The Race To The Bottom

Many people throughout our country are now working longer hours for lower wages than ever before. Some people now work two or three jobs just to pay the bills, and today there are relatively few middle class families that don't need both husband and wife to work for economic reasons. In addition, more and more workers are seeing substantial increases in the cost of health care, and cutbacks in other benefits. Further, it seems that almost every day there is another news story about a company that is laying off workers or closing down altogether. More often than not, the jobs lost are the kind of good-paying manufacturing jobs that families need in order to have a decent standard of living.

The fact of the matter is, our disastrous national trade policy has cost this country millions of decent-paying jobs, and has forced wages down for many workers in Vermont and throughout our country. The sad truth is that this country today now has a $346-billion trade deficit. Between 1994 and 2000, the US lost more than 3 million decent-paying manufacturing jobs due our trade policies. In 2001, the manufacturing sector lost another 1.3 million jobs. Over the past four years we have lost a total of 2 million factory jobs representing 10% of the manufacturing workforce.

As a result of the decline in our manufacturing base, more and more people are asking hard questions. They want to know why plants are being shut down, and why workers are receiving pink slips. They want to know why, when they go shopping, it is harder and harder to find products manufactured in the USA. They want to know why major American corporations seem to care so little about the working people in their own country, and why the exorbitant compensation packages of corporate CEOs seem to get even larger when they lay off workers. Sometimes, officials and the media tell us that manufacturing jobs are leaving Vermont because of the so-called unfriendly business climate in our state.

The real problem is that Congress passed anti-worker legislation such as the North American Free Trade Agreement (NAFTA), General Agreement on Tariffs and Trade (GATT), Most Favored Nation (MFN) status and Permanent Normalized Trade Relations (PNTR) with China, as well as other trade legislation that benefits large multinational corporations at the expense of working families. The devastating truth is that "free" trade is not about exporting US manufactured goods, it's about exporting American jobs. The real goal of free trade is to lower labor costs everywhere, by allowing companies to move production to wherever labor is cheapest. Eliminating tariffs in the name of free trade allows corporations to do that without penalty. Rather than pay Americans a living wage, they can hire desperate workers in China for 20 cents an hour, and keep the difference as profits.

To understand just how difficult it is for Americans to compete against Third World workers, consider the hourly wages paid to people who make apparel clothes and shoes in other countries: El Salvador $0.59, Honduras 0.43, Haiti 0.30, China 0.23, Nicaragua 0.23; and these are average wages, not minimum wages. Some workers earn even less!

Can Vermont workers, or workers in South Carolina or California, compete with workers in Honduras, Haiti or China? Of course not. So jobs go abroad, because the labor costs are less. Ironically, even workers in countries like Honduras have to worry about losing their jobs to countries where wages are even lower. For example, if wages are lower in Bangladesh, it is likely that the Hondurans' jobs will end up there. So workers, states, and entire nations everywhere are thrown into what is known as the Race to the Bottom. A race driven by corporations that threaten to move their plants to countries with lower labor costs if workers don't accept pay cuts. And it's a race to lower not just wages, but also every benefit, worker safety requirement, and environmental standard.

Free trade is bad news for all Americans. While those who lose jobs are most directly affected by our failed trade policy, each of our communities suffers as a result of the free trade policies pushed by our presidents and approved by Congress. When corporations can move their facilities to countries where workers make 20 cents an hour, those corporations can use these horrendous wages as leverage to get American workers to take pay and benefit cuts. Throughout our country today workers are hearing their employers say, "If you are not happy with the pay or benefit cuts we've established, we can take your job to Mexico or China." When workers lose their jobs or suffer pay cuts, they buy less from community businesses and local economies suffer. One of the groups of Americans hardest hit by free trade are young, entry-level workers without a college education. When manufacturing jobs are available these workers are often able to earn a living wage and receive decent benefits. With the collapse of our manufacturing sector, the only jobs available to these young workers are in the service industry.

Global trade can be good for American workers and the countries we trade with when our trade functions have an underlying principle of fair trade, not unfettered free trade. The goal must be to create decent paying jobs in the United States, and improve the standard of living of people abroad. The goal should not simply be to increase corporate profits and the salaries of CEOs. We must act now to get out of the fast lane in the race to the bottom.

Bernie Sanders is an independent congressman from Vermont. Phone 202-225-4115 or email To view Sanders' complete newsletter, from which this is adapted, please click 

Home Page

News | Current Issue | Back Issues | Essays | Links

About the Progressive Populist | How to Subscribe | How to Contact Us

Copyright © 2002 The Progressive Populist