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It’s a mantra among politicians and CEOs across the Midwest and the country: we need to graduate more engineers in order to stay competitive in the world economy. It’s pitched as a way to create jobs and innovation. But all that might be wrong.
Joseph Bersuder, Marcus Grimm, and Cameron Close are days away from starting their engineering careers. The three are graduating from the University of Akron and hearing them talk, it’s almost like: “what economic crisis?”
Bersuder is going to work at a company constructing wastewater treatment plants. Grimm took a position with BP in Houston. And, Close accepted a job at a local green energy startup.
The money’s not bad either. From salaries in the $50,000 range to Grimm’s “Upper 70s, with five-figure signing bonus.”
To many politicians and CEOs, these guys are just what America needs.
President Obama has made it a major policy.
“We’re announcing an all hands on deck strategy to train 10,000 new American engineers each year,” he said last year at an advanced lighting company.
The conventional wisdom is that more engineers will lead to more innovation and help create the so-called jobs of tomorrow. But when Hal Salzman heard that from the President, he had a very different reaction: disbelief.
Salzman is a sociologist at Rutgers University in New Jersey. He’s been looking at the job market for engineers for years now, and he says despite all the fears out there of a shortage, and falling behind other countries, the US graduates plenty of engineers each year—more than are hired. And, of course, not all of them want to work directly in the field. So, why work so hard to create more?
“What are these engineers going to do?” he said. “If you produce more engineers, and we’re only hiring now maybe 50-60% of the engineers who graduate each year, where are they going to go? What kind of jobs? Are they supposed to sit around and wait until the economy improves?”
Salzman says hoping more engineers would help the economy is kind of like saying building more cars would help the auto industry. Instead, he says, the market does a pretty good job in this field. For instance, an oil boom in recent years has increased demand for petroleum engineers.
“The response is just what you’d expect out of Econ 101, which is: salaries went up and almost immediately the number of graduates increased,” Salzman said.
Salzman doesn’t disagree that engineering can be a good job, and he says graduates landing lots of jobs is exactly what we want. In recent years, the unemployment rate among engineers is about half the national average. But adding 10,000 more to the pool, he says, could make it harder to find work, and drive down wages. Already, many of the best and brightest students are attracted to higher-paid Wall Street or consulting careers.
What about the idea that America needs more engineers to compete globally? Salzman doesn’t buy that either. He says only a small percentage of engineers are involved in anything that could be as classified innovation. Most are building things like bridges or roads.
“Last I looked, those were not sectors that are booming,” he said.
At the same time, much of the engineering we do need is being outsourced. Even large portions of San Francisco’s Bay Bridge were designed and built in China and shipped to the US.
But Charles Vest thinks this this view is short sighted. For years, he was President of MIT. Today, he heads the National Academy of Engineering. He says we can’t predict the inventions that will create demand for engineers down the line, like the computer revolution did a generation ago.
“I don’t know that increasing the production of engineers tomorrow is going to immediately help turn the economy around,” Vest said. “But I do think it will orient our talent base to the kinds of jobs that are going to be there in the future and the people who will create those jobs.”
And, back in Akron, Joseph Bersuder, Marcus Grimm, and Cameron Close, the three engineering students, say they and their peers found plenty of offers in engineering.
“At the end of my job search, I probably turned away six or seven interviews,” Close said.
The question is, if we had more engineers, like the President and so many advocate, would that still be the case?
Meg Cramer · Midwest Migration: What’s So Great About Austin? Plenty, According To Former Midwesterners
April 18th, 2012
This week Changing Gears is taking a closer look at the Midwest Migration, and we’re talking with people who have left the region. Reporter Peter O’Dowd met with some of those former Midwesterners living in Austin, Texas, and brings us this report:
The Brookings Institution reports that 20-somethings fled Detroit and Chicago at the end of the last decade for places like Seattle and Portland. Cities they thought were cool. “Cool” has become a selling point for young professionals. And perhaps no city has it figured out better than Austin, Texas. Over the next few days Changing Gears will profile people who have left the Midwest, and that’s where we go next – to the home of music festivals known around the world.
