Building a low-wage economy regrettable

“The rich will always require an abundant supply of the poor”

-Voltaire

In l979, Iowa slaughterhouse workers made solid middle class incomes, and no company had trouble remaining profitable while treating their workers well. Expressed in present dollars, these workers were making $18.32 an hour, plus benefits. By 2000, wages had fallen to $10.32 an hour. What happened?

In the early l980s the meat-packing industry was completely reorganized in response to the availability of cheap foreign workers. Congress rewrote our immigration laws in l965 which led to spiraling family chain migration and introduced massive refugee resettlement operations which greatly expanded the pool of low wage workers. Newly formed non-union companies, like Iowa Beef Processors, took advantage of abundant foreign labor by slashing pay, speeding up the processing lines, and allowing safety conditions to deteriorate to a shocking level. (See Mother Jones, ” The Chain Never Stops.”) The old companies, which had paid good wages, like Armour, Hormel, Swift, and Wilson, could not compete. They slashed wages or declared bankruptcy , and Iowa Beef Processors acquired one-third of the national red meat slaughter market.

Americans were not accustomed to such low wages and shameful working conditions. But immigrants, legal and illegal, were willing to take these jobs. And so the story was told that we needed immigrants to do the “jobs that Americans won’t do.” (See “The Case Against Immigration” by Roy Beck.) The fact is, Americans were slaughtering their own meat and earning a livable wage doing it, until Congress decided to rig the system for non-union companies and swamp the labor market with millions of new workers .

We expect the federal government to establish a system which provides incentives for behavior which improves our society . Our current policy of mass immigration, which is four times the historic average level, is creating a low wage economy that requires a continual supply of cheap foreign labor.

What happened to the Iowa slaughterhouse workers is now happening in other blue-collar industries which have come to expect and rely on a third world labor force: poultry processing, garment making, food processing, construction, and agriculture. The profit to employers of reorganizing an industry around cheap labor has been documented by Harvard economist George Borjas in his book “Heaven’s Door.” Borjas estimates that native born American workers are losing $160 billion a year due to competition from immigrant labor. The savings to business from cheap labor travels upwards to the employers, and today we have the largest income disparity we have ever witnessed. The only other period in our history when we experienced such enormous disparity between rich and poor was during the last great migration.

Evidence that we are building a low wage economy was recently released by the Washington, D.C.-based Economic Policy Institute which issued a report in July of this year entitled, “Hardships in America.” This report shows that 29 percent of families with young children do not earn enough to live at a basic level of comfort and security. And most remarkable , this situation was created during our longest and largest period of economic expansion.

And what about Maine? According to a l999 study by the Maine Center for Economic Policy, 32 percent of working Mainers do not earn a livable wage despite record levels of low unemployment. The number rises to 60 percent for tourism workers, this despite media stories (including those in your newspaper) of labor shortages, leading the authors to conclude “that the media reports have been biased toward high-end exceptions and that many employers are in denial about the need for attractive wages to lure attractive workers.”

We are making decisions today which have enormous impact on the kind of nation we become. If we continue with the present policy of mass immigration and multiple amnesty for illegal immigration, then we will encourage businesses which require a continual supply of cheap workers. Wealth based on cheap labor does not come without a price tag for society. Lower wages generate lower tax revenues. According to the National Research Council, taxes paid by low-skilled immigrant workers do not pay for the increased costs they generate, such as increased services and infrastructure. As we have seen in California: taxpayers must build more power plants, more roads, more schools, more hospitals to accommodate the growth.

But we do have another choice. A nation whose wealth has been built upon livable wages will have citizens who can purchase their own homes and their own health insurance. There is dignity in being a nation who does its own work and solves labor shortages by hiring and training from within. It is wrong to exploit the poor, and to force low skilled Americans to continually clamor for government handouts, as they compete with a third world labor market

Well educated elites who promote immigration, under the assumption that we are “sharing the wealth” with the world’s poor, are indulging in cheap virtue. They are not the ones who do the sharing.

Jonette Christian of Holden, a member of Mainers for Immigration Reform, can be reached at jonette@acadia.net.