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Sunday, August 27, 2006

Chamber of Commerce Explains how to Eliminate the Middle Class

by William R. Hawkins

American Economic Alert

Lou Dobbs, host of the popular CNN Moneyline show, has been doing a great job covering the decline of American manufacturing and the perils such a decline poses for both the country’s prosperity and national security in our tumultuous world. He interviewed the always acerbic Thomas Donohue, president of the U.S. Chamber of Commerce on the January 8 program on President Bush’s proposal to give some form of legal “guest worker” status to millions of illegal aliens. Donohue argued that such an amnesty was a good thing for the large corporations that control his business organization. But along the way, Donohue unknowingly presented to the viewing audience how the issues of “open borders” for both foreign goods (trade) and foreign peoples (immigration) are related.

The common thread is obvious enough: the search for cheap labor -- whether at home or abroad. But the decision on which jobs are to be kept in this country and which are to be sent overseas is one that involves potentially restructuring and stratifying American society in ways that would render the country unrecognizable within a generation.

Donohue wants the gates open for immigrant workers because he believes, “We have a serious, serious question over the next few years of where we are going to get our workers. And if we don't have workers, we will send the jobs somewhere else.” So this explains why hundreds of factories have been closing in the United States -- they apparently have been sitting idle due to a lack of workers! But wait, haven’t 2.8 million manufacturing workers been laid off in the last three years? Haven’t 300,000 to 500,000 white collar service jobs been “outsourced” overseas? And haven’t the big corporations in Donohue’s Chamber been in the lead in this shift of jobs to foreign production sites?

The plot thickened when Dobbs challenged Donohue about the ability of immigrant labor to fill the high-tech jobs on which future American leadership is supposed to depend. “Estimates vary, but the most recent estimate that I have seen suggests that two-thirds of illegal immigrants coming to this country don't even have a completed secondary education. They do not speak English, for the most part,” said Dobbs, who then asked, “How effective a work force can they be?”

Donohue responded, “Well, actually, 70 percent of the jobs in this country do not require extensive training.” So business doesn’t need an educated workforce? This is not what the Chamber of Commerce website states: “To remain competitive, business needs employees who are prepared to meet the rapidly changing demands of the 21st century workplace...Over 80% of the 23 million jobs that will be created in the next 10 years will require some postsecondary education.” The Chamber position piece then cites a report from the National Commission on Mathematics and Science Teaching for the 21st Century that concludes “60% of all new jobs in the early 21st century will require skills that are possessed by only 20% of the current workforce.”

How do we square this apparent contradiction between Donohue and his organization? The answer lies in understanding how the transnational firms are restructuring the country. In a future America , low-level, unskilled labor will provide luxury services for the elite. The low-skilled will serve in restaurants, hotels and resorts, provide child care and maid service, drive executives around and provide security guards for their offices and estates. The influx of immigrants will keep the wages of this new peasant class low. Dobbs noted, “Harvard studies show that $190 to 200 billion a year are lost in wages to working men and women in this country as a result of illegal immigration.” There is already significant downward pressure on wages exerted by an oversupply of labor.

Donohue tried to claim he supported good pay for such work, saying “the law provides for a minimum wage. And no one in this country should be employed in a full-time job that is not paid a minimum wage.” But again, if one looks at the Chamber’s website, the following statement is found: “In the past, the U.S. Chamber of Commerce has opposed increases to the minimum wage. Although the intent of an increase is to help low income workers, studies show that it can have the opposite effect by causing loss of entry-level jobs…given the fact that our economy has only recently began to recover, the Chamber will again oppose drastic increases such as the one proposed by Senator Kennedy during the 107th Congress [which would have raised the minimum hourly wage by $1.50 over an 18-month period.” In other words, if peasants cost too much, it’s not worth hiring them.

Meanwhile, the jobs that do require skills or a higher education will be shipped overseas where they can be let at what would be peasant wages in the United States . We already know the corporate preference for $1 a day factory workers, but as economist Robert J. Samuelson noted in a recent Washington Post column [January 14], the higher-end service jobs also have a large pay differential when outsourced to India or China. For software engineers the difference is $60 an hour here versus $6 overseas; for accountants, its $75,000 a year here versus $15,000 overseas.

The American middle class is too expensive for Donohue, so it will be eliminated. But the remaining upper managers, corporate officers, and moneyed elites will still need their servants, gardeners, sewer workers and bodyguards – especially the latter as a future America comes to look more like a Third World oligarchy than the affluent republic it once was.

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