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    Globalization, Lost Jobs, Immigration and More

    Long before one line of NAFTA was written, manufacturing in the United States was dying. Not just factory after factory was shuttered, but entire industries were shipped out of the country, until virtually noting remained. While it is not part of this discussion, as manufacturing left, the strength of unions bled out onto the broken foundations of the dead factory floors. By the 1970's there was already the movement from an Industrial to Post Industrial society, and the burning question was 'Could a society that produced nothing survive?' (Something that is still a viable question) However, the question that was not raised until much later was 'Can the middle class survive?'

    Big business, meaning manufacturing at that point, saw cheaper labor outside the country and they picked up and moved. It was a move facilitated by Congress lowering import tariffs so that these same businesses did not lose their profits when bringing those self-same products back into the US for sale.

    Original Ford plant

    First automotive plant in the world at Highland Park, Michigan. (Sammi De)

    Manufacturing, and most particularly, the unions, created an environment of the 'good job.' Namely, a 40 hour work week with job security and  benefits (sick leave, vacation, health insurance, and more). They were jobs that paid above, not just minimum wage, but 'living wage.' Workers in many factories were 'blue collar' workers, but they made middle class wages, and many of them were able to send their children to college. For them however, a high school education pretty much set them for life - and that education was free.

    As manufacturing went, union membership dropped, and wages started dropping with them. Enter formal globalization with the passage of NAFTA (North American Free Trade Agreement) that allowed the movement of goods and materials relatively freely between Canada, the United States, and Mexico. There were massive concerns about the loss of even more of manufacturing, and the relatively good paying jobs that it provided, being lost to Mexico (where labor was cheaper and environmental regulations almost nonexistent). While workers were promised new and better 'good jobs' that were 'clean', the promise never materialized.

    As we moved through the end of the 1990s and into the new century, household income continued to drop and the big losers of the death of US manufacturing were white male workers who lost almost 25 cents on the dollar in wages. Further, as economic crises cracked down, big business took another bite out of the workforce by virtually eliminating 'middle management' - thereby dislocating hundreds of thousands of college educated workers with strong middle class resumes, most of whom were white males. Most never found equivalent 'replacement jobs' either. National insecurity was so high that almost everyone had at least one person in their intimate circle (family or close friends) who had lost their job.

    Before I go forward, let me take a small digression. One might ask why the erosion of the middle class did not happen much sooner than the 1990s and beyond, given that both 'good jobs' and decent pay evaporated at an escalating rate. The answer is relatively easy - first women's wages and then multiple jobs. The primary 'winners' of the manufacturing revolution, and of unionization, were white males. Except for select industries (clothing) most factories were white male dominated, as was mining (the major extractive sector). When one looked at 'family wage,' for much of the population, that wage was one person's and that person was male. The poor, including the overwhelming majority of people of color, already had all hands on deck with all available workers working.

    As men's jobs eroded, disappeared, and replacement jobs were downgraded, women (particularly white women) entered the workforce. This additional money stabilized the fall of family income and allowed the maintenance of both the working and middle classes, and even the lower rungs of the upper class. Women's jobs went from the infamous 'pin money' (that little bit extra for special occasions) to significantly important to the stability of family income. When the erasure of middle management hit, women's contributions remained, but were woefully inadequate to keep most families in their class, and everyone began to slide. For the nerds among you, if you look at household income data in the U.S. prior to 1980, most family income was single income (male), and forward from 1980 increasingly family income was two wage earners.

    As an aside within an aside, and because it has always pissed me off, the Christian conservatives have long harped on how wrong it was for women to work outside the home, and that women were somehow following their own selfish pursuits in leaving the home (though they did not shed wife and mother responsibilities in doing so). This argument of the 'voluntary' self-pursuit so dominated the narrative that many women felt tremendously guilty for working. Women were saving their families. When the middle management ax struck, women's labor was all that saved many families, even if they slid in class.

    What I am describing here is the constant erosion of the economic stability of the PEOPLE of the United States. However, it has pretty consistently been boom times for big business. As they 'off-shored' jobs, increasingly high skilled jobs (technology, medical, general office) as well as manufacturing, they argued that they needed to do so to be 'economically competitive.' They claimed that the American workforce was too expensive. Bull Shit! What changed was that their profit margins got larger and larger. Meanwhile, the minimum wage was largely stuck (and some states have no minimum wage) and people's ability to survive on their pay eroded to the point that the so-called 'safety net' began to subsidize the low wage employers - like Wal-mart. At one point (and I imagine it is still true though employees have fought for and won some concessions) most Wal-mart employees were eligible for food stamps and medicaid. Yes, there are millions of people working full time in this country who are eligible (and desperately need) food, housing subsidies, and healthcare access. Think about that as the Republicons rush to cut all three.

