WHATEVER THE success of the new administration's economic policies, prosperity will return slowly, if at all, to the communities of the industrial heartland hard hit by the closing of plants in many of our basic industries. Business failure has always been a familiar fact of our wide-open economy -- one study estimates that a firm in business in 1967 had less than a 50 percent chance of surviving until 1976. What is new is the concentration of closings in big, high-paying industries, long the mainstay of the American economy.
Recently, the Labor Department invited plant managers and workers to a meeting to discuss ways of reducing the enormous social and economic costs of major plant closings. All of those invited had been directly involved in relatively "model" closings usually involving large multi-plant firms with strongly unionized work forces.
The conference revealed that most of the reemployment help the workers got came from the companies themselves. What the government provided was mostly simple income maintenance -- basic unemployment insurance (typically at far less than half of previous wages) and, for the lucky, far more generous "trade adjustment" cash benefits. Local public employment services tried to help, but one job-finding effort launched by a private employer revealed that only a small fraction of available openings in the surrounding area were even listed with the public employment service. Virtually no retraining assistance was provided by the government, and as long as unemployment benefits held out -- especially if these were supplimented by employers or by trade benefits -- workers were understandably reluctant to take lower-paying jobs or to sever ties with their communities. Even in these "best" cases, the economies and morale of communities declined rapidly.
This painful process of adjustment is in sharp contrast to the policies of our major international competitors. In Japan and Germany, government works with companies and unions to provide job retraining, placement and, if necessary, relocation assistance. Active efforts are made to move new industrial activities into areas affected by plant closings. Receipt of relatively generous cash benefits may be tied to the willingness of workers to take the jobs or training offered them.
As the result of these "positive adjustment" policies, our most successful competitors are finding it less difficult to get public and worker acceptance of necessary industrial change. They are also preserving valuable skills and physical resources usually lost when company plant-closing decisions are made and carried out without consideration of the costs left behind for individuals, communities and, ultimately, the general taxpayer.
In the United States, cooperation among government, business and labor has been almost entirely in the way of resisting change -- propping up dying industries, erecting trade barriers and maintaining the income of the unemployed. Not all change is unavoidable or beneficial. But substantial and continuing movements of labor and capital may be necessary for future prosperity. Economic growth will continue to lag unless some way can be found to make the process of adjustment less frightening and less expensive.