Originally Published in April, 2004

As trade liberalization and the resulting offshoring of jobs impact U.S. workers, the issue of who is responsible for educating and training displaced workers has come front and center.  Without question, the practice of offshoring is a loaded topic. However, arguments for free trade appear to be just as strong. In an April 2004 speech before industry, trade and academic leaders in New York City at the UPS-sponsored Longitudes 04 conference, Robert Rubin, former U.S. Treasury Secretary and Assistant to the President for Economic Policy, and currently a member of the Office of the Chairman at Citigroup, noted that protectionism would be detrimental to the U.S and world economy. However, he added that a quality public education system and worker retraining are essential to balance the effects of offshoring.

 

But what programs and educational initiatives should be adopted to blunt the impact of offshoring? How can U.S. employers, and more importantly, their workers, figure out what industries will be the most stable?  The overseas exodus of manufacturing facilities, which began in the late 1970s and peaked in the 1980s, eliminated many manufacturing jobs. By the late 1990s, on the heels of the Internet revolution, the loss of technology positions to India and China illustrated that service jobs were just as susceptible to offshoring.

 

Forrester Research, a technology research company, projects that 3.4 million U.S. service jobs (in such fields as sales, computer, design, and management) will move offshore by 2015. Today, locales as diverse as Canada, Brazil and Ireland are gaining as popular places to employ offshore workers. Considering the statistics and the broad impact of offshoring on a variety of fields and skill levels, the need for more specialized training and education appears to be essential for the U.S. worker.

 

Few would dispute that education is key to economic development and, in turn, a strong economy. Higher education levels equate to higher job skill levels and, consequently, higher income levels. The figures bear it out. According to U.S. Census Bureau Director Louis Kincannon, “The higher the level of educational attainment, the more one can expect to earn over the course of their working life. College graduates earn a lifetime average of $2.1 million, and those holding master’s degrees can expect to earn a lifetime average of $2.5 million.”

 

The Need for Science and Tech Training

 

Despite the recent technology sector downturn, many argue that the future growth industries, and thus the training, should still be tilted toward emerging technologies in the fields of math, medicine, science and engineering. As U.S. innovation creates opportunity, such fields as nanotechnology and biotechnology, for example, offer a promise of increased job security and a higher average wage. However, interest level in the science and technology fields is on the downturn in U.S. High Schools and Universities. 

 

According to the National Foundation for American Policy, a non-profit public policy research organization, more than half of the engineers with PhDs working in the U.S. and 45% of the nation’s computer science doctorates are foreign born or children of immigrants. Earl Hill, a senior lecturer in organization and management at Emory University’s Goizueta Business School, contends that there needs to be a dramatic push to interest secondary and higher education students in these fields. “We have to have more specialized training in science and technology. We need to promote a different mind frame and mindset, and we need to do it at an earlier stage of the game.”

 

But, says Hill, a change of mindset may be essential for the employer and employee too. “We have to understand and see offshoring as a form of downsizing. It can happen very rapidly. Companies are vulnerable to business cycles, and that’s one of the main reasons why no one works at a company for twenty or more years, like they did in the past.” He reasons that if employers begin to view offshoring from this perspective, it may serve to focus their commitment to training.  Though employee training generally pays for itself over time, some employers will continue to avoid any sort of added costs. Hill cautions, “The bottom line is that the responsibility for updating skills will always ultimately lay on the employee. They must make an effort to see beyond the next year, making sure they get necessary training and development to be employable. You simply cannot approach your career in the same way you approached it in the past. Today, you have to do the research, and you can’t wait for things to happen to you. You have to be aggressive or you won’t be successful.”

 

Despite the employer and employee’s role in training, many still look to Washington, D.C. for funding of needed retraining initiatives. As political pundits and economic experts wade through President Bush’s budget proposal, there is fear that government-sponsored retraining programs, including those funded through state and federal sources, will be the biggest losers as the deficit, Social Security reform, and the war in Iraq take priority. Today, a limited amount of government retraining initiatives exist, including the nation’s Trade Adjustment Assistance (TAA) program, administered by the U.S. Department of Labor. “Certified workers” receive limited income support, relocation and job search allowances, health coverage tax credit, and retraining, in certain instances. A group of company workers must apply to have their company designated as one adversely affected by foreign trade.

 

Additionally, a bumper crop of legislation sits at the state and federal levels, at various stages of approval, all looking to address the offshoring of jobs and the retraining of workers stateside. Much of the state legislation aims to forbid or curb the awarding of state contracts to companies that use overseas labor.  

