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Think US Manufacturing Is In Trouble Now? Wait Till WALMART Jumps In

photo 0f 2007 Northcross Mall Wal-Mart protest by Kristin Hillery, via flikr
photo of 2007 Northcross Mall Wal-Mart protest by Kristin Hillery, via flikr

Photo by Kristin Hillery, via flikr

Hey, Richard Trumka! You didn’t need to be so darn diplomatic yesterday. My take: Wal-Mart getting into in US manufacturing is pretty much the LAST thing America’s economy needs right now.

Unless, of course, somebody’s had an attack of conscience and they’ve completely changed their business model.

Really quick, let’s look at Walmart’s business model:

The retailer has a clear policy for suppliers: On basic products that don’t change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year.

Yep, it’s that old ratcheting-down thing. Works the same way as chained-CPI for Social Security benefits. Or, what’s been happening to the middle-class for the last 40 years. Death by a thousand cuts (also known as “creeping normality”). They take a little bit this year, and a little bit more next year, and a little bit more the year after that.  Wal-Mart’s business model:

Wal-Mart also clearly does not hesitate to use its power, magnifying the Darwinian forces already at work in modern global capitalism. …The Wal-Mart squeeze means vendors have to be as relentless and as microscopic as Wal-Mart is at managing their own costs. …Wal-Mart has also lulled shoppers into ignoring the difference between the price of something and the cost. Its unending focus on price underscores something that Americans are only starting to realize: Ever-cheaper prices have consequences.

Why would anybody in their right mind want to apply this business model to US manufacturing? (Other than, of course, the Walton family. But maybe having a bigger fortune than the bottom 42% of Americans, combined, isn’t enough for some people…?)

Isn’t it time to start ratcheting things UP again?

Mr. Trumka, please… save the diplomacy for elsewhere. We gotta stop this Race to the Bottom.

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made in prison labelAnd, oh yeah… something else about “Made in the USA.”

If you haven’t noticed, we’ve got a lot of prisons here in the US. And inmates work for really cheap wages.

That USA-grown organic produce sold at Walmart? Yep.

Stuff that gets returned to Walmart? Yep.

And that may just be the tip of the iceberg. Thanks to ALEC pushing “prison industries enhancement” laws for the past 20 years, there’s now lots and lots of stuff “Made in the USA” behind prison bars. And no way to tell how much of it ends up for sale on retail store shelves. Apparently, in some states, it’s legal to sell prison-made stuff in local stores… as long as it’s not transported across state lines.

Myself, I’m thinking it’s about time for another nationwide product-labeling campaign. So consumers will know exactly where in the USA these products are made.

H/T to the Teamsters for the really great graphic above… and to Dennis Trainor, Jr. and Acronym TV for the video below.

Race to the Bottom: another view of what “cheap labor” looks like

Patients working in a compound at the Kunming Municipal Compulsory Rehabilitation Center in China Photo: GETTY
Patients working in a compound at the Kunming Municipal Compulsory Rehabilitation Center in China Photo: GETTY

Patients working in a compound at the Kunming Municipal Compulsory Rehabilitation Center in China Photo: GETTY

Today’s New York Times has another tale of “cheap labor” in China:

The cry for help, a neatly folded letter stuffed inside a package of Halloween decorations sold at Kmart, traveled 5,000 miles from China into the hands of a mother of two in Oregon.  Scrawling in wobbly English on a sheet of onionskin paper, the writer said he was imprisoned at a labor camp in this northeastern Chinese town, where he said inmates toiled seven days a week, their 15-hour days haunted by sadistic guards.

[Prison officials] buy small-time offenders from other cities on a sliding scale that begins at 800 renminbi, or about $130, for six months of labor.

Do the math.  The Chinese prison buys their labor for $5 a week.  And those inmates are working 105 hours a week.

How on earth can US workers compete with that?

The really bad news is: prison labor isn’t just a problem in China.  It’s a problem here in the US, too.  Read “The Hidden History of ALEC and Prison Labor” in The Nation here.

Just one example:  Arizona inmates working for private agricultural companies are paid a “whopping fee” of “more than 50 cents an hour.”  Read “How US prison labour pads corporate profits at taxpayers’ expense” in The Guardian here.

How on earth can US workers compete with that?

Another thing that went wrong in the Bush Economy

AZ Correctional Industries

Watch this employer-recruitment video produced back in 2004 by the National Corrections Industry Association in partnership with the US Department of Justice:

Yep, if you’re a business, that’s certainly one way to “control labor costs”.  You don’t have to pay health benefits; you don’t have to pay overtime; you don’t even have to pay minimum wage.

If you’ve been watching the American Legislative Exchange Council (ALEC) closely, this probably isn’t a big surprise.  ALEC has been pushing “prison industry enhancement” (PIE) laws at the state level for about 20 years.   Read “The Hidden History of ALEC and Prison Labor” in The Nation here.

Industry spokesmen describe the program as a “win-win” – but that’s from their perspective.

“I asked an NCIA spokesperson how private companies can get away with what could reasonably be described as forced labor. He explained that the PIE program classifies certain work functions as a ‘service’ rather than an actual ‘job’, and therefore is not subject to [restrictions in a 1979 federal law]. Conveniently, then, the backbreaking work of picking crops in the blistering sun counts as a ‘service’, so prisoners can be paid even less than the immigrants who have traditionally performed this work.”

(Yes, of course there’s a Wal-Mart connection.  Read about it in the British newspaper The Guardian, here.)

Here’s how the prison labor system works in Arizona: 

  • State law requires all able-bodied prisoners to work.
  • “Arizona statute requires that all inmates that are making $2 per hour will have deductions of 30% to offset the cost of their incarceration. In addition, thirty percent of the prisoner’s wages will be deducted for court ordered restitution.”  (Are you doing the math here?  Sounds like the inmates actually receive 80 cents an hour for their work.)
  • Nevermind the recession, the prison labor business is growing.  The number of inmate hours worked during FY12 was up 8.5% over FY11.  Room and board “contributions” were up by 9.8%.  Sales were up.  Profits were up.  Arizona Correctional Industries added new products and new customers, and “are currently working on finalizing contracts that will help grow our telemarketing and service business.”  (ACI helpfully explainsHow we do it: We provide a positive learning experience for all of our workers.  We balance our home and business life.  We continually strive to improve our quality focusing on Lean Continuous improvement.  We are passionately involved in making the customer happy.”)
  • Arizona is now leading the nation in efforts to crack down on those same immigrants who used to pick crops.  Read National Public Radio’s “Prison Economics Help Drive Arizona Immigration Law” here.

Think about that employer-recruitment video that was funded by the Bush Administration in 2004:

“I have a workforce that doesn’t have car problems, or baby sitter problems et cetera.  They’re always here, and they’re always willing to come to work.”

“The situation here allows us to be able to control costs far more than we could in the past.”

“Partnerships between correctional industries and private business are a rapidly growing segment of a multi-billion dollar industry in America.”

“Bring us your business challenge.  Chances are, there’s a nearby correctional facility that can supply dependable labor, enhance your competitiveness, and increase your profitability.”

Now, think about the growth in the non-violent inmate population.

  • As of 2008, non-violent offenders made up over 60 percent of the prison and jail population.
  • If incarceration rates had tracked violent crime rates, the incarceration rate would have fallen to less than one third of the actual 2008 level.

Don’t you think something went terribly, terribly wrong?


Related Article

New Hampshire is considering privatizing the NH correctional facilities. We cannot let that happen. 

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