ON THE SKILLS OF OUR WORK FORCE
Brand, H.
I n his article, "Human Capital and Economic Policy" (Dissent, Summer 1983), Robert B. Reich offers a critique of current corporate and government programs for improving the skills of...
...He does not explore the causes of dead-end labor and the remedies needed to eliminate it...
...About 60 percent of all auto workers and 50 percent of all steel workers are in semiskilled and unskilled jobs, compared with 75 percent in eating and drinking places (and the 75 percent under125 states actual skill levels since it includes cooks, who account for about one-third of all food-service workers...
...Cost-reduction efforts and technical innovations have usually yielded the greatest financial benefits to management when concentrated on simplifying or eliminating skilled work...
...This development has also affected such professions as medicine, dentistry, and engineering...
...True, retraining workers with obsolescent skills was the aim only of the initial Manpower Development and Training Act of 1962...
...They have directed available funds into more profitable, if not necessarily more productive, ventures...
...Between 1979 and 1982, the number of unemployed workers rose 79 percent, to 10.7 million...
...But he would not upgrade it, or change the organization of work (for instance, by consolidating rather than subdividing tasks) or of industry (by eliminating centralized financial control), which fosters such labor...
...He deplores this because it supposedly shows that jobs in low-skill, low-wage industries have been expanding, while jobs in highskill, high-wage areas have been contracting...
...Such refocusing, however, broadened the objectives of those programs: imparting employability and skills to the disadvantaged arguably enhances society's human resources no less than retraining persons with obsolescent skills...
...The general tendency is to build the skill into the machines, reducing the worker to operating them rather than making the product...
...But when economic conditions worsen, those who were hired last are first fired, and the erstwhile beneficiaries of the programs are usually among them...
...But where...
...The technology underlying higher productivity now is rapidly diffused throughout industrialized and industrializing countries...
...printing by electronic composition...
...The large U.S...
...But jobs and wages can be protected only through such political measures as import quotas, controls on capital outflows, and foreign-exchange restrictions...
...The history of labor everywhere is a history of self-protection against the dictates of unfettered markets, including labor markets that are now, as it were, also internationalized...
...If, as Reich writes, a large proportion of the 21 million jobs created between 1971 and 1981 were "dead-end"—and the trend could be extended back to 1961—then we must assume that a systemic cause exists, a cause inherent in the industrial and business system that makes for such jobs...
...Machine-tool manufacture and use have been transformed in this sense by numerical control...
...There is an added point to be made here...
...We deceive ourselves if we believe that American labor can safeguard its working conditions and living standards by increasing its human capital...
...He overlooks the fact that the waste of human resources is deeply embedded in the business system and economic policy...
...Examples of skill-reducing technologies abound...
...The vouchers would be issued to unemployed workers, entitling them to training by private firms, whose training costs in turn would be reimbursed by the government...
...He describes some of the impediments to the mobility of workers that prevent or complicate their efforts to upgrade their skills...
...True, but steel, auto, and textile companies have failed for nearly 20 years to update their facilities, products, and management habits—notwithstanding intensifying foreign competition...
...Here again, economic policies that do not compensate for cyclical employment losses lie at the root of the destruction of human capital...
...Robert Reich deplores the fact that the increase in employment in eating and drinking places has been greater than the total employment in the auto and steel industries combined...
...Rather, it appears that he would create ways of shifting large parts of such labor into the high-skill, high-wage jobs in industries able to withstand international competition...
...This magnitude of unemployment makes Mr...
...Among industries contributing to the surplus were: foods and feeds (where output is linked with a large infrastructure of nonfarm inputs of manufactures, services, and laboratory research...
...central planning as a "false choice...
...More to the point, he doesn't tell us just what industries or functions he has in mind, except to speak of "flexible system enterprises...
...Reich's argument for intensified investment in human resources somewhat irrelevant...
...it operates in manufacturing as well, as indicated by Reich when he notes that . America's high-technology industries are filling almost as many dead-end jobs as skill-intensive ones...