    Globalization

    First, let me give a novel, though I think accurate, definition of 'globalization.' Globalization is the exploitation of both natural resources and human beings by primarily 'white' nations. This has been changing of late, but with the exception of China, the rewards of globalization still accrue to white nations and businesses even when nonwhites are the proximal hands of control.

    Globalization is nothing new. It is just the form it takes that change over time - at least thus far. The primary purposes of agreements like NAFTA and the Uruguay Round of GATT (there is a long history on GATT that goes beyond the scope of this discussion) was to 'liberalize' the movement of goods (and then certain services and investment) across national boundaries. They were also meant to do something else that was very important - keep workforces in place. In other words, to block immigration - the relatively free movement of people across borders. Why?

    If we look at early globalization, you had Western European nations launching out on voyages of exploration, exploitation, and conquest. Soon, flag planting and land claiming began, and a flow of colonizers followed. Indigenous populations were sometimes worked with (for a while), fought, or enslaved. Resources were exploited, goods produced, and returned to the homelands of the colonizers.

    The next wave of globalization came when the colonizers brought immigrants into their stolen lands to provide additional labor as the colonizers could not breed quickly enough to produce the desired levels of profit. The U.S. was nicely positioned to pull a supplemental workforce back and forth across its southern border, and it did so - repeatedly.

    The next wave of globalization held workforces in place, and sent the work to them. However, imported labor (immigrants) were still needed as a cheaper and more vulnerable workforce than the native workforce. In the United States, this meant a workforce that was cheaper than even the already highly underpaid African, Hispanic, and Native American workers (of both sexes).

    Syrian refugees

    Syrian refugees at Yugoslavian/Greece border. (Syran Freedom House)

    Then the plan of largely holding workforces in place and having them bid each other into the sub-basement began to fall apart. At first, the huge inequality between exploited nations vis a vis exploiting nations drew waves of immigrants into the lands of the colonizers. Then the desire to control natural resources (and the populations surrounding them) created bloody conflict of all sorts. Bound together with environmental issues (such as extended drought or rising sea levels) immigration was not the real issue. The flow of people along the historic economic lines, was a flow of refugees - most who had nothing but the clothes on their backs and families in tow.

    Here and Now

    anti-immigrant

    Anti-immigration rally organised by an initiative called "Stop Islamisation of Europe" and backed by the far-right "People's Party-Our Slovakia" on September 12, 2015 in Bratislava, Slovakia. AFP PHOTO / Samuel Kubani

    What we have seen happening in so called "Western societies" is the mobilizing of white nationalism that is vehemently against both immigrants and refugees. There seems to be a pro-business, but anti-globalization sentiment, but one can't help but wonder if all of this is being scripted. Contemporary globalization became undermined by two basic forces. One was that people were 'escaping' their national containment and therefore ruining the workforce competition strategy. Second, was the "wall" that was hit with global financial markets and their interlinkage. Global finance created a 'brave new world' financially, and none of the old strategies for stabilizing (or even manipulating) national markets worked. A crash in a major market from Brazil's crash during B. Clinton's administration, to the US housing crash from 'liberalizing' finance (started under B. Clinton). Whatever lessons were not learned from the collapse of Brazil were quadrupled in the crash of 2007-2008.

    Wal-Mart strike

    2012 Wal-Mart strike (Matt Hamilton)

    The losses of this final blow knocked another huge segment of the population out of not just the middle class, but the working class. A workforce that had filled the white collar positions were suddenly surviving at the lower end of the labor pool - fast food and Wal-mart. They did (do) not care for the conditions, and there has been a resurgence of unionization and mobilization for better wages and conditions. They have had more success, but also gotten better press, than earlier inhabitants of those jobs. I believe because ignoring them would have had a real knock on their customer base.

    A new form of entrepreneurship (still largely white) rents out part of one's home to vacationing strangers (Air BnB), or using their own cars as cabs (Uber) has become yet another survival strategy - largely for the remainder of the middle class, and for those too old to compete in the labor market.

    The white nationalist movements sweeping the Western European racial groups come with built in biases to remove the 'constraints' on business and finance. While promising that this will make           great (again), the elite already know that they are structuring yet another economic coup against the citizens of their various nations. Cynically, they promote "law and order"; increasing police forces and the use of more extreme measures. "Others", both foreign and domestic are scapegoated to direct hostility away from the elite. Realizing this may spill over into something larger, they also promote radically building up their militaries, always a lucrative venture.

    The elite are attempting to do two things with their current strategies. One is a globalization 'reboot' by closing the borders and creating discrete, exploitable, competitive labor forces again. The second goal is to get a much stronger and direct grasp to control populations.

    Welcome to the club, United States.

    Comments

    Nicely written, though as a framework I think some important issues aren't discussed and I'm sure I don't agree with several conclusions.

