Commoditized labor focuses need to retake lost industries
by Bob Hoig, Publisher
Midlands Business Journal
Given global trade, labor is fast becoming a worldwide commodity.
Although undetected by the United Auto Workers and other sleepwalkers snugged up in a kind of employment Fortress America, circa 1950, this fact adds urgency to an idea suggested long ago by the Midlands Business Journal.
America must team its industrial expertise with Hispanic labor brought north to work in border factories to recapture industries otherwise lost forever to India and the Pacific Rim, mainly China.
We will recap the advantages, first offered by this writer in 1996:
The painless way for America to buy time for future worldwide wage adjustments certain to come is to team Yankee know-how with Latino labor, busing workers daily to factories on the U.S. side of the border and paying them good wages by Latin America standards.
The idea is make the products and get back the jobs lost over the past two decades – manufacturing electronics, tools, textiles, pots, pans, consumer goods of all kinds great and small.
The factories and equipment would, of course, be state of the art, and thus more competitive in a world market. U.S. construction firms, like Omaha’s own Peter Kiewit Co., would be kick-started on a mega scale building its share of the thousands of factories that would be needed to make the goods China and the others now make for us.
Equipment manufacturers would ride the same wave. American labor unions would lose nothing because the jobs in question involve making things we don’t make anymore because of low-wage competitors, like China. American consumers gain in another way because ocean shipping expenses would be no more. The unions gain when the border factories hum and feeder plants sprout all over America. Hispanic workers gain because the wage rate, while well below U.S. averages, should be what a Mexican worker could earn, say, in Mexico City or a Colombian in Bogota.
The U.S. Immigration Service wins because honest Latinos would have a way to funnel into the United States and gain citizenship through an orderly process, rather than in the current chaos at the border.
Even excess illegal workers – those not needed in our restaurant, hotel, entertainment, tourist and construction industries – could be told, “Fine, you want a job, get down to Laredo or El Paso or San Diego and apply!”
We will warn policy makers that time is running out. With trillion dollar deficits ahead and China looming even larger as a huge financer of U.S. debt, the Chinese rulers might simply say, “Make one move to take back your industries or, or fact, do anything, to displease us and we stop loaning you money!”
Congress should enact a “Lost Industries Reclamation Act” and Barack Obama, when he is president, should sign it into law.
To take up the labor-as-commodity issue, once unthinkable weaknesses in the post-World War II model of industrial unions driving wages, benefits and work rules ever higher are sinking operations.
The woes of the “Detroit Three” automakers are but the biggest example.
After World War II, the prices of almost everything, cars and trucks for certain, were what American industry said they were. Labor costs as part of the equation were mostly what labor unions said they were.
In 2008, given the world of global trade that apparently will be with us for a long while, the cost of white collar labor is what China, India and elsewhere off-shore determines it is to be.
Turning the idea inside out, when the land has to be here, Mexican workers can be imported as it was when jumbo jets flew them to the Pacific Northwest for the apple harvest, then flown back.
Lower level professional duties, such as reading X-rays and handling easily formatted American accounting or legal chores, are done in India via the Internet.
On the higher scale, dental patients in Great Britain have opted to fly to Poland dentists for high quality work, either to save money or to beat the infamously long waits posed by a nationalized health service.
On an even larger scale, medical tourism is taking hold in the U.S. and other rich nations wracked by high labor costs.
What we make of all this is that the world labor market is like two great tectonic plates, one poised high above the other. But as the have-not nations, India, China, others along the Pacific Rim gain stature, America yields its preferred stature for how long one works to gain a certain lifestyle.
Another way of looking at it is to think of two high school or college age kids, one an American and one Chinese. Is there any divine ruling that the American with no special energy level gets to tool around in a new or near new car while the Chinese kid works overtime to afford a cheap bike or walks instead? Travel abroad for some specialized medical treatment, and get a foreign holiday thrown in.
Eventually U.S. wage rates for basic work and some specialties are going to fall, not necessarily as a fixed dollar amount but as a relative measure of work expended to the wage granted.
Unions and politicians have been sailing into that wind for some time now, but the journey appears about to end.
January 2009
