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Ethix Merch Interviews Julie Su, an Advocate for Workers Everywhere

Julie Su is the Litigation Director at the Asian Pacific American Legal Center of Southern California (APALC), an affiliate of the Washington D.C.-based Asian American Justice Center. Ms. Su was one of the leaders in fighting for the freedom of the Thai garment workers who were enslaved for years in an apartment complex in El Monte, California and served as lead counsel in a federal lawsuit against the garment manufacturers and retailers whose clothes they sewed.

Ethix Merch: The slave labor case in El Monte, California is probably the most notorious example of sweatshop abuse in modern American history. (Allow us to be the latest in a long line of people to thank you for the amazing work you did to help free the victims.) Are there more recent examples that anti-sweatshop advocates should have at their fingertips when discussing the continued existence of sweatshops in the United States?

Julie Su:

Unfortunately, sweatshops in the United States remain a reality in many industries, including the garment industry.  Today, Los Angeles is the sweatshop capital of the U.S., where garment workers sew for long hours, often without meal and rest breaks and often for less than the minimum wage.  They almost invariably work overtime but these hours are not reflected in the time cards of the factory or in the pay workers receive.  The U.S. Department of Labor's last study about this was nearly 10 years ago but at that time, over 60% of Los Angeles factories were found to violate basic wage and hour protections for workers.  Over 90% were found to have health and safety violations detrimental to workers' well-being.  These statistics are unacceptable and they demonstrate that sweatshops are not aberrations in an otherwise lawful industry.  They are a way of doing business.

 

Even during the El Monte case, I was afraid that the horrific conditions endured by the Thai garment workers would set a new low, would make the routine sweatshop conditions seem tame by comparison and therefore, would make it harder to push for higher standards in the industry as a whole.  People would say, "maybe the conditions aren't perfect but at least the workers aren't held behind barbed wire as they were in El Monte." After the El Monte case, we at the Asian Pacific American Legal Center, working together with our allies, brought a number of cases involving such sweatshop conditions.  We represented immigrant Asian and Latino workers against companies including bebe, BCBG, and XOXO using the same theory, that manufacturers and retailers at the top of the garment industry food chain are responsible for the conditions in which their clothes are made.  We represented a group of Latino workers who sewed jackets, including university apparel, right here in L.A. and we drew strength from the fabulous student movement that has grown up to leverage university power to demand decent working conditions.  Perhaps the most publicized case was the one in which we represented Latino garment workers against Forever 21. These workers labored in different factories but all were paid less than their lawful wages and endured terrible verbal abuse and inhumanely long hours.  The workers launched a 3-year campaign against Forever 21, which was covered in the Emmy-award winning documentary, "Made in L.A."   Finally, a few years after El Monte, several nonprofit workers' rights organizations sued over a dozen manufacturers and retailers producing garments in the U.S. territory of Saipan. Those garments were sold with "Made in the U.S.A." labels but the workers, mostly from China and the Phillippines, were forced to live, sleep, eat and work in abject poverty without any of the federal labor law protections that exist in other parts of the U.S.

I think it's critically important to know that the fight against sweatshops in Los Angeles and in the U.S. did not begin and end with El Monte.  But El Monte lit a fire and exposed the standard practices of the industry -- and the dangers when we look the other way and pretend they don't exist -- in a way that galvanized the anti-sweatshop movement.  Incidentally, there is happy news to report for the El Monte workers, the majority of whom became U.S. citizens last year (2008).  It was an incredible moment in their long and often very difficult journey toward achieving the dreams that brought them to the United States in the first place.

 

Ethix Merch: After all these years, do you think most people understand that sweatshops still exist in the United States? If not, why hasn’t the message sunk in?

Julie Su:

I definitely think people are more aware of sweatshops in the U.S. than they were, say, 15 years ago.  When I started this work in 1994, the campaign against Jessica McClintock, led by the brave Chinese workers from Oakland and the Oakland-based Asian Immigrant Women Advocates (AIWA) and the Los Angeles-based Koreatown Immigrant Workers Alliance (KIWA), was in full swing.  Activists, workers,  and students regularly picketed outside of the Jessica McClintock boutique at the corner of Wilshire and Rodeo Drive in Beverly Hills, and when people saw them, or took the flyers about the campaign, I often heard them say, "What sweatshops? Not here."  It is harder to claim total ignorance about the existence of sweatshops in our backyard.

