Free trade leads to poorer workers in U.S., Mexico
CHICAGO — In recent months, several U.S.-based manufacturers have announced that they’re moving factory operations to Mexico. These moves are yet another blow to an already hobbled working class.
Goodyear, the Akron, Ohiobased tire manufacturer, broke ground on a $550 million, 1 million-plus-square-foot plant in Mexico in late July.
A few days later, Mondelez International announced that it will lay off half its employees at a Chicago facility that makes Mini Chips Ahoy cookies and Cheese Nips crackers. Their work will be sent south to address what company spokeswoman Laurie Guzzinati told the Chicago Tribune is a $46 million gap between the cost of operating in Chicago and in Mexico.
Now Ford is reportedly negotiating a move of its small-car production to Mexico in 2018. It would join Fiat Chrysler, Gener- al Motors, Toyota, Volkswagen and the hundreds of component-part manufacturers that have moved operations to Mexico to provide cheap assembly materials for cars.
Some used to blame the unions for raising the cost of labor so high that manufacturers had no choice but to look to outsourcing as a way of maintaining a profit. Now, it’s just a given that in the game of “globalization,” American companies will send work to the foreign country that can offer the lowest possible wages from their starving citizens.
The sugarcoated argument for globalization is that it is a net positive, with more winners than losers. In the case of sending U.S. work to Mexico, moving jobs south of the border supposedly is a net gain for us on two counts: We get cheaper, highquality goods, and Mexico gains the infrastructure and jobs to create a middle class, improve quality of life and maybe blunt some illegal immigration to our country.
With the exception of marginally lower sticker prices for cars in the U.S. for those who can afford them, this narrative is an illusion.
During a visit this past June to the city of Juarez, I had the opportunity to see firsthand the marvel of these border-town mega-manufacturing facilities, known as maquiladoras.
They run like clockwork at getting seas of Mexican shift workers to their stations to quickly assemble products such as car components, washing machines and refrigerators.
Company officials I spoke to at one plant lauded maquiladoras as a lifeline to workers. They said they offer not only steady work at competitive wages but also health insurance (including onsite medical care), onsite K-12 education, professional development, bonuses and even transportation to and from work.
The problem: The Mexican workers are paid a pittance.
At the plant I visited, which boasted $16 billion in revenue per year, the managers gushed about the smart, agile, hardworking pool of “talent” they tapped in Juarez.
The pay, however, averaged a breathtaking $200 per month, with possible cash bonuses for attendance, punctuality and productivity totaling maybe another $140. Higher-value line workers could make anywhere from $430 to $600 per month. Per month. For many residents of Juarez, the cost of living does not make such pay a living wage. In fact, the guides on my tour, which was sponsored by the Latinos and Society Program at The Aspen Institute, pointed out that often these workers were barely making it and living in colonias, large slum-housing communities. Civil rights advocates in the city spoke of the low wages as contributing to the resurgence of the drug trade as families do whatever is necessary to survive.
According to Robert E. Scott, director of trade and manufacturing policy research at the left-leaning Economic Policy Institute, “the quality of the jobs in Mexico that NAFTA was supposed to create has not closed the gap in wages in Mexico and the U.S.” Citing research from Robert Blecker of American University, he told me: “You don’t see any decrease in inequality in Mexico. In fact, it has gone up.”
“It’s really a story of class,” he continued. “Factory owners, a small share of managers and those in Mexico with college degrees who work in middle management at these plants may be reaping the rewards but the workers are making starvation level wages. What you’re seeing is an explicit bargain between owners, banking and managerial classes against working people in both countries.”
That’s certainly what it must look like to factory workers in the U.S. who are now out of a job and won’t be able to afford the cars — or the cookies, in some cases — coming back from Mexico.