This is an audio transcript of The Economics Show with Soumaya Keynes podcast episode: ‘What happens when manufacturing goes away? With Amy Goldstein’
Soumaya Keynes
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What happens when a massive manufacturing plant shuts down? What happens to the people and what happens to the area? Amy Goldstein is a Visiting Fellow in Economic Studies at the Brookings Institution, after decades as a reporter with The Washington Post. Her book, Janesville: An American Story won the Financial Times and McKinsey Book of the Year, and she recently wrote a follow-up essay to that book, which is published in the FT. I wanted to talk to her about it and ask what she learned going back to Janesville, the city that experienced such an enormous economic shock during the financial crisis when the local GM car plant closed down. I wanted to ask what happens when manufacturing goes away?
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This is The Economics Show with Soumaya Keynes, and I am joined by Amy Goldstein speaking to me from Washington, DC. Amy, hello.
Amy Goldstein
Hello. It’s a pleasure to be with you.
Soumaya Keynes
Great to have you. Could you start out by telling us a bit about Janesville and what took you there?
Amy Goldstein
Well, Janesville is a small city of about 65,000 people now in southern Wisconsin. It’s in the American heartland. It’s about 100 miles north-west of Chicago, just to give your listeners some sense of where in the United States we’re talking about. And it was a city that had homegrown industrialists in the late 19th and early 20th century. It’s the home of the Parker Pen Company. A man named George Parker, invented a good fountain pen and built a global company called the Parker Pen Company, based in Janesville, Wisconsin.
Soumaya Keynes
That took me through secondary school. That was a good pen.
Amy Goldstein
That was a good pen. And a couple of decades later, there was another industrialist who was running a farm implements factory who persuaded the founder of General Motors to buy his company. And that was the beginning of General Motors in Janesville just after World War I. And the Janesville assembly plant, as it was called, made Chevrolets decade after decade after decade, until two days before Christmas of 2008, when the plant shut down right in the middle of the Great Recession, as we call it in the United States, or you would call it the Global Financial Crisis.
And I was interested in finding out the questions that you just raised: what happens to a perfectly ordinary place when good work goes away? And I wanted to tell this story focused on one place that could be a microcosm or a metaphor for what was happening during the Great Recession in many communities in the United States, and Janesville turned out to be a good place to look at all this.
Soumaya Keynes
OK. So can you tell me a bit more about the GM plant? I mean, how important was it?
Amy Goldstein
The GM plant was for decades the heart of the local economy. It had, at the heyday in the 1970s, about 7,000 workers. Its last year, 2008, it had about 3,000 workers. So it was by far the largest employer. And because it was so old, going back to the early 20th century, it was a place where families passed on jobs one generation to the next. And it also spawned suppliers locally. There were metal factories. There were all kinds of local businesses that existed because the GM plant did. And all of this was propped up by this enormous automobile plant.
GM also had kind of a social function in town. Like the American car industry at large, its workers were unionised. They were part of the United Auto Workers. And that union local had lots of fundraisers and parties and really kind of buoyed the feeling of the community. So when that shut down, along with the plant, that made a big difference too. So it was both the heart of the economy and it was heart of the sort of social life and philanthropic life of this community.
Soumaya Keynes
Yeah, that really struck me reading the book, the kind of the importance of union life to the kind of fabric of the community and also to its sort of local politics. That was one thread that you brought out, and that they were actually quite important in terms of political organising, I guess, for the Democrats.
Amy Goldstein
Well, that’s right. I mean, you know, there were lots and lots of reasons why of all the places in the United States that lost jobs during the Great Recession, I picked Janesville. In terms of the politics, I figured it was going to be an interesting place to learn about. It had this big Democratic-leaning union population that we’ve just been talking about.
Soumaya Keynes
OK, well, I want to get more into that. But before we do, can we just talk about the closure of the plant? I mean, why exactly did it close?
