I will review the history on employment policy in the last few decades to show why we experienced such economic stagnation and joblessness. As Presidential elections bring social Democratic Bernie Sanders vs Hillary Clinton we are seeing all kinds of revision of history. Everyone now understands from Reagan/Clinton the same Robber Barons that gave us the Great economic crash from massive Wall Street fraud leading to the Great Depression are back doing the same only this time----they are not looking for monopolies across the US----they are looking for global empire monopolies taking America back to a colonial status ruled by global corporate tribunal of the world's rich.
When Clinton brought Reagan Republican neo-liberalism to the Democratic Party in the 1990s----AND HE DID NOT HAVE TO---HE CAME TO OFFICE WITH THAT GOAL------he advanced what were already written public policy goals of Republican think tanks----ending New Deal/War on Poverty/Equal Protection/anti-trust-----and bringing all public wealth accumulated by citizens and public institutions back to the same Robber Barons. THAT WAS THE GOAL. This was to be done by creating great unemployment, to create the conditions to allow for looting of US Treasury and public trusts and retirements (downsizing government/outsourcing/ and deregulating). The right wing has always kept citizens poor by making jobs scarce and wages cheap so that is what Clinton came to office to do. Reagan set the stage, Clinton set the ball rolling, Bush whacked that ball as hard as he could, and Obama came to office saying WHAT BALL?
Below you see the major legislation that killed a thriving US domestic economy and pushed unemployment to Great Depression levels-----lots of other laws did but these framed the process.
Crime Bill------Welfare reform------Commodities Act-----NAFTA and global market.
Americans remember Reagan going to USSR and starting the Gorbachev under Perestroika. Below you see that this was the mirror of what is happening in the US from Clinton/Bush/Obama.....creating the same Oligarchs looting their nations of all the wealth----the 1%. This is to what Clinton came to office to do and at the same time Bush neo-cons were positioning themselves to be the oligarchs getting that wealth. If you knew that was the goal of Reagan/Clinton neo-liberals Americans would not have allowed them to gain control-----they lied, cheated, and stole elections as is happening today.
As it says below-----much of that USSR wealth passed to these Russian oligarchs were moved to Wall Street through the frauds of last decade. Reagan was setting the Russian people up to lose all their wealth just as he and Clinton did the American people. Americans thinking it is patriotic to support movement of wealth to Wall Street----Wall Street is no longer American----it looks at the US as it does Africa------economic zones with cheap human capital for profit.
The Russian Oligarchs
of the 1990's
There were some individuals who became so immensely rich in the privatization of the assets of the Soviet system that they became known as the oligarchs. The name implies that they were powerful. They were not the only ones who became rich, but their success put them into a separate class. Some have lost their status as a result of the August 1998 financial crisis but all of the original seven oligarchs are included here. Their names are:
- Boris Berezovsky
- Mikhail Friedman
- Vladimir Gusinsky
- Mikhail Khodorkovsky
- Vladimir Potanin
- Alexander Smolensky
To understand the reason for the Crime Bill at the very beginning of Clinton's terms 1994------we need to look what Clinton neo-liberals and Republicans had in mind next-----Welfare Reform, Breaking Glass Steagall, and NAFTA global markets. We will come back to Crime Bill. They knew as they dismantled social safety nets at the same time creating massive unemployment and US economic stagnation-----citizens would be pushed to crime, drugs, and violence as always happens in developing nations filled with great poverty. THAT IS WHY THE CRIME BILL CAME FIRST FOLLOWED BY WELFARE REFORM. It's all about personal responsibility say Republicans and neo-liberals as they killed the jobs needed to be responsible and moved corporations to being the welfare queens. Responsibility for you and no responsibility for me. So, Welfare Reform was never about lowering taxes because poor people were taking too much tax base----it was always about allowing the American people to fall into Depression era poverty creating third world conditions in the US and moving all that tax base to a few of the richest. The sad thing as Americans positioned themselves to be the winners in the looting of America-----they will end up just as the Russian Oligarchs----losing it all to illegal actions of the few richest.
The Personal Responsibility Act was only there to make sure the massive growth in unemployment would lead to no safety net for most.
Personal Responsibility and Work Opportunity Act
From Wikipedia, the free encyclopedia
Personal Responsibility and Work Opportunity Reconciliation Act of 1996
An Act To provide for reconciliation pursuant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997
- Introduced in the House as H.R. 3734 by John Kasich (R-OH) on June 27, 1996
- Committee consideration by House Budget, Senate Budget
- Passed the House on July 18, 1996 (256–170)
- Passed the Senate on July 23, 1996 (74–24, in lieu of S. 1956)
- Reported by the joint conference committee on July 30, 1996; agreed to by the House on July 31, 1996 (328–101) and by the Senate on August 1, 1996 (78–21)
- Signed into law by President Bill Clinton on August 22, 1996
'In 1935, Congress created three safety-net programs aimed at alleviating poverty: Social Security, which is for the old and disabled, Unemployment Insurance, which is for those temporarily out of a job, and Aid to Dependent Children, whose name was later changed to Aid to Families with Dependent Children. The latter is what we typically think of as “welfare”—cash transfers intended to help widows with children'.
