Friday, April 02, 2004
MSNBC - Forecasters scale back job hopes
After months of overestimating job growth, cautious forecasters have lowered their sights and are looking for only a modest increase in payrolls Friday, when the government delivers its monthly update on employment.
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Even if the closely watched report comes in stronger than analysts are willing to predict, it will be far too soon to say whether the economy has reverted to the pattern of robust hiring typically seen in an expansion. And a report that falls short of expectations would be “very disconcerting” to financial markets, said Mark Zandi, chief economist of Economy.com, a forecasting firm.
Economists generally are looking for the Labor Department to report that non-farm payrolls grew by 100,000 in March, according to Thomson Financial. That falls short of the 150,000 typically needed just to keep up with growth in the nation’s work force but would be substantially better than the dismal 21,000 jobs added in February.
The unemployment rate is expected to remain unchanged at 5.6 percent.
..............................................................
That these figures are a surprise to anyone is an indication as to how out of touch the politicians and those economists who pander to them are.
After months of overestimating job growth, cautious forecasters have lowered their sights and are looking for only a modest increase in payrolls Friday, when the government delivers its monthly update on employment.
advertisement
Even if the closely watched report comes in stronger than analysts are willing to predict, it will be far too soon to say whether the economy has reverted to the pattern of robust hiring typically seen in an expansion. And a report that falls short of expectations would be “very disconcerting” to financial markets, said Mark Zandi, chief economist of Economy.com, a forecasting firm.
Economists generally are looking for the Labor Department to report that non-farm payrolls grew by 100,000 in March, according to Thomson Financial. That falls short of the 150,000 typically needed just to keep up with growth in the nation’s work force but would be substantially better than the dismal 21,000 jobs added in February.
The unemployment rate is expected to remain unchanged at 5.6 percent.
..............................................................
That these figures are a surprise to anyone is an indication as to how out of touch the politicians and those economists who pander to them are.
Spotts, at least, has found a new occupation (count that as one job created) by virtue of the continuing loss of American jobs.
Job Losses
By D. David Beckman
WashTech News
Last May, television producer Greg Spotts puzzled over a question he couldn't get out of his mind. With the U.S. economy supposedly on the rebound, why were so many of his friends out of work?
So Spotts, 36, began to look into it. An hour of research before work one day turned into several hours over as many days. Spotts could see that something big, something on a global scale was happening. He learned that hundreds of thousands of the jobs that had been lost in the United States were showing up in places such as Mexico, China and India.
Filmmaker Greg Spotts during a recent Seattle visit. Photo by D. David Beckman
Although there was plenty of anecdotal information about the job shifting, which American businesses casually termed "offshoring" or "nearshoring," Spotts found it hard to find data that measures the extent of it. Still, the job shifting issue continued to pull at him. Within weeks, the research project morphed into an avocation. It absorbed all of his free time and slowly began to crowd his day job. Personal relationships began to suffer, but by then Spotts had developed a vision. He had a story he needed to tell. He would tell it, he decided, in a documentary film.
Spotts' fiancé is a doctor who knows something about dedication to a calling. Late last year, she issued an ultimatum. Either give it up, she told him, or go and do the film.
She and Spotts' parents pooled some money and presented Spotts with a state of the art digital movie camera. Spotts left his job, which included producing segments of "The Real World" for MTV. Ironically, it was indeed the real world he yearned to chronicle, in particular, how recent global trade policies such as NAFTA had wrecked havoc on Third World economies, as well as how they were affecting the world's largest economy.
He found the issue complex, but his research so far has brought him to this conclusion: new technologies have allowed businesses in highly industrialized countries like the United States to move jobs to other locales abroad where workers are plentiful and cheap. First it was the loss of manufacturing jobs in the early 1980s, more than 2 million of which were lost and never returned.
A similar phenomenon occurred again twenty years later. This time, nearly 3 million technology and white-collar jobs moved abroad, likely never to return. And there was more irony — these were the jobs for which many who were victims of the first job exodus had retrained.
After six months of research, Spotts began shooting in January. In Los Angeles, near his Santa Monica home, he interviewed garment workers whose jobs have moved to China. In Northern California, he heard from tech workers whose jobs are now being done in India.
