Last week, General Motors announced significant layoffs across both its salaried staff and production workers. This should come as no surprise. Through government bailout, GM GM, +1.32% was spared the deep structural changes needed in 2007-2009, so it was inevitable that new leadership would have to make some tough choices.
We should expect more of the same, but this column is not about corporate downsizing. Rather it is about fundamental economic conditions surrounding factory job losses, and how poorly we are facing these inevitable challenges.
First, the U.S. will continue to face a declining share of manufacturing employment. Our current run of factory job growth is likely near its end, leaving us far short of our 2007 levels. Factory jobs are not coming back and manufacturing employment will be a much smaller share of U.S. jobs in 5, 10, 50 and 100 years than they are now. Expectations to the contrary reflect stubborn ignorance.
To be clear, manufacturing production will long be important to Indiana and other Midwestern states, but its days of growing employment were over nearly a half century ago. Economic development strategies that mention factory employment growth are themselves exercises in stubborn, willful ignorance.
Our current run of factory job growth is likely near its end, leaving us far short of our 2007 levels.
The second lesson is about the job losses themselves. For workers in Michigan, Ohio and Maryland, this will be a tough season. As for most of us, a period of unemployment is part of life’s vicissitudes. It is tough, but hardly akin to family illnesses, military deployments or failed relationships. The lasting harm comes not from losing a job, but in not having the ability to learn a new job. Here state policies on education and training play a big role, for both good and ill.
In my home state of Indiana, the government’s human capital policies increasingly emphasize preparing workers for a job. Whether it is in universities, community colleges or high schools, the emphasis on career readiness has never been stronger. I have long been sympathetic to that approach. Labor of all types is noble, and we cannot too often tell that to young people.
Nevertheless, I increasingly believe we have gone too far, and now risk doing more harm than good to the long-term employability of Hoosiers. Here’s why:
Young people now in school must expect to work to age 70. Quite naturally, that should mean more time spent developing human capital, part of which should be in formal schooling. Over the past quarter century, the United States has not created one single net new job for people who have not been to college. It seems natural that a bit stronger focus on college preparatory might be wise for most Hoosier kids. Instead, we are shifting our focus towards more career preparation. This necessarily means turning our attention away from traditional academic coursework. This has two very troubling costs.
The first of these is to rob from many students the aspirational goals of higher education. This will disproportionately affect poorer children, who have no family experience with college. Second, it will shift the focus of traditional school away from fundamental learning and toward more vocational instruction. Both of these policies may be well meaning, but both will unduly harm the very children they are designed to help.
The deep, dark secret of post-secondary training is that success is mostly a matter of mastering middle school skills. The mastery of pre-algebra, basic experimental physical sciences, the ability to read and write at a sixth- or seventh-grade level is sufficient for nearly all the coursework in the trades, at our state’s community colleges and at programs supported by the Department of Workforce Development.
Workers who cannot master these skills and retain them through adulthood are unlikely to succeed in a postsecondary education of any type. Yet, the career focus of Indiana’s K-12 and workforce development system is moving resources away from the very classrooms that provide that knowledge.
The workers laid off from GM’s plants likely have few transferable skills. Even fewer are ready for the highly automated factories that will become the norm over the next two decades. More troubling still, recent history suggests that a large share of these workers are unlikely to be successfully retrained simply because they are not ready for modern post-secondary training. These are vulnerable workers clustered in vulnerable communities, and there are dozens of these communities across our state.
Job losses, especially among the least educated workers, will always be a public policy issue. The most important skill we can give anyone is the ability to learn and relearn new skills over a long lifetime. The best and least costly place to do this is in elementary, middle and high schools. It is shortsighted to shift resources away from this central task of public education, which should be attracting more resources of time and money, not fewer. It’s time to get back to basics.
Michael J. Hicks is the George and Frances Ball distinguished professor of economics and the director of the Center for Business and Economic Research at Ball State University in Muncie, Ind. This is adapted from his weekly commentary — “GM’s Layoffs Are a Warning to Indiana’s Workforce Policies”. Follow him on Twitter @HicksCBER.
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