February 2007: When Greed Has No Limits

Outsourcing and job "restructuring" swell corporate profits
February 1, 2007

Most private sector employers have always regarded their employees as necessary evils, and unions as UNnecessary evils. When profits have to be shared with workers, the share going to owners, managers, and shareholders is correspondingly lessened, so payroll costs have always been kept as low as possible. Since the main role of unions is to prevent employers from cutting payroll costs, the unionization of employees has always been fiercely opposed.

Up until the late 1970s, the ability of employers to suppress workers’ wage and benefit levels was constrained by national labour laws and standards, by the confinement of most industrial work within national boundaries, and by the freedom of workers to join unions with bargaining power.

Over the past 30 years, however, all those limits on employers’ dominance have been swept away. The globalization of trade, investment, and marketing has elevated corporate power to unprecedented heights. Free from most national government regulation, free to move their operations to low-wage countries with few if any unions, free to pay little or no taxes, business leaders and investors can now amass billions of extra dollars that would otherwise have to be shared with workers in wages and with governments in taxes.

It’s free enterprise gone mad, but who’s to stop the impoverishment of millions of workers and the obscene enrichment of a privileged plutocratic élite? With unions deprived of much of their bargaining strength, with governments converted into political lackeys of the corporations, with the mass media acting as corporate cheerleaders, what force is left to prevent the greedy free-market overlords from diverting even more from workers’ pockets into their own?

The resistance, ultimately, has to come from those being denied their fair share of the economic pie. What form such a revolt would take — whether organized or spontaneous, peaceful or violent, political or consumer-activated — is difficult to foresee. One thing is certain, however: it has to start with an awareness of why and how the unconscionable maldistribution of wealth is taking place.

Most people still lack that understanding. They have been led to believe that the growing economic inequality is due to global forces that are inevitable and uncontrollable — forces that, though as yet distributionally unfair, will allegedly in the future benefit the workers now being victimized. (All they have to do is wait for the promised trickle-down crumbs.)

Fortunately, knowledge of the extent and inequity of the corporate income grab is becoming known to more and more people. It’s pretty hard for corporations to hide their more blatant anti-worker tactics.

Take Wal-Mart, for example. The world’s largest retail chain, with revenues of more than $310 billion a year, announced a few months ago that it plans to double the number of its part-time workers from 20% to 40% of its total workforce. In the United States, that will add 260,000 more Wal-Mart workers to the ranks of those paid only about half of what the full-time employees get. The company estimates it will save over $3 billion a year in reduced wages and benefits. (Not surprisingly, Wal-Mart’s stock price rose by more than 10% following this announcement.)

Other retail chains in the U.S. are ahead of Wal-Mart in the workforce conversion derby, some having converted even more of their personnel to part-time status. Most manufacturing and service industries are also jumping on the “just-in-time” employment bandwagon. The number of part-time and temporary workers in the U.S. had ballooned to a staggering 33.8 million by 2004, and is expected to reach more than 43 million by 2008 — about 33% of the total U.S. non-farm workforce.

The same trend is accelerating in Canada, with the latest statistics showing that 27% of workers in this country are now in temporary or part-time jobs — up from 24% in 2000.

The corporate restructuring has also included the transfer of millions of jobs from the U.S. and Canada to Mexico, China, India, and other countries, where labour costs and taxes are much lower. These include manufacturing, high-tech, and even some business and professional service jobs. Scores of factories have been closed, with mass layoffs eroding the local economies of many states, provinces, and communities. Over a million full-time jobs were outsourced in the U.S. between 1993 and 2004, according to the Economic Policy Institute, and an estimated 300,000 manufacturing jobs disappeared from Canada over the past four years, according to the Canadian Labour Congress.

Jack Rasmus, in a recent article in Z magazine, cited studies showing that most of the American workers stripped of their jobs by outsourcing are now working at service jobs paying at least 20% less. “A conservative estimate,” he writes, “is that U.S. corporations have saved $100 billion a year from exporting jobs since 1980.”

Add to this the enormous amount saved by converting full-time work to part-time and temporary jobs and you get, according to Rasmus, “an aggregate annual wage savings for corporate America of roughly $350 billion a year.” And that doesn’t include the other big cost savings from denying most part-timers pensions, paid vacations, and other benefits.

The ranks of the working poor are swelling. In the U.S., they comprise most of the 47 million Americans who can’t afford health care insurance. In Canada, they can be found desperately resorting to food banks to feed their families. Campaign 2000’s latest report card on child and family poverty in Canada discloses that a third of low-income children in this country live in families where at least one parent (and sometimes two) work full-time for the entire year.

What we have been witnessing over the past three decades, in short, is a massive transfer of income from workers to employers and investors. With it has come a rapid widening of the gap between rich and poor, an erosion of the middle class, and the reversal of most of the progress made in the post-war period toward social and economic justice.

As Rasmus says in the title of his article, welcome to the new world job order.

(Ed Finn is the CCPA's Senior Editor.)