John Livingston and his friends say Austin has a soul, and on a gorgeous Friday night in March you can see why.
Livingston is a lot like any other 24-year old. He and his friends still like to party, and on this night, they’re doing it on the north side of town.
Not long ago, Livingston and four others moved to Austin from Bloomington, Indiana.
It was January 2010. College was coming to an end. The friends were drinking at their favorite hang-out, and wondering what to do next in life. It was pretty clear that Bloomington – a city of 80,000 and home to Indiana University – didn’t have what they wanted.
“We just started thinking of places to go – something different, something new. By the end of the night we were all just chanting Austin. We wanted to go to Austin. We were all about Austin,” says Livingston.
A lot of people these days are all about Austin and its reputation for constant cultural festivity. The city is home to Austin City Limits and South By Southwest. If you’re even remotely into music, you already knew that. So Livingston and his buddies stumbled home that night with visions of central Texas in mind.
“The next morning we woke up and really started thinking about it and the logistics and it was a good idea. It still is a good idea,” says Livingston.
They had no jobs lined up and the economy was still lousy, but they found the cost of living in Austin was comparable to Bloomington. And it didn’t actually take very long for Livingston to find a job in tech support for a video game company called Blizzard Entertainment. His buddy, Travis Carrico, got the same gig.
“Those types of jobs don’t exist in Indiana,” says Carrico. But they do here, and that’s just the type of work Carrico wanted.
It’s a pretty classic story: A few ambitious kids move to Austin and love it. So what’s the deal with this city?
Ryan Robinson is the city of Austin’s demographer. “How can you engineers and manufacture that?” he asks. “At the heart of our success is the fact we attract more highly skilled college educated individuals than any other city in the country. It’s our golden goose.”
Golden is a good word for it. The last Census showed half a million people moved here in the past decade. That growth spawned jobs in retail, healthcare, real estate and technology. Austin’s job growth over the past year ranked third in the country. The city’s unemployment rate is about 6 percent. Robinson says 60 percent of its population growth came from Latinos, another 25 percent from Asians.
“Cities that are not diversifying are not growing, but it goes way beyond that,” Robinson says. “Socio-economic diversification, cultural diversification, lifestyle diversification. Simply put, we are a far less homogenous place today than we were 30-40 years ago.”
Robinson says Austin’s diversity and vibrancy emerged over time. The University of Texas is here, and had a lot to do with the burgeoning culture. But Robinson says Austin’s boom has led to a worrisome socio-economic divide – an underclass of under-educated, minority workers. He says it threatens to stall the city’s rise if not tended to.
What can you possibly say to a city that’s losing its educated, young creative class about what you’ve been able to do here? Robinson’s not sure what to tell them.
“It’s all organic,” he says. “It’s the gifts that history gives you. There’s only so much you can do to make that magic happen.”
Sometimes it can feel like everyone loves Austin’s magic. After spending some time here, it gets kind of weird when the only complaint most people have is about the terrible, terrible, terrible traffic. In some ways, it’s the most tangible sign that Austin hasn’t been able to keep up with its growth.
Matt Sadler is a comedian who grew up in a military family. He has lived everywhere, but settled in Austin and loves it. He’s proud of the city, but he can throw a stone or two. “Driving in Austin, Texas, is an effing nightmare,” Sadler says. “Would I give another city advice about how to be more like Austin? I’m not sure I would. Austin doesn’t necessarily have it figured out.”
As with most things, what’s charming and quirky can quickly become tiresome. Before I came to Austin I cast a poll on Facebook to see what my network of 20- and 30- somethings knew about the city. People had mostly good things to say, but I did find one person who complained that Austin is obsessed with being cool.
The city is full of hipsters drinking old-school beers and liberals protesting every injustice. Criticizing Austin’s vibe is definitely not cool. I asked Matt Sadler about this.
