Repairing America starts with trade
Published 9:49 am Friday, August 20, 2010
We need jobs. We need good jobs, jobs that pay a living wage.
We are not lazy.
We do not prefer unemployment over work.
But so far, while the economic recovery has worked well for American corporations, with first half profits up as much as 36 percent, few jobs have come as a result.
The best news in recent weeks was a fall in worker productivity. Sounds bad, not good to you? Well the fact is American business has “leaned up” on employees to the point where it is no longer productive to not hire additional workers.
Industrial hiring has continued to be a bright spot, with hiring up over last year for the year to date. But even that indicator is not as good as it has been in the past because these jobs pay lower wages than they once did.
Consider American automobile manufacturers. After the economic collapse of 2007 and the damage to the auto industry the companies all changed their pay and benefits packages to the lower scales of the non-union manufacturers in the South. New workers now earn about half of what they would have previously.
Now if their smaller wages meant cars became less expensive, then Americans might find the trade-off a good one. But just the opposite has been the outcome. The average sale price of U.S. autos has increased this year. Both Ford and GM have shown profits from the lower cost/higher price formula.
The same formula has worked for airlines, where lower wages for pilots and all other employees have combined with higher prices for consumers with the good economic result for the companies’ of higher profits or a return to profitability.
So the trend has been decidedly for American business and industry to grow their business with lean staffing, lower wages and higher prices.
It has worked. For business.
Not so much for Americans.
When combined with over two decades of trade agreements that sold American jobs to the lowest bidder in exchange for lower consumer goods prices, it has not worked for American workers at all.
The idea, spawned by economic geniuses in the Reagan, Clinton, Bush and Bush administrations, was that free trade would create a balance…one where American wages might fall, but those reductions would be offset by lower consumer prices. The outcome would be Americans could buy more even if they earned less.
But it has not worked out that way.
Instead most Americans lost their single best investment value when real estate prices collapsed. And they lost their incomes to layoffs, salary reductions, and benefit cuts when the banking industry just about destroyed the nation.
After those setbacks we watched as China, our newest trade partner, artificially held down the value of its currency to make its exports highly affordable against the purchasing power of the dollar.
And now wages in China are rising and those costs are going to result in higher consumer prices in America, ending even the myth that free trade worked by treaty.
And while our trade deficit continues to grow, not only with China but with South Korea that sells cars here but does not sell American cars there, and with others who take advantage of our careless trade policies … American workers suffer.
Our consumer market is almost three times larger than the next largest, yet our policies reflect weakness not strength. The only fair trade is never going to be free trade, and until our politicians understand that, American workers will remain victims of their own policies.
We need jobs.
We need good jobs that pay a living wage.
Jim Crawford is a contributing columnist for The Tribune and a former educator at Ohio University Southern.