Employers Invest in the Workforce

Some business leaders balk at the prospect of government mandating private employers to provide training programs. They worry about the financial burden it might bring to bear, and instead opt for a more market driven approach. United Technologies, a diversified high technology products and support services company, is an example of a company that provides some of the most forward-looking education initiatives for its workforce. They provide tuition reimbursement and time off for employees attending college. United Technologies also provides a four-year college scholarship to those employees who lose their jobs due to offshoring.

 

In an April 2004 keynote address at the Longitudes 04 conference, Carla Hills, chairman and CEO of Hills & Company and former U.S. Trade Representative, touted the example of United Technologies and argued for the need to devote “some of the gains derived from trade to help those who are displaced by the change that is primarily driven by technology and globalization.” Of particular note, Hill advised the audience that about 15 percent of United Technology’s domestic workforce was in the process of upgrading their education, about three times the national average.

 

According to Lea Soupata, senior vice president for human resources at UPS, “Every business has to think of skills set development and where there are gaps. It’s about projecting where the jobs will be twenty or so years from now. If you make the investment, it will ultimately pay you back.”  She notes that UPS currently spends more than $300 million a year on worker training, which includes the actual development of the training programs as well as the paid for time required for people to attend the programs. Employees participate in in-house training programs focused on everything from safe driving to sales and general management skills. She adds, “We also encourage our people to continue their education. We have earn and learn programs for our part time employees, so they can attend an outside school and work.” Individual business units also provide in-depth worker training.

 

Soupata sees a more broad-based approach resolving the training debate, with business, academia and government involved in a joint effort. She adds, “Many business leaders are reluctant to talk about mandated requirements. Regulation does add to the cost of doing business, and then you run the risk of having the company leave the country. There are ways for government, the universities and private companies to do it. It’s all about the right partnerships---developing the links between all three.” Currently, UPS is the largest corporate sponsor of the National Urban League’s Black Executive Exchange Program (BEEP), with high-ranking African American executives and professionals at the company serving as teachers, mentors and role models at a number of historically black universities.

         

Many industry, labor and academic groups agree with Soupata’s contention that a joint approach is best. For example, the December 2004 report from the Council on Competitiveness, a panel of some of the nation’s top business, policy and university leaders, recommended the creation of a national science and engineering scholarship fund, providing tax credits to businesses that help fund it. The group also proposed “portable graduate fellowships” to encourage research in burgeoning industries.

 

Programs that specifically look to bridge the divide between the corporate world and the university research lab are drawing significant attention. For example, Texas Instruments announced that it would build a $3-billion, 300-millimeter semiconductor manufacturing facility in Richardson, Texas. When many high-tech firms are manufacturing outside of the U.S., this news came as a pleasant and welcome surprise. Under the plan, the University of Texas at Dallas receives up to $300 million from the state and other sources for its engineering and research programs.

 

Reaching Out to America’s Youth

 

Of course, getting American workers in gear for higher skilled positions also requires a commitment to revamping and improving elementary and secondary education, says Richard Makadok, associate professor of organization and management at Goizueta Business School. He believes that weaknesses in the elementary and secondary school levels need to be addressed, in order to boost the skills of the next generation of American workers. “Relative to higher education, our elementary and secondary schools face comparatively few incentives to improve, innovate, or to be efficient---few material rewards for success and almost no punishment for failure.”

 

The resolution for under-performing public elementary and secondary schools is a source for great debate. Still, Makadok believes that public schools should look to the success of the country’s universities and colleges, “unleashing the forces of competition to help ensure that Americans get a world-class education to give them the best available tools for innovation. In higher education, we have free-market competition that provides huge incentives for colleges and universities to be the best that they can be---the most innovative and the most efficient---with the market generously rewarding those colleges and universities that do a good job of it, and appropriately punishing those that fail.”

 

But getting teens and younger children interested in the sciences or math may be half the battle. Says UPS’s Soupata, “There is a gap between the lower grades and higher education. There needs to be a better mentoring relationship for those in secondary education.” Today, UPS employees teach high schoolers through Junior Achievement, in addition to participating in a job-shadowing program and other school to work initiatives. Soupata notes, “We simply can’t wait to see if someone is in high school to then determine if they have an aptitude for math or science. If our technological superiority is going to continue, then we have to produce people with a math and science aptitude. That might require us to figure out how those on the university level can connect with children even in middle school, so they can understand there are opportunities in the math and science fields. We really have to think about it from a business standpoint, and [devise strategies to] connect with these younger students.”