	otherwise worked,			otherwise worked, but
	but not mounted, set			not mounted, set or
	or strung (except			strung (execpt ung-
	ungraded stones			raded stones tempor-
	temporarily strung			arily strung for
	for convenience of			convenience of
	transport			transport):
				2.Others:
				(i) uncut and	20	30
	2.Others:			unpolished
	(i) uncut or	40	50	(ii) others	50	70
	(ii) others	70	90
76.08	Structures and parts			Structures and parts
	of structures (for			of structures (for
	example, hangers and			example, hangers and
	other buildings,			other building,
	bridges and bridge-			bridges and bridge
	sections, towers,			sections, towers,
	lattice masts, roofs,			lattice masts, roofs,
	roofing frameworks,			roofing frameworks
	door and window			door and window
	frames, balustrades			frames, balustrades,
	pillars and columns)			pillars and columns)
	of aluminum; plates,			of aluminum; plates
	rods, angles, shapes			rods, angles, shapes
	sections, tubes and			sections, tubes and
	the like, prepared			the like, prepared
	for use in			for use in
	structures, of			structures, of
	aluminum;			aluminum:
	1.Shutters, gates,			1.Shutters, gates,
	doors, door and	40	50	doors, door and	60	80
	window frames and			window frames and
	the like			the like
	2.Others	25	35	2.Others	40	50
84.09	Mechanically			Mechanically
	propelled road			propelled road
	rollers;			rollers:
	1.Vibration rollers	15	20	1.Vrbration rollers:
				(i) vibration rollers	30	40
				less than 18 tons
				(ii) Others	15	20
84.12	Air-conditioning			Air-conditioning
	machines, self-			machines, self-
	contained.comprising			contained.comprising
	a motor-driven fan			a motor-driven fan
	and elements for			and elements for
	changing the temper-			changing the temper-
	ature and humidity			ature and humidity
	of air:			of air
	1.Of a refrigerating			1.Of a refrigerating
	capacity of more			capacity of more
	than 4.000 Kcal per	40	50	than 4,000 Kcal per	100	130
	hour			hour
	2.Others	70	90	2.Of a refrigerating
				capacity of more	50	70
				than 4,000 Kcal per
				hour
				3.Others	70	90
84.15	Refrigerators and			Refrigators and
	refrigerating			refrigerating
	equipment(electrical			equipment(electrical
	and others):			and others)
	1.Of a refrigerating			1.Of a refrigerating
	temperature of-30			temperature of -40
	or lower, or of a			or lower, or of a
	capacity of more			capacity of more
	than 340 liters	30	40	than 340 liters	40	50
	2.Others	80	100	2.Others	100	130
84.19	Machinery for clean-			Machinery for clean-
	ing and drying bot-			ing adn drying bot-
	tles or other			tles or other
	containers; machinery			containers; machinery
	for filling, closing,			for filling, closing
	sealing, capsuling			sealing, capsuling
	or labelling bottles			or labeling bottles
	cans, boxes, bags			cans, boxes, bags
	or other containers;			or other containers;
	other packing or			other paking or
	wrapping machinery;			wrapping machinery;
	machinery for aerat-			machinery for aerat
	ing beverages; dish			ing beverages; dish
	washing machines:			washing machines:
	2.Others	25	35	2.Machines for fill-
				ing beverages and
				liquid foods	35	45
				3. Cement packing
				machines	35	45
				4.Others	25	35
84.33	Paper of paperboard			Paper or parperboard
	cutting machines of			cutting machines of
	all kinds; other			all kinds; other
	machinery for making			machinery fro making
	paper pulp, paper or			paper pule, paper or
	paperboard	20	30	paperboard
				1.Paper or
				paperboard cutting
				mahines of all kinds	40	50

[Vision]

Havoc, who is in the treason lobby?

[durasell]

It's wrong, not to mention unkind, to confuse the desire for "fairness" with Marxism. Of course, Marxism promises fairness, but delivers something else entirely.

People in general are told "work hard and prosper." And when they work hard and don't propser, they get a bit cranky. There are literally millions of people who have seen their jobs devalued over a period of years, not even decades. How do you tell a guy who spend a decade running an injection molding machine that his job is now worth 50 cents an hour?

For the record, I've run into quite a few of the hedge fund kids. They crack me up. Most, if not all, are quite bright. However, they tend to lack a certain self-awareness.

[Sunnyflorida]

Where in the Constitution does it say an American cannot own and operate a business in the global markets? Where does it say I am not allowed to sell overseas and pay a tariff? Where does it say that I MUST pay a tariff on imported goods? What is the "Constitutional" tariff on computers? Cars? Where does it prohibit my right to be a free trader? Please cite for me.

Curious: how would the "free trade" amendment read?

[durasell]

Countries have always protected their markets via tariffs.

[Paul Ross]

BTW: That list was supposed to be drastically reduced at the beginning of 2002, but, inexplicably, didn't happen as promised...here is a clip of a late 2002 report from the U.S. embassy in China:

Tariff Reductions.

