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Age of Crushing Anxiety: How the Bottom Fell Out in America

How economic security was destroyed.

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Shunting its workers off to temp agencies is just one of the many ways Wal-Mart diminishes what it sees as the risk of unionization. When the employees in one Canadian store voted to unionize, Wal-Mart closed the store. When butchers in one Texas outlet voted to go union, Wal-Mart eliminated the meat department in that store and in every other store in Texas and the six surrounding states. But Wal-Mart’s antipathy to unions and affinity for low wages merely reflects the South’s historic opposition to worker autonomy and employee rights. By coming north, though, Wal-Mart has lowered retail-sector wages throughout the U.S.

The more recent influx of European- and Japanese-owned nonunion factories to the South has had a similar effect. In their homelands, Mercedes, Volkswagen, and Toyota work closely with unions, and the German companies pay their workers as much as or more than the most highly paid American autoworkers. When such companies move into the American South, however, they go native, not only paying their workers far less than they do in Europe or Japan but also opposing their efforts to form a union. (Under pressure from the German autoworkers union, however, Volkswagen has recently committed itself to establishing a consultative works council at its Tennessee plant. Such councils are standard at Volkswagen plants in Germany and other nations; in the U.S., the particulars of American labor law require that the company recognize the UAW as the workers’ representative.)

One way these factories reduce workers’ wages is not to employ them directly. By the estimate of one former manager, roughly 70 percent of the workers at Nissan’s plant in Smyrna, Tennessee, aren’t Nissan employees but rather are under contract to temporary employment-service companies that pay them roughly half the hourly wage of Nissan’s own employees. One academic survey found that while just 2.3 percent of manufacturing workers in 1989 were temps, by 2004 the number had risen to 8.7 percent. 

Southern competition is one reason newer hires at the Detroit Three’s auto plants have hourly wages that top out between $16 and $19, while workers hired before the institution of the two-tier system can see their base pay rise to between $29 and $33 an hour. A cumulative effect of Wal-Martization is that incomes in the industrial Midwest have been dropping toward levels set in Alabama and Tennessee. According to Moody’s Analytics, the wage-and-benefit gap between Midwestern and Southern workers, which was $7 in 2008, had shrunk to just $3.34 by the end
of 2011.

2000

As corporate executives came under pressure to reward share-holders by cutting labor costs, the revolution in transportation and communication enabled them to move production facilities to the developing world where workers came cheap. The flight of jobs to low-wage nations was accelerated by a series of trade accords, most prominently the North American Free Trade Agreement in 1993 and the extension of Permanent Normal Trade Relations to China in 2000.

The textile and apparel industry lost more than 900,000 jobs in the 1990s and 2000s. High-tech manufacturing was not spared, either. The computer and electronics--manufacturing sector lost an estimated 760,000 jobs during that time. By offshoring the production of its iPhone to the Chinese labor contractor Foxconn, Apple has realized a profit margin of 64 percent on each device, one of many reasons its stock price soared. From 2000 to 2010, the number of Americans employed in manufacturing shrank from 17.1 million to just 11.3 million. In 2011, the number of workers in the low-paying retail sector surpassed the number in manufacturing for the first time.