From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Mar 26 2006 - 00:35:41 EST
NYTimes
March 26, 2006
Retraining Laid-Off Workers, but for What?
By LOUIS UCHITELLE
Layoffs have disrupted the lives of millions of
Americans over the last 25 years. The cure that
these displaced workers are offered - retraining
and more education - is heralded as a sure path
to new and better-paying careers. But often that
policy prescription does not work, as this book
excerpt explains. It is adapted from "The
Disposable American: Layoffs and Their
Consequences" by Louis Uchitelle, an economics
writer for The New York Times. Knopf will publish
the book on Tuesday.
JO GOODRUM, a thin, energetic woman older than
her audience of aircraft mechanics - old enough,
perhaps, to be their mother - got their attention
with a single, unexpected sentence, which she
inserted early in her presentation. Her husband,
she said, had been laid off six times since the
late 1980's. And yet here she was, standing
before them, in one piece, cheerful, apparently
O.K., giving survival instructions to the
mechanics, who would be laid off themselves in 10
days.
They were, in nearly every case, family men in
their 30's and 40's who had worked for United
Airlines since the mid-1990's. Summoned by their
union, they had gathered in the carpeted
conference room at the Days Inn next to
Indianapolis International Airport, not far from
United's giant maintenance center, a building so
big that 12 airliners could be overhauled in it
simultaneously. That no longer happened. Most of
the repair bays were empty. The airline was
cutting back operations, and the 60 mechanics at
the meeting were in the fourth group to be let go.
Confrontation had brought on the layoffs.
Influenced by militants in their union local,
Hoosier Air Transport Lodge 2294 of the
International Association of Machinists, the
2,000 mechanics at the center had engaged in a
work slowdown for many months, and then a refusal
to work overtime. But rather than give ground,
United responded by outsourcing, sending planes
to nonunion contractors elsewhere in the country.
That scared the mechanics. They quieted down and,
in effect, authorized the leaders of Lodge 2294
to make peace. Their hope was that if they
cooperated, United would ease up on the layoffs
and revive operations at, arguably, one of the
most efficient, high-tech maintenance centers in
the world. In this state of mind, the union was
helping to usher the 60 laid-off mechanics
quietly away. It had rented the conference room
on this cold January evening in 2003 to introduce
the men to what amounted to a boot camp for
recycling laid-off workers back into new, usually
lower-paying lines of work.
SIMILAR federally subsidized boot camps,
organized by state and local governments, often
in league with unions, have proliferated in the
United States since the 1980's, and now many
cities have them. Unable to stop layoffs,
government has taken on the task of refitting
discarded workers for "alternate careers." In
deciding as a nation to try to rejuvenate them as
workers, we put in place a system, however
unrealistic, that implicitly acknowledged layoffs
as a legitimate practice.
The presumption - promoted by economists,
educators, business executives and nearly all of
the nation's political leaders, Democrats and
Republicans alike - holds that in America's
vibrant and flexible economy there is work, at
good pay, for the educated and skilled. The
unemployed need only to get themselves educated
and skilled and the work will materialize.
Education and training create the jobs, according
to this way of thinking. Or, put another way, an
appropriate job at decent pay materializes for
every trained or educated worker.
If the workers were already trained, as the
mechanics certainly were, then what they needed
was additional training and counseling as a
transition into well-paying, unfilled jobs in
other industries. If the transition failed to
function as advertised, well, the accepted wisdom
suggested that it was the fault of the workers
themselves. Their failure to land good jobs was
due to personality defects or a resistance to
acquiring new skills or a reluctance to move
where the good jobs were.
That was the myth. It evaporated in practice for
the aircraft mechanics, whose hourly pay ranged
up to $31. Not enough job openings exist at $31
an hour - or at $16 an hour, for that matter - to
meet the demand for them. Jobs don't just
materialize at cost-conscious companies to absorb
all the qualified people who want them.
You cannot be an engineer or an accountant
without a degree; in that sense, education and
training certainly do count. Furthermore, in the
competition for the jobs that exist, the educated
and trained have an edge. That advantage shows up
regularly in wage comparisons. But you cannot
earn an engineer's or an accountant's typical pay
if companies are not hiring engineers and
accountants, or are hiring relatively few and can
control the wage, chipping away at it.
For the mechanics at the Days Inn, the retraining
process would begin in a few days with workshops
in résumé writing and interviewing skills,
personality evaluations and job counseling - and,
for a lucky few, tuition grants to go back to
school. The mechanics were being "counseled out"
of their well-paying trade, as some of them wryly
put it, and Mrs. Goodrum was the lead-off speaker
in this endeavor.
