Dr. Joe Wolverton II
The New American, September 6, 2004
The jobs needed to live the American Dream are fast disappearing — not because of unrestrained market forces but because of government policies including NAFTA.
Joe Wolverton II, a Juris Doctor graduate from the University of Memphis, is our newest contributor.
By the time you finish reading this magazine, 500 more American families will be out of work. Headlines around the country report the devastation:
• “Lives Unraveled” — Kannapolis, North Carolina, is decimated when 4,800 families are left jobless in the wake of the closing of the Pillowtex textile mill. Charles Morris labored at Pillowtex for 36 years and is now unable to find work: “It’s been terrible. I’ve job searched, but I haven’t been able to find anything.” Left without health insurance for himself or his wife, and under the stress of being unemployed, Mr. Morris broke down while visiting his doctor — who was generously treating Morris pro bono.
• “Workers at Luzerne County Plant Asked To Go Home” — 670 townspeople are out of a job as the cheaper cost of labor and equipment in China and India forces Techneglas to shutter its factory in Jenkins Township, Ohio.
• “The Problem in Galesburg” — 1,100 workers are shown the door when the Maytag plant closes. “Christmas won’t be the same for quite awhile for the kids,” says former Maytag employee Aaron Kemp. Unemployment in his town will reach 20 percent once all the jobs have made their move to the new plant in Reynosa, Mexico.
• “Tariff-dropping Pacts Blamed for Elimination of Countless Jobs” — 2,700 families in Saginaw, Michigan, are left without a paycheck after the Electrolux factory relocates to Mexico. State legislator Michael Huckleberry explains the reason for the closing: “These companies go to Mexico and China for starvation wages.” Electrolux closed another U.S. factory in Texas, resulting in 1,000 more families without work. The Texas plant is also headed for the cheaper labor of Mexico.
• “It’s Almost As If All of Lewiston Has Been Outsourced” — A thousand men and women in Pennsylvania are left jobless and hopeless. Waiting for the bus that will take her to Army boot camp, 18-year-old Miranda Frymer tearfully sums up the situation in her home town: “I want to make something of my life, there’s nothing left here.” Unemployment in Lewiston has risen 4 percent in the last three years to a rate of 8 percent. Lear, Standard Steel, Mann Edge Tool, Collins Tool, and Guardian Industries have all closed their local plants and moved them abroad, mostly to Mexico.
Tragically, most of these people who do find new jobs will earn less than at their previous employment. According to a study commissioned by the U.S. Conference of Mayors, the jobs that vanished between 2000 and 2003 paid an average of $44,000 a year, but the new jobs that will be created will pay an average of $38,800 a year. Moreover, says the study, the new jobs will provide 14 percent less in health insurance and other benefits than the lost jobs. According to a Bureau of Labor Statistics survey, 35 percent of full-time workers who lost their jobs between 2001 and 2003 are still unemployed.
The job market has deteriorated to such an extent that Americans’ overall income has fallen for two consecutive years — “the first time that has effectively happened since the modern tax system was introduced during World War II,” the July 29 New York Times reported based on newly disclosed IRS data. The total adjusted gross income on tax returns fell 5.1 percent from 2000 to 2002. Due to population growth, average incomes fell even more (5.7 percent). “Adjusted for inflation, the income of all Americans fell 9.2 percent from 2000 to 2002,” noted the Times.
A recession, Ronald Reagan famously said, is when your neighbor loses his job; a depression is when you lose your job. If that is true, then America is in a deep recession and is likely careening headlong into a depression.
No job is safe from the hatchet wielded by the globalist Power Elite: technology — 1.2 million jobs lost since 2000; farming — 33,000 small farmers out of business since NAFTA became law in 1994; manufacturing — 2.3 million men and women left without work in the last 39 months; textiles — 440,000 jobs eliminated since 1993; citrus industry — 90,000 jobs on the chopping block waiting for the FTAA ax to fall; forest/timber — thousands out of work as mills are closed and relocated to Mexico. Not even the press is exempt. Reuters announced it would be cutting 60 American editorial jobs and outsourcing them to Bangalore, India.
