Wanted: Blue-Collar Workers - Who will power America’s new industrial revolution?

T o many, America’s industrial heartland may look like a place mired in the economic past—a place that, outcompeted by manufacturing countries around the world, has too little work to offer its residents. But things look very different to Karen Wright, the CEO of Ariel Corporation in Mount Vernon, Ohio. Wright’s biggest problem isn’t a lack of work; it’s a lack of skilled workers. “We have a very skilled workforce, but they are getting older,” says Wright, who employs 1,200 people at three Ohio factories. “I don’t know where we are going to find replacements.”

That may sound odd, given that the region has suffered from unemployment for a generation and is just emerging from the worst recession in decades. Yet across the heartland, even in high-unemployment areas, one hears the same concern: a shortage of skilled workers capable of running increasingly sophisticated, globally competitive factories. That shortage is surely a problem for manufacturers like Wright. But it also represents an opportunity, should Americans be wise enough to embrace it, to reduce the nation’s stubbornly high unemployment rate.

Driving the skilled-labor shortage is a remarkable resurgence in American manufacturing. Since 2009, the number of job openings in manufacturing has been rising, with average annual earnings of $73,000, well above the average earnings in education, health services, and many other fields, according to Bureau of Labor Statistics data. Production has been on the upswing for over 20 months, thanks to productivity improvements, the growth of export markets (especially China and Brazil), and the lower dollar, which makes American goods cheaper for foreign customers. Also, as wages have risen in developing countries, notably China, the production of goods for export to the United States has become less profitable, creating an opening for American firms. The American Chamber of Commerce in Beijing expects China’s “low-wage advantage” to be all but gone within five years.

It’s also true that American industry hasn’t faded as much as you might think. Though industrial employment has certainly plummeted over the long term, economist Mark Perry notes that the U.S. share of the world’s manufacturing output, as measured in dollars, has remained fairly stable over the last 20 years, at about one-fifth. Indeed, U.S. factories produce twice what they did back in the 1970s, though productivity improvements mean that they do it with fewer employees. Recent export growth has particularly helped companies producing capital equipment, such as John Deere and Caterpillar, and many industrial firms are even hiring more people for their plants, especially in the Midwest, the Southeast, and Texas.

One area in which industry is positively roaring: firms that service the thriving oil and natural-gas industries, from Montana and the Dakotas to Pennsylvania. In Ohio alone, there are already 65,000 wells, with more on the way, says Rhonda Reda, executive director of the Ohio Oil and Gas Energy Education Foundation—while a new finding, the Utica shale formation in eastern Ohio, could hold more than $20 billion worth of natural gas. As a result, Karen Wright’s business—selling compressors for natural-gas wells—has been soaring, leading her to add more than 300 positions over the past two years. “There’s a huge amount of drilling throughout the Midwest,” Wright says. “This is a game changer.”

Wright isn’t alone. Firms throughout the Midwest are moving aggressively to meet the demand for natural-gas-related products. Take the $650 million expansion of the V&M Star steel mill in Youngstown, Ohio, which builds pipes for transporting gas. The expansion will add 350 permanent jobs to the factory after it’s completed next year.

As the natural-gas boom continues, it could have another effect beneficial to industry: keeping energy prices low, which will give American manufacturers a leg up on their global rivals. Companies in the business-friendly midwestern and Plains states will profit the most, while New York and California—though each has ample fossil-fuel resources—will probably be too concerned with potential environmental problems to cash in.

The industrial resurgence comes with a price: a soaring demand for skilled workers. Even as overall manufacturing employment has dropped, employment in high-skill manufacturing professions has soared 37 percent since the early 1980s, according to a New York Federal Reserve study. These jobs can pay handsomely. An experienced machinist at Ariel Corporation earns over $75,000, a very good wage in an area where you can buy a nice single-family house for less than $150,000.

A big reason for the demand is changes on the factory floor. At Ariel, Wright points out, the operator of a modern CNC (computer numerical control) machine, which programs repetitive tasks such as drilling, is running equipment that can cost over $5 million. A new hire in this position must have knowledge of programming, metallurgy, cutting-tool technology, geometry, drafting, and engineering. Today’s factory worker is less Joe Six-Pack and more Renaissance man.