She presented herself as one of them. Her
husband's wage slid from $25 an hour in his
heyday as a factory worker in the 1980's to $10
an hour in his latest job in a watch store. To
supplement that falling income, she had taken
part-time work as an "education presenter" for
the Consumer Credit Counseling Service of Central
Indiana.
In this capacity, it was her task to explain how
easy it would be for the departing mechanics -
separated from salaries of $55,000 a year and up
- to sink deeply into debt. The glimpse that she
offered of her husband's downfall suggested that
she had learned these lessons herself.
Distinguish, she said, between needs and wants.
Rent, food, insurance premiums - those are needs.
Cable television is a want; cancel it. Day care
can be a want or a need. It's a need for parents
with jobs, but a want for the soon-to-be-laid-off
mechanics who would now have more time to watch
their children themselves.
In the blue-collar world, aircraft mechanics are
at the top, and these were painful economies for
them. They are the highly skilled people who
repair and overhaul the nation's airliners. Each
mechanic in the room had completed two years of
collegelike schooling to qualify for the exacting
task of dismantling and rebuilding airliners
every five years, the work carried out at the
maintenance center. Several compared their role
proudly to that of a pilot, claiming as much
credit as the pilots for the safety of air travel.
Now they were falling out of this high-level
world, in most cases for good. They were unlikely
to match or come close in their next jobs to the
level of pay that would soon cease. They would be
newcomers again in the work force. They must
learn how to get a foot in the door, the speakers
that evening unceremoniously told them. Their
careers were gone, and the grief at this loss
must be absorbed in order to move on.
Recognizing their vulnerability, Mrs. Goodrum
spoke to the mechanics in the simplified,
encouraging language that a skilled teacher uses
to instruct children who are just learning to
read, or that a speech therapist adopts to guide
stroke victims struggling to speak again. Did the
mechanics realize, she said, that credit card
companies and mortgage lenders give special
consideration to laid-off workers? She held up a
"sample letter to a creditor" in which the writer
announces his layoff, says he expects to be
working again in three months and proposes to
reduce his payments in the meantime. "It is very
important that you negotiate now," she said, "and
not when you are 60 days behind on a debt."
When Mrs. Goodrum had finished outlining in
step-by-step detail the various survival
strategies, Ben Nunnally, then 44 and the
president of Lodge 2294, rose and without moving
from behind the head table inserted into the
proceedings some impromptu advice of his own,
exercising his authority one last time as their
union leader. While he had the mechanics in one
room, Mr. Nunnally said, he wanted to caution
them about the unemployment checks they would
soon be getting. If they did not file promptly on
Jan. 25, their last day, they could waste two
weeks in collecting the first check.
Even if the unemployment pay arrived on time, it
would be little enough: $336 a week for 26 weeks,
way below the nearly $1,100 a week or so that the
mechanics had been earning at United. Mr.
Nunnally, however, made no mention of either
amount. "We have no choice but to offer as little
conflict as possible with United and hope that
will avoid more layoffs," he said afterward.
It was a wasted hope. Three months later, in
April 2003, United abruptly laid off the 1,100
remaining mechanics, including Mr. Nunnally. On
May 4, it said it would abandon the maintenance
center completely. Outsourcing had won, hands
down, and although Mr. Nunnally stayed on as the
president of the much-diminished union local, he,
too, applied for unemployment pay.
Mr. Nunnally had experienced the center's glory
days. He joined United in 1989 as a 30-year-old
mechanic in San Francisco and transferred to
Indianapolis in 1994, drawn by the lower cost of
living and the recently opened center. The
mechanics in Indiana worked mostly on Boeing
737's, but as United expanded the operation -
opening more repair bays, hiring more mechanics
and extending the legs of the L-shaped building
until each was nearly a half-mile long - they
also overhauled other so-called narrow-body
aircraft, including Airbus 319's and 320's and
the larger Boeing 757's.
With morale high in the 1990's and the mechanics
willing to work hard, they put airliners through
their periodic overhauls in record time. The
stem-to-stern refurbishing of a 737 normally
required 22 days at other maintenance centers.
The mechanics at Indianapolis cut that to 11 days
for a 737 going through its first heavy
maintenance and to less than 20 days for older
planes. "We had overhaul bays that kind of
competed in a friendly way to see who could do
the best," said Frederick L. Mohr, general
manager of the Indianapolis center from 1997
until 2002.
The rapid turnaround meant an infusion of
passenger revenue from the additional days that
the plane was in service, helping to justify the
mechanics' pay of $26 an hour in the late 1990's.
