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Original Articles

Downsizing and Worker Separations: Modelling the Regional Economic Impacts of Alternative Department of Energy Workforce Adjustment Policies

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Pages 67-83 | Received 01 Feb 2001, Accepted 01 Jun 2003, Published online: 23 Jan 2007
 

Abstract

Lewis D., Frisch M. and Greenberg M. (2004) Downsizing and worker separations: modelling the regional economic impacts of alternative Department of Energy workforce adjustment policies, Reg. Studies 38, 67–83. Fifty years of huge investments by the US Department of Energy (DOE) in some regions has resulted in the DOE being the de facto steward of their regional economic health. With the end of the cold war, job reductions of DOE contractor workforce have severely impacted these regions. DOE worker separation policies may cushion or intensify these impacts. Using an economic simulation model, we examined the impacts of three different worker separation policies: the ‘painful response’ (no severance packages), the ‘current response’ (the current average of DOE separation packages), and the ‘supportive response’ (more lucrative severance and continued medical coverage). The analysis is split on two regional axes: (1) more rural DOE regions, as in the area surrounding the Savannah River Site (SRS) near Augusta, GA; versus (2) more metropolitan locations, such as the area surrounding the Rocky Flats Site which is in the Denver MSA. The results indicate that recent legislation which enhances worker separation packages for nuclear defence workers will substantially help the workers and their DOE-dependent communities cope with the negative impacts of DOE restructuring. Our research also corroborates earlier work which asserts that the state can play an effective, positive role in helping workers and communities adjust to economic restructuring.

Lewis D., Frisch M. et Greenberg M. (2004) Le dégraissage et la séparation des travailleurs: une modélisation des retombées économiques régionales des politiques alternatives du ministère de l’Energie quant à l’ajustement de l’emploi, Reg. Studies 38, 67–83. Suite à cinquante années d’importants investissments par le ministère de l’Energie aux Etats-Unis, ce dernier est devenu de fait le gardien de la santé économique régionale. Avec la fin de la guerre froide, les suppressions d’emploi par les sous-traitants du ministère de l’Energie a eu des retombées non-négligeables sur ces régions. Les politiques du ministère de l’Energie en faveur de la séparation des travailleurs pourrait amortir ou intensifier ces retombées. A partir d’un modèle économique simulé, on cherche à examiner les retombées de trois politiques en faveur de la séparation des travailleurs: la ‘réponse douloureuse’ (aucunes indemnités de licenciement), la ‘réponse actuelle’ (la moyenne des indemnités de licenciement en vigueur du ministère de l’Energie), et la ‘réponse secourable’ (des indemnités de licenciement plus favorables, plus des assurances maladie). Dans une optique régionale, l’analyse se divise en deux, (1) les régions plus rurales du ministère de l’Energie, dont la zone qui entoure le Savannah River Site (SRS) près d’Augusta, GA, par rapport (2) aux emplacements plus métroploitains, dont la zone qui entoure le Rocky Flats Site situé dans le MSA de Denver. Les résultats laissent voir que la législation récente qui améliore l’ensemble de mesures spécifiques à la séparation des travailleurs dans la défense nucléaire va aider considérablement les travailleurs et les communautés qui dépendent du ministère de l’Energie à faire face aux retombées négatives de la restructuration du ministère de l’Energie. La recherche vient à l’appui de la recherche antérieure qui affirme que l’Etat pourrait jouer un rôle efficace, positif afin d’aider les travailleurs et leurs communautés à ajuster à la restructuration économique.

Lewis D., Frisch H. und Greenberg H. (2004) Verkleinerung und Entlassungen: ein Modell der regionalwirtschaftlichen Auswirkungen der alternativen Arbeiterschaftanpassungpolitik des Ministeriums für Energie, Reg. Studies 38, 67–83. 50 Jahre enormer Investierungen des U.S. Ministeriums für Energie (DoE) haben dazu geführt, daß das DoE de facto zum Verwalter ihres regionalwirtschaftlichen Wohlbefindens geworden ist. Seit Ende des Kalten Krieges haben Entlassungen in der DoE Arbeiterschaft diese Regionen schwer getroffen. Die Arbeiterentlassungspolitik des DoE kann diese Auswirkungen dämpfen oder verschärfen. Mit Hilfe eines Wirtschaftssimulationsmodells haben die Autoren die Auswirkung drei versohiedener Entlassungsprogramme untersucht: die der ‘schmerzhaften Reaktion’ (ohne jegliche Abfindung), der ‘gegenwärtigen Reaktion’ (dem z.Zt. üblichen DoE Entlassungspaket) und der ‘Unterstützungsreaktion’ (lukrativere Abfindung und Beibehaltung der Gesundfürsorge). Die Analyse verfolgt zwei Regionalachsen: 1. vorwiegend ländliche DoE Regionen, wie z.B. im Gebiet um das Savannah Flußgelände (Savannah River Site=SRS) bei Augusta GA, im Gegensatz zu ‘vorwiegend großstädtischen Standorten, wie dem Gebiet urn die Rocky Flats, das in der Denver MSA liegt. Die Ergebnisse zeigen, daß die jüngste Gesetzgebung, die Entlassungsabfindungen für Arbeiter in der nuklearen Verteidigungsindustrie verbessert, ebenso den Arbeitern und ihren vom DoE abhängigen Gemeinden sehr helfen wird, mit den negativen Auswirkungen der Umstrukturierung des DoE fertig zu werden. Diese Untersuchung bestätigt auch frühere Arbeiten, die den Standpunkt vertraten, daß der Staat eine wirksame, positive Rolle spielen kann, indem er Arbeitern und Gemeinden hilft, sich an wirtschaftliche Umstrukturierung anzupassen.