Republicans like to say this reform helped the poor but everyone in the world sees the third world poverty and desperation these reforms produced as employment disappeared from both rural and urban areas. This bill was the most responsible for super-sizing poverty in our US cities. Look at how this article poses progressive by saying the safety net spending shifted to Disability and SS Trust-----we all know where the SS Trust sent to US Treasury went-----and they don't want it going to seniors. What Republicans did when Welfare Reform killed this safety net was to move more and more and more citizens onto SS Disability-----to replace welfare and implode our SS Trust and SS Disability Trust. The funds were not being transferred to people really disabled------they were used to push people wanting to work and finding no jobs into what are the lowest of wages US workers can receive-----Disability wages.
It wasn't just mothers with children harmed by this bill------the families of young men-----and then adult men were left with no means of bringing in money with jobs moved overseas. Welfare payments helped mothers with child care often allowing them to work----ending welfare blocked even that route for getting people into the workplace.
THAT WAS THE PLAN TO LOWER US WAGES AS FAR AS THEY COULD. ONLY THE CRIME BILL AND PRISON LABOR BROUGHT THAT LOWER.
This article from Atlantic makes it seem as though there was a shift in safety net funds from Welfare to SS and Disability-----but the people needing these funds most are not getting them.
How Welfare Reform Left Single Moms Behind
Nearly every government program has grown over the past few decades, except the one that helps poor, unmarried parents.
- Olga Khazan
- May 12, 2014
If they can't find work, they have few other options. Payments from Temporary Assistance to Needy Families (TANF, but more colloquially referred to as welfare), once a last resort for single mothers, have declined precipitously in the past two decades, even as other government programs have grown.
“Some get income from family members. Some engage in illegal activity. Some have boyfriends."In a forthcoming study for the journal Demography, Robert Moffitt, an economist at Johns Hopkins University, details how the poorest single-parent families—80 percent of which are headed by single mothers—receive 35 percent less in government transfers than they did three decades ago. Meanwhile, government spending on older and disabled adults has increased.
“We know now that there has been a large increase in total government support to low income families since 1986, but the distribution of that support has dramatically changed,” Moffitt said in a recent presentation at the Population Association of America, where he serves as president.
In 1935, Congress created three safety-net programs aimed at alleviating poverty: Social Security, which is for the old and disabled, Unemployment Insurance, which is for those temporarily out of a job, and Aid to Dependent Children, whose name was later changed to Aid to Families with Dependent Children. The latter is what we typically think of as “welfare”—cash transfers intended to help widows with children.
Food stamps, which go to low-income families or individuals, were added in 1964, and in 1975 came the Earned Income Tax Credit, or EITC, which goes to working families with a certain level of income.
AFDC was never flawless—it excluded black women until the 1960s—but it did become an important lifeline for poor mothers throughout the 1980s. By 1992, the majority of AFDC recipients were single mothers, rather than widows.
As more women entered the workforce, however, society began to sour on unemployed single mothers. Those drawing government benefits were derided as “welfare queens.”
“The expectation was that since middle-class women are working and supporting their families, that low-income families should be doing the same,” Moffitt told me.
In 1996, former President Bill Clinton pledged to “end welfare as we know it,” and AFDC morphed into TANF—Temporary Assistance to Needy Families. A five-year time limit was introduced, and mothers were required to work 30 hours per week or risk losing their benefits. States’ funds were capped, pressuring them to slice welfare rolls.
The effect was that thousands of single moms were promptly shoved off the program: “The legislation reduced the number of poor single mother families served by 63 percent within 10 years, effectively removing it as an important program in the nation’s safety net for the poor,” Moffitt writes.
Here’s a chart showing spending on all of the benefit programs over time, which Moffitt calculated using the Survey of Income and Program Participation.
Robert Moffitt/Johns Hopkins UniversityBut that’s not to say we were growing more tight-fisted as a nation. Spending on these programs rose from nine percent of GDP in 1985 to 12 percent in 2007. Between 1990 and 1995, SSI spending grew by 80 percent because of changes in eligibility rules. The EITC grew by 274 percent between 1988 and 1998. And though there were recently major cuts to the food-stamp program, it had expanded by 20 percent between 2003 and 2007.
The average older adult received about 20 percent more from the government in 2004 than they did in 1983, but the average able-bodied, single parent younger than 62 received 20 percent less. Meanwhile, spending on TANF, the only program that non-disabled, non-elderly, poor single mothers are eligible for other than food stamps, was lower in 2007 than it had been in 1970.
Food stamps, meanwhile, provide an average of just $5 per day per person.
The result has been that over time, older people, disabled people, and working families have reaped the increased welfare benefits. Unemployed, single-parent families have gradually lost out.
Here’s a look at how the transfers to various groups have changed over time:
Robert Moffitt/Johns Hopkins UniversityThe average older adult received about 20 percent more from the government in 2004 than they did in 1983, but the average able-bodied, single parent younger than 62 received 20 percent less. And that decrease was concentrated among single-parent families who make less than half the poverty level—the poorest of the poor.
Robert Moffitt/Johns Hopkins University“It helps to be married and not a single person if your earnings are very low,” Moffitt said.
The 2012 New York Times story estimated that now, “one in every four low-income single mothers is jobless and without cash aid—roughly four million women and children.”
What they do for money isn’t clear, but Moffitt listed a few possibilities.
“Some find occasional jobs, but that's not enough to qualify them for the TANF program,” he told me. “Some get income from family members. Some engage in illegal activity. Some have boyfriends. All the indications are that they kind of scrape by.”
Moffitt is careful to emphasize that this doesn’t mean benefits to the disabled, elderly, or working families should be cut. But his findings do suggest that the stigma surrounding unwed mothers has made their economic lives much harder.
