[OPE-L] Retraining Laid-Off Workers, but for What? By LOUIS UCHITELLE

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Sun Mar 26 2006 - 00:35:41 EST


March 26, 2006

Retraining Laid-Off Workers, but for What?
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 
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 
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 
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 
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 
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 
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 

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