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How GE bosses used unemployment to beat down wages

Published Jan 9, 2012 8:59 PM

The giant General Electric Co. is announcing “good news” for its U.S. workers, and for manufacturing workers across the country. Well, … sort of.

“We have gotten to a point where making things in America is as viable as making things any place in the world,” said James P. Campbell, president and chief executive of GE’s appliances and lighting division, citing the drop in labor costs as a crucial reason. “They are significantly less with the competitive wage,” he said, “and that is a big help.” (New York Times, Dec. 30)

The “revival” is in an early stage.

Employment is beginning to inch up as new hires start to come aboard faster than older workers leave. But the new people are always at the lower wage scale, except for some specialists.

“We are getting from the company an $800 million investment in Appliance Park over the next two years, and what we had to do for that investment was accept the ‘competitive wage,’” said Jerry Carney, president of IUE-CWA Local 761.

Even so, GE’s workforce in the U.S. is slightly smaller than its workforce overseas — 133,000 to 154,000. Nearly 80 percent of those in the U.S. are in manufacturing, reflecting GE’s origins. It has 219 factories in this country and 16 more are being built or renovated, including two in Louisville. An additional 230 GE plants are overseas, which helps to explain why 53 percent of the company’s $150.2 billion in revenue last year — from all sources — was generated abroad, up from 35 percent a decade ago.

GE used loopholes in U.S. tax law to avoid paying any tax whatsoever on its $14 billion in profits last year. Jeff Immelt, the CEO of GE since 2001, is the chair of President Barack Obama’s Council of Jobs and Competitiveness.

Mr. Carney’s “competitive wage” — which is unfortunately the same term used by GE officials — is really the lower tier of a two-tier system first introduced in the 1980s. In this system, workers were supposed to eventually move to the higher tier, but this system is rapidly disappearing. Already, a majority of workers, those younger and people of color, are condemned to the lower tier of $14 per hour or less for the foreseeable future. Soon there will be none left in the higher tier.

Racism, anti-communism aided GE’s owners

GE’s search for low-cost labor power is nothing new.

When GE’s Appliance Park complex in Louisville opened in 1954, it was really a huge runaway shop operation. Thousands of jobs were moved from union strongholds in the North — particularly upstate New York — and relocated to Kentucky.

A particular aim was to cut the membership of the United Electrical Workers (UE), a militant union, many of whose class-conscious organizers were communists. Anti-communism drove the UE out of the CIO labor federation in 1949.

Racism was also involved in the company’s moves.

There’s always been a large Black community in Louisville, but GE didn’t automatically hire African Americans.

The National Negro Labor Council — whose spokesperson was future five-term mayor of Detroit, Coleman Young — led a campaign supported by the local NAACP and Black churches to open up jobs at Appliance Park. Louisville’s Ford plant was also forced to hire African Americans as production workers. (See “Organized Labor & the Black Worker 1619-1973” by Philip S. Foner, pages 302-303.) The anti-communists during the Joe McCarthy period destroyed the NNLC for demanding justice for Black workers.

These real gains for African Americans were largely wiped out through massive layoffs. Between 1973 and 1998, GE Chairman “Neutron Jack” Welch and his predecessors axed 16,000 jobs in Louisville. (Time, Nov. 9, 1978) Thousands of Black workers were laid off.

The connection between Black workers, unions and layoffs is an important one. In his book, “Low Wage Capitalism: Colossus with Feet of Clay,” Fred Goldstein notes: “In the 1980s a Black worker was 50 percent more likely to be in a union than a white worker. By 2006 this had fallen to 30 percent. Between 1983 and 2006 the proportion of Black workers represented by a union fell from 31.7 percent to 16 percent. … Up to the 1990s Black workers were just as likely to have manufacturing jobs as white workers. By 2006 they were 15 percent less likely to have a manufacturing job than whites.” (p.163)

Virtually all of these developments were the direct result of restructuring and outsourcing to oppressed countries overseas, which led to massive layoffs.

Low-cost labor comes home

Now, it seems that the search for low-cost labor has come full circle.

According to the Bureau of Labor Statistics, the decline in unit labor costs is dramatic. In manufacturing, the wages and benefits invested in each unit of production have fallen in eight of the past 10 years, with a net decline of 13.6 percentage points.

“We are at an inflection point in manufacturing in terms of relative cost structures,” said Mark M. Zandi, chief economist for Moody’s Analytics. “Ten years ago, it was a no-brainer to locate in China, and now it isn’t so clear whether China is the low-cost place to produce.” (New York Times, Dec. 30)

GE is interested not in helping U.S. workers but in minimizing the total cost of production and maximizing profits. What GE management has done is use the threat of unemployment to bludgeon U.S.-based workers into accepting low wages that leave workers in poverty.

Steven Millies contributed to this article.