What’s interesting is that the idea of the "welfare queen" has persisted even as welfare itself has evaporated, as Amanda Marcotte pointed out in the Daily Beast. In December, Ann Coulter claimed on Fox & Friends that “single women look to the government as their husbands. Please provide for me, please take care of me.”
Even if single moms wanted to do that, though, they couldn’t.
NAFTA was not the beginning of US corporations moving overseas but it was Reagan era when investments in upgrading our steel mills and other manufacturing was left undone knowing the movement was coming. Baltimore was hit by all this in the 1980s-----same time Baltimore Development Corporation was creating the Master Plan-----bringing the model of International Economic Zones being installed across Asia back to US cities. This is when US manufacturing plants were allowed to decay along with all US city communities AND NONE OF IT WAS NECESSARY----IT WAS DONE TO CREATE BILLIONAIRES INSTEAD OF MILLIONAIRES AND EXPAND GLOBAL CORPORATE POWER.
Clinton did NAFTA in 1993 at the same time Crime Bill hit so we see the plan to create mass unemployment rolling out and the school to pipeline Crime Bill occurring at the same time Welfare Reform-----this was the first attack on the US middle-class and public wealth as employment went from strong manufacturing and government jobs to black market and prison labor. Wall Street likes to spin employment during Clinton years with the TECH Bubble----but this was the start of the boom and bust and temporary employment structure replacing strong career employment. This bump in employment centered on building all of the technology infrastructure overseas.
The high price of ‘free’ tradeNAFTA’s failure has cost the United States jobs across the nation
By Robert E. Scott | November 17, 2003
Briefing Paper #147Download PDF
Since the North American Free Trade Agreement (NAFTA) was signed in 1993, the rise in the U.S. trade deficit with Canada and Mexico through 2002 has caused the displacement of production that supported 879,280 U.S. jobs. Most of those lost jobs were high-wage positions in manufacturing industries. The loss of these jobs is just the most visible tip of NAFTA’s impact on the U.S. economy. In fact, NAFTA has also contributed to rising income inequality, suppressed real wages for production workers, weakened workers’ collective bargaining powers and ability to organize unions, and reduced fringe benefits.
NAFTA is a free trade and investment agreement that provided investors with a unique set of guarantees designed to stimulate foreign direct investment and the movement of factories within the hemisphere, especially from the United States to Canada and Mexico. Furthermore, no protections were contained in the core of the agreement to maintain labor or environmental standards. As a result, NAFTA tilted the economic playing field in favor of investors, and against workers and the environment, resulting in a hemispheric “race to the bottom” in wages and environmental quality.
Proponents of new trade agreements that build on NAFTA, such as the proposed Free Trade Agreement of the Americas (FTAA), have frequently claimed that such deals create jobs and raise incomes in the United States. When the Senate recently approved President Bush’s request for fast-track trade negotiating authority1 for an FTAA, Bush called the bill’s passage a “historic moment” that would lead to the creation of more jobs and more sales of U.S. products abroad. Two weeks later at his economic forum in Texas, the president argued, “(i)t is essential that we move aggressively [to negotiate new trade pacts], because trade means jobs. More trade means higher incomes for American workers.”
The problem with these statements is that they misrepresent the real effects of trade on the U.S. economy: trade both creates and destroys jobs. Increases in U.S. exports tend to create jobs in this country, but increases in imports tend to reduce jobs because the imports displace goods that otherwise would have been made in the United States by domestic workers.
President Bush’s statements—and similar remarks from others in his administration and from members of both major parties in Congress—are based only on the positive effects of exports, ignoring the negative effects of imports. Such arguments are an attempt to hide the costs of new trade deals, in order to boost the reported benefits. These are effectively the same tactics that led to the bankruptcies of Enron, WorldCom, and several other major corporations.
The impact on employment of any change in trade is determined by its effect on the trade balance, the difference between exports and imports. Ignoring imports and counting only exports is like balancing a checkbook by counting only deposits but not withdrawals. The many officials, policy analysts, and business leaders who ignore the negative effects of imports and talk only about the benefits of exports are engaging in false accounting.
NAFTA supporters frequently tout the benefits of exports while remaining silent on the effects of rapid import growth (Scott 2000). Former President George H.W. Bush, whose administration negotiated NAFTA, recently claimed that “two million NAFTA-related jobs have been created in the United States since 1993″ (Bush 2002). But any evaluation of the impact of trade on the domestic economy must include the impact of both imports and exports. If the United States exports 1,000 cars to Mexico, many American workers are employed in their production. If, however, the United States imports 1,000 cars from Mexico rather than building them domestically, then a similar number of Americans who would have otherwise been employed in the auto industry will have to find other work.
Another critically important promise made by the promoters of NAFTA was that the United States would benefit because of increased exports to a large and growing consumer market in Mexico. This market, in turn, was to be based on an expansion of the middle class that, it was claimed, would grow rapidly due to the wealth created in Mexico by NAFTA. Thus, most U.S. exports were predicted to be consumer products destined for consumption in Mexico.
In fact, most U.S. exports to Mexico are parts and components that are shipped to Mexico and assembled into final products that are then returned to the United States. The number of products that Mexico assembles and exports—such as refrigerators, TVs, automobiles, and computers—has mushroomed under the NAFTA agreement. Many of these products are produced in the Maquiladora export processing zones in Mexico, where parts enter duty free and are re-exported to the United States in assembled products, with duties paid only on the value added in Mexico. The share of total U.S. exports to Mexico that is represented by Maquiladora imports has risen from 39% of U.S. exports in 1993 to 61% in 2002.2 The number of such plants increased from 2,114 in 1993 to 3,251 in 2002 (INEGI 2003a, 2003b).
