To Ease Fears About Jobs, Put Imagination to Work

Has the American worker become a throwaway item?

You could think that from listening to major corporations talk of saving money by “offshoring” jobs to India and other countries, as Marla Dickerson reports on this page today.

You could conclude that from learning in Times colleague David Streitfeld’s recent article that underemployment, an economic malaise once associated only with underdeveloped countries, now afflicts the U.S. workforce.

You could believe that from the brushoff that supermarket company managements have given the food workers union in the now endless Southern California grocery strike. There has been no collective bargaining to speak of. Management wants workers to have a lower wage structure and less extensive health benefits so that the supermarkets can compete with nonunion rivals. The union, having failed to calculate organized labor’s weakness in the U.S. economy today, is losing the strike. Management, says economist Harley Shaiken of UC Berkeley, “has torn up the social contract.”

It sure seems to be in tatters. More than 27 million working Americans, about 20% of the U.S. labor force, earn wages below the poverty level, according to “Low-Wage America,” a new book of studies by 38 economists published by the Russell Sage Foundation.

Has it come to this? That the richest economy in world history is reduced to competing on cheap labor and gutted benefit programs?

No, it hasn’t quite come to that. U.S. workers are understandably riven by fears of being replaced and many experts are riddled by doubts that the economy can continue to create good jobs, but the fears are in many ways overblown.

To see clearly and even optimistically into this new year and beyond just takes some straight thinking. And more, it takes “imagination,” as economist James Galbraith of the University of Texas puts its. “There is no reason why we can’t create plenty of good jobs,” Galbraith says. That we seem to have lost our way understanding how to do that, he continues, “I blame on a failure of imagination.”

We created millions of jobs of all kinds in the 1990s, when we had abundant investment in technology. Yes, that boom grew overripe, as booms will. But the imagination of that decade, the innovations in Internet communications that allow U.S. business to operate so efficiently around the world, helped to produce the very productivity gains and profit flows that spell economic recovery in 2004.

Forrester Research’s forecast as the year starts is that U.S. companies will increase their investment in information technology, a trillion-dollar item in the U.S. economy, by 16% this year. No accident that economists also predict that the economy will create 1.5 million jobs this year.

Those 1990s innovations allowed American jobs seamlessly to be performed in India and China, spawning fears about countless millions of jobs being sent offshore.

And some transfer of jobs overseas is inescapable. Jobs that are transferable “are to a great extent governed by rules that can be computerized,” says Professor Frank Levy of M.I.T., coauthor of “The New Division of Labor,” to be published this year. But many other jobs -- any task that Levy describes as requiring “judgment and pattern recognition,” whether it’s driving a truck or preparing a legal brief -- can’t be easily or cheaply computerized or transferred.

Think about it this way: China has begun making cars but isn’t designing or manufacturing quality auto parts. So General Motors Corp., Ford Motor Co. and DaimlerChrysler are urging their U.S. parts makers, which years ago developed design capabilities, to set up operations in China and help boost its local industry. This isn’t the dreaded loss of jobs overseas; it’s market development. China one day will no doubt be the largest car market in the world, and operations in that country will inevitably create design and organizational and many other judgment jobs in the United States.

That has been the pattern with Southern California firms that have offices and factories in India and Pakistan and China. Skilled jobs at decent pay are created here by jobs created over there -- by jobs that are sent offshore over there -- in societies that are only starting their evolution to modern economies.

Now, this country must ensure that the U.S. doesn’t lose out as those evolutions continue. Playing the role of the chief organizer of an expanding world economy means putting a premium on the ability of Americans to perform those judgmental, pattern-recognition jobs. The training and education of the U.S. workforce are increasingly important.

Yes, the training-and-education calls have echoed for years. But it is noteworthy that some of the most successful new companies to start up in recent years are in career education: Apollo Group Inc., based in Phoenix, for example, and Career Education Corp., near Chicago. There are other encouraging signs, one being that President Bush is reportedly planning to introduce an aid program for community colleges, institutions that work closely with industry. (In North Carolina, the hosiery industry devised ways to make its mostly private companies more competitive by helping employees adapt to computerized machinery, with the aid of community colleges, and thus increase their skills and earn higher pay.)

All of that said, what of the competitive force of low wages here at home? The truth is that a cheaper workforce isn’t the panacea for the supermarket chains looking to be competitive with the major discount companies, Wal-Mart Stores Inc. or Costco Wholesale Corp., nor with the specialty markets finding customers in all kinds of neighborhoods.

The supermarkets have to look beyond their payrolls. The companies are enduring a long strike to achieve lower costs in the future, but as economist Daniel J.B. Mitchell of UCLA’s Anderson School says, “it is not clear that they have factored in permanent losses in market share as the consuming public is educated in alternative shopping options.”

By the same token, it’s not clear that the union factored in all its members could lose before it took its stand.

A more cooperative effort might have hashed out issues and prevented billions of dollars in lost revenue and wages. But that would have taken a little imagination.

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James Flanigan can be reached at jim.flanigan @latimes.com. To read previous columns, go to latimes.com /flanigan.