“Ask anyone who has been here 10 years, and they’ll tell you how cool it was 10 years ago, ask someone who lived here 20 years and they’ll tell you how much cooler it was 20 years ago. With the population boom we’ve got a lot of douchebags. We’re douchebag heavy right now,” he says.
Long-time residents of any growing city tend to be skeptical of newcomers. The gang from Bloomington appreciates the energy of this place. John Livingston says Austin is just more interesting than Indiana.
“This is the place where the fun is. This is where things are changing. This is where people are coming up with new ideas and growing those and everything,” he says.
When you’re young, change is what you want. Forward momentum and good music. At Travis Carrico’s apartment we listened to an Australian band called Tame Impala. Carrirco saw them live when they came to Austin.
“That’s what I expected when we moved down here – to see a show that probably wouldn’t be playing back home. I was really impressed with them,” Carrico says.
It hasn’t been all good. Carrico recently lost his job at Blizzard Entertainment, proof that Austin isn’t totally immune to recession. But he has no plans to come home to look for work.
Carrico didn’t finish college, but he is confident that he is better off looking for work in Austin than Indiana.
“I’ve never wanted to work a factory job…I don’t know if I was afraid of that, or if i wanted to distance myself from it, because that’s all I knew of manufacturing industry – the image today of the Rust Belt, these empty factories turning to rust, just rusting away,” he says.
Instead he’ll stake his future to this quirky, rhythmic city a thousand miles from home.
This story was informed by the Public Insight Network. If you want to learn how to be a part of our network, click here.
April 17th, 2012
Last year, everyone in the auto industry was chuffed about Detroit’s comeback.
The carmakers were enjoying a healthy rebound from the bankruptcies at General Motors and Chrysler. And for a while, at least, Chrysler outsold Toyota to make the Detroit Three the Big Three again.
But this year, Detroit’s market share has been slipping, and that has ramifications all across the Midwest.
In fact, the auto companies have fallen back to the market share level they held in 2009, as GM and Chrysler were struggling. In a piece for Forbes.com, I look at what happened to the Detroit companies during the first quarter.
Basically, there are three issues:
1) GM and Ford are losing share. In March, GM’s market share fell to a 90-year low. And while Ford’s car sales are up in 2012, they aren’t up as much as the competition. That’s one way a company can lose share, by not keeping up.
2) Toyota got stronger. Japan’s biggest carmaker was battered by millions of recalls, the tsunami and earthquake and floods in Thailand. But its market share is climbing back, thanks to new members of the Prius family, and the newest version of the Camry.
3) Korean and European companies are gaining. Hyundai and Kia are causing headaches for all kinds of automakers with their sales gains. Volkswagen is picking up market share, too, and it’s planning to build more cars at its new plant in Tennessee.
Here’s how Detroit’s market share looks, according to Autodata, Inc.
2012: 44.3 percent (through March)
2011: 47 percent
2010: 45.1 percent
2009: 44 percent
April 16th, 2012
It’s tax time, and today is the last day before the filing deadline. If you spent your weekend filling out your tax forms, you have come face-to-face with your 2011 finances. Now is a time for reflection and reckoning – it’s also a time for planning. What will this year look like for you?
Over the next two weeks, Changing Gears will be sharing stories about how people are planning ahead in a tough economy, and how their expectations have changed in light of the recession.
You can read some of the stories about changing expectations on our tumblr page: http://chgears.tumblr.com.
You can also tell us about your own experiences. How are you planning for what comes next? Are you coming up on a milestone like retirement, marriage, or a new career? How have your plans changed since the start of the recession? Follow this link to share your story.
April 12th, 2012
Tax incentives have become the weapon of choice among states battling for new business investments. Niala Boodhoo reported in December that offering incentives has become a sort of strategy game for Midwest states hoping to one-up each other as everyone fights to grow jobs. But, as Niala reported, these are games with millions of dollars in tax breaks and thousands of jobs on the line.
Now, the Pew Center on the States is taking a look at incentives from a different angle. The Pew Center tried to figure out whether anyone is actually checking to see whether the incentives are worth it.