...Certainly, he mentions no such possibilities...
...That it should improve its skills, participate in decisions affecting work, press for a more humane work organization—these objectives are indispensable, I believe, if workers are to preserve their integrity as human beings...
...Of the 21-million increase in jobs noted above, close to 40 percent occurred in professional, technical, managerial, and administrative positions, and only 12 percent in skilled blue-collar work...
...He notes the inadequacies of the unemployment insurance program and of many other regional or local programs...
...Cyclical downturns will dissipate many of the gains made by participants in federal employmenttraining programs...
...But skilled factory and construction work has escaped from it least of all...
...High unemployment has been largely attributable to regressive economic policies, designed to constrain wage and salary claims and to encourage investment in physical capital...
...Less pronounced but still significant improvements have resulted from institutional (classroom) training...
...The drop in exports since 1980 relative to imports was caused by anti-inflationary policies that drove up interest rates and caused the dollar to be overvalued— not by diminishing capability to compete because of inadequate skill...
...Quoted on p. 74 of the Report...
...industry is quite favorable in areas of comparatively high skill levels and research expenditures...
...Over the past two decades, the average restaurant worker's hourly wage has declined relative to the steel and auto worker's—from 37 percent in 1964 to 31 percent in 1982...
...q 126...
...These data do not point to a great need for highly skilled production workers, as Reich suggests, or indicate any urgency for shifting workers into goods production...
...balance on merchandise trade was close to $50 billion in the black in 1980 when the deficit from petroleum imports is excluded...
...chemicals...
...According to Department of Commerce data, the U.S...
...and professional and scientific instruments...
...In commercial food services, the extreme (and, of course, deliberate) fragmentation of work is indicated by the enormous operations manual of McDonald's, which consists of some 400 pages and details the running of its shops and machinery down to the minutest detail...
...Soon thereafter, federal job programs became part of the War on Poverty—the causes of poverty having been defined largely in terms of unemployability as well as of a lack of skills and employment opportunities...
...This brightens neither the future of skilled work nor the prospect of high wages...
...The use of the tax system to further certain economic goals—advocated by Reich to improve human capital—cannot substitute for such planning...
...telephone-repair services by the adoption of electronic switching...
...He notes the "dependence" of auto and textile workers upon two industries "that are losing rapidly to international competition...
...He does not cite evidence for the extent of skill needs in industry...
...It might be noted that massive shifts of labor have occurred only under pressure of wartime needs...
...I suppose that he means manufacturing establishments producing in relatively small batches rather than in volume...
...He would turn over the task of improving human capital—a term I accept here only for the sake of the discussion—to business, even though the hurdles he cites as impeding such improvement are mostly linked to the business system, or to the economic policies that sustain it...
...the number of workers on short schedules (or involuntary part-time work) increased 72 percent, to 6.2 million...
...He deplores the waste of human resources in dead-end jobs and in unproductive pursuits, such as financial manipulation...
...Moreover, the average duration of unemployment grew by four to five weeks, to a period of about four months...
...But the raising of skills has been widely documented...
...It is whether major structural changes, such as the decline of the auto and steel industries, should be left to decisions by corporations and to the workings of other uncontrolled market forces, or steered by social democratic planning and intervention...
...The cause consists of extreme standardization, specialization, and fragmentation of work...
...In sum, Mr...
...Wage levels differ so much, not because of different skill levels but because the auto and steel workers have been unionized for decades, while food-service workers have not, or to a minimal extent...
...No matter, then, how much additional skill the American work force acquires, it may be unable to compete against imports of many kinds...
...Among arguments that will be fielded against foreign-trade controls will undoubtedly be that productivity improvement would be retarded when international competition is thus restrained...
...And he does not explore the significance of dead-end jobs in terms of the organization of industries and of work that generates them and tends to obviate worker training...
