08.01.2016

The Long Road to Crisis

The dismantling of autoworker gains was a class project, not the inevitable result of globalization.

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American workers are losing the class war. Private-sector union membership is in the single digits, and hiring this quarter is the worst since 2010. The low unemployment rate is more a sign of people withdrawing from the labor force than of the jobless finding work. And while the rich continue to make money hand over fist, real hourly and weekly wages have fallen since the 1970s.

A recent Federal Reserve poll found that nearly half of Americans would have to essentially beg, borrow, or steal if faced with an unexpected $400 expense. Two out of three respondents in a recent Pew survey said they believed the next generation would be worse off financially, while a poll gauging consumer confidence finds only a quarter of respondents believe jobs are “plentiful.”

There are, however, developments that challenge this depressing picture. Precarious work is rising in the United States, but full-time, long-term employment still drives employment in most sectors. In recent years, workers’ centers, the immigrants’ rights movement, and the Black Lives Matter movement have crafted innovative organizing techniques.

Struggles to increase the minimum wage are on the upswing. Nurses have proven themselves a force to be reckoned with, and militant teachers have demonstrated how to build community-labor connections. Just recently, Verizon workers won concessions from their employer.

These considerations haven’t done much to wash away the gloom, however. Powerful workers, especially powerful unionized workers, are presented as an anachronism from a bygone era — before globalization and deindustrialization pulled the rug out from under the US working class.

American workers have certainly taken a beating, but popular explanations for why — particularly those that focus on nebulous developments like globalization — often obscure the central role of class struggle.

Globalization is significant, but it’s not a “natural” outcome of technological advances or market evolution. Globalizing processes are political and ideological — part of a decades-long class project to dismantle the gains of American workers.

Developments in the US auto industry show this project at work.

Assumed Obsolescence

Perhaps the best demonstration of labor’s assumed obsolescence is the contrast between the extensive media coverage of the United Auto Workers union election loss at the Chattanooga, Tennessee Volkswagen plant in 2014 and the modest coverage of the victory of the Communications Workers of America and the International Brotherhood of Electrical Workers against Verizon this spring.

Dozens of doleful thinkpieces dissected the UAW’s defeat, pondering whether it spelled the end of the once-mighty union — or of organized labor as a whole.

The focus on Chattanooga makes sense in some respects. The US South is a site of new investment, particularly manufacturing investment, and there is a certain nostalgia when it comes to both automobile manufacturing and its unions. Cars signify independence, power, and sexuality and have always had a special place in American culture. The UAW itself is also iconic. In its heyday it represented the powerful potential of the working class, for better or worse.

The story of how the UAW lost in Chattanooga is also retold because it seems like a straightforward allegory, conveying in a nutshell everything that’s gone wrong for the American working class.

Unlike the disastrous 2001 UAW election at Nissan in Smyrna, Tennessee (which the union lost by a two-to-one margin), the Volkswagen election was supposed to be in the bag. The union spent two years and millions of dollars on the campaign. It played nice with the company and promised to care about creating value. It assured workers that it would do right by them and, in the weeks leading up to the election, a majority of workers signed cards.

But as the election neared, and Volkswagen (at least publicly) maintained its neutrality, local politicians stepped in. Senator Bob Corker boasted about his insider knowledge of Volkswagen’s plans to build a new SUV in Chattanooga if a “no” vote prevailed.

State senator Bo Watson threatened to deny Volkswagen fresh state and local subsidies, while Governor Bill Haslam fretted in the press about whether a union victory would deter future investment in the state. Anti-tax activist Grover Norquist won the prize for most bombastic, posting anti-UAW billboards that featured images of abandoned Detroit factories.

Threats and Rumors

Fear of capital flight wasn’t the only reason the UAW lost. For one, the UAW’s tiered wage structure — which pays new and younger workers significantly less for the same job — hampered its efforts. At the time of the election, new Volkswagen workers in the nonunion South made more than new hires at Big Three plants and had the same benefits. In addition, the union’s promise not to make home visits to autoworkers during the organizing drive was puzzling, to say the least.

But globalization and worker insecurity loomed large in the narrow defeat. The threat that Volkswagen could move to Mexico seemed credible — the company has been building cars south of the border since 1967, when the first Bug rolled off the Puebla assembly line.

Mexican automobile production is growing at a rapid clip. 2015 was a record-setting year, with over 3.5 million vehicles produced in the country. While more than 70 percent of its exports were destined for the United States last year, Mexico has also significantly expanded its trade relationships.

