Seriously, Rochester. What Are We Gonna Do About The Long-Term Job Situation?
One of the many recent “graduates” of a Fortune 500 company with a Rochester presence told me that although the company is financially sound, with plenty reserves to weather the current recession, they still are laying off professionals in droves. Why?
Having been in the level just below senior management, he got a peek at the company’s top-level strategic resourcing plan: take advantage of the recession to shed pesky, higher-paid American professionals, and hire like crazy in Russia, China, India, etc. to replace them.
Many, many other companies are doing the same.
A short-term business model to be sure. But who can blame them? If the only thing being measured is profit, then sure, let’s destroy the American economy by exporting good jobs.
It’s called “Race to the Bottom”, and here’s what Wikipedia has to say about it:
In its early stages, a race to the bottom can be of immediate benefit to all parties, in situations where laws are genuinely and inefficiently burdensome.
In general, however, these contests regularly work to undermine the ability of governments to enforce labor standards such as workers’ compensation, or to raise taxation in order to fund social services and correct externalities (such as pollution and social degradation).
According to this theory, races to the bottom between sovereign states can also undermine democratic accountability, since the elected governments are no longer economically capable of passing legislation which enforces environmental or labour protections that are more stringent than those current in neighbouring countries.
And that’s where we are now. The social safety net has been frayed to near-non-existance (although some is being temporarily patched by the stimulus and other new laws), while at the same time good-paying jobs are being moved overseas. Has that tax credit for exporting jobs been even freaking ended yet?
So we’ve already lost manufacturing. We’re now losing most technical jobs and managerial jobs. My Radiologist friend tells me they’re starting to outsource diagnostic medical imaging.
So, yay, we can buy cheap stuff at WalMart or via a website created in India, but who’s going to have the money to buy it, the way we’re going?
So, seriously, Rochester, what are all these out-of-work people going to go?
Depression-era mural of the unemployed - Coit Tower, San Francisco
Related posts:
I wrote a published piece about this in the early 1990s, when I saw these disturbing “outsourcing” and off-shoring” trends. No one listened, of course, because the economy was (so we thought) booming.
We now find ourselves with the end result of NAFTA, CAFTA, downsizing, “right-sizing”, etc.
The economy is in turmoil, and only those at the very top are weathering this storm, and still collecting hefty bonus checks, I might add.
Start with three assumptions:
1. Most jobs are created by small firms and startups.
2. At least some part of the decision to start a firm in an area, relocate to an area, expand in an area, or open a new facility in an area is rational: most profit for fewest dollars spent. The other part is irrational– based on “we like Silicon Valley because we’re already there” or “we like sunny weather” or “the South doesn’t have unions”.
3. Government has a role to play in helping nurture a climate that encourages businesses to provide new jobs.
So– where do we go from here?
1. Bring the costs of doing business in WNY down. Do the following things:
a. Lower energy costs by directing all hydroelectric power at businesses in WNY.
b. Lower tax costs by reducing state government expenditures.
c. Lower transportation costs by building a regional airport serving Buffalo, Rochester, and Syracuse and getting a better economy of scale.
d. Target any tax reductions and incentives at businesses that are creating real jobs– creating goods and services that are sold outside of the region– instead of shuffling jobs from one company already based here to another– such as hotels, nursing homes, restauraunts, car repair shops, local construction firms, and the like.
e. Absolutely stop wasting money on foolishness like the fast ferry. That was an obvious con job from the day it was announced. We’re going down the same path, again, with Rennaissance square. We seem to like shooting ourselves in the foot.
2. Better promote our region and increase its intrinsic value
a. Point out that we have the best educated workforce in the company (more productivity, better creativity, better final product) with a low cost of living and relatively low wages. Make sure that our schools stay the best in the country.
b. I hate earmarks or member items or pork or whatever you want to call it. It’s wasteful and bad governance and sends all the wrong messages. But as long as our system is set up with it (maybe, even, centered on it), use it wisely to fund research facilities that will spin off companies and new technologies. Decide as a delegation that we’ll focus on an area of technology, seed institutes at the local colleges and universities, and make sure that the output has practical value.
c. Better network regionally among our colleges and universities. Make sure that we have a coordinated higher educational plan. Stop treating “upstate” as a bunch of individual fiefs and treat it as a region. That’s the kind of thinking that turned a swath of North Carolina into “Research Triangle Park”.
d. Implement a real high speed rail– 200-300 mph– from New York to Buffalo so that the upstate region can serve as a back-office community for firms in NYC. There is a huge difference between a 1 1/2 to 2 hour train ride and a four hour train ride. We’re missing the ball on this one– we’re willing to settle for the 100 mph train that has been proposed.