In February, Spotts covered a protest march in Juarez, Mexico, where hundreds gathered in front of the Chihuahua state attorney general’s office. Spotts has described what has happened in Juarez as a "cautionary tale," where modern economic realties clash with archaic cultural norms. Traditionally, Mexican women who work for a paycheck are often judged to have low moral standards and are considered fair game for violence, or even murder. The protestors, however, were finally speaking out about the murders of as many as 320 Mexican women that have occurred since 1994. This is the same year American businesses such as General Electric and DuPont set up assembly plants, known as “maquiladoras,” to take advantage of cheap Mexican labor. The 45-hour work week jobs are usually taken by young women, who are paid on average less than $1.25 and hour.
While the movement of U.S. corporations south of the border might have been thought to help create a budding middle class in the communities where the factories were located, Spotts said he saw little evidence of it. The municipal infrastructure has not kept pace with the growth. Plumbing, water and sewer projects lag behind. There are few environmental protections. The police force has not grown to keep pace with population increases. Spotts said he perceived a general sense of lawlessness in the city.
One week later, Spotts was in Kannapolis, North Carolina, where the Pillowtex Corp. closed down a year ago, wiping out over 1,500 jobs paying $10 to $15 an hour in one day. Once known as Fieldcrest Cannon, the company’s layoffs devastated the town of 36,000. The closure came as foreign textile manufacturers in countries such as India could manufacture and ship to the United States the same type of goods for about half the cost.
Spotts was interested in how the layoffs affected other members of the community on a personal level who were not employed by the factory.
"I want to talk to a teacher," Spotts told the Kannapolis Tribune. "I want to talk to someone in retail."
Early in March, Spotts was in Seattle, where he interviewed laid-off tech and aerospace workers. He also filmed a high school class during a discussion about whether globalization and offshore outsourcing was affecting their future career choices. Several teens said they had wanted to earn degrees in computer science after graduation, but worries that they would find a closed job market have dissuaded them.
By early April, Spotts hopes to have enough footage to spend the summer editing the footage for his film, which has a working title of "American Jobs."
"I've interviewed over 60 people in 40 locations," Spotts said recently. Besides Seattle, Los Angeles and Juarez, Spotts has traveled to New York, Boston, Kannapolis, North Carolina and Washington D.C.
His goal is to release the movie on DVD by Labor Day, and then he plans to travel on a nationwide screening tour in September and October. Spotts also plans to screen a preliminary, work-in-progress version of the documentary in June at an academic conference on Long Island.
Spotts said his focus has been primarily on recently laid-off blue collar and white collar workers "because their jobs can be done cheaper in another country."
In addition to textile, garment, software and aerospace workers, Spotts has interviewed economists, professors, clergymen, politicians, social service providers, human rights activists and two members of Congress.
Spotts said he wants those who see his film to view the issues as non-partisan and human, not just American.
"It represents my own personal exploration of structural changes in the American economy, blending history and economics with an 'up close and personal' look at impacted families and communities," said Spotts. "I'm meeting some amazing people in my travels, people who share their personal stories and their views about where we are headed as a nation."
Spotts, whose background also includes promoting popular musicians, said he wants to compose a companion soundtrack to the film, including some original compositions inspired by situations depicted in the movie.
"Think 'Dead Man Walking' as an example," said Spotts.
Washington Alliance of Technology Workers (WashTech) President Marcus Courtney said he wants the union to help market the DVD movie. Spotts said he likes the idea.
"I intend to involve progressive organizations as distribution partners, possibly using the DVD as a gift with donation or gift with subscription," such as was done with the recent Iraq documentary "The Truth Uncovered," by the Web-based organization MoveOn.org.
Spotts said he will send out a series of newsletters about the film as it develops.
"Comments, ideas, suggestions and diatribes are welcome," he said.
And what of the future for Spotts?
"This is it," Spotts said. "I want to be a filmmaker."
David Beckman is a freelance journalist who covers tech labor issues for WashTech News. You can send him your comments at dbeckman@davidbeckman.com
Job Losses
By D. David Beckman
WashTech News
Last May, television producer Greg Spotts puzzled over a question he couldn't get out of his mind. With the U.S. economy supposedly on the rebound, why were so many of his friends out of work?