...He criticizes the inadequacy of corporate training outlays for employees, "even though the need for such training is much greater now that America's competitive position is in jeopardy...
...A REASON—within the context of the book from which the article was excerpted, perhaps the reason— for Reich's emphasis on improving human capital in the United States appears to be the international competitiveness of American labor...
...True, with the simplification or elimination of existing skills, new skills will also develop...
...I have fundamental disagreements with Robert Reich's approach and take exception to some of his criticisms...
...But is it true that such jeopardy (assuming it exists) has arisen from lack of adequate skills...
...And this cause isn't confined to shaping jobs in services and trade...
...He dismisses them for in effect excluding skilled workers for retraining...
...The author of one such study (sponsored by the National Commission for Employment Policy) finds "that OJT produced large and sustained earnings gains for women and men, whites and blacks . " 124 (Sixth Annual Report of the Commission, p. 91...
...Why should these conditions be any less subject to social controls than labor conditions at home...
...Higher unit labor costs can be offset, of course, by higher output per employee (or productivity...
...deficits on passenger cars, steel, and clothing are linked to higher unit labor costs here, not to lack of worker skill...
...But there is an issue here that can't be evaded...
...The outputs of public jobs—in socially useful tasks accomplished, and in human capital preserved and improved—are in the end the principal criteria for evaluating programs," economists Martin Neil Bailey and James Tobin have written...
...REICH DISCUSSES DEAD-END LABOR at some length...
...And he places his trust in a corporate business system that has proven its inability to utilize human resources wisely...
...However, flexibility in producing small batches is being greatly advanced by the introduction of microelectronic controls, computer-numerical controls, and robots...
...But he errs in associating skill levels and wage levels...
...at best, it can help to implement it...
...He ignores the history and meaning of federal training policies over the past 20 years in their bearing upon the failure of business to utilize human resources...
...aircraft...
...The basic answer to such wage deterioration would be a resolute full-employment policy, creating pressure to raise wages and encouraging unionization...
...many categories of electrical and nonelectrical machinery...
...carpentry and millwork by modular fabrication in factories...
...By far the most important source of wasted human resources is unemployment, which Reich barely mentions...
...How effective federal employment-training programs are has not ceased to be disputed, but it is difficult to generalize about them since they address diverse needs...
...Reich fails to make a convincing case...
...Even Public Service Employment jobs—which were a primary focus of federal employment-training programs for a brief spell during the 1970s and were not principally oriented toward skill improvement— raised participants' post-program earnings, thus meeting a central criterion of such jobs...
...During upturns, employers are often willing to lower hiring standards and to institute such programs...
...Among professional and technical personnel, unemployment rose 55 percent over that period, and among crafts and other skilled workers by 37 percent...
...I n his article, "Human Capital and Economic Policy" (Dissent, Summer 1983), Robert B. Reich offers a critique of current corporate and government programs for improving the skills of the American work force...
...The waste of human resources can thus be linked directly to the business system that engenders such policies...
...Studies of post-training earnings of participants of on-the-job training (OJT) programs indicate significant increases...
...The improvement of human capital lies for him at the core of economic policy, and he recommends tax incentives as well as a voucher system to begin to deal with it...
...Its passage had been spurred by fear of worker displacement by automation...
...REICH BRANDS THE COUNTERPOSING of free markets vs...
...Robert Reich discusses federal job-training programs in a most cursory manner...
...The squandering of energies and talent implied by these statistics is clear when we focus on the increased unemployment among the more highly skilled and educated workers...
...Thus foreign labor-cost advantages cannot be overcome in a perhaps growing number of industries manufacturing readily transportable goods...
...From the way I read the evidence I've come across, the competitive position of U.S...
...Beyond question, such labor mostly degrades those who do it...
...He doesn't elaborate...
...But why should workers be ruthlessly exposed to world-market conditions...
...The remaining portion of the increase centered among clerical, sales, semiskilled . blue-collar, and service workers...
Vol. 31 • January 1984 • No. 1