    First, if you go back and look at the supposed "glory years" of manufacturing below, the wages for the bottom 2 quintiles weren't growing either - not much at quintile 3 either.

    Second, there's not any discussion of prices and costs, and with most of US inflation occurring in only 4 parameters - healthcare, education, energy and housing - it's easy to imagine that this didn't have to happen, and can be reversed. Education is largely driven by the increasing loan profit tied to the nervousness around lack of opportunity without that degree. Healthcare we pay 2 1/2 times other industrial countries for not appreciably better healthcare. Energy has been pushed and manipulated to a good degree by wars and blatant price fixing (not just cartels). Housing has largely been "subsidized" (to our detriment) by the mortgage deduction along with the myth that housing is a good investment (Nate Silver dispenses with this in a chapter of Signal and Noise, where housing only saw appreciable gains in the 90's, after which that rare new opportunity shut).

    Third, competition for customers increased greatly in the 90's, especially with eCommerce that meant you could pay half price online. There really was no extra profit - margins were cannibalized as consumers got to shop around.

    Fourth, the flirtation with offshoring worked with some industries, failed with others (e.g. the costs and difficulties erased any gains). We have a much more rational sense of this than 10 years ago and labor costs have adjusted globally.

    Fifth, there was a huge opening of 2nd and 3rd world labor when the Wall fell and countries from East Europe, ex-Soviet Union and China were able to compete in the free market, something we didn't have to deal with in the 80's. Prior to that, helping the 3rd world poverty meant a few alms to Africa (that's not that populous). After that, we added at least 2 billion more to the job pool, glutting supply, even though not all supply was sufficiently skilled.

    Probably more comments later when I have time.


    PP's chart paints a very misleading picture of how each quintile and the 5% did relative to each others over the past 49 years.  The chart seems to show that the bottom 60% saw their position relative to the upper middle-class and wealthy dropping pretty consistently while there was nothing but blue skies for the top 5%. 

    In fact, until Reagan, the 5% were not doing particularly well relative to everybody else.  Due to anti-poverty measures and affirmative action, the bottom 20% saw the greatest percentage growth in income of any of the 6 groups charted until the early 80s.   Concomitantly, the top 5% saw their income grow more slowly than most other Americans did until Reagan took office.

    Then tax cuts for the wealthy, the war on unions, welfare reform, and the move away from job protectionism towards "free" trade did their dirty work leading to the ugly situation we face today with ever-greater economic injustice.  Since we know what caused the problem we know just how to solve it.  We need to raise taxes on the rich, empower working people to join unions, tighten up the safety net, exit the trade pacts, and impose tariffs.  One further point: since greater efficiencies - automation, robotization, etc. - are certainly part of the problem we also need really smart tax policy that treats expenditures on middle-class salaries much more favorably than it treats capital expenditures, top management compensation, and shareholder distributions.

    To be sure, other steps need to be taken.  While the bottom quintile did okay until Reagan took office the 4th quintile did not.  Probable causes include declining union membership throughout this period, increased automation, declining military enlistment, and more costly higher education.  It's not hard to come up with solutions to these problems as well.


    Shorter Hal - "your chart sux, now here's my agenda again". No time to lose...


    This was very well written. Joesph Stiglitz would be proud of the way you defanged complex subject matter. There are people trying awfully hard not to acknowledge the nationalism inside this current strain of populism. I know it's not all racism and xenophobia, but we have to be honest.


    Thanks for this.  I learned a lot.  I wonder though about the dual-earner household.  You say that women went to work to save their families when their husbands' wages went down.  No doubt that was true for many.  But I also wonder if the fact of dual-earner incomes are part of what allowed wages to stay flat over the last several decades.  In the 50's when I was growing up, my middle-class neighborhood saw people buying new (instead of used) cars for the first time.  Vacations, which had not been a fact of life for most folks began to be a norm.  

    That was the time that paying men more than women was considered justified (even though it is still a fact, though no longer justified) by the fact that the father HAD to have a job and the mother had a CHOICE about it.  But because the Lady of the House could get a job, all wages stayed flat.

    The other factor in keeping wages down was credit cards.  All of a sudden people could purchase what they could not actually afford, and this again, kept people quiet.  At least until the plastic debt got out of hand for so many people.  I recall a good friend who told me she needed to see a "debt specialist."  I was shocked when she told me that she had accrued CC debt of $50,000!  That was more than her annual salary!  I couldn't believe it!  

    For me, using a credit card is a great convenience, and I never carry a balance, and accrue points that I can trade in for $$.  Back when this all started though, it was yet another way to keep wages from creeping up.

    Benefits, such as insurance, retirement packages, and other incentives, are no longer needed by industry when searching for workers at an entry level.  I know that this is somewhat tangential to the subject of globalization, but not entirely so.  But all this leads me to one big question:

    What in the WORLD are we going to do to clean up this mess?


