Laborers vote with their feet when firms offer no security
Wisconsin’s manufacturers are facing a skilled labor shortage of machinists, operators, craft workers, distributors and technicians. In response, the Milwaukee 7, southeastern Wisconsin’s regional development organization of business and community leaders, has announced a public relations campaign.
News flash: It will take a lot more than branding to solve these labor shortages.
Any solution must start with defining the scope of the problem. Why is there a shortage of the kind of skilled workers that for decades made Milwaukee a destination for manufacturers?
Outsourcing is a huge part of the answer. One day after the M-7’s announcement, Dana Corp. announced it was closing its Milwaukee operations and moving more than 150 jobs to low-wage Kentucky.
Similarly, the Thermo Fisher Scientifica in Two Rivers, which already had moved hundreds of jobs to a Reynosa, Mexico, plant, announced it may shut down entirely.
The list of companies that have offshored or outsourced production reads like a who’s who of Wisconsin’s manufacturing: Briggs & Stratton Corp., A.O. Smith, Rockwell, Badger Meter – and many more.
The loss of family-supporting manufacturing jobs has been going on since the early 1980s. Milwaukee’s working families have had their lives turned upside down by plant closings, downsizings, outsourcings and offshoring. Their experience in manufacturing has meant job loss, declining wages and benefits and economic insecurity.
Take my former student, John. He did everything we ask young workers to do, earning two journeyman cards while working and attending Milwaukee Area Technical College full time. John left Briggs when it began moving jobs to low-wage states and Mexico. But his new employer, Rockwell, began outsourcing to nonunion, low-wage plants even before it eliminated all hourly workers last year. So John started over again at Harley-Davidson. But, a year and a half ago, Harley laid John off.
John’s experience is unfortunately not unique. Almost everyone with roots in this community has a father or mother, aunt, cousin or uncle who has experienced the instability that characterizes manufacturing employment. Nationally, manufacturers shed 2 million jobs during the Great Recession. Wisconsin lost 58,300 manufacturing jobs, 11.6% of its total, between December 2007 and June 2009, the official end of the recession. The state continued to lose manufacturing jobs for several months even after the recession ended. By September 2010, Wisconsin had lost 69,800 manufacturing jobs, 14% of its total.
Laid-off manufacturing workers have summed up this experience with their kids, nieces and nephews. As Mario, a nursing student now after being laid off from a foundry after 16 years, told me, “I have a family, and I need a job with security.”
His attitude is reinforced by the occupational programs at MATC that are most popular and have waiting lists: culinary arts, automotive, heating and air-conditioning, physical therapy, barber and cosmetology, occupational therapy and nursing.
What do they all have in common? These are jobs that cannot be offshored.
Our working-class students are voting with their feet by choosing careers that provide more secure employment. They’ll continue to do so until manufacturers offer the same level of security they find in other occupations or sufficient compensation to justify the insecurity that has characterized manufacturing employment.
What can be done to address this? Manufacturers need to:
- Abandon human resource strategies that treat employees like variable costs instead of the strategic assets they are. Offering security will attract students to skilled manufacturing careers.
- Revive apprenticeship programs that were eliminated or downsized in the 1980s under the illusion that automation would result in workerless factories.
- Insist that state government restore the 30% slashed from Wisconsin’s technical colleges in the last budget. Technical colleges train the very skilled and technical workers that manufacturers need. Yet, over the past 20 years, their state funding has been cut by more than 50%.
- Support public school investments in reviving technical education and participate in the state’s youth apprenticeship program.
- End free trade deals that provide countries that do not have or enforce labor and environmental laws, an unfair advantage over responsible American manufacturers.
Solving labor shortages requires more than public relations.
Henry Ford recognized this when he doubled his hourly workers wages to $5 a day. Ford’s 400% turnover rate and 10% absentee rate vanished as hard, undesirable work was transformed into desirable employment and at the same time created a market for his cars when his workers finally could afford them.
Wisconsin had a similar experience in the 1990s when hospitals were facing acute nursing shortages. In response, they increased nurses pay and instituted incentives such as signing bonuses. Enrollments in nursing programs soared, technical colleges invested in nursing education and students flocked to occupations that promised employment security and decent compensation.
It’s ironic that the area’s business leaders, who are among the fiercest proponents of market solutions to most problems, are reluctant to use pricing to solve the skilled worker shortage. Any Econ 101 student knows that pricing efficiently allocates resources.
John Schmid of the Journal Sentinel recently blogged that prices should rise in response to shortages – causing quantity supplied, in this case skilled labor, to increase. Think about crude oil, nurses or Green Bay Packers tickets in the secondary ticket market.
As Melanie Holmes, a vice president at Manpower Group, said, “The No.1 reason why employers are having trouble filling these positions is they’re not offering pay that the candidates are demanding.”
I applaud the M-7’s decision to focus on advanced manufacturing. But it will take more than glossy brochures and television ads to persuade the next-generation workforce that becoming a skilled manufacturing worker is a stable and secure career path.
Michael Rosen is an economics professor at Milwaukee Area Technical College.