The New Economy: Challenging the Fictions by Alan Hall

If we accept local media reports, the crisis in manufacturing jobs is largely a Windsor problem caused by local economic factors. After all, we are told, the Canadian unemployment rate is at a 20-year low at 6.1%. Statistics Canada reports some of strongest employment growth in several years along with one of the best employment rates in decades (63.4%). Yet Windsor’s unemployment rate is now in the double digits at 10.1%. This usually provokes the question: “What’s wrong with Windsor?”

Job Loss: More than a “Union Problem”
The standard answer, of course, it is that Windsor’s labour unions and their history of militancy are responsible by discouraging employers from investing in the area. Whether there is any truth to this claim is hard to say, since there is no hard evidence either way. But one thing is clear: the crisis in manufacturing jobs is not unique to Windsor. It is not even unique to Canada. Canadians have lost over 250,000 manufacturing jobs since 2002, but all industrialized countries have been bleeding hundreds of thousands of manufacturing jobs at similar rates. In fact, until recently, Canada had been doing a little better than most other G8 countries (like Britain, for instance).

Although most of these lost manufacturing jobs (55%) are relatively good paying and unionized, they are not disappearing because they are unionized. Certainly, the closing of plants in the U.S., Europe and Canada and the movement of industries to Asia and Latin America has everything to do with the exploitation of cheaper labour. But non-union jobs are disappearing at a similar rate to union jobs, simply because the difference between them doesn’t matter to investors. Whether it’s $26.00 an hour or $12.00 an hour, Canadian, American, Italian, French and British workers can’t compete with $2.00 a day, despite higher oil and transportation costs attached to imports.

The Employers’ Role in Job Loss
Still, the decline of manufacturing jobs is not a just a function of globalization. It is also a consequence of technological and other production changes which are constantly removing the need for human workers from an ever-broadening range of production lines. Even China, the manufacturing tiger of the Asian economy, has actually seen a decline in the number of manufacturing jobs over the last decade despite its capture an enormous share of world production. Why? Because it too has been reorganizing production and introducing technology to boost productivity and reduce the labour intensity of its industries.

Historically, Canada and other countries have relied on the expansion of consumer demand and the creation of new products to sustain an increase in the number of manufacturing jobs, despite the job destruction aspects of new technologies and the pull of early globalization. However, two trends now place the future of manufacturing as a significant source of employment in considerable jeopardy. First, computerization, computer-assisted design, robotization and flexible technologies are replacing workers with machines at a far faster pace than did previous technical innovations. Second, employers’ efforts to reduce their labour and production costs have put tremendous downward pressure on wages in developed nations, and prevented significant improvements in wages in developing nations. The result is inadequate demand for manufacturing products, even though there are more products for sale than ever. Retail giants like WalMart seek to sustain mass consumption through cutthroat pressures on supplier prices, but of course this has simply accelerated the decline and instability of manufacturing employment as firms constantly look for major reductions in production costs.

Governments: Helping Workers or Employers?
Although neoliberals like to think that the sustained growth of manufacturing between the 1950s and 1980s just happened on its own through market forces, it actually took considerable government intervention in the form of protection for and public investment in domestic industries, improved labour and employment legislation, and the redistribution of wealth through welfare and other programs. In other words, past governments actively supported the creation of a manufacturing sector and the jobs that go with it. Most governments, including Canada’s, are now strongly committed to global free trade and economic growth as the solutions to local and national employment, and like to point to the low national unemployment rate as proof that the 'non-interventionist' approach is working. Manufacturing losses are simply 'structural adjustments' on the way to a different and ultimately richer economy, with more value-added, high-tech and knowledge-based jobs. If people are excluded from these jobs, governments assert that individuals need to adjust to the changes through retraining and 'lifelong learning'. Policy-makers are backed up by the arguments of some sociologists like Daniel Bell and Charles Sabel, who optimistically herald the advent of a 'post-industrial' economy in which most workers are highly-paid managers, professionals and technical experts. Instead of factory workers, we’ll all be computer programmers, and the better off for it. They generally don't talk about what happens to the quality of knowledge-based jobs when computer programmers are a dime a dozen and are also subject to global competition.

