Janesville, WI

What’s the Matter with Janesville?

Each Thursday on the PBS NewsHour, plain-speaking economist Paul Salmon explains difficult issues in his “Making Sen$e” segment. This past week he focused on the economic changes in the town of Janesville, WI, which happens to be the home of House Speaker Paul Ryan.

As to what is wrong with Janesville, it begins with the standard story of an industrial town highly dependent on manufacturing lost its main factory. The initial problem that followed was high unemployment which has now been replaced by under-employment. For government solutions (or non-solutions) It now regularly votes for Ryan. However, in the 2016 presidential race, it favored Hillary Clinton over Donald Trump.

As Salmon clearly points out in his May 4 report, Janesville serves as a poster child for how manufacturing jobs have disappeared from so many communities in the northeastern quadrant of the United States. Since 1919, its lifeblood was a General Motors assembly plant which initially produced tractors then later Chevrolet automobiles. During World War II, it produced munitions; then it became a primary producer of GMT900 trucks such as the Chevrolet Suburban. But by 2008, higher gas prices created a slow-down for full-size sports utility vehicles. First the plant shut down one of its two shifts; then it closed all together.

As the older factories across the upper Midwest became less efficient and newer ones were built either below the Mason-Dixon line or overseas, the people in towns like Janesville were left with choices that included moving to sometimes-available manufacturing jobs elsewhere, or adapting to a new local economy with no hub industry. In an attempt to build a “new economy,” Salmon shows the efforts that were made to provide new job training opportunities for those who had been displaced.

On the surface, it appeared that a number of citizens were enrolled in the job training programs and many “graduated.” But it’s important to never lose sight of what the real goal is, and in Janesville it was not to retrain workers. The goal was to find new jobs for the former industrial workers, jobs that had pay scales comparable to what the United Auto Workers had negotiated for them with General Motors. But the sad truth was that while job re-training succeeded, employment with UAW-level wages did not come back. Yes, after a hike in the employment level, people found jobs, but they were more in the service sector and the pay scale was often only half of what they previously made. This is a classic case of under-employment – workers having jobs that either do not utilize their full skills or do not pay that to which they had become accustomed.

One of the indicators of the unseen hardship within the community is an unmarked and usually closed room in Janesville’s Parker High School full of donated food, toiletries and other personal supplies for students in the school whose families cannot afford basic necessities. There is more than one dirty secret in this high school and a big one is that Parker is now serving the role of provider of all level of community services, much as is often done within inner-city neighborhoods.

To Ryan, this is the way the free market works. And if you’re primarily concerned about allowing the captains of industry to make decisions in their own interest and with minimal government interference, then Janesville is a success story. But if your priorities are the best interests of the citizens of a community, then the free market is failing in Janesville and a new approach is needed.

Two things are clear:

  1. For people who are left without good jobs, a social safety net must be in place to help them through difficult times.
  2. Perhaps more importantly, with modern technology and the growth of artificial intelligence, we may be past the time when our society could produce well-paying jobs for all. We may be able to supply ourselves with almost everything we need without a full-employment economy. That means that we are experience fundamental structural change in our economy.

Ryan, like so many Republicans, are living in a world that they dreamed was yesteryear. The future is changing at a much more rapid pace than even was the decline of Janesville and other similar communities. Our first goal is something that former President George H.W. Bush fumbled about in 1987, “that vision thing.”