CONNECTING THE DOTS

Connecting the dots

March 13, 2003

A recent article in the Washington Times lamented the loss of 308,000 jobs in the United States in three of the past four months mainly in the areas of manufacturing, construction, service and retail trade. While some of those jobs, particularly in the construction industry, will be recouped as the weather improves, such will not necessarily be the case in manufacturing, service and retail trade.

How does this play out over the long haul? What will the long-term effect be? What will be the effect on America and the American economy?

Because the jobs are no longer there, a large percentage of the 308,000 people who have lost their jobs will not be able to find comparable jobs at the same or higher wage to maintain their current standard of living. They will, therefore, seek jobs at a lower wage.

In seeking and obtaining a lower wage job to bring in some kind of income, the individual or family now struggles to meet prior debt obligations based on a higher wage. It is easy to see that an individual whose debt obligations are based on $35,000 per year income will have a hard time meeting those debt obligations when his wage drops to say $30,000 per year or lower.

This loss of purchasing power will either result in liquidation of current assets to cover debt, bankruptcy, wage-earner or debt consolidation. Any way the thing is done, the result is a lower standard of living for the individual and the family.

As more and more high cost assets, such as homes and vehicles, are placed on the market as they are no longer affordable, the glut causes a loss in value of those assets. If the purchasing power in a given area is diminished enough through job loss, this glut will not be absorbed by the current economic base, resulting in foreclosures and repossessions, creating an economic strain on the diminished economic base.

It is easy to see how all of this creates a downward spiral in the standard of living, something not talked about in correlation with NAFTA - the North American Free Trade Agreement, or GATT - General Agreement on Tariffs and Trade. Both of these agreements have encouraged companies to move their bases of operation to foreign countries and to outsource ... moving production jobs to other countries with cheaper labor.

While one could argue that labor in the United States costs too much, American's have not seen a reduction in prices that should occur due to outsourcing products to countries with cheaper labor. What they have seen is CEO's receiving outrageous salaries and huge bonuses.

And, of course, the effect of outsourcing on the United States as a nation is the loss of jobs resulting in a loss of standard of living. And it is easy to see that the long-term result will be a loss of standard of living for the entire nation.

While economists claim this won't happen, it is already happening.

Continually, in the context of the restructuring of the education system to produce a workforce, comments have been made, here and there, that belie the truth.

From America's Choice: high skills or low wages!, the report of the Commission on the Skills of the American Workforce (CSAW), a commission of the National Center on Education and the Economy (NCEE)(1), comes this statement,

"But in a broad survey of employment needs across America, we found little evidence of a far-reaching desire for a more educated workforce." (p 26)

It stands to reason, if higher-paying jobs require a more educated workforce, then the move to a less educated workforce also means lower-paying jobs.

Testifying before Congress on October 23, 1989, Thomas Sticht, president and senior scientist, Applied Behavioral and Cognitive Science, Inc; member of the Secretaries Commission on Achieving Necessary Skills (SCANS), had this to say:

"Many companies have moved operations to places with cheap, relatively poorly educated labor. What may be crucial, they say, is the dependability of a labor force and how well it can be managed and trained-not its general educational level, although a small cadre of highly educated creative people is essential to innovation and growth. Ending discrimination and changing values are probably more important than reading and moving low-income families into the middle class."

From Democratic Schools, edited by education reform advocate, Michael W Apple, and James Beane, ASCD, 1995, comes the following admission:

"...despite political and educational rhetoric to the contrary, more economic forecasts show that a large proportion of the jobs the modern economy is creating are low-skilled, part-time, and poorly paid." (p 102)

This quote is referenced to a prior work of Apple entitled American Realities: Poverty, Economy, and Education; 1989.

But isn't this totally counter to what the advocates of reform have been saying all along? Haven't they claimed higher standards resulting in higher wages?

That is the rhetoric but, as so often happens, it isn't the reality. In government reports whose existence is not generally known to the public, it has been stated that the United States is moving to a "service economy." What does that mean? That means low-skill, low wage jobs.

