By
Robert Reich
On
May 11, President Obama chose Nike headquarters in Oregon to deliver a defense
of his proposed Trans-Pacific Partnership.
It was an odd choice of
venue.
Nike isn’t the solution to
the problem of stagnant wages in America. Nike is the problem.
It’s true that over the
past two years Nike has added 2,000 good-paying
professional jobs at its Oregon headquarters, fulfilling the requirements of a controversial
tax break it wrangled from the state legislature. That’s good for Nike’s
new design, research and marketing employees.
Just before the President
spoke, Nike announced that
if the Trans Pacific Partnership is enacted, Nike would “accelerate development
of new advanced manufacturing methods and a domestic supply chain to support
U.S. based manufacturing,” thereby creating as many as 10,000 more American
jobs.
But that would still be only a
tiny fraction of Nike’s global workforce. While Nike makes some shoe components
in the United States, it hasn’t assembled shoes here since 1984.
Americans made only 1 percent
of the value of Nike products that generated Nike’s $27.8 billion revenue last
year. And Nike is moving ever more of its production abroad. Last year, a third of Nike’s
remaining 13,922 American production workers were laid off.
Most of Nike’s products
are made by 990,000 workers in low-wage countries whose abysmal working conditions have made Nike a symbol of global
sweatshop labor.
In other words, Nike is a
global corporation with no particular loyalty or connection to the United
States. Its loyalty is to its global shareholders.
I’m not faulting Nike.
Nike is only playing by the rules.
I’m faulting the rules.
In case you hadn’t noticed,
America has a huge and growing problem of inequality. Most Americans are
earning no more than the typical American earned thirty years ago, adjusted for
inflation – even though the U.S. economy is almost twice as large as it was
then.
Since then, almost all the
economic gains have gone to the top.
The President is
angry at Democrats who won’t support this trade deal.
He should be
angry at Republicans who haven’t supported American workers. Their obduracy
has worsened the potential impact of the deal.
Congressional
Republicans have refused to raise the minimum wage (whose inflation-adjusted
value is now almost 25 percent lower than it was in 1968), expand unemployment
benefits, invest in job training, enlarge the Earned Income Tax Credit, improve
the nation’s infrastructure, or expand access to public higher education.
They’ve embraced
budget austerity that has slowed job and wage growth. And they’ve continued to
push “trickle-down” economics – keeping tax rates low for
America’s richest, protecting their tax loopholes, and fighting off
any attempt to raise taxes on wealthy inheritances to their level
before 2000.
Now they – and
the President – want a huge trade agreement that protects corporate investors
but will lead to even more off-shoring of low-skilled American jobs.
The Trans Pacific Trade
Partnership’s investor protections will make it safer for firms to relocate
abroad – the Cato Institute describes such protections
as “lowering the risk premium” on offshoring – thereby reducing corporate
incentives to keep jobs in America and upgrade the skills of Americans.
Those same investor
protections will allow global corporations to sue the United States or any
other country that raises its health, safety, environmental, or labor
standards, for any lost profits due to those standards.
But there’s nothing in the
deal to protect the incomes of Americans.
We know that when
Americans displaced from manufacturing jobs join the glut of Americans
competing for jobs that can’t be replaced by lower-wage workers abroad –
personal service jobs in retail, restaurant, hotel, hospital, child care, and
elder care – all lower-skilled workers face downward pressure on wages.
Jobs being lost to imports
pay Americans higher wages than the jobs left behind. Government data show
wages in import-competing industries (e.g. manufacturing jobs) beat those in
exporting industries overall.
Without a higher
minimum wage, an expanded Earned Income Tax Credit, affordable higher
education, and a world-class system of job retraining – financed by higher
taxes on the wealthy winners in the American economy – most Americans will
continue to experience stagnant or declining wages.
Instead, the Trans Pacific
Partnership – which includes twelve nations, including Vietnam, but would be
open for every nation to join – would lock us into an expanded version of the
very policies that have failed most American for the past twenty years.
No doubt Nike is
supporting the TPP. It would allow Nike to import its Vietnamese and
Malaysian-made goods more cheaply. But don’t expect those savings to translate
into lower prices for American consumers. As it is, Nike spends less than $10
for every pair of $100-plus shoes it sells in the U.S.
Needless to say, the TPP
wouldn’t require Nike to pay its Vietnamese workers more. Nikes’ workers are
not paid enough to buy the shoes they make much less buy U.S. exported goods.
Nike may be the perfect
example of life under TPP, but that is not a future many Americans would
choose.
ROBERT
B. REICH, Chancellor’s Professor of Public Policy at the University of
California at Berkeley and Senior Fellow at the Blum Center for Developing Economies,
was Secretary of Labor in the Clinton administration. Time Magazine named him
one of the ten most effective cabinet secretaries of the twentieth century. He
has written thirteen books, including the best sellers “Aftershock" and
“The Work of Nations." His latest, "Beyond Outrage," is now out
in paperback. He is also a founding editor of the American Prospect magazine
and chairman of Common Cause. His new film, "Inequality for All," is
now available on Netflix, iTunes, DVD, and On Demand.