 

But at the same time, I think there has been some anti-sweatshop fatigue both by the public and the media.  There was a tremendous amount of attention in the 1990s, spurred by the horror of the El Monte case and the courage of the Thai and Latino workers in that case who refused to be silent.  Soon after that, there were exposes about Kathie Lee Gifford and Disney and the conditions in which their clothes were made overseas.  And federal and state governments felt they had to do something, but the reality is that this type of change requires a fundamental challenge to the industry itself, not just fixes at the margins and window dressing.  It is not enough to enforce existing minimum wage and overtime laws without looking at the fundamental reason why sweatshops exist, which is the power exerted by corporations at the top for the cheapest labor possible and the corresponding lack of power by workers at the bottom to protect themselves. 

Shifting this balance of power, making it more equitable, more just, is difficult and faces intense resistance by those who profit from things the way they are. Some of this resistance is more institutional, like the media coverage about business and what is good for business vs. labor and what is good for workers.  It's hard to get sustained public attention to sweatshops.  Even in our cases, we started to see the media ask, "Ok, so it's another sweatshop case, what is the new angle on this story?"  Some of this relates to consumer habits, people are really devoted to fashion and if there isn't a quick answer to where they can get sweatshop-free clothes they like at prices they can afford, they'll tend to still buy whatever is available. The change needed to really eliminate sweatshop conditions requires sustained, focused efforts and resources which simply aren't there.   So while workers, activists, unions, community-based organizers and nonprofit organizations continue to do this work, the public often doesn't hear about it.

 

Ethix Merch: From an economic standpoint, how is the struggle of garment workers in the United States connected to that of foreign garment workers? 

Julie Su: 

The struggle for justice for garment workers in the U.S. is intimately tied to justice worldwide for workers.  Most obviously, the threat that manufacturers and retailers have always made is that if U.S. workers stand up for themselves, organize, and improve working conditions, the companies will simply ship their work to countries with even more vulnerable workers and even fewer labor law protections.  It's really quite cynical and, I think, appalling, but it is a real option for corporations in the garment industry and we saw this in the years immediately before and after the sunset of the Multi-Fibre Agreement, which made it even easier for companies to seek out the cheapest labor anywhere in the world.  It led to a significant (though by no means complete) decrease in garment production in the U.S. 

So it is essential for working conditions everywhere to be improved to eliminate the competitive advantage that companies find by producing elsewhere.  This doesn't mean that every worker has to be paid the same wage, but it does mean that there should be living wage standards across the globe that ensure that someone who works in a garment factory can make enough to live, to eat, to have shelter, education, health, and some leisure. 

From a justice perspective, it is obvious that the crushing poverty faced by so many workers who sew garments violates our most basic notions of human rights.  We cannot pay attention to one group of workers in one country without understanding the interconnectedness of all the workers on whose backs billions of dollars in clothing are sold each year.

 

Ethix Merch: Why did Sweatshop Watch, the organization you co-founded, close its doors? Who is stepping in to do the work that was being done by SW?

Julie Su: 

Sweatshop Watch closed our doors after an amazing 15-year history of fighting with and for garment workers in the U.S. and aorund the world.  We started as a coalition of groups across the state working on anti-sweatshop efforts in the garment industry, and together, we helped pass the strongest anti-sweatshop legislation in the country, California's AB 633 (which has had multiple problems with implementation, but has also allowed hundreds of garment workers to access a speedier process of winning wages through the state labor commissioner and has also been the model for legislation in other low wage industries, such as the car wash industry). 

What we found in the last few years is that the garment industry in California has changed.  Production that used to be in the Bay Area has all but left, so many of our coalition partners were no longer working in the garment industry.  In this economy, funding was a challenge.  We realized that it made sense to go back to the roots of why we started Sweatshop Watch in the first place, which was to support the organizing and advocacy efforts of garment workers in the U.S., and this work would have to happen in Los Angeles.  We decided that using limited resources to sustain a statewide coalition didn't make sense, but everyone involved in Sweatshop Watch remains very committed to having the work carried on by APALC.

 

Ethix Merch: Can you tell us a little bit more about the work that APALC is currently doing?

