Restoring the Blue Collar Commonwealth

The Century Foundation officially launched a new initiative on Tuesday, June 13, to find ways to bring high wage work back to America’s Heartland, including via manufacturing, technological innovation, expanding workforce training and targeted investment. A standing room audience of 150 Congressional leaders, staff-members and participants attended the sold-out event held at the U.S. Senate offices at the Capitol Visitors’ Center.

This event featured opening remarks by Senator Bob Casey (D-PA) and Representative Marcy Kaptur (D-OH-9). Speakers included:

  • Jeff Madrick, acclaimed author and economist, Director of TCF’s Bernard L. Schwartz Rediscovering Government Initiative

  • Fred Block, Professor of Sociology, University of California Davis

  • Amy Goldstein, award-winning journalist, the Washington Post, and author of Janesville: An American Story

  • Madeline Janis, Executive Director, Jobs to Move America

  • Andrew Stettner, Senior Fellow, The Century Foundation

Overseen by Mr. Madrick, the "High Wage America Project” will focus on research and policy solutions to develop a high wage agenda and reverse policies that have cut wages, benefits and working conditions since the Reagan Administration, thus contributing to the high levels of income inequality that are eroding the middle class.

On behalf of the SVA and Heartland Capital Strategies (HCS), I was honored to introduce Senator Casey, who fought tenaciously to win the Mineworkers health care bill, and who has proposed new legislation to assist distressed communities, and say a few words at the event as one of the organizers. We’ll have a more complete report on the event in coming weeks, as we’ll take the research and best practices uncovered by the event on a series of town hall meetings in cities and towns across the Rust Belt, starting with Pittsburgh in the Fall.

Here are my remarks:

As Jeff Madrick has argued, an engaged government is necessary for the social and economic answers that Americans desperately need in changing times. He has showed that the big governments of past eras fostered greatness and prosperity, while weak, laissez-faire governments marked periods of corruption and exploitation.

Good governance and good economics, indeed, go hand in hand. America benefits when the government actively nourishes economic growth. This buffets Jeff’s view that our economy has often and chronically failed its workers, and his “call to arms” for innovation, experimentation, and a willingness to fight for what’s right.

Responding to Economic Uncertainty, Political Chaos

The recent presidential campaign brought about a startling transformation in the nation’s conversation about the economy, circling around the deep economic anxiety of millions of voters in both red and blue states and the role of manufacturing.

Trump won the rust belt, and thus, the election, partly due to a long simmering rejection of neo-liberal policies by working families in the industrial Midwest, which suffered sharp economic declines tied to trade-related losses in manufacturing and union jobs since the 1970s.

But Trump wasn't the only “populist” in the 2016 campaign. Democratic candidate Bernie Sanders echoed the belief that free trade agreements led to a loss of American jobs and depressed American wages. He said America needs to rebuild its own manufacturing base by using American factories and supporting well-paying jobs for American labor.

Continuing Collateral Damages

In the Rust Belt, there are towns and cities still suffering from the Great Recession, bankruptcies and population loss, including my own mill communities surrounding Pittsburgh. But think about it. Our communities were devastated by man-made disasters for decades. Some made by Wall Street, some by bad public policy.

The long trail of destruction was documented, set to music, televised and novelized in our culture. It’s not like we weren’t warned. In the 1980s, we heard "Well we’re living here In Allentown, and they’re closing all the factories down.” Billy Joel. Bruce wrote about "Looking for the Ghost of Tom Joad.” The reference to Joad harkens back to the Grapes of Wrath, about another depression.

More recently, "Hillbilly Elegy," about the diaspora of Appalachians and mountaineers to the factories of the Industrial Heartland, people hoping to escape poverty and find the middle class. Except the factories closed down.

Responding to Economic Uncertainty, Political Chaos

If our country is serious about rebuilding industry, the infrastructure and good jobs, it needs to turn to not just industry, but its’ partners and stakeholders—including unions. Let’s talk a little economic history.

Faced with a severe recession and restructurings in steel in North America in the 1980s, Lynn Williams, President of the Steelworkers, deployed labor-friendly investment banks to restructure parts of the steel and manufacturing industries, through defensive buy-outs and other strategies.

These strategies often worked because workers were empowered to participate in production or ownership. Other unions, such as the Machinists and Pilots, followed suit.

By the mid-1990s, USW’s Leo Gerard, the AFL-CIO and the SVA assembled the Heartland Labor/Capital Network and commissioned the first of many books asking how the labor movement and citizens might harness the power of pension funds to rebuild America. This work followed on the half-century success of housing trusts, which were started after a meeting of the minds between Martin Luther King, Jr. and labor leader George Meany, in 1960.

Our efforts helped capitalize KPS Capital Partners, which respected workers’ rights and sought to provide a voice for workers as stakeholders in the company. This initiative gained ground and was similar to efforts in Quebec and Australia, where unions established specific investment managers to invest in industries, infrastructure, renewable energy, and other responsible alternatives.

Ron Bloom, who was one of the principals of the investment bank group that eventually set up KPS, and later worked for President Gerard, by the way, went on to help save the auto industry as a leader of Obama’s Auto Czar program.

Mobilizing Workers’ Capital

Jeff talked about the advances made in our nation’s infrastructure by our governments in the past. In addition to public and private investors, our pension funds invested in many of these advances in the last half of the 20th Century. Our money—workers’ capital--saved by teachers, electricians, steelworkers, firefighters, hotel workers and other employees—seeded many of these earth-changing innovative industries, such as solar and wind energy.

