Why each $1.3 million GM invests creates just one job

cap_end_logoOn Dec. 13, General Motors announced with great fanfare that it was going to invest $1.3 billion, mostly in Flint, Mich., to “create or preserve” 1,000 jobs. The company did not say how many of the jobs would be preserved — how many workers would be saved from layoffs — and how many would be new.

Giving GM the benefit of the doubt, let’s say that all those 1,000 are new jobs. Do the math and you find that each added job takes a $1.3 million investment. If only 500 new jobs resulted, that would be an investment of $2.6 million per job.

In fact, GM says that it has invested $10.1 billion in operations since it emerged from bankruptcy in 2009 and that this has “created or kept” 26,500 jobs — or $380,000 per job.

At this rate of hiring, the hundreds of thousands of autoworkers and other workers laid off during the economic crisis in Michigan have little to cheer about. The mass of workers in Detroit, who face the destruction of their city and severely high rates of poverty and unemployment, can take little solace in the announcement by GM billionaires that they have “created or preserved” 1,000 jobs.

With Gov. Rick “right-to-work-for-less” Snyder on the platform together with United Auto Workers officials, GM announced it would put $600 million into a new paint shop at the Flint assembly plant. It also designated $493 million for a new 10-speed transmission at the Romulus Powertrain plant. And there was $121 million for a new “logistics optimization center” at the Detroit-Hamtramck plant.

Paint shops in the auto industry are highly automated. GM will undoubtedly put in the most modern equipment at the transmission plant. And the logistics optimization center is focused on cutting jobs out of the supply chain. So much for job creation.

This GM situation illustrates that the new high-tech era has made investment so expensive that creating new jobs has become monumentally difficult under the capitalist profit system.

Irreversible mass unemployment

This is something that Karl Marx pointed out over 150 years ago when he analyzed the capitalist system and its laws of development. Marx explained that as the capitalist system develops, the struggle of the capitalists for profits throws them into competition with each other. In this competition each one tries to introduce technology that compels fewer workers to turn out more and more products or services in less and less time.

This law has been confirmed by developments over the last 60 years. Bloomberg’s Business Week, voice of the billionaires, ran an article in its Jan. 27 edition crudely entitled “Factory Jobs Are Gone. Get Over It.” The article showed that manufacturing output in the U.S. has more than tripled since 1953. At that time there were 16 million manufacturing workers. In 2012 there were only 12 million. So output went up by 300 percent while employment went down by 25 percent. Productivity in manufacturing, or output per worker per hour, went up 189 percent just between 1980 and 2012.

The scientific-technological race by the bosses — which forces fewer workers to be more productive and raises production so the company can capture more market share from its rivals — has reached the stage at which permanent mass unemployment and underemployment have become irreversible.

What goes for GM goes for the entire auto industry, for manufacturing and for the capitalist economy in general.

GM, like Ford, Chrysler, GE, Caterpillar, IBM, Walmart, McDonald’s and other corporate giants that dominate the system, cannot invest anywhere near enough to employ the tens of millions of unemployed and underemployed.

This is the age of low-wage capitalism. Low wages are being imposed throughout the capitalist system. Fast food workers, big-box store workers, airport workers, janitors, nursing home workers, home health care workers, security guards, and tens of millions of others work for survival wages. Even the new workers who will be hired at GM will be making $13.50 or $14.50 an hour — less than $30,000 a year.

The needs of capital are to make profits. The bosses will hire only enough workers to fit their profit needs. Capital is so productive now that if it were to expand its production, it would rapidly create far more goods than the mass of the working class could buy. So the bosses hold back on investment, which means holding back on hiring or resorting to firing where that will “create or preserve” their profits.

In his fundamental work, “Wage-Labor and Capital,” Marx wrote about this process of using technology against the workers in the war for profits.

“This war has the peculiarity that its battles are won less by recruiting than by discharging the army of labor. The generals, the capitalists, compete with one another as to who can discharge the most soldiers of industry.”

Instead of applauding the bosses for creating a handful of jobs, they should be denounced for the millions of jobs they have destroyed and the millions of workers they have driven into poverty, low-wage jobs, and lives of permanent suffering and insecurity.

Goldstein is the author of “Low-Wage Capitalism” and “Capitalism at a Dead End,” which has been translated into Spanish as “El capitalismo en un callejón sin salida.”

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