Julie Su: 

Over the last few years, APALC has been trying to do more research on the state of the local garment industry.  There have been many changes, including, for example, the distribution of work by a single manufacturer across many different contractors (we believe this is in part a response to our lawsuits which demonstrated that if one factory was completely dependent on a single manufacturer, this helped prove that the manufacturer exercised control over working conditions in that factory and helped establish liability of the manufacturer).  We have also been very interested, particluarly in the last 2 years, in identifying companies who want to partner with us in raising standards in the garment industry and actively working to combat sweatshops.  We have also reached out to City officials to try and launch a "Made in L.A." marketing campaign that would harness the power of Los Angeles production -- there are strong reasons production has decreased everywhere else in the country but the L.A. industry remains vibrant. 


 

Eco-Friendly Buzzwords: An Ongoing Glossary with Comments

Biodegradable:

I think everyone has a basic understanding of what this once jargon-y term means by now. (Way to go, all you environmental crusaders!) The question is, though, how big a factor should it be in your eco-friendly purchasing decision?

Unfortunately, “biodegradable” is one of those terms that seems clear enough when you read about it in the dictionary, but becomes a real head-scratcher when it makes the leap to the free market. There don’t seem to be laws governing the commercial use of the term, so you can end up with biodegradable products on the market that biodegrade over a very, very long time or that only biodegrade under certain optimal conditions that may be unlikely to occur in practice.

Furthermore, even if something is genuinely biodegradable, that might not even be a good thing, depending on what it is that’s biodegrading! Toxins that are trapped inside a mug, for example, are probably better off staying put rather than leaching into the soil or the water table.

In a way, the term “biodegradable” is a relic from the early days of the environmental movement. At that time, many environmentalists were just trying to get people to be aware of how much trash was being put into landfills. Since landfills are smelly eyesores, why wouldn’t you want things to biodegrade? Now we know that the existence of landfills is the least of our worries. Because of global warming, the viability of life on earth (as we know it) is very much in question.

So when you’re shopping around for eco-friendly products, make sure to also consider what kinds of energy went into creating the product, what the product is actually made from, and whether or not the product is recyclable.

If you're looking for a product that goes beyond biodegradable, check out the new Vision USA Biomugs. They're biodegradable, recyclable, as well as BPA & Lead Free, not to mention Union Made in the USA. Click the image for details.

Next up on "Eco-Friendly Buzzwords," Bamboo: Better than Cotton or Just the Latest Advancement in Greenwashing? 
 

Tonight on PBS: Encore Performance of Made in LA

In far too many cases, clothes that come with a "Made in USA" tag are cut and sewn by workers toiling in American sweatshops, characterized by many of the same entrenched abuses as are seen in sweatshops in the developing world.

"Made in LA," a film about garment workers in Los Angeles, documents the struggle of three Latina sweatshop workers as they bravely stand up to demand basic labor protections that should be available to them by law.

The film is an incredibly powerful reminder--not just of the existence of U.S. sweatshops--but of the equalizing effect that unions can have in the epic battle between workers and retail giants. These giants (Forever 21, in the case of the "Made in LA" workers) have the luxury of turning a blind eye to exploitation in their subcontractor factories, because they technically don't own the factory. 

That, however, is a poor excuse. The biggest reason why factory owners exploit their workers is that the price paid to them by retailers is so incredibly low.

Is this a government enforcement problem? Well, yes and no. Even if the government somehow came up with the funds for a ten-fold expansion of labor law enforcement, sweatshops would persist, because they can close down and spring up again virtually overnight, under a different name. Also, since sweatshops are an industry norm and not an exception, the government would be bogged down by having to prosecute violations in virtually every factory it visits.

Instead of enforcing the law factory by factory, it would be much more efficient to hold retailers responsible for what happens in subcontractor factories. Retailers make the big profits, and they are the ones, ultimately, with the power to end the abuses and bring justice to the industry.

Until retail corporations are held liable for sweatshop conditions, unions are the best and often the only tool that workers have to bring their exploitation into the light where there is a chance, at least, for resolution to the most serious abuses. "Made in LA" does an amazing job of demonstrating how essential it is for workers to be able to organize. You can't walk away from the film believing that any of these workers could have made any headway alone against the factory or against Forever 21.

The action items for today's blog entry are 1) to watch the film tonight on PBS and 2) look for ways to support unions, including searching EthixMerch.com for union made logo items for your organization, school, event, or business.

 

Free Trade Gets Some Fresh Thinking

The Obama administration has taken some nice first steps toward a more worker-friendly vision of global trade. New free trade agreements pushed by the Bush Administration, such as those with Colombia and South Korea, are apparently getting some deep re-thinking – or at least, being put on the back burner while the new Administration sorts out climate change, health care and domestic trade union rights. And refreshingly, on July 16, the new United States Trade Representative Ron Kirk announced a more proactive strategy to enforce labor provisions in existing free trade agreements. Here’s what’s new under the sun.