It currently has more than forty different free-trade agreements, making it an increasingly attractive export platform for the world market. Companies like Nissan, Honda, Mazda, Audi, and BMW have all built new assembly plants in Mexico in the past few years — investment that has helped make it the world’s fourth-largest auto exporter, after Germany, Japan, and South Korea.

The notion that low-wage locales like Mexico were beckoning capital fits seamlessly into the broader mainstream narrative about jobs leaving the United States. There’s a good deal of truth to it: jobs in small electronics, shoes, apparel, and household-goods production have largely fled the country for cheaper shores.

To make matters worse, companies bandy about the “nuclear option” of plant closure at every opportunity. Facing a strike last year, management at the Wisconsin-based Kohler Company vowed to shutter the plant and relocate if workers didn’t agree to concessions. This spring, Verizon declared that it would move its call-center jobs to the Philippines if workers didn’t cooperate.

As the labor experts Kate Bronfenbrenner and Stephanie Luce have shown, these widespread, regular threats are debilitating to unions attempting to organize new members or just negotiate a decent contract.

Persistence in the Face of Change

Yet the globalization explanation for worker weakness is as problematic as it is instructive. Bronfenbrenner and Luce also find that companies rarely follow through on their threats to leave — and while manufacturing jobs have certainly declined in the United States, they have also declined in virtually every country (especially China).

Today, the United States has roughly twelve million manufacturing workers — one in ten, rather than one in four as in 1960. Yet, in the past six decades, domestic manufacturing output has increased fivefold and manufacturing output per employee has risen year after year (outside recessions); in 2014, it was more than $170,000 per factory worker.

Most of what Americans buy is still made in the United States. A 2011 study by the Federal Reserve Bank of San Francisco found that 88.5 percent of US consumer spending is on goods and services made in the United States.

Products with the “made in China” label account for only 2.7 percent, and just 1.2 percent of that amount reflects the actual costs of the imported goods (the rest goes to services produced in the United States to deliver those goods to the consumer).

The auto industry is a good example of how fixating on globalization can obscure more than it illuminates. US autoworkers produced roughly three out of four cars globally in 1950; today they make a little more than one in ten cars worldwide.

But global production has increased dramatically, and after smoothing out the bumps, US workers actually make roughly the same number of cars today that they did the year James Dean got his break and North Korea captured Seoul.

In the United States, foreign firms like Volkswagen, Daimler, and BMW are all boosting production. Even domestic automakers are flourishing, seven years after the US Treasury frog-marched GM and Chrysler through an undignified structured bankruptcy. Ford pulled in more profits last year — $10.8 billion — than it has in fifteen years, while GM is spending billions to expand plants in Spring Hill, Tennessee; Arlington, Texas; and Bowling Green, Kentucky.

If anything, the churning and changing since the financial crisis highlights the dynamic nature of the auto industry. Looking back at the past seventy years of production, both globally and in the United States, it is clear that the industry is never up nor down for long.

Hypercompetitive battles to win customers in America’s “replacement” market and the current dominance of “localized” production models undergird a landscape of perpetual creative destruction.

This creative destruction hasn’t involved a straightforward funneling of production out of the Midwest to the US South and Mexico. Instead, growth and decline have occurred simultaneously up and down the US auto production corridor.

A Broader Crisis

Treating globalization as an isolated, implacable process in which companies pulled up stakes and moved overseas as soon as communication and transportation technology enabled them to do so creates a confusing picture.

Globalization is a political and ideological project as much as a set of logistical or technological changes. The power of globalization to undercut workers can’t be understood outside a much broader process of restructuring.

Capitalism, of course, is always restructuring, and history is not composed of distinct periods, each with a coherent set of policies and practices. Critics of capitalism’s neoliberal turn often focus on the reversals of the Reagan era, contrasting it with the comparatively prosperous and harmonious Keynesian era.

There is certainly some truth to this story. Neoliberal policies and projects were greatly strengthened by Reagan’s and then Clinton’s policies. But the Keynesian bifurcation is often overplayed. Continuity is the watchword.

The militancy of US unions, even strong unions like the UAW, was always strictly limited. Unionized autoworkers were on the defensive from the start, and deep-seated intra-workforce tension plagued the union and the working class more broadly. Because the UAW never managed to gain control over the shop floor or the production process, it was bound to get worn down eventually.

Continuity notwithstanding, the late 1970s is a good anchor point. By the end of that decade the country was engulfed in what sociologist Greta Krippner describes as a simultaneous social, fiscal, and legitimation crisis.

The United States had overextended itself trying to manage both its domestic and overseas geopolitical projects. Military defeat, unrest at home and abroad, and increasing competition from European and Japanese firms led to skyrocketing inflation and rising unemployment.

