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Lost Jobs at Bad Wages

Posted: August 20, 2016 at 3:52 pm   /   by   /   comments (0)

Mark UncapherBy Mark Uncapher

Throughout the month of August, Hillary Clinton’s campaign has aired a TV ad blasting Donald Trump on outsourcing, featuring him struggling to identify where clothing from his branded line was made.  It features a 2012 clip of Trump on “The Late Show with David Letterman,” in which Letterman quizzes him on where the ties and shirts from his clothing line are made. Trump offers that they’re made “someplace” before Letterman reveals they’re actually made in China and Bangladesh.  Certainly Trump set himself up for criticism for his own global sourcing, given his very vocal criticism of U.S. trade policy. (See: https://www.youtube.com/watch?v=U8qUhXzr43o)

Yet coming from Hillary Clinton, the response proves to be an example of the proverbial “pot calling the kettle black.”  Clinton served as a member of the Wal-Mart board of directors for six years, from 1986 -1992.  The left-leaning Economic Policy Institute claims that, as a result of sales just through Wal-Mart of least $49 billion worth of Chinese-made goods, 400,000 American jobs were “lost” between 2001 and 2013.   Wal-Mart’s practice of aggressively globally sourcing to reduce its costs was already well established during Clinton’s participation in the company’s leadership.

Today, imports comprise nearly 98% of the apparel market, with “Made in USA” making up just 2.5% of apparel consumption.  Only 95,000 U.S. apparel manufacturing jobs remain.  As recently as 1960, 95% of clothing sold in the U.S. was manufactured in New York City’s garment district. Today barely 7% of the city’s garment production jobs remain, as compared with the days of peak employment.

However, these remaining jobs do not even qualify as “good jobs at good wages.” Garment workers are typically paid for each garment they sew or cut, resulting in payments of as little as $6 per hour, well under the federal minimum wage of $7.25.  A Labor Department survey of garment workshop conditions found that more than half of the country’s 22,000 sewing shops violated minimum wage and overtime laws and 75% of American garment shops violated health and safety laws. The Labor Department also found that 61% of New York factories violated overtime laws and 31% violated minimum wage laws.

Unquestionably, there are intense competitive pressures that bear down on the remaining U.S.  manufacturers, even as they move away from “commodity” garments to higher value added ones.  However, countries such as China and Mexico are also experiencing their own pressures as production shifts to countries with even lower labor costs, such as Bangladesh, Viet Nam, India and Sri Lanka.

Mark Uncapher Graph

Although China became the world’s leading manufacturing economy in 2010, the US maintains a strong second-place standing. Gross output of U.S. manufacturing industries, counting products produced for final use as well as those used as intermediate inputs, totaled $6.2 trillion in 2015, about 36% of our GDP. The U.S. now manufactures twice as much as it did in 1984, but with one-third fewer workers. Impressive gains of about 300% per average worker explain why U.S. manufacturing production increased, while employing a smaller share of the total workforce.

During the presidential campaign, both major party candidates have engaged in global trade bashing, even when it contradicted their personal business experiences. Instead of “gotcha” and frankly over-the-top rhetoric about past global trade negotiations, a more productive election conversation would focus how to most effectively promote America’s own most competitive industries in global markets, rather than preserving  less competitive legacy ones.