Thread: Curing the job crisis & my question

Curing The Job Crisis
Richard L. Trumka
July 12, 2006


Richard L. Trumka is the Secretary-Treasurer of the AFL-CIO. This column is excerpted from a speech prepared for “Trade Summit 2006: Crisis and Opportunity,” a conference held July 12 in Washington by the AFL-CIO and U.S. Business and Industry Council.

Today, Thomas Jefferson and Ben Franklin must be turning over in their graves.

We face a balance of payments crisis of our own making that threatens the economic independence and promise of widely shared prosperity so boldly declared by our forefathers.

Our nation’s trade policies have failed in almost every important dimension. They have failed to create good jobs and healthy communities at home. They have failed to foster equitable, democratic, and sustainable development abroad. They have failed to safeguard our long-term national security interests. And they have utterly failed to ensure that American producers and workers are able to compete successfully in the global economy.

Today we must borrow an unsustainable $2 billion dollars a day to pay for the goods we consume that we do not produce as a nation.

The real danger lies in the growing debt load the deficits produce. The nearly $2 trillion in U.S. dollar assets held by China and Japan poses a threat to the stability of the world economy.

It cannot go on.

Eventually, we must either produce more of what we consume, or be forced to consume less. Unless there is a change of direction, the threat of a steep global economic downturn is real.

At a recent conference Paul Samuelson, the godfather of modern economics, described our situation as one of a group of villages sitting on a mountainside with a monster avalanche building on the slopes above. “The avalanche will happen,” he said. Another respected economist, William Baumol, quickly chimed in, saying, “The question is how deep will it be and how long will it take us to dig out.”

From our viewpoint we have two choices: We can sit in our village homes and do nothing or we can take action to deflect the most serious damage.

We believe that increasing production and exports is the best way to reduce the trade deficit, but therein lies the problem: If you don’t make things you have nothing to trade, and if we have nothing to trade the deficit cannot be solved.

The real problem is the blind, free-market fundamentalism driving the nation’s trade and tax policies that, in the end, are undermining our national security.

The free marketeers tell us there is no cause for alarm—that what we’re witnessing is merely the natural maturing of our economy — heavy production and labor-intensive industry will move to lower wage labor markets, like Mexico or China, while the U.S. retains higher skilled mental labor and service jobs.

The process, we’re told, is inevitable and in the long term, benign.

That kind of thinking avoids addressing the most difficult questions facing us. This process is benign only for those at the top of the income scale. For a majority of American workers globalization has brought deindustrialization, declining real wages and vanishing pensions and health care.

One thing this “new global economy” doesn’t handle well is equitable sharing of the fruits of expanding trade and investment opportunities. .

Look at what has happened over the past five years.

Since 2000, the U.S. economy experienced a net job loss in goods-producing activities. We lost 2.9 million manufacturing jobs, 17 percent of the manufacturing workforce.

Not a single manufacturing payroll classification created a net new job.

Studies by the Economic Policy Institute, our own Industrial Union Council and others confirm that over half this job loss is trade-related.

More than 40,000 manufacturing establishments closed.

Within manufacturing, nearly every subsector suffered from double-digit employment declines—48 percent in textiles, nearly 30 percent in computer and electronic parts and primary metals, and 23 percent in machinery.

The crisis hit everywhere and everyone. State and local tax revenues have withered, undermining important public services. It has hit minorities, the south, and rural areas the hardest, as textiles, clothing, furniture and more closed or went offshore.

Just as troubling, the past five years of job growth were the weakest on record, while real wages declined. The entire job growth was in non-tradable service-providing activities—primarily credit intermediation, health care and social assistance, waiters, waitresses and bartenders, and state and local government.

Columnist Paul Craig Roberts hit the nail on the head when he wrote: “No sane economist can possibly maintain that a deplorable record of merely 1,054,000 net new private sector jobs over five years is an indication of a healthy economy.”

This sorry record is not benign but it is prologue for our future—unless we change course soon.

Trade deficits are the stepchildren of our trade policies and practices that have been defined by our transnational firms and the financial community. The national interest must not be held captive by their narrow interests. We need to forge a new political will to enforce our own trade laws, change the negotiating formula of our trade deals and take steps to balance the trade deficit.

The AFL-CIO has been unwavering in saying that labor rights and environmental standards must have equal standing with the commercial property and financial rights that dominate the WTO and our own trade deals.

The AFL-CIO has joined with our business partners in trade cases and legislation to address the outrageous currency manipulation practiced by many of our Asian trading partners.

Last month the AFL-CIO and Reps. Benjamin Cardin, D-Md., and Christopher H. Smith, R-N.J., filed a 301 petition charging that the Chinese government’s systematic and egregious violations of workers’ rights are in fact an unfair trade practice under U.S. trade law.

All of these are examples of trade solutions, but it is time to do something more, because doing nothing is not an answer.

We can consider a trade-balancing quota system, as Warren Buffett has suggested.

We can consider imposing a temporary, across-the-board import surcharge under article 12 of the WTO.

The point is, there are real options, real answers. Frankly, it’s long past time that we do consider doing things differently.

And to all those economists, financial and business leaders and politicians who admit there is a crisis but will spend their time criticizing this summit and trying to brand us as protectionists, I say to them: You got us into this mess; what’s your solution?

Two hundred and thirty years ago our founding fathers had the courage to take action to solve their trade problems. Now it’s our turn.

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With our jobs going overseas, someone tell me why our politicians think we need millions of illegal aliens or visa workers here?????!!!!!

The government does not care about the middle class and the poor!

I have'nt heard anything from the President addressing how he is going to help the middle class in creating well paying jobs(not minimum wage)!

The Congress won't even raise the minimum wage, but they have the gaul to vote themselves a raise!


I'm disgusted and can't wait until November. Then some of them will be out of a job!

We face a balance of payments crisis of our own making that threatens the economic independence and promise of widely shared prosperity so boldly declared by our forefathers.

No we face a balance of payments crisis of OUR CONGRESS'S making that does not threaten economic indpendence since that was destroyed with the line of credit extended to the UNITED STATES OF AMERICA in 1935 as a result of the Emergency Banking Act that bankrupted the Republic and replaced it with a corporation.

With our jobs going overseas, someone tell me why our politicians think we need millions of illegal aliens or visa workers here?????!!!!!

One factor is the large group of people that will retire out of the work force. The immigration law is in place to deal with that need in a manner that will not destroy the country. There has never been a desire by our citizens to allow illegal alien invaders from one place in the world to overrun us and destroy the country as is happening now.

Corporations are amoral. Think of them as the Terminator that has no feelings. They do what they do and they will not stop. They want bodies and it doesn't matter which, although they may prefer them quickly favoring a bordering country. The Congress is supposed to balance or filter the needs of the corps with the will of the people they are supposed to represent. Many of our polititians are corrupt, morally bankrupt and require huge amounts of cash to convince voters the other guy is even worse. So money from corps and special immigrant groups talks and we citizens can take a walk. But we will not!

We support legal immigration for our needs. Anarchy is not an acceptable solution.