First, a bit of explanation about what he’s talking about. Existing free trade agreements from NAFTA on through the most recent deals require our trade partners- at least on paper- to enforce their labor laws and to try to live up to international labor standards.  So what’s so striking about USTR Kirk saying that the Administration wants to make sure existing language in our trade deals is enforced?

In truth, no prior administration has ever sought to actually take the initiative when it comes to these provisions. Instead, we have assumed that of course all our trade partners are enforcing labor rights protections- except when someone points out they aren’t. In other words, enforcement of these provisions has been carried out largely on a complaint-driven basis. This model can’t really work, as the people who are most affected- the most exploited workers in the countries with which we trade- just don’t have practical means to access the mechanisms that have been set up for filing complaints. Thus, not surprisingly, very few complaints get filed, no matter how many abuses actually occur. Even when complaints do get filed- for instance, my organization, ILRF, filed about a dozen cases on behalf of Mexican workers in the early years of NAFTA- those cases take years to resolve, and workers see little return for the effort of engaging in the process.

But there is no downside to the US Trade Representative taking a new look at how we enforce these deals- and, we hope, finding a better way to do it. Real enforcement of the labor provisions in trade deals would be a win-win for both US workers and workers overseas.  Promoting policies that protect workers in other countries makes good sense for the US, economically.  Creating decent and sustainable jobs that raise developing country workers into the middle class is a win-win for workers and businesses, as it expands markets for US and global products. That has long been the main moral argument for more global trade- although few have cared to deal with the ugly reality that many workers in export industries in these countries have been getting sweatshop jobs, not decent jobs, and have not been able, in their lifetimes, to afford the goods they are producing.

Poor working conditions in developing nations not only strip laborers in those countries of their rights, but also create unfair competition in the global labor market. This global "race to the bottom" leads to degradation of conditions, to the increase in ‘sweatshop jobs,’ here at home. We need to bring up the bottom for everyone.

It’s great that USTR Kirk wants to hold trading partners accountable for labor rights, and would be even better if the new Administration sought ways to hold investors- the multinational companies that chase cheap labor around the globe- accountable as well. This would get us past the current ‘free trade’ model to one of what we might call fair trade. For example, we should be supporting terms of trade requiring that investors who benefit from trade deals agree to a floor of decent wages and working conditions that ultimately enable workers to lift themselves out of poverty, and should reward governments that institute laws and policies to regulate ‘footloose’ investors and require companies to make long-term commitments to investments- and their workforce- in developing countries. This is in all of our long term interests.

Bama Athreya is the Executive Director of the International Labor Rights Forum.

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Kissell, My Ass

The executive branch has always had the power to redefine words to serve their interests.  Reagan's USDA reclassified "ketchup" as a vegetable so school lunches could meet both budgetary and nutritional requirements.  George W.'s DOJ redefined "torture" so as not to violate international agreements, and Bill Clinton himself took a stab at redefining the meaning of "is" with reference to another sort of violation. 

Now Obama's Department of Homeland Security has redefined the word "domestic" to include products made in Mexico and Canada in order to reconcile the "Buy American" provisions of the Stimulus Package with NAFTA.  

So the Kissell Amendment, which was intended to give USA manufacturers an edge, has actually handed the edge to Mexico, which is now allowed to bid on "domestic" contracts but is exempt from any of the Workers Rights provisions of the Federal Acquisition Regulations regarding workplace safety, overtime, child labor, and other abuses. There is just one problem: the Kissell Amendment does not use the word “domestic".  It specifically requires that TSA Uniforms be produced "in the United States".

But redefining the meaning of "in the United States" to include Mexico would torpedo another Homeland Security Program: E-Verify. On the same day that the Transportation Safety Administration released their uniform program featuring the new definition of "domestic" the Senate passed the "E-Verify Amendment", an attempt to legislate George Bush's executive order that federal contractors use none other than the Department of Homeland Security's electronic system verify the legal status of their workers for work performed "in the United States". 

As the Senate's "E-Verify Amendment" Sponsor, Jeff Sessions said, "Our unemployment rate is now at 9.5 percent, the highest in 25 years. E-Verify is a critical tool to ensuring that jobs go to lawful, taxpaying, American workers -- which, in the current recession, is more important than ever before. I am pleased that the Senate has agreed that federal contractors benefiting from the stimulus should be required to use the program in the future."  He did not add, "or they will have to manufacture their products in Mexico" at the end but he could have to make the statement more accurate.

