Training a Skilled Work Force

...As the Wall Street Journal recently put it, "As long as we don't train enough Americans ourselves, immigration is a saving grace...

...Americans who work in Japanese automotive factories in the United States are almost as productive as their Japanese co-workers back in Japan, and far more productive than American workers in U.S...

...What about retail service workers, secretaries, clerks, hospital workers...

...auto plants...

...They do this by demanding tax breaks and subsidies as a condition for remaining in or coming to an area...

...American firms are building factories abroad at a faster pace than in the United States...

...Engineers in Singapore are helping HewlettPackard develop a new generation of laser printers and helping Apple Computer design video screens of the future...

...American corporations already employ 11 percent of the industrial work force of Northern Ireland, mass producing everything from cigarettes to computer software, and in Singapore, United States firms employ over one hundred thousand Singaporeans, who fabricate and assemble electronic components for export back to the United States...

...This strategy is typified by the Hyster Corporation, a manufacturer of fork-lift trucks, which in the early 1980s notified public officials in the five states and four nations where Hyster had factories that some of them would be closed...

...Where will we get the money to retrain our work force and rebuild our infrastructure...

...Texas Instruments maintains a software development facility in Bangalore, India...

...A few corporations are taking active roles, but the vast majority remain on the sidelines...

...Chicago publisher R.R...

...The multinational American firm is nothing new, of course...

...Mountains of raw data are shipped or telephoned to them—records of credit card purchases and payments, credit reports, cleared checks, customer accounts, payroll, billings, WINTER • 1992 • 43 Training a Skilled Work Force personnel records, and so on—which they then enter into computers...

...And by removing the $54,000 cap on income subject to the pension and disability portions of the Social Security payroll tax and treating all Social Security benefits as taxable income (while exempting the poorest fifth of workers and retirees from both taxes), an additional $600 billion could be generated over the decade...

...But what about all the work that can't be sent abroad...

...Several American towns—including Kewanee, Illinois...

...Training is, in this sense, a "public good...

...Of Seagate's 40,000 employees, some 27,000 work in Southeast Asia—designing, fabricating, and assembling the drives that Seagate sells around the world...

...According to the American Society for Training and Development, employees with college degrees are 50 percent more likely to receive corporate training than non–college graduates, and executives with postgraduate degrees are twice as likely to get training as those with college degrees...

...A 15-percent-a-year cut in current and planned military expenditures would yield $450 billion over the decade...

...At no time since the Great Depression has there been a better occasion for the party of Roosevelt and Kennedy and Johnson to champion the working class...

...coordinate its production with other AT&T facilities around the world via computer, satellite, fax, and modem...

...To get the skilled workers we need, the administration recommended "increasing quota limits for potential immigrants with higher levels of basic and specific skills...

...One of Procter & Gamble's most successful products of the 1980s—Liquid Tide—was the handiwork of the company's European researchers...

...Why aren't American firms worried about providing them with better training...

...Individual taxpayers have had to fill the gap, and in many poor and working-class towns, they just haven't had the money to pay for good schools...

...Global capital will create highwage jobs in the United States only if we can offer skilled workers and a first-class infrastructure...

...and Berea, Kentucky— surrendered a total of $18 million to attract or preserve around two thousand Hyster jobs...

...After cutting its American work force by 10 percent, shifting much of its production to Mexico, and buying Dutch-owned Philips's appliance business, Whirlpool employed 43,500 people in 45 countries—most of them non-Americans...

...To make matters worse, American corporations are busily siphoning off state and local tax dollars that might otherwise prop up the public schools...

...If we believed the news releases coming out of corporate public relations offices, we would assume that American business was aware of this troubling trend and on a crusade to improve the American work force...

...When American workers don't measure up, American business simply turns elsewhere, finding the workers it needs in another country or bringing them to America...

...Or look at Whirlpool...

...By 1989, Congress decided that the nursing shortage was sufficiently serious that these temporary nurses— more than ten thousand of them—should be 44 • DISSENT Training a Skilled Work Force granted permanent American citizenship...

...Ultimately, investments in human capital and infrastructure must be public responsibilities...

...Although they are not doing much to improve the quality of American education (and are demanding many of the same subsidies and tax breaks from local governments as do American corporations), foreign firms operating in the United States seem to be doing a better job at training their lower-level American workers and helping them achieve higher levels of productivity...

...The needs of low-level employees are the most neglected of all...

...The truth is, however, that American business has spent very little on educating its workers...

