(Image: Berrett-Koehler Publishers; Edited: to)
Only a fool would try to deprive working men and working women of their right to join the union of their choice.
— Dwight D. Eisenhower
Back in the late 1980s, when I ran an advertising agency in Atlanta, a multinational corporation approached us about producing its internal newsletter, a monthly eight-pager about the company’s goings-on in the United States, Mexico, and Japan. Not surprisingly, they wanted the newsletter produced in English, Spanish, and Japanese.
For our small agency trolling for clients, this corporation was a big fish—it could provide a good shot of cash for what was then a startup business with a half dozen employees—so I put a help-wanted ad in the local daily newspaper, the Atlanta Constitution Journal, for a graphic designer who was also fluent enough in those three languages to know how to set type and where to hyphenate words (the company was providing us with the text in the three languages). It was clearly a search for a needle in a hay stack, so I was totally shocked when a young man showed up on our doorstep, claiming that he was a graphic artist with fluency in all three languages.
Hiroki (not his real name), the son of Japanese immigrants, had been born in Japan and spoke Japanese at home. When he was a young boy, his family moved to a major South American city, and he lived there until his last year of high school, acquiring the Spanish language along the way. Then his father’s job brought him to Atlanta, where Hiroki finished high school and spent four years in college getting a degree in graphic arts. As a recent grad, he was looking for his first job in America.
There was one problem, however: Hiroki was not a U.S. citizen and didn’t have legal permission to work in the United States. To get a job, both he and his employer (me) would have to prove to the Immigration and Naturalization Service (INS, now part of the Department of Homeland Security) that he had skills no American could offer.
He filled out his form for a visa, and I wrote a letter stating that I could not find an American citizen who was a graphic designer and spoke those three languages. A few weeks passed, while I assured the corporate client that we would be able to do the job. Then a man from the INS called me and pressed me quite hard— saying that they may even inspect my workplace—on whether I really couldn’t find an American graphic designer in Atlanta who was fluent in those three languages.
He then asked what I would be paying Hiroki, making it plain that the visa would be denied if I was hiring him only so that I could pay him less than what I would have to pay an American. I assured him that Hiroki would start out at the same pay as our other designers and would have the same advancement potentials they had.
Hiroki got a call with similar questions and had to go to the INS office in Atlanta to make his plea. While he was there, they called me again to confirm what he was saying, warning me again that if we paid him a lesser wage than we’d pay an American, there could be criminal penalties.
Hiroki got the visa, we got the newsletter job, and our business grew. Hiroki was with us for years, becoming one of our best designers and a great employee.
There’s a good reason why the government officials were suspicious that I would hire an immigrant to bring down the cost of doing business, which would boost my profits: it’s a common practice among businesses small and large. In fact, it is the single most important factor in our “immigration problem”—employers hiring “illegal immigrants” or “undocumented workers” (take your pick) because they will work for less money than American workers.
In other words, our problem is not an immigration issue, it’s an economic one.
And the way to address it is to crack down—hard!—on businesses that break the law and hire people who do not have a work permit and so will work illegally for substandard wages. Once you stop employers from hiring illegal workers, you stanch the flow of immigrants crossing our borders illegally.
The same corporate lust for profits is at work in the whole “outsourcing” business—instead of paying substandard wages here, they’re doing it over there. Outsourcing is not about some high-and-mighty notion of creating a competitive “global marketplace”—it’s about corporations shipping jobs to places where they can pay slave wages to benefit their bottom line.
The Outsourcing Mania
Around the time I hired Hiroki, General Electric’s then-CEO Jack Welch made a trip to India to pitch some GE business and stumbled upon something big. Looking around at a well-educated and skilled workforce that spoke English and—most important—was willing to work for a few dollars an hour, he realized the bonanza this could represent for GE, which was paying back-office bookkeepers and customer support workers in America $20 or more per hour with benefits.
