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.

[Havoc]

Since when are they grossly overpaid if they negotiated a contract agreed to by the employer. (tapping foot and waiting for answer rather than dodge..)

You and I may both think Union workers are overpaid; but, they used the rules of the market and came to agreement in a proper setting. And don't tell me you're invoking ethics.. lol

[Havoc]

The corporate idea is to remove accountability from the person owning incorporation. It is a legal manuever to deflect responsibility. Most of the worst fears of the founders along the lines of mega-corporations/compaies have been realized.
Corporations should not exist and are a longterm danger to the Nation's economic health and it's security. They should be outlawed.

[Havoc]

Sorry; but, what we had in place before free trade built this nation into an economic power house. Despite your intentions to fudge things in order to make an intelligent "sounding" argument, you cannot overcome that fact.

[Havoc]

It is over the top for you when it points in the direction of your party. If you were to apply that term to the dims, it would just be good fun. All "relative" huh. Spare us the hypocrisy.

[Havoc]

Can you make a cohesive argument for once. Whether businesses
improve in efficiency locally or not has zero to do with whether a "global shift" has taken place. The only shift taking place is the shift in some diapers as people call the non-baby contents good for us. The real shift that has taken place is business and Politicians trying to TELL us how it is gonna be. Last I looked, we out here are the boss in this nation. And the market sets the standards, not business which is but one half of it. Politicians and business schemeing together to destroy the standing of the worker in the market in order to "shift" favor to business artificially is criminal IMHO. If you want to pretend some imaginary shift took place and try to bs America with that nonsense, you better think again.

[Havoc]

Now if the treason lobby could present such a coherent direct response, one might trust to get somewhere with them. I think the only way we'll get anywhere with them is to start spraying for them or get a bigger club for the size of whackamole game it is.

[Havoc]

I think that does accurately describe the situation. But, if you want to carry this on, I would prefer it be done in private. This is not about me. I'm here because I believe what happened to me is wrong. I believed it was wrong before it happened to me. And I believe it should never happen to another American. I'm here to put an end to the betrayal of America by whatever means I can with my limited resources. If that means debate upto and including running for office, so be it. If that means other plausible means, so be it. I don't know all the options; but, this was bigger than me when it got to me and will remain so. I am not the focus nor do I want to be. I'm trying to put my money where my mouth is.. which is more than I can say for the treason lobby.

[SteveH]

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.

I think the concept you're avoiding here is "evasiveness."

As in, "I am out of ammo. I need to get out of here quickly."

You can't explain it because there is nothing to explain; I've got you covered no matter how you twist and turn. [Some people can't admit this when it happens to them, and so they habitually respond with non sequiturs. Whatever, it's OK with me (smile).]

[muir_redwoods]

"As in, "I am out of ammo. I need to get out of here quickly."

We're on the 628th post in this string, I don't think getting out of here quickly is my objective. I simply have identified you as a person with statist tendencies who looks for his government to protect him from truly fair and, especially, open competition. I am not afraid of such competition. I am worthy of freedom. I accept the risks. I don't think I am talking to someone like that and, frankly, I try to limit my contact with such people.

Rail away if you like but it's not my job to educate you.

[raybbr]

Trying to have a discussion with you is a waste of time.

[Fury]

Since when are they grossly overpaid if they negotiated a contract agreed to by the employer. (tapping foot and waiting for answer rather than dodge..)

You and I may both think Union workers are overpaid; but, they used the rules of the market and came to agreement in a proper setting. And don't tell me you're invoking ethics.. lol

I think there are two issues getting intermixed here. No one besmirches the union workers (or ANY workers) getting as much as they possibly can for their services.

The issue of more import may be "is the compensation union (or ANY workers) workers receive for their work reasonable for the type of work they do?" Of course the word reasonable is subjective.

I don't believe jobs being outsourced out of the US is a primary reason why sales of GM, Ford, etc vehicles have been declining over the years. I believe initial quality, fuel economy, vehicle cost, overall maintenance costs, etc are some of the primary factors that consumers use in making car purchase decisions. And based on those factors, I believe GM products have been suffering.

Certain industries related specifically to national defense should never be taken off-shore. I guess the discussion centers around "what are those industries"?

The private-sector unions are just a small part of the outsourcing issue. If we want to talk about unions, we need to take a look at public sector unions, which in the example of states e.g. NY), have a provision in the State Consitution that earned pension benefits must be provided, and cannot be done away with.

The Unions and management, and yes taxpayers have created an unsustainable liability in the way of health care, etc that drives up the cost of products, especially in the areas of cars, etc. But as noted on this thread, it takes two to tango.

[BeHoldAPaleHorse]

"Since when are they grossly overpaid if they negotiated a contract agreed to by the employer. (tapping foot and waiting for answer rather than dodge..)"

