Posted on 01/02/2006 4:19:44 AM PST by 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.
http://www.cbo.gov/showdoc.cfm?index=5078&sequence=0
Three reasons
* productivity
* competition from countries where businesses face lower compensation costs.
* increasingly use of contract and temporary labor (in the past would have likely been company W-2 jobs and shown up as manufacturing employment)
Jobs losses are not usually serious in the dynamic U.S. economy (true!) "lasting only through a period of adjustment during which displaced workers obtain other employment (albeit in many cases in less desirable jobs). "
"Less desirable jobs" -- hey! Jobs is jobs! Right, Rush?
At the macro level it's no big deal. At the micro level it can hurt.
I believe that that is the key to all these threads and the acrimony.
Some of us acknowledge that at the micro level it can hurt others retort, stop your whining! Socialist! -- or as someone above pointed out, Reagan put it this way (paraphrasing). "To the neighbor with a job it's a recession, to the neighbor without a job it's a depression."
Mostly for my own benefit I add the rest of this. These damn reports always leave questions begging, pleading, holding their breath until they turn blue.
"The United States has specialized in products requiring a highly skilled labor force even as lesser jobs have shifted to countries where labor is less skilled."
That's a start to answer, how many jobs went (one way or another) over there?
No totals given but it did say the the apparel sector lost 600,000 jobs during the 1990s. All due to technology?
What of competition from lower-labor-cost countries? Who owns the factories over there? Regardless, is it really Ricardo's comparative advantage when domestic businessmen transfer U.S. technology, wealth, and production over there, import, and sell here?
(It's not U.S. technology, it's the businessman's technology? Who serves in the armed forces to protect his ass, for example? Don't forget, one reason for going over there is to escape taxes.)
And what of those great productivity increases? How much is imported productivity as Stephen Roach has described it? How much of that contracted work is done in China, Mexico, etc. to produce end items or components, both of which are imported -- the latter assembled into end items?
Show me the (impartial) numbers, I tell myself! I'll keep looking.
It was probably originally Harry Keister, but the editor thought that was too much over the top.
Don't forget, a company importing foreign goods still pays taxes on the profit earned here.
"And since when has what anyone made per hour or per year ever mattered to the treason lobby."
Had to cry to mommy because I was mean, eh?
You're still an impudent whelp. And whatever your boss is paying you now is definitely too much.
I do not for one minute believe Americans should work for such low wages to compete. I believe Americans should relinquish such mundane work to countries who are willing to compete at that level. Our economy and infrastructure is much more mature, and should be the innovating engine of the world economy (which exists whether one likes it or not).
If companies are going to go offshore for cheaper labor then they should be selling those products here cheaper.
They are! Imagine what your every day consumer products would cost if the manufacturer was paying average U.S. wages. I don't believe there are more than a handful, if any, American companies that produce televisions. Televisions!, that most American of appliances. Is that a problem? I don't think so. US capital that was poured into an increasingly commodified industry (consumer electronics) could then be used to discover new products and ideas.
I have no intention of minimizing the pain of losing a job or even the value of an entire skill set (earned over many years) to another country on an individual basis. But it is reality, and it is not bad for the country as a whole.
Hey, you be nice to poor Havoc. It's not his fault he's always the smartest person in the room. And now, thanks to George Bush, he's also the lowest paid person in the room.
That kind of situation would crush a lesser man.
Certainly do. I'm not in any position to affect the levers of power, however. So the best I can offer is to work with one man, a neighbor so to speak, to explore his options of what may best put food on the table for his family next week, next year, and five years from now.
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.
I enjoy chewing the fat with my friends about the state of the world, lamenting the deplorable conditions of America, and hurling invective at those who bring down the nation. At the end of the day however, action is all that leaves tracks in history. As someone with limited time, and even less access to political power, the action I can meaningfully offer is simply leading by example, and offering to share what I know with others in the hope that it might help them avoid the same learning curve I went through. I have neither the expertise nor experience to know what would really work in the halls of power, so I can't really offer anything realistic in terms of discussing general policies that might help solve the offshoring issue, and leave that instead to others on this thread who follow the issue far more closely than I do.
Very good point.
