Janesville – A Story About the Rest of America

I just read 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.

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.

25 Responses

  1. While everything Steve writes is true, I believe not all company owners wanted to move factories overseas but some were compelled to do so in order to compete with those who had already done so. Further, as Steve noted, the US has no real industrial policy though it had plenty of “coastal elites” and academics who fostered globalism without concern for those left behind. Shame on America!

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  2. While I am a disciple of your approach to business having adapted your ideas to create graduate and undergraduate courses at Temple University and to create multiple tech ventures, I believe that there is no magic bullet for this problem. Whille i have not read this book, I have learned that mere job retraining does not work. Without going into a long treatise, work is going to continue to evolve at an accelerated rate. Specific jobs will come and go. People can no longer learn one thing and expect that skill to carry them through life. We must instill a love of learning into the population and an eagerness to be flexible. I would be happy to discuss this further.

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  3. Came here for a different reason (raving fan of your lean-launch process and want to share the process with emerging women entrepreneurs!) The demise of the one-company city due to globalization shifts is sad. The revelations that the retraining programs didn’t help is eye opening. There is a whole additional demographic that is facing similar issues (educated-professional that opts-out for care-giving). That is the problem I am attempting to solve with a social enterprise model Upotential.org. They are often side-lined for the remaining of their careers or woefully underpaid relative to male-counterparts. I will highlight that while getting my MBA in ’95 my macro-economics professor totally laid out the eventual ‘lower standard of living’ that all americans will suffer due to globalization. Totally known and easy to understand his prediction.

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  4. Thanks for sharing. Another book sharing this perspective that you may enjoy is Glass House by Brian Alexander:
    http://www.brianralexander.com

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  5. It begs the question of whether our current incarnation of capitalism actually works — and whether it will implode.

    Don’t get me wrong, I don’t think it’s a political question. None of our current political parties has the answer — whatever that is.
    Libertarians place too much trust in human nature (we should have learned now that does not work based on the socialist, communist, and now capitalist experiments). Republicans today seem dead-set on even more inequality (revolution anyone?) in a slash-and-burn, live for today only mentality. And Democrats would end up spoon feeding everyone using biodegradable, organic, made-from-non-gmo-corn, plastic substitute spoons, from a factory with regulations manuals taller than the roofline, that take 4 weeks each to hand make and cost $40 a piece.

    I haven’t seen anyone come up with a better answer so far. Maybe our traditional checks-and-balances approach will save the day. Maybe there’s no way to actually layout a better course. We could just continue over-regulate for a while, then spoil some resources, then raise taxes for entitlements, then over-profiteer, etc. etc.

    Perhaps a swinging pendulum will win out over a compass as the way through all this.

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  6. Great post. Printed and sent to Speaker Paul Ryan, whose district includes Janesville, WI. Clint Day.

    >

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  7. Steve, that is an interesting piece and sad to note that the retraining of the laid-off workers in new skills did not produce the desired result – the result to make them gainfully employed in another trade. Two things came to mind that could be responsible for this counter-effect result: 1) The workers did not have a buying-in into the training program; 2) The workers were not part of the decision-making process about the type of new skills they are interested in. My suggestion is that an alternative program should be made available for laid-off factory workers. They should have the choice to choose between starting a small business and seeking employment at another enterprise. If they decide to start their own business, they should be trained specifically on this, with a start-up support funding that is repayable over a long-term. Shola Ajiboye

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  8. I saw this same process taking place in the North of England in the 1970 & 80s; to an extent it was even more bitter as the decline of the industrial base became a battleground between the unions and the government and it took place in a geographically small area, so both the impact and ability to mobilise were high; the end was when the coal industry unions went toe to toe with the government in an attempt to force a general election which the government was never going to allow. The clashes between the mine workers and police have left scars to this day.

    I always thought that the better path would have been to encourage movement away from those jobs, by ending subsidies created by previous government industrial policy and use that money to provide retraining in some form, rather than the beat down approach the government took. The industries had to go, but the management of the decline was terrible. As we look forward to the impact of automation I have a real fear that the scenes I saw here in the UK will be dwarfed as people realise the potential reality of the numbers and quality of the jobs that will remain.