So perhaps it isn’t surprising that American employers are hard-pressed to find the skilled workers they need. Delore Zimmerman, the CEO of Praxis Strategy Group (for which I consult), observes that this shortage extends to virtually any industrial operation. In his hometown of Wishek, North Dakota, whose population is just 800, one company making farm machinery has 17 openings that it can’t fill. Skilled-labor shortages grip the whole of this energy-rich state. Demand for skilled workers in the North Dakota oilfields—from petroleum engineers to roustabouts—exceeds supply by nearly 30 percent. The shortage of machinists is 10 percent. “The HELP WANTED signs in North Dakota are as common as FOR SALE signs in much of the rest of the country,” Zimmerman reports.

“There are very few unskilled jobs any more,” says Wright. “You can’t make it any more just pushing a button. These jobs require thinking and ability to act autonomously. But such people are not very thick on the ground.” Among the affected industries will be the auto companies, which lost some 230,000 jobs in the recession. David Cole, chairman of the Center for Automotive Research, predicts that as the industry tries to hire more than 100,000 workers by 2013, it will start running out of people with the proper skills as early as next year. “The ability to make things in America is at risk,” says Jeannine Kunz, director of professional development for the Society of Manufacturing Engineers in Dearborn, Michigan. If the skilled-labor shortage persists, she fears, “hundreds of thousands of jobs will go unfilled by 2021.”

The shortage of industrial skills points to a wide gap between the American education system and the demands of the world economy. For decades, Americans have been told that the future lies in high-end services, such as law, and “creative” professions, such as software-writing and systems design. This has led many pundits to think that the only real way to improve opportunities for the country’s middle class is to increase its access to higher education.

That attitude is a relic of the post–World War II era, a time when a college education almost guaranteed you a good job. These days, the returns on higher education, particularly on higher education gained outside the elite schools, are declining, as they have been for about a decade. Earnings for holders of four-year degrees have actually dropped over the past decade, according to the left-of-center Economic Policy Institute, which also predicts that the pattern will persist for the foreseeable future. In 2008, more than one-third of college graduates worked at occupations such as waiting tables and manning cash registers, traditionally held by non–college graduates. Mid-career salaries for social work, graphic design, and art history majors are less than $60,000 annually.

The reason for the low rewards is that many of the skills learned in college are now in oversupply. A recent study by the economic forecasting firm EMSI found that fewer computer programmers have jobs now than in 2008. Through 2016, EMSI estimates, the number of new graduates in the information field will be three times the number of job openings.

There’s a similar excess of many postgraduate skills. Take law, which flourished in a society that had easy access to credit. Now, with the economy tepid, law schools are churning out many more graduates than the market wants. Roughly 30 percent of those passing the bar exam aren’t even working in the profession, according to a survey by the National Association for Law Placement. Another EMSI study indicates that last year, in New York State alone, the difference between the number of students graduating from law school and the number of jobs waiting for them was a whopping 7,000.

The oversupply of college-educated workers is especially striking when you contrast it with the growing shortage of skilled manufacturing workers. A 2005 study by Deloitte Consulting found that 80 percent of manufacturers expected a shortage of skilled production workers, more than twice the percentage that expected a lack of scientists and engineers and five times the percentage that expected a lack of managerial and administration workers. “We don’t just need people—we need people who can meet our standards,” worries Patrick Gibson, a senior manufacturing executive at Boeing’s plant in Heath, Ohio.

Some of Gibson’s fellow manufacturers blame the shortage of skilled workers on the decline of vocational education, which has been taking place for two decades now. Such training is unpopular for several reasons. For one thing, many working-class and minority children were once steered into vocational programs even if they had aptitude for other things, an unfair practice that many people haven’t forgotten. Today’s young people, moreover, tend to regard craft work—plumbing, masonry, and carpentry, for instance—as unfashionable and dead-end, no doubt because they’ve been instructed to aspire to college. “People go to college not because they want to but because their parents tell them that’s the thing to do,” says Jeff Kirk, manager of human relations at Kaiser Aluminum’s plant in Heath, Ohio. “Kids need to become aware of the reality that much of what they learn in school is not really needed in the workplace. They don’t realize a pipe fitter makes three times as much as a social worker.”