It was the first major crisis since the Great Depression. The way that workers, companies, and the state responded laid the groundwork for the present landscape of defeat.

Stimulus and Response

Today, many scholars date the birth of neoliberal capitalism to the convulsive 1970s. At the time, however, policymakers weren’t so sure about what was coming next. They groped in the dark for solutions and weighed conflicting ideas about how to restore “business confidence.”

In the end, the US state combined monetary solutions — like Volcker’s “shock and austerity” interest-rate hike — and deregulation (particularly of the financial sector) with attacks on the welfare state and concrete measures to roll back the gains of social movements.

Many of these strategies were ad hoc. Washington phased out “Regulation Q” ceilings in 1980, liberalized markets, and moved more aggressively toward constructing a global free-trade architecture.

Yet Reagan also bowed to pressure from auto companies and implemented “voluntary export restraints” on Japanese assemblers in 1983, leading to an influx of greenfield investment by Japanese assemblers and component suppliers in the late eighties. His administration, along with local governments, also gave domestic automakers a leg up by maintaining a bevy of protectionist taxes and laws and easing regulations on average fuel economy.

Companies worked through the crisis in an equally haphazard way. Following the Chrysler restructuring, which forced major (Treasury-led) givebacks from unionized autoworkers, GM and Ford eagerly sought their own concessions. When it became clear that the Japanese were not going away, US assemblers began reconfiguring their production footprint after a long lull in the fifties and sixties.

They moved investment to the interior to be closer to the country’s transportation nerve center, shifted more low value-added production to low-wage sites in Mexico, and ceded the small-car segments to Japanese and European manufacturers, focusing on much more lucrative large cars and light trucks.

These moves were combined with pricy internal restructuring schemes, a buying spree in digital technology and niche brands, and an increased emphasis on making money outside of manufacturing, particularly in sectors like finance.

But all this restructuring didn’t necessarily make things better. The Detroit Three earned record profits in the late 1980s, found themselves near the brink of collapse in 1990, and then rocketed back to the top by 1994 — prompting Paul Ingrassia and Joseph White to pen the story of Detroit’s “comeback.”

The turbulent year 2001 brought decline and then recovery, but only for foreign automakers. (Tellingly, Ingrassia’s 2011 book is called Crash Course.) Today, the sun is shining for automakers once again.

The Detroit Three’s undulations, in the context of a broader attack on workers, proved highly destabilizing for unionized autoworkers. What had been unthinkable in the 1960s — that American companies could credibly threaten to mass-produce American cars for the American market outside of the United States — suddenly seemed possible. The companies began ransoming jobs for concessions; the state seemed uninterested in the fate of autoworkers.

For the first time, though, US auto companies also appeared vulnerable. Japanese assemblers and suppliers were building factories in the United States, and as the share of non–Detroit Three cars (imports plus those domestically produced) ate away at Ford’s, Chrysler’s, and especially GM’s market shares, it seemed like US companies were genuinely on the run. The UAW suddenly faced a choice: align with the working class or align with the companies.

Unionized autoworkers, for the most part, chose their companies, framing the Japanese as the mortal enemies of working Americans. For years Local 659 in Flint, Michigan had a sign in its parking lot that read: “The parking of any foreign made autos on Local 659 property is absolutely prohibited. Violators will have their auto towed at their own expense.” (Flint City Hall’s underground parking garage sported a similar sign in the nineties). A popular 1980s bumper sticker read: “Toyota, Datsun, Honda — Pearl Harbor!”

The union also began drawing ever tighter boundaries in a bid to hold on, first around unionized autoworkers — instead of all autoworkers or all workers — then around unionized assembly workers (abandoning parts workers), and finally around older assembly workers with more seniority.

This process didn’t happen overnight, but the long-term effects have been stark. The industry’s union density has now dipped below 20 percent — certainly higher than in the private sector overall, but a substantial drop from even a few decades ago. In 1985, roughly 60 percent of autoworkers were unionized. That number had dropped to 44 percent by 1995 and continued to spiral downward, reaching 29 percent in 2005.

Today, many unionized autoworkers struggle to make a living wage. The UAW agreed to expand and standardize tiered wages in its 2007 agreement with the Detroit Three, and during the financial crisis that began in 2008 the Treasury Department forced it to loosen the terms even further, raising its cap on the number of workers who get cut-rate pay and increasing the number of “flex” workers, temporary workers, and workers on “temporary assignment” — all of whom constitute, in effect, a third tier.