So Spotts, 36, began to look into it. An hour of research before work one day turned into several hours over as many days. Spotts could see that something big, something on a global scale was happening. He learned that hundreds of thousands of the jobs that had been lost in the United States were showing up in places such as Mexico, China and India.
Filmmaker Greg Spotts during a recent Seattle visit. Photo by D. David Beckman
Although there was plenty of anecdotal information about the job shifting, which American businesses casually termed "offshoring" or "nearshoring," Spotts found it hard to find data that measures the extent of it. Still, the job shifting issue continued to pull at him. Within weeks, the research project morphed into an avocation. It absorbed all of his free time and slowly began to crowd his day job. Personal relationships began to suffer, but by then Spotts had developed a vision. He had a story he needed to tell. He would tell it, he decided, in a documentary film.
Spotts' fiancé is a doctor who knows something about dedication to a calling. Late last year, she issued an ultimatum. Either give it up, she told him, or go and do the film.
She and Spotts' parents pooled some money and presented Spotts with a state of the art digital movie camera. Spotts left his job, which included producing segments of "The Real World" for MTV. Ironically, it was indeed the real world he yearned to chronicle, in particular, how recent global trade policies such as NAFTA had wrecked havoc on Third World economies, as well as how they were affecting the world's largest economy.
He found the issue complex, but his research so far has brought him to this conclusion: new technologies have allowed businesses in highly industrialized countries like the United States to move jobs to other locales abroad where workers are plentiful and cheap. First it was the loss of manufacturing jobs in the early 1980s, more than 2 million of which were lost and never returned.
A similar phenomenon occurred again twenty years later. This time, nearly 3 million technology and white-collar jobs moved abroad, likely never to return. And there was more irony — these were the jobs for which many who were victims of the first job exodus had retrained.
After six months of research, Spotts began shooting in January. In Los Angeles, near his Santa Monica home, he interviewed garment workers whose jobs have moved to China. In Northern California, he heard from tech workers whose jobs are now being done in India.
In February, Spotts covered a protest march in Juarez, Mexico, where hundreds gathered in front of the Chihuahua state attorney general’s office. Spotts has described what has happened in Juarez as a "cautionary tale," where modern economic realties clash with archaic cultural norms. Traditionally, Mexican women who work for a paycheck are often judged to have low moral standards and are considered fair game for violence, or even murder. The protestors, however, were finally speaking out about the murders of as many as 320 Mexican women that have occurred since 1994. This is the same year American businesses such as General Electric and DuPont set up assembly plants, known as “maquiladoras,” to take advantage of cheap Mexican labor. The 45-hour work week jobs are usually taken by young women, who are paid on average less than $1.25 and hour.
While the movement of U.S. corporations south of the border might have been thought to help create a budding middle class in the communities where the factories were located, Spotts said he saw little evidence of it. The municipal infrastructure has not kept pace with the growth. Plumbing, water and sewer projects lag behind. There are few environmental protections. The police force has not grown to keep pace with population increases. Spotts said he perceived a general sense of lawlessness in the city.
One week later, Spotts was in Kannapolis, North Carolina, where the Pillowtex Corp. closed down a year ago, wiping out over 1,500 jobs paying $10 to $15 an hour in one day. Once known as Fieldcrest Cannon, the company’s layoffs devastated the town of 36,000. The closure came as foreign textile manufacturers in countries such as India could manufacture and ship to the United States the same type of goods for about half the cost.
Spotts was interested in how the layoffs affected other members of the community on a personal level who were not employed by the factory.
"I want to talk to a teacher," Spotts told the Kannapolis Tribune. "I want to talk to someone in retail."
Early in March, Spotts was in Seattle, where he interviewed laid-off tech and aerospace workers. He also filmed a high school class during a discussion about whether globalization and offshore outsourcing was affecting their future career choices. Several teens said they had wanted to earn degrees in computer science after graduation, but worries that they would find a closed job market have dissuaded them.
By early April, Spotts hopes to have enough footage to spend the summer editing the footage for his film, which has a working title of "American Jobs."
