DC Elites! What About Southern Elites? Their Regressive Business & Economics Spreading Across America

The Resistance Reports

March 19, 2017

The Southern region of America, is great for American & global business elites, because it is anti labor with cheap wage, position to serve American consumers. As a result there has been a migration of American and Global companies to the Southern America region. And because of competitiveness reasons, the South is becoming a “Base-line” for many.

“Writing in The American Prospect, Harold Meyerson offers a more sobering image. “The South today [2015] shares more features with its antebellum ancestor than it has in a very long time.”  He adds, “Now as then, white Southern elites and their powerful allies among non-Southern business interests seek to expand to the rest of the nation the South’s subjugation of workers and its suppression of the voting rights of those who might oppose their policies.”

While much of the South remains formally very Christian conservative, with tough anti-abortion and anti-gay regulations, nearly every state hosts a city – like Austin or Nashville or Durham — that offers a more liberated social space where an underground scene thrives.  Perhaps more revealing, demographic shifts and renewed urbanization are heating things up both politically and culturally,” wrote wrote David Rosen is the author of Sex, Sin & Subversion:  The Transformation of 1950s New York’s Forbidden into America’s New Normal (Skyhorse, 2015).  He can be reached at drosennyc@verizon.net; check out www.DavidRosenWrites.com.

 “For global manufacturers, the United States—more precisely, the American South—has become the low-wage alternative to China.

For global manufacturers, the United States—more precisely, the American South—has become the low-wage alternative to China. For American manufacturers, too: In 2012, General Electric re-shored its production of refrigerators and water heaters from Mexico and China to its Appliance Park factories in Kentucky, nearly doubling the park’s workforce in the process. Unlike the vast majority of Southern factories, Appliance Park was unionized, but in recent years, the union there was compelled to agree to a two-tier contract, in which the lower tier of workers (70 percent of them) make far less than the more senior workers: Their starting hourly pay is just over $13.50, almost $8 less than what new workers at Appliance Park used to receive.

In the 21st century, the American South has become the low-wage anchor of a global production process—just as it was before the Civil War,”  reports the American Prospect.

From the America Prospect (source)

Today, as the auto and aerospace manufacturers of Europe and East Asia open low-wage assembly plants in Tennessee, Alabama, South Carolina, and Mississippi, the South has assumed a comparable role once more. Indeed, the South today shares more features with its antebellum ancestor than it has in a very long time. Now as then, white Southern elites and their powerful allies among non-Southern business interests seek to expand to the rest of the nation the South’s subjugation of workers and its suppression of the voting rights of those who might oppose their policies. In fact, now more than then, the South’s efforts to spread its values across America are advancing, as Northern Republicans adopt their Southern counterparts’ antipathy to unions and support for voter suppression, and as workers’ earnings in the North fall toward Southern levels. And now as then, a sectional backlash against Southern norms has emerged that, when combined with the Southern surge, is again creating two nations within one.

IN THE SPRING OF 2011, the Boston Consulting Group made a bold prediction: Manufacturing, which had been fleeing American shores for years, particularly to China, was going to come back. “China’s rising manufacturing costs will significantly erode [the] savings” that U.S. companies had realized by having their products assembled there, three of the firm’s partners wrote in a widely publicized study. The advantages of offshoring would wane, and American manufacturing would rise again.

The numbers that the authors adduced certainly made their claim seem plausible. As their wages continued to increase, Chinese factory workers, whose pay, adjusted for the productivity differences between China and the United States, came to just 23 percent of their American counterparts’ in 2000, had already seen that figure grow to 31 percent in 2010, and it would likely increase to 44 percent in 2015. More revealing still, however, was the authors’ comparison between factory workers in one particular region of China and one particular region of the U.S. In 2000, they showed, factory workers in and around Shanghai already made 36 percent of the productivity-adjusted pay of workers in Mississippi—a figure that rose to 48 percent in 2010 and that they projected to grow to 69 percent in 2015.

By contrast to the more rigid European economies, with their safeguards of workers’ rights, America’s was perfectly positioned to take advantage of China’s growing labor costs. “America is so robust and so flexible compared to all economies but China,” said Harold Sirkin, BCG senior partner and the study’s primary author, when I interviewed him at the time of his study’s release. “Getting the work rules right, getting the wage scales right—the [U.S.] economy can flex in ways that people wouldn’t believe!”

The study’s readers might be forgiven, though, if their reaction to its revelations was less effusive than the study’s authors. The basis for their comparison was Mississippi? The key to an American manufacturing renaissance was, as the study put it, “an increasingly flexible workforce”? “Flexible” has a distinct economic meaning: being paid less than what had been the standard for American manufacturing workers. It had a distinct geographic meaning, too: Southern.

“We made a mistake by picking Mississippi,” Sirkin admitted when I suggested that most Americans’ view of a rosy national future probably didn’t include having wage levels reduced to those of the country’s poorest state. Indeed, when BCG produced a fuller version of its study a few months later, all mention of Mississippi had vanished. But BCG’s focus merely crossed some state lines. “When all costs are taken into account,” the authors wrote, “certain U.S. states, such as South Carolina, Alabama, and Tennessee, will turn out to be among the least expensive production sites in the industrialized world.”