Alternative work schedules” — alternating day/night, weekday/weekend shifts that wreak havoc on sleep cycles, parenting duties, and overall quality of life — are a major bone of contention. When these schedules are combined with enormous workloads and worsening health and safety conditions, work life for many autoworkers becomes close to unbearable.

Nonunion autoworkers are also suffering. The average nonunion auto wage today — lumping together assembly and supply workers — is only $16.60 an hour for grueling work. Nonunion assembler wages vary greatly between companies like Toyota and Hyundai, and many supply workers, as well as contract and temporary workers, barely clear minimum wage. The waning strength of the UAW has meant that newer assembly plants in the South feel little pressure to offer wages comparable to those of the Detroit automakers.

Moreover, while many union locals keep a radical flame burning, the broader union structure has become ossified and bureaucratic. In the struggle for something better, that structure seems more like a roadblock than a vehicle for change.

Granted, the dismantling of autoworker power has been punctuated by courageous moments of militancy. In the late 1990s, the UAW staged the costliest work stoppage in GM history to protest outsourcing. Delphi parts workers showed serious resolve after the company declared bankruptcy in 2005 and demanded that workers and pensioners give up everything.

Following the 2009 restructuring, Ford workers stood up to demands for more givebacks. In last fall’s contract negotiations, militant rank-and-filers demanded concrete steps to abolish tiers and forced the union back to the bargaining table. There are many examples of autoworkers saying “no” to power.

But considering the losses working families in the auto industry and elsewhere have experienced, confrontations have been muted and few. The companies are winning the long game with a time-tested strategy: Buy off the older workers, cultivate fear, and divide and conquer. In auto, the result is a hollowed-out union — not a hollowed-out industry.

Winning the Class War

The Left should resist the temptation to pronounce the present morass a foregone conclusion guaranteed by globalization or the internal drives of capitalism or competition. It’s more productive to look at the trajectory of auto — and of US workers more broadly — as the accumulation of specific decisions by states, companies, and workers operating in an uncertain and constantly shifting environment.

Situating the auto-industry restructuring in the context of multiple intersecting processes — globalization, neoliberalism, and financialization — also highlights the central role of class struggle. Far from being the product of faceless shifts in the global economy, the dismantling of the UAW was a concrete class project that sent workers reeling.

For some, the restructuring of manufacturing resembles the restructuring of agriculture long ago: higher productivity and fewer workers, but the same centrality to the economy.

This may be so. Workers shed from manufacturing aren’t, for the most part, jobless. They’ve moved into the service sector and other jobs. But the trauma of this move underscores how thoroughly capital has been able to dictate the terms of nearly four decades of restructuring.

The pervasive fear and insecurity created by the restructuring of manufacturing has seeped into the economy as a whole.

Most jobs don’t produce something you can drop on your foot, and most jobs can’t be moved elsewhere — at least not easily. Yet the feeling that the working class is lucky for the crumbs it gets is ubiquitous; the neoliberal mantra of “there is no alternative” shows no signs of quieting.

Take the university. Both cash-strapped state universities and private universities flush with funds have moved with gusto to create a two-tiered workforce similar to the system created in auto.

According to the American Association of University Professors (AAUP), 50 percent of classes today are taught by part-time faculty (like adjuncts and graduate students), and 70 percent of instructional staff appointments in higher education are non–tenure track.

Just like on the tiered assembly line, these instructors perform essentially the same role as tenured faculty but get paid peanuts. They have no job security and often no health insurance. They cobble together classes, often at multiple universities, to make poverty wages in the hopes of one day landing a tenure-track gig.

Meanwhile, comparatively better off tenure-track faculty members have seen their conditions deteriorate as well. Their workload has increased dramatically because fewer permanent positions means that advising students, committee work, and curriculum duties fall on fewer people.

Some universities are truly in financial trouble, but that excuse doesn’t hold for universities writ large. Private universities are spending billions on new facilities and more administrators, and the AAUP notes that “the greatest growth in contingent appointments occurred during times of economic prosperity.”

The model of dismantling autoworkers’ gains maps neatly onto the university campus. There’s no fear of capital flight, nor even a profit to be made in most cases. Yet the pressure, workload, insecurity, and devaluation of work are identical.

The striking similarities reveal the limitations of dominant narratives that chalk up labor’s defeat to vague processes like globalization.

The feelings of economic anxiety and pessimism that continue to dominate the public consciousness aren’t misguided. They’re reactions to real shifts in political economy. But they’re also the product of real battles, concrete wins and losses in the age-old dynamic of class struggle. Capital is ready to take anything and everything, any way that it can, and it will never stop.

Until we stop it.

After all, cars can’t be made without autoworkers, and universities can’t run without instructors.

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