"I've interviewed over 60 people in 40 locations," Spotts said recently. Besides Seattle, Los Angeles and Juarez, Spotts has traveled to New York, Boston, Kannapolis, North Carolina and Washington D.C.
His goal is to release the movie on DVD by Labor Day, and then he plans to travel on a nationwide screening tour in September and October. Spotts also plans to screen a preliminary, work-in-progress version of the documentary in June at an academic conference on Long Island.
Spotts said his focus has been primarily on recently laid-off blue collar and white collar workers "because their jobs can be done cheaper in another country."
In addition to textile, garment, software and aerospace workers, Spotts has interviewed economists, professors, clergymen, politicians, social service providers, human rights activists and two members of Congress.
Spotts said he wants those who see his film to view the issues as non-partisan and human, not just American.
"It represents my own personal exploration of structural changes in the American economy, blending history and economics with an 'up close and personal' look at impacted families and communities," said Spotts. "I'm meeting some amazing people in my travels, people who share their personal stories and their views about where we are headed as a nation."
Spotts, whose background also includes promoting popular musicians, said he wants to compose a companion soundtrack to the film, including some original compositions inspired by situations depicted in the movie.
"Think 'Dead Man Walking' as an example," said Spotts.
Washington Alliance of Technology Workers (WashTech) President Marcus Courtney said he wants the union to help market the DVD movie. Spotts said he likes the idea.
"I intend to involve progressive organizations as distribution partners, possibly using the DVD as a gift with donation or gift with subscription," such as was done with the recent Iraq documentary "The Truth Uncovered," by the Web-based organization MoveOn.org.
Spotts said he will send out a series of newsletters about the film as it develops.
"Comments, ideas, suggestions and diatribes are welcome," he said.
And what of the future for Spotts?
"This is it," Spotts said. "I want to be a filmmaker."
David Beckman is a freelance journalist who covers tech labor issues for WashTech News. You can send him your comments at dbeckman@davidbeckman.com
Tuesday, March 30, 2004
MSN Hotmail - More Useful Everyday
From the Christian Science Monitor
Where job drain is biggest (it's not Ohio)
In percentage terms, Massachusetts tops the list of job-losing states since 2001
By Noel C. Paul | Staff writer of The Christian Science Monitor
NORTH ANDOVER, MASS. – Here along Highway 495, a crescent of asphalt arching around Boston's suburbs, the effects of large-scale layoffs the past four years are visible from local restaurants to defunct car washes. When Lucent Technologies laid off close to 3,000 workers here between 2001 and 2002, half a mile away the lunch crowd at the Loft Restaurant and Bar thinned to a tiny gaggle. Business at the local car wash nose-dived.
Development of a nearby strip mall stopped. "Lucent's employees were the heart of a lot of business here," says Loft owner Jane Cassidy, gazing at the restaurant's mahogany bar. Lost jobs, especially in high-tech manufacturing, have become as familiar here as bad driving and Red Sox boosterism.
The job-drain problem runs nationwide, of course, with some 2.3 million more jobs lost than gained since 2001. But some states have been hit harder than others, and by one measure Massachusetts tops the list. It has lost a higher percentage of jobs the past three years - 6 percent - than any other state, according to data released this month by the Labor Department.
The reasons here and in other hardest-hit states are varied, and suggest why the job issue is both at the centerpiece of the presidential campaign and difficult for politicians to solve. Outsourcing, enemy No. 1 in current discussions of the job dearth, is part of the problem. Lucent's jobs, for example, went to China and Canada. Meanwhile, if manufacturers aren't moving work offshore, they are learning to produce more efficiently at home, shedding workers in the process.
But there are other factors at work. Corporate scandals. The 9/11 attacks. Even drought. And as happened in North Andover, cutbacks at one large employer ripple outward in local economies, affecting small business and consumer buying.
"This isn't just about outsourcing overseas as many people are saying," says Doug Woodward, an economics professor at the University of South Carolina. "This is a complex issue that varies state to state."
Consider a few of the states that have lost jobs: Massachusetts, Colorado, Ohio, Illinois, and South Carolina.
