U.S. Factory Workers Competing in a Global Market
ED GORDON, host:
From NPR News, this is NEWS & NOTES. I'm Ed Gordon.
On Monday, General Motors announced that it will cut 30,000 North American manufacturing jobs. GM will also close a dozen factories, including plants in Pennsylvania, Michigan and Georgia. The closures highlight a growing trend in American manufacturing. Companies are saving billions by outsourcing low-skill jobs or replacing workers with machines. Meanwhile, workers who once made a middle-class living are now being forced to find new ways to compete in the global market.
For more on the changing face of American manufacturing, we're joined by Bill Fletcher Jr., president and CEO of TransAfrica Forum. Mr. Fletcher formerly served as education director for the AFL-CIO and later as assistant to that union's president. He joins us from New York.
And joining us from Philadelphia is Bernard Anderson, professor of management at the University of Pennsylvania's Wharton School. He is also former assistant secretary of Labor for the Clinton administration.
Gentlemen, I thank you both for joining us. Professor Anderson, let me start with you. Some critics will suggest that perhaps some of these jobs are due in part to the management style of General Motors, the problems they have had over the years, but this is a growing trend in America, is it not?
Professor BERNARD ANDERSON (University of Pennsylvania Wharton School): It certainly is. And first of all, the 30,000 jobs that were announced by General Motors that should be added to the 20,000 reduction in employment that was announced by GM last year, so we're talking here about 50,000 jobs minimum to be eliminated over the next three years. I think that to some extent, the discouraging and unfavorable effect of this is due to management decisions, which show that General Motors simply is not competitive in world production and distribution of automobiles. They missed the market. This is a management decision. They were producing products that many people did not want to buy and certainly wanted to buy far fewer of when the price of gasoline reached $2.50 or $3 an hour.
GORDON: Mr. Fletcher, no one wants to say the sky is falling yet. We are seeing what used to be, as we noted earlier, the Mecca for manufacturing, and that is this country turned out almost everything to a degree that there was world dominance, and over the decades, we have seen that shift and change, yet we haven't seen America change with that shift. What's the problem?
Mr. BILL FLETCHER Jr. (TransAfrica Forum): Well, I think that part of what's happening is that manufacturing is actually bifurcated in this country, so you have a high-end, very skilled component of the manufacturing work force, and then you have an increase of low-skilled manufacturing jobs, so it's not that manufacturing is disappearing, but the unionized, semiskilled work that once was central to the development of a middle class in this country is being destroyed, and with it, we are seeing the hollowing of many cities and the elimination of the opportunity for people to have stable jobs where they can buy a home, send their children to college. Instead, people are working two, three--many jobs.
Prof. ANDERSON: Well...
GORDON: So, Professor, taking what--and pick up on Mr. Fletcher's point.
Prof. ANDERSON: Yes.
GORDON: But taking that, what we've seen, as his suggestion is, is the manufacturing moving to high-end, like computer chips and the like, and what we knew before--the automobile industry, steel factories and the like--being displaced and disproportionately displacing a whole lot of African-American workers.
Prof. ANDERSON: Yes. Ed, welcome to the world of globalization. What's happening here is that as a result of the development of fiber-optic communications technology, many middle-income jobs are being outsourced to other countries. As a result of our trade policy, NAFTA in particular, there is strong encouragement for domestic manufacturers to operate offshore. What this is doing is eliminating the middle steps of the ladder of upward mobility for non-professional working families. We're eliminating those jobs that pay on average between maybe 800 and a thousand dollars per week. And these are jobs that typically paid good benefits. Fifty-three percent of American workers now have no pension coverage; 46 million, no health insurance; 37 million, no prescription drug coverage. The average Social Security payment is $900 per month.