When the contracted pay and benefits destroy the profit margin in the product, the employees are grossly overpaid as of that moment.

[Mase]

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

And here I thought the pro-tariff/higher tax lobby was an exclusive membership open only to certified (or certifiable) protectionists. You learn something new every day. I can't wait to see if he finds anyone who qualifies.

[Toddsterpatriot]

I think by 2008, no later than 2009 we will have it. (Elections in 2006 plus 2008 will do it)

In the US or in Poland?

[A. Pole]

[tyen to Havoc:] I'm interested in your specific situation and instead of talking generalities

But do you comprehend the possibility that some care not only about their own individual interest? This is the secret of the freetraders - for them their country can go to hell so long as they make a few dollars in profit.

[A. Pole]

When the contracted pay and benefits destroy the profit margin in the product, the employees are grossly overpaid as of that moment.

Read my tagline.

[A. Pole]

I think by 2008, no later than 2009 we will have it. (Elections in 2006 plus 2008 will do it)

In the US or in Poland?

In USA. Poland as other European countries already has it.

The only thing that keeps Republicans in power is that Democrats are dominated by the barking moonbats.

[Toddsterpatriot]

Read my tagline.

Your tagline is incorrect.

[Toddsterpatriot]

And you think national helthcare in the US is a good idea?

[Toddsterpatriot]

My point: You insult western free market enterprises by equating them to Mao-era, Communist-owned worthless "enterprises".

The series missed the fundamental truth that trade has been a key ingredient in the acceleration of worker productivity and rising living standards in the United States in the last decade. During much of the 1990s, when imports and trade deficits were both rising rapidly, so too were domestic employment, manufacturing output, and real wages. Between 1994 and 2000, civilian employment in the U.S. economy rose by a net 12 million and the unemployment rate fell from 6 percent to 4 percent. During that same period, U.S. manufacturing output rose by 40 percent while the volume of imported manufactured goods doubled during that same period. Meanwhile, real compensation rose for American families up and down the income scale.

MoneyLine Series Misses the Story on Trade and Jobs

While Mr. Uchitelle first began whining about manufacturing being "downsized," it actually grew by 5.3 percent a year from 1992 through 2000. Manufacturing then fell 4.1 percent in 2001 (the bottom of his "trend") but rose at a 6.1 percent pace during the first three quarters of last year. What has been unusual about U.S. manufacturing was not the inevitable recession in 2001 but the unusually long and strong expansion for the preceding eight years. About half of the unusually strong gains came from the manufacture of high-tech equipment, which is a lot more valuable than T-shirts.

The cyclical ups and downs of manufacturing are international, by the way, not national. Manufacturing started falling in August 2000 in Japan and Korea, followed by the United States a month later. When manufacturing falls, so do imports.

Increases in productivity from improved machinery and skills are the reason manufacturing employment falls most of the time, as it does in farming, even when output is growing briskly. From 1990 to 2000, manufacturing employment fell by 0.4 percent a year in the U.S., by 1.8 percent a year in Japan and by 2.5 percent a year in Germany.

Manufacturing Myths

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Data extracted on: January 4, 2006 (10:45:31 AM)

Employment, Hours, and Earnings from the Current Employment Statistics survey (National)

Series Id:     CES3000000001 Seasonally Adjusted Super Sector:  Manufacturing Industry:      Manufacturing NAICS Code:    N/A Data Type:     ALL EMPLOYEES, THOUSANDS
Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Annual
1990	17796	17896	17870	17845	17796	17774	17704	17647	17610	17574	17428	17395
1991	17329	17214	17141	17093	17069	17042	17016	17025	17011	16997	16960	16916
1992	16839	16831	16805	16830	16834	16825	16822	16782	16762	16750	16758	16768
1993	16790	16806	16795	16771	16766	16742	16742	16741	16768	16778	16800	16815
1994	16853	16862	16896	16932	16962	17011	17027	17082	17114	17144	17187	17218
1995	17259	17264	17263	17278	17260	17250	17218	17241	17246	17215	17207	17230
1996	17206	17229	17192	17204	17221	17226	17222	17255	17253	17268	17276	17285
1997	17298	17316	17339	17351	17362	17387	17387	17451	17466	17513	17555	17587
1998	17621	17627	17637	17636	17624	17607	17421	17564	17558	17512	17466	17449
1999	17426	17394	17368	17342	17333	17294	17319	17288	17281	17275	17283	17277
2000	17285	17285	17302	17299	17276	17297	17325	17287	17232	17215	17204	17181

 

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I guess the huge increase in American manufacturing output during the 1990s was caused by the huge increase in manufacturing workers? Hmmmm...we actually had fewer workers making more stuff? Maybe we closed our Communist-owned worthless "enterprises" while more efficient enterprises were created? I hope you're not feeling too dizzy from this "spin".