Ripples of the high-tech bust
In Massachusetts, job losses are rooted in the woes of the very industries that made the state an engine of the new economy during the '90s.
The decline of high-tech, prompted largely by a bursting stock market bubble in 2001, hit the state's information-based economy with inordinant force.
"The customers we serve got very conservative about how much they were willing to spend for our equipment," says Mary Wark, a Lucent spokesperson.
In addition to outsourcing some work overseas, the company also began working with contractors who paid their employees part-time wages of $9 compared to the minimum of $16 to $25 they received from Lucent, says Gary Nilsson, who heads the local Communication Workers of America union here.
Ohio has also seen a big loss of jobs, but it exemplifies another side of the nationwide trend in manufacturing. The state is known for manufacturing heavy durable goods like appliances and automobiles. Jobs have leaked from these industries for several decades, largely because of pressure overseas.
But the 3.8 percent job decline in Ohio since 2001 was based primarily on factories' investments in better technology during the late 1990s. When the recession came, factories were able to increase productivity while still laying off thousands.
"Companies in leaner times often start applying new technology," says Keith Ewald, head of the bureau of labor market information in Ohio.
Leaner times in services, too
Illinois also took a hit in manufacturing, but that's just part of the reason it lost 3.7 percent of its workforce since 2001. The collapse of accounting firm Arthur Andersen, based in Chicago, left thousands unemployed. American Airlines and United Airlines have each faced serious setbacks recently, including layoffs and even rumored bankruptcies. The purchase of Bank One by Morgan Stanley has led to a thinning of several businesses tied into financial services in Chicago.
9/11 and consumers
Colorado lost more than 4 percent of its workforce during the past three years for a variety of reasons. Most important: The state was a major hub of the telecommunications industry, where fiber-optic firms like Level Three, Quest, and Time-Warner Telecom slowed their pace of construction as the promise of a vast revenue stream dimmed. The acts of terror on Sept. 11 also played a role. Tourism fell sharply in Colorado after 9/11, because so many visitors get to the state by air. A long drought and a series of fires in 2002 also depressed tourism.
The cumulative effect dampened the state's population boom of about 2 to 3 percent a year through much of the '90s. That prompted homebuilding - a key bright spot in much of the US economy - to slacken.
"With fewer jobs here, there was less migration, and then less construction, and that led to another loss of jobs," says Rich Wobbekind, a business professor at the University of Colorado.
Fewer state government jobs
In South Carolina, it had been known for several years that apparel industry was failing because of Chinese competition. But Chinese competition has evolved to the point that countries like Mexico have sought out other industries in which to compete because they, too, are losing to China. Now another key South Carolina industry, auto parts, faces competition from Mexico.
New efficiencies in the chemical and paper industries have also made many workers obsolete. And as in other states, South Carolina's state budget woes have led to a freeze on government salaries and in hiring.
Fewer parties at The Loft
In North Andover, workers earning part-time wages after getting laid off are having a hard time making ends meet. One recent study found that a wage of no less than $22 an hour is needed to afford a two-bedroom apartment. The high-cost of living here has chased many of Lucent's former workers out of state, says Nillson, looking for work in the South and Southwest where rents are lower and hiring is up.
And like in so many communities that have seen employment pillars crumble, what is noticeable is not only the lack of jobs, but a shaken sense of community.
The Loft, says Ms. Cassidy, once was the site of near-weekly parties celebrating job promotions and growing stock options. Now, there's rarely a reason to hire a DJ, and faces that were familiar for more than 20 years are rarely seen. Says Cassidy: "They're not going to drive up here to say 'hi' if they don't have work to do."
SCOTT WALLACE - STAFF
SOURCE: US LABOR DEPARTMENT
From the Christian Science Monitor
Where job drain is biggest (it's not Ohio)
In percentage terms, Massachusetts tops the list of job-losing states since 2001
By Noel C. Paul | Staff writer of The Christian Science Monitor
NORTH ANDOVER, MASS. – Here along Highway 495, a crescent of asphalt arching around Boston's suburbs, the effects of large-scale layoffs the past four years are visible from local restaurants to defunct car washes. When Lucent Technologies laid off close to 3,000 workers here between 2001 and 2002, half a mile away the lunch crowd at the Loft Restaurant and Bar thinned to a tiny gaggle. Business at the local car wash nose-dived.
