Forces of global economy usher
in uneasy change for low-skilled
workers
By GREG BARRETT | Gannett News Service
WASHINGTON — Laid-off factory worker Ruth Schumacher rises before the sun most days and earns $7 per hour tending the breakfast bar at a Holiday Inn in Celina, Ohio. She would like to set out a tip jar for the occasional dollar, but management forbids it.
After work, she occasionally goes next door to shop at Wal-Mart or at Kmart one town away.
“They’ve got real good bargains,” she said of Wal-Mart, echoing a generation of thrifty shoppers.
Never mind that Wal-Mart is a major reason Schumacher no longer has a $12-per-hour job at Huffy Corp.’s bicycle plant. Five years ago, Wal-Mart pressured Huffy to lower the cost of its bikes, so Huffy closed its Celina plant. Schumacher’s job and the job her husband held at Huffy eventually ended up in China.
“We can’t go out to eat every Friday, Saturday and Sunday like we used to,” Bob Schumacher said in a tone suggesting there are worse things. “When you lose a job like that you cut back on everything, that’s all. I guess that’s life.”
Ruth Schumacher, former Huffy employee in Celina, Ohio, works at a Holiday Inn Express in Celina, Ohio, where she earns less than in her previous job at Huffy's bicycle plant. (Greg Barrett | Gannett News Service)
Despite the announcement from the private Institute for Supply Management that manufacturing employment grew in November, the factory jobs that have disappeared will not come back, said Richard Berner, chief U.S. economist for Morgan Stanley Dean Witter.
The economic forces that have led U.S. companies to go overseas to manufacture low-end commodities — toys, jeans, towels, computers — are unlikely to change.
“Dauntingly high costs in manufacturing is the key reason why manufacturing employment has been uncharacteristically weak,” Berner said. “My guess is manufacturing employment is now stabilizing, and I don’t expect rapid job growth.”
Manufacturing has suffered such steep employment losses that any rebound seems cause for celebration. But while the job losses will slow, they are not likely to abate, said Syracuse University’s J. David Richardson, an economist and international relations specialist.
“The long-term trend in manufacturing will be about a half-million jobs down per year,” Richardson said. “That will continue, and it will be smaller in booms and bigger in busts.”
The past three years have produced manufacturing’s worst job recession since the Great Depression:
— Since July 2000, the United States has lost nearly 3 million manufacturing jobs, more than 15 percent of its factory work force.
— In July, Pillowtex Corp., a giant U.S. manufacturer of towels and sheets, announced it was bankrupt and was laying off 7,650 workers in one of the nation’s worst one-day textile layoffs ever.
Manufacturers large and small, from jean-makers in California to toy-makers in Kentucky, are lured abroad en masse because it is cheaper to manufacture those goods elsewhere.
Economists predict this trend will continue because so many people benefit. Consumers pay lower prices for retail, Wal-Mart and other discount stores make bigger profits, and CEOs earn fat bonuses.
Even manufacturers who don’t flee the relatively high cost of doing business in the United States are likely to rely more and more on technology to produce more with less. That’s why manufacturing’s portion of the U.S. gross domestic product barely fluctuates even as factories shut down.
Economy evolves
But as one door closes, another opens. It’s the maturation — and growing pains — of a new economy.
By 2010, an additional 22 million jobs will be created in the United States, bringing the total to 168 million, the Department of Labor reports. Nearly 14 million, or three out of every five, will be in service occupations such as home health care, food preparation, child care and transportation.
In a report titled “Tomorrow’s Jobs,” the Labor Department projects that employment agencies like those that supply temporary workers — who are frequently excluded from health and retirement benefits — will be among the largest single sources of growth, creating 1.9 million new jobs.
Meanwhile, occupations that require a bachelor’s degree and usually offer higher pay and benefits will account for 7.3 million jobs. Of the 50 best-paying jobs listed today by the Labor Department, 48 require at least a college degree. The two exceptions are air traffic controllers and nuclear power reactor operators.
“As bleak as it sounds, we just have to say to our fellow citizens, ‘Get a skill, an education, learn a (second) language.’” said economist Richardson. “That is sometimes called tough love.”
It’s a lesson that Ruth Schumacher, a 64-year-old great-grandmother who never graduated from high school, lives every day.
Her husband earns $9.15 per hour today as a part-time church janitor, about $4 less per hour than he did welding bike rims for Huffy. Together, he and Ruth draw $518 per month in pension money, but their AARP health insurance eats up half of that. All told, their income is enough to get by on and nothing to celebrate.
These days, they depend more than ever on low prices at Wal-Mart and other stores.
“The buck stops with the folks with the lowest skills,” Richardson said. “These people find themselves now in a world with a whole bunch of other low-skilled folks who are competing with them.”
It’s the yin and yang of the global economy. As the Schumachers worked last year to stretch every dollar, Wal-Mart, the world’s largest retailer, reported $245 billion in sales, $40 billion more than any other U.S. company. American consumers saved tens of billions of dollars on retail, $20 billion just at Wal-Mart, according to market estimates. And CEOs earned about 250 times more than their workers, almost a tenfold increase from the wage gaps of 1965.
On the day after Thanksgiving this year, Wal-Mart posted a single-day sales record of more than $1.52 billion. The company makes no apologies for its market influence.
“We are in business to take care of the customer,” spokeswoman Melissa Berryhill said. “We are going to do what we need to do to deliver everyday low prices to our customers, and we are going to go where we have to go in order to do that.”
However, Berryhill added, Wal-Mart would “prefer to buy locally whenever viable.”
Officials at Huffy Corp., a supplier of Wal-Mart, declined to comment for this story.
But this fall, Celina’s mayor, Paul Arnold, summed up Wal-Mart’s recent history to a dozen government students at the local high school.
Wal-Mart’s low-priced medicines took business away from Celina’s mom-and-pop pharmacists, including him, Arnold explained. And its demand for cheaper bicycles drove Huffy out of Celina. Still, Wal-Mart is so popular in Celina that it’s expanding into a new Wal-Mart SuperCenter on 50 acres once owned by Huffy.
As a small retailer, Arnold would prefer to discourage Wal-Mart’s expansion and steer customers toward the locally owned stores downtown. As mayor, he knows Celina needs the jobs and taxes and low-priced goods that will accompany the 203,000-square-foot SuperCenter.
So Arnold steeled himself last year and courted Wal-Mart. Celina made zoning concessions and agreed to bankroll some water and sewer upgrades. The road leading to the SuperCenter was widened.
“We simply couldn’t afford to lose Wal-Mart,” the mayor told the students, just as the bell rang.