...firms that have recently opened research facilities in Japan reads like a Who's Who of corporate America: Eastman Kodak, W.R...

...The skills and insights of a nation's people, and the transportation and communications infrastructures linking them together and to the global economy, are the sole remaining unique attributes of a national economy...

...The biggest winner was Danville, Illinois, a city of 39,000 people, which agreed to provide Hyster with roughly $10 million in subsidies and tax breaks...

...There is, however, no way that foreignowned firms can solve the problems the American work force now faces...

...Spurred by this and similar ventures, India is building a teleport in Poona, to make it cheaper for other firms to send their software design specs to India's growing corps of software engineers...

...The corporate share of local 42 • DISSENT Training a fildlled Work Force property tax revenues has dropped precipitously in recent decades, from 45 percent in 1957 to just 16 percent last year...

...Their share of global exports has not significantly changed from what it was during the Carter years...

...What the administration was recommending was in fact a policy that was already being practiced...

...IBM's Tokyo research lab, tucked away behind the far side of the Imperial Palace in downtown Tokyo, houses a small army of Japanese engineers who are perfecting image-processing technology...

...American firms claim to spend $30 billion a year improving the skills of their employees, and every time a CEO makes a speech about public education we hear how corporations are worried about America's students...

...During the 1980s, some eight million immigrants—almost as many as in the first decade of the century—entered the United States legally...

...At DuPont's Yokohama lab, more than 180 Japanese scientists and technicians work on developing new materials...

...Services are also being farmed out around the world...

...Employees who have gained broadly applicable skills can always leave and go to work for another company...

...McGraw-Hill processes subscription renewal and marketing information in nearby Galway...

...So AT&T disassembled its Singapore plant and built a new one in Thailand...

...And their American workers are often producing better products...

...After Toyota assumed control over General Motors' Fremont, California, plant in 1984, productivity rose by over 50 percent and absenteeism plummeted from 25 percent to 4 percent...

...New York Life dispatches insurance claims to Castleisland, Ireland, where workers determine the amounts due and then instantly transmit the computations back to the United States...

...More than half of the 32.5 million Americans whose incomes fall under the official poverty line live in households with at least one full-time worker...

...Grace, DuPont, Merck, Procter & Gamble, Upjohn, IBM, to name a few...

...One answer is that American corporations are increasingly finding the skilled workers they need outside the United States and hiring them at a fraction of what they would pay in America...

...46 • DISSENT...

...In part, from American business itself...

...The list of U.S...

...In short, training is typically provided to employees who need it least...

...Here, too, American business has found a way to avoid paying for the education of its work force—immigration...

...The same cannot, however, be said of the competitiveness of the American work force...

...A federal income tax as progressive as it was in 1978 would require the top 10 percent of income earners to pay Training a Skilled Work force $950 billion more than they are supposed to now...

...The United States has the ability to make the investments that a modern national economy requires...

...We underfinance Head Start, child nutrition, and other preschool programs...

...Until the late 1970s, AT&T had depended on workers in Shreveport, Louisiana, to assemble standard telephones for the American market...

...Right now we are moving in exactly the wrong direction for such a transformation to take place...

...According to a recent Hudson InstituteTowers Perrin survey, only 8 percent of American firms provide their employees with training to improve their writing and verbal skills...

...The Bush administration came to a similar conclusion in the 1990 Economic Report of the President: "With projections of a rising demand for skilled workers in coming years, the nation can achieve even greater benefits from immigration...

...The same pattern of neglect holds for corporate America's highly touted generosity to schools...

...There, fifty Indian programmers are linked by satellite with Texas Instruments' Dallas headquarters...

...and transport its output efficiently via cargo plane and container to wherever telephones were needed...

...AT&T could set up a state-of-the-art manufacturing plant in Singapore...

...For American workers, the consequences of this trend are a disaster...

...Although the 1990 Consumer Reports ranks most Japanese cars higher in quality than American cars, it finds no difference between the quality of Japanese cars produced in the United States by American workers and those made in Japan...

...Now that they have not, the question is whether the Democrats are prepared to argue for a policy that challenges the Republican orthodoxy of the 1980s...

...Why isn't American business more worried about the state of the American work force...

...The rate of corporate giving to American education has been declining for the past five years, and most of the money that is given never finds its way to public primary and secondary schools...

...Donnelly sends entire manuscripts to Barbados for computer entry in preparation for printing...

...Typical of this trend is Seagate Technology, the California-based leader in computer hard-disk drives...