Amy Goldstein
Well, General Motors was in very bad financial shape at this time. As I said, it closed just before the end of 2008. And several months later, in 2009, it filed for bankruptcy, which was just an unimaginable thing for one of these big automakers. So it was cutting costs. It was closing plants, not all plants, but a number of plants at the same time that Janesville closed, and Janesville was vulnerable. It was the oldest operating General Motors plant at the time that it was shut down. And for years, people in town had this sort of dual feeling about that. They wondered whether they’d be vulnerable to closing because it was so old. But it had been going and going and going for so long, and it had escaped other sort of near-death moments that people also kind of figured to keep going forever. So, at the time that it closed, the Janesville assembly plant was making full-sized SUVs, sport utility vehicles. And if you think about the price of gas during the Great Recession, it was very, very high. It was over $4 a gallon. And SUVs were not popular cars for Americans to buy. So the market for them really was shrinking during this time. And there was another plant in Texas that was making the same kind of vehicles, and General Motors decided that it didn’t need both, and Janesville was a victim.
Soumaya Keynes
So I think this is just so fascinating because, you know, obviously you’ve got so many narratives about the decline of manufacturing in particular places. You’ve got this story of imports and those driving away manufacturing jobs. You also just have the Great Recession, right? Huge hit to aggregate demand for cars. You’ve also got these kind of product-specific trends. So, you know, SUVs and gas, as you were saying. And then also you’ve got this kind of competition between places, between places within the US, for manufacturing work. So, you know, it could be that manufacturing jobs went away from a particular place within America. And actually some of them went to a different state where perhaps the labour laws were different and more kind of favourable to employers.
Amy Goldstein
Well, that’s right. And on your point about imports, you know, many people think that the closing of the Janesville assembly plant was part of a global trend and American jobs moving to other countries. And that actually wasn’t the case. It was more the points that you were making about the terrible economy at the time, the fact that these vehicles weren’t selling well, and the fact that there were two plants making them and this company that was in very fragile financial shape itself, decided that just needed one of those factories.
Soumaya Keynes
OK. Well, look, I want to move on to one of the kind of key elements of your book, which is the stories of individual people as they were affected by this shock. So you followed people, families affected as these jobs went away. Could you share a couple of examples?
Amy Goldstein
The core people were families with autoworkers who lost work. So one was a family called the Vaughns. And like all of these families, they were multigenerational auto workers. The father of Mike Vaughn, his name was Dave Vaughn, he had worked at the General Motors plant, and he had retired. And he was the second generation of the Vaughn family who was a union leader in town. Now, Mike Vaughn, who was in his late thirties when all this work collapsed, didn’t work at General Motors. They weren’t hiring when he came of age. So he went to work at Lear Seating, the big seat-making plant that was very dependent on General Motors. And he became the top union guy at Lear. So he was the third generation of the union Vaughns, and he met his wife at Lear, they both lost their work, it was not a good situation. And Mike was one of many people in town who went back to a local technical college that was doing a lot of job retraining. He was looking for union jobs in several states in the Midwest, you know, not just in Wisconsin, but nearby, and couldn’t find anything that seemed appropriate. So he finally went back to school.
And he was trying to think about what kind of new work would make use of the union skills that he had developed. And Blackhawk Technical College, the school that was doing this retraining, was starting a programme in human resources management. And Mike Vaughn thought, well, that would make use of some of the leadership skills and organising skills, and working with people skills that he had acquired as a union leader at Lear. But if you think of the name of that field, it has the word “management” in it, and it was a very hard decision for him to switch from the union side, which had been going back generations in his family, to the management side. But he did make that transition. So that’s one family.
Another family is the Wopat family. And they also had several generations of GM workers. The older-generation Marv Wopat retired from General Motors the summer before the plant closed down. And Marv was a big figure in town. He had been somebody whose job at the plant for a long time had been kind of counselling people who might have alcoholism or mental health issues or struggles going on in their family. So he knew a lot of people at the plant and their secrets, and he had this big, big party this summer before GM closed. And by the time that party happened, he knew that his son Matt, who was working at General Motors, was going to be laid off. And Matt eventually decided that he was going to do something he had just sworn he was never going to do, and that was to become something called a GM gypsy. Now, people in Janesville were called GM gypsies because if you had worked at the General Motors plant itself, you had the opportunity to take a job if one was open at another General Motors plant elsewhere in the United States, and people did this, they would commute. And Matt was a really big family guy, he had sworn he never wanted to live away from his family, but a set of jobs opened up at a GM plant in Fort Wayne, Indiana, still in the Midwest, but a couple of states over from Wisconsin. And he very, very reluctantly decided to do that. So in the spring of, early spring of 2010, began a commuting life where he and some of his General Motors buddies from Janesville would drive early Monday morning to Indiana to work there during the week, had an apartment there, and would come home on late, late Friday night. So that was Matt’s transition.
