After the 2006 elections, many of us cheered because several Democrats were elected to Congress who—gasp—supported trade policies that are fair to workers and the environment. We in the union movement oppose the type of trade deals pushed by the Bush administration, but not because we’re anti-trade. We want trade pacts that work for working people, not just line the pockets of CEOs.
This year’s presidential and congressional candidates who think they understand what’s at stake with U.S. trade should take a close look at the strike by 3,600 workers at American Axle & Manufacturing—an action that puts a human face on U.S. trade policies, and their connection to CEO greed and the future of America’s middle class. (Well, maybe most candidates—Sen. John McCain just yesterday said he is "an unashamed and unabashed defender of NAFTA.")
The members of UAW have been on strike since Feb. 26 because American Axle is seeking steep wage cuts for its U.S. employees while expanding its Mexican operations. The company earned $37 million in profits last year with sales of $3.25 billion—but management is demanding wage reductions of up to $14 an hour, as well as elimination of future retiree health care and defined-benefit pensions for active workers.
Meanwhile, American Axle CEO Richard Dauch raked in nearly $10.2 million last year—getting a 9.5 percent pay raise and stock options valued at $4 million—and three other top executives all received pay increases in 2007. (Lots of local UAW union coverage of the strike here, here and here.)
We have built a life around [American Axle] and our pay. You can’t just take 60% of our pay and benefits and not expect a fight. What is left after I pay benefits with $11.40 an hr? How can I support my family with that? How would you support your family with that? With gas going to $4.00 a gallon, how can I even drive to work on that?…I will help pay my medical. I will even agree to taking my COLA away. (Which will save you an estimated 30 million with COLA alone)….Are you so callous as to leave all these families bankrupt and homeless? I know it sounds extreme but it is very true.
American Axle was created in 1994 when General Motors spun off five U.S. plants making axles and drive-line components, employing some 6,500 UAW members. That’s the same year NAFTA, the North American Free Trade Agreement, became law. So even though American Axle is making plenty of profit, its greedy CEO wants more—and trade pacts like NAFTA and U.S. laws that provide no incentives for employers to create and expand good jobs in this country encourage corporations to move jobs out of the country. The result: Unbridled corporate greed at the expense of workers who make the products that in turn make the CEOs big bucks. Continuing the letter to Dauch, the American Axle worker writes:
I have to say I know you have a negative opinion of the hourly worker. You feel that we are all replaceable and dispensable. I can assure you I am not. I am that worker who gives 110%. I go over and beyond. My Supervisors never have to tell me what to do because it is already done. I am never someone who says “that isn’t my job.” I can run and problem solve an Upsetter [machine] better than most people on the floor and any Manager that has come through this plant in my 14 yrs. I gave you 14 years of dedicated service and I deserve the respect as such.
Even as American Axle has cut its U.S. workforce in half since 2004, the company continues to expand overseas with facilities in 12 countries, including Mexico, Poland and China. Since 2000, the company has invested millions of dollars in its 1.5 million-square-foot plant in Silao, Mexico, which has been expanded six times. That plant is slated to be the hub for American Axle’s growing business supplying parts for passenger cars and crossover utility vehicles
So, U.S. workers lose, but those in other countries gain, right? Not so. According to a study by the Economic Policy Institute (EPI), NAFTA has failed workers in all three countries it covers: the United States, Mexico and Canada.
- In each nation, while workers’ productivity grew, their wages remained stagnant or dropped, and the wealth of those at the top increased significantly.
- More than 1 million jobs that would have been created were lost in the United States.
- In Mexico, many of the new jobs that were created were low-wage with no benefits and no future.
- In Canada, the United States’s largest trading partner, wages stagnated and inequality increased.
NAFTA is just one part of the globalzation of the U.S. economy that current legislation is failing to address for the middle and working classes. EPI looked at the effects on U.S. wages of globalization and offshoring of jobs. Using traditional economic analyses, they concluded the harm done to U.S. jobs—as manufacturing moved to low-wage countries—was not compensated for by gains in high-tech trade. Economic theories also have underestimated the adjustment costs for workers. EPI says the United States needs a "hugely more ambitious response to offshoring."
Instead, what’s happening here, as Cynthia Tucker, a columnist at the Atlanta Journal-Constitution, writes, is that U.S. jobs are going overseas in vast numbers—and not just manufacturing jobs.
Princeton economist Alan Blinder, a longtime proponent of free trade, now says that it will create more severe social and economic upheavals than he once thought. He predicts that 30 million to 40 million Americans jobs are likely to be shipped overseas in the next 10 to 20 years. Not only will the lunch-bucket crowd feel the pain, but college-educated, white-collar types will, too, as occupations such as graphic designer, video editor, financial analyst, microbiologist, and, ironically, economist are outsourced.
Blinder is among many policy wonks rethinking how the nation approaches "free trade." And such about-faces are a good sign that those seeking office this year should do some rethinking as well.
For if it is possible, as economist Dean Baker writes, that "trade policy has been an important factor in the rise in inequality," then
trade can also be an important factor in reducing inequality.
For all of us.
When the candidates look into the faces of American Axle workers, slogging through the snow in a cold picket line, they need to understand those are the faces of all America’s workers.