Two news stories today form an interesting connection if only we take a quick moment to look.
First, the Census Bureau reports that the gap in U. S. household incomes grew in 2011, with the top 20% of households seeing increases, the top 5% doing best, and families in the middle seeing a noticeable decline. Those stuck at the bottom, however, suffered little damage. They had little and simply stagnated. As the New York Times explained this week: “Median household income after inflation fell to $50,054, a level that was 8 percent lower than in 2007, the year before the recession took hold.”
In response, Mitt Romney took time off from talking about how President Obama wanted to take “God” off America’s coins, and called again for huge tax cuts to help save the suffering top 1%.
A second story, from the BBC News, might not seem related; but careful scrutiny tells us it is. In Karachi, Pakistan, a textile factory went up in flames yesterday and before the blaze was under control 289 workers had been killed.
What’s the connection? Cheap labor, the man said. No unions, by the way, he said. You can’t ask an American worker to accept $50 per month to turn out denim and knitted garments and hosiery. In places like Karachi, though, you can. That means if you have a factory making underwear in North Carolina it makes perfect economic sense to close down and ship all those high-cost jobs overseas. In the business world it’s simple math and, to a large degree, simple math helps explain declining incomes in this country today. Ship work to places like China and Pakistan and desperate U.S. workers, faced with high unemployment and less and less likely in recent year to be represented by unions, will accept almost any wage to get a job or keep one. You can even play off cities against each other to get tax breaks or scare workers in high-wage states by talking about moving to low-wage states. North Carolina, for example. (Pakistan comes later, suckers.) And there you have it, Mr. Romney. A perfect business environment. Cheap labor, cheap production costs. Higher profits for those at the top.
Or, maybe it’s only the “nearly perfect’ environment. There are no labor unions in Pakistan, few safety regulations, and those that exist are poorly enforced. If a few safety rules are going to make it hard to speed production, don’t sweat it. That’s why they call them “sweat shops” in the first place. Just bribe lawmakers or inspectors and you’re back in business, boys. Of course, if fire breaks out, your employees are screwed, because your foremen have locked all the factory doors, the better to control workers who might take unauthorized breaks. After all, those regular 14-hour shifts can be tough.
Now scores of your workers have been reduced to ashes–and you’re looking at serious production delays–and life as a job creator can be a real bitch.
HOW DOES THIS IN ANY WAY RELATE TO AMERICANS TODAY, other than to see it as a tragedy and maybe say a prayer for the dead? It might help to go back in time and remember what it was like when the labor movement in America was still trying to gain a hold. It might help you see that we were like Pakistan once. A century ago, at a time when the Titanic was under construction, the fight to end child labor was still being waged. Factory owners were then strident in defense of their right to hire eight-year-olds to work twelve-hour shifts. In fact, the math of the matter was clear. Tiny children could be convinced to work for pennies per hour. Coal miners might suffer from black lung and die in cave-ins and explosions in those days and no one cared except co-workers, friends and families. Railroad workers might be crushed between cars and steel mill puddlers burned alive on a daily basis. A worker in a slaughter-house who cut off three fingers would be fired for carelessness, not offered worker’s compensation. It didn’t matter. It was all math. In 1910, for example, thousands of textile workers in New York City had to go on strike to win even a partial victory, including a 52-hour work week. Unfortunately, the owners held fast against unions and safety issues continued to be a serious concern. Reformers knew there were problems but workers, who lacked all kinds of job protection, were afraid to complain because they knew they’d be fired.
The inevitable result was the famous Triangle Shirtwaist Company fire of March 25, 1911. The Triangle Shirtwaist Company operated out of a ten-story building in the Greenwich Village neighborhood of New York City, employing 900 workers, mostly young Jewish women and girls, many recent immigrants in desperate need of work. When fire broke out around 4:45 p.m. (workers later explained that the actual time was in question because foremen often set clocks back to stretch the work day) it spread quickly. There were piles of finished goods and combustible debris in barrels blocking most exits (because cleanup was an expense and it was good arithmetic to skip the whole mess). Too late, eyewitnesses had to watch in horror as girls in flaming dresses leaped from eighth and ninth story windows. The final toll was 146.
That’s where unions really come into this story. Unions came into existence as a necessary counterweight, to lead an organized fight, to protect the workers’ best interests. That’s what they do (no matter how mad that makes opponents on the right). And where workers are in no position to fight for their rights you can expect to see falling wages. In New York City in 1911 it was falling bodies.
In Pakistan, where unions have no hold, it’s still the same way.
We’re not going to end up like Pakistan. No need to fear that; but the more the average worker loses ways to fight back the more we need to get used to the idea of a shrinking American middle class. The right howls that union thugs want to destroy the capitalist system. That’s not true it at all. Unions want to insure that the average worker, the men and women who form the foundation of every economic system known to man, get their good share. In other words, we need to remember the math and grasp what it means. You don’t enjoy the eight-hour day in 2012 because your boss loves you. You have an eight-hour day because previous generations of workers, especially organized into unions, fought to reduce the load. (It didn’t kill capitalism, by the way; capitalism adjusted, which is always one of its strengths). You don’t get overtime pay because businessmen and women now believe the principles of math have been changed. You get overtime because workers fought for it and because unions pressed lawmakers to pass laws to guarantee time-and-a-half pay.
The laws of math still hold absolutely true in Pakistan if you can make workers put in terribly long hours for ridiculously low pay. The laws still hold if you can ship an American job to Mexico, too. In fact, if you’re old enough, you might still remember a time when U.S. trade unions had the power to enforce “union only” rules at almost all construction sites in the United States. Business types didn’t like the arithmetic, though, broke the unions when they could and, what do you know, started paying much less and even hiring undocumented immigrants to pound nails, install sinks and lay shingles down. Those illegals! They can’t complain about pay or working conditions because they’re here illegally; and boy, do they work cheap.
Really, the math of it all is easy to see. The more American workers let themselves be pushed around the lower wages sink. Unions exist to protect workers. The more unions are broken the less protection they have. According to government statistics, the figures are clear. The average worker in the United States, represented by a union earned $934 weekly in 2011. The average unrepresented worker made substantially less, $729 (and tended to be much less likely to have health coverage, as well).
Multiply that out and the average union worker is $10,000 + better off ever year. If Mom and Dad both work and both are represented, you’re looking at a family that can afford to send a child to college. If it’s just Dad, you’re seeing a man who can more easily afford to take his wife out to dinner or buy his teenage son new Nike shoes (probably made in a Southeast Asian sweat shop, by the way). You’re looking at a young woman, a nurse, teacher, UPS driver, or Ford worker, who can buy a new car every fifth year. Now you’re looking at the middle class.
If you’re in business to make a buck, in the end, you’re looking your own best customers in the eye. In Pakistan, all they see is the math. That’s how it used to be in this country, too, but we made real progress, achieved a fairer division of the wealth. Capitalism didn’t die. Instead, it thrived. It probably strikes most economists and sensible thinkers that we’re all better off it we don’t go back.
Someone probably needs to tell Mitt Romney the facts.