    I think Shola’s comment above is the most effective approach, with a third option of early enhanced retirement for older workers, but it’s got to be something that the people choose and it needs to be funded properly. The idea that the 4th industrial revolution will be socially painless and can be managed on the cheap is an illusion.

    Liked by 1 person

  9. Thanks, Steve, for another thoughtful, passionate, and thought-provoking article. It makes a powerful case… for…??? going back to the past and trying to preserve it forever? Keep things the way they were back then? Yes, that does sound appealing and comfortable. And unrealistic.

    In my personal view, we are not dealing with the reality of the Darwinian evolution that is occurring in global economics and culture. We seem to always be looking backward for “the way it used to be…” as “the standard of excellence.” Who wouldn’t want to live forever in the Eisenhower era?

    When we go back to Adam Smith and the “invisible hand” of the marketplace, we can notice that there is an economic evolution at work. You can try to stop the tide from coming in and going out, but that will not work – natural forces will prevail.

    Almost the same disruption occurred when the Industrial Revolution threatened farms and stimulated migration to cities and manufacturing opportunities. “What used to be” faded away, and a “new normal” emerged. Were individuals uprooted, threatened, victimized in this process? Sure they were. And that’s an individual shame. But the natural process continued. Nobody or nothing could stop it.

    In my opinion, that’s what is occurring (globally) today with advances in internet, communication, AI, and one element you did not mention, additive (3D) printing. As that technology matures I forecast we will be able to notice a product on television (used to be made in the U.S., right? Not so much any more…) and decide to purchase it. You will point your laser controller to the item, click, and Amazon will process your payment and send the 3D printing instructions to the printer in your office or garage. In under 10 minutes, like magic, you will have the fully functioning product in your hands. Complex products including watches, motorized and electronic devices… you name it.

    In that world, who needs our transportation and storage industry? Who needs all the support infrastructure that supports them (maintenance, gas stations…). Continue the consequences of this transformation for yourself…

    This is not some malicious plan to take control of the world – it is natural economic and technological evolution.

    What’s “the solution”? “I skate to where the puck is going to be, not where it has been.” – Hockey great Wayne Gretzky

    We cannot drive by only watching our rear view mirror. Again, in my opinion – and this message underlies my college teaching – we have to prepare today for an unknown and unknowable future. It will not look like the past. We need to develop a new skill set (creativity, innovation, entrepreneurship, adaptability, diversity, etc) to be able to survive and thrive in the century to come. It won’t be easy, but there will be uncounted opportunities for those who adapt and embrace the new world.

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    • I dispute this opinion, especially when it cites the 19th century. People were anxious when they lost their jobs in the 19th century, but were not slapped in the face by stories like Zuckerberg, Gates, Jobs, and the fabulous wealth made by ‘every one but me’….the magic of television. In addition, the Industrial Revolution of the 19th century was done by improving farm production. Go to the Henry Ford Museum, and see all the constant increase in farm production. Farming was 50% of the economy. Now it is less than 2%. You could always be a “field hand” somewhere in the 19th century. ‘Hobo’ came from “Hoe Boy”, Union soldiers roaming the country, with only a hoe and nothing but a few clothes. Why do we tolerate ‘Milfare’, military training and secure jobs, and the production of Abrams tanks and ammunition, that will simply be parked and never used? Yet, a similar-to-military program in alternate energy (can always sell electricity….who is buying used Abrams tanks?) is what the world needs. We have huge industries built on supplying military goods that never get used.

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    • “When we go back to Adam Smith and the “invisible hand” of the marketplace, we can notice that there is an economic evolution at work. You can try to stop the tide from coming in and going out, but that will not work – natural forces will prevail.”

      Actually, you need to read ALL of Adam Smith’s books, like his first one, “Theory of Moral Sentiments,” the ETHICS that is the foundation for ECONOMICS!!

      Fail at ethics, you fail at economics!!

