September 21, 1996 in Nation/World

America: Who Stole The Dream? U.S. Retraining Workers To Earn Less Than Before Government Spends Billions Training For Phantom Jobs

Donald L. Barlett And James B. Steele Philadelphia Inquirer

Fifth in a series

You may have missed the commercial on television, or the advertisement in your newspaper.

The one aimed at you folks who were making between, say, $10 and $20 an hour.

The one that urges you to return to college or a trade school to acquire skills for a new occupation in a global economy.

The one that says that after you have completed your advanced education, you will be able to earn between $5 and $10 an hour.

Five to $10 when you were making $10 to $20?

You bet.

There’s no such commercial, of course. If there were, no one would sign up for the retraining courses.

Nevertheless, that’s what the people in Washington are encouraging jobless workers to do. In fact, they are spending tens of billions of taxpayer dollars to retrain and re-educate American workers so they can make less money.

Except they aren’t telling workers that once their education is completed they will receive smaller paychecks. And their benefits - most notably health care and pensions - won’t be as good as they had at their last job.

But before the litany of statistics that show how things are, it may be useful to understand what the people in Washington believe is an appropriate income for those who’ve been put out of work.

In conducting studies of workers who have lost their jobs because their companies were unable to compete against cheap imported goods, the government considered one of its retraining programs a success if workers moved into a new job “that paid or had the potential to pay suitable wages.”

And what was the U.S. government’s definition of “suitable wages?”

It’s 80 percent or more of the displaced worker’s former wages.

Thus, if you earned $35,000 at a company that shut down and moved to Mexico, and you completed a retraining course and found a new job that paid - or might one day pay - $28,000, the people in Washington chalked you up as one of their success stories.

Retrained to earn less

Now the findings from an audit report prepared by the Office of Inspector General of the U.S. Department of Labor. Its investigators tracked a group of displaced workers who qualified for retraining under the Trade Adjustment Assistance program, which was enacted in 1974 to aid workers who lost their jobs as a result of imports.

Just five of every 10 displaced workers who were eligible to attend retraining courses did so.

Of those five workers who completed retraining, only two found work in their new field.

And only one of the five retrained workers found a job in the new field “that paid or had the potential to pay suitable wages.” Remember, suitable wages means the potential to make 80 percent or more of what they earned in their old job.

The median weekly wage of workers in their new jobs was $320. That was down 25 percent from the $425 median wage in the jobs they lost. The median wage means half earned more, half earned less.

The more money workers made in the jobs they lost, the less likely they were to earn as much or more in their new jobs.

Of those workers who earned $300 to $399 a week, 54 percent found new jobs “that paid or had the potential to pay suitable wages.”

But of those workers who earned $800 a week or more, only 32 percent found new jobs that paid, or might pay, 80 percent of their former pay.

Of those workers who completed retraining and responded to the government survey, 54 percent said the program did not assist them in getting another job.

The inspector general’s findings from 1993 buttress the Philadelphia Inquirer’s findings, gleaned from interviews of displaced workers conducted from 1994 to 1996 across the country.

With few exceptions, retrained workers are earning less in their new jobs than they did in the jobs they lost - in some cases, up to 50 percent less.

They are unable to find employment in the new fields in which they received specialized training and have been forced, in many cases, to take jobs that require few or no special skills.

They are either going without health insurance or are paying a portion of the premiums for coverage that is inferior to what they had in their old jobs.

They are working two or more part-time jobs that add up to more hours but less money than their former job paid, traveling greater distances to those jobs, and spending more time away from their families.

And, finally, many workers signed up for the Trade Adjustment Assistance (TAA) program not really to get the retraining but so they could collect income-support payments for an extra year. Workers who lose their jobs receive unemployment compensation for 26 weeks. Those who qualify for TAA training can receive support payments equal to their unemployment benefits for an additional year.

‘A re-employment system’

None of this discourages members of Congress, government officials and American presidents from talking about the wonders of the training legislation they have enacted and all the high-tech jobs waiting to be filled by unemployed workers who have successfully completed retraining courses.

President Clinton in April 1994: “We want instead of an unemployment system, a re-employment system, so the minute people lose their jobs, they’re immediately eligible for retraining and for job help to find new jobs and different jobs …”

Labor Secretary Robert Reich in January 1996: “As this country continues to adjust to a changing national and international economy, it is critical that we retain the talents and skills of individuals whose work lives are affected but whose contributions to society are as vital as ever. This is why training and retraining services are so critical to our nation’s work force development.”

Truth to tell, the single largest group of beneficiaries of retraining is not the workers themselves but the people employed in the cottage industry that it supports.

In fact, far and away the best-paying jobs available are not for the graduates of retraining but rather for those associated with the retraining programs.

They range from teachers, educators and administrators in trade schools, technical schools, colleges and universities to workers in federal, state and local governments who administer a bewildering array of training courses.

Since 1990, in dozens of programs designed for everyone from workers who lose their jobs because of imports to illiterate teenagers, the U.S. government has spent more than $100 billion. The bulk of that money - perhaps as much as 80 percent - has been used to pay for the courses and support the retraining bureaucracy, not for direct aid to those out of work.

