General Motors announced Monday that it will slash nearly 30,000 of its current 120,000 domestic manufacturing jobs. While the job cuts are sure to be devastating to the nation at large, Michigan’s already frail economy is sure to be hit especially hard. GM and the state must now work to find effective short-term solutions for the laid off workers while continuing to work toward a modern, knowledge-based economy.
There is little doubt that the layoffs will disproportionately affect Michigan; four of the plants to be shut down are located within the state. This kick to the struggling Michigan economy just goes to show what dire straits the state is now in. The heavy manufacturing sector is shrinking, if not dying, and people now need to plan for a future within this framework instead of trying to artificially prop up this industry.
But in the short term, the people who will lose their jobs will need assistance to get back on their feet. Obviously, GM should make good on the medical, pension and severance benefits it owes its former workers. GM is, however, in the midst of a crisis, and may not be able to meet all the needs of these people. Where GM falls short, the state needs to step in and help.
Most importantly, the state needs to make sure Medicaid is alive and robust enough to meet the health concerns of the newly released workers, most of whom are sure to lose their insurance soon after their termination. The Republican-controlled state Legislature was recently very anxious to pass large reductions to Michigan’s Single Business Tax. If Republicans believe the state could have shouldered that loss of revenue, surely they cannot oppose spending a fraction of that amount on basic medical benefits for recently downsized workers as they struggle to find work.
The state also needs to provide transition assistance and job training. Many of these workers have been laboring on the assembly line their entire working lives and possess no marketable skills with which to re-enter the workforce. Clearly it is financially unfeasible to send all of these people to four-year institutions, but the state can still help by providing shorter trade and technical training. This invaluable training can prove to be the difference between having a comfortable middle-class life and having to work several minimum-wage jobs.
In the long term, the situation is more complicated. GM needs to avoid bankruptcy if possible by developing new, more attractive products. The enormous reductions and eliminations that would befall GM pensions, benefits and wages in the event of bankruptcy would be catastrophic for the state and regional economy. On a broader scale, the state economy must be restructured for the future, and this restructuring must include a more educated workforce. Gov. Jennifer Granholm recently stated that there are nearly 75,000 jobs in Michigan that cannot be filled because of a lack of qualified applicants. This statistic can only change through education.
Michigan also needs to develop a strategy to attract even more of these new economy jobs so that highly educated people are not forced to flee the state in order to find work. By placing educated workers in the good jobs that already exist and enticing businesses to move more of these jobs to Michigan in the future, the state can disengage from a manufacturing sector that is slowly bleeding to death.