Under the terms of its WTO accession, China was to reduce tariff rates upon accession. Because China acceded so late in the year (December 11, 2001), it delayed making its scheduled WTO tariff cuts until January 1, 2002, when it implemented two rounds of reductions. The overall average tariff rate fell from over 15 percent to 12 percent, with the average for industrial goods falling to 11.6 percent. Tariff treatment of certain products – including chicken parts and 15 products subject to the Information Technology Agreement (ITA), however, does not appear to fully match China’s WTO commitments. The United States and other WTO members have raised these issues with China and will ensure that China fully implements its tariff commitments.

Over the next three years, China must further reduce the duties charged on imports. China’s elimination of tariffs on the products covered by the ITA (semiconductors and semiconductor manufacturing equipment, computers and computer parts, software, telecommunications equipment and computer-based analytical instruments), which began upon accession, is to be completed by January 1, 2005. Tariffs for U.S. priority agricultural products will fall from an average of 31 percent to 14 percent by January 1, 2004. China’s post-WTO tariff rates are also now “bound,” meaning that China cannot raise them above the bound rates without “compensating” WTO trading partners (i.e., rebalancing tariff concessions or, in accordance with WTO rules, being subject to withdrawal of substantially equivalent concessions by other WTO members). “Bound” rates will give importers a more predictable environment.

WTO accession will have a dramatic effect on tariffs for many products of interest to the United States. Tariffs for some passenger cars, for example, were over 100 percent prior to accession, and will be reduced to 25 percent by 2005. China will also reduce its tariffs on frozen beef cuts to 12 percent, frozen potato products and grapes to 13 percent, on beef and pork offal, cheese, and citrus to 12 percent, and frozen poultry parts, apples, pears, almonds, and pistachios to 10 percent by January 1, 2004. China may also apply tariff rates significantly lower than the published MFN rate in the case of goods that the government has identified as necessary to the development of a key industry. For example, China's Customs Administration has occasionally announced preferential tariff rates for items that benefit key economic sectors, in particular automobiles, steel and chemical products.

China plans to maintain high duties on some products that compete with those of domestic industries. For example, the tariff on large motorcycles will only fall from 60 percent to 45 percent. Likewise, most video, digital video, and audio recorders and players still face duties of around 30 percent.

Tariff classification. Tariff classification remained a problem in 2001. Customs officers have wide discretion in classifying a particular import. Processed food importers report that they had to “negotiate” tariff classification with customs officers at each port. While foreign businesses might at times have benefitted from their ability to negotiate tariff classification into tariff categories with lower import duty rates, lack of uniformity made it difficult to anticipate in advance what the applied duty would be. U.S. exporters of dehydrated potatoes and veneer reported tariff misclassifications resulting in higher duty rates. At the end of 2001, China revised its laws on the import of goods and its regulations for determining origin in order to comply with WTO rules. These new rules attempt to address longstanding problems related to tariff classification.

Import valuation. Valuation of imports has sometimes been an issue for importers. For example, the U.S. wine industry has expressed its concern about certain customs taxes and the application of a minimum invoice value of $2.70 per 750 ml on all imported wine (although other importers claim that this is also often taken as a maximum value for much more expensive bottles). In late 2001, China released new valuation regulations in order to bring its valuation practices into conformity with the WTO Customs Valuation Agreement. Under the regulations, the Customs Administration has been tasked with assessing a fair valuation to all imports. The United States will be monitoring China’s implementation of the Customs Valuation Agreement to ensure that Customs officials do not use minimum or reference prices for valuation purposes.

COMMENT: There are many other such 'competition' exceptions. For example, Fiber-optic bundles. They are currently as of 2005 at 30% for general, and in some specific cases 45%.

[Toddsterpatriot]

I guess there are free traders that want higher taxes.

Yes, many of them right here on Free Republic.

I don't suppose you can name any of those high tax free traders on Free Republic? I've always been a low tax, low tariff, free trader myself.

[Paul Ross]

I've always been a low tax...

B'whahahahahahahahahahahahahahaha!!!

[Toddsterpatriot]

Where have I ever espoused higher taxes? Even once? I see you support higher taxes all the time.

[expat_panama]

Havoc, who is in the treason lobby?

That is a bit over the top IMHO.

[1rudeboy]

Add me to your list. I'm also looking for a free-marketeer that's in favor of higher taxes (without corresponding reductions elsewhere). I'd give him a nice cage, and even feed him. I would never think of donating him to science.

[Toddsterpatriot]

This is PURE bunk. It is NOT a matter of the "whole world" being caught in some shift..

If there is no shift, Havoc should be able to explain why manufacturing jobs have been disappearing worldwide. Even in China. But a conspiracy is so much more satisfying than the truth. And it doesn't require you to find any facts. Easier.

[Toddsterpatriot]

Add me to your list. I'm also looking for a free-marketeer that's in favor of higher taxes

I'm sure Paul has a big list for us.