Posted on: Tuesday, May 3, 2005
More job seekers learning high-tech skills
By Craig Torres and Will Edwards
Bloomberg News Service
WINSTON-SALEM, N.C. — Dell Inc. needs to hire 1,500 people for a factory it's building in tobacco fields near Winston-Salem. Carl Caddell needs a job. The state is betting a quarter of a billion dollars that the two will make a good match.
Caddell, 56, a former textile worker, is among 30,000 people applying to work at the computer plant, which will be Dell's largest and most advanced when it opens in September. North Carolina gave the world's biggest personal-computer maker $247 million in incentives over 15 years to locate in Forsyth County, including money to hire displaced workers such as Caddell.
Even after 14 quarters of economic growth, the U.S. jobless rate — officially 5.2 percent — is more than 9 percent when the underemployed and those who have quit seeking work are counted, the Bureau of Labor Statistics says. Among the discouraged job-seekers are dislocated workers, and states are offering companies everything from tax breaks to outright payments to train them.
"Is that skilled workforce out there?" says David Ratcliffe, chief executive of Southern Co., the second-largest U.S. power utility. "It's a very real concern," he says, citing "tremendous" technical requirements that factories now have.
The 2001 recession resulted in an unusual number of permanent job losses versus temporary layoffs as companies sought to boost productivity while paring workforces, a 2003 study by New York Federal Reserve economists showed. It took almost four years for employment to recover to February 2001 levels. Hundreds of thousands of workers were marooned as their skills proved obsolete.
More than a third of 976 companies surveyed in March by the National Association of Manufacturers said they can't fill jobs because applicants lack math, science and technological aptitude.
From January 2001 to December 2003, 5.3 million people lost jobs they held at least three years because their company or plant shut or moved, a Bureau of Labor Statistics survey showed.
Failure to elevate worker skills will aggravate an income gap that could lead to "resentment and political polarization," Fed Chairman Alan Greenspan warned Congress in February. Graduates of four-year colleges earned $342 more a week than the median wage of high-school graduates in 2004, the bureau says. In 1992, the gap was $235.
As a result, states are cranking up spending to give workers new skills. North Carolina's federal funding for dislocated-worker retraining more than doubled to $41 million in 2004 from 2000. The state lost 112,000 manufacturing jobs from September 2001 to September 2004 as the tobacco, furniture and textile industries contracted.
Nationwide, the number of workers getting money for retraining under the Workforce Investment Act, a seven-year- old federal program for displaced employees, was 365,199 in 2003, up almost 60 percent from 230,403 in 2000.
North Carolina's Caddell is using a federal program to pay his $1,800 in annual tuition and book costs for an engineering degree he's pursuing at Forsyth Technical Community College. "When you have skills in manufacturing, and these jobs go away, you have to learn new skills," he says.
Former U.S. Labor Secretary Robert Reich says employees are at the mercy of the markets.
"Many of our nation's workers are subject to the upheavals of financial and product markets that are far more efficient than ever before, while our labor market remains incredibly immobile and inefficient," says Reich, 58, a professor of social and economic policy at Brandeis University in Waltham, Mass.
In the North Carolina field where tobacco once grew, Dell is clearing ground on its $100 million, 527,000-square-foot factory. The Round Rock, Texas-based company will pay as much as $14 an hour at the plant. Benefits will include tuition reimbursement of as much as $3,000 a year for workers who add skills.
North Carolina had to outbid Virginia for the plant. The decision came with a price. In addition to the package the state legislature granted Dell, Forsyth County gave $39 million in incentives, including 189 acres of land valued at $7 million. Within the state package is some $7.7 million in training incentives, or more than $5,000 per employee.
"The incentives helped make this economic-development partnership possible," Dell spokeswoman Amy King says. Other considerations included a large labor pool, proximity to East Coast customers and a good transportation network, she says.
The state says Dell will generate $743 million in net tax revenue over 20 years, partly by creating 6,000 indirect jobs, including suppliers setting up shop near the plant.
