I wrote this originally as a class paper in early 2008 to explore whether or not and how much globalization has affected the unions and whether or not this has had an impact upon our standard of living.
I let the paper stand on it's own merits and leave you, the reader, to develop and pursue your own opinions upon this subject. I will be the first to admit, after researching for this paper, that there is a whole host of underlying themes and information that were not able to be covered in the length I was limited to.
The Fall of the Family Wage
Today, globalization is in every facet of our lives. We get calls from American solicitors thru call centers in India, our clothing is made in the Far East and our car parts may be made in 5 or more different countries and assembled in the U.S. to be shipped to Europe. Because of satellite communication and the Internet, we can see and talk to someone halfway around the world with the push of a few buttons.
Why then, is the perception of the American economy by the average American worker so gloomy? Why have the unions steadily lost members since the 1950’s and the average hours a family needs to work to provide a living wage increased in the last 25 years? What role has the government and corporate business played in the seeming decrease in the American worker’s spending power?
To answer these questions, it is necessary to look at the history of the union, changes in corporate policies and technologies and government agreements in the form of tariffs and trade agreements.
Unions have a history dating back to the Middle Ages when guilds were formed in Europe to control quality and pricing of goods and services. The same principles have been handed down through the centuries and across the ocean to today’s modern unions- A fair day’s pay for a fair day’s work. However, at the beginning of the 20th century, such was not the case; child labor, no minimum wage and horrendous working conditions were the norm. Unions were in their infancy and still struggling to become a national force. Between 1900 and the institution of the Fair Labor Standards Act by the government in 1938 unions became more and more organized and began to have a larger voice in politics through the American Federation of Labor (AFL). Soon after the Congress of Industrial Organizations would form an independent federation of unions and further empower the working class.
From the 1940’s to the 1970’s union workers enjoyed a golden age of prosperity and political activism that brought about changes in law to include the Equal Pay Act which prevents discrimination based on gender, the Civil Rights Act which bans discrimination based on race and passing of the Occupational Safety and Health Act(OSHA). During this time the AFL merged with the CIO and became the AFL-CIO with a membership of millions of workers throughout the manufacturing industry.
During this same time period, industrialization reached new height for companies, spurred on by two World Wars and the Great Depression. The blue collar worker was seen as the backbone of the country. However, with the advent of technological advances, such as computerized automation, this slowly and surely began to change the landscape of the working class.
Companies soon realized that automation was more cost effective and easier to control than workers. Although there were worries that automation would provide less jobs for workers, the union leadership was slow to see the long term effects that automation and other technological advances would have upon unions and their powers to bargain with companies. Union leadership did not mark the change in the job landscape that was occurring with the advent of computers from a manufacturing to a service oriented and, largely non-union, base. This lack of foresight would have large consequences for the union’s bargaining power in the loss of millions of jobs and members over a 20 year period.
Union Vs Company
Today, the union has basically divided itself over the course it wishes to take to attempt to regain its power to protect worker’s rights. Many in union leadership believe that using political influence to keep government trade agreements and tariffs from further eroding the standard of living enjoyed by American workers is the course to take. The opposing faction within the union leadership believes that the union as a whole should be concentrating their efforts of organizing the service sectors previously overlooked by unions and to ensure that any governmental trade and tariff agreements include provisions for the basic human rights and wages of workers in other countries.
Corporate business, over the same period of time, was getting larger and larger. At the turn of the century a company may have been considered large if it had more than 100 workers. By the 1970’s, large companies hired thousands to staff a plant. Post- war Europe and Japan were beginning to be globally competitive and U.S businesses were faced with lower profits and smaller markets due to foreign competition.
Corporate business was beginning to look for ways to cut costs to compete with foreign companies that could produce the same or a better product at a cheaper price. The rise of automation and computer technology at the same time seemed to be a ready-made solution for manufacturing companies. Automation reduced the cost of manufacturing by being able to produce more products with less people thereby reducing the workforce necessary to complete a job. Outsourcing, the practice of getting parts or components made outside of a company by a third party at a cheaper cost was another solution for many manufacturing companies. Outsourcing was often done to foreign countries where wages were lower and workers did not have the same governmental protections afforded to American workers.