Turns out, a lot of states do very little follow-up once they approve incentives programs.
From the Pew Center’s release on the study:
States that have conducted rigorous evaluations of some incentives virtually ignore others, or evaluate infrequently. Others regularly examine these investments, but not thoroughly enough.
Michigan and Wisconsin are both called out for heavily scrutinizing incentives for the film industry, while ignoring other incentive programs:
Massachusetts, Michigan, New Mexico and Wisconsin have studied their film tax credits in recent years but have not reviewed other types of incentives in the same detail.
Michigan made news when Governor Rick Snyder announced the state would get out of the incentives game, and focus instead on helping small startups. But Michigan still has some incentives programs. It’s just not evaluating them rigorously, according to the Pew Center.
Indiana and Illinois fare even worse in the study. Both are listed among the 26 states the Pew Center says are “Trailing Behind.” According to the study, both states “did not publish a document between 2007 and 2011that evaluated the effectiveness of a tax incentive.”
So, none of the tax incentive programs in Indiana and Illinois have been evaluated, according to the Pew Center.
The Associated Press says Illinois, in particular, has drastically increased its tax incentives. It made headlines last year by offering $330 million to keep Sears and two financial exchanges from leaving the state.
Marcelyn Love, a spokeswoman for Illinois’ Department of Commerce and Economic Opportunity, defended the agency’s evaluation process. She said companies applying for tax breaks through Illinois’ primary incentives program have to have an outside audit showing they created the promised jobs before they receive the credit. The program, called EDGE, is only for companies threatening to leave the state.
The Pew Center report focuses not on individual awards, but on incentives programs as a whole. The researchers looked for any sign that the states have stopped and evaluated their programs, and whether those evaluations actually had an effect on policy.
By those criteria, a few Midwest states did well in the report. Wisconsin, Minnesota, Iowa and Missouri were all listed as “Leading the Way” on tax incentive evaluations.
Iowa is listed as one of only four states in the country that have fully integrated those evaluations into the policy-making process. What that means is there’s actually something called the Iowa Legislative Tax Committee. The committee is relatively new, but its job is to review all of the state’s tax incentives every five years, and report those findings to state legislators so they can decide whether to change the programs.
According to the Pew Center:
“The more time legislators spend understanding how these things work, the better,” says state Sen. Joe Bolkcom (D), co-chair of the committee. “If we know how they work, we’ll make better decisions.”
Sounds like a worthy goal.
April 10th, 2012
Changing Gears is collecting stories about how people are planning ahead in a tough economy, and we’d like your help. What’s on your mind as you plan for what comes next?
We want to hear from you – whether you’re planning for retirement, saving for a home, sending kids to college, or just starting a career. If you’re retired, have you had to make some adjustments?
Are things different from what you expected? Tell us what kinds of choices you’re making.
Say Akron, Ohio, and the first thought that still comes to mind for a lot of people is “tires.” But the latest news in the tire making world comes from South Carolina.
Michelin, the French tire maker, will launch construction next week in Anderson County, S.C., on its first new North American tire plant in 15 years, according to the Wall Street Journal.
The plant will make those heavy duty tires used on mining and road building equipment.
Michelin also is expanding a nearby plant in Lexington, S.C., which produces tires for earthmoving equipment.
That’s not all. Two other tire makers — Bridgestone and Continental — also have announced new ventures in South Carolina. All the projects could end up helping Midwest companies. How?
A big reason for the growth is the global expansion of construction projects, which is benefitting Midwest companies such as Caterpillar. (Hear Niala Boodhoo’s report on the outlook for Midwest manufacturing.)
“We are constantly hearing from our customers ‘We need more tires, we need more tires,” Michelin North America Chairman and President Pete Selleck said in an interview with the Journal. “These are very large pieces of equipment and the supply of tires determines their capacity.”
According to the Journal, Caterpillar, the world’s largest maker of construction and mining equipment, has been investing heavily in production capacity in a bid to extend its market-leading position around the world, especially in countries such as China.