Workers’ capital means, simply, our money, the pension funds and other savings and assets of working people, including 401ks, insurance funds, bank deposits, etc. Real pension funds—defined benefit plans—grew from $153 billion in 1978 to $9 trillion in U.S., including $4 trillion in public and T/H plans where workers have a voice. Overall, US workers own $22 trillion in institutional assets.

What Can Workers’ Capital Accomplish?

Responsible capital stewards have profitably invested workers’ capital for decades in cities and industries around the country, to:

  • Rebuild cities

  • Revive our industrial commons

  • Grow the clean economy

  • Make the “Boss” more accountable

Given its sizable influence, workers’ capital stewards have mobilized hundreds of billions of dollars in investments, creating hundreds of thousands of housing units, creating or retaining hundreds of thousands of good jobs.

Here are a small handful of examples:

Restoring/Re-shoring the Industrial Commons:

In Michigan, Minnesota and Dakotas, the KPS Capital Partners Fund turned around 16 auto supplier plants, saving 3,200 mostly union jobs, and rebuilt New Flyer Industries, the greenest bus company in the U.S., saving 3,500 mostly union jobs. KPS has now saved over 40,000 jobs in the US, Canada and Europe.

Rebuilding Cities:

The AFL-CIO HIT MidWest@Work initiative, managed by Ted Chandler and co-designed by HIT Presidnet Steve Coyle, is committing $1.2 billion program to rebuild nine Heartland cities. renovating homes, building affordable housing and rebuilding factories from Detroit to Buffalo. The program is providing union jobs and pre-apprenticeships for local youth, part of a plan to indirectly create 25,000 good jobs and lever over $3 billion.

HIT is willing to work with the Century Foundation and our allies to launch the Rust Belt Road Show, and to amplify the bullhorns in the Heartland.

Growing the Clean Economy:

ULLICO completed a half-dozen infrastructure investment deals, including solar, energy distribution and hydro projects across the Northeast/Midwest, capital improvements to the water infrastructure of Rialto, CA, and a new wind farm in Hawaii.

Blue Wolf Capital Partners, utilizing it’s long experience in stewarding forestry assets back toward sustainability, has recently helped to resurrect Suwannee Lumber Company — a profitable, family-owned lumber business specializing in southern yellow pine decking — in Florida, providing a succession model, and Caddo River Forest Products, an integrated forest products company in Glenwood, Arkansas which had been shuttered since the Great Recession. These projects have saved hundreds of good jobs.

Pegasus Capital Partners helped build Lighting Science, focused on improving the health and wellness of the planet and its people through innovative and safer LED lights.

Community Stakeholders Fighting for Good Jobs

Concurrently, many community stakeholders have been active for over three decades in fighting to save Heartland hometowns. They have designed the building blocks for a social democratic society, for a productive Commonwealth.

  • Dan Swinney and the original MCLR designed the first early warning network, and that strategy was replicated around the country. Today, Dan is standing up the Manufacturing Renaissance program, training the next generation of manufacturing and knowledge workers in three inner city high schools, as well as other brilliant initiatives.

  • After the collapse of Big Steel in Pittsburgh, my predecessors at the SVA, formed a regional jobs authority with eminent domain powers to take on arbitrary corporate closures. Funded by the PA DLI, through DOL, we opened five offices thru five governors, helped over 1,300 manufacturing SMEs and saved or deferred the loss of 23,000 good jobs. Last year, we helped bring back Kangol Hats from China to the Bollman Hat Company in Lancaster, PA, with the help of a kickstarter campaign with Samuel L. Jackson. It is part of a broader re-shoring movement.

Joel’s paper will provide some tremendous best practice examples from around the Northeast-Midwest, as well as national examples, and you’ll hear more today. But, just to mention a few:

  • Jack Wells has built the National Network of Sector Partnerships, which has organized marketing and training programs for SMEs employing thousands of people, and created career pathways for young people and people of color. Jack also led the fight to win sector partnership language in the Workforce Innovation and Opportunity Act (WIOA).

  • Madeline Janis of Jobs to Move America has won amazing major campaigns to ensure that public procurement projects have been awarded to responsible, home-grown manufacturers. And she’s created awareness of the need to diversify manufacturing, so that more women have job opportunities.

  • Lee Wellington has helped build a vibrant, millennial-driven Urban Manufacturing Alliance (UMA), fostering dozens of city maker chapters, focused on building the next generation of manufacturing entrepreneurs and connecting to city urban planning strategies.

Towards a Blue Collar Commonwealth

In closing need to rebuild a new jobs and investment coalition that will amalgamate power, capital and solutions in Rust Belt cities and states, and fight for real economic recovery, inclusive development and broad prosperity. We need to bring together the stakeholders of local communities and the shareholders of workers’ capital.

This innovative agenda might logically be followed by local initiatives, to encompass a comprehensive jobs and investment agenda:

  • Restoring and re-shoring the manufacturing jobs base.

  • Rebuilding affordable housing and the built environment.

  • Repairing and rebuilding the infrastructure.

  • Growing the clean economy.

You may ask: What do we want? We want a fair, inclusive, productive economy, and a stakeholder society for all. And,

  • We want a policy and knowledge shop that provides help to stakeholders and shareholders to resist bad policy and push forward on good policy initiatives at the federal, state and local levels. We must start addressing economic change and helping people in distressed communities.

  • We want economic activism, direct action and public interventions to prevent economic harm and create responsible jobs growth.

  • We want a standing “Community of Practice” that structures a path toward this Commonwealth Coalition. We want to establish, as part of this, a mutual support and technical assistance center that shares best practices and raises resources to help implement and bring to scale those best practices.

I think to build this “Commonwealth Coalition,” we just need to “show up” in the Heartland.

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