As the transition from a manufacturing base to a service base continued, companies also found it more cost effective to build plants closer to their customers. Trade agreements with other countries for the use of land, people and resources created greater savings for many companies without many of the restrictions found in the United States due to labor and environmental laws. This created a new mind set for companies toward unions. According to Charles Craver, a professor of Law at George Washington University,
“As the U. S. has been transformed from an industrial to a white collar, service and retail economy that is increasingly affected by globalization and competition from foreign nations, employers increasingly view representative unions as uncompetitive and inefficient institutions.” (Craver 133-147)
The globalization of many manufacturing businesses created record growth and profits for many companies. Globalization also provided foreign countries with an increase in cash flow from wages earned by their workers. This allowed more foreign families to buy products produced by American companies further driving up the American company’s profits.
Corporate businesses began to be seen as a global political force. Where once unions held political sway, now companies learned to manipulate the political system for their own gain. Companies have poured millions of dollars into lobbying. Companies lobbied for changes in trade agreements and tariffs that allowed for open borders and equality amongst different nations. The backing of business by the government was seen as necessary to keep U. S. businesses at the forefront of the emerging global economy.
The North American Free Trade Agreement or NAFTA is the most commonly known trade agreement to most Americans. NAFTA effectively eliminates the majority of tariffs between Canada, Mexico and the United States. In a speech by President Clinton after the House of Representatives vote on NAFTA, he outlined the benefits to the American public:
“By eliminating Mexico's tariffs and restrictive rules we'll be able to export more cars, more computers and other products and keep more American workers on the job here at home. NAFTA will raise environmental and labor standards in Mexico. And I want to ask tonight labor and management to work together with our administration to ensure that the labor and environmental provisions of NAFTA are honored. We must make sure that this pact works to America's advantage.” (“President Clinton”)
Yet, the result of NAFTA according to economist Kevin Gallagher is that “America has lost between 530,000 and 750,000 jobs” (Brownfeld) Additionally, according to a report by the Washington Post in 2006, Tariffs, which are taxes on imported goods to level the playing field for domestic producers, have largely been lowered or eliminated in many of the agreements that the United States is now party to. According to the Washington Post in 2006, “The results of such trade agreements are skyrocketing trade deficits -- more than $800 billion this year alone -- and downward pressure on income and benefits for American workers.”(Brown A21) Opposition to liberalized trade came increasingly from Labor Unions, but their shrinking size and diminished political clout repeatedly left them on the losing side.(Doran and Marchildon 34)
Too Much of a Good Thing...
It has become increasingly clear to the average union worker that globalization has not had the benefits hoped for by politicians and statistics seem to bear this out. Average wages fell 3.6 percent after inflation, a reversal of rising incomes in the 1980s and 1990s. And while wealthier households got richer, those in the lower rungs got poorer- effectively weakening America’s middle class. (Newman 48-56) Union membership has fallen to its lowest levels since the formation of the unions. Union members themselves understand the results of globalization and the impact it is had. According to many union members they feel the greatest cause is corporate greed aided and abetted by government protection of corporations and political maneuvering on a global scale.
Even companies that promote globalization are realizing that it may not be in their best bottom line to continue globalization. Many of the executives said their own companies or industries in particular were negatively affected by increased government regulation (63%), manufacturing's shift to low-wage countries (51%), the availability of lower-priced goods from abroad (44%) and the greater education and skill levels of workers in other countries (42%). (“U.S. Lags Behind” 14)
This disproportionate distribution of wealth is felt not only in the United States by also globally. Consider the fact that “the assets of the 200 richest people in the world are greater than the combined income of the more than 2 billion people at the other end of the economic spectrum. “ (Mazur 79-93) Mazur also points out the fact that the “Of the 100 largest economies of the world, 51 are corporations.” These global corporations and other multinational corporations have continued to systematically engage in tactics to discredit and break unions or their organization.