What specifically do we need to do differently?
1. It’s clear we need to reduce the cost of government. We need to streamline at the local level and reduce what we spend at the State level. There are three primary areas the state government spends: prisons, health care, and education.
a. We need to go further than we have in reforming our drug laws to reduce prison costs and we also need to take a good hard look at prison contracts.
b. We need to figure out how to do high quality education at a lower cost. My suspicion is that we need to figure out how to dramatically reduce administrative and overhead costs.
c. We need to look at reimbursements, especially for nursing homes, and bring them in line with other States. This is probably the area with the largest savings potential– it is also a danger zone for politicians: witness the campaign against the Governor over the past six months.
2. We need to eliminate our IDAs and either do a blanket tax reduction or have non-political agencies really focusing tax relief on businesses with high value jobs. The Monroe County IDA is the poster child, as these pages have covered previously, for wasteful IDA efforts.
3. We need to stop wasting our earmarks and member items on foolish small projects that win political points for the legislator who has sponsored them. Every single one ought to be sized up in terms of “how does it help improve the local economy”.
4. We need to change and invigorate and spend a lot more money on promoting this region to businesses outside the region. I can’t believe how much money and effort has been spent on “Rochester made for living” advertisements in this market. Spend it on “Rochester made for business” (or, thinking regionally, “Upstate is made for business”) advertisments in San Francicso, Boston, New York, and Chicago– where the people with investment capital live. We’re “made for business” because we have a better educated workforce with cheaper land and lower wages than where they are currently investing. Make sure they know that.
5. Every governmental body that deals with business regulations and affairs– state, county, city, and town– should have an ombudsman office for small businesses to help them steer through the beauracracy and reduce the “government overhead”: time, frustration, and money that they need to endure in order to be successful.
Some of these are easy, many are tough, a few may be borderline impossible. But right now, we’re wasting time, money, and breath on foolishness like Renaissance square, worrying whether we have good enough bars and nightclubs to convince college graduates to stay, and silly projects. We need political leadership that has vision, strategy, and a plan and is focused more on improving the State than on pandering to the entrenched political power players.
I had hoped Elliot Spitzer would be that leadership. That’s why I supported him. I’ve yet to see anyone else with that kind of promise.
Whew…that is a lot to think about! Here’s more:
Are we at the point where we need to throw out all laws and regs and start completely over? Could the State really accomplish such a feat? So darn much does not make sense!
Can we get NAFTA and CAFTA revoked?
Can we stop Off-Shore shelters?
Can we stop the real thieves…those who sit on each others Boards and scratch each others backs? Lobbyists?
Can we stop Politicians who earmark so much…like Murpha getting $200 million for a tiny little airport in PA , which bears his name, that is used only 2-3 times a day and has an extremely high-tech radar room than no one has ever sat in? http://www.washingtonpost.com/wp-dyn/content/article/2009/04/18/AR2009041802128.html
See…if we don’t grab earmarks (which really should be much better managed…does “Bridge to Nowhere” ring a bell?) then someone else will. Is that the right mentality? NO, but like davesnyd says…we should get ours, until thi insane system is changed. Spending huge money on places that don’t need it…just because you can…is the wrong thing to do for people of any political leaning.
The very real question is how? How do we get MORE people in charge who actually have COMMON SENSE?
How do we fight the incumbents and the gerrymandering and all the protectionism that takes place at every single level from small villages to DC?
Can we have IDA’s that really look out for the taxpayers best interest and take back money if the promised jobs are not created?
What about the Authority system, like MCWA, and NYSTA, and RGRTA, can we get those locked doors opened and demand accountability?
How do we get Maqgie to listen to the populous regarding Ren Square?
How do we get major employers to recognize the true value of employees down the line? (George Eastman must be rolling over in his grave!)
How do we stop health insurers from making decisions that doctors should make?
So much more…
We got a start last November…but we need so much more.
The problem is more fundamental.
For along time since Kodak and Xerox have gone County and even some city leaders have embraced the race to the bottom. They have thought they could try to game the system to win. They can’t
Much of what local business association put forward is just a variant of the race. Cutting wages and social benefits is really what it is all about.
Until and unless we reject the race to the bottom and the whole project associated with it we are just picking at the edges.
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