Fortunately, there are signs that some schools are getting that message and passing it along to their students. Funded by industry sources, the Houston Independent School District’s Academy for Petroleum Exploration and Production Technology trains working-class, mostly minority high school students in the skills they’ll need to perform high-wage industrial jobs. Tennessee—like Texas, a growth-oriented state—has developed 27 publicly funded “technical centers” that teach skills in just months and carry a far lower price tag than a conventional college does.

Two-year colleges will be crucial to the effort to train skilled workers. One of these schools, Central Ohio Technical College, has recently expanded by 70 welding students and 50 aspiring machinists per year. Many of the college’s certificate programs are designed and partly funded by companies, which figure that they’re making a wise investment. “You have a lot of people sitting in the city doing nothing. They did not succeed in college. But this way, they can find a way up,” says Kelly Wallace, who runs the college’s Career and Technology Education Center.

Such shorter educational alternatives will become ever more important as industrial workers retire. The average skilled worker in the industries supplying the gas boom is in his mid-fifties. “At our plant, you have lots of people with 20 to 30 years’ experience,” says Kirk, who has three high-skill openings that he can’t fill. “But there’s no apprenticeship program—no way to fill the future growth. We are simply running out of people.”

New programs may not produce enough graduates to fill all these openings. But Karen Wright, at least, suspects that more young people will start looking for careers that offer them the prospect of a decent living and less debt. This may not be the postindustrial future envisioned by Ivy League economists and Information Age enthusiasts. But it could spell better times for a country in sore need of jobs.

Joel Kotkin is a Distinguished Presidential Fellow at Chapman University in Orange County, California.

“I’m sorry, but these verses do NOT apply.”

In Rerum Novarum, On the Condition of the Working Classes, an Encyclical Letter of His Holiness Pope Leo XIII issued on May 15, 1891, the Holy Father wrote:

32. Among the most important duties of employers the principal one is to give every worker what is justly due him. Assuredly, to establish a rule of pay in accord with justice, many factors must be taken into account. But, in general, the rich and employers must remember that no laws, either human or divine, permit them for their own profit to oppress the needy and the wretched or to seek gain from another’s want. To defraud anyone of the wage due him is a great crime that calls down avenging wrath from Heaven, “Behold, the wages of the laborers...which have been kept back by you unjustly, cry out: and their cry has entered into the ears of the Lord of Hosts.”

61. We shall now touch upon a matter of very great importance, and one which must be correctly understood in order to avoid falling into error on one side or the other. We are told that free consent fixes the amount of a wage; that therefore the employer, after paying the wage agreed to would seem to have discharged his obligation and not to owe anything more; that only then would injustice be done if either the employer should refuse to pay the whole amount of the wage, or the worker should refuse to perform all the work to which he had committed himself; and that in those cases, but in no others, is it proper for the public authority to safeguard the rights of each party. (This would seem to be your position, Elsie.)

62. An impartial judge would *not* assent readily or without reservation to this reasoning, because it is not complete in all respects; one factor to be considered, and one of the greatest importance, is missing. To work is to expend one’s energy for the purpose of securing the things necessary for the various needs of life and especially for its preservation. “In the sweat of thy face shalt thou eat bread.” Accordingly, in man sweat-labor has two marks, as it were, implanted by nature, so that it is truly personal, because work energy inheres in the person and belongs completely to him by whom it is expended, and for whose use it is destined by nature; and secondly, that it is necessary, because man has need of the fruit of his labors to preserve his life, and nature itself, which must be most strictly obeyed, commands him to preserve it. If labor should be considered only under the aspect that it is personal, there is no doubt that it would be entirely in the worker’s power to set the amount of the agreed wage at too low a figure. For inasmuch as he performs work by his own free will, he can also by his own free will be satisfied with either a paltry wage for his work or even with none at all. But this matter must be judged far differently, if with the factor of personality we combine the factor of necessity, from which indeed the former is separable in thought but not in reality. In fact, to preserve one’s life is a duty common to all individuals, and to neglect this duty is a crime. Hence arises necessarily the right of securing things to sustain life, and only a wage earned by his labor gives a poor man the means to acquire these things.

63. Let it be granted then that worker and employer may enter freely into agreements and, in particular, concerning the amount of the wage; yet there is always underlying such agreements an element of natural justice, and one greater and more ancient than the free consent of contracting parties, namely, that the wage shall not be less than enough to support a worker who is thrifty and upright. If, compelled by necessity or moved by fear of a worse evil, a worker accepts a harder condition, which although against his will he must accept because an employer or contractor imposes it, he certainly submits to force, against which justice cries out in protest.