...Today one out of five American eighteen-year-olds is functionally illiterate, and the real wages of nonsupervisory workers (about two-thirds of all wage earners) have plummeted 12 percent, putting them back where they were in the late 1950s after we adjust for inflation...

...If they need more skilled workers, American firms are finding them abroad, too...

...A recent amendment to the immigration laws, strongly supported by American business, creates a new category of skilled immigrant to whom an extra 54,000 visas will be issued each year...

...Hard-pressed states and localities can't begin to make up the difference in lost federal dollars...

...America must make a vast investment—at least $2 trillion in the 1990s—to prepare our work force for the next century...

...Our per-pupil spending on kindergarten through high school lags behind that of five other industrialized nations...

...American firms are also relying on European techniques and researchers...

...Faced with a shortage of skilled nurses in the 1980s, American hospitals began recruiting nurses from the Philippines and Ireland to come to the United States on temporary work visas...

...Ironically, foreign-owned firms may be coming to the rescue...

...Even advanced research and development is going to foreigners...

...Today poverty is as much a result of not having the skills for a decent paying job as being unemployed...

...Advances in the technologies of communications and transportation enable firms to go to the remotest parts of the planet...

...According to a recent survey, an American worker in a Japanese plant can assemble a car in 19.5 hours, as compared to the 19.1 hours it takes an average Japanese autoworker in Japan and 26.5 hours it takes an average American autoworker in an American auto factory...

...American Airlines employs over a thousand data processors in Barbados and the Dominican Republic to enter names and flight numbers from used airline tickets (flown daily to Barbados from airports around the United States) into a giant computer bank located in Dallas...

...According to the National Science Foundation, American firms increased their overseas spending on research and development (R&D) by 33 percent between 1986 and 1988 (the last date for which such data are available), compared to a 6 percent increase in R&D in the United States...

...Most of the employees of Saztec International, a twenty-million-dollar-a-year data-processing firm headquartered in Kansas City, live and work in the Philippines...

...Federal outlays for worker training have been slashed by 50 percent since 1980, and federal grants and loans for college students have been cut 13 percent over the decade...

...The real question is, finally, not whether we have the resources to prepare the American work force for the next century but whether we have the political will...

...In IBM's Kanagawa lab in Yamato City, fifteen hundred Japanese researchers are developing advanced hardware and software...

...One answer to this classic market imperfection is to require by law that each company devote a percentage of its WINTER • 1992 • 45 total payroll (say, 2.5 percent, as in France) to the training of its nonsupervisory workers or, if it spends less than this minimum, contribute the difference to a training fund available to any employee on a voluntary basis...

...Japanese firms, which now employ almost two million Americans, have been spending about $1,000 more each year training their lower-level American workers than what's spent by American firms...

...Most corporate giving to American education flows to the nation's elite colleges...

...Even IBM—the very symbol of American technological preeminence—is beginning to tip the scales...

...Although a skilled and educated work force is still in the interest of corporate America as a whole (when skilled workers can't be found more cheaply abroad), no individual company will reap much benefit from investing in the training of its low-level employees—apart from public-relations advantages...

...Meanwhile, our spending on infrastructure has fallen by almost a third, resulting in collapsing bridges, crumbling highways, dilapidated subways, overflowing sewers, and rush-hour traffic jams extending for miles...

...The governments were invited to bid to keep local jobs...

...According to Rosanne Cahn of First Boston Corporation, in 1991 American firms planned to boost capital investment abroad by 14 percent compared with just 6.7 percent at home...

...Already 40 percent of its employees are foreign...

...All other factors of production—plant, equipment, money, technology—are becoming footloose, moving effortlessly across borders...

...By the late 1980s, AT&T found that workers in Thailand were happy to assemble telephones for a small fraction of the wages of workers in Singapore, and could do so as efficiently and reliably...

...AT&T then discovered that workers in Singapore would perform the same tasks, as reliably, at a far lower cost...

...As a result of such bidding, corporations now pay a far smaller proportion of local taxes than they once did...

...Sulligent, Alabama...

...Reaganomics was sold to the country on the premise that the fruits of American investment would "trickle down" to enrich the average worker...

...But what is new is that a growing percentage of its employees are foreign...

...In sum, as we enter the 1990s, American firms face no shortage of literate, reliable, minimally skilled workers...

...In the late 1980s, two researchers at IBM's Zurich lab came up with breakthroughs into superconductivity and microscopy, which earned each of them Nobel prizes...