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Janesville — A story about the rest of America

Steve Blank, lecturer, Haas School of Business | February 2, 2018

I just read a book – Janesville – that reminded me again of life outside the bubble.

Janesville tells the story of laid-off factory workers of a General Motors factory that’s never going to reopen. It’s a story about a Midwest town and the type of people I knew and worked alongside.

Janesville book image

Image from the front cover of “Janesville” (Simon and Schuster)

When I got out of the Air Force after Vietnam, I lived in Michigan and I installed process control systems in automobile assembly plants and steel mills across the industrial heart of the Midwest. I got to see the peak of America’s manufacturing prowess in the 1970s, when we actually made things – before we shipped the factories and jobs overseas. I hung out with the guys who worked there, went bowling and shooting with them, complained about the same things, wives, girlfriends, jobs, the union and bosses, and shared their same concerns. Janesville is their story.

On the surface the book is an incredibly well written narrative over the course of five years, from 2008 to 2013, that connects the laid off auto workers, job center retraining, union organizers, community and business leaders, and politicians. Five stars for the reporting.

But what makes the book great is that the story is deeper than just the people it follows. On closer reading it busts the shared delusions about our economic system that requires our faith in order for it to survive.

First, America was built on workers who believed that their hard work would allow their children to have opportunities to do better. The hard truth is that part of the Janesville story is about a generation of blue collar workers who grew up thinking that a factory job wasn’t just an entry into the economy, but instead was a multi-generational entitlement. They believed the posters that said, “Our employees are our greatest asset” and assumed it meant forever – instead of reading the fine print which said, “Until we can reduce our labor costs by moving your jobs overseas.”

To be clear it doesn’t mean they didn’t work hard or that they deserved what happened to them. Far from it. But it does mean, that even as evidence was piling up around them that this couldn’t last, they took for granted that a high-paying factory job was a never ending economic cornucopia. The grim reality is that the 50 years of post WWII factory work in GM and other places was a golden age of blue collar jobs – in the U.S. – it’s gone and not coming back. 

Second, the jobs aren’t coming back because while our economy has continued to grow, in the name of corporate efficiency and profitability we’ve closed the shipyards and factories and moved those jobs overseas. In board rooms across the country we traded jobs for short-term corporate profits – while selling out the very people who believed they had a social contract with their company – and their country. And while we gave those policies polite names like globalization and outsourcing, the consequences have wreaked havoc on towns like Janesville. Oh, and the jobs we moved overseas, or never even attempted to build here, (think iPhones)? They helped build the blue collar working class in China and India.

And with campaign donations spread equally, both parties supported this exodus and no one in the government stood in their way – in fact, they encouraged it. The result was that the bulk of those corporate profits have ended up in the pockets of the very affluent. The contrast is pretty bitter in towns like Janesville where income inequality stares you in the face. When towns do recover, the new jobs are most often at a fraction of the salary the closed factories once offered. The level of despair and anger of the workers the companies and politicians and the rest of the country abandoned is high. The Janesville’s across the U.S. really didn’t care about Hacker News, TechCrunch, etc, Hollywood gossip in Variety, or the latest financial moves in the Wall Street Journal. They wanted to hear people talking to them about how to get their lives back. They voted their interests in 2016. 

Third, when those jobs moved in the name of maximizing profits, no one (other than unions) pointed out that all the supporting jobs would disappear as well. Not only the obvious ones like machine tool makers, direct suppliers, etc. but that the supporting service jobs would also disappear in the community. Restaurants, movie theaters, real estate agents, etc.

Fourth, this was the story of just one town and one factory. If we believe any of the predictions of autonomous vehicles and disruption in the trucking business, and machine learning disrupting other industries, Janesville is just the harbinger of much larger economic upheavals to come.

Fifth, and a critical insight that I almost missed, because it was buried in Appendix 2, (and a real surprise to me) was that, “laid-off workers who went back to school were less likely to have a job after they retrained than those who did not go to school.” Wow. Talk about burying the lead. Skill retraining is a core belief of any economic recovery plan. Yet the data the author and her associated researchers gathered shows that it’s not true. People who went through skills retraining were worse off than those who went out on their own.

Sixth, this means that in spite of their well-meaning efforts, both the jobs training people and the local boosters of “Janesville will rise again” were actually doing the laid-off workers a massive disservice. The very things they were advocating were not going to help this generation of laid-off workers. I wonder if they’ve come to grips with that.

Seventh, This raises the question of what kind of skills training, if any, should be given to laid-off workers when the factory shuts down in a one-company town. My conclusion from the narrative that followed the families is that they would have been better served by basic training in the reality of their new economic context, financial management and new life skills. For example, teaching a few days of, “Lessons learned from families in other one-industry cities” and “the mortgage meltdown – how to get out from underneath an underwater mortgage,” and practical job search tips outside their community, along with organized trips to other cities and paid-for car pools for they gypsy workers commuting to far off GM plants. In addition, skills training in resilience, agility, etc. would have provided these workers with an education and relevant tools for surviving in the new economy.

A great book that made me sad, angry and make me think long about the consequences of not having a national industrial policy. And why by using the fig leaf of “maximize shareholder value” corporations and financial institutions have set it by default.

It truly feels like a return to the Gilded Age.

Worth a read.

 

Read more Steve Blank blogs at www.steveblank.com.

Comments to “Janesville — A story about the rest of America

  1. ” When did the descendants of intrepid people become opiated by the notion that factory jobs paying comparatively high wages for unskilled work–not to mention the campers, basement rec rooms, hunting land, and Packers season tickets that those wages buy–are a birthright, to be handed down from generation to generation without any of the risks of ownership? Where does nobility reside in an unskilled worker, spending to the edge of solvency, who’s now so afraid of the unknown–or, in any event, the uncomfortable–that he won’t train for a new job that requires a move to, or even immediately consider a relocation that preserves his lifestyle but that requires starting over in (perish the thought), a new town 200 or 400 or 800 miles away?”

    (Janesville review on Amazon by farmboy)

  2. And the other side of the coin is that the tech industry in Silicon Valley has kept their labor costs down via another method by bringing in h1b workers.

    I know this all too well having seen in the 70s and 80s with the mostly Japanese auto industry demolishing a good part of the Detroit automobile industrial base. Japanese labor costs were simply a LOT LOWER than comparable American labor costs.

    The US high tech industry concentrated in Silicon Valley keeps its labor costs down by bringing in an almost unlimited/unrestricted number of foreign entrants to the tech labor force. It’s not just h1b Visas, but OPTs, L1s, etc.

    If the tech industry had to play by the same set of labor rules that the American manufacturing workforce had to play with then a good part of the tech industry would have suffered the same fate as the American manufacturing labor force.

    I just mention this because one of the biggest myths out there is that laid off blue collar worker should retrain themselves for the high tech field. In reality, it is relatively low cost foreigners getting jobs in the US.

    In the old days, the jobs went overseas. In the new days, we bring in foreigners willing to work cheap.

    In both cases, the US worker gets the shaft.

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