The US job’s picture brightened a bit earlier this month when the Labor Department reported that the economy added 200,000 new jobs in December. According to Doug Henwood, publisher of the Left Business Observer, the report even contained good news about the manufacturing sector. During 2011, it added 200,000 jobs, “the best gain in percentage terms (using yearly averages) since 1984.”
Henwood, however, goes on to say that every silver lining has a dark cloud hanging over it. The reason that manufacturing jobs are on the rise is because good paying manufacturing jobs that offer workers a chance at a decent life are being replaced by low-paying manufacturing jobs that offer little but a hard scrabble life on the brink of poverty.
In fact US labor costs are dropping so low that companies are moving operations from Europe and Canada to the US to take advantage of our cheap labor. Caterpillar is one company that appears poised to take advantage of these lower labor costs. It recently locked out workers at its Electro Motive Diesel (EMD) plant that manufactures locomotives in London, Ontario in Canada, and according to the Wall Street Journal, may use the lockout as an excuse to move the work to its newly opened Progress Rail plant in Muncie, Indiana.
Workers at EMD make about $30 an hour; workers at the Muncie plant make between $12.50 and $14.50 an hour. At $30 an hour, a Canadian worker can afford a life with some middle-class amenities. The annual base pay for a Muncie worker, however, would be between $26,000 and $31,160, which would be 120 percent and 140 percent respectively of the US Census Bureau’s poverty level for a family of four.
For what this means in more substantial terms, we can look to the auto industry, which seems to have succeeded in making a two-tiered wage rate system a permanent part of the industry’s labor cost structure.
While the base pay for workers on a GM assembly line hired before 2007 is about $32 an hour, newly hired workers, or Tier 2 workers as they are known, start out at about $16 and over time may see their base pay increase to a maximum of about $19 per hour. Even workers whose pay rises to the maximum Tier 2 rate will find that their base pay falls short of the $44,226 a year that labor market economist Heidi Shierholz of the Economic Policy Institute says is needed to meet “bare-bones, month-to-month” expenses such as food, clothing, transportation, and health care of a family of four.
Nick Waun, a Tier 1 auto worker at GM’s Lordstown, Ohio plant, explained to Remapping Debate the difference between the lives of Tier 2 workers and higher paid Tier 1 workers. Waun, a fourth-generation auto worker, remembers that when he was growing up, his family wasn’t wealthy, but they could afford vacations and other extras that made life enjoyable.
The extras, however, are out of reach for most Tier 2 workers. It’s even difficult for them to meet day-to-day expenses. A Tier 2 friend told Waun that she had to take out a payday loan to buy a new pair of glasses.
According to the business class, low-paying manufacturing jobs are the natural result of a globalized economy. There’s nothing that workers can do but accept their fate and try to be more flexible–a euphemism for give up your labor rights, take what the boss gives you, and don’t try to organize and fight back.
But Remapping Debate says that low-paying manufacturing jobs are less the result of the natural laws of economic evolution and more the result of a conscious national policy on taxes, trade, and labor issues. In Germany, Remapping reports, there is no two tier wage system for auto workers. All are paid a fair wage that allows a decent standard of living, and auto makers still make a healthy profit even though, presumably, they compete in the same globalized market as US auto companies.
The difference is that German unions had a stronger voice in establishing national manufacturing and labor policies and continue to have enough strength to maintain most of those policies.
Now, there’s no guarantee that German unions over the course of time will be able to protect workers’ standard of living because as David Harvey points out in The Enigma of Capital the essential law of capitalism is that capital must circulate and expand and to do so must minimize all barriers, such as labor costs, to its expansion.
But the example of Germany and the European social democracies like Sweden offer at least a short-term alternative to the race-to-the-bottom policies like those being pursued in US manufacturing. But changing the race-to-the-bottom strategies advocated by the business class will require a much more powerful labor movement whose voice cannot be ignored.