A Pencil for the U.S. Worker

Like one of those zippy little foreign sports cars, the issue of America’s competitiveness has accelerated from zero to 60 in no time flat. Not bad for an issue that only a few years ago was so underpowered that a presidential competitiveness commission headed by Hewlett-Packard chief executive John Young handed over its report in an out-of-the-way Commerce Department office, never coming near the Oval Office.

Today the issue is politically ubiquitous, and competitiveness is known simply as “the c-word.” There is a caucus devoted to the subject in the House of Representatives; the nation’s governors have drafted yet another comprehensive report with yet another comprehensive agenda; legislation proliferates on Capitol Hill with the promise of one committee, one competitiveness bill. It has become a national hobby horse.

Competitiveness may be a trend, but it is not just a fad. The economic map of the world has changed, and we must change the way we do business, or suffer the consequences. This realization has come late and hard. In typical American fashion we resolve to do everything, not just something, about it--and do it all at once. Proposals appear like ornaments on a Christmas tree: a research-and-development tax credit on one branch, special funding for a semiconductor facility on another, a committee of leading competitiveness thinkers on another, and so on. Small wonder that most business leaders are convinced that the federal government can create lots of competitiveness problems, but can do little to create solutions.

The federal government can make important contributions--if it will stop trying to make so many of them and all at once. So let’s start with a short list, just two items that will make a big difference and that are clearly within reach of the federal government: Reduce the federal budget deficit and invest in American workers’ education, training and retraining.

Everyone in both major political parties, in business and in organized labor agrees that the deficit is a giant millstone around the neck of the American economy. The debate is not over whether to bring it down, but how to do it. So far there is only debilitating deadlock, with one side yelling, “Cut spending,” and the other answering back, “Raise taxes.” In the meantime the problem continues to tick.

Yet there is an answer, or a partial one, waiting to be tried at least as an interim solution: Collect all taxes that are owed. It is an approach that has been employed with good results by almost two dozen states facing tough budget deficits. American tax delinquency is scandalously high; today roughly one out of every five taxpayers cheats, and it costs the federal Treasury nearly $100 billion a year in tax revenues. A rigorous federal tax-enforcement program that raised only two-thirds of that $100 billion would bring the federal budget into compliance with the second Gramm-Rudman deficit-reduction target, without higher taxes or lower spending. It would also send a fresh reminder about good management and good ethics.

The second item on the list is the education, training and retraining of American workers. Most American managers would agree that their companies’ most valuable investments on the factory floor are the workers. And yet our workers are poorly equipped to contribute to their companies, not in the tools that they use but in the knowledge and skills that they have.

A story makes the point. While in Japan studying the auto industry, I was taken aside one day by a plant manager. “Our workers all have one piece of equipment that your American workers do not,” the manager told me. I looked around the factory, but all I saw were the usual machine tools. Then the manager reached into his shirt pocket and took out a pencil. “Every auto worker has one of these,” he said, “and they use them all the time to write down ways to improve the cars, improve their jobs, improve the whole operation of the company.”

Here in America, even if our workers all had pencils and were encouraged to use them, a shocking proportion simply could not. Illiteracy among workers in some industries is estimated to be as high as 40%. And these are young workers, with a lifetime of employment ahead of them, not an aging group about to retire.

Worker training and retraining are critical not only to get better quality and lower-cost, American-made products but also to make industrial change more likely. The harsh reality is that if American companies do not become more competitive, we will lose an enormous number of jobs. And if we do become more competitive, we will still lose jobs--a substantial number of a certain kind of jobs.

Becoming more competitive means becoming more productive. It means replacing routine jobs, mindless jobs, less skilled jobs with new technology. Ultimately that may mean more new jobs. But unless we invest in our workers, offering them both new skills and new training, we risk diminished competitiveness now, and a work force that is unwilling to accept change for the future. Change is a frightening prospect, especially if it is just a rhetorical disguise for unemployment. A new partnership between the federal government, business and labor can put new training into the equation and take some of the fear out of change.