Lewis D., Frisch M. y Greenberg M. (2004) Recortes de personal y despido de trabajadores: modelando los impactos económicos regionales de las políticas de ajuste alternativas del Departamento de Energía (DDE) Reg. Studies 38, 67–83. Cincuenta años de cuantiosas inversiones en algunas regiones por parte del Departamento de Energía (DDE) de los Estados Unidos han llevado a que el DDE sea el administrador defacto de la salud económica regional. Con el fin de la guerra fría, las reducciones en la plantilla contratista del DDE han impactado a esas regiones duramente. Las políticas de despido de trabajadores del Departamento de Energía pueden amortiguar o intensificar dichos impactos. Usando un modelo de simulación económica, examinamos el impacto de tres políticas de despido de trabajadores diferentes: la ‘respuesta dolorosa’ (ningún paquete de despido), la ‘respuesta actual’ (la media actual de los paquetes de despido del DDE), y la ‘respuesta de apoyo’ (un despido más lucrativo y una covertura médica continuada). El análisis se divide en dos ejes regionales, (1) las regiones más rurales del DDE, como la zona que rodea el Savannah River Site (SRS) cerca de Augusta, GA, versus (2) zonas más metropolitanas, como la zona que rodea el Rocky Flats Site que se encuentra en Denver MSA. Los resultados indican que la legislación reciente que realza los paquetes de despido para aquellos empleados en la defensa nuclear ayudarán a los trabajadores y a las comunidades dependientes del DDE a soportar los impactos negativos de la reestructuración del DDE. Nuestra investigación también corrobora estudios anteriores que aseguran que el estado puede desempeñar un papel efectivo y positivo en ayudar a los trabajadores y a las comunidades a ajustarse a la reestructuración económica.

Acknowledgments

The research for this project was funded by a cooperative agreement with the DOE in which the authors are charged with responding to requests for information from people who occupy the regions surrounding the sites and from other stakeholders. The authors would like to thank director Charles Powers and the other members of the management board of the Consortium for Risk Evaluation with Stakeholder Participation (CRESP) for encouraging this work. The project was supported by a cooperative grant to CRESP from the US Department of Energy, Instrument DE-FG26-00NT 4038. We would like to thank some particularly helpful DOE employees for spending a lot of time with us explaining the details of the workforce restructuring activities. Finally, we would like to thank our colleagues Henry Mayer and Karen Lowrie for participating in conversations about this study for many months. The observations, conclusions and interpretations drawn from the data are solely the responsibility of the authors and should not be interpreted as representing the views of any of the people acknowledged, nor should it be inferred that they agree with the conclusions drawn from the analysis.

Notes

We contracted with Regional Economic Modeling Inc (REMI) of Amherst, MA to construct the model. The model has 12 regions: 10 regions are centred on locations with significant DOE spending, one is the rest of the State of Washington not included in the Hanford site region and the last region is all remaining counties in the US.

Generally an increase in demand in one year in one region will lead to an increase in economic activity for up to three years, before wages, prices and migration nudge the economy back toward a new equilibrium. The REMI model gives the user the ability to simulate economic impacts over time and these impacts are limited by price and wage constraints. Both of these characteristics are great advantages over input–output based models (Treyz, Citation1993).

The REMI model’s migration package is primarily built on interregional wage differentials and interregional labour supply and demand under the constraint of the interregional convergence assumption (Treyz, Citation1993).

The increase in taxes across all regions is equal to the total additional expenditures to cover the worker separation packages. The distribution of taxes was based on the historical percentage of taxes paid by each region. Thus, if region x paid 10% of all personal taxes, then its share of the cost to cover the separation package would be 10% and modelled as a increase in the region’s personal taxes.

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