The Illinois company expects 2012 sales to be in a range of $68 billion to $72 billion, up from a record $60.1 billion in 2011.
Measuring the success of retraining programs used to be straightforward. You just looked at how many people got better paying jobs. Now the emphasis is shifting from how job seekers benefit to how taxpayers benefit too. That’s because some federal funds for workforce development are shrinking, and local agencies have to do more to make their case.
In the Midwest, we hear a lot about retraining. A lot of the money for retraining and other job services comes from the federal government, through the states, to local programs like this one in Jackson, Michigan.
Sparks fly as Ron Waldon grinds the surface off a steel block. Soon he’ll learn to be a CNC operator– someone who can program computerized milling machines. It’s a hot skill for a guy who’s had a rough few years.
“Aw man, ups and downs. I lost the job, lost the house,” he says.
Temporary work here and there. Nothing steady.
“Suddenly, you’re just not part of society anymore without a job,” says Waldon. “I know I’m not the only one who suffers from the fact that you lose that independence or that self-worth, I guess.”
Todd Debenedet is also retraining.
“You can only mow the lawn so many times, you can only walk the dog so much,” he says. “And getting back to work and being, like he said, a productive society member would be very important.”
Personally important, for sure. But what is the economic impact for the public? There’s a big debate right now about how effective workforce development programs are, how many there should be, and how involved government should get with budgets so tight. Which all led to a near-death experience for the main source of workforce development funding last year.
Ron Painter is CEO of the National Association of Workforce Boards.
“In the last budget cycle that was introduced, the House Republicans zeroed out the Workforce Investment Act. So that was a pretty clear signal that we had a lot of explaining to do,” he says.
It was a wake-up call for Christine Quinn, too.
“Well, after my stomach settled a little bit, I actually started saying, ‘What do we need to do?’” she says.
Quinn is president of South Central Michigan Works!, where 100 thousand people sought job services last year, from just three counties. Their Workforce Investment Act (WIA) funding survived, but not unscathed. And Quinn decided the old performance metrics – employment, wages, job retention — weren’t enough by themselves. She wanted a tool to show whether benefits to the public outweigh costs to the taxpayer.
“Somebody wants to see what that dollar value is,” she says. “It’s not necessarily touchy-feely, it’s not the fact that you see somebody get a job who has who has been struggling for so long, which is important. But we also have to have the hard data too.”
South Central Michigan Works! just released a benefit-cost analysis of their programs for 2009. It says every public dollar spent should generate $1.22 in benefits over a decade.
Christine Quinn is poised to take over as director of Michigan’s overarching Workforce Development Agency. She says she’ll continue to emphasize the importance of data on the state level.
The state of Ohio may go even further. According to workforce development officials there, Ohio’s WIA funding has been cut almost in half over the last five years, a loss of about $80 million. (That’s not including a large, temporary influx of cash from the stimulus package.)
Ohio recently completed a pilot project measuring return on investment for part of its dislocated worker program. This kind of study analyzes not just wages earned and program costs, but also wages sacrificed while participating in the program and reduction in unemployment compensation afterwards. Results from the small pilot showed that participants recouped their investment after two years and taxpayers after five years. Development officials hope to expand the analysis into a longitudinal study.
When it comes to workforce development, return on investment studies can be difficult. Take it from Kevin Hollenbeck who’s done a bunch of them, including for Washington state.
“If I were administrator of the day, I would not do it by return on investment,” he says. “I understand I’m kindof shooting myself in the foot.”
Hollenbeck is vice president and senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo. He says measuring return on investment involves a lot of assumptions about what would’ve happened to people if they had never encountered these programs. Like how much money they would have earned.
That means analysts and policymakers could end up comparing different things. He’d like to see more research on what kind of assistance really helps.
“In my work, we more or less treated the program like a black box,” he says. “People came in, something happened, and then there was a result. And the ‘something happened,’ we really haven’t done a lot of research on what’s best for whom.”