Soumaya Keynes
Right, yeah. I mean, that really speaks to this point, that there were just so many dimensions of, you know, how good your job is, right? So maybe that job in the factories, two states over, wouldn’t have been that much worse-paid than the old one. But the deterioration in the quality of life associated with having to commute all that distance and then be away with your family, that kind of thing might not show up so easily in, you know, standard economic surveys.
Amy Goldstein
Well, that’s right. And it all kind of speaks to what my big idea was, which is I wanted to focus on families, each of which found a different answer to the big question of: what do you do when your job goes away, and there’s no obvious good solution? So I was trying to help readers understand the different choices that people made.
Soumaya Keynes
Right. So now I want to ask what you think the big lessons from Janesville were that thinking about that first period that you looked at in your book?
Amy Goldstein
Well, I think there are several big lessons. I mean, one is what I just said, which is that there’s no clear road map for what to do when work you think is going to last for ever suddenly disappears on you. And losing work is a very, very hard experience. And I think one of the things I learned is that falling out of the middle class is very different than having been poor all along. As part of the work for this book, I worked with some researchers at the University of Wisconsin and did a survey of the county. Just a one county survey that Janesville’s in. This was five years after the plant closed, to see what people’s economic attitudes and experiences were. And we asked a lot of questions about if you or someone in your home had lost a job during the Great Recession, how did it affect you? And it was really striking how many people told us that they were having disagreements in their family, they were avoiding social situations, they felt ashamed. And I thought, how powerful? Because these were people who lost work during what had been the worst period of the economy in the United States since the Great Depression of the 1930s. And all of these people around them were losing the same kind of work, and nevertheless, it felt very, very personal to them. It felt like a personal failure when objectively, that wasn’t true at all.
Soumaya Keynes
Can I ask about the effects of job retraining? Because that’s another thing that you really focused on. How effective do you think it is or can be?
Amy Goldstein
Well, I mean, job retraining is an interesting policy question, because it’s one of the few economic remedies in this country that Republicans and Democrats tend to agree on. It’s very widely embraced. And yet, what I found, at least in the context of this community at this time in the US economy, is that it wasn’t all that helpful.
I talked to a lot of people who had gone back to school, and I did another piece of quantitative work, looking at data on what happened to people who had lost work in Janesville and then did or did not retrain. And it turned out that the people who went back to school, you know, not necessarily today, but a few years after they had gone back to school, were not faring as well as people who had not gone back to school. They were less likely to be working full time. If they were working more likely to have lower incomes and those who had not retrained. These were obviously very counterintuitive findings to the common wisdom.
But talking with lots of people, both in this community and people who think about things like this for a living, I came to think that job retraining can be helpful, but it really depends on the context. If you’re in a place or a time when jobs aren’t coming back, retraining isn’t necessarily going to be the route to new work.
Soumaya Keynes
Yeah. I mean, I’m definitely aware of a study in the trade adjustment assistance space. So this is a policy helping workers who were affected by import competition. I think there was an evaluation of that during the Great Recession, and it was found to be incredibly ineffective because the people who did go straight back to work without doing the retraining, they were the ones who kind of had jobs and kept them. Whereas by the time the people who had finished their training were looking to find a job, there just wasn’t anything there. And so, you know, you do need that demand for workers for the retraining to be useful.
OK. Well, look, I want to throw to a break now, but when we get back, I want to ask you about your updated essay. Why did you go back to Janesville?
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Soumaya Keynes
We are back from the break. So you, after a few years, decided to return to Janesville. What took you there?
Amy Goldstein
Well, I hadn’t been in Janesville since the fall of 2018. That was the last time I had been there. I went back to Janesville this late winter, originally because I was invited to be part of a panel of women authors speaking in Janesville. And when I was preparing to go out there for that event, I just started looking up, well, how is the economy doing now? And I realised that that General Motors site, which was supposed to have been redeveloped by now, was still sitting fallow. There was nothing going on there. And I thought, well, that’s kind of interesting. So when I went out there for a few days, I did so with the idea that maybe I should do some more research and see what this community could tell us about the US economy today, all these years past the Great Recession. So that was my motivation.