Something’s gotta give here.  If “Buy American” violates the anti-protectionism procurement laws of the World Trade Organization, wouldn’t a law requiring that American Citizens work on federal contracts violate the same laws?   If Homeland Security redefines "produced in the United States" as it sees fit for its own contracts does it have to hold other federal agencies to the same standard?

 

Pope Benedict the Progressive?

“Upright men and women are needed, both in politics and in the economy, people sincerely concerned for the common good.”

So says the Pope, in remarks made yesterday about his just-released “Encyclical Letter.”

The letter itself is an extraordinary document. In it, the Pope makes a plea for an economy that is not neutral to morality, but rather guided by it. As he says, “…the canons of justice must be respected from the outset, as the economic process unfolds, and not just afterwards or incidentally.”

The Pope goes on to argue that profit is not a good enough motive to drive the economy:
“Once profit becomes the exclusive goal, if it is produced by improper means and without the common good as its ultimate end, it risks destroying wealth and creating poverty.”

The letter is revolutionary because it adds legitimacy to a vision of economic justice that seems so necessary to so many people, but that has yet to reach the “tipping point.” In calling for a moral economy, the Pope recognizes capitalism’s incredible power to innovate in any direction it chooses. Right now, it is innovating almost exclusively toward maximum profit, resulting in an ever-increasing divide between global rich and poor. We should be encouraging prosperity, the Pope argues, but for all people, not just a select few.

A lot of Catholics around the world have worked tirelessly toward the vision of economic justice that the Pope outlines in his letter. Hopefully, the Pope’s decision to dedicate an entire encyclical (just the third of his 4-year Papacy) to the importance of a moral economy will energize and magnify the voices of progressive Catholics. And it may also impact the direction of Catholicism in general. If Sonia Sotomayor is confirmed, she’ll be the sixth Catholic out of nine Justices. About a quarter of the U.S. senators are Catholic.

But the Pope’s moral authority extends beyond Catholics. It’s clear that in order for the economy to begin to work for everyone, we need a sea change in politics and in culture. The Pope doesn’t have a direct say on politics (although the Catholic Church is certainly a major economic actor and has its own politics) but he has a profound impact on culture. Pope John Paul II became a beloved figure among Catholics and non-Catholics alike, influencing the global debate on issues such as the compatibility of science and religion.

Pope Benedict seems to be trying to use his “bully pulpit” to shape the world economy toward compassion. I wonder if the Pope is aware of some of the good actors in the economy who have already made looking out for the common good a non-negotiable piece of their business models. Our online catalog here at EthixMerch is filled with companies--like Unionwear, Norco, Pedline, Garyline, Gill-Line, King Louie and DLX--who actively pursue the common good through basic rights on the job (health benefits, a living wage, safe conditions and collective bargaining rights) for their workers. These companies are almost uniformly small, and probably unknown to likes of Pope Benedict. But they are the ones clawing at the grassroots of our economy, planting seeds of justice while the Pope rains down much-needed words of encouragement that will reach millions.

It will be fascinating to see what changes occur as a result, both inside and outside the Church.
 

CSR Scorecard: Econscious and Unionwear

The world-wide gap between rich and poor is “vast and growing.” That’s according to a recent report by the International Labour Organization. Apparently, the ever-expanding reach of corporations and large companies hasn’t brought shared prosperity along with it.

Yet, if you ask the companies themselves, they will tell you that their companies are doing all the right things: offering good jobs and a route out of poverty for factory workers, investing in the local communities in which they operate, and helping protect and sustain the environment.

There is even a movement in place known as Corporate Social Responsibility by which companies communicate to consumers all the amazing things they are doing.

All of which is great, honestly. Companies should feel the need to do good things for the world, to give something back for all the profit they rake in, and to ensure that those profits aren’t earned by keeping other people down or by exploiting the environment.

The trouble is that there are very few ways for the consumer to identify genuinely responsible corporate behavior versus marketing schemes that emphasize relatively small “good works” as a smokescreen for fundamental irresponsibility.
Through the Ethix Merch “CSR Scorecard” we’ll be digging into some of the claims that companies make about their impact on people and the planet, with the goal of helping our readers separate the wheat from the chaff. This time around we’re looking at Econscious and Unionwear.
 

