The Cold Shower

As long as what American workers are paid is not in line with what they produce, then natural market forces are going to continue to force good manufacturing and textile jobs out of the United States, cutting off American workers from the good jobs that are necessary to allow unskilled and uneducated individuals to penetrate the middle class.

The beginnings of a great American company found its roots in eastern Pennsylvania, four years before the start of the Civil War. Through a process of haggling, financial struggles, and even a couple of name changes, the company finally opened its doors as Bethlehem Steel. For one hundred and forty years, through numerous conflicts, two World Wars, the Korean and Vietnam Eras, Bethlehem helped provide the steel that went into the mailed fist of the American military might. She made everything from I-beams to warships.

She helped changed the face of America from coast to coast, from the Golden Gate Bridge in San Francisco, CA to the Chrysler Building in New York City, NY. She built beautiful things, like the Waldorf Astoria Hotel, exciting things, like Madison Square Garden, and symbolic things, like the Peace Bridge. In 2001, this American monolith of manufacturing fell into bankruptcy. In 2003, Bethlehem Steel ceased to be.

The story of this great American company echoes the story of many great and storied companies across America. At one time, America was the manufacturing power of the world, employing almost 19.5 million Americans at its height in the 1970’s. Then the capitalist powerhouse, corrupted by socialist agendas, strangled by collective bargaining, and distracted by nationalist friction, suddenly found the ground ripped right out from under her. Now less than 13 million Americans work in manufacturing.

decadalmanufacturingjobs

“They can’t be bought, bullied, reasoned, or negotiated with.
Some men just want to watch the world burn.”
-Alfred, Batman: The Dark Knight-

The word on every politician’s lips today is the same, regardless of their political party. They are all talking about the jobs problem in America. The middle class is shrinking relative to the upper and lower classes, and there is a lot of political pressure for someone to do something about it. There is a lot of political posturing, as various politicians from both sides have made noises as if to do something about it. This is ironic, considering many of them are responsible for the conditions that created this very problem.

Unfortunately, due largely to artificially inflating wage rates, it’s impossible to create an apples to apples comparison of the middle class in 1971 and 2014 (two years that were a subject of a Pew Research paper from December of 2015). In economic analysis, things like this are often hopelessly incongruous, and definitions, where they are even available are fairly fluid, but the basic fact that the middle class is shrinking is undeniable. The only question that many politicians and American workers conspicuously avoid asking is why?

FT_15.12.10_incomeByIndustr

While these numbers are alarming, but they are only half of the picture. For example, while we see the percentages plummet for middle class workers in nondurable manufacturing and durable manufacturing, in 1971 the United States had over 17 million Americans manufacturing jobs, out of 207 million Americans, representing roughly 8% of the population or 12.3% of the workforce (at 67% work force participation). In 2014, only about 12 million Americans work in manufacturing out of 317 million people, representing only 3.7% of the population or 5.6% of the workforce (at 67% work force participation). This trend is fairly consistent across production industries.

There are two different problems converging on the American middle class from the same underlying problem, but very few people are being honest about it. The American people have been sold a comfortable illusion, the product of generations of willfully uneducated workers, the politicians they elected, and labor representatives unwilling to face the economic reality that an hour of a worker’s labor will never be worth more or less than what the worker produces.

The harsh truth is that American jobs are going overseas because the rest of the world is catching up to America and Americans are being paid an artificially high rate as a result of decades of leftists in both parties pushing the myth of the minimum wage. Until Americans wake up and face this reality, American jobs will continue going overseas regardless of corporate tax rates, free trade agreements, or any other excuse the leftist Establishment has been feeding the American people for the last forty years.

One of the largest and most politically sensitive trade issues in presidential politics has been the trade imbalance with China, specifically how so much is manufactured in China now. Consider that the minimum wage in Beijing, China is $2.90 an hour. In the United States, the minimum wage is $7.25 an hour. Why does it cost more than 2 times for an American laborer to sweep a floor than a Chinese laborer? There is no rational explanation for this disparity, and Americans can’t go on justifying artificially higher prices because of “‘Murica!“. We’ve only gotten away with this in the post-war period from the 1950’s through the 1980’s because the rest of the world was embroiled in so much economic turmoil.

Communism set China, India, and much of the rest of the world decades behind the United States economically and technologically. After the effective death of communism in the 1980’s, the socialist powers have adjusted their economic game plans and have made huge strides regaining much of their lost ground. Meanwhile, the United States political discourse continues as if China, Mexico, and India aren’t doing what Japan did in the late 1970’s and 1980’s, rapidly industrialize. There are over a hundred other countries waiting in the wings to do exactly the same thing.

If we compare the average manufacturing wage in the United States in March of 2016 of $20.20 an hour, at $40,660 annually, the American manufacturing workers are paid more than 5 times the annual income of their Chinese counterparts ($7,946.51). Unless American workers produce more than five times the Chinese worker with access to the same machinery and methods as their American counterparts, there’s no way for an American worker to compete on a global market.

American wages are artificially locked into place by misguided leftist minimum wage policy, preventing wages from falling so that American workers can compete in an increasingly global market. Worse, skilled American workers have become accustomed to thinking domestically, comparing themselves to other domestic workers, rather than to their actual international competitors.

American manufacturing workers correctly see themselves as being worth more than inexperienced and uneducated workers like fast food cooks, cashiers, and janitors, despite decades of the socialist progressive left trying to eradicate such class distinctions. Unfortunately for both the leftist paradigm as well as the American worker, economics doesn’t consider unrealistic ideals nor compare unrelated fields of employment. Only workers in the same industry effect economic decisions, and no amount of hand wringing, good intentions, misguided nationalism, or political social engineering is going to change that.

As long as what American workers are paid is not in line with what they produce, then natural market forces are going to continue to force good manufacturing and textile jobs out of the United States, cutting off American workers from the good jobs that are necessary to allow unskilled and uneducated individuals to penetrate the middle class. American workers can compete in the international market, what we need in America is for the political class and the American people to get out of their own way, and allow Americans to compete based on productivity and not be handicapped by price.

For a solution to this problem, check out this article: Minimum Wage: Down the Rabbit Hole.

Liberty is For The Win!


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