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Steel Valley Authority is the nationally recognized leader in layoff aversion, responsible investment and innovative economic policy. Our mission is contributing to renewed prosperity and sustainable communities through our expertise and continued innovation in job saving and capital strategies.

6/5/11 - Fish Tales

Fish Tales
Sunday, June 5, 2011

It is not unusual to hear politicians talk about teaching people to fish. As the adage goes, if you give people fish, they can eat for only a day but if you teach them to fish, they can eat for life. This fishing analogy, which really is about providing jobs, succinctly embodies the economic policy of many of its proponents.

And the focus on job creation is surely a lofty goal. The addition of even a few new jobs to any politician's district is cause for a news conference in these tough times. But saving jobs that are already there hardly ever gets the attention it deserves. And that's where the Steel Valley Authority makes its entrance.

Formed in 1986, the SVA originally focused on a handful of communities that were hit especially hard by the collapse of Big Steel in and around Pittsburgh. Fighting the crushing tide of plant closings, the authority had enough early successes to be asked to expand its efforts into Allegheny County, then the region and, eventually, the entire commonwealth.

As Tom Croft, the executive director says: "We have been successful at the ground level, focusing on production-, management- or union-related problems. Our mission is to save viable companies and jobs."

The Strategic Early Warning Network (SEWN) was designed by the SVA in collaboration with the Pennsylvania Department of Labor and Industry. It provides enough lead time, through a number of team members, to allow the authority's management experts to catch a struggling company and turn it around before it goes belly up.

At the first sign of trouble in a company -- or within 48 hours of a WARN notice, the federal requirement that workers get a 60-day notice prior to a plant closing or mass layoff -- the SVA team starts working to bring public and private resources to bear to avoid the shutdown. This consulting service, part of a comprehensive layoff-aversion strategy, is free to the manufacturer.

In the last five years, 3,625 jobs have been saved through the efforts of SEWN at a cost of $3.7 million, or about $1,000 per job. Using a low-ball figure of $25,000 each, it would have cost $90.5 million to create that many new jobs. And the topper is that by saving those existing jobs, nearly $19 million in unemployment compensation was saved.

This strategy makes sense in other areas as well. Instead of throwing lawbreakers in jail -- essentially paying for intensive care for every one of them regardless of the crime they committed -- it would be cheaper and safer and more efficient to treat them before they are incarcerated. Jail can be reserved for the worst.

And wellness policies that provide sufficient money to keep Pennsylvania residents healthy make a lot more sense than the illness-based policies that are dragging society down. It costs more to treat people who have been allowed to get unhealthy than it would have cost to keep them healthy.

If Pennsylvania is to save its citizens and be saved, it must acknowledge that it is far cheaper to keep people off the unemployment line or out of prison or in good health than it is to address their plight after the harm has been done. Read entire article