Service Economy Jobs: The Real Story
While these kinds of jobs are definitely more significant sources of employment, the so-called new economy has also created an increasing proportion of relatively low-paid service industry jobs in tourism, restaurant and accommodation industries, domestic services, industrial services, finance, and insurance, many of which are part-time, temporary, non-union positions with few or no benefits. In other words, more people are underemployed today, sometimes taking on multiple jobs to earn a decent wage. A disproportionate share of employment these days is also self-employment, which accounts for 70% of the new jobs created this year. While some might see this as a good thing, economists widely view self-employment as an indication of a weak job market, since it usually means people are unable to find a regular, permanent job. Contrary to the images of boot-strapping, rags-to-riches entrepreneurs, self-employment also usually translates into low pay, no benefits or security, and long hours often for no compensation at all.

The Way Forward?
We’ve had ups and downs in manufacturing and self-employment before, but it’s naïve to think this is simply another cycle which will eventually right itself. We are talking about a profound structural shift in the quality of jobs available to us. Unfortunately for us, governments, corporations and the banks are unlikely to do much, since they don’t see what’s happening as a problem--indeed, they benefit in the short-term from increased competition amongst workers to just get by. In a neoliberal world where individual responsibility is paramount, we can’t expect too much help adjusting either, even if we’ve paying into unemployment insurance and taxes for all these years. The fact that more and more people may be left behind in this process, with little to look forward to except poverty and insecurity, is simply not on the public radar. But it needs to be put there, and soon.

Even if there were adequate adjustment supports, the current globalization strategy still spells disaster for all of us, not just the growing ‘minority’ in Canada who will fail to adjust to the new economy or the majority in the developing world whose situations have gotten much worse over the last two decades. High quality jobs for the majority of the world won’t be created by an economic logic that constantly pushes for the lowest bid. A global value-added economy can’t sustain itself without an adequate redistribution of wealth and a stable consumer base. Governments can try to deal with these contradictions by tinkering with the system and trying to soften the blow, but as long as they stick with the neoliberal game plan, these tensions are only going to get worse over the long-term.

In the final analysis, then, Windsor is a harbinger of what awaits manufacturing communities in this country and around the world. The union presence might explain why the effect is more visible here. But rather than blaming unions, we should realize that they are fighting for the principle of secure and high quality jobs. Union jobs are also important to defend because unions give workers a say over their working lives. The Supreme Court of Canada, in one of its more brilliant moments, has recently recognized collective bargaining as a protected Charter right, which speaks volumes about the moral imperative behind unionization: unions are needed to achieve human rights and fair conditions for workers because the profit motive cares little for the workers who produce that profit. We need to seize on this point and challenge the very logic of a free trade system that destroys high quality and productive operations and jobs simply because it can be done more cheaply somewhere else. The moment we accept the premise that non-union jobs are better than no jobs at all, we will have set the clock back a hundred years.

There’s no doubt that many of the manufacturing jobs now disappearing were boring, dirty and/or dangerous. Good riddance, some might say. But shifting those poor working conditions to the developing world, where workers have less legislative or organized protection, is as reprehensible as the technological destruction of trade skills and pride without consideration for the impact on those affected. As we compete with each other for the fewer remaining ‘good jobs’, we lose sight of the broader struggle to improve the quality of work life for everyone. Instead of people adjusting to the needs of the new economy, we need to make the economy respond to the needs of people.

This is no easy task, to be sure, but one thing is certain: Labour must challenge at every juncture the claim that competition and markets demand and justify worker adjustments and concessions. This does not mean ignoring the challenges facing unemployed and displaced individuals as they try to find the best work they can in the present context. But it does mean a constant and diligent effort to build a political consensus among workers that puts their needs and rights on the agenda again. Solutions to unemployment cannot be found at the level of individual adjustment. Instead, we require radical and far-reaching structural changes in our politics and our economic systems.