It was a “Eureka!” moment for Welch, and he proudly claims to be the grandfather of the modern movement of outsourcing pink- and white-collar jobs to India (and other English-speaking countries like the Philippines).
On his Web site, Welch includes a Q&A with him that was published in Business Week on July 31, 2006:1
How can we change things in the U.S. so we don’t have to outsource to India and other countries anymore?
We can’t—and we shouldn’t.
Look, the debate over outsourcing should be over by now. It was pretty much all about politics to begin with. The question now is not how do we stop outsourcing, but how do we use outsourcing to enhance competitiveness in what is, and forever will be, a global marketplace?
Of course, outsourcing has not been painless: Layoffs hurt. Still, they have to be seen as part of a broader picture, one in which outsourcing is not only integral to the world economy but crucial to our own growth.
Integral because economies always respond to consumer demands. People have come to expect the lowest price and the highest quality in one package. And companies can’t deliver on that expectation without moving around the world to capture cost advantages and innovative minds.
He concludes his answer with this depressing kick-in-the- face to American workers: “So forget outsourcing. America’s labor challenge today is talent insourcing.”
Welch is cut from the same cloth as Alan Greenspan, the Ronald Reagan–appointed Federal Reserve Chairman, a devotee of Ayn Rand and a promoter of outsourcing as well as “talent insourcing.” Greenspan believed that one of our big problems was “wage inflation,” a term he applied only to the earnings of working-class people and never to the stratospheric salaries paid to CEOs and other corporate executives.
In a September 2007 interview on C-SPAN for Book TV,
We pay the highest skilled-labor wages in the world. If we would open up our borders to skilled labor far more than we do, we would attract a very substantial quantity of skilled labor which would suppress the wage levels of the skilled because the skilled are essentially being subsidized by the government, meaning our competition is being kept outside the country.
Easy to say—if you’re so incredibly wealthy that neither you nor your children or grandchildren will ever need a job answering phones or doing bookkeeping or being an engineer.
Under the guise of satisfying a consumer demand for low prices, multinationals have accelerated outsourcing ever since the Reagan years and pushed the “free trade” and “globalization” ideology that has given us the NAFTA and GATT/WTO processes initiated under President George H. W. Bush and finished by President Bill Clinton. As a direct result, American blue-collar workers saw their jobs vanish as factories making things from jeans to precision tools moved to Mexico and other countries. Not to worry, the Bush and Clinton administrations assured workers, just learn new skills so you can join the “service economy,” which included millions of new “Do you want fries with that?” and “Welcome to Wal-Mart” jobs, and the wonderful new Internet that would bring millions of new computer software and hardware engineering jobs to America.
It seemed to work for a few years, helped along by a dot-com bubble, followed by a credit bubble, and then a housing bubble. But when the bubbles all burst, American blue-collar workers (who are increasingly showing up at Tea Party rallies and joining citizens’ militias) realized they were screwed, and the pink- and white-collar workers who thought their jobs were secure (and so didn’t get all militant in the 1980s and 1990s like the blue-collar union men and women) discovered that they were screwed, too.
So Jack Welch can talk all he wants about how we can “use outsourcing to enhance competitiveness” in the “global marketplace,” but that can’t stand the light of day.
One illuminating glimpse of what that outsourced “competition” looks like today comes to us via a story published in London’s Daily Mail on April 18, 2010, headlined: “The Image Microsoft Doesn’t Want You to See: Too Tired to Stay Awake, the Chinese Workers Earning Just 34p an Hour.” The accompanying photograph, smuggled out of a Chinese factory run by KYE Systems at Dongguan, China, showed workers passed out from exhaustion while still on the assembly line—a line producing goods for Microsoft, Hewlett-Packard, Samsung, Acer, and Logitech, among other companies. The article noted:3
The mostly female workers, aged 18 to 25, work from 7:45 am to 10:55 pm, sometimes with 1,000 workers crammed into one 105 foot by 105 foot room.