Capitalizing on the growing productivity, United
itself got into outsourcing as a means of keeping
the giant center busy during slack periods in its
own operations. America West was sending 737's
and 757's to Indianapolis for heavy maintenance,
and by the spring of 1999 the work force had
grown to 2,400 mechanics from fewer than 250 when
Mr. Nunnally arrived in 1994. The fast
turnarounds and reliable work justified the
relatively high fees that United charged, and
America West shifted maintenance to Indianapolis
from a private, less expensive contractor in
Portland, Ore., whose mechanics earned less.
It was outsourcing in reverse, an American
victory in the global competition. "We had people
visiting us from Europe to see what we were
doing," Mr. Mohr said.
What these visitors saw as they approached the
maintenance center was a strikingly futuristic
light gray structure, trimmed jauntily in blue,
that had risen in the rolling, grassy fields on
the far side of the runways, opposite the
terminal. The soaring entrance hall, designed to
suggest a giant airliner cabin without seats,
reflected the efficiencies that were built into
nearly every aspect of the building. The
mechanics came and went through this hall, where
before or after a shift or during a meal break,
they took care of nonproductive chores: banking
at a credit union, visiting a personnel office,
shopping at a small store.
On the eve of the closing, only Hangar 1A was
active. A 737 was parked there, its interior
gutted. It was the last airliner United would
recondition in Indianapolis, and David Doucey,
the maintenance center's operations manager, said
matter-of-factly that although the mechanics had
already received their layoff notices, they would
finish the job seven or eight days faster than
any other center could.
Parts from the dismantled interior were spread
out on an unpainted wooden floor, a mezzanine
that fit snugly around the plane just below the
wings and stretched out 200 feet on either side.
The servicing of many components removed from the
cabin and cockpit took place there, eliminating
the time required to send them to workshops
elsewhere - the practice at other centers.
The time-saving features were numerous, and Mr.
Doucey pointed them out. Hydraulic devices erect
scaffolding around the plane in an hour, rather
than the four hours required elsewhere. Parts are
ordered by computer and delivered on an automated
miniature railroad, rather than by hand or on
bicycles as in other shops. A controlled climate
permits mechanics to use fiberglass or graphite
composites to patch a plane's outer skin without
having to send the sections to special shops.
What drove away America West was the labor
trouble that erupted over the Fourth of July
weekend in 1999 and then mushroomed into a
prolonged slowdown. In retrospect, that weekend
was the turning point, the moment when the
remarkable efficiencies that had been achieved at
Indianapolis began to unwind, and
labor-management tensions that had been
accumulating suddenly asserted themselves.
IN an earlier era, the two sides would have tried
to settle their differences through negotiation
and would probably have succeeded. There was
really no other alternative. The outsourcing of
maintenance did not exist before the 1980's;
airlines did their own maintenance. But now
layoffs and outsourcing had become an easy and
acceptable option. Everywhere in America, the
barriers to layoffs came down one after another
starting in the late 1970's, and by the turn of
the century there was acquiescence.
The incident that started United down the road to
outsourcing and layoffs seemed so minor. During
the trusting years, the foremen had relaxed the
restrictions on the number of mechanics who could
take vacation days at the same time. For that
Independence Day weekend, more than 100 mechanics
had been granted time off - 10 times the
prescribed number.
Mr. Mohr, the general manager, was himself on
vacation in the days leading up to the weekend,
and he called the office to remind his
lieutenants to be careful about allowing too many
mechanics to be away. Somehow that became a
wholesale, last-minute cancellation of vacation
time, outraging the mechanics. "To this day, they
get upset when they talk about what happened that
weekend," Mr. Doucey said.
The uproar over vacations stirred up other
resentments - how United had gotten tough about
sick days, how it had scaled back flexible hours,
how it had substituted an 8-hour shift for a
10-hour one that allowed three- and four-day
weekends, which the mechanics preferred.
"Once the vacation thing happened, that ignited a
lot of small fires," Mr. Nunnally said. The
militants in his local fanned those fires,
arguing that the mechanics, because of their
unique skills, were special people, essential to
airline safety, and that United should be forced
to recognize their value.
Mr. Mohr resisted this logic. "Anything we had to
do to respond to the business environment was
seized upon by the mechanics as something
negative," he said. Mr. Nunnally, who was then
chairman of the lodge's grievance committee, was
caught between management and his members, his
leadership challenged by the militants, who
numbered nearly 300 mechanics. "I said to Mohr,
'I have to have some wins, too; I can't be beaten
in every grievance and do nothing,' " Mr.
Nunnally said. "I practically begged him to
cooperate, and he could not do that."