Development of a nearby strip mall stopped. "Lucent's employees were the heart of a lot of business here," says Loft owner Jane Cassidy, gazing at the restaurant's mahogany bar. Lost jobs, especially in high-tech manufacturing, have become as familiar here as bad driving and Red Sox boosterism.
The job-drain problem runs nationwide, of course, with some 2.3 million more jobs lost than gained since 2001. But some states have been hit harder than others, and by one measure Massachusetts tops the list. It has lost a higher percentage of jobs the past three years - 6 percent - than any other state, according to data released this month by the Labor Department.
The reasons here and in other hardest-hit states are varied, and suggest why the job issue is both at the centerpiece of the presidential campaign and difficult for politicians to solve. Outsourcing, enemy No. 1 in current discussions of the job dearth, is part of the problem. Lucent's jobs, for example, went to China and Canada. Meanwhile, if manufacturers aren't moving work offshore, they are learning to produce more efficiently at home, shedding workers in the process.
But there are other factors at work. Corporate scandals. The 9/11 attacks. Even drought. And as happened in North Andover, cutbacks at one large employer ripple outward in local economies, affecting small business and consumer buying.
"This isn't just about outsourcing overseas as many people are saying," says Doug Woodward, an economics professor at the University of South Carolina. "This is a complex issue that varies state to state."
Consider a few of the states that have lost jobs: Massachusetts, Colorado, Ohio, Illinois, and South Carolina.
Ripples of the high-tech bust
In Massachusetts, job losses are rooted in the woes of the very industries that made the state an engine of the new economy during the '90s.
The decline of high-tech, prompted largely by a bursting stock market bubble in 2001, hit the state's information-based economy with inordinant force.
"The customers we serve got very conservative about how much they were willing to spend for our equipment," says Mary Wark, a Lucent spokesperson.
In addition to outsourcing some work overseas, the company also began working with contractors who paid their employees part-time wages of $9 compared to the minimum of $16 to $25 they received from Lucent, says Gary Nilsson, who heads the local Communication Workers of America union here.
Ohio has also seen a big loss of jobs, but it exemplifies another side of the nationwide trend in manufacturing. The state is known for manufacturing heavy durable goods like appliances and automobiles. Jobs have leaked from these industries for several decades, largely because of pressure overseas.
But the 3.8 percent job decline in Ohio since 2001 was based primarily on factories' investments in better technology during the late 1990s. When the recession came, factories were able to increase productivity while still laying off thousands.
"Companies in leaner times often start applying new technology," says Keith Ewald, head of the bureau of labor market information in Ohio.
Leaner times in services, too
Illinois also took a hit in manufacturing, but that's just part of the reason it lost 3.7 percent of its workforce since 2001. The collapse of accounting firm Arthur Andersen, based in Chicago, left thousands unemployed. American Airlines and United Airlines have each faced serious setbacks recently, including layoffs and even rumored bankruptcies. The purchase of Bank One by Morgan Stanley has led to a thinning of several businesses tied into financial services in Chicago.
9/11 and consumers
Colorado lost more than 4 percent of its workforce during the past three years for a variety of reasons. Most important: The state was a major hub of the telecommunications industry, where fiber-optic firms like Level Three, Quest, and Time-Warner Telecom slowed their pace of construction as the promise of a vast revenue stream dimmed. The acts of terror on Sept. 11 also played a role. Tourism fell sharply in Colorado after 9/11, because so many visitors get to the state by air. A long drought and a series of fires in 2002 also depressed tourism.
The cumulative effect dampened the state's population boom of about 2 to 3 percent a year through much of the '90s. That prompted homebuilding - a key bright spot in much of the US economy - to slacken.
"With fewer jobs here, there was less migration, and then less construction, and that led to another loss of jobs," says Rich Wobbekind, a business professor at the University of Colorado.
Fewer state government jobs
In South Carolina, it had been known for several years that apparel industry was failing because of Chinese competition. But Chinese competition has evolved to the point that countries like Mexico have sought out other industries in which to compete because they, too, are losing to China. Now another key South Carolina industry, auto parts, faces competition from Mexico.