They are not allowed to talk or listen to music, are forced to eat substandard meals from the factory cafeterias, have no bathroom breaks during their shifts and must clean the toilets as discipline, according to the NLC [National Labor Committee].
The workers also sleep on site, in factory dormitories, with 14 workers to a room. They must buy their own mattresses and bedding, or else sleep on 28-inch-wide plywood boards. They “shower” with a sponge and a bucket.
And many of the workers, because they are young women, are regularly sexually harassed, the NLC claimed.
The article continues with the story of one woman who was fired after she lost a finger to a hole-punching machine, and another who said, “We are like prisoners.” They are paid about $25 per week, according to the article.
How Jack Welch, Bill Clinton, or the oracle at the New York Times, Thomas Friedman, think American workers can ever “compete” with such conditions and circumstances in the “flat world” that Friedman lauds is beyond comprehension. This “outsourcing is good” and “free trade” ideology obviously aids the class of people who are executives in or stockholders of transnational corporations, but what possible gain is in it for the workers in any nation?
The answer, according to such elitists, is that it provides “more freedom” for American “consumers” because they now have more choices of cheaper goods. But that ideology treats us only as consumers instead of citizens and assumes that our buying options are so important to us that we would ignore what this means for our income, our quality-of-life, our ethics, or our responsibility as citizens to the future of our nation.
These, however, are discussions you will not hear on the network Jack Welch used to run (NBC)—or any other corporate or corporate-sponsored (like PBS) network in today’s media world. An examination of the nature of outsourcing—and its long-term effects on our quality of life here—would illuminate the real winners and losers in this new “flat world,” and that’s never to happen.
Instead they want to direct all our anger and frustration about losing our jobs against all those brown people—particularly the ones coming in from Mexico and countries south of us—and have us conclude that it’s the immigrants who are to blame.
And it’s an easy story line to cover and promote regularly in the news, because—like most things used to misdirect us from the real agenda (think of “weapons of mass destruction” in Iraq instead of Cheney’s note that “Iraq sits on top of 10 percent of the world’s oil”4)—there’s a kernel of truth under the larger issue.
So an interesting rift has taken place within the GOP regarding the whole immigration issue—between the corporatist Republicans (“Amnesty!”) and the racist Republicans (“Fence!”). And it provides an opportunity for progressives to step forward with some clear solutions that address not only the immigration problem facing America but also the labor and wages problems that are decimating our middle class.
The solutions lie in following the strategies that brought us sustained success in creating a stable middle class in the midtwentieth century.
Looking Back to Look Ahead
When the topic of illegal immigration comes up, we hear this recurring mantra: “There are some jobs Americans won’t do.”
It’s a lie.
Americans will do virtually any legal job if they’re paid a decent wage. This is the economic reality underlying the immigration debate.
The history of the labor struggle in America has always been about securing wages and benefits that provide a decent living for workers and their families. And the best way to guarantee that is by making sure the labor market is not flooded. Working Americans have always known this simple equation: more workers, lower wages; fewer workers, higher wages.
Progressives fought—and many lost their lives in the battle— to limit the pool of “labor-hours” available to the robber barons from the 1870s through the 1930s, and their successes created the modern middle class:
- They limited labor-hours by pushing for the 50-hour week and the 10-hour day (and then later the 40-hour week and the 8-hour day).
- They limited labor-hours by pushing for laws against child labor (which competed with adult labor).
- They limited labor-hours by working for passage of the landmark 1935 National Labor Relations Act (aka the Wagner Act) that provided for union shops in the private sector.
They limited labor-hours by supporting laws that would regulate immigration into the United States to a small enough flow that it wouldn’t dilute the unionized labor pool.
As Wikipedia noted in early 2010: “The first laws creating a quota for immigrants were passed in the 1920s, in response to a sense that the country could no longer absorb large numbers of unskilled workers, despite pleas by big business that it wanted the new workers.”