Soumaya Keynes
So as well as the plant, how was the local economy doing?
Amy Goldstein
Well, what I found is that the answer to how Janesville’s economy is doing today is quite mixed. On the one hand, it’s recovered by some measures. The unemployment rate, which had shot up to over 13 per cent a few months after the GM plant closed, now has settled back down to where it is in the United States, at a very low level. That was about 3.5 per cent now. So people have jobs. If you look at there’s a kind of nerdy statistic called the labour force participation rate, and that’s, you know, what proportion of people who want to be working are working or looking for jobs. And that rate also looked very healthy. So by a lot of measures, Janesville recovered.
One really important thing that struck me is that manufacturing has not come back. The proportion of jobs in the county that Janesville is the county seat for, that are manufacturing jobs is much lower than it used to be. And partly because General Motors is no longer paying good salaries and providing good benefits. People, on balance, aren’t earning as much as they did back in the, you know, good old General Motors days.
Soumaya Keynes
So why was the plant lying fallow?
Amy Goldstein
Well, it’s kind of a complicated story. The company that bought this property was a company based in St Louis that specialised in rehabilitating old industrial land, and much of it polluted as this land was from all the years of automaking on that property. And they were supposed to find a new owner that would make new use of it. But they discovered that finding a new owner was really, really, really hard. And one of the things that I did was take a look at the context. So I took a look at what happened to the other auto plants, of which there were a bunch that were closed to the United States around the same time, within a year of when the Janesville assembly plant shut down. And it turns out that reusing an old auto plant is a pretty hard thing to do. It takes years, and the odds that’ll be used for automotive purposes again are very low. On the other hand, all the other properties had eventually by now found some new use, and Janesville has not. So it may be its location. The fact that a lot of manufacturing in the United States has moved to the American South, where, it’s less union-friendly terrain, so it’s easier to not pay workers quite as much and not offer them as good benefits. The Upper Midwest is no longer ground zero for the best manufacturing jobs in the United States. So that’s a factor. It’s also a huge property. So the odds that one company is going to want to make use of it all, that’s also a hard thing to pull off. There’s also kind of a bureaucratic fight going on between the state government of Wisconsin and the local government of Janesville over how much environmental clean-up needs to be done. So the state said the company that now owns this land has clean things up enough that it can be used for other industrial purposes. And the city laws disagree with that. So that’s a bit of a deterrent for anybody who wants to come in and reuse this property. So those are some of the reasons.
Soumaya Keynes
Yeah. I mean, it sounds like there are a few things going on there. I mean, in one sense, Janesville is just sounds very unlucky that they got sort of tangled up in this mess of local regulatory disagreement. But then I guess, on the other hand, there does seem to be this broader point about how, you know, I think a lot of the discussion about manufacturing jobs, the idea that there’s a big, big plant means that you’re very specialised, right? You’re not diversified. You’re very reliant on that one employer and actually. That also is sort of the case when it comes to your reliance on a physical space. Like it’s not easy to recover if for whatever reason, you can no longer use that big space for that one thing, you can’t adjust very easily.
Amy Goldstein
That’s right. Other employers have come into the area. I mean, Janesville and the county government have worked very, very hard to recruit new businesses, and they’ve succeeded to some extent. But there are different kinds of work. There’s a big Dollar General — which is like a discount store that has branches all around the United States — distribution centre that’s come in now that doesn’t pay anything like what General Motors wages were, but it’s providing jobs to about 500 people. So there’s been some progress, but there’s still this huge vacancy in the middle of the town.
Soumaya Keynes
Can I just ask a follow up about the point that the wages are down because I was looking at a chart that you put in your update essay that was describing kind of the median household income, inflation-adjusted dollars. I mean, actually, before the pandemic, it looked like it had increased relative to before the recession and recently dipped, I guess, between 2020 and 2022. But, you know, that was a weird time. I guess it’s possible that wages could rebound, I suppose, as a question of, you know, how much is that a weird Covid thing and how much actually has there been a wage increase.
