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Some Factory Jobs Return, Paying a Whole Lot Less

Posted on May 18, 2011
Flickr / ninahale

The Red Wing shoe factory in Red Wing, Minn.

Unemployed American workers are glad to see factory jobs returning, but they’re finding that the pay is drastically lower now, the result of a global race to the bottom for cheap labor. Since the start of 2010, U.S. manufacturers have added 250,000 jobs, the first time since 1997 that the country is enjoying a sustained increase in factory employment. The Rust Belt in particular is beginning to see a turnaround, but workers will be making do with less income. Meanwhile, anti-union interests continue to chip away at workers’ right to organize and bargain, a sorry state of affairs for a country that must realize by now that being a “service economy” is getting us nowhere fast. —KDG

Washington Post:

The Rust Belt’s nascent recovery is being fueled by a host of factors, including a revitalized auto sector, innovations that have made workers more productive, and a weakened dollar, which makes American products more appealing for export.

Lower labor costs are also a critical factor. But many of the prospective workers who braved a cold rain Monday outside the old Hoover plant for a shot at a job with benefits did not complain.

“I was a little disappointed about the rate of pay,” said Leslee Valentine, 52, who rushed down to the factory after hearing about the job fair on the news. “But right now I’m on unemployment, so it looks pretty good. There is always that opportunity to move up.”

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By surfnow, May 20, 2011 at 10:14 am Link to this comment

Fat Freddy:
MOnetarists have argued that- a stable money supply keeps prices low and therefore a healthy economy, since we were on the gold standard in the 19thcentury. The problem is yeah, but it also keeps an economy in the 19thcentury. MOneycreation is the only way for a modern consumption economy to progress- creeping inflation will certainly result- but that’s not the huge problem monetarists like Milton Friedman et al contend that it is.

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By MarthaA, May 20, 2011 at 9:36 am Link to this comment

TDoff, May 18 at 3:40 pm,

I wonder if no matter how badly the majority population are treated
if they will ever join forces as the one class and culture they are? ——
or will they forever be divided under the delusion that they are the
middle class?  The 70% Majority American Populace need to
recognize their class and culture, so they will be able to obtain power
to be represented in the making and enforcing of legislated law and
order in the best interest of the majority population’s class and
culture, the 70% Majority American Populace—NOT the Middle Class.

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By Fat Freddy, May 20, 2011 at 7:45 am Link to this comment

I haven’t sorted out the evidence yet, but it seems that factors in these changes
included the demise of the labor unions, excessive executive salaries, and the
decline in the educational effectiveness of our schools.

The evidence is clear, and was revealed in 1961 by an economist named Melchior Palyi in his manual An Inflation Primer. Intentional perpetual creeping monetary inflation results in a redistribution of wealth from the poor and Middle Class to the wealthy. The problem with Palyi’s findings is that they didn’t jive with the accepted Keynesian models of the time, or today. It is the inflation of the money volume-paper
currency. and bank deposits-that creates the fact
and maintains the expectation of a disproportion
between the total supply of goods for sale and the
total amount of purchasing power people have
and are ready to use. Hence the definition; Moneycreation is inflationary when the additional purchasing power has no counterpart in goods and
services people want to buy-when too much
money chases too few goods. Well, the Keynesians claim that demand creates supply. The “trickle downers” claim that supply creates demand. Guess what? They are both fucking wrong. Wealth is created by savings and investment in real production. It is also created by mutually beneficial exchange of goods and services. [Money creation =/= wealth creation]. Wealth is not created by artificially inflating the prices of stocks and real estate through the creation of new money. What we do know, for sure is:

1. Money creation leads to price inflation, or dollar devaluation.

2. Price inflation always lags the creation of new money, by several years.

The new money going into the economy goes to the banks, first. That’s the way the system is set up. (Actually, the banks can create new money themselves. See: fractional reserve banking). The banks get the full benefit of the new money, because they get it at today’s value. We also know, as a fact, that the wealthiest individuals, and the large corporations are the largest debtors of society. They are the second recipients of the new money. Eventually, that new money works its way through the economy, down to you and me. But by the time it works its way down, price inflation has set in. So, we get “devalued” dollars. Not to mention our savings have lost value. Now, to add insult to injury, the richest debtors get to pay back large sums of money that the borrow today, with tomorrow’s devalued dollars. It is the ultimate “trickle down” scheme ever invented. The good news is, eventually it will crash.