Even as major a labor figure as César Chávez, the co-founder of the United Farm Workers (UFW) union, fought against illegal immigration, and the UFW turned in undocumented workers during his tenure as president. Chávez, like progressives since the 1870s, understood the simple reality that labor rises and falls in price as a function of availability. In 1969, Chávez led a march to the Mexican border to oppose the growers’ use of illegal immigrants as temporary replacement workers during a strike.
This issue of protecting the labor market so that wages are kept high is as relevant today as it was a hundred years ago.
Do a little math. As of March 2010, there were 15 million Americans unemployed, for an unemployment rate of 9.7 percent, according to the federal Bureau of Labor Statistics (BLS). The number of “long-term unemployed” (those unemployed for 27 weeks or more) was 6.5 million. Another 9.1 million Americans were “involuntarily” working part-time, meaning either their hours were cut back or they could not find full-time work. Another 2.3 million Americans had simply given up looking for work and were not even counted among the unemployed, according to the BLS.5
So a snapshot of the labor situation in March 2010 shows us that there were more than 32 million Americans who were unemployed or underemployed.
At the same time, the number of illegal immigrants in the United States quadrupled from 3 million in 1980 to almost 12 million in 2008,6 no doubt diluting our labor pool. A parallel trend not entirely unrelated—shows that the percentage of the private workforce in the United States that was unionized declined from roughly 25 percent in the early 1980s to around 7 percent in 2009.
The way we can deal with the immigration problem is, first, not to treat it as an immigration problem. It is really a problem of the supply and demand of labor or, more accurately, cheap labor. We need to first focus on reducing, if not eliminating, the demand for cheap labor. This means going after the businesses that are hiring all the illegal immigrants at poverty-level wages.
So long as employers are willing and able (without severe penalties) to hire illegal workers, people will risk life and limb to grab at the America Dream. When we stop hiring and paying them, most will leave of their own volition over a few years, and the remaining few who are committed to the United States will obtain citizenship through normal channels.
We also need to require that all nonrefugee immigrants go through the same process to become American citizens or legal workers in this country (no amnesties, no “guest workers,” no “legalizations”) regardless of how they got here. And we need to make it clear that while health care is a human right and anyone needing medical service while in the United States will get it, no one has the right to a public education or a job or any government help unless they are here legally.
A common response and criticism to these remedies is this: but if illegal immigrants won’t pick our produce or bus our tables, won’t our prices go up?
The answer is simple: yes.
But wages would also go up, and even faster than housing, consumer products, and food prices. All working Americans would gladly pay a bit more at the store or restaurant if their paychecks were both significantly higher and more secure.
One problem with implementing these measures is that Democrats and progressives—as well as some labor unions—have taken the bait and begun to look at what they perceive to be advantages in the growing immigrant population. It’s frankly astonishing to hear “progressives” reciting corporatist and conservative talking points, recycled through “conservative” Democratic politicians, in an effort to pander to the relatively small percentage of newly legal (mostly through recent amnesties or birth) immigrants. It’s equally astonishing to hear unions going along with this (in the desperate hope of picking up new members) and embracing illegal immigration.
Every nation has an obligation to limit immigration to a number that will not dilute its workforce but will maintain a stable middle class—if it wants to have a stable democracy. This has nothing to do with race, national origin, or language and everything to do with economics.
Other Ways to Tighten the Workforce
Here’s another way to tighten up our labor market and thus raise wages and our standard of living: lower the Social Security retirement age from the current 65–67 to 55 and increase the benefits to where they were in inflation-adjusted 1960s dollars by raising them between 10 to 20 percent (so people could actually live, albeit modestly, on Social Security).
The right-wing reaction to this, of course, will be to say that with fewer people working and more people drawing benefits, it would bankrupt Social Security and destroy the economy.
But history shows the exact reverse. It would instead eliminate the problem of unemployment in the United States. All those Boomers retiring would make room in the labor market for all the recent high school and college graduates, who are now finding it so hard to get a job.