Amy Goldstein
Well, Janesville, I mean, if Janesville was a metaphor during the Great Recession for what happened when work went away, it turns out that Janesville was a pretty good metaphor now for what’s happening with US wages. Because all around the country, wages had been rising in recent years. Obviously, inflation has taken a bite out of that, but they have been going up. And one of the things that I was curious about was how people in Janesville felt about the fact that pay isn’t as good as it used to be. And I asked this question of a number of people, one of whom was an old-time journalist in town, and he said something interesting to me. He said, most people don’t know what used to be was. In other words, most people in the workforce now never worked at General Motors. They’re younger and their expectations may be a little different. And as long as they’re sort of doing OK, it’s OK enough.
Soumaya Keynes
OK, well, look, can I now ask about manufacturing and I guess the special place that manufacturing has in the US political discourse at the moment. So recently on the podcast, we had Adam Posen, who’s the president of the Peterson Institute, your rival think-tank, just across the road from Brookings. And he was very critical of politicians on both sides of the aisle being obsessed with manufacturing. So obviously that’s very important for the Biden administration. But I was also really struck listening to JD Vance, a speech at the Republican National Convention recently where he promised, quote, we’re going to build factories again, put people to work, making real products for American families, made with the hands of American workers. So clearly, you know, it’s very present.
And so my question is, is what you think: do you think there is something special or important about manufacturing jobs specifically? Are they worth trying particularly hard to save?
Amy Goldstein
Well, I think you’re right that the notion of manufacturing, of America as a place that makes things is part of the credo of this country. So there’s something kind of threatening about manufacturing jobs going away. It also is very much aligned with the worries about jobs going offshore. And both parties have a strong goal of bringing back jobs to America. So, you know, I think what Janesville illustrates is that you can have a lot of jobs and people re-employed without them necessarily being as often manufacturing jobs. But that doesn’t take away the kind of psychic role of manufacturing, you know, as connected with the American dream or how this country’s economy, quote, ought to be. As for how realistic either party’s aspirations are, I mean, that will be known in the future.
Soumaya Keynes
Yeah. I mean, I guess in this kind of overall move, you’ve got the US economy moving from manufacturing to services. And, you know, for many, I suppose it seems to be working. Right? I mean, the . . . There are advantages of being more diversified and not being so exposed to these big shocks. But you know, how do people feel about that shift?
Amy Goldstein
You know, as Janesville’s manufacturing identity has attrited, its economy has diversified. And that’s something that people like the county economic development manager, who’s been in his job for a quarter century, very much has wanted to happen. And this is a point on which people disagree in town. There are people who thought that, you know, General Motors was king and the town wouldn’t be the same without it. And there were other people in town who thought that Janesville was too dependent on its auto making history and really would be economically more secure if it brought more different kinds of work into the area. So it’s a debatable point.
Soumaya Keynes
OK, so I have just one final question, which is: do you know what happened to any of the people that you spoke to for the book?
Amy Goldstein
I’ve stayed in touch with a number of people to see how they’re doing and what reflection that has on how the community is doing, and there are different answers. I’ve also been interested in what’s happened to the former GM workers themselves. And let me tell you about Matt Wopat, who is the man who reluctantly became a GM gypsy in Indiana within General Motors. If you work for 30 years, you’re eligible for a pension. Matt was nowhere near that. So to this day, all these years later, he’s doing what he began in 2010, which is getting up on Monday mornings and driving to Indiana and coming back home late, late Friday nights to spend the weekend with his family and turning around and do it all over again. This coming winter, Matt is finally going to reach his 30 years with General Motors, and will be eligible for the pension that his father began to draw the year that General Motors was about to close the plant. So he’s looking forward to finally having life home with his family.
Soumaya Keynes
And so he’s about to retire.
Amy Goldstein
He’s about to retire.
Soumaya Keynes
OK, well, maybe we should retire. On that note, Amy, thank you so much for joining me.
Amy Goldstein
I’ve really enjoyed this.
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Soumaya Keynes
That is all for this week. If you like the show, then please do rate and review it. It really helps other people find us. You have been listening to The Economics Show with Soumaya Keynes. This episode was produced by Edith Rousselot, with original music from Breen Turner. It is edited by Brian Urstadt. Our executive producer is Manuela Saragosa. Cheryl Brumley is the FT’s global head of audio. I’m Soumaya Keynes. Thanks for listening.