BY the fall of 1999, the mechanics were engaged
in a slowdown. That is not difficult when airline
safety is at issue. If an inspector, drawn from
the ranks of the mechanics, finds fault with a
newly refurbished wing flap assembly or some
other repair, he writes up a ticket reporting the
flaw or a potential malfunction; even if there
isn't a problem, time has to be spent to
investigate the issue to the satisfaction of the
Federal Aviation Administration.
As the mechanics had intended, turnaround time
inched up, soon reaching 15 days and eventually
more than 20 days for a 737. America West stopped
sending planes to Indianapolis, as the mechanics
had hoped. To regain the lost business, they
expected United to restore some of the lost
perquisites and thus win back the mechanics'
cooperation. Jobs would be preserved, and on the
mechanics' terms. That did not happen, and as the
slowdown dragged on, work backed up on United's
own airliners. For the first time, planes were
parked on the tarmac outside the center, out of
service - and not generating revenue - while
awaiting overhaul.
Then, in July 2000, the mechanics slowed work
even more by voting to withhold overtime, to
protest what the militants viewed as management's
recalcitrance in negotiating a new contract to
replace one that had just expired. Mr. Nunnally,
as grievance chairman, had spoken against
withholding overtime, and worked it himself, in
defiance of his militant members, but his point
of view did not prevail.
Soon after, the outsourcing began. United
diverted work from Indianapolis to private
contractors in Alabama and North Carolina,
contractors who employed nonunion mechanics - in
most cases, at lower wages and with fewer
benefits. "The outsourcing was a business
decision," Mr. Mohr said. "The cycle time had
gotten to the point that if we did not outsource,
we would have aircraft continuously parked,
waiting for maintenance."
When United and the union finally signed a new
contract in March 2002 - 20 months after the old
one expired - and the mechanics in Lodge 2294
lifted their ban on overtime, United continued to
outsource maintenance, gradually shrinking the
operation in Indianapolis. Under the new
agreement, the mechanics' combined wages and
benefits rose to more than $60 an hour, an
increase of roughly $20. While that was the first
increase in five years, the new total was double
the labor cost of nonunion contractors. It was
too big a spread for the mechanics in
Indianapolis to overcome - unless they could
return to the record turnarounds achieved in the
late 1990's. But the old efficiency did not
reappear.
Even if it had, the outsourcing would not have
stopped, and for a reason quite apart from labor
costs. United would not submit again to the
leverage over maintenance operations that the
mechanics in Indianapolis had exercised.
Outsourcing had become too easy an alternative,
and the airline crisis that followed the
terrorist attacks of September 2001 only
encouraged the practice.
What had started as an escape from a unionized,
often militant work force took on a second
function. The outsourcing of heavy maintenance
became a means for the airlines to cut costs, and
nearly every major airline gradually moved that
way. In an earlier era, before layoffs and
outsourcing were acceptable options, United might
have weathered the crisis by taking in work from
other airlines, as it had once done with America
West. But layoffs and outsourcing were now
standard practice, and rather than pursue
economies of scale, United sought heavy
maintenance at the lowest immediate cost. As work
shifted away from Indianapolis, the layoffs
multiplied.
The 60 mechanics gathered at the Days Inn that
January evening were in the fourth wave to lose
their jobs, bringing the total to 1,200. The
recycling of former mechanics into new lines of
work was now in full swing, and Mr. Nunnally,
when he had finished speaking about the
importance of filing promptly for unemployment
benefits, introduced Tori E. Bucko. She turned
out to be the main speaker, the chief of the boot
camp that the mechanics were being encouraged to
enter.
Given her responsibilities, Ms. Bucko was
surprisingly young - only 30. But as the manager
of a federally subsidized program for processing
laid-off airline workers in Indianapolis, she
would soon play a more important role in the
lives of many of the mechanics than Mr. Nunnally
or the union they were leaving behind.
The program that Ms. Bucko directed was sponsored
by the Indianapolis Private Industry Council, a
coalition of companies, unions, government
agencies and civic groups. Virtually all of the
funding comes from Washington, which sends less
than $7 billion a year to the states to recycle
laid-off workers back into jobs. In Indiana's
case, the state distributes its share of the
federal money to 16 regional work-force
investment boards. The Indianapolis Private
Industry Council is one of these boards, and the
council in turn paid a private, nonprofit
company, Goodwill Industries of Central Indiana,
to do the actual work.
Goodwill employed Ms. Bucko as the manager in
charge of the recycling program for laid-off
airline workers in Marion County, whose
boundaries encompass the city of Indianapolis.