    Thanks for the thoughtful comments and adding to the discussion. My hope was that this would provide that sort of platform.

    I went into this post deciding that I would not try to hit everything, but the major components that provide ... let's call it the warp of the story, and the weft provides varying degrees of specificity and complexity. So thank you all for doing that.

    A couple of points. Household income and wages have been driven by a lot of things, some of those raised by PeraclesPlease and some by CVille Dem. Women working outside the home, and the reasons given for it, were and are explained in varying ways. As I mentioned, class was significant as poor women of all races have always worked. If we look back in time - non-war times - women of color have generally worked in both working class and even middle class families. Of course, prior to the 1980s there were not a lot of middle class and above families of color. In 'Asian' families, you had more in the middle class (even now) but you also had more small business and more multiple workers in the family. Meaning that there were extended kin in households and they were all working. This is still true in some communities. All of this to say that when you start moving in on the data and patterns interesting info starts emerging that tells us things that are important, but I did not really address in this piece. 

    When you wonder how cheap can labor go, you can look to the folks rushing in to the Air BnB and Uber/Lyft situation which is going to have long term impacts on the regulated (and unionized) markets. That will both surely drive wages down in the standard markets.

    Back to women working. Even women may (and did) say that they were voluntarily going back to work, and that it was 'liberating', etc. However, there were a lot of fragile male egos in that mix, and concerns about men as heads of household. Divorces were much higher in the 80s (and earlier) when women's earnings exceeded their husbands. Therefore a rationalization that women were working because they 'wanted' to rather than because they 'had' to for family income is reasonable.

    CVille, thanks for raising the issue of credit because it played a HUGE role in 'making up the difference' of rising coasts and stagnant (or dropping) wages. Not only credit cards, but loosening the use of taking out second mortgages and using homes as lines of credit came in to make the situation even worse. Since credit was going up (as with your friend) ultimately there was an opportunity to REALLY make some money by opening up peoples homes as a source/backing of credit. This whole situation blew up with the 2007-08 crash and folks have been much more cautious about both credit and using their homes as lines of credit. My guess is that if we don't crash again in the near future (something I am expecting to happen) then people will forget the lessons (or a younger generation that didn't get burned) will lead down the devil's path.

    Interestingly, credit and class is (or was) significant. I came from the lower class, and then through my foster family a working class family, and the lesson I learned was 'debt is death.'  Clearly not a message that the middle class was passing along.

    What do we do?

    I'm sure this will cause dissension, but my suggestion is to back out of capitalism, or at the very least defang it. Focus on smaller scales and bartering type economies to at least supplement the need for cash.

    Seriously look at international unions that perhaps cover broader swathes of workers.

    Seriously look at building for the long term and at fixing rather than throwing away.

    As I see it, we have a major problem in that we have forced the world into our economic model. Unfortunately, it is an economy that is based on the concept of perpetual growth in an environment that is limited - and we are reaching the limits.

    Women should have equal pay, or else be compensated for 'women's work' - maintaining families, taking care of all those invisible 'little' things.

    These are just random thoughts. I am sure that others have ideas as well.


    What do women want? Is "equal pay" the only demand or even the major one?

    Where is the cost analysis for families, both for men and women? If we look at expenses and risk throughout a life, we see: childbirth (including long periods of pregnancy), childcare, education, sickness, housing, retirement, end-of-life care, with energy and food a major sub-component.

    Needs for security differ greatly, especially without a continuous record in the job market. The issue of "how one chooses (or is forced to) use one's time" can be very very different for women, and changes drastically in different stages of life, whereas for men it's typically childhood, college, work, retirement with the majority in work. Women of course can be stay-home moms, working moms, working only, quite often volunteering as part of the mix, etc.

    Men's part in sharing the home life and tasks is typically still minimal. Whether they're the cash cow still varies more and more.


    ETA the main point (ed note:the ADD is bad this afternoon...) when we talk about the good paying manufacturing jobs, what we really mean is the union jobs that happened to have been all in manufacturing.  All the bullshit about retraining better include unionization of the work force.  If Grad Students can organize, anyone can.

     

    Nafta was correctly defined by Harper's Magazine as "labor racketeering" and represents the second of the dual pronged fork on which the rust belt is impaled.  The chance to escape entirely the reach of the NLRB empowered the destruction of manufacturing unions.

     

    There are some characteristics of manufacturing work forces that made industrial organization slightly easier but if the Federal government were to tip even a minute amount towards fairness in Labor Law (card check anyone) let alone actively encOuraging orgainization, service industries could be organized successfully

     

    I can remember when the construction trades would  strike, and the central labor council would sanction the strike and picket line as approved, and the Teamsters wouldn't drive a single truck to that job site.

     

    SOLIDARITY!


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