The ANNALS of the American Academy of Political and Social Science

The convergence of the recent recession, a secular decline in the rate of growth, and the accelerating structural reorientation of the U.S. economy produced serious employment problems in the late 1970s and early 1980s. Since the mid-1970s, plant closings in large manufacturing firms have eliminated over 900,000 jobs a year, with rates of loss doubling in 1980-82 over the previous two-year period. Perhaps more important than the jobs lost are the number and nature of new employment opportunities created. Between 1976 and 1982 large manufacturing firms replaced jobs lost in closings at the rate of only 9 new jobs for each 10 lost. Further, the industries and geographic regions in which businesses are generating new jobs differ markedly from those losing jobs in plant closings and major layoffs. This mismatch in the loci of growth and decline has resulted in pockets of serious economic distress.

Job loss and plant closings have, until recently, been considered part of the inevitable cycle adjustments of economic growth. Since the late 1970s, however, a multifaceted debate has developed relating to the possible permanence of industrial decline in the American Northeast. Postindustrial and product life-cycle theories maintain an optimistic perspective predicting offsetting job gains in new sectors; while capital mobility theory predicts accelerated job loss and long-term depression. Evidence from the New York State Industrial Migration File offers little cause for optimism. Between 1960 and 1980, state job capacity declined by 200,000, a result of both an increase in disinvestment and a decrease in new investment. Contraction took place in every region and industrial sector. There is questionable evidence of compensatory expansion to offset contraction during most years as a consequence of physical changes in plant and equipment investment. Multilocal firms showed a much greater propensity to disinvest than local firms, suggesting support for capital mobility theory.

The current debate concerning the necessity and propriety of establishing an industrial policy for the United States turns, to a significant extent, on the question of whether the nation is undergoing deindustrialization. Using data on aggregate trends in manufacturing employment, Robert Z. Lawrence and others at the Brookings Institution claim that despite widespread plant closings during the 1970s, most employment loss was cyclical in nature and not permanent. In this article, new evidence on individual industries and regions is explored to test again the deindustrialization thesis. The conclusion of the current study is that while aggregate manufacturing employment has remained constant over the past decade, substantial permanent job losses have occurred in key basic industries and in particular regions of the nation. These employment losses pose a serious problem because the economy generally fails to provide comparable jobs in other sectors that can absorb the workers who become displaced.

How do displaced workers cope with job loss? Is the adjustment of workers confronting a shutdown today different from the adjustment of those who were put on the shelf in the mid-1970s? Comparison of longitudinal data from a Mason City, Iowa, meat-packing shutdown in the mid-1970s with responses to similar items from workers displaced when a major automotive supplier firm in Wisconsin closed in 1980 and from respondents who lost their jobs in farm-manufacturing and meat-processing closures in Des Moines, Iowa, in 1981 indicate that job loss is still the plight of the individual worker and his or her immediate family. Workers continue to cut back on expenses, extend their informal network of relatives and friends for employment possibilities, and, where possible, send a spouse into the work force.

Human resource programs that were developed to serve those displaced by plant closings have been fragmented. Participation rates have been low in placement, job search assistance, relocation, and retraining programs, and results have not been particularly positive. Great emphasis was placed upon serving those in need when programs did develop. The fragmentation characteristic of previous policy—or nonpolicy—seems to have undergone considerable organization and rationalization with the advent of the Job Training Partnership Act (JTPA) and the association of several major labor-management displaced worker programs with the federal-state program. This change tends to emphasize placement and to focus upon training exclusively. As a result, not only will disadvantaged workers compete with displaced workers for training resources and jobs, but participation in programs for displaced workers will be encouraged for those who are most advantaged, thus consigning a large number of less-advantaged displaced workers to underemployment, permanent unemployment, and eventual dependence upon income maintenance.

Major structural changes are sweeping the national and world economies. The United States is shifting away from the basic industries and toward an economy based on more specialized production, services, and information exchange. The effects of this shift—unemployment, plant closures, and major reductions in force—disrupt the work force and the communities that support it. The public and private sectors have a stake in developing nondisruptive approaches to plant closures and layoffs and the transition of affected workers to other occupations. The private sector has developed some positive responses, from employment security and profit sharing, to buffering the job transition for workers when no alternatives to termination can be found. Models currently being used are state of the art. Communities have also taken a proactive stance as closures and layoffs threaten their economic survival. The community-based model is very similar to the private sector worker-transition model, except that it features the community in a leadership role. Communities are encouraged to develop an economic crisis plan for use when a major facility closure or layoff occurs.