It is crucial to understand that the economic devastation described above is not the result of unfettered capitalist greed. The shattered households and ruined communities are not casualties of the bottom-line logic of the free market. Rather, the jobs being sent abroad reflect policies deliberately enacted by our government: Tax and regulatory burdens that drive businesses to move production abroad; perverse tax incentives and subsidies that entice U.S. corporations to relocate offshore; and — as noted elsewhere in this issue (see the article on page 21) — the outright transfer of U.S. wealth to other countries through foreign aid.
What follows is a brief list of the victims of the anti-American globalists and the weapons they are using to eradicate the economic foundation of our Republic — the middle class.
Manufacturing and Textiles
American manufacturers are struggling to compete, for one reason, because of the gargantuan regulatory burden our own government has placed on them. According to a 2003 study prepared for the National Association of Manufacturers, “the total compliance burden of environmental, economic, workplace, and tax compliance on the economy is in the order of $850 billion — with $160 billion on manufacturers alone, equivalent to a 12 percent excise tax on manufacturing production.”
The income tax code is also being used to demolish American factories. Section 936, the Possessions Tax Credit, provides tax breaks to American corporations who relocate to Puerto Rico and Guam. Companies taking advantage of this law are exempted from paying federal income taxes on profits generated by relocated plants, while being legally allowed to continue marking the goods produced in those overseas factories “Made in America.” Overall, it is estimated that 80,000 jobs have been lost as a result of industrial relocation subsidized by Section 936. Is your job next?
The hardest blow to the manufacturing strength of the United States has come from the pet projects of the globalists and their government agents: NAFTA, CAFTA, FTAA and the smaller bilateral Free Trade Agreements (FTA). According to the Economic Policy Institute, manufacturing industries were responsible for 78 percent of the net job loss under NAFTA, a total of 686,700 Americans left without work. This is the devastation wrought by an agreement between three nations. What will happen to the factories in America if the FTAA, an agreement between 34 nations, is made law?
America cannot compete with the $4 a day wage in Mexico, much less with the $3 a day wage in Brazil or the $1 a day wage in Honduras and Haiti. Such a shift from Mexico to poorer nations is anticipated in a remark by General Electric’s chief of Mexico operations: “Mexico still has a lot to offer. But two of its advantages — low cost labor and cheap currency — are gone.” It’s on to the friendlier — and cheaper — shores of Brazil and Ecuador.
The textile industry is being hit particularly hard. NAFTA has critically wounded the textile industry; the FTAA would likely kill it.
The prospect of FTAA and CAFTA becoming the law frightens Mark Tapley, the executive vice-president of Sylacauga, Alabama’s Avondale Mills. If CAFTA passes, he predicts, “jobs will be lost to China under the guise of Central America.” Mr. Tapley’s employees could be the next to join the 780,000 American textile workers left jobless since NAFTA. This scenario apparently doesn’t bother President Bush, who blithely noted in a speech at the National Small Business Summit that “people of North Carolina in the textile industry have had to look for other jobs.”
Since 1985, Congress has allowed about 6,000,000 workers to enter the United States through the immigration policy known as H-1B and L-1 visa exceptions. These foreign tech workers displaced approximately one million Americans. Nine out of 10 new tech jobs in 2001 were filled by H-1B visa holders.
Astonishingly, the Web site of the U.S. Citizenship and Immigration Services even explains to employers the ease of hiring an H-1B worker compared to hiring an American for the same job. Intel hired approximately 8,000 foreign workers under the H-1B program at the same time it was laying off much of its American workforce. Siemens used L-1 visas in a similar way.
At Siemens, 20 American computer techs were fired to make room for engineers from India hired to do the same job but at wages approximately 25 percent lower than the Americans they displaced. Siemens’ own Mike Emmons sadly tells the tale: “Management mandated we train our foreign replacements, then Americans were shown the door. It was the most demoralizing thing I have ever experienced.” Many of these foreign workers stay in America past the expiration of those visas, adding to the already cumbersome burden imposed by illegal aliens. Additionally, since March 2000, some 240,000 tech jobs have been outsourced overseas.