Growing trade deficits and job losses
NAFTA’s impact in the United States, however, has been often obscured by the “boom-and-bust” cycle that drove domestic consumption, investment, and speculation in the mid- and late 1990s. Between 1994 (when NAFTA was implemented) and 2000, total employment rose rapidly in the United States, causing overall unemployment to fall to record low levels. But unemployment began to rise early in 2001, and 2.4 million jobs were lost in the domestic economy between March 2001 and October 2003 (BLS 2003). These job losses have been primarily concentrated in the manufacturing sector, which has experienced a total decline of 2.4 million jobs since March 2001. As job growth has dried up in the economy, the underlying problems caused by U.S. trade deficits have become much more apparent, especially in manufacturing.
The United States has experienced steadily growing global trade deficits for nearly three decades, and these deficits accelerated rapidly after NAFTA took effect on January 1, 1994. For the purposes of this report it is necessary to distinguish between exports produced domestically and foreign exports, which are goods produced in other countries but exported to the United States, and then re-exported from the United States. Foreign exports made up 11.6% of total U.S. exports to Mexico and Canada in 2002. However, because only domestically produced exports generate jobs in the United States, our trade calculations are based only on domestic exports. Our measure of the net impact of trade, which is used here to calculate the employment content of trade, is the difference between domestic exports and total imports.3 We refer to this as “net exports,” to distinguish it from the more commonly reported gross trade balance. However, both concepts are measures of net trade flows.
Although U.S. domestic exports to its NAFTA partners have increased dramatically—with real growth of 95.2% to Mexico and 41% to Canada—growth in imports of 195.3% from Mexico and 61.1% from Canada overwhelmingly surpass export growth, as shown in Table 1. The resulting $30 billion U.S. net export deficit with these countries in 1993 increased by 281% to $85 billion in 2002 (all figures in inflation-adjusted 2002 dollars). As a result, NAFTA has led to job losses in all 50 states and the District of Columbia, as shown in Figure 1. Through September 2003, the U.S. goods trade deficit with Mexico and Canada has increased 12% over the same period last year (U.S. Census Bureau 2003a). Job losses for the remainder of 2003 are likely to grow at a similar rate.
NAFTA’s effects on foreign direct investment
NAFTA contained a number of unique provisions designed to provide special protections for investors in order to encourage foreign direct investment in chapter eleven of the agreement, which concerned investment. Chapter eleven specifically outlaws a number of performance requirements, including 1) exporting a given percentage of goods; 2) achieving a given level of domestic content; 3) transfering technology; and 4) other limits on the use of foreign exchange (NAFTA Secretariat 2003, article 1106). These types of measures were used by both Mexico and Canada to encourage development of their domestic economies, and to maximize the benefits they obtained from foreign indirect investment (FDI).
In addition, NAFTA included unprecedented guarantees to protect the value of corporate investments and even the rights to earn profits in the future arising out of changes in government regulations or policy. In particular, NAFTA created specific clauses that provide for compensation for lost investments and loss of future profits due to regulations that are “tantamount to expropriation” (NAFTA Secretariat 2003, article 1110). No other part of NAFTA has generated as much controversy as this “investor state” clause. To date, 27 cases have been reviewed under this clause by companies alleging that their foreign investments or their right to earn profits in other countries have been expropriated (Hemispheric Social Alliance 2003, 68-74). These claims, several of which have resulted in damages paid or regulations rescinded, have had a chilling effect on government efforts to regulate private businesses throughout the hemisphere.
The enormous surge in FDI entering Mexico and Canada after 1994 was clearly driven in large part by the signing of NAFTA. NAFTA essentially represented an ironclad commitment on the part of the Mexican and Canadian governments to a development strategy hinging on attracting foreign investment by harmonizing investment deregulation with standards in the United States. Substantial deregulatory reforms undertaken during the 1980s did not lead to increasing foreign direct investment in Mexico. NAFTA was the next step in trying to assure foreign investors that Mexico was an attractive place to invest. The Congressional Budget Office (1993) describes this strategy as follows:
The key to this [development] strategy is to attract and productively absorb foreign capital. In addition to making Mexico more attractive for U.S. investors (because of the investment provisions of the agreement), NAFTA reduces doubts that other foreign investors may have about the permanency of Mexico’s economic reforms—that is, it helps to lock in those reforms and so reduce the risk involved in investment.
Research by Monge-Naranjo (2002) shows that the passage of NAFTA immediately translated into significant increases in FDI into Mexico, in large part because NAFTA made Mexico an attractive export platform for labor-intensive manufacturing. A recent report from the World Bank reaches a similar conclusion: “In particular, a conservative estimate of NAFTA’s influence would suggest that it is responsible for increasing FDI in Mexico by about 70%” (Cuevas, Messmacher, and Werner 2002).
NAFTA has resulted in a huge surge of foreign direct investment into Canada and Mexico, as shown in Figure 2. This figure measures changes in the stock of FDI over 10-year periods, before and after NAFTA took effect (IMF 2003).4 Between 1983 and 1992, before NAFTA, the stock of FDI in Mexico increased by $23 billion U.S. dollars. In the decade after NAFTA, between 1993 and 2002, the stock of FDI increased $124 billion, an increase of 435% over the decade before NAFTA.