Econscious

As you can see, Econscious has a beautiful, user-friendly website, much of which is dedicated to their corporate social responsibility efforts. Among their laudable claims are an entire line of organic cotton products. They also claim that "social equity" is central to their business practices, which they define as, "paying employees a decent wage, offering a safe and healthy work environment, and encouraging employees to grow in their work and their lives."

So, if you take their word for it, Econscious is taking giant strides to protect the environment and to ensure that employees share in the prosperity resulting from globalized manufacturing.

It all looks extremely impressive, and some of it surely is. But when you dig underneath the surface of the site, despite all of the bells and whistles, there is very little in the way of verifiable assurances that any of the claims about labor practices are accurate. Without such assurances, it is reasonable to assume that their operations may very well be contributing to the “vast and growing” inequality identified by the ILO.

When it comes to certifying their products as organic, Econcious is above board. The reason we can be assured of the veracity of Econscious's claim on this front is their certification by the U.S. Department of Agriculture, backed by the force of law.

With regard to its labor claims, however, Econscious is on much shakier ground. One one of their factories (the one that makes organic caps) is independently certified, in this case by the Worldwide Responsible Apparel Production certification program. However, the problems with WRAP are many, including:
• There’s a large percentage of garment industry executives on the board
• Factory audits are not made available to the public
• Even if you assume that certified factories are legitimately compliant, certification standards don’t require wages above the legal minimum, which in many countries keeps workers in perpetual and abject poverty.

Econscious is also certified by Green America which, like WRAP, does not make specific information about compliance available to the public.
 

Unionwear

 
Like Econcscious, Unionwear offers a wide selection of certified organic products.Also like Econscious, Unionwear makes laudable claims about its labor practices.

There is much less information about Corporate Social Responsibility at Unionwear than you’ll find at Econscious, and no affiliation with common CSR projects like "1% for the Planet."

However, Unionwear's claims about labor conditions are backed by much more powerful assurances.

First, Unionwear's factories are all located within the United States. The “Made in USA” tag reminds us that Unionwear is not a subcontractor. If you want to see the plant where the products are made, just hop on a bus or a plane. If you don’t like what you see, you can make your own educated choice about whether or not to support the company.

Secondly, and most importantly, Unionwear's workers are represented by a trade union (UNITE)

The union label tells us that: 

1.  Experts in the apparel field have researched and collectively bargained for a fair and living wage for the workers,
 
2.  All of the workers have medical insurance and retirement plans provided by their contract, and
 
3.  If workers experience exploitative or dangerous conditions in the factory, they have bargaining power and a powerful megaphone (provided by the union international) through which they can shout these abuses or use a democratic civil legal system to have their claims adjudicated.

Union representation takes labor conditions out of the back rooms, out of the shadows.

 

Look out for more editions of our "CSR scorecard" soon.

 

Reviva La Mexico

In 1992, Ross Perot foretold of NAFTA causing a grand migration of jobs to Mexico to emit a "giant sucking sound." I started Unionwear the month Perot made that famous prediction and spent the next few years second guessing my career choice.

Q. So why don't I ever see apparel labelled "Made in Mexico?"

Step 1: The law of supply and demand met the law of unintended consequences

Legend has it that immediately after the passage of NAFTA, US agribusinesses began flooding the Mexican market with cheap corn and other farm products. This drove Mexican farmers out of business, and North in search of factory jobs faster than American maquiladoras could be deployed along the US-Mexico border. The supply of cheap labor outpaced the demand for it, and real wages began shrinking. Desperate, Mexicans began illegally crossing the border where they were able to find work building and maintaining the houses built during the real estate bubble and filling entry level positions in the burgeoning service economy.

Step 2: Natural selection meets adverse selection

In 1995 I was kibitzing with Milty, an avuncular garmento across the aisle at M.A.G.I.C., a Las Vegas Menswear Convention. He had just pulled the plug on his Mexico operations and decided to move it to China. "Mexicans are not like Americans. They worked until they made $200 then they would quit and go back to their villages. We could never get any momentum." An agrarian worker content with seasonal employment must have seemed odd to Milty. His grandparents probably uprooted their lives at the turn of the century in order to escape a permanent struggle with survival. They came to America and contributed to a gene pool already wired to chase dreams. As we broke down our booths, Uncle Milty tossed me a sample shirt I had been eyeing. "Do yourself a favor. Don't wash the f:)kin' thing."