It’s been four years since BCG made its predictions, and they’ve proved lamentably accurate. The American economy has “flexed” just as the study’s authors said it would: Manufacturing has continued to move to the South, and factory workers’ wages have gone south as well. Between 1980 and 2013, The Wall Street Journal has reported, the number of auto industry jobs in the Midwest fell by 33 percent, while those in the South increased by 52 percent. Alabama saw a rise in manufacturing jobs of 196 percent, South Carolina of 121 percent, and Tennessee of 103 percent; while Ohio saw a decline of 36 percent, Wisconsin of 43 percent, and Michigan of 49 percent.

Many firms opening factories in the South pay wages well below companies like General Motors and Ford, despite paying higher wages in their home countries, and block attempts to unionize. The one exception is Volkswagen, which has not opposed employees at its Chattanooga, Tennessee, plant (above) from attempting to unionize.

Even as auto factories were opening all across the South, however, autoworkers’ earnings were falling. From 2001 to 2013, workers at auto-parts plants in Alabama—the state with the highest growth rate—saw their earnings decline by 24 percent, and those in Mississippi by 13.6 percent. The newer the hire, the bleaker the picture, even though by 2013 the industry was recovering, and in the South, booming. New hires’ pay was 24 percent lower than all auto-parts workers in South Carolina and 17 percent lower in Alabama.

One reason wages continued to fall throughout the Deep South, despite the influx of jobs, is the region’s distinctive absence of legislation and institutions that protect workers’ interests. The five states that have no minimum-wage laws are Mississippi, Alabama, Louisiana, Tennessee, and South Carolina. Georgia is one of the two states (the other is Wyoming) that have set minimum wages below the level of the federal standard. (In all these states, of course, employers are required to pay the federal minimum wage.) Likewise, the rates of unionization of Southern states’ workforces are among the lowest in the land: 4.3 percent in Georgia, 3.7 percent in Mississippi, 2.2 percent in South Carolina, 1.9 percent in North Carolina. The extensive use of workers employed by temporary staffing agencies in Southern factories—one former Nissan official has said such workers constitute more than half the workers in Nissan’s Southern plants—has lowered workers’ incomes even more, and created one more obstacle to unionization.

The South’s aversion to both minimum-wage standards and unions is rooted deep within the DNA of white Southern elites, whose primary impulse has always been to keep African Americans down.

The South’s aversion to both minimum-wage standards and unions is rooted deep within the DNA of white Southern elites, whose primary impulse has always been to keep African Americans down. To those elites, the prospect of biracial unions threatened not just their profits but the legitimacy of their social order. To counter the biracial Southern populist movement that emerged in the 1890s, those elites created Jim Crow laws that legitimated and promoted white racism, and it was largely by manipulating that racism that they were able to thwart almost all the Southern organizing campaigns that unions have waged since the 1930s.

Ironically, most of the largest factories that have arisen in the South in recent years belong to European and Asian firms that, in their home countries, pay high wages and are entirely and harmoniously unionized. In going to the South, however, they go native, paying wages and providing benefits well beneath those that such firms as General Motors and Ford offer their employees, and blocking workers’ attempts to unionize. (The one exception to this rule is Volkswagen, whose corporate board—controlled by worker representatives and public officials—has not opposed the unionization of its Chattanooga plant. In that city, state and local public officials have led anti-union campaigns.) Nissan has plants in Tennessee and Mississippi; Mercedes has one in Alabama and will open one next year in South Carolina; BMW has one in South Carolina, where Volvo recently decided to build a new plant; Airbus plans to open one in Alabama. They come to sell to the American market and they come because the labor is cheap.

“Airbus is a global manufacturer,” Jürgen Bühl, who heads the treasurer’s office of IG Metall, the German metal-workers union, and is the primary staffer for the union’s representative on Airbus’s board of directors, told me in April. “When we go abroad, we have the high-value work, the research and development, done in Germany. We [workers in German factories] supply the high-value parts. The workers who assemble the parts in the Airbus factory in Tianjin, China, produce 3 to 5 percent of the total value. But given the 6-to-1 productivity advantage that the United States has over China, it’s cheaper to do the final assembly in the U.S.” And a lot cheaper than in high-value-added Germany, where the average hourly compensation for manufacturing workers in 2011 (the last time the Bureau of Labor Statistics performed an international comparison) was a third higher than their U.S. counterparts’ ($47.38 there; $35.53 here).

For global manufacturers, the United States—more precisely, the American South—has become the low-wage alternative to China.

For global manufacturers, the United States—more precisely, the American South—has become the low-wage alternative to China. For American manufacturers, too: In 2012, General Electric re-shored its production of refrigerators and water heaters from Mexico and China to its Appliance Park factories in Kentucky, nearly doubling the park’s workforce in the process. Unlike the vast majority of Southern factories, Appliance Park was unionized, but in recent years, the union there was compelled to agree to a two-tier contract, in which the lower tier of workers (70 percent of them) make far less than the more senior workers: Their starting hourly pay is just over $13.50, almost $8 less than what new workers at Appliance Park used to receive.

In the 21st century, the American South has become the low-wage anchor of a global production process—just as it was before the Civil War.

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