Balancing outsourcing and retraining

Andrew McKeever

GNAT-TV News Project

We’ve all heard a lot this presidential election cycle about the negative impact foreign trade has had on communities which once boasted of strong manufacturing businesses that provided well-paying jobs for hundreds or thousands of their residents. Presidential hopeful Donald Trump has built his strongest appeal to (mostly white) blue collar workers who found their jobs outsourced when the companies they had labored for decided it was cheaper to move operations overseas and take advantage of cheaper foreign labor. It was cheaper to build over there, and ship the finished products back here, the bean counters involved apparently concluded, putting millions of hard-working Americans on the unemployment lines or flipping hamburgers instead of pouring steel (and being paid a fraction o their former wages).

The number of ways to look at this is more than one, and it’s complex, especially for those of us who aren’t CPAs or lie awake at night pondering the nuances of the U.S. tax code (a frighteningly complex document). One is that in the grand scheme of things — the “big picture” — this is very rational conduct by the corporations involved, like the recent example of air conditioner manufacturer Carrier Corp. which recently and inelegantly announced to more than a thousand of its soon-to-be-former employees that they were going to start making their units in Mexico. Maybe when all is said and done, this move actually might result in a net plus for the U.S. economy, freeing Carrier  and companies like it to invest more in other plants and lines of business that result not just in more wealth for their shareholders, but more jobs for the 99 percenters. Or maybe those benefits don’t level the playing field when the large payroll that used to be pumped into several communities located in the vicinity of said plant vanishes. Plus, there are the social costs — drug and alcohol abuse, petty crime, domestic assault, for example — that are often hidden, at least in the beginning.

Whatever’s the case, Trump, followed by many others on the left, and including candidates like Hillary Clinton, who was in favor of the TPP (Trans Pacific Partnership), the 2016 presidential campaign’s favorite whipping boy, before she said it needed more work, have made a good living out of attributing every problem in the U.S. to trade deals like NAFTA (North American Free Trade Agreement) and the yet to be signed TPP treaty. And there can be no question that having the rug pulled out from underneath you after years or decades of hard work in the factory is a crushing blow. You could argue that there’s been no shortage of warning signs going out for a long time now that for certain industries at least, the globalized patterns of world trade mean that for many products, you don’t have to be in Oshkosh (or Manchester, or Burlington) to sell your wares in the U.S. But that’s little consolation or comfort when the pink slips fall anyway.

We can’t bring back the economy of the 1950s. But what we can do is equip laid-off workers with the needed retraining and new skills to move on to something new and different. If coal miners in Kentucky can learn computer coding http://www.npr.org/sections/alltechconsidered/2016/05/06/477033781/from-coal-to-code-a-new-path-for-laid-off-miners-in-kentucky, then surely other blue collar workers can leverage their current skills into relevance in the new economy of the 21st century.

But here’s the kicker — that costs money. Who pays? The U.S. tax payer? Why not make the company that proposes to shut down its domestic operations and move them off-shore pay the bulk (like 90 percent) of the retraining costs, with federal government, with its existing retraining programs, picking up the remaining 10 percent or so?

This would not apply in cases where a corporation is going totally out-of-business and closing its doors. But if the game plan is to simply make its widgets in China (or increasingly, in even lower cost places like Vietnam) instead of Ohio, that might be enough of an additional cost to tilt the decision-making process entirely, or re-think the plan.

How much does it cost to retrain a former factory worker into a computer coder? Maybe $100,000? Maybe more. If the bulk of that cost was tacked onto the cost of shuttering a plant, maybe that’s no longer so attractive.

Even if it is, that puts the burden squarely where it belongs. It’s the morally right thing to do. and it gives those laid-off workers an opportunity to retain a lifestyle and dignity, and move along with the times. Retraining workers is where we’ve stumbled badly. We can’t reverse the march of economic history, but its impacts can be softened and used to advantage. And intelligent trade packages like TPP don’t need to be made the poster child for insider political-Wall Street bashing. Hillary Clinton, and even Donald Trump (maybe) knows better. It’s good politics right now, but it doesn’t have to be that way.