U.S.-based multinational corporations decreased the number of U.S. workers they employ by 3.3 million from 1989-2011, according to a recent report from The Economic Populist. The rapid shift to a service economy comes as millions of Americans, many with college degrees, are now taking low-paying jobs at fast food restaurants and retail stores to make ends meet.
Helping to accelerate this shift has been the proliferation of trade pacts like the North American Free Trade Agreement, which eliminated nearly 700,000 U.S. jobs since it was first enacted in 1994.
The effects of globalization and offshoring are nothing new in the U.S. economy, but major demonstrations against low pay are only beginning. On Monday, hundreds of fast food workers walked off the job across nine U.S. cities, demanding a wage of $15 per hour and the right to form a union. This occurs as fast food continues to take in record profits. McDonald’s notched $34.2 billion in sales last year while Burger King and Wendy’s each boasted $8.1 billion in sales, according to CNN Money.
Globalization and the fast food economy
The protests are the largest in several rounds of one-day strikes led by Fast Food Forward, an advocacy organization that seeks to improve the low pay, unsafe working conditions and paltry benefits fast food workers face. Thus far, more than 124,000 fast food workers and supporters have signed on to the campaign.
The problem: There are no better options for a whole layer of the U.S. workforce. Decent-paying manufacturing jobs — once abundant during the post-World War II economic boom — still exist, but they’re increasingly being shipped abroad where labor is cheap and regulations are sparse.
All the evidence is seen in an aging service-sector workforce. Data shows that the workforce at McDonald’s and other chains is attracting more middle-aged employees, supplanting the youth workforce that once made up the bulk of fast food jobs. Using U.S. Bureau of Labor Statistics data, NBC News reports that only 16 percent of fast food industry jobs now go to teens, down from 25 percent a decade ago.
“I might be doing the work of three people due to under-staffing,” McDonald’s employee Kareem Starks, a 30-year-old former Parks Department employee, told Salon. “It’s been hard trying to live off the minimum wage, $7.25, and support my two kids plus pay rent.”
Many of the older fast food workers are well-educated, with 42 percent of employees over the age of 25 having least some college education, including 753,000 with a bachelor’s degree or higher.
Starks’ condition is increasingly common. Recent Associated Press reports show that “four out of 5 U.S. adults will struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives.”
The salient question is: Where did all the good paying jobs go? Multinational corporations like General Electric, Microsoft and Caterpillar are still creating jobs, but the bulk of hiring now takes place outside the U.S., where wages are lower and workplace regulations are virtually nonexistent.
Using U.S. Bureau of Economic Analysis data, The Economic Populist’s Robert Oak reports that multinationals added 6.5 million employees to their payroll overseas between 1989 and 2011. At the same time, the share of these companies’ workers that reside in the United States fell from 79 percent to just 66.3 percent.
“Multinational corporations are clearly doing their hiring abroad,” Oak wrote.
But many are left asking: What has facilitated this rapid offshoring of jobs in recent years?
Free trade eliminates jobs
The answer is as simple as the free trade agreements that allow corporations to take in larger profits where labor is cheaper. Leaders in Washington have overseen, or even helped pave the way for, the elimination of U.S. jobs.
The alphabet soup of free trade acronyms — NAFTA, for the North American Free Trade Agreement; CAFTA for the Central American Free Trade Agreement; and now TPP for the Trans-Pacific Partnership — have all been touted as “win-wins” that will lower costs, increase consumer selection and strengthen international economic ties. The problem is that free trade appears to have eliminated millions of U.S. manufacturing jobs.
The most recent experiment for the Obama administration will likely be the TPP, a free trade agreement that is in its 18th round of secret negotiations. The exact details remain unclear, but if implemented, the agreement would considerably expand the existing 2005 Trans-Pacific Strategic Economic Partnership Agreement, a pact that includes Brunei, Chile, New Zealand and Singapore.
The proposed expansion would bring Australia, Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam into one of the largest trade pacts, allowing the 11 countries to freely trade goods and services.
The downside, however, is that the TPP is projected to virtually wipe out the remaining U.S. textile industry. A recent study concluded that the TPP could cost more than 500,000 U.S. textile and related jobs and put more than 1.5 million jobs in the textile and apparel supply chains in the Western Hemisphere and Africa in jeopardy.
Concerns have been echoed by some in Congress, as well.
“I am deeply concerned about the transparency record of the U.S. Trade Representative and with one ongoing trade agreement in particular — the Trans-Pacific Partnership,” said Sen. Elizabeth Warren (D-Mass.).
Similarly, NAFTA eliminated 682,900 jobs, according to one study conducted by the Economic Policy Institute. Although the agreement was considered a major boost for Mexico, the country’s economy grew only 1.6 percent per capita on average between 1992 and 2007. Among the U.S. jobs lost were about 415,000 middle-class manufacturing positions.
What do fair trade agreements do to help workers abroad? Proponents of fair trade and human rights believe that globalization does little to lift those who toil in factories for U.S. companies.
The low wages and poor working conditions get some attention only when a disaster occurs. In April, the collapse of a textile factory in Bangladesh killed 1,129 workers and sparked an outcry for reform.
Few American companies that source their clothing from Bangladesh signed on to an international safety pact that would require them to pay for inspections and equipment upgrades. Wal-Mart, Target, Gap Inc., and J.C. Penney declined to sign on to an international safety pact.
Few of the the 5,000 factories in Bangladesh are unionized and workers continue to toil in dangerous conditions for pay as low as $40 per month.