New efficiencies in the chemical and paper industries have also made many workers obsolete. And as in other states, South Carolina's state budget woes have led to a freeze on government salaries and in hiring.
Fewer parties at The Loft
In North Andover, workers earning part-time wages after getting laid off are having a hard time making ends meet. One recent study found that a wage of no less than $22 an hour is needed to afford a two-bedroom apartment. The high-cost of living here has chased many of Lucent's former workers out of state, says Nillson, looking for work in the South and Southwest where rents are lower and hiring is up.
And like in so many communities that have seen employment pillars crumble, what is noticeable is not only the lack of jobs, but a shaken sense of community.
The Loft, says Ms. Cassidy, once was the site of near-weekly parties celebrating job promotions and growing stock options. Now, there's rarely a reason to hire a DJ, and faces that were familiar for more than 20 years are rarely seen. Says Cassidy: "They're not going to drive up here to say 'hi' if they don't have work to do."
SCOTT WALLACE - STAFF
SOURCE: US LABOR DEPARTMENT
Monday, March 22, 2004
An Opposing View on Corporate Social Responsibility
March 22, 2004
The Economist’s Matthew Bishop believes corporate social responsibility programs are bad for both businesses and under-developed communities.
Mar. 22, 2004 Issue
by Manda Salls
In a day that celebrated social responsibility and corporate virtue, one speaker offered a counter view by calling such programs "a complete fig leaf" and saying they can do more harm than good.
Matthew Bishop, business editor of The Economist, said company social responsibility initiatives could diminish shareholder returns, distract business leaders from their focus, and often allow companies to continue bad behavior in the shadows.
"Are companies actually socially irresponsible? I think the overwhelming message is that they are not," said Bishop at the 5th Annual Social Enterprise Conference, held March 6 at Harvard Business School. "It has been the process of people seeking to make profit, and the expansion of an economic system where that pursuit of profit has been possible, that has made the world fantastically more wealthy than anyone thought possible, even thirty or forty years ago."
In the end, pressure put on businesses by non-governmental organizations and other advocates to create social as well as financial benefit may have the opposite effect of what is intended. Because of media attention, Bishop said, many companies are beginning to feel it is better to pull their factories out of countries where there is desperate poverty, rather than risk being seen operating at standards below what you might expect in, say, Massachusetts.
"It is troubling to see companies accused of treachery for trying to be economically efficient," he told the audience, which largely appeared to disagree with his comments.
Recalling his recent experience at the World Economic Forum in Davos, Switzerland, in February, Bishop said that CSR proponents have terrified the CEOs of the world. Nestlé CEO Peter Brabeck-Letmathe was the only chief executive willing to say for the record that the primary role of the company is long- or medium-term profit maximization to benefit shareholders. "All of the other chief executives with whom I spoke said they thought he was completely mad to get up and say that in a public forum," Bishop said. But privately they agreed with him.
On the defensive
Companies are funding CSR initiatives not because they are in the best interest of the company or shareholders but to get NGOs off their backs, Bishop said. "Bad press has put everyone on the defensive."
In addition, there is no guarantee that cooperating with NGOs buys a company any long-term reputation protection, he said. Both Nestlé and Nike have spent millions to improve social conditions in their factories, yet get little credit in the press because they work outside of the CSR movement, Bishop said.
It is troubling to see companies accused of treachery for trying to be economically efficient.
— Matthew Bishop, The Economist
Bishop criticized the media for contributing to the problem. Media companies are out to make a profit, and many have cut back on foreign coverage. "You've got a group of people who are not well paid, who are not in the same mindset as people who work in companies, and who haven't really been exposed to the realities of what corporate life is like."
NGOs often feed journalists stories of supposed corporate malfeasance, which the reporters are happy to print without much on-the-scene checking. "They are desperate to get noticed because your main professional reward as a journalist… is to get your name in lights by saying something interesting. So there is a tremendous appetite for powerful stories."
Another worrying issue, he said, is that the climate for open debate about free trade and the business pursuit of profit is being destroyed.