In Canada, the story is much the same. Between 1983 and 1992, before NAFTA, the stock of FDI in Canada increased by $44 billion U.S. dollars. In the decade after NAFTA, between 1993 and 2002, the stock of FDI increased $202 billion, an increase of 354% over the decade before NAFTA.
Inflows of FDI, along with bank loans and other types of foreign financing, have funded the construction of thousands of Mexican and Canadian factories that produce goods for export to the United States. Canada and Mexico have absorbed $326 billion in FDI from all sources since 1993. One result is that the United States absorbed 84% of Mexico’s total exports in 2002, up from 77% in 1993.5 The growth of U.S. imports from these factories has contributed substantially to the growing U.S. trade deficit and the related job losses. The growth of foreign production capacity in these factories has played a major role in the rapid growth in exports to the United States.
Job losses in all 50 states
All 50 states and the District of Columbia have experienced a net loss of jobs under NAFTA (see Table 2). Exports from every state have been offset by faster rising imports. Table 2 provides detailed estimates of job gains due to the growth in exports, job losses due to changes in imports, and the trade balance for each state. In every case, many more jobs are lost due to growing imports than are gained by increasing exports.
Net job loss figures range from a low of 719 in Alaska to a high of 115,723 in California. Other hard-hit states include New York, Michigan, Texas, Ohio, Illinois, Pennsylvania, Florida, Indiana, North Carolina, New Jersey, Massachusetts, Wisconsin, Georgia, and Tennessee, each with more than 20,000 jobs lost. These states all have high concentrations of industries where a large number of plants have moved to Mexico (such as motor vehicles, textiles and apparel, computers, and electrical appliances). Manufacturing industries were responsible for 78% of the net jobs lost under NAFTA, a total of 686,700 manufacturing jobs.
While job losses in most states are modest relative to the size of the economy, it is important to remember that the promise of new jobs was the principal justification for NAFTA. According to NAFTA’s promoters, the new jobs would compensate for the increased environmental degradation, economic instability, and public health dangers that NAFTA brings (Lee 1995, 10-11). If NAFTA does not deliver an increase in net jobs, it can’t provide enough benefits to offset the costs it imposes.
Long-term stagnation and growing inequality
NAFTA has also contributed to growing income inequality and to the declining relative wages of U.S. workers without college degree, who made up 72.1% of the workforce in 2001 (Mishel et al. 2003, 163). NAFTA, however, is but one contributor to a larger process of globalization and growing structural trade deficits that has shaped the U.S. economy and society over the last few decades.6 Rapid growth in U.S. trade and foreign investment as a share of U.S. gross domestic product (GDP) has played a large role in the growth of inequality in income distribution in the last 20 years. NAFTA has continued and accelerated international economic integration, and thus contributed to the growing tradeoffs that have accompanied this integration process.
The growth in U.S. trade and trade deficits has put downward pressure on the wages of workers without a college degree, especially those who have no formal education beyond a high school degree. This group includes most middle- and low-wage workers, including the 68.5% of the total workforce with the lowest pay, those earning a wage that is e
qual to 200% or less of poverty level wages in 2001 (Mishel et al. 2003, p. 134). In March 2000, the base year used for data, these workers earned wages of $16.93 or less per hour (See Appendix 1). These U.S. workers bear the brunt of the costs and pressures of globalization (Mishel et al. 2003, 181-89).
A large and growing body of research has demonstrated that expanding trade has reduced the price of import-competing products and put downward pressure on the real wages of workers engaged in producing those goods. Trade, however, is also expected to increase the wages of the workers producing exports, but growing trade deficits have meant that the number of workers hurt by imports has exceeded the number who have benefited through increased exports. Because the United States tends to import goods that make intensive use of skills of less-educated workers in production, it is not surprising to find that the increasing openness of the U.S. economy to trade has reduced the wages of less-educated workers relative to other workers in the United States.7
Globalization has put downward pressure on the wages of less-educated workers for three primary reasons. First, the steady growth in U.S. trade deficits over the past two decades has eliminated millions of manufacturing jobs and job opportunities in this country. Most displaced workers find jobs in other sectors where wages are much lower, which in turn leads to lower average wages for all U.S. workers. Recent surveys have shown that, even when displaced workers are able to find new jobs in the United States, they face a reduction in wages, with earnings declining by an average of over 13% (Mishel et al. 2001, 24). These displaced workers’ new jobs are likely to be in the service industry, the source of 98% of net new jobs created in the United States between 1989 and 2000, and a sector in which average compensation is only 81% of the manufacturing sector’s average (Mishel et al. 2003, 177). This competition also extends to export sectors, where pressures to cut product prices are often intense.
Second, the effects of growing U.S. trade and trade deficits on wages goes beyond just those workers exposed directly to foreign competition. As the trade deficit limits jobs in the manufacturing sector, the new supply of workers to the service sector (from displaced workers plus young workers not able to find manufacturing jobs) depresses the wages of those already holding service jobs. The growth in import competition and capital mobility under NAFTA has also contributed to stagnant and falling wages in the United States (Bronfenbrenner 1997a).