The American economy is undergoing a fundamental process of industrial restructuring. The manufacturing sector is being reorganized and deindustrialized, the location of capital investment is changing, labor markets are becoming increasingly polarized, and new job-displacing technologies are rapidly being introduced. Although this restructuring process maintains profitability for large corporations, it imposes heavy costs on workers and their communities and adversely affects the nation's long-term economic and social stability. As a consequence of restructuring, concern about job retention and creation is higher now than it has been since the 1930s. However, the authors argue, the current policy responses of liberal, industrial policy advocates and conservative less-government proponents are inadequate because they subordinate the needs of workers and their communities in order to restore the conditions of capital accumulation. The authors outline an alternative strategy based on a new national framework for investment, greater community involvement, and increased worker control and certainty over their own livelihoods.

As the severity of the recent recession mounted so did the debate over what to do about it. Three basic options for policy are being promoted: conservative free-market, liberal industrial, and social welfare. Though the first of these has dominated in the United States, France has relied on an industrial policy, while Sweden has adopted a social welfare emphasis. In comparing the experiences of these three countries it becomes clear that an approach more interventionist than relying on the market is both possible and advisable. But neither the social welfare policy nor the industrial policy can fully address the problem of factory closings. In fact, Sweden is turning to industrial policies to complement their social welfare programs, while France is beginning to address the social welfare issues that accompany economic development. For the United States, the lesson is that the proponents of industrial and social welfare policies not only have more in common than the recent debate would suggest, but that these two groups of reformers must ally with one another if either policy is to be politically viable.

Swedish plant-closure research has evolved from the study of individual, community, and regional consequences to the evaluation of political measures taken, evaluation of future consequences, and the development of counterproposals and alternatives to plant closures and cut-backs. What is occurring in the development of the Swedish manufacturing industry today is not only a decrease in employment and the total number of places of employment, but also a rapid change of production technology stimulating capital-intensive and concentrated production. This article takes up examples from the Swedish food and glass industry. There are several laws that govern plant closures and production cutbacks. The Swedish Codetermination Act has given the trade union new rights to information and negotiation before decisions are made. However, the law still reserves for the employer the right to decide. The article concludes with a discussion of the possibilities to form union counterproposals with examples from the Swedish Food Workers Union's industry policy program.

This article deals with certain aspects of British economic decline. After a short historical review of British economic performance, the phenomenon of deindustrialization is examined. Two major economic theories of deindustrialization are discussed alongside empirical evidence of the recent, rapid decline in Britain's manufacturing base and its worsening trade performance in goods and services. The effects of multinational corporations are also briefly examined. In the final section of the article, attention is given to some of the social and political aspects of deindustrialization. In particular, evidence on poverty, unemployment, and living standards in contemporary Britain is discussed in relation to a sociological model that attempts to explain certain apparent paradoxes of British society. This model is an extension of T. H. Marshall's pioneering work on citizenship and social class and serves to highlight both the continuing stabilizing effects of the modern status order and the possibility of further clashes between the competing claims of citizenship and social class.

Responding to the severe recession in the U.S. automobile industry in the late 1970s, Ford Motor Company and the United Automobile Workers negotiated, as part of their 1982 national agreement, innovative provisions to deal with the problems faced by redundant workers. This article outlines the basic components of the UAW-Ford model for plant closings and describes the implementation of the model at a San Jose site. The UAW-Ford approach is an example of best practice in the area of joint labor-management cooperation when dealing with the human resource problems of a plant closure. Among the lessons learned from the San Jose experience are the value of early advance notice; the importance of an external catalyst and source of technical assistance in getting the program under way and moving in the right direction; the necessity of good union and management leadership; the importance of on-site delivery of services to the displaced workers; the importance of frequent communication with the workers; the value of having a flexible, readily available resource base to underpin the readjustment program; and the employer's sense of responsibility in discharging obligations to the dislocated work force.