When manufacturers began deploying maquiladoras right on the US border they begged for what the health insurance industry terms "adverse selection" in their labor pool. The $10 per hour US jobs across the border attracted Mexicans with the drive to go there, the planning and stamina necessary to get there, the skills to stay there, and the persistence to return if necessary. Those left behind toiled in miserable, unsafe sweatshops for $1 per hour or less and left as soon as they got the chance.

So you know what these maquiladoras got for $1 per hour? Labor that was worth... $1 per hour. This didn't last long. Whole factories and industries started disappearing to Asia, where employers didn't have to compete with the American Dream next door or contend with pesky labor laws or monitors.

Q. Now jobs appear to be returning to Mexico from China. Is this good for the US economy?

Mexico is "local" compared to China. Tijuana is certainly more local to Los Angeles than New York is. Local means more oversight, less environmental damage, and a more direct connection between labor and consumer. Opportunities in Mexico at a time of little opportunity here explains why undocumented workers are returning to Mexico. Manufacturers in Mexico are more likely to use US made parts, particularly under NAFTA. Rebuilding Mexico's supply chain infrastructure after it was gutted by companies relocating to China will also help US manufacturers who import parts.

A "lean" US manufacturer can compete with Mexican manufacturers as long as a weak immigration policy continues to result in adverse selection of Mexican labor. We can't, however, compete with an economy like China's with a low wage workforce, held at gunpoint, that grows by 30 million annually. The original intent of NAFTA was to bring wages in Mexico up to the level of America's wages, and develop a true, viable trading partner and net buyer of our exports. That is a lot more likely to happen now.

And when that happens, work -- not workers -- will be returning to El Norte. 

"American Made" Gets Played by "Free Trade"

Free trade is defined as the ability for a buyer and seller to conduct business without government interference.    So when the government is the buyer why can't it freely choose who to buy from without incumbent sellers claiming interference with free trade?

I have a solution to this loophole-infected quagmire: Scrap protectionist language and simply require sellers to the US, state and local governments to comply with US labor law regardless of where the goods are made. 

A recent NY Times Editorial about the "Buy American" bill is a perfect example of how easily the razzle of "Free Trade" can dazzle the journalistic integrity of our last great voice of skepticism.

"Foreign and domestic companies that employ hundreds of workers in this country cannot bid for government projects because they cannot guarantee the American provenance of all the steel, iron and manufactured goods in their supply chain, as the provision requires.  Others are scrambling to figure out whether American-made alternatives exist to replace their foreign inputs.  The steel company Duferco Farrell, for example, has cut about 600 jobs in Pennsylvania after it lost orders from its biggest customer because some of its goods are partly produced abroad..."

Dear Editor:
 
You just got played.
 
If you believe these companies "don't know the provenance" of their steel and iron, I'd love to sell you a bridge.  It happens to be made out of steel and iron from some company who has absolutely no idea where the steel and iron came from.   The only catch is that your family has to drive over it twice a day for the next forty years.
 
Do you really believe that companies savvy enough to co-opt both the liberal and conservative media elite to their cause are actually "scrambling to find out **whether** American-Made alternatives exist" -- as if this bill magically sailed through Congress without backing from a trade group that would benefit from its passage?
 
And why did Duferco choose to layoff 600 workers rather than produce the goods domestically?  US steel plants are at half capacity.  Isn't this an example of the "Buy American" bill working?   I think I just found the 600 jobs that Duferco lost--at the company that got their business by supplying domestic steel.   Oh, and look! that company needed another 200 Americans to make the steel. A net gain in employment.
 
The editorial moved on to the question of retaliation.   Will our trading partners will stop buying American if we force our government to buy American?
 
What "made in America" products are people in other countries buying that they can--or will--stop buying?  The grains that we can't give away fast enough but that many countries can't get enough of?  Will Chinese teenagers boycott Kanye West because we didn't use chinese iron to build a new airport in Chicago? How about American brands like Nike? If no one buys another Nike shoe, ever, how many American manufacturing jobs will be lost?
 
I'm not being coy, I really want to know. How about Caterpillar? 60 minutes featured their CEO terrified of how the Buy American act could cost his company business because the Chinese won't buy Caterpillar frontloaders.  Caterpillar monster trucks are a commodities?  Then why are Asian governments already paying double for a Caterpillar over a Korean frontloader?  It's the Free Trade Razzle Dazzle. Whackity Schmackity Doo, Leslie Stahl, you forgot to ask Caterpillar if they were upset that they'd have to spend more to buy domestic steel to use in trucks used in infrastructure projects.
 