Finally, “threat effects” arise when firms threaten to close plants and move them abroad while bargaining with workers over wages and working conditions. Employers’ credible threats to relocate plants, outsource portions of their operations, and purchase intermediate goods and services directly from foreign producers can have a substantial impact on workers’ bargaining positions. The use of these kinds of threats is widespread. A Wall Street Journal survey in 1992 reported that one-fourth of almost 500 American corporate executives polled admitted that they were “very likely” or “somewhat likely” to use NAFTA as a bargaining chip to hold down wages (Tonelson 2000, 47). In a unique study of union organizing drives in 1993 though 1995, it was found that more than 50% of all employers made threats to close all or part of their plants during organizing drives (Bronfenbrenner 1997b). This study also found that plant closing threats in National Labor Relations Board (NLRB) union certification elections nearly doubled following the implementation of NAFTA, and that threat rates were substantially higher in mobile industries, where employers can credibly threaten to shut down or move their operations in response to union activity.
Bronfenbrenner updated her earlier study with a new survey of threat effects in 1998 and 1999, five years after NAFTA took effect (Bronfenbrenner 2000). In her updated study, Bronfenbrenner found that most employers continue to threaten to close all or part of their operations during organizing drives, despite the fact that, in the last five years, unions have shifted their organizing activity away from industries most impacted by trade deficits and capital flight (e.g., apparel and textile, electronics components, food processing, and metal fabrication). According to the updated study, the threat rate increased from 62% to 68% in mobile industries such as manufacturing, communications, and wholesale distribution. The threat rate was only 36% in immobile industries such as construction, health care, and education. Meanwhile, in 18% of union certification election campaigns with threats, the employer directly threatened to move to another country, usually Mexico, if the union succeeded in winning the election.
In the context of ongoing U.S. trade deficits and rising levels of trade liberalization, the pervasiveness of employer threats to close or relocate plants may conceivably have a greater impact on real wage growth for production workers than actual import competition. There are no empirical studies of the effects of such threats on U.S. wages, so such costs have been underappreciated.
NAFTA’s effects on workers throughout the hemisphere
Further study of NAFTA by researchers in Canada and Mexico has shown that workers in all three countries have been hurt, but for different reasons (Faux et al. 2001). In Mexico, real wages have fallen sharply and there has been a steep decline in the number of people holding regular jobs in paid positions. Many workers have been shifted into subsistence-level work in the “informal sector,” frequently unpaid work in family retail trade or restaurant businesses. Additionally, a flood of subsidized, low-priced corn from the United States has decimated farmers and rural economics. In Canada, a decade of heightened competition with the United States is eroding social investment in public spending on education, health care, unemployment compensation, and a wide range of other public services.
NAFTA, globalization, and the U.S. economy
The U.S. economy created 21 million jobs between 1992 and March 2001 (Bureau of Labor Statistics 2003c). All of those gains are explained by growth in domestic consumption, investment, and government spending. The growth in the overall U.S. trade deficit eliminated production supported by three million jobs in the same period (Scott 2001). Thus, NAFTA and other sources of growing trade deficits were responsible for a change in the composition of employment, shifting workers from manufacturing to other sectors and, frequently, from good jobs to low-quality, low-pay work.
Since the onset of recession in early 2001, trade-displaced workers have been especially hard hit. Workers have experienced longer unemployment spells, and they have found it much more difficult to get new jobs. Many have concluded that their jobs in manufacturing will never come back. The growth of the trade deficit since early 2001 has contributed to an absolute decline of jobs, not just a shift in jobs from manufacturing to other sectors.
When trying to identify the causes behind trends such as the disappearance of manufacturing jobs, the rise in income inequality, and the decline in wages in the United States, NAFTA and growing trade deficits only provide part of the picture. Other major contributors include deregulation and privatization, declining rates of unionization, sustained high levels of unemployment, and technological change. While each of these factors has played some role, a large body of economic research has concluded that trade is responsible for at least 15% to 25% of the growth in wage inequality in the United States (U.S. Trade Deficit Review Commission 2000, 110-18). In addition, trade also has indirect effects on wage inequality by contributing to many of these other causes. For example, the decline of the manufacturing sector attributable to increased globaliza
tion has resulted in a reduction in unionization rates, since unions represent a larger share of the workforce in this sector than in other sectors of the economy.
Although NAFTA is not responsible for all U.S. labor market problems, it has made a significant contribution to the state of the U.S. economy, both directly and indirectly. Without major changes in NAFTA to address unequal levels of development and enforcement of labor rights and environmental standards, continued integration of North American markets will threaten the prosperity of a growing share of the U.S. workforce. Expansion of a NAFTA-style agreement, such as the proposed Free Trade Agreement of the Americas, will only worsen these problems. Past experience suggests that workers have good reasons to be concerned as NAFTA enters its second decade.
At the same time Republicans and Clinton neo-liberals were dismantling all that is public and allowing our manufacturing infrastructure to decay and US corporations move overseas----the same was happening to our US infrastructure. The Federal, state, and local Transportation Trusts were gutted and looted rather than spent on upgrades as had been happening for most of last century. The steady flow of Federal funding to keep infrastructure in the US best in the world KILLED MORE US JOBS, this time the public sector. Remember, the goal was to kill American wealth by leaving people unemployed using all savings and retirements trying to survive until next employment which never came.
This was when Federal unemployment benefits ended and the beginning of long-term unemployed-----and our Federal unemployment figures tied to unemployment benefits no longer showed accurate employment figures. Started in the1990s------and through Bush and now Obama----Federal unemployment figures are not even close to actual unemployment as US citizens more and more became long-term unemployed. Once unemployment ended many moved to SS Disability for support since there was now no welfare.