One of the major factors associated with this decline is, in my view, the decline in unionization, which eliminates the major source of wage growth for middle-wage production workers. If you look at the relationship between the increase in productivity in the American economy and the increase in compensation, what you find is that beginning around the 1980s, there was a widening gap between productivity and compensation. Well, in economic terms, under the basic economic principles, the two should go hand in hand, but that is not what's happening. What is the impact on the black community? It is eliminating production jobs that were the bedrock of the black non-professional middle class. These were the jobs that provided income for black families to send their kids to college. Many of the kids who went to college, many of them going to state universities, were the first in their family ever to graduate from college or even from high school. That whole slice of jobs available to non-professional African-American families is being eliminated in this country as a result of globalization.
GORDON: So, Bill Fletcher, what do we tell those people and coming generations that would have taken that same route, that same track, people in Chicago and Cleveland and Detroit, as the professor said, who made solidly middle-class lives for themselves and bettered their children's future--with these jobs gone and nothing to replace them, are we really looking at a city that will, in fact, decay and a group, a generation, that will evaporate?
Mr. FLETCHER: I think in order to answer that, I have to just qualify one thing that the professor said, which is just so that there's not a misunderstanding, when people talk about globalization, very often--and I'm not saying that this is what the professor's saying--the assumption is that this means jobs are simply moving overseas or something, and what it's very important for the listener to understand is that many of the manufacturing jobs that were once upon a time in our major cities are being moved not overseas, but they're being moved into rural parts of the United States. It's a calculated move. There's a historical basis of this in what happened in the textile industry in the early part of the 20th century. And it relates very much to what the professor was saying earlier about management decisions in terms of issues and profits.
One of the things that I think is so critical for us to keep in mind is that because these are decisions made by human beings, that human beings can begin to make other decisions, particularly political decisions, when it comes to issues of economic development. So instead of having governments that are emphasizing the building of racetracks and baseball stadiums, we need to have economic development planning for our municipal areas where we're thinking about the development and production of high-end employment. Other than that, what we're going to have is the continued growth of low-end work.
GORDON: Professor, let me ask you this. Even if you account for state vs. state, the South having perhaps more relaxed regulations or out West in Los Angeles, where many undocumented workers take many of these jobs from those who might have taken them in the past, you still find it hard--companies being `you'--find it hard to compete on the global market by virtue of the sheer wage that can be paid overseas.
Prof. ANDERSON: Absolutely, and I think, at the end of the day, it comes down to wage and profit competitiveness. That's what it comes down to. Take the automobile manufacturing industry. For some years now, going back at least two decades, automobile manufacturers domestic were moving their plants increasingly to the South. But--and here is the globalization angle--foreign companies that produce automobiles moved into the United States and where did they locate? They located in the South, in South Carolina, in Tennessee, in Mississippi, in Alabama. They are seeking the lowest-price, lowest-cost areas in which to operate. They get tremendous tax advantages from the states in which they locate, but they also avoid unionization. I don't believe there is an automobile manufacturing plant located in the South that is currently unionized. Well, when they're not unionized, what does that mean? That means they don't pay the higher wages. They don't pay the benefits. They don't have the pension obligations. And so, yes, there's a rush to the bottom in minimizing the cost of production. Much of that, as was indicated, depends on management decisions, but (technical difficulties) management decisions...
Prof. ANDERSON: ...in an effort to compete in a global economy.
GORDON: Bill Fletcher, with less than a minute to go, quickly for me, are you optimistic about what we have known for years as the black middle class, that eventually they will be able to shore up and find ways to fill the void that now exists?
Mr. FLETCHER: I'm not optimistic about any middle class unless we increase the rate of unionization and unless we change the political priorities of this country. I think that what we will see is exactly what the professor was indicating, a continued race to the bottom, declining living standards and increased polarization of wealth. And when you have that in any society, what you have is a recipe for mass social instability.
GORDON: All right. Bill Fletcher is president and CEO of TransAfrica Forum. He formerly served as education director for the AFL-CIO. And Bernard Anderson is professor of management at the University of Pennsylvania's Wharton School and former assistant secretary of Labor under the Clinton administration. I thank you both for joining us.
Mr. FLETCHER: Thank you.
Prof. ANDERSON: Thank you.
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