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  10. Funny to see your blog post, I am halfway through reading Janesville, and coming from the midwest orginallly, absolutely agree with your thoughts on what the globalization issue did to the midwest, starting in the late 80s and ending with the story in this book during the 2008-12 crash. It’s a beautiful book that tells the story from the ground level of pain the workers. I hadn’t got to the appendix so the retraining aspect is news, but not really. Retraining timber workers who lost their jobs to shipping raw logs to Japan starting in the late 70s, never was successful.
    I disagree with Dinah’s thought above that “the US has no real industrial policy though it had plenty of “coastal elites” and academics who fostered globalism without concern for those left behind. ” While some of us ‘coastal elites’ and ‘academics’ support globalism (and being in software, I still do, as our leadership in software development has been a huge help to our economy for decades now), the problem laid out in Janesville is not about globalism. It’s about what happens to a small town during a global financial meltdown, where it’s markets vanish, and the corporate powers that be move on.
    Both political parties are to blame for what caused the meltdown, and also the vanishingn American jobs to foreign markets. Both R’s and D’s passed laws from the 70s to today that help move jobs elsewhere (let’s remember that jobs moved from the industrial north to the rural south in the 60s to 80s here in America, didn’t hear much crying then). The economists that told them to do that, were both right and wrong. At the same time we continue to spend more on the military industrial complex and less on education. That is *our* choice and more and more of our economy is dependent on military spending, which cannot be eternallly supported, as Russia’s collapse so graphically showed.
    Janesville opens with Paul Ryan, who was a freshman Congressman then, taking the phone call telling him his town was being abandoned by GM. While he clearly sees the pain that is coming, his reactions to it are human and typical of a local politician, but is at odds with his Ann Rand “government is not here to help” politics of today. And the book also clearly shows why Wisconsin, Michigan and Ohio have tilted towards the Rs’ and Trump. People feel abandoned by politics and are searching for new hope. Any politician that promises them hope, from their two votes for Obama, to the demagoguery of Trump, will get many of their votes.
    Thanks for your review & analysis, I enjoy following your blog posts, and yes, this is a highly relevant book, whether from a great view of American history, political science, or economics.

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  11. Looking forward to reading this. The individuals and families who have suffered through this experience probably don’t believe in institutions, policy, “shareholder value”, or retraining. I think tweaking a change to #6 delusion would be super meaningful for them rather than abandoning it: recruit the right Leaders who are capable of resetting the experience and showing individuals and families what to believe in now in order to go forward and accept policy, training, etc. The truth is, belief change happens only one person at a time. Let the hard work be focused on that first.

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  12. And technology will further erode American jobs. If manufacturing does miraculously return it will be using the latest robotics and other tech. The bygone era has passed and we all have to reinvent ourselves and face reality. A public/private effort to retrain workers would benefit society as a whole before another major recession/depression!

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  13. WOW – this is exactly why I follow the author – succinct and highly insightful recaps like this are gems of wisdom that I share with family, colleagues and clients. Things change: chances are that they will never go back to what was thought to be “normal” – the new “normal” will also change, albeit this time with a more compressed change cycle than last time… and so it goes. Given these factors, we need to alter our life approach – the references to resilience, flexibility, mobility and reinvention should be guiding principles for each of us.

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  14. An excellent article, and well worth the slight diversion.

    It was interesting but not surprising that conventional re-training did not work in Janesville. As you suggested, there may be ways to make it more relevant and effective.

    But still, it does not address the macro picture whereby the accelerating pace of job-killing technologies will create a giant disruption to our whole societal system. A system where there is a single bottom line: profits. Where full time employment is the only real mechanism for distributing/sharing society’s growing wealth and abundance.

    The uncomfortable truth is that our form of extreme capitalism does not scale into the impending future environment. We should be thinking outside the box, at mechanisms like the Guaranteed Annual Income, and universal rights of citizenship (eg health care, education, basic shelter).

    In entrepreneurship terminology, we are about to experience a huge disruption. I can’t see how you can address this existential threat without establishing comprehensive centralized planning, which would encompass not just industry, but our whole societal structure.

