Friday, May 16, 2008

The Big Squeeze

Steven Greenhouse, The Big Squeeze: Tough Times for the American Worker, (New York, NY: Alfred A. Knopf, 2008). 303 pages, notes, bibliography. $25.95 USA

Some years ago I was talking with someone who worked for a large international corporation that did business all over the world. He named several countries as very troublesome, but mentioned one in particular, whose name shall remain anonymous, where making a phone call outside the country required walking across the street to another building to pay a bribe to an official in the phone exchange.

I recall saying, “That’s why they’re underdeveloped; they don’t understand the importance of honesty and integrity in economics and business. Reading Steven Greenhouse’s book The Big Squeeze reminds me of the story. Greenhouse uses the interview and case study method to write accounts of Americans by name who struggle to make a living in present day American labor markets. However, the common thread in the book amounts to a current review of America’s honesty and integrity. It is in decline.

The book has 16 chapters. Chapter one opens with brief profiles of six people in difficult and low paid jobs. The brief profiles are a lead-in to a thesis like statement:

"One of the most important trends taking place in the United States today is the broad decline in the status and treatment of American workers -white collar and blue collar workers, middle class and low end workers - that began nearly three decades ago, gradually gathered momentum, and hit with full force soon after the turn of the century."

The remaining pages of the first chapter has data and discussion that lets readers feel the squeeze on millions who work and earn wages, but decline in status and treatment.

In Chapter 2 we meet Kathy and read the book’s first story of status and treatment. As her story begins she has just left a job cleaning offices. The work is solitary, late at night and low pay. Friends and family suggest a local company where she becomes an inspector-packer at a plastic container manufacturing plant. On her first day her trainer and two new hires quit. In quick succession she is witness to accidents, cut off fingers, verbal abuse, and sexual harassment. She finds a new identity in resistance and tries union organizing as an advocate for worker rights. We share her triumphs and courage, but the story ends with disability, dismissal and no union.

Over the next 13 chapters we meet more people with stories to tell. There is Chuck with years working in a meat processing plant sold to wage cutting Tyson’s Foods. We meet Farris who works as the night shift manager at a Wal-Mart where he and his work crew are locked in because Wal-Mart assumes all their help steals merchandise. We meet Julia who takes a job at a store called Save Smart where they hand out small sums of cash and call them wages.

Some chapters highlight specific issues of work and pay. In a chapter titled, Here Today, Gone Tomorrow, we meet Jean and Jennifer and learn about their lives as temp workers at Fed Ex and Hewlett Packard. In the chapter, Outsourced and Out of Luck, we go to Galesburg, Illinois and learn what happened when Maytag outsourced refrigerator production to Mexico. We hear about union organizing in Houston, Texas with the Service Employees International Union and their Justice for Janitors organizing campaign. There is a chapter on immigrants and their peculiar vulnerabilities and another on the difficulties of retiring at retirement age.

The book has two entire chapters and parts of three others devoted to Wal-Mart. We hear from several people including a former store manager and read a catalog of abuses heaped on employees. Some of the abuses have nicknames that encourage the impression they occur widely throughout Wal-Mart stores. Names and nicknames include end of shift lock-in, internal banishment, child labor, slashing schedules, overnight lock-ins, missed breaks, shaving time, hiring illegal immigrants and sex discrimination.

Readers who reach the last chapter may feel worn down. The decline of status and treatment of the American workers interviewed in the book reads in places like class warfare, as when Greenhouse quotes senior management at Tyson’s food. “Jefferson was in a luxurious position from our perspective. We’re not pleading poverty. We’re not saying the Jefferson facility is losing money. We’re saying cost in Jefferson is out of line and we have to make adjustments.” Luxurious factory work sounds like an oxymoron. Apparently Tyson managers expect people to accept a lower wage as it fits their notion of social class for their workforce.

The last chapter makes policy suggestions. The suggestions are all good ones for helping labor, but they require political influence that does not exist and has not existed for some time. Wage theft was mentioned in many of the interviews in the book. Store managers and supervisors delete hours worked from computerized time sheets, or demand someone to work off the clock, or demand work through scheduled breaks and on and on. The United States Wages and Hours Act and other labor laws specify minimum legal standards for work and pay that do not include stealing from employees. The failure to enforce the law by the Bush Administration has never been an oversight, but appears as a deliberate, and so far successful, political decision.

Greenhouse has hopes that unions and unionization can be more successful relieving the decline of status and treatment of the workforce. His discussion of the Justice for Janitors campaign is especially appropriate. Janitors are the type of workforce where unions need to concentrate their organizing. That is because they are among the lowest paid of the workforce. If unions can successfully raise wages at the bottom they have their best chance to push everyone up to higher wages. Raising wages at the bottom also gives the best chance to unify the workforce politically.

Serious political divisions exist in the workforce and the evidence shows up when millions of working class Americans do not vote, or vote for candidates without regard to their history of support for labor, including their own. For example, America’s personal income tax requires those who work for a living to pay higher tax rates on their wages than income earned as dividends from not working. This and other political attitudes debase work, but Greenhouse largely avoids these political issues or the problems that divide labor. Still we admire a well-organized and comprehensive review of current labor markets using interviews and case studies from people willing to go on the record. Perhaps the accounts in the book will bring more action and unity to American labor. It would help if more see the big picture in the Big Squeeze.