And what about steel?  If we can't win bids here without legislative intervention, how are we going to win them overseas? What else are we a net exporter of? Scrap metal? Nuclear technology?
 
Foreign governments only buy American Made products as a last resort already. If we are not the only, the best, or the cheapest, we are shut out of a market, save for some diplomatic crumbs.    The USA is already the victim of protectionism--governments abroad protect their industries by denying workers rights, keeping labor costs low, and subsidize industries to keep American industry out under the guise of "Free Trade".  
 
US Protectionism won't invite retaliation... US PROTECTIONISM IS THE RETALIATION.
 
Without a Buy American clause a Federal Contractor has a hard time competing with importers. The Federal Acquistion Regulations have hundreds of laws regarding the way contractors treat their employees--unless the supplies are manufactured outside the United States, Puerto Rico, and the U.S. Virgin Islands are, in which case they are always exempt from these regulations.  My company has to pay minimum wage, honor collective bargaining agreements, pay time and a half, not employ children, not co-erce labor, give minorities and the disabled equal opportunity, and it goes on.  
A competitive factory in Mexico does not have to honor these laws.  Guess which contractor is the low bidder?
 
At a minimum, if we don't want to violate trade agreements, our trading partners should be subject to the same Federal Acquisition Regulations domestic contractors are if they want to do business with the US government.  I would take that over a Buy American clause any day.

Jews (wearing sweat-free t-shirts) March for Pride

Sometimes it’s nice to stop pushing for a minute and recognize that, indeed, the “arc of the universe...bends toward justice.”

Despite (or perhaps even partially because of) the passage of California’s Prop 8 last November, much progress has been made of late in the long struggle for LGBT rights. Just this year, the number of U.S. states to legalize gay marriage jumped from two to six. And this week, President Obama announced that federal employees will be permitted to share some of their benefits with same-sex partners. (Allowing same-sex partners to share full health benefits will require legislation.)

An often-overlooked benefit of this particular civil rights movement is that it obliterates lines of class, ethnicity, race, geography and politics. While a white, heterosexual couple is probably not going to produce an African-American child, they could very well produce a gay one. Homosexuality can be a tremendously effective reminder of the diversity that defines our species. You simply can’t run away from it, so even if it makes you uncomfortable, you may as well learn tolerance and, eventually, appreciation for all kinds of people.

Former Vice President Dick Cheney is a case in point of someone who probably had to overcome significant personal reservations in order to make room in his heart for his openly gay daughter. The fact that he has come out publicly in support of gay marriage speaks volumes about the potential for a widening circle of compassion.

This circle needs widening even among progressives, however, as the current struggle for gay rights is going to show. The fallout from Prop 8 created tension in California between two historically oppressed minorities – gays and African Americans – when some in the gay community publicly lashed out against African Americans, approximately 6 in 10 of whom supported Proposition 8. California Assembly Speaker Karen Bass argued that “No on 8” advocates failed to outreach in a significant way to African-American members of the LGBT community, that this oversight needlessly reminded African-Americans of the history of white racism, and that the resulting tension cost the campaign valuable momentum.

The fight for equality for same-sex couples goes on, of course, offering more opportunities for many different communities – each with their own LGBT community within it – to work together and in so doing, to create bonds that last from movement to movement.

The upcoming Pride Parade in San Francisco is one such opportunity. We were excited to get a call from a group of Jews (both LGBT and their straight allies) representing synagogues and mainstream Jewish institutions across the Bay Area, looking for sweatshop-free t-shirts that proclaim their solidarity with the LGBT marchers.

Working on this project has been extremely rewarding because of the forward progress it represents in so many different areas: recognizing our role as consumers in creating justice for workers around the world whom we may never meet; resisting complacency when the rights of others hang in the balance; and proudly adhering to one’s own cultural identity while simultaneously pushing on that culture to embrace diversity.

The parade is June 28th, so be sure to come back here to check out the photos of hundreds of Jews marching for LGBT rights, wearing sweatshop-free t-shirts. Meanwhile, here are some links to read about the “Jews March for Pride” project.

About Jews March for Pride

How to Get Involved

And here are links to the specific Jewish groups that will be standing against sweatshops while they march for LGBT rights: 

Jewish Community Relations Council

Jewish Community Federation of San Francisco

Temple Sinai of Oakland

Congregation Emanu-El of San Francisco

 

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