Thus a tightened labor market would increase wages. And as wages go up, tax revenues—which are paying for Social Security (among other things)—would increase.
Additionally, these new-into-the-workforce people can then pay off student loans, buy new houses and cars, and otherwise drive the economy from the bottom up (which is the only way that actually works). This will increase tax revenues even more, further strengthening the Social Security system.
What all of the above measures—cracking down on illegal employers, standardizing citizenship procedures for all nonrefugee applicants, banning any government services for illegal immigrants other than urgent medical care, and lowering the retirement age to 55—will do is ultimately tighten our labor market.
And a tighter labor market will improve wages and once again result in a stable middle class.
Bring Back the Unions
Probably the most visible evidence of a strong middle class—in every nation in the world—is a strong and vibrant union movement.
In Europe’s industrial powerhouse Germany, for example, not only are virtually all industries unionized but the law requires that half of the members of the boards of directors of every corporation in the country be composed of representatives of the workers via the union. It was one of those little things—like a national health-care system—that Harry Truman made sure got slipped into German law as the nation was being rebuilt from the rubble of World War II. The timing was particularly ironic in that at about that time—1947—the U.S. Congress had been taken over by Republicans, who, over Truman’s veto, passed the Taft-Hartley Act that legalized the union-busting for which Reagan became
Ever since 1947 American labor unions have been fighting an
uphill battle, and every loss for organized labor has been a loss for the middle class.
“Supply-side” insanity aside, any real economist can tell you that a nation’s economy grows because wages grow, increasing the purchasing power of an economic class that spends most everything its earns.
As wages go up, purchases go up. As purchases go up, demand goes up. As demand goes up, entrepreneurs will notice opportunities to meet it and create new products and start new businesses and then hire people to create the product or service they noticed.
It all begins with increasing wages.
And in America, from the founding of our republic until around 1980—about 200 years—the growth of wages had been on a steady upward trajectory. Wages produce demand, and in a supply-and-demand economy such as we have, supply is created by productivity.
Interestingly, the increase in wages pretty much perfectly tracked the increase in industrial productivity from 1786 until 1980. People earned more, and they bought more (there were hiccups for several of our large wars, but they leveled out as soon as the wars were over). As people bought more, industry became more productive both in efficiency and gross output. Supply and demand were in balance.
Then, in the 1980s, Art Laffer and Ronald Reagan and David Stockman rolled out an insane economic theory that they called “supply-side economics” (George H. W. Bush called it “voodoo economics”). Basically, it said that demand didn’t matter. If there was more stuff for people to buy, that surplus of goods would create the demand. And because with supply-side you could create a “new” type of demand—unlike “old-fashioned” demand that comes from wages—then wages didn’t matter, either. (This is why Reagan felt just fine, thank you very much, about taking a meat ax to the modern labor movement.)
Thus from the early 1980s until this day, wages of working people in America have been pretty much flat, while supply (productivity) has continued to rise. As the two lines separated, the gap had to be filled with something—and Alan Greenspan had just the thing.
The Credit Trap
While American working people’s wages have been under relentless attack—with the largest part of that assault being against the unions, which protect wages—working people were encouraged to keep buying more and more. Even after 9/11, George W. Bush knew the drill without dropping a beat when asked what Americans could do to help the nation: “Go shopping” was his instant response.
But with what money?
Alan Greenspan opened up the spigots to credit in the 1980s to fill in that “wage gap,” so credit cards that used to be very difficult to get were everywhere. In the late 1990s and the early 2000s, he further opened credit lines to include letting people use their home equity as if their house were an ATM.*
So American working people went from earning and spending to borrowing and spending. We maxed out our credit cards, then wiped out the equity in our homes.
Instead of the extra money from increased supply/productivity going to workers, it could now go to CEOs, who saw their compensation rise from 30:1 in 1980 to 500:1 in 2004. What was left over went to what the Wall Street Journal calls the “investor class,” and the stock market went from around 1,000 when Reagan was elected to nearly 14,000 in 2008—a massive transfer of wealth from wage earners to investors.
