Where have all the good jobs gone
from the book
Sharing the Pie
by Steve Brouwer
Leanness and Meanness, International Style
We live in an era when free trade is trumpeted as the defining
virtue of Americanism. American capital is free to travel to any
part of the world in search of maximum profit, and foreign capital
is encouraged to do likewise in the United States. In the process,
American citizens encounter and purchase a never-ending flurry
of products-Japanese cars, Chinese clothing, Mexican cars and
clothing-which are driving our merchandise trade deficit higher
than ever, to nearly $200 billion in 1996.
Among the products Americans purchase in great quantity from
factories operated abroad are athletic shoes, first and foremost
those with the Nike label. The Nike company is American-owned,
mostly by its founder, Phil Knight, who is said to be worth more
than $5 billion. Nike combines low-wage and low-tech production
with the most sophisticated high-tech marketing and distribution
of goods. It produces sneakers at a cost of about $5.60, materials
and labor combined, then sells them for $73 to $135 per pair all
over the world. Nike, based in Oregon, has no U.S. production
facilities and depends entirely on fast, high-dexterity, low-pay
labor abroad. The company scours the world to find subcontractors
who pay the lowest possible wages. Until the early 1990s, most
Nikes were assembled by subcontractors in South Korea and Taiwan.
When wages rose too much there, twenty factories were closed.
Thirty-five new ones were opened, often under Korean and Taiwanese
ownership, in Indonesia, Thailand, China, and Bangladesh. In 1991
an experienced female worker in Indonesia earned 82 cents per
day; others made much less.
Indonesian workers who sewed Nikes told a reporter from the
Far Eastern Economic Review that they were "terrified"
of their South Korean managers, who often threatened them. Others
told the New York Times that Korean supervisors "liked to
hit people, slap people. There were some who would kick the Muslim
workers when they were praying during their lunch break.
Because of international pressure, Nike fired the subcontractor
who operated that particular Indonesian factory; by 1996 Nike
was managing to pay the legal minimum wage, which had risen to
a little over $2 per day. Journalist Bob Herbert asked Knight
why he didn't pay higher wages to the workers in Indonesia. Herbert
reported the interesting answer: "He said it would wreck
the country's economy if wages were allowed to get too high."
In the meantime Nike began slowing down its Indonesian expansion
because it was pursuing cheaper options with its subcontractors
in China, which now produces almost one half of all the world's
shoes. One gigantic new Chinese factory complex in YuYuan employs
forty thousand workers, 70 percent of them women. Each immense
building at the site is emblazoned with a major brand name-Nike,
Reebok, Adidas, L. A. Gear-and inside production is carried out
to the exact specifications of that particular Western company.
Outside the plants, it is possible to witness one of the strange
paradoxes of multinational production: foreign managers, brought
in from Taiwan (where many were once officers in the Taiwanese
army, scream out orders and march new recruits around in military
formation. Workers live in newly constructed barracks-ten to a
room is considered relatively low-density housing-and perform
twelve-hour shifts. The workplaces resemble prisons. At another
South China plant, this one owned by Taiwanese investors, one
hundred guards are employed to make sure that no one escapes the
In the North China city of Tianjin, the Korean-run factories
are even more harsh. According to sociologist Anita Chan, managers
resort to "beatings, military control, and public humiliation"
to keep their workers in line. Of the ten labor strikes that occurred
in Tianjin in 1993, nine were against Korean operations. The Chinese
authorities who respond to labor unrest and complaints are not
necessarily sympathetic to their own citizens. In addition, many
officials in the trade unions are retired officers from the Red
Army, and their highly regimented training makes them poor arbitrators
of workers' complaints. "The common underlying belief,"
writes Anita Chan, "that they and the Taiwanese and Korean
managers share is not in Confucianism but militarism and authoritarianism."
Taiwan and South Korea are two of the "Asian Tiger"
economies that have been the marvel of the industrialized world
and the envy of other developing countries. In the 1970s and 1980s,
they rose to prominence as Newly Industrialized Countries (NICs)
thanks to strictly authoritarian governments that suppressed any
sign of labor activity. Their regimes kept wages low and profits
very high, in part through their willingness to permit the highest
rate of industrial accidents and deaths in the world; at one point
in the 1980s it was calculated that 2.26 percent of South Korea's
labor force sustained serious injuries or died at work every year.
Taiwanese employers vied with the South Koreans for the dubious
distinction of requiring the longest workweek in the world.
Working people fought back. In 1988, after a nominally democratic
government was installed in South Korea, there was a wave of strikes
and fourteen hundred unions were formed. Korean companies retaliated
with a vengeance, using well-organized gangs of thugs called Kusidae
to terrorize workers and drive out the new unions. One American
company, a subsidiary of the Tandy Corporation (the corporation
that makes Radio Shack equipment), used these anti-labor squadrons
to subdue its female workforce. Groups of male Kusidae assisted
male managers in the factory in a brutal attack on women union
leaders; several women were hung upside down, beaten, and sexually
molested; twenty-three others were physically abused in other
ways until they signed resignation letters.
Such viciousness was a sign of business "realism"-that
is, knowing what to do to boost profits and promote growth in
an increasingly competitive world. After four decades of political
and labor repression, pressures from the restive working and middle
classes eventually pushed both Taiwan and South Korea toward democracy.
The new labor unions negotiated successfully for substantial raises
that more closely reflected the productivity of the South Korean
economy. And, after free elections were held, public anger against
two ax-presidents was so great that they were convicted of crimes
against the people and thrown into prison.
The traditions of authoritarian repression that once propelled
South Korea and Taiwan toward economic success are still alive;
they have been eagerly assumed by other regimes in Southeast Asia.
Countries such as Thailand, the Philippines, Malaysia, and Indonesia
are being pulled into the international web of export manufacturing
and are trying to achieve very rapid economic growth under severely
These management techniques can be transplanted to places
outside of Asia. In Guatemala five hundred export factories have
opened up over the past fifteen years in order to take advantage
of the lowest wages in Central America and the disciplinary methods
of a repressive government. At these production facilities, half
of which are Korean-owned, the most common complaint of workers
is that they are yelled at and beaten by their employers. One
Guatemalan manager excused the Korean companies' actions by explaining
that "the people are accustomed to being treated badly; if
you don't treat them badly they don't understand." Wendy
Diaz, a fifteen-year-old worker at Global Fashion in Honduras,
testified to the U.S. Congress that she had to work seventy-four
hours per week for 40 cents an hour. Her South Korean managers,
who were accused of hitting and sexually harassing employees,
were overseeing the manufacture of clothing for Wal-Mart.