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By Fat Freddy, May 20, 2011 at 6:37 am Link to this comment


Where would the airline industry be today were it not for the influences of pilot
unions over years?

I don’t know. Where would it be today if Carter hadn’t deregulated it?

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By driving bear, May 20, 2011 at 12:40 am Link to this comment

One question , will the Washington post apologize to Ross Perot.

back in the 92 campaign Ross said that the average wage of U.S factory workers was $10/hr and in Mexico $1/hr. He then went on to say that because of NAFTA it would average out to both the US and Mexican would be making about $6/hr

And people called him crazy,

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By MarthaA, May 19, 2011 at 7:59 pm Link to this comment

The 70% Majority American Populace are going to have to learn they
are the Majority American Populace and demand a living wage.

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By purplewolf, May 19, 2011 at 6:06 pm Link to this comment

As for prof. Mark Perry of Flint,(extended article) this is not really a shining star. I still live in Flint and the pick up on jobs at GM might sound really great from people out side the area, but little has changed for the people who live in the area. As for the Hoover company in Ohio, all I can say to John Bonehead, better expect an increase in food stamps and medicaid as minimum wage is not a living wage for people with families, house payments, medical,house and car insurance,car payments, food and other things needed to survive in America today. These wages will not cover the needs of a family,especially since all the GOP wants to do is make women have more babies and they are not cheap to keep either.

Rico: As for many people who go above and beyond what is typically expected of them on a job, it usually does not reward them with a wage increase but rather the attitude of “well you will do this for the same wage so therefore,there is no reason to increase your wages” company mindset.Being a good employee might have at one time given way to higher wages,but those days are long gone.

Since we will all soon be living below the poverty level with these new wage levels, can we expect to see the cost of all daily living expenses also decrease to better fit into this new era of low pay? Probably not.

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By surfnow, May 19, 2011 at 5:12 pm Link to this comment

Sorry Rico, have to disagree a bit, but growth in the 1980s was not “spectacular”- it was a mixed bag. There were two recessions in the 1980s. Yes, there was substantial growth across the board through the mid-1980s due to the tax cuts- which even Reagan understood needed to be across the board and not just for wealthy investors.However, much of the huge gains on WallStreet, as in the 1990s, were due to speculation and not real blue chip growth.As we seem to both agree, sustained growth only comes from consumption in the middle, not speculative investments.

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By gstoddard, May 19, 2011 at 4:08 pm Link to this comment


The other thing that soared, in addition to the debt and and the deficit, was the
income disparity. Just prior to the Great Depression the top 10% took 50% of the
income. After the Depression and through World War II the inequality decreased
to around 33% and it stayed near that level until the late seventies and early
eighties when the inequality started to grow back to about 50% until just before
the recent recession. It has come down bit now but is still higher then in the
period during which we accomplished some significant things like transitioning
from a war to a peace time economy and reintegrating the veterans into the
work force and schools.

I haven’t sorted out the evidence yet, but it seems that factors in these changes
included the demise of the labor unions, excessive executive salaries, and the
decline in the educational effectiveness of our schools.

As I say I need to give more thought to trying to understand the
interrelationships between these issues and factors. I do not however believe
that it was just the excesses of the unions.

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By rico, suave, May 19, 2011 at 3:35 pm Link to this comment


I agree that productivity gains are unfairly rewarded.

I read an interesting article arguing that a German auto worker who earns $80,000 per year making BMW bumpers is underpaid compared to a Chinaman earning $2000 making whoopee cushions. His argument is that the auto worker produces $100,000 worth of bumpers, whereas the Asian only makes $2000 worth of whoopee cushions. Why shouldn’t the German get a bigger piece of that $100k? And why does the Asian company pay a worker so much that it can’t make a profit?

Legacy airline contracts pay pilots based on weight and speed among other things, but not seats. Totally stupid. For instance, the 747 comes in many iterations. Some have 300 seats. Some have 400 seats. Same weight, same speed, same pay. Fly a full 400 seater and company gets 33% more productivity out of you over a full 300 seater for the same pay.

I don’t know. I just don’t know.