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  15. There are some problems with this whole narrative that are inconvenient. I live in Janesville. I work in the field of economic development. We are thriving …LIKE NEVER BEFORE. Unemployment is at 2.7 percent, the lowest EVER. EVER. Retail sales have set new records for 12 straight quarters. Houses sell faster than ever and the lack of inventory is a new kind of challenge. The apartment vacancy rate is 1%, again, a new kind of challenge. There are 30,000+ open positions in our laborshed. Please move here and fill an open job. Average wages are higher than ever and rising faster than in a decade. We are investing $30 Million in downtown improvements over the next 5 years. Finally, YES, the nature of work has changed. High-wage, low-skill, 30-and-out jobs with generous pensions are rare. But moving jobs off shore is not the principal reason things have changed. I meet with leaders of companies throughout the region and technology is the real driver of change. We saw it with GM and it is part of almost every company here. Faster, cheaper, better. We still make things here. We still have a thriving economy. And we are becoming an even better place to raise a family than ever before. The California-based Milken Institute just rated us as the 25th best small city economy in the US.

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  16. These observations are key to building a meaningful dialog. But who is going to be in the conversation? As you point out — the short-term, private sector perspective is not incentivized to care [quite the opposite], and the public sector is powerless [local level does not have the resources, national level does is politically impotent — deep pockets, short arms syndrome]. SO who can effect a refocus — a discussion that evolves to acceptance of reality and the construction of reasonable action steps [such as those you mention]?

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  17. I work as an angel investor in the McCormick Reaper building in Chicago. Forbes quotes historian William Hutchinson saying, “Of all the inventions during the first half of the nineteenth century which revolutionized agriculture, the reaper was probably the most important.”
    The good citizens of Janeville ended up with all their eggs in one basket. Today the McCormick building, and GM’s Janesville plant, are reminders of how success fades.

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    • No we (Janesville) didn’t have all of our eggs in one basket. Not even close. We still have six locally based companies with annual sales north of $1 Billiion. That’s a B as is Billion. We have 2.7 percent unemployment. 30,000 jobs open on our regional job board. This notion that we were just an auto town that is now suffering from a closed GM plant is just not true. It is what stories in the NYT, WaPost, Atlantic, and Mother Jones want to tell but that is because there is a political agenda behind the reporting/writing.

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  18. Sir.

    Again, my respect and admiration for your writing.

    If by any chance you ever visit the Dominican Republic, it would be my honor to take you out for dinner and show you around.

    Cheers, Alex

    Alejandro Fernández W. Director Gerente

    E-mail: afw@argentarium.com Skype: ArgentariumRD www: Argentarium.com Tel: (809) 563-2877 Cel: (809) 330-4220

    Argentarium, SRL Solazar Business Center 16F Av. Gustavo Mejía Ricart No. 54 Santo Domingo, DN República Dominicana

    Ideas, informaciones e intercambios que enriquecen vidas.

    >

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  19. Steve, LOVE your thoughts, but you still missed the point and here is the problem: GOVERNMENT is the problem!!

    Watch THIS video and tell me how government policies, and by extension EDUCATIONAL (government) solutions (hammers looking for nails) have RUINED people and industries.

    https://www.povertyinc.org

    Game changer video for me!!

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  20. Hi Steve, Although I’ve not yet read Janesville, I will now. Thank you for the excellent summary of your takeaways.

    This topic has been of real interest and concern to me, and not simply as a thought exercise. Although I’m well educated (Engineer from Purdue, MBA, etc) and have a long fortunate history of working and leading organizations in high technology, I’ve nonetheless experienced first-hand the viscisitudes of a rapidly evolving world, the drive to maximize quarterly profits and share prices. I understand the business drivers and at the same time have empathy for those folks that feel displaced. The reality is, complacency can result in anyone becoming an unwitting participant in their being unmoored from employment during these rifts.

    One comment, I would suggest your conclusion that retraining personnel resulted in a less effective outcome vs. those that did not go to school, is too generalized. Perhaps it would be more accurate to conclude that “the retraining provided” was less effective than not going to school. That would then beg for the examination of the type and structure of the retraining provided. Which as was concluded was ostensibly ineffective.

    Education, thinking and reinvention (and working our asses off) have been ever-present throughout the history of human advancements, and will remain necessary into the future – whether helping individuals and society navigate through incremental or disruptive change.

    I’m a great admire of yours! Best, Tom Triumph

    > Thomas Triumph > Mobile +1 973 692 8657 > Email triumph.thomas@gmail.com > Web tomtriumph.com > LinkedIn thomastriumph

    >

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