The remaining portion of the U.S. forest/timber industry that escaped the enviro-inspired government landgrab now finds itself caught in the globalist cross-hairs. Globalization has forced American companies to compete with the cheaper production costs in Brazil and other lumber producing states. When Columbia Forest Products closed their hardwood veneer plant, 225 workers lost their jobs.
Globalization destroys lumber-related jobs in two ways: first, cheap wood and cheap resources motivate companies to relocate their mills overseas; and second, onerous consumer and environmental regulations make offshore relocation beneficial to the bottom line. Boise Cascade couldn’t resist the temptation and in 1995 they closed their mill at Council Falls, Idaho, and moved the entire operation to Papanoa, Mexico. In the wake of this departure, 75 jobs were lost in a town of only 1,000 people.
Since NAFTA was signed, 33,000 small farmers in the United States have gone out of business. This is roughly six times the rate prior to NAFTA. Those farmers who manage to survive have found the price of corn has dropped by 33 percent, the price of wheat by 42 percent, and the price of soybeans by 34 percent. The catastrophic effect of these price reductions will be augmented by huge agri-business interests dumping tariff-proof crops harvested overseas by foreign laborers employed for nearly nothing.
NAFTA regulations drive up costs for small farmers, while simultaneously directing subsidies to foreign competitors via the World Bank and the IMF. NAFTA also facilitates the dumping of foreign grown crops into the American marketplace. The independent farmer is squeezed out of existence by the process. The FTAA would force the American farmer to compete with minuscule production costs in 33 other nations and with the open door that Washington will show to the crops grown in those countries.
In Florida, citrus grove owners and workers fear for their livelihood. Terry McCoy, the Latin American studies director at the University of Florida, sums up the prospects this way: “The administration will have to sacrifice Florida agriculture for the FTAA. They can’t get the agreement if they don’t.” President Bush and John Kerry have both indicated that they will seek passage of the FTAA by any means necessary.
Unfortunately for Floridians, the betrayal extends to their own governor, Jeb Bush (brother of President George W. Bush). Governor Bush has established a nonprofit organization called “Florida FTAA” whose sole aim is to disseminate globalist propaganda throughout Florida in support of the FTAA. He is doing this even though, according to Daily Business Review, two of Florida’s largest industries — citrus and sugar — will be devastated by the increased competition from cheap imports from Brazil and other Latin American countries.
The reduction or elimination of tariffs on Brazilian oranges would decimate Florida’s citrus industry, which employs 90,000 people. As Jim Griffiths, the managing director of Citrus Growers Associates, laments, “If the tariff is removed, you will probably see the Florida citrus industry essentially go out of business.”
Subsidizing Our Own Demise
Washington is forcing Americans to subsidize their own economic demise through projects such as the Partnership for Prosperity (PfP) and the Overseas Private Investment Corporation (OPIC). These programs siphon the wealth of the middle class by using taxpayer money to finance the building of businesses in Mexico, Russia and other Third World nations. The CEO of OPIC, Peter S. Watson, touts the PfP and OPIC as programs that “will help to further unleash the entrepreneurial capacity of Mexican businesses by mobilizing U.S. capital.”
What this means is that money from American taxpayers is used to build factories in Mexico, where companies formerly based in America can fatten their bottom line by employing cheap foreign laborers — made possible by taxes paid by the very American workers they are booting out the door.
The worst aspect of all the economic desolation wrought in the name of globalism is that it is only a foretaste of what is to come. All the methods listed above, especially the expansion of NAFTA to Central America under CAFTA and then to the entire Western Hemisphere under the FTAA, will be used by architects of a centralized global economy to obliterate the American middle class.
We must restore our constitutional limitations on government power, reject the FTAA proposal, and withdraw from multilateral trade pacts, such as NAFTA and the WTO, that are being used to steal our economic future.