Loss of Manufacturing Jobs and Fissured Economy Symptoms of Same Illness

Steve Smith

Steve Smith Director of Communications, California Labor Federation

Eduardo Porter of the New York Times penned an interesting column this week that posits that President Trump is missing the mark with his economic focus on the return of manufacturing instead of addressing the scourge of big corporations outsourcing full-time in-house employment to subcontractors who make those jobs low-wage and temporary by nature.


Mr. Trump is missing a more critical workplace transformation: the vast outsourcing of many tasks — including running the cafeteria, building maintenance and security — to low-margin, low-wage subcontractors within the United States.

This reorganization of employment is playing a big role in keeping a lid on wages — and in driving income inequality — across a much broader swath of the economy than globalization can account for.

David Weil, who headed the Labor Department’s wage and hour division at the end of the Obama administration, calls this process the “fissuring” of the workplace. He traces it to the 1980s, when corporations under pressure to raise quarterly profits started shedding “noncore” tasks.

The trend grew as the spread of information technology made it easier for companies to standardize and monitor the quality of outsourced work. Many employers took to outsourcing to avoid the messy consequences — like unions and workplace regulations — of employing workers directly.

Porter is absolutely correct that the subcontracted workplace is a devastating trend that undermines the middle class and fuels income inequality. He’s also right to point out that Trump hasn’t addressed this problem at all, and likely won’t.

The problem is that Porter fails to recognize that bad trade deals that led to the outsourcing of millions of jobs to other countries and the fissuring of the traditional workplace are both symptoms of the same illness: unfettered corporate greed. And they work not in silos to damage our economy, but in tandem.

When corporations absolved themselves of any responsibility to American communities and workers, and instead made their only focus increasing profit margins for executives and shareholders, the economy began to crack. This illness has many symptoms beyond outsourcing and subcontracting. It also includes the attack on unions, which has stripped workers of a seat at the table. These factors together have conspired against the masses to benefit the privileged few.

We don’t do ourselves any favors by prioritizing one problem over the other. We must stop the outsourcing of good jobs to other countries AND provide more protections for workers. That starts with corporate accountability. For far too long we haven’t discouraged corporations from prioritizing profits over people. In fact, flawed trade agreements, tax loopholes and broken laws actually provide incentives for CEOs to destroy good jobs in pursuit of ever higher profits and executive bonuses.

If you’re sick, your doctor (hopefully) addresses not only your symptoms, but your illness. We need to view the economy in the same way. With his cabinet of millionaires and billionaires, Donald Trump hardly seems interested in doing that.

It’s up to the labor movement and all who care about the future of good jobs to lead the charge to demand corporations and the lawmakers who retire to become their high-priced lobbyists to stop killing good jobs just to pad their own bottom line.

Whether we’re talking about outsourcing to other countries or contracting out good jobs to low-wage temporary agencies, it’s time for a structural economic shift that empowers workers and makes the American Dream possible again. That starts with working people having the ability to stand together and stand up to the corporate elites who’ve been getting exceedingly wealthy at our expense.


This was reposted from Labor's Edge.