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Cheap labor is good for business! Low wages can be bad for workers. From the BBC World News: http://www.thewe.cc/weplanet/news/children/child_labor.htm Outsourcing and Michigan The state of Michigan expects manufacturing to continue to decline by 1.2 percent through 2012. Group discussion

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low wages can be bad for workers
Low wages can be bad for workers.

From the BBC World News: http://www.thewe.cc/weplanet/news/children/child_labor.htm

outsourcing and michigan
Outsourcing and Michigan

The state of Michigan expects manufacturing to continue to decline

by 1.2 percent through 2012.

group discussion
Group discussion
  • What do you consider to be a high quality job? What does it look like?
  • Do you think that high quality jobs and successful businesses are possible are mutually exclusive or both possible? Why or why not?
today s lecture
Today’s lecture
  • Concepts—what role does labor have in globalization?
  • Case 1—CAFTA
  • Case 2—slavery in Brazil
slide7

I have a problem. These people below me are demanding higher wages and better working conditions

I know! I will globalize my company and hire people overseas where unions are illegal and they are desperate for jobs!

I’ll help because I need international loans (and I can make a buck too!)

CORE

PERIPHERY

$

Give us higher wages and better working conditions or we won’t work for you!

What other choice do we have?

Wages

Working conditions

Environmental standards

what is the importance of labor
What is the importance of labor?
  • The global mobility of capital (i.e. business) means that it seeks ways to lower costs and increase profits.
  • We have talked about how capital does this through things such as seeking lower wage workers, movement of culture, and export of environmental degradation.
  • This class we will look more closely at the consequences of how capital seeks to lower costs through labor wages.
the rise of lean production
The rise of “lean” production
  • Essentially, new form of mass production that seeks to streamline the production process (more $ faster!).
  • Involves strategies such as:
    • Casualization and contracting of labor
    • Speeding up of work over longer work periods
    • Just-in-time production
    • Outsourcing
globalization made lean production more possible
Globalization made “lean” production more possible
  • Sourcing from various parts of the world is now cost effective.
  • New technologies allow for highly coordinated global production (no stockpiling necessary).
  • Automation has also “deskilled” production meaning movement of workers in and out of a job is easy.
outsourcing
Outsourcing
  • High degree of unionization in the US has meant that past workers have “competed” with management.
  • Now, workers in core countries are competing against workers in peripheral countries
  • Competition is against, non-unionized workers in areas with a low standard of living and low wages.
  • Interestingly, out-sourcing within the US takes place between union and non-union sources.
the impact
The impact
  • 3.3 million jobs are expected to be lost overseas by 2015
  • Over half of Fortune 500 companies have moved jobs offshore
  • According to the U.S. Bureau of Labor Statistics, job separations due to overseas relocation are at their highest level since 1995.
in short there is a race to the bottom
In short: There is a “Race to the Bottom”
  • Mobility of capital depresses wages, benefits, and working conditions globally
  • Under neoliberal policies, capital is always more mobile than labor.
the impact on workers here and abroad
The impact on workers here and abroad
  • 80% of the total workforce in the US that hold working-class jobs saw their real average weekly earning slip by 18% from 1973 to 1995 (Moody 1997).
  • 11% of the US workforce is at risk of outsourcing (Anderson 2005).
  • 47,000 workers in China died on the job in 2001 (Brown 2002).
  • For each fatality there is an estimated 750 disabling injuries (Brown 2002).
slide15

I have a problem. These people below me are demanding higher wages and better working conditions

I know! I will globalize my company and hire people overseas where unions are illegal and they are desperate for jobs!

I’ll help because I need international loans (and I can make a buck too!)

CORE

PERIPHERY

$

Give us higher wages and better working conditions or we won’t work for you!

What other choice do we have?