A recent twist in this campaign has been the filing of racketeering charges against unions, accusing unions of the same tactics used by the Mafia. A lawyer for one of the companies G. Robert Blakey stated “he knew of six racketeering suits against unions for so-called corporate campaigns meant to pressure companies into unionizing by drawing attention to their asserted shortcomings. Five of the suits survived motions to dismiss, he said, at which point the unions generally entered into settlements.” (Liptak)
Given the statistics of job loss, decreases in the middle class and their spending power, and the systematic erosion of union influence and bargaining power, it is clear that globalization has had a much greater negative impact on unions and the middle class than politicians and other experts could have predicted.
For More Information
Brown, Sherrod. How Free Trade Hurts." Washington Post 23 Dec 2006, Natl. Ed.: A21.
Brownfeld, Peter. "NAFTA Gets Mixed Reviews after 10 years." FoxNews.com. 18 Dec 2003. Fox News. 22 Feb 2008 <http://www.foxnews.com/story/0,2933,106056,00.html>.
Clinton, William. "Remarks by the President After House NAFTA Vote." The White House, Washington DC. 17 Nov 1993.
Craver, Charles. "The Relevance of the NLRA and Labor Organizations in the Post-Industrial, Global Economy." Labor Law Journal 57(2006): 133-147.
Doran, Charles and Gregory Marchildon. The NAFTA Puzzle: Political Parties and Trade in North America. 1st ed. Boulder,CO: Westview Press, 1994.
Liptak, Adam. A Corporate View of Mafia Tactics: Protesting, Lobbying, and Citing Sinclair." New York Times 05 Feb 2008, Natl. Ed.: Sidebar.
Mazur, Jay. "Labor's New Internationalism." Foreign Affairs 79(2000): 79-93.
Newman, Richard, and Carol Hook; Allegra Moothart. "Can America Keep Up?." US. News & World Report 03 Mar 2006: 48-56.
"U. S. Lags Behind." Journal of Accountancy 202(2006): 14.
Neil Sperling from Port Dover Ontario Canada on August 02, 2010:
Extremly well researched and done - great job - I have to agree with James "by 1970 union members in the Rust Belt were doing shoddy work; vastly overpaid for menial labor with no education" thus a huge reason why companies go over seas.
World-Traveler from USA on April 03, 2010:
A very nice analysis. Content excellent.
Cuz Tom on August 27, 2009:
There you are! ONe of the Firefox updates wiped my bookmarks so I had to dig around to find your url again :P
Nanny J.O.A.T. (author) from Somewhere over the rainbow on May 20, 2009:
Thank you very much! I am gald you liked it.
That was actually the hard part for this paper - finding sources that were knowledgeable without the hyperbole and skewed facts.
Barbara Yurkoski on May 20, 2009:
Excellent, thoughtful, well researched essay Nanny J.O.A.T. In contrast to the sweeping generalizations and angry rhetoric that so often masquerades as debate on this issue.
Nanny J.O.A.T. (author) from Somewhere over the rainbow on May 12, 2009:
Thank you for your thoughtful and insightful comment :)
As I stated there are a whole host of issues that I did not get into - I was concentrating on what the effects of globalization has done - not placing blame on either side. I just got laid off from a large UAW corporation and I can see both sides of the issue and there's enough blame to go around for everyone I think. nuff said! I take no sides!
James A Watkins from Chicago on May 12, 2009:
You have presented one side of this issue extremely well so kudos for that. The 1940s through the 1970s were indeed the golden age for unions but that golden age killed the golden goose. I will have to write a whole hub to succinctly explicate the entire issue but in short: by 1970 union members in the Rust Belt were doing shoddy work; vastly overpaid for menial labor with no education many of whom's parents picked fruit for a living; with unsustainable lifetime benefits; with sinecures like one can see on the Sopranos where a guy collects a paycheck for sitting in a chair all day; and as a result drove American manufacturing out of business or the production part out of the country while they continued to go on strike every other year against the companies that had provided their families with the best jobs in generations while Nero played his fiddle and the unions were controlled by mobsters. They fought automation that would have kept us competitive with the Japanese and other countries. It was state laws in the Rust Belt, particularly in Michigan that did them in, not Federal Law.