Will Americans Work For $5 a Day?

By GISELA BOLTE William Brock

Q. Do we have a work-force crisis?

A. Yes, but it pales in comparison with the management crisis. Workers work with the tools they are given. Workers do not reorganize the workplace. Managers do. It has to tell us something if Japanese and German and Swiss firms come to the U.S., put up a plant, hire American workers and produce a competitive product that is better than one produced in an American plant. It happens too often.

We can make our workplace so much more fun, and we can get rid of so much overhead. We have as much bureaucracy in some of our businesses as we have in Washington, because by de-emphasizing the quality of workers, we have to increase the number of supervisors. What a waste.

Q. What kind of labor force does America need?

A. All my life people have talked about the global economy in prospect. Suddenly it is here. We are moving in the most fundamentally different world in history, a world in which individual nations are increasingly vulnerable. Governments are going to be faced with increasing pressures to deal with issues like global growth or the environment or drugs that are almost invariably subject only to an international solution.

In economic terms, the world is moving beyond multinationals to firms that are truly transnational. The successful firm will be one that is very fast on its feet, capable of short production runs, short product life cycles, very creative, very flexible. That will drive them to have a work force that is equally flexible and responsive and that can adapt to rapidly and even radically changing economic demands.

Q. We have had economic growth for seven years. Why worry?

A. We increased our production significantly. We did it in part by investing in more productive equipment. But the biggest single source of growth came from the surge of women, young people and immigrants into the work force. That pool of low-skill, low-wage labor is going to dry up. If we are going to have growth, it has to come from greater human productivity.

Q. And what has happened to productivity?

A. The rate of improvement is half of what it was 20 years ago. The only reason family income is up is because we've got two-earner families. Wages in real terms are lower today than in 1973. Business tried to pull wages down and put in laborsaving machinery because so many workers who are coming in from our educational system cannot read and write. The easy answer is to buy the most idiot-proof machinery so business can continue to compete.

Today every country in the world can buy the same machinery. If there are people in other parts of the world who will work for $5 a day and they have the same equipment as Americans who want $10 or $15 an hour, either we have to change the way people work here -- not only work harder but smarter, more effectively -- or we have to compete on the basis of wages. The choice is between high skills and low wages. We seem to be continuing to compete on the basis of wages, which means that the effort will constantly be to pull wages down instead of building skills up. We are making the wrong choice.

Q. What is the consequence of going the low-wage route?

A. We take on the characteristics of a Third World country after a while. We will gradually have less and less net real income in the U.S. Our savings will continue to be inadequate, and businesses will have to either shut down because Americans won't work for Third World wages or go overseas for their production. The net effect is an economy that goes downhill very fast.

Q. What are businesses doing about upgrading the skills of their workers?

A. Less than 1% of our businesses are spending 95% of the training money. Most are doing very little, and the ones that are doing very much are using their funds to train management. There is almost nothing in most companies for the great majority of workers, but the workplace is changing underneath their feet. The average young person coming out of high school today will have at least four to six jobs in his working life, two to three different careers. If workers are given continuing training and education by the firms they work for, that is not going to be a problem. If they are not, we are going to leave 15% to 30% off to the side of the road every year. We proposed in our Commission on the Skills of the American Workforce that those firms that do not train their workers pay a 1% tax so that we as a country can train them and that those employees are not disadvantaged by working for those companies.

Q. Is this the fault of the public schools?

A. We have put our emphasis on the college bound, who are 30% of our young people. We have the finest university system. We have public education at the elementary and secondary level that ranks below every industrial competitor we have in the world. Everybody knows what it takes to get into college. Has anybody ever told a teacher what it takes to be productive if you don't go to college? The answer is no. We have not dignified alternatives to college. We are the only country in the industrial world that says to 1 out of every 4 of its young people, We are going to let you drop out of sight; we are not going to give you the tools to be productive. No wonder they drop out, because the market signal says to them, We don't care about you, so leave school. If you haven't got anything, $4 an hour sounds like a lot of money. The trouble is that they are still making $4 an hour when they are 30, and then they cannot feed and clothe their own children.

Q. Why haven't the schools made better use of the money they have received?

A. Education is the most backward single institution in all the U.S. I don't know of an industry that spends less money on research and development. It is not for lack of money. It is a lack of intelligence and will and competence. It is a bureaucratic inertia that is unbelievable and inexcusable. Between 38 cents and 41 cents of our education dollar gets to the classroom. That is an act of irrationality. We are not putting our resources where the kids are. In the city of New York there are more school administrators than there are in % all of France. In the state of New York there are more administrators than there are in all of the European Community, and the E.C. has 12 countries and 320 million people.

Q. You don't sound very optimistic.

A. It is way too early to condemn the U.S. to doom. We are dealing from strength, not weakness. We are still the most productive country in the whole world, in part because we are efficient in other things like distribution, marketing and all the services we have that are world class. We invested more in the past, and we are still living off those investments. We have the capacity to change, but it takes a conscious decision, and change is painful. The storm clouds are out there.

One of the nice things that has happened is that we have got international competition, and it is sending us urgent signals to get with it. The good companies have heard the message. Look at Xerox, Motorola. You can just see the surging excitement of those companies. They don't take any garbage. They are not going to take any unfair competition from overseas. They are willing to fight for their rights. But they have no fear about competing on any playing field anywhere with anybody, because they think they and their people are that good and they are willing to commit resources to research and development. But they are the minority, and that's the concern.