Wages

Working conditions

Environmental standards

cafta

CAFTA

Depressing wages by moving jobs

what is cafta
What is CAFTA?
  • U.S.-Dominican Republic-Central American Free Trade Agreement
  • Expansion of NAFTA and a stepping stone towards the FTAA (Free Trade Area of the Americas)
  • According to the Department of Commerce, "More than 80 percent of U.S. exports of consumer and industrial goods will become duty-free in Central America (Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua and the Dominican Republic) immediately, with remaining tariffs phased out over 10 years."
the current state of cafta
The current state of CAFTA
  • Signed in May, 2004 by the governments of the US, Guatemala, Nicaragua, Honduras, Costa Rica, and El Salvador. The Dominican Republic was added late 2004.
  • Passed in congress on July 28, 2005 by a vote of 217-215.
  • Last week, Bush traveled to Argentina to meet with leaders about FTAA.
slide19

A masked protester carries stones Friday in Mar del Plata, Argentina, during a march against a visit by President Bush for the Summit of the Americas. The violence broke out after a long day of peaceful protests involving an estimated 30,000 marchers.

© 2005 The Seattle Times Company

the cafta argument
The CAFTA argument
  • Small Countries, BIG Markets
  • CAFTA levels the playing field for U.S. workers and farmers
  • Strengthening freedom and democracy
  • Textiles: United to compete with Asia
  • Strong protections for labor and environment
  • Increased sugar imports under the agreement equal little more than one day's U.S. production.
the argument against cafta
The argument against CAFTA
  • May create new markets, but will also export manufacturing jobs
  • Central American farmers will likely not be able to compete with American farmers.
  • CAFTA fails to include the core standards established by the International Labor Organization (ILO).
  • Under CAFTA, corporations would be able to pit exploited workers in Costa Rica against even more desperate workers in countries such as the Dominican Republic.
the consequences for workers
The consequences for workers
  • The average U.S. manufacturing worker $16/hr while the average Honduran worker producing goods for export to the United States makes 90 cents/hr.
  • The U.S. has lost over 879,000 jobs under NAFTA, many of those moving to Mexico.
  • Now one-third of the 800,000 manufacturing jobs claimed by the Mexican government to have been created under NAFTA have disappeared as companies move once again to cheaper labor sources.
group discussion23
Group discussion
  • Do you think that CAFTA will have a positive or negative impact on people in the United States?
    • Who do you think that it will help?
    • Who do you think that it will hurt?
  • If you had the option of voting for or against CAFTA, what would you vote and why?
slavery in brazil

Slavery in Brazil

Depressing wages forcibly

low wages to no wages
Low wages to no wages
  • While outsourcing (or the threat of it) can help capital depress wages, there has been a recent increase in slavery as a means to keep labor costs low.
  • According to the CIA, 50,000 people are trafficked into or transited through the U.S.A. annually as sex slaves, domestics, garment, and agricultural slaves.
in brazil
In Brazil
  • As estimated 25,000 people are working in slavery (number may be much higher).
  • A decade ago, there were less than 5,000 slaves.
  • Workers are recruited by the "gatos," or "cats," who go to towns deep in Brazil's two poorest states, Piauí and Maranhão to recruit laborers.
  • They are then transported deep into the Amazon and held under armed guard to clear trees for wood and to make room for cattle ranches.
the pressure to export
The pressure to export
  • Until 1990 Brazil produced only enough beef to feed itself. Since then its cattle herd has grown by some 50 million, and the country has become, according to some estimates, the world's biggest exporter: it now sells 1.9m tons a year.
  • The United States is the main importer of Brazilian mahogany (as much as 80 percent of Amazon timber comes from illegal sources )
group discussion28
Group discussion
  • Section 307 of the US tariff act of 1930 prohibits the "import of merchandise that has been produced in whole or in part with prison labour, forced labour, or indentured labour in the penal system“
  • Should the US import products that were produced using slave labor?
  • Why do you think these imports continue?
one more set of questions
One more set of questions…
  • Globalization appears to have a negative impact on the working class both in the US as well as in peripheral countries.
    • Is this negative felt by everyone?
    • Is this negative impact inevitable or can it be prevented?