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By rico, suave, May 19, 2011 at 3:17 pm Link to this comment


Growth in the 80s was spectacular. Even though Reagan cut taxes, revenue soared, indicating that a lot of people were making money, and not just the rich. (Yes, yes, I know the deficit and debt soared too,  but that was because we spent more than we collected.) The 90s was indeed a false boom: The dotcom bust proved that. Nevertheless, Clinton managed to almost erase the debt with the revenue boom he was lucky to be presiding over.

Can’t agree more- a strong middle class with disposable income is the key.

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By gstoddard, May 19, 2011 at 7:54 am Link to this comment


I find it a bit ironic when my airline pilot friends become so ideologically
critical of unions, blaming them for the failures of free market capitalism while
absolving management of any responsibility.

In fact the pilots’ unions, while imperfect and guilty of some excesses over the
years, played a very constructive part from the early days of aviation in
promoting aviation safety. I would cite their role in emphasizing human factors
research that led to significant redesign of the cockpit (oops flight deck)

Further, the labor contracts allowed the pilots to share in the benefits of
increased productivity as planes generated more revenues. Of course that all
changed with deregulation. But I submit that both management and labor
share responsibility for the difficult transition to the deregulated environment.

On a broader scale, the benefits of productivity no longer are shared fairly with
workers but flow into the often excessive compensation of management. I
would also note that often there is a disconnect between long term company
performance and executive compensation.

Not too long ago a manager’s compensation was 45 or so times more than the
average worker in a company. It has now grown at its peak to about 500
times. The recent recession has brought the disparity down some, but
nevertheless it remains far greater than in other developed nations. The demise
of unions has removed any effective restraint on this growing disparity.

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By surfnow, May 19, 2011 at 7:03 am Link to this comment

If investment capitalism is as you characterize it, as being the primary engine behind macroeconomic growth, than why was American growth so inconsistent through the 1980s and 1990s when Wall Street saw some of its biggest gains in history ? That argument is just the Laffer Curve and Supply-Side Economic Theory which is proving everyday to be what HW Bush called it “voodoo economics.” What leads to real sustained growth is a middle class that is paid enough to consume- consumption equals growth- and that my friend requires healthy union activity.

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By Jim Yell, May 19, 2011 at 6:53 am Link to this comment
(Unregistered commenter)

Investment took the jobs away because we had no protection from the use of slave labor in poor countries. You can not have fair competition when business has open access to a market and can avoid the true cost of production (which includes cleaning up the messes they make), good wages and benifits for the workers. It was never a matter that business couldn’t make good profits it is they want labor to starve so they can put the grocery money in their pockets.

Free enterprise is fine with effective regulations and enforcement. We once had those things. Now they are mostly gone and we will see increase in people poisoned in the work place, poisoned at home all so rich bastards can be so rich they don’t pay their taxes, they don’t obey the laws.

This is where corporate control of our society has led us.

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By rico, suave, May 19, 2011 at 6:35 am Link to this comment


The spectacular growth you speak of was created by capitalism- profit reinvested in businesses, risk-taking and a free market where winners prosper and losers fail. Unions went along for the ride. Prove to me that the UAW was responsible for the Corvette or the Thunderbird, or the Edsel, or the K car, or that the Steel Workers Union was trying to find ways to produce a ton of steel with less workers.

The heyday of airline pilot unions was in the pre-deregulation sixties and seventies, when the airlines were run like public utilities- airlines could meet union demands simply by asking the old CAB for fare increases, which were always granted. Talk about corporate welfare! Compare a trans-continental ticket price in 1978 to one today. Sure service sucks and planes are cramped, but that’s what a cheap ticket buys.

And why was the Soviet Union, a paradise owned and operated by workers, which disdained private property and profit, such an economic basket case?

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By surfnow, May 19, 2011 at 5:06 am Link to this comment

Don’t pay too much attention to Rico and other anti-union propagandists. They’ve been shoveling that “unionism creates no initiativeness ” for decades. Then why did the American economy see its most significant rises in GDP and in the health of the middle class when union membership was at it’s highest from 1940 to 1970 ? If you really want to see a lack of leadership, falling motivation and lack of innovation look at management in the typical Amerikan corporation since 1980: it is the height of hucksterism, and locker-room mentality- it’s where a good golf game moves you up and a good work ethic labels you a chump.