#1 IMO, yes unions are partly responsible for every problem (seriously). In their heyday they grossly interfered with market forces -- after doing great things for labor.
#2 IMO market forces should (more or less) set executive and labor wages.
The topic of market forces is definitely germane to your suggestion IMO and interference can be two-way. And "unions" are not limited to labor, IMO.
I would ask what of the interference with market forces today that affects solely labor wages; to wit, a domestic labor glut and labor arbitrage?
Why say interference and how did it happen?
IMO due to non enforcement of immigration laws the labor glut is artificial. Did it just happen that there is virtually no enforcement? I don't think so. It's what business and both political parties wanted.
Adding to the glut of labor, what of labor arbitrage? Mostly it is due to improved transportation and IT-enabled cross-border outsourcing.
But there is also taxpayer-backed cheap risk insurance and other government-sponsored services provided to corporations to encourage doing business over there.
That too is a business / two-party endeavor (union?). I think that it's fair to say that "globalization" shifted into high gear during the Clintons' administration.
I sort of hate the word fair, but is it "fair" that business and both parties have seemingly (IMO) moved beyond being Americans?
Are we on the road to a Davos world led by a union of business and both parties?
You noted above that "Since the US is no longer, and never will be again, a closed market, our companies cannot raise prices to cover these [labor] expenses."
I think that this is all germane though somewhat wider than the dollar value of executive v. labor wages alone. But I appreciate your point about focusing on someting so we can all at least agree to disagree on something. Then move on.
(I don't recall seeing anyone asking for a "closed market" mostly it's stop free tradin' away technology, wealth, and production, especially to China. Stick with what has always been good for us, real free trade.)
Ah, you caught me ---there were a few times that I've said that Democrats were making a bad choice on the ballot.
Then again, if you're thinking treason is no worse than making a bad choice on the ballot, then we've got some really serious problems here...
Action not informed by the well thought ideas is not very efficient and often is destructive. Where would be the Western civilization without thinking and debates?
In Econ 1A everyone has to memorize the definition of pure capitalism --a market where no one buyer and no one seller can affect the market price. This was the case of the labor market before we had factories. Back then we had as many households buying handywork as there were shops selling it. When factories were invented, suddenly the labor buyers (factory owners) were calling the shots. This stopped when the workers formed Unions and made the number of labor buyers equal to the number of labor sellers. The unions restored the pure capitalist market.
Things keep changing. Over the last few decades there's been a big shift to small non-union businesses. Now, unions are neither good nor bad; they're irrelevant --a thing of the past.
Try looking at it from their corporation's point of view -- their most valuable assets leave the property every day, seal themselves into a steal box with a controlled explosion in front of them and highly explosive liquid behind them. Then they hurtle down the freeway at 60 mph...
First let me wish you good luck with your business venture!
And thank you for trying to keep things here.
Here focus widens a bit. I personally have no problem with shifts to foreign manufacturing if our guys sell over there. They (their guys) could come here, manufacture, and sell here.
I have no problem with imports from a country that grew its economy serving its citizens and just had a better product. Our guys could even invest in / buy that company. Their guys could come here ditto.
Now the laser beam, for me.
I am old enough that Mao and his "agraian reformers" revolution plus every "great leap" onto the backs of tens of millions of Chinese citizens killing them were all contemporaraneous events for me.
Elsewhere on this thread there are quotes from the highest ranking Chi-coms describing just how they will "clean up" America and make room for their overflowing population.
I remember the entire history of the Cold War. Many clamored to grow the Soviet Union economy with "trade" and thus win them over. Show them that we are no "threat" lest we play into the hands of the Communist hardliners.
Better minds prevailed and we did not "trade" -- what the hell did they have? Except raw materials. "Trade" meant sending techonology and wealth to them.
Well, I don't know how to stop it [Red China "trade"] short of declaring a national security matter -- or as you suggested it "can be done by US consumers choosing to purchase goods and patronize businesses that are US based and friendly."
Red China is my major concern.
Also, I'd much prefer that India had built its economy serving its citizens rather then offering cheap labor to us to help build their economy.
What an interesting perspective.... =^D
I pretty much agree yet these threads are full of "It's the unions' fault!"
I guess I miss the nuances.
Government unions are mostly lobbyists.
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