66. …But if the productive activity of the multitude can be stimulated by the hope of acquiring some property in land, it will gradually come to pass that, with the difference between extreme wealth and extreme penury removed, one class will become neighbor to the other….All can see how much this willing eagerness contributes to an abundance of produce and the wealth of a nation. Hence, in the third place, will flow the benefit that men can easily be kept from leaving the country in which they have been born and bred; for they would not exchange their native country for a foreign land if their native country furnished them sufficient means of living.

People who use cheap foreign labor are not giving every worker what is justly due him. They are for their own profit oppressing the needy and the wretched and seeking gain from another’s want. In fact, they use that cheap foreign labor specifically because they do not want to pay a just wage.

Your position fails to take into account that a person’s work energy is both personal and necessary. “If labor should be considered only under the aspect that it is personal, there is no doubt that it would be entirely in the worker’s power to set the amount of the agreed wage at too low a figure.” However, the personal nature of work can only be separated from its necessary nature “in thought but not in reality.”

“…man has need of the fruit of his labors to preserve his life, and nature itself, which must be most strictly obeyed, commands him to preserve it. In fact, to preserve one’s life is a duty common to all individuals, and to neglect this duty is a crime. Hence arises necessarily the right of securing things to sustain life, and only a wage earned by his labor gives a poor man the means to acquire these things.”

The influx of cheap, usually illegal, foreign labor has the effect of driving wages down for all of us, and that cannot be denied. Those who use that labor are denying the foreign laborers what they are entitled to—just compensation—and are at the same time using the power represented by that labor pool to deny the rest of us a just wage, or even adequate employment. (And don’t go off chasing the illusion that there is anything socialist about what I have just said.)

What has caused this situation?

1. Our immigration laws are not being enforced. This sort of alliance between business and government, with its purpose of harming just about everyone else, is *not* capitalism. It is properly termed mercantilism. Under free-market capitalism, the government does not abuse its powers to distort markets in this way.

2. Excessive demands by some labor unions have handicapped many giant companies’ ability to compete.

3. Excessive regulation by unelected bureaucrats has made it extremely difficult for American businesses to do business in America. We must have a constitutional amendment barring enabling acts, which allow despicable scoundrels in congress to pass off their lawmaking powers to agencies such as the EPA, BATF, etc. The Department of Education, for corn’s sake, has a SWAT team.

4. Dumbing down of the schools by malevolent leftists has greatly reduced the value of our human capital. Young people today can’t even calculate a tip in their heads.

5. A general decline in morals and ethics—which is to say, of the Christian Faith—has allowed moral lepers of all stripes to worm their way to the top in every area of the public and private sector, and these loathsome vermin have no interest in the welfare of their own organizations, much less of the United States.

The purchasing power of wages has plunged since the 1960s, faster even than inflation has risen. In 1969, a young person could live adequately on $100 a week. Now, if we say that there has been 500% inflation since then, a young person should be able to live adequately on $500 a week. Should be able to pay rent, buy food and clothing for his wife and himself, maintain a used car, and even have something left over for a recreation budget.

Is that happening? $2,000 a month is a pittance for a married couple, even in low-cost areas.

If “they took our jobs” seems too simple to you, try “they are killing our Republic.” The Mexicans come up and work for an unjustly low wage because they are “compelled by necessity or moved by fear of a worse evil.” They “(accept) a harder condition” because employers impose it. In this, they “certainly (submit) to force, against which justice cries out in protest.”

At the same time, the effect of this pool of cheap labor on the United States is disastrous. Because of it, employers have the power to insist on ever-lower wages, and we are “compelled by necessity or moved by fear of a worse evil” to accept those wages—if we can get them. We are submitting to force, plain and simple.

If your position is accepted, employers can continue to drive wages down until they reach a level just slightly above those in Mexico. It would be stupid and unjust of them to do so, but when is the last time you saw that stop a corporate bean counter?

Those Bible verses, therefore, most certainly do apply.

Importing cheap labor to drive wages down is a mortal sin.

It is worth noting that no policy to the left of Ronald Reagan has the slightest chance of improving any of this in the slightest. Can’t go too far to the right on this one.

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Deuteronomy 24:14-15