SEE HOW THE WHOLE SOCIAL SAFETY NET AND THRIVING US ECONOMY WAS KILLED IN JUST A FEW DECADES ALL WITH THE GOAL OF RESTRUCTURING THE US AS A COLONIAL ENTITY RULED BY A GLOBAL CORPORATE TRIBUNAL.
Republican voters loved all this thinking social Democracy was being dismantled, unions busted, civil rights that cost businesses profits were being ignored under Clinton------by Executive Order the Federalism Act sought to win STATE'S RIGHTS REPUBLICANS for neo-liberalism ------Clinton knew Republicans would not like what was coming and they did not know-----the ending of all US Constitutional rights and US sovereignty----something Republicans really do not like. As they reveled in the downfall of a middle-class built on Social Democratic and labor union strength----now Republicans can see they are going to be thrown into Global FOXCONN factories with everyone else having no rights or pathway to justice under these Clinton/Obama neo-liberals and Republicans.
FEDERAL, STATE, AND LOCAL PUBLIC WORKS PROJECTS DRIED WITH HUGE LAYOFFS OF WORKERS AT THE SAME TIME US CORPORATIONS WENT OVERSEAS AND THAT IS WHY UNEMPLOYMENT IN THE US HAS BEEN 25-35% THROUGH BUSH/OBAMA.
Of course global pols expect to send that $1 trillion to global corporations to further privatize all our US infrastructure while social Democrats want these projects going to local trade unions, regional businesses and to rebuild our public works department of public sector unions....creating competition to global corporations now controlling all development --------will stop International Economic Zone policies.
Oct. 7 2013 7:30 AM
America’s Infrastructure Is Crumbling
Shortfalls in investment will lead to fewer jobs, gridlock, and inevitable catastrophe.
By Jeremy Dennison
An aerial view shows the collapsed I-35W bridge in Minneapolis on Aug. 4, 2007. We can expect more disasters like this at current levels of infrastructure investment.
Photo illustration by Lisa Larson-Walker. Photo by Mandel Ngan/AFP/Getty Images
This article is part of a series presented by the American Prosperity Consensus in partnership with Slate. You can read the rest of the stories in this series here.
America’s infrastructure is the backbone of its economy. If not for the United States’ networks of roads and bridges, its waterways and sanitation systems, its power plants and electric grids, and its airports and harbors, trade and transport would vanish. The golden age of American infrastructure was during the post-World War II era. But now far fewer resources are dedicated to repairing, updating, and replacing the country’s infrastructure. Like any system, it needs care to keep up with the demands placed on it. Yet lawmakers continue to neglect the maintenance of this vital network.
Today, America’s infrastructure is woefully underfunded and its condition is severely degraded, despite local and state agencies’ continued efforts to form private-public partnerships to manage our infrastructure in a tight fiscal climate. The American Society of Civil Engineers documents these shortcomings of investment in its series of reports Failure to Act. The investment shortfall is forecast to be $1.1 trillion by 2020, increasing to $4.7 trillion by 2040. The bottom line, according to ASCE, is that if investments in surface transportation aren’t made in conjunction with significant policy reforms, families will have a lower standard of living, businesses will be paying more and producing less, and our nation will lose ground in the global economy.
This dangerous scenario is not merely some abstract concern. Investment shortfalls mean that much-needed maintenance and modernization are not being done and our infrastructure systems are deteriorating. For the most part, this isn’t something dramatic you will notice overnight, but a gradual worsening of conditions over time. Your commute will become less reliable. Your shipments will take longer. You may experience more electrical outages and water issues. Occasionally, we will observe tragic events like the collapse of bridges seen recently in Minnesota and Washington. The deterioration of infrastructure has direct and indirect costs, sometimes measured in human lives. Naturally, a systemic failure presents an incredible direct cost.
Each infrastructure sector is linked to another. A failure of one adds pressure to another. For example, deteriorating conditions on our nation’s roads may shift goods to travel by rail or barge on the inland waterway system. As we look onward over the next generation, the gap between allocated investment in surface infrastructure and the necessary funding widens. By 2020 the overall cost of deficient infrastructure will grow to $1.2 trillion for businesses and $611 billion for households under current investment trends.
In total, the nation’s declining surface transportation infrastructure will cost the American economy more than 876,000 jobs and suppress the growth of the country’s GDP by billions of dollars. Without a network of functional roads and bridges, the economy will grind to a standstill—just like so many cars caught in rush-hour congestion on a choked, deteriorating strip of highway pavement.
America’s infrastructure underpins the nation’s economy. It is the thread that knits the nation together. To compete in the global economy, improve our quality of life, and raise our standard of living, we must renew and update America’s aging public infrastructure.
Looking locally this is why Baltimore homeowners are constantly fighting flooding basements and water damage from water pipe breaks from aging water infrastructure-----it came from looting of our Transportation Trusts-----looting from revenue collected each month as water bills where those funds were to upgrade and repair over these few decades. Instead they were misappropriated. This occurred with all infrastructure across the board -----all creating great unemployment from early 1990s forward-----all centered on Republicans and Clinton neo-liberals sending all that Federal, state, and local revenue overseas to expand corporations ---PERIOD. None of this was necessary to strengthen our domestic economy as they said-----and it was social Democratic policies that kept this from occurring until global pols decided they could ignore Rule of Law, US Constitution, Equal Protection, anti-trust, YOU KNOW----THE ENTIRE US CONSTITUTION AND CENTURIES OF FEDERAL COURT AND SUPREME COURT STANDINGS. Only all of this is illegal, unconstitutional, and a threat to US sovereignty and national security AND CAN BE VOIDED AS SUCH.
