Outsourcing? Lax US Labour Laws Attract Overseas Companies

Outsourcing has been the great bogeyman of discussions about jobs of late, with complaints that the United States is sending jobs overseas. There’s a reason, of course, that many US companies like to work overseas. It’s because of lax labour laws and a lower cost of doing business. It’s far cheaper for Apple, for example, to exploit Chinese workers than it is to pay for fabrication of its products in the United States.

Overseas labour is cheap and disposable, and we directly profit from it by paying artificially low prices for consumer goods produced in harsh conditions that wouldn’t be legal here. And sometimes aren’t legal in their home nations, either, but the factories are located in economic incentive zones with relaxed regulations that attract overseas investment.

However, it’s not just the US that ships jobs elsewhere to take advantage of inexpensive labour. Overseas companies are doing the same thing in the US, sending operations here because we have fewer working protections and thus can lower the costs of production. Both BMW and Ikea, to name two recent high profile examples, have established plants in the United States to take advantage of a lax labour climate. The law facilitates the exploitation of US workers, and these companies are happy to flock to US shores.

An Ikea plant in Virginia recently made headlines with rampant discrimination and union-busting tactics. It took national media attention to exert enough pressure for workers to finally win, voting to unionise in August after considerable pressure not to. It’s a good thing they did, because the conditions in their factory were, well:

Though company factories in Sweden produce the same bookcases as the plant in Virginia, the Times notes that “the big difference is that the Europeans enjoy a minimum wage of about $19 an hour and a government-mandated five weeks of paid vacation (while) full-time employees in Danville start at $8 an hour with 12 vacation days” — and that doesn’t count the one-third of Danville workers who are paid even less because they are subcontracted through temp agencies. (‘Ikea Joins the Race To the Bottom With Its Treatment of US Workers‘)

In California, BMW attempted to cut jobs after receiving bailout funds; funds which, presumably, should also have included job creation. The situation attracted the attention of the National Labour Relations Board, which started investigating after workers claimed the company was firing long-time employees with good wages and benefits with the goal of replacing them with low-wage workers who would, of course, cost less.

The peril of outsourcing looms over many discussions about labour and jobs in the US, but people aren’t talking about the way the US attracts some outsourcing of its own. European companies love the business climate in the United States. We have far fewer worker protections, allowing them to access a source of cheap, and often desperate, labour. Like companies in the US, they threaten the states they work in, suggesting that if a state doesn’t like their practices, they can pack up and go elsewhere. Faced with the prospect of jobs in poor conditions or no jobs at all, states acquiesce, and these companies enjoy luxury treatment while US workers labour in worse conditions than those provided in European plants.

Meanwhile, these companies get to say their products are made in an industrialised country, so they aren’t engaging in the kind of labour abuses people think of when they see a ‘made in China’ sticker. And, to be sure, the kind of worker exploitation happening here is different than that of companies working in Mexico, Taiwan, Thailand, China, and other nations desperately trying to attract overseas investment. There is no suicide epidemic at the Ikea plant, workers for BMW aren’t being asked to sign no suicide contracts to retain their jobs.

But this is exploitation, of workers in a nation with a regulatory climate less stringent than that of the company is based in, working in regions where local governments are willing to relax regulations to ensure that companies stay put. Because those governments need the jobs, the tax revenue, the investment. They hope that these factories will help build and strengthen their communities, will provide some social benefits even if the working conditions are less than ideal. Consumers in Europe may not be aware of the circumstances surrounding the production of their goods, or, like consumers in the US, they might not care enough to do something about it. Since they demand cheap prices and manufacturers keep delivering, nothing changes.

The United States was once a very strong nation for labour. Activists fighting for better working conditions brought about sweeping, important changes that reshaped the landscape of this country. In recent decades, this has shifted, as the country becomes increasingly anti-union, less interested in protecting the rights of workers and more interested in making sure corporations stay wealthy. Hard-won battles have been subject to quiet erosion behind the scenes as workers enjoy fewer protections, and some workers even regard unions as the enemy.

Anti-union propaganda warns workers that the union will take all their money, exploit them, trap them. When workplaces get set to unionise, employers bring on the big guns, the misleading information, the threats, and workers vote the union down because, based on the information they have, it would be bad for them. Who wants to give up their paycheques to those big bad unions? And the cycle perpetuates itself, making it extremely hard for unions to regain ground where it’s been lost. The unionisation at the Ikea factory was a rare victory, and I hope it portends something for the future, that US workers are going to start fighting back against exploitation, that maybe we won’t be such an appealing company to outsource to if our workers can find their dignity again.