“Unions and the minimum wage are to blame.”
Very few if any furniture factories in the south were represented by unions. The wages in southern furniture plants are about $12.00 per hour which equates to $24,000 per year (50 weeks, 40 hours per week, $12 per hour). It would be very difficult for a head of household to raise a family on $24,000 per year today. Lower the pay to the federal minimum wage and the same worker will earn $14,500 per year.
In 2013 the average minimum wage in China was $264 per month which represents an annual income of $3,168. If the US minimum wage is to blame, and Chinese labor is the competition, what would you suggest is the appropriate pay for US labor in US factories? Should a non-union US furniture factory be paying its workers $3,168 per year?
The reality is an American worker cannot feed, clothe, and provide shelter for himself or herself, much less a family, on a wage competitive with Chinese workers. Chinese wages are so low it is more economical to ship lumber from US forests to China, convert the raw lumber to finished furniture, and ship it back across the ocean than it is to employ US workers doing the same job at minimum wage or even below minimum wage.
Unions and the minimum wage are not the problem. The problem is the Congress of the United States approved free trade agreements eliminating tariffs and quotas opening and up the US market to unrestricted sales of products by foreign factories. Once these policies were implemented the economics of entire industries changed. Corporations and Wall Street investment companies decided to allocate manufacturing capital outside the US, resulting in the deindustrialization of the United States over a period of 25 years.
If the same trade policies had been in effect in the second half of the 19th century, the United States would never have become a great industrial power. During the period after the Civil War Congress chose to sustain high tariff for the express purpose of encouraging capital investment in US manufacturing and transportation network required to move raw materials to the factories. Congress also encouraged massive immigration to supply low cost labor to man the factories.
Today we have chosen to eliminate tariffs. If the unions were banned and the minimum wage was eliminated today, the fundamental economics would not change. A US factory offering Chinese wages to workers would have no employees because a worker cannot afford to live in the USA on a Chinese wage.
The answer is simple but politically unacceptable to Wall Street and multinational corporations. Reinstate the tariff rates in effect before George H.W. Bush took office and it will become economically viable to manufacture consumer products in the United States for domestic consumption. Continue the current policies and watch more US factories and manufacturing jobs go offshore.
Twenty five years of the free trade experiment has gutted the US manufacturing economy and is destroying the middle class. Union greed and work rules certainly played a role in encouraging northern factories to move to the southern US in the 1970’s and 1980’s. However, it was elimination of trade barriers that caused factories to exit the US in the last 25 years, not the minimum wage or union activity.
If we continue the same trade policies, the US will look like a poor Central American country in another 25 years. Low wages, high unemployment, high crime, rampant corruption, a dictatorial government, and a two class society with the very poor and a very small ultra rich ruling class.
Both political parties are funded by Wall Street and large corporations. Both political parties supported globalization and free trade. As a result we never had a national debate about free trade, it quietly happened. The results have been disastrous for US workers and the total economy. However, no one in the political class today is even talking about changing policy. Running for office is expensive and any politician proposing a radical change in trade policy would be unable to find funding for an election campaign.
-——Unions and the minimum wage are not the problem. ——
From a stockholders/owners view, there is no problem. To produce a profit, the cost of the commodity called labor can be reduced if noncompetitive plants are closed. What is frequently misunderstood is that the labor competition exists on a global basis.
The wreckage of WW II dampened the ability of many countries. For perhaps the last two decades there has been all sorts of growth that permitted them to act in ways previously not possible. The temporary advantage We had begin to dissipate.
The competition is now fully in force. The off the beaten path unbeaten paths to the mountains and Robbinsville are feeling the effect. They are no longer competitive.
The present is not a problem, it is a challenging opportunity.
A good read, thanks for that.
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I retrieved this data from here:
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http://www.tradingeconomics.com/united-states/imports
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The United States is the world’s largest importer.
Imports in the United States for February 2014 were valued at $232,734,000,000.
U.S. main imports are:
Industrial Supplies, including crude oil (32 percent of total imports);
Capital Goods (24 percent);
Automotive vehicles, parts, and engines (13 percent);
Consumer Goods (12 percent);
Foods, Feeds, and Beverages (5 percent).
Main imports partners are:
China (18 percent of total imports);
European Union (16 percent);
Canada (14 percent);
Mexico (12 percent);
Japan (6 percent).
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I’m not sure how they define “capital goods”.
What’s 1% of 200 trillion? (2 billion)
So your solution is to raise prices for all Americans (aka, inflation) during an economic downturn, all for a vague goal of "more manufacturing" when we are still #2 in the world in manufacturing? Sorry, that would be a very poor idea. We already have WAY too many programs that essentially boil down to "have all Americans pay some more so that a few people can have XYZ". We don't need more.
(Our overlords are also doing EVERYTHING they can do keep inflation at an absolute minimum, because they know that if interest rates go up just a 2-3 points, there will be massive repercussions worldwide. The hyper-debt that Japan and the US have been living on for the past 6 years will hit both like a ton of bricks... and without anyone large enough to bail us out (Germany is barely big enough to bail out tiny Greece), it will spiral quickly. Inflation is their greatest and realest fear right now... and not just for their phoney-baloney jobs, either.)