Goodwill also recycled men and women laid off in
other industries in Marion County, recruiting
them as they signed up for unemployment benefits
at state-run offices. But in the winter of 2003,
outcast airline employees, two-thirds of them
United's mechanics, were still getting special
attention in what was called the AIR Project, the
short name for Airline Industry Re-careerment
Project, a title that suggests just how awkward
and difficult recycling is.
Ms. Bucko's task, in this initial presentation at
the Days Inn, was to encourage the 60 mechanics
to take the next step. There would be no help for
them if they failed to show up at the AIR
Project's center, in an industrial park not far
from the airport. There, they would be asked to
fill out a detailed enrollment application and
submit to a series of workshops and evaluations.
What Ms. Bucko did not mention was the pressure
on her employer, Goodwill Industries, and on
herself, to meet the employment goals specified
in the federal grant - to get most of the
mechanics re-employed at 90 percent of their
previous wage. Meeting this goal was a condition
for getting more federal money once the initial
grant expired. In the end, Goodwill managed to
put together enough money to string out the AIR
Project for nearly four years. But the employment
goals were not met. They could not be met; they
were too optimistic, mythically optimistic.
Ms. Bucko knew that as she struggled to meet the
standard. So did Carolyn Brown, vice president of
the Indianapolis Private Industry Council, the
agency that picked Goodwill Industries to run the
project. "When large numbers of people are laid
off, there just isn't any occupational cluster
that is waiting out there to receive them," Ms.
Brown said.
Job training, as a result, became a channeling
process, channeling the unemployed into the
unfilled jobs that do exist, with a veneer of
training along the way. Yet job training is
central to employment policy. It has been since
1982, when Congress passed the Job Training
Partnership Act at the urging of President Ronald
Reagan. President Bill Clinton took job training
even further, making it available to
higher-income workers - including the aircraft
mechanics in Indianapolis.
Saying that the country should solve the skills
shortage through education and training became
part of nearly every politician's stump speech,
an innocuous way to address the politics of
unemployment without strengthening either the
bargaining leverage of workers or the federal
government's role in bolstering labor markets.
But training for what? The reality, as the
aircraft mechanics discovered, is painfully
different from the reigning wisdom. Rather than
having a shortage of skills, millions of American
workers have more skills than their jobs require.
That is particularly true of college-educated
people, who make up 30 percent of the population
today, up from 10 percent in the 1960's. They
often find themselves working in sales or as
office administrators, or taking jobs in hotels
and restaurants, or becoming carpenters, flight
attendants and word processors.
The number of jobs that require a bachelor's
degree has indeed been growing, but more slowly
than the number of graduates, according to the
Labor Department, and that trend is likely to
continue through this decade. "The average
college graduate is doing very well," said
Lawrence F. Katz, a labor economist at Harvard.
"But on the margin, college graduates appear to
be more vulnerable than in the past."
The Labor Department's Bureau of Labor Statistics
offers a rough estimate of the imbalance in the
demand for jobs as opposed to the supply. Each
month since December 2000, it has surveyed the
number of job vacancies across the country and
compared it with the number of unemployed job
seekers. On average, there were 2.6 job seekers
for every job opening over the first 41 months of
the survey. That ratio would have been even
higher, according to the bureau, if the
calculation had included the millions of people
who stopped looking for work because they did not
believe that they could get decent jobs.
So the demand for jobs is considerably greater
than the supply, and the supply is not what the
reigning theory says it is. Most of the unfilled
jobs pay low wages and require relatively little
skill, often less than the jobholder has. From
the spring of 2003 to the spring of 2004, for
example, more than 55 percent of the hiring was
at wages of $13.25 an hour or less: hotel and
restaurant workers, health care employees,
temporary replacements and the like.
That trend is likely to continue. Seven of the 10
occupations expected to grow the fastest from
2002 through 2012, according to the Labor
Department, pay less than $13.25 an hour, on
average: retail salesclerks, customer service
representatives, food service workers, cashiers,
janitors, nurse's aides and hospital orderlies.
The $13.25 threshold is important. More than 45
percent of the nation's workers, whatever their
skills, earned less than $13.25 an hour in 2004,
or $27,600 a year for a full-time worker. That is
roughly the income that a family of four must
have in many parts of the country to maintain a
standard of living minimally above the poverty
level. Surely lack of skill and education does
not hold down the wages of nearly half the work
force.
Something quite different seems to be true: the
oversupply of skilled workers is driving people
into jobs beneath their skills and driving down
the pay of jobs equal to their skills. Both
happened to the aircraft mechanics laid off by
United.
* Copyright 2006The New York Times
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