As for outcomes, Kevin Hollenbeck says a rigorous, consistent measurement of plain old earnings is the way to go.
The Department of Labor tracks how much money is spent on workforce development through the Workforce Investment Act. You can see it here.
The U.S. Government Accountability Office has a newish report on innovative collaborations between businesses and local workforce boards.
The GAO also looked at the range of federal employment and training programs out there, which got a temporary boost from stimulus spending.
Jennifer Knightstep was a researcher in the media archives at General Motors until she was laid off in 2008. Her first reaction was fear.
“I panicked for a few minutes, and then I tried to think of what I wanted to do next,” she says. “There’s not a big demand for archivists in Metro Detroit or anywhere else for that matter.”
So instead of trying to get a similar job, Knightstep decided to go in a new direction.
“I thought maybe I should start trying to do what I really wanted to do, which was be a writer.”
When she filed for unemployment, she learned about No Worker Left Behind, a program in Michigan that offered up to $10,000 in tuition for degrees in emerging industries. NWLB was scaled back in 2010 following federal funding cuts.
When most people think about growing fields, freelance writing is not the first job that comes to mind, but Knightstep made it work.
She went back to school and graduated with her associate’s degree in December 2011. She has been working as a freelance writer since November 2009.
“I figured education wouldn’t hurt in my quest to become a writer, so I took advantage of No Worker Left Behind and I started taking college classes,” says Knightstep.
“I had no idea what to expect. To be honest, I was really afraid…I expected to be the oldest person in the room and usually I wasn’t. I expected everything to be difficult and I expected to feel really strange, but it was wonderful, actually,” she says.
Knightstep is now self-employed.
“I’m a freelance writer slash reporter and photographer for a couple of local publications,” she says. ”Last year I finished my first book…and right now I am working on a story for the society of automotive engineers in Detroit.”
For the newly unemployed, she offers this advice: “Take advantage of whatever programs [you] can and be bold from the beginning. The only regret I have is that I spent that couple of weeks being fearful, being timid. I wonder how different things would have been if I was intrepid and bold from the start.”
This story was informed by the Public Insight Network. If you want to learn how to be a part of our network, click here.
April 2nd, 2012
JoAnne Jachyra learned about the Trade Adjustment Assistance (TAA) program when she was laid off from her IT management job in 2009. TAA is a federal program that funds retraining for workers who lose their jobs to international competition.
Jachyra qualified for the funds and used them to go back to school, something she’s always wanted to do. “Ever since I graduated from Michigan State with a degree in astrophysics I had entertained the idea of becoming a teacher,” says Jachyra. “I had to do a process and say ‘OK well here’s what I want to do, here’s how long it’ll take, here’s how much it’ll cost.’ And part of that is they have a list and they say ‘these are the growing professions that you can get trained in because we feel that you will be able to find a job when you are done with that.’” Teaching was on that list.
Jachyra spent a year in an accelerated degree program – the cost was about $3,000 – that was paid for by the TAA. “It didn’t cost me anything other than time and a lot of effort,” says Jachyra.She got her certification to teach high school and middle school math and physics, but finding a job proved more difficult than she had expected. “I seriously thought being certified as a physics and math teacher I should be able to walk into any school in metro Detroit and have a job,” she says.Jachyra spent several months looking for a teaching position before settling at a charter school in the Detroit area.By most accounts, JoAnne Jachyra is a retraining success story. Her degree program led directly into a teaching job. But Jachyra sees things differently. “Charter school teaching, for anyone that’s ever been a teacher will tell you, it’s challenging and difficult, and certainly for a first year teacher maybe not such a good idea,” she says.
She left the charter school in February and has been substitute teaching since. Eventually, she plans on returning to IT management. Jachyra still wants to be a teacher – if the right job opens up – but her experience so far has been disappointing. “I’m not sure I would have pursued a degree in teaching had I known how difficult it would be to find a job once I got it,” she says.
This story was informed by the Public Insight Network. If you want to learn how to be a part of our network, click here.