Thursday, May 1, 2008

Three Billion Capitalists

Clyde Prestowitz, Three Billion New Capitalists: the Great Shift of Wealth and Power to the East, (New York: Basic Books, 2005). 278 pages

Three Billion New Capitalists tells the story of three billion new entrants into the global economy. The new entrants work mostly from China, India, Japan, Korea, and places that were formerly isolated, socialist strongholds that refused to open their economies and to trade. Not that many years ago it was Japanese cars and Japanese cameras that introduced Americans to imports and foreign trade. The introductory period has past. Three Billion New Capitalists tells us how far we have come and where we are going in the global economy.

The book has a brief prologue and 12 chapters. The opening chapter describes three waves of globalizing integration among national economies: 1415-1914, 1947-2000 and now. In the new wave, time and distance continue to compress and technology keeps spreading over the world at ever faster rates, but the United States keeps losing more and more manufacturing and a variety of services while running bigger and bigger trade and currency deficits. In chapter one, we learn America’s problems.

The heart of the book comes in Chapters 2 through 7. These chapters divide material by country, China, India, and so on, but all include discussion of the changing policies and efforts of foreign governments to build their economies by entering and trading in the global economy. Prestowitz sketches the transformation of China and India to saving, investing and exporting. He describes the evolution of Europe to economic union and the processes leading to NAFTA.

We are introduced to many people, some pioneering Americans, but especially foreign nationals who played key entrepreneurial roles developing specific products and processes in the global economy. The focus is on recent events and he uses a story telling narrative, including personal and family examples, as well as a mixture of data and documentation.

Meet Morris Chang whose family escaped mainland China in 1949 and came to America. He earned mechanical and electrical engineering degrees, including a doctorate at Stanford University, before working at Texas Instruments. It was there Mr. Chang had an idea to build a better and cheaper semi conductor using one big plant that could produce multiple products for different companies. He shopped the proposal and found the Taiwanese government eager to provide a package of incentives to attract ideas and investments like Mr. Chang.

Other stories of global investments in China, India and elsewhere include foreign government schemes to attract investments with cheap land, tax holidays, low utility rates, stable currencies, capital grants and cheap labor. Cheap labor is mentioned in the prologue and again on pages 59 and 75 where he writes “… for all practical purposes, the Chinese labor supply is endless.” It is a fact worth repeating.

Foreign government policy contrasts with today’s Democrats and Republicans who preach free trade and free markets and the good it will bring Americans. For those not devoted to the economist’s way, America’s losses sound like bad policy and it is here Mr. Prestowitz looks back at American attitudes in more practical times. We learn that IBM Corporation developed computer technology as part of a federal government contract to pay for the B-52 computer guidance system. We learn that Boeing started in 1916 with a federal government contract and continued to prosper with government contracts for WWII bombers and later the KC-135 military plane that doubled as the Boeing 707. We are reminded of the government’s role creating AT&T and Bell Labs.

The emphasis changes in Chapters 8 through 10 where topics cover specific issues rather than following countries and historical narrative. Chapter 8 discusses natural resources in the global economy, which primarily covers oil, agriculture and water. Chapter 9 covers the dollar and its role as a reserve currency in the international economy. Chapter 10 covers competition in the global economy: labor market and job issues especially. At this juncture Mr. Prestowitz makes a brave and audacious effort to explain theoretical economics to a general audience. The easy reading narrative of previous chapters breaks down somewhat amid nouns mostly known to economists, but his task is monumental so we sympathize and read on.

These three chapters have a common theme. America has specific problems with potentially serious economic and social consequences, but Americans and America’s politicians prefer to ignore them. Some of America’s current prosperity depends on foreigners who use dollars as a reserve currency. Still more of America’s prosperity depends on pricing oil in dollars. Some Americans in positions of influence believe that will go on indefinitely. Mr. Prestowitz is not one of them.

Chapter 11 makes an assessment and forecast for major countries in the global economy. China, Russia, India, Japan, Europe get most of the emphasis, but Brazil, Mexico and South America are mentioned. American prospects come at the end of the chapter. There is guarded optimism.

It is only fitting in a book that describes problems for the last chapter to offer solutions. Chapter 12 is the book’s policy chapter. Suggestions include a list of doing something to reduce energy use, increase savings, control government spending, especially social security and military spending, and reform taxes, health care, and education. Those are standard policy fare, but he also suggests promoting an international currency and several other strategies to reduce the use of the dollar as an international reserve currency. Otherwise the chapter is a plea for new attitudes and a realistic review of results.

Mr. Prestowitz does not try to hide his frustration with America’s practices and policies over the last 20 years. American politics has always paid homage to capitalism, an economic order that counsels waiting for self correcting improvements. In the past though, voters were less willing to wait out poor economic performance. In the present those of us with a practical outlook hope results will start to count more than they have been lately, but that is what Mr. Prestowitz’s book is really about.