For many older workers who lose their jobs but are too young to consider retirement, returning to a classroom for retraining is the most difficult hurdle to overcome.

Some are skilled craftsmen who never finished high school and are fearful they will be unable to master the academic material. Some are reluctant to start over at 45 or 55.

Many are simply embarrassed because they have lost their jobs. They believe it reflects on them personally, that they are failures.

From middle class to poor

Let’s look at one facility, and at the employees who once worked there. The place is Canonsburg, Pa., about 30 miles south and west of Pittsburgh.

The factory was known for decades simply as “the transformer plant.” Owned by Cooper Power Systems, the plant, which in the early 1990s employed as many as 1,000 people, manufactured custom-designed transformers for electric utilities and other large users of electricity.

In the spring of 1994, Cooper Power Systems, a subsidiary of a Houston-based conglomerate, Cooper Industries Inc., decided to close the transformer plant - the last American-owned facility of its kind. Layoffs began that fall and the shutdown was completed by Thanksgiving.

What you see and hear in these conversations is everything that has gone wrong in America: from failed retraining programs to government policies that treat one jobless worker quite differently from another - to the elimination of entire occupations so that jobs skills and expertise built up over decades are lost forever.

In all of this, the employees of the transformer plant are representative of workers at other shuttered plants, in other industries, across America.

Men like John Bizub. After 25 years, Bizub, a 48-year-old widower with two grown children, lost his job as an electrical draftsman in 1994.

Because Cooper workers qualified for assistance under the federal government’s Trade Adjustment Assistance program - the program for workers hurt by imports - he signed up for a heating and air conditioning course at Penn Commercial, a business and technical school in his hometown of Washington, Pa., south of Canonsburg.

Bizub was one of 10 people who began classes in January 1995. “All 10 were from Cooper,” he recalled. “So it was like everybody knew each other.”

In December 1995, he received his associate degree in heating and air conditioning and began to search for a job.

“I put in applications everywhere,” he said. But there were no offers. “I had an interview with one guy about three days after I graduated. He said, ‘OK, we’ll give you a call for your second interview.’ And I never heard from him.”

Unable to find work in the field he had been retrained for, Bizub lowered his expectations. He saw an ad in the paper for a cleaning supervisor at Futtrel Inc., a company that trains mentally and physically challenged people.

In February 1996, he was hired to supervise a Futtrel work crew that cleaned the Army Aviation Center in Washington, Pa. It was a part-time job without benefits. The hours were from 3:30 to 8:30 p.m. The pay: $5.25 an hour.

That represented a 60 percent cut in hourly wages from the $13.27 that Bizub earned at the transformer plant.

The $13.27 an hour at Cooper gave Bizub an annual salary of $27,600, placing him in the middle class. The $5.25 for a part-time job gave him an annual salary of $6,800, placing him among those the federal government classifies as living in poverty.

Recognizing he could not make it on the income from one part-time job, and with his unemployment benefits gone, Bizub sought another part-time job.

He found it - not in heating and air conditioning, for which he’d been retrained - but, once more, in cleaning.

Bizub went to work for Hennson Maintenance, a company with cleaning contracts in a half-dozen counties in southwestern Pennsylvania. His work days are full.

“I work for Hennson Maintenance in the mornings,” he said. “I start there at 7 in the morning and normally we quit around 12. So I get five hours in the morning and then I come home, get cleaned up, and at 3:30 I have to be down at Futtrel to go pick up my clients.”

Bizub’s pay at Hennson Maintenance: $5.50 an hour. Now his employment looks like this:

He works 10 hours a day for a total daily pay of $53.75.

That amounts to one-half the $106 a day that he made at the transformer plant. Of course, the $106 was earned over eight hours.

Bizub is philosophical about his situation: “I’m at half of what I was making there at Cooper, plus no benefits. So the only thing I’m doing is working to pay bills. Put a little food on the table. Maybe go out once a month.

“I’m making enough money to pay the bills. But God forbid if something should happen. You know, like the car breaks down, or the water tank goes, or this or that. And then I might have to forego paying the bills for one month to try to get something fixed. … Luckily, I don’t have a mortgage, don’t have a car payment …

“I consider myself fortunate because I do have two part-time jobs. And I know some guys that don’t have any jobs. … One guy, a real good friend of mine I went to school with for heating and air conditioning, the bank’s knocking on his door.”

As for the government’s retraining program, Bizub echoes the view of other displaced workers who were interviewed. Many, if not most, sign up for retraining just to continue collecting unemployment checks.

“They should have just gave us two years’ unemployment and forgot about the retraining program,” Bizub said. “Because of the fact a lot of the guys that went to school are now finding jobs that aren’t related, and if they are, they’re starting at the bottom rate.”

Bizub said that of the 10 Cooper workers in his course, only two found work in that field. As for pay, Bizub said, “one guy’s making $6, the other guy’s making $7. Now these guys were making $16 an hour (at Cooper). They were like $16-plus an hour when they left Cooper. And they’re taking $6- and $7-an-hour jobs.”

MEMO: Next: The search for solutions.

Next: The search for solutions.

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