For the Record: John Engler: December 2012| STATE LEGISLATURES MAGAZINE
“Three million jobs in America today could be filled if people had the right skills.”
John Engler, a former three-term governor of Michigan, is president of the Business Roundtable, an association of chief executive officers of leading U.S. corporations with a combined workforce of more than 13 million employees and nearly $6 trillion in annual revenues. In 1970, at the age of 22, Engler became the youngest person ever elected to the Michigan House of Representatives. He served 20 years in the Legislature before becoming, in 1990, the first sitting legislator to be elected governor in Michigan in more than 100 years.
State Legislatures: What is the most important area government should invest in to create jobs?
John Engler: We need to have the best skills, the smartest engineers, the most highly trained workforce we can have. You can’t do that with dropout rates in some urban centers at 30, 40, 50 percent. You can’t do it if rural kids don’t stay in school. You can’t do it if those who stay in school can’t get a quality education, if they’re not literate, if they can’t compute. Getting a return on that annual $650 billion investment we make as a nation—with nearly all of it overseen by state and local communities—is the primary payoff. Three million jobs in America today could be filled if people had the right skills. So getting that right is a differentiator, I believe. I’ve always said the state with the best schools wins, and I still think that’s true.
SL: What kind of skills do companies want in their workforce?
Engler: The nature of work today is more complex than the basic job of somebody just showing up and working hard doing physical labor. Those kinds of jobs are few and far between, even in sectors like construction. Today we are using materials and processes that are quite sophisticated. Manufacturing facilities are highly sophisticated. The tolerances are virtually nonexistent, so the quality has to be perfect. You can’t have error rates. You may be operating technology that automated a process that years ago was done manually. For a lot of people today, their job’s being done by a robot. But somebody has to build the robot, somebody has to maintain the robot, somebody has to program the robot—all of those are high skills.
SL: As a former governor and state legislator, what would you recommend state officials do to strengthen their economies?
Engler: I’d certainly rely on education. I’d also make sure I had no ticking time bomb in some part of the balance sheet. In this time of an emphasis on debt, we’re certainly going to have to make sure everyone is very credit-worthy, so they can’t hide a problem. You can’t look the other way and leave it for the next person. I also think a smart strategy relative to infrastructure is going to be increasingly important. We’ve under-invested in our own infrastructure for some time, and we’re going to have to figure out how to catch that up. There’s a role there for the national government, as well as the states. It’s very hard for the states to do it all by themselves, but at the same time the states are in a position to do some very creative things.
SL: Did the TARP money the federal government gave to the automobile industry save the Rust-Belt states?
Engler: What saved them are the bankruptcies, sadly. The bankruptcies required very hard decisions. Literally thousands of jobs were lost. There was a great dramatic rightsizing going on where excess capacity was wrung out. It was very hard on some of the dealers who lost their franchises. You had this whole realignment in the industry. The TARP money came at the end of the Bush years and the beginning of the Obama years when there was a credit crisis, a liquidity lock, when nobody had capital available. So that [TARP money] was very important, but ultimately, that wouldn’t have been enough. The debate is how quickly the bankruptcy occurred and whether it occurred in the right way. Those are good political questions, but now I think whether the industry is saved or not may depend on a regulatory perspective. I don’t believe big national and global industries ought to be regulated differently state by state. Let’s have one standard for the nation so U.S.-based companies are able to go out and compete globally.
SL: Is uncertainty over the fiscal cliff keeping businesses from hiring and expanding?
Engler: I think it’s a bigger drag than has been understood. I hear from people running companies who say, “Look, we don’t know what the tax rates are. We don’t know what the energy policy is. We don’t know when the budget or debt policy is going to get resolved. If we’re in the defense sector, we don’t know what sequestration means. We can’t answer most of the questions that matter about the future of our enterprise, so we’re going to be cautious, we’re going to stockpile cash and resources and hunker down a little bit here and see what happens.” I think 2013 is going to be one of the most important congressional sessions we’ve had in a long time, at least from the standpoint of business. We’ve reached the decision point— we can’t keep putting this off, kicking the can. We’re not kicking cans, we’re kicking 55 gallon drums down the road, and now it’s getting a little harder to do that.
SL: States compete for businesses. What are most of them looking for when making decisions about where to relocate?
Engler: I think it comes down to people. States are going to do about the same things on taxes and somewhat on regulations. You have to be able to recruit your talent. There’s a reason why some of the high-tech companies in this country located or expanded where they did. States need to decide and understand what they’re really good at. It’s very hard even for a very big state to be good at everything. There are going to be some assets that are stronger than others. I’ve always believed you work from strength, and if you do that you’re going to have success and as you have success you’re going to bring other parts up as well.
SL: What is your view on term limits?
Engler: I watched term limits implemented in Michigan. What that has done is remove from the Legislature the senior members who have served a long period of time, who have mastery over the complexities of school financing or how Medicaid or public assistance works, how you finance your highways, what you’re doing with your prison system. All of these are very complex, very costly components of state budgets. It is very difficult for someone who’s only going to spend six years in the House of Representatives to come in and be up to speed, or have any institutional memory. You see mistakes being repeated because no one is around to remember that the first and second times that was tried, it was the wrong way to go. So, they’re back at it for a third time. I don’t think term limits have worked. I’m prepared to say it was a failed experiment. Maybe there’s a way to come up with something more reasonable than six or eight years for a House or Senate body. I think it has to be a little longer.
Editor’s note: This interview is part of a series of conversations with opinion leaders. It has been edited for length and clarity. The opinions expressed by the interviewee are not necessarily those held by NCSL.