The following is from the Investment in Human Capital study, Office of Financial Management (OFM); Washington State; December 1, 1990:

"Industry employment forecasts formed the basis for occupational forecasts by ESD (Employment Security Department) and OFM. According to the occupational forecast, also completed in August 1990, the rapidly expanding occupations tend to be those requiring higher levels of training, while jobs with lower skill and training requirements are expected to grow at a slower pace. The major exception to this trend is the strong growth in service occupations which tend to have relatively low education requirements." (pages 15-16)

The report goes on to list the service occupations which were expected to show the strongest growth. Topping the list, expected to create 102,000 jobs, was the food and beverage service industry, requiring little or no formal training. Second on the list was sales jobs, expected to create 90,000 jobs, requiring some post secondary training. Next was managers and administrators, expected to create 74,000 jobs, most requiring a college degree. Fourth on the list, expected to create 56,000 jobs, requiring some post secondary education, was general office occupations.

Some will undoubtedly find it of interest that this OFM study references the report of CSAW: America's Choice: high skills or low wages! which came out in June 1990, just five short months before; making it very obvious that this study was but a mere formality in coalescing the state agenda to the CSAW report that set in motion the SCANS commission and undergirded Goals 2000 and School-to-Work legislation at the federal level.

What has been the result? The following is from A Report to the Legislature on implementing High Skills, High Wages; Workforce Training and Education Coordinating Board (WTECB); Washington State, 1996 (five years later):

"The evaluation found that 89 percent of program participants gained employment after completing training; ... and the median wage obtained by graduates was $10.29 or 89 percent of their pre-job-loss wage."

First, using the figures given above, if 12,000 people lost their jobs during the time frame mentioned, and 89 percent of those people gained employment after being retrained, this means that 10,680 people were employed at new jobs and 1,320 people did not become employed. This constitutes 1,320 people who have no viable means of supporting themselves, ie, they require public assistance to survive. The 89 percent figure looks good until one figures out the actual numbers the 89 percent represents.

And using the figures given in the report, the median pre-job-loss wage was $11.56. The 11% loss in wage, while not seeming like much, turns into a loss of $1.27 per hour. In an eight hour day, the loss is $10.16. Using median hours per month (173.3) and per year (2080), the loss adds up to $220 per month and $2,642 per year. That's a healthy chunk of change to an individual making $11.56 an hour. Figuring a minimum of a 2% increase in pay per year, in five years the individual will have recouped to 95% of his pre-job-loss wage. That equates, in that five years, to over $20,000 in lost wages. In that same five years, the cost of living will have increased by 1 to 2% per year, maybe more, meaning the loss in standard of living and buying power will be even greater.

The State of Washington considers this a successful training program! The reality is hard to miss.

The long and short of this whole scenario is that high-paying good jobs are being lost in America as corporations move their operations to foreign countries and outsource their products or production lines to other countries. The result is a slow but sure downward spiral of the American economy that spells disaster for America as a nation and for our people.

Repeatedly we hear the term "world class standards ... economy ... workers." World class means lowering American standards to those of other nations, nations whose economies have, because of the humanist world view undergirding those economies, been unstable and unpredictable. The same will happen here, the rhetoric to the contrary.

World class doesn't mean higher standards, it means lower standards across the board resulting in a loss of jobs, loss of economic base, loss of standard of living, devolving into the quagmire of poverty known to so many nations.

Footnotes:—

(1) For those who may not be familiar with NCEE, the center - originally funded by the Carnegie Corporation of New York - is run by Marc Tucker, good friend of Bill and Hillary Clinton. Tucker is the author of the infamous "Dear Hillary" letter in which he laid out the master plan for a "seamless web ... cradle to grave" for workforce training and retraining, changing the purpose of education from educating for intelligence to educating to produce a workforce. When governor of Arkansas, Bill Clinton had brought Tucker in to restructure education in that state. In 1990-91, as Bill Clinton was mounting his campaign to seek the Democrat nomination for the presidency, Tucker paid Hillary Clinton over $100,000 to promote America's Choice: high skills or low wages! - an act that brought NCEE under the scrutiny of the New York State Attorney General in 1996.