NOTHING DEMOCRATIC HAPPENING HERE FOLKS----THIS IS ALL FAR-RIGHT WING REPUBLICAN ECONOMIC POLICY!
Now, we are supposed to pay higher taxes, pay toll fees, pay higher utility rates to rebuild this infrastructure when the problem is all this revenue was paid and looted. This is when FDR placed heavy taxation on corporations and the rich and that must occur again.
Inside America's crumbling infrastructure
The Week Staff
Well that's not car-ready. (Jonathan Alcorn/Getty Images)
August 22, 2014
What's the problem?
America once had the best road and transportation system in the world, but nothing lasts forever. Last May, the I-5 bridge near Seattle buckled when an overloaded tractor trailer grazed an overhead girder, sending two cars plummeting into the river below. In 2007, a stretch of the I-35W bridge in Minneapolis collapsed during rush hour, killing 13, injuring 145, and resulting in repairs costing $234 million. In 2009, the 80-year-old Champlain Bridge between upstate New York and Vermont was shut down with just 10 minutes' warning after an underwater inspection revealed severe structural weaknesses. Throughout the country, many urban roads and highways built decades ago now carry five to 10 times the traffic the original engineers expected and require constant emergency repair — creating horrible traffic jams. Water and gas pipelines laid in the first half of the 20th century are failing, leading to explosions and floods. "Some of this infrastructure is more than 100 years old," said Rick Grant, owner of a Maryland structural engineering firm, "but it wasn't designed with more than a 50-year life span in mind."
Are the roads and bridges safe?
Every four years, the American Society of Civil Engineers (ASCE) releases a comprehensive assessment of U.S. infrastructure. Its most recent report card, from 2013, had an overall grade of D+. Catastrophic events remain rare, but the nation's 607,380 bridges have an average age of 42 years, and one in nine is rated structurally deficient. Among them are the Storrow Drive Bridge in Boston, which has cement pavement too thick for its corroding steel beam structure to support, and the U.S. Route 1/9 Bridge over the Passaic River in New Jersey, which is rusted out. They and dozens of other deficient bridges still carry heavy traffic daily. Despite a recent uptick in government spending to $91 billion annually, the Federal Highway Administration estimates this amount needs to be doubled. "It's a no-brainer," said Jeffrey Zients, director of the National Economic Council. "If we don't act, we could lose our competitive edge in infrastructure."
How did things get so bad?
Time and neglect. The U.S. built much of its vast network of highways and roads beginning in the late 1950s, when President Dwight Eisenhower signed the Federal-Aid Highway Act into law to link rural and urban areas and spur economic growth. For most of the subsequent 40 years, government spending on highway construction and maintenance was seen as an important investment and averaged well above 2 percent of gross domestic spending. In 2012, it fell to a 20-year low of 1.5 percent. By comparison, China spends 7 percent of its GDP on infrastructure and India spends 5 percent. As a result, U.S. infrastructure now ranks 14th globally. "When you look at politicians and Congress," said former ASCE president Andrew Herrmann, "they're not really looking to the future; they're looking to get re-elected."
Where will the money come from?
The majority of spending on municipal transportation projects comes from state and local governments and the federal Highway Trust Fund. The HTF contributes from $40 billion to $50 billion a year to construction projects and is funded by a gas tax of 18.4 cents per gallon, a rate that has not increased since 1993. Raising the gas tax is "the most viable, responsible, and effective near-term solution," said AAA's Kathleen Bower. But ever since 1995, when conservative lobbyist Grover Norquist persuaded Republicans to pledge to never raise taxes, Congress has refused to increase the gas tax. "It's not that they don't like roads," said President Obama of his GOP counterparts. "They just don't want to pay for it." Obama has put forth a plan to raise some private capital for infrastructure investments, but that is seen as a short-term solution. "None of the steps we are taking should be seen as a substitute for adequate public financing," said Transportation Secretary Anthony Foxx. "There is no substitute for that."
How big are the challenges?
They are massive, because the public infrastructure serving the needs of 316 million people is so large and expensive to maintain, and it encompasses so many different services and utilities. It includes roads, bridges, mass transit systems, waste- and drinking-water management, levees, dams, ports, electrical grids, and broadband communication systems. And it is all interwoven into a complex web, so that failure in one area can have a cascading effect across the grid. For example, power outages during Superstorm Sandy shut down several water treatment facilities, which led to the release of roughly 11 billion gallons of raw sewage into East Coast waterways. "What we really need is some innovative thinking about financing," said Department of Energy senior scientist Tom Wilbanks. "It's kind of a national crisis."
Putting Band-Aids on ancient pipes
While the majority of America's roads and bridges were built in the 1950s, many of our water systems date to the early 1900s or even to the 19th century. Cities across the country are starting to see them fall apart. In late July, a 93-year-old water main burst beneath Sunset Boulevard in Los Angeles, sending up to 10 million gallons of drinking water gushing into the streets. Residents of Baltimore contend with roughly 1,000 bursting pipes every year. In Houston, more than a quarter of the city's water supply is either lost or unaccounted for because of underground leaks. Every year, there are 240,000 water main breaks in the U.S., and inadequate sewage systems let up to 850 billion gallons of untreated waste water flow into rivers and lakes. Yet despite the growing crisis, the U.S. still relies on "the Band-Aid approach," said Harvey Gobas, co-author of a report on California's water system. "You fix it, it lasts a few more years, but you still don't have a new pipe."