The banksters then made off with whatever else was left, and the working people of America found themselves with nothing much more than a corporate-funded Tea Party to attend to express their outrage at the state of things.
Here’s where another primary benefit that unions provide to society (and workers) comes in: they supply a countervailing balance to the power of aggregated capital. If money can organize (and it does, in the corporate form), then labor must organize to balance the excesses of unrestrained capital. Unions are democracies; corporations are kingdoms. Within historic monarchies like the United Kingdom and Norway, a strong democratic institution balancing the kingdom (parliament) has produced a positive and sustainable result. We need democracy in the workplace for American business to optimize its competing forces of ownership, management, workers, and community—a democracy that only unions can provide.
Straightening Out the Mess
The solution is to rebalance the power shift that’s occurred since 1981 by bringing back the unions. If we rolled back Taft-Hartley— or even went halfway in that direction by passing the Employee Free Choice Act—wages would begin to rise again toward the direction of productivity. This would produce real stimulus to the economy (as opposed to the phony stimulus of debt-based spend- ing); and as our economy grows, our tax base grows.
As the tax base grows, we can pay down our debts and actually go back to building things here like schools and hospitals and high-speed rail lines. (There’s a simple reason why so much of our nation’s infrastructure—including our interstate highway system, which would cost trillions to reproduce—was built during the unionized halcyon days of 1950 to 1980, and so little since then. Back then we had high wages for working people, producing a real and healthy economy, which in turn produced a stable base for property taxes and other infrastructure-funding revenue sources.)
So to bring back a strong middle class, we need to bring back the unions while we’re cleaning up our labor surplus with comprehensive immigration reform.
This is particularly important now because without a middle class, any democracy is doomed. And without labor’s having power in relative balance to capital/management—through control of labor availability—no middle class can emerge. America’s early labor leaders did not die to increase the labor pool for the robber barons or the Walton family; they died fighting to give control of it to the workers of their era and in the hopes that we would continue to hold it—and to inspire other nations with the same idea of democracy and a stable middle class.
This is, after all, the middle-class American Dream. And think how much better this hemisphere would be if Central and South Americans were motivated to stay in their own nations (because no employer in the United States would dare hire them illegally) and fight there for a Mexican Dream and a Salvadoran Dream and a Guatemalan Dream, and so on. It means a better quality of life for everyone, rather than our lax immigrant-employment enforcements providing a political and social safety valve for repressive or regressive conservative Central and South American nations.
This is the historic progressive vision for all of the Americas.
*A brilliant book on this is economist Dr. Ravi Batra’s Greenspan’s Fraud: How Two Decades of His Policies Have Undermined the Global Economy (Basingstoke, Hampshire, U.K.: Palgrave Macmillan, 2005).
1. Jack Welch, “Outsourcing Is Forever,” http://www.welchway.com/ Management/US-Economy-and-Government-Policy/Economic -Trends-and-Phenonmenon/Outsourcing-is-Forever.aspx.
3. Liz Hull and Lee Sorrell, “The Image Microsoft Doesn’t Want You to See: Too Tired to Stay Awake, the Chinese Workers Earning Just 34p an Hour,” Daily Mail, April 18, 2010, http://www.dailymail.co.uk/ news/article-1266643/Microsofts-Chinese-workforce-tired-stay -awake.html
6. “Hispanics and Arizona’s New Immigration Law,” Pew Research Center Publications, April 29, 2010, http://pewresearch.org/ pubs/1579/arizona-immigration-law-fact-sheet-hispanic-popula tion-opinion-discrimination.
Thom Hartmann is a New York Times bestselling Project Censored Award winning author and host of a nationally syndicated progressive radio talk show. You can learn more about Thom Hartmann at his website and find out what stations broadcast his program. He is also now has a daily television program at RT Network. You can also listen to Thom over the Internet.
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