As a remedy, Bishop said the media and the public should start putting pressure back on governments to improve labor and social issues. In effect, we are letting government and politicians off the hook by pressuring the companies we work for and invest in to take on additional financial and social burdens.
Bishop compared using company money to further socially responsible causes with a CEO deciding to buy a corporate jet. The executives shouldn't be spending shareholder money on things that aren't directly related to the bottom line, Bishop said.
In a world where government/NGO's and business each have full responsibility for their domains, Bishop's view would be right on target. However, in the US, where business and the White House are one and the same, and neither acknowledges social responsibility as their domain, Bishop's point of view is naive.
March 22, 2004
The Economist’s Matthew Bishop believes corporate social responsibility programs are bad for both businesses and under-developed communities.
Mar. 22, 2004 Issue
by Manda Salls
In a day that celebrated social responsibility and corporate virtue, one speaker offered a counter view by calling such programs "a complete fig leaf" and saying they can do more harm than good.
Matthew Bishop, business editor of The Economist, said company social responsibility initiatives could diminish shareholder returns, distract business leaders from their focus, and often allow companies to continue bad behavior in the shadows.
"Are companies actually socially irresponsible? I think the overwhelming message is that they are not," said Bishop at the 5th Annual Social Enterprise Conference, held March 6 at Harvard Business School. "It has been the process of people seeking to make profit, and the expansion of an economic system where that pursuit of profit has been possible, that has made the world fantastically more wealthy than anyone thought possible, even thirty or forty years ago."
In the end, pressure put on businesses by non-governmental organizations and other advocates to create social as well as financial benefit may have the opposite effect of what is intended. Because of media attention, Bishop said, many companies are beginning to feel it is better to pull their factories out of countries where there is desperate poverty, rather than risk being seen operating at standards below what you might expect in, say, Massachusetts.
"It is troubling to see companies accused of treachery for trying to be economically efficient," he told the audience, which largely appeared to disagree with his comments.
Recalling his recent experience at the World Economic Forum in Davos, Switzerland, in February, Bishop said that CSR proponents have terrified the CEOs of the world. Nestlé CEO Peter Brabeck-Letmathe was the only chief executive willing to say for the record that the primary role of the company is long- or medium-term profit maximization to benefit shareholders. "All of the other chief executives with whom I spoke said they thought he was completely mad to get up and say that in a public forum," Bishop said. But privately they agreed with him.
On the defensive
Companies are funding CSR initiatives not because they are in the best interest of the company or shareholders but to get NGOs off their backs, Bishop said. "Bad press has put everyone on the defensive."
In addition, there is no guarantee that cooperating with NGOs buys a company any long-term reputation protection, he said. Both Nestlé and Nike have spent millions to improve social conditions in their factories, yet get little credit in the press because they work outside of the CSR movement, Bishop said.
It is troubling to see companies accused of treachery for trying to be economically efficient.
— Matthew Bishop, The Economist
Bishop criticized the media for contributing to the problem. Media companies are out to make a profit, and many have cut back on foreign coverage. "You've got a group of people who are not well paid, who are not in the same mindset as people who work in companies, and who haven't really been exposed to the realities of what corporate life is like."
NGOs often feed journalists stories of supposed corporate malfeasance, which the reporters are happy to print without much on-the-scene checking. "They are desperate to get noticed because your main professional reward as a journalist… is to get your name in lights by saying something interesting. So there is a tremendous appetite for powerful stories."
Another worrying issue, he said, is that the climate for open debate about free trade and the business pursuit of profit is being destroyed.
As a remedy, Bishop said the media and the public should start putting pressure back on governments to improve labor and social issues. In effect, we are letting government and politicians off the hook by pressuring the companies we work for and invest in to take on additional financial and social burdens.
Bishop compared using company money to further socially responsible causes with a CEO deciding to buy a corporate jet. The executives shouldn't be spending shareholder money on things that aren't directly related to the bottom line, Bishop said.
In a world where government/NGO's and business each have full responsibility for their domains, Bishop's view would be right on target. However, in the US, where business and the White House are one and the same, and neither acknowledges social responsibility as their domain, Bishop's point of view is naive.