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By rico, suave, May 19, 2011 at 4:26 am Link to this comment


Let me tell you a true story. I was a brand new flight engineer (second officer). One early morning I went out to preflight our Boeing 727. The external power cart used to provide electricity when the engines are shut down, was sitting next to the plane, disconnected and useless. Being an enthusiastic new guy, I fired up the machine and plugged in the power cable myself. When the captain showed up later, I complained to him about the situation and his only response was, “You did what? Did any of the maintenance guys see you do that? That’s not your job, that’s maintenance’s job. The TWU will file a grievance for sure if they saw you.” I related the story to others in the company and their response was the same- “Just do your own job.”

So much for initiative. In a non-union shop, my effort might have been rewarded, and the maintenance guy’s failure to do his job might have been punished. In a union shop, I would have been punished and the union would have grieved my overstepping my bounds. After all, who needs a maintenance guy to stick a plug in a socket when any old crew member can do it? Job security is what it’s about; superior performance and “moving up” as a result are not part of the contract.

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By MarthaA, May 18, 2011 at 7:06 pm Link to this comment

The Right could not have possibly destroyed the 70% majority populace
without the help of the middle class Democrats, but the middle
class conservative/moderate Democrats have been cooperating in
the demise of the majority population since the 1980’s, because
the middle class determined that the majority population are
Epsilon-Minus Semi-Morons and do not need representation. 

The 70% majority populace as a class and culture who are not
Epsilon-Minus Semi-Morons need to organize as a class and
culture for their own representation, because Democrats do not
represent the majority population and the Republicans never did
represent anyone other that their upper 10% minority class and

If the 70% majority populace as a class and culture organize they
can take over the Democratic Party and have a chance of getting
real representation for themselves, but as long as the 70%
majority populace wait on the Democrats or the Republicans to
represent them, it will never happen and slavery wages will be all
they can expect for a future.

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By MarthaA, May 18, 2011 at 6:39 pm Link to this comment

rico, suave, May 18 at 4:35 pm,

You’re talking twaddle.  I worked 25 years in a union and personal
motivation is not frowned upon.  You are expected to be personally
motivated if you want to keep your job.

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By berniem, May 18, 2011 at 6:18 pm Link to this comment

The return of manufacturing to the US is directly related to transportation costs and the continued spinelessness of organized labor as well as the laughable and hypocritical democratic party! Socialism is the cure for capitalist greed and corporate capitalism is a criminal enterprise protected by a corrupt, fascist regime!

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By gstoddard, May 18, 2011 at 4:38 pm Link to this comment


Where would the airline industry be today were it not for the influences of pilot
unions over years?

One can be a union member and still exercise individual initiative.

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By rico, suave, May 18, 2011 at 4:35 pm Link to this comment

Big B:

“Nothing could be further from the truth”. You mean “farther”.

“Americans are so fucking stupid.” So why should they be paid more than minimum wage? Would you ever say that of Indians or Chinese?

Labor unions are NOT a vehicle for “moving up”. They are perfect vehicles for the status quo. If you know anything about union contracts, you know about “work to rule”. That means don’t do ANYTHING beyond what’s in your negotiated job description. Personal motivation is frowned upon, etc.

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By TDoff, May 18, 2011 at 3:40 pm Link to this comment

In a ‘global economy’, replete with ‘free trade acts’. it’s obvious that the wages paid labor around the world will tend to merge to a common mean over time. That’s the future of labor in the world. Which is good for the ex-rice-pickers who were able to survive on a dollar-a-day, now assembling Chinese Cherry autos for a dollar-an-hour.

But not so good for an ex-Chrysler assembly-line worker, accustomed to making $25/hour, now unemployed, trying to learn how to grow his own carrots and corn in the parking lot of an abandoned Dodge Neon auto factory, so he won’t starve.

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By gstoddard, May 18, 2011 at 11:55 am Link to this comment

That’s all right. The top ten percent in the country are benefiting nicely while labor
struggles along. Virginia’s Republican Governor Bob McDonnell thinks this a cause
for celebration.

Sadly the idea of upward mobility has become a myth here, but not in many other
developed nations. We have reached a level of income and wealth disparity not
seen since before the Great Depression.

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By Big B, May 18, 2011 at 11:08 am Link to this comment

“There is always opportunity to move up.”

This false belief has helped kill union labor in the USA, as well as limit salaries and benefits for everybody else. Americans still falsely believe that all they need to do is be honest and work hard and success will inevitably follow.

Nothing could be further from the truth, but that won’t stop us from buying it hook, line, and sinker.

Americans are so fucking stupid.

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