Category Archives: Globalization

U.S. Multinational Activity Abroad and U.S. Jobs: Substitutes or Complements?

Source: Ann E. Harrison, Margaret S. Mcmillan, and Clair Null, Industrial Relations, Vol. 46 no. 2, April 2007
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Critics of globalization claim that firms are being driven by the prospects of cheaper labor and lower labor standards to shift employment abroad. Yet the evidence, beyond anecdotes, is slim. This paper reports stylized facts on the activities of U.S. multinationals at home and abroad for the years 1977 to 1999. We focus on firms in manufacturing and services, two sectors that have received extensive media attention for supposedly exporting jobs. Using firm-level data collected by the Bureau of Economic Analysis (BEA) in Washington, D.C., we report correlations between U.S. multinational employment at home and abroad. Preliminary evidence based on the operations of these multinationals suggests that the sign of the correlation depends on the crucial distinction between affiliates in high-income and low-income countries. For affiliates in high-income countries there is a positive correlation between jobs at home and abroad, suggesting that foreign employment of U.S. multinationals is complementary to domestic employment. For firms that operate in developing countries, employment has been cut in the United States, and affiliate employment has increased. To account for firm size, substitution across firms and entry and exit, we aggregate our data to the industry level. This exercise reveals that the observed “complementarity” between U.S. and foreign jobs has been driven largely by a contraction across all manufacturing sectors. It also reveals that foreign employment in developing countries has substituted for U.S. employment in several highly visible industries, including computers, electronics, and transportation. The fact that there were U.S. jobs lost to foreign affiliates in key sectors, despite broad complementarity in hiring and firing decisions between U.S. parents and their affiliates, helps explain why economists view the impact of globalization on U.S. jobs as benign despite negative news coverage for declining industries.

Globalization and Declining Unionization in the United States

Source: Matthew J. Slaughter, Industrial Relations, Vol. 46 no. 2, April 2007
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For decades, the private-sector unionization rate in the United States has been falling. At the same time, the integration of the United States into the world economy has been rising. Many anecdotes suggest the latter has played a role in that decline, with unions feeling pressured to reduce employment and/or compensation demands in the face of rising cross-border activity of employers. To investigate this possibility econometrically, in this paper I assembled a panel of U.S. manufacturing industries that matches union-coverage rates with measures of global engagement such as exports, imports, tariffs, transportation costs, and foreign direct investment. The main finding is a statistically and economically significant correlation between falling union coverage and greater numbers of inward FDI transactions. Possible interpretations of this finding are then discussed. Because U.S. affiliates of foreign multinationals have higher unionization rates than U.S.-based firms do, this correlation does not reflect just a compositional shift toward these affiliates. Instead, it may reflect pressure of international capital mobility on U.S.-based companies, consistent with research on how rising capital mobility raises labor-demand elasticities and alters bargaining power.

Who’s on the Line? Indian Call Center Agents Pose as Americans for U.S.-Outsourced Firms

Source: Winifred R. Poster, Industrial Relations, Vol. 46 no. 2, April 2007
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This paper explores the globalization of service work through an analysis of customer service call centers in India for U.S. firms. It reveals a new kind of managerial strategy, “national identity management,” in which employees are asked to subsume different national identities as part of the job. Through interviews with over eighty Indian call center personnel and case studies of three call centers, this paper analyzes how and why ethnicity and citizenship have become crucial elements of the labor process. It builds upon and elaborates seminal theories of managerial control in interactive service work, including Hochschild’s theory of emotion management and Leidner’s theory of scripting. It argues that globalization fundamentally alters the relationship of the actors, the purpose and practice of managerial control, and the outcomes for those involved. In addition, it reflects on theories of advancing information and communication technology (ICT), and global identity. Some scholars argue that the development of ICTs will lead to a homogenization (especially an “Americanization”) of identities, while others see increasing global disjuncture and renegotiation of identities. Instead, this analysis reveals a continuum of responses by workers to the process of national identity management, and the forging of multiple, internally differentiated ethnic identities. It concludes by arguing that customer service work will continue to be globalized, and as a result, issues of “nation” will increasingly surface within interactive service work.

Steel Magnolias: Labor Allies With the Environmental Movement

Source: David Foster, New Labor Forum, Vol. 16 no. 1, Winter 2007

The Donora disaster was the root cause of the USW’s subsequent embrace of environmental issues that led eventually to the founding on June 7, 2006 of a new Strategic Alliance between North America’s largest private sector manufacturing union, and the Sierra Club, the country’s oldest and largest grass-roots environmental organization. While the decision to align the USW and the Sierra Club originated in their shared history of supporting environmental protections like the Clean Air Act, the new Alliance was sparked by the accelerating pace of globalization and the seismic social shifts accompanying it. Both organizations realized that for the first time in human history any meaningful improvement in the economic well-being of the world’s population was dependent on the sustainable management of our planted and its resources.

Global Unions: A Solution the Labor’s Worldwide Decline

Source: Stephen Lerner, New Labor Forum, Vol. 16 no. 1, Winter 2007

At no time in history has there been a greater urgency or opportunity to form real global unions whose goal is to organize tens of millions of workers to win economic and social justice by counterbalancing global corporations on the world stage even as the power of the state declines.

Focusing on Health Care and Trade

Source: Dean Baker, Challenge: The Magazine of Economic Affairs, January-February 2007, Vol. 50 no. 1 (subscription needed)

The Democrats regained control of Congress in November in part as a result of the corruption and incompetence of the Republicans, but also in part because of their promises to make things better for the average family. Their ability to stay in power will depend on their ability to make good on these promises. Two areas that are central to the economic security of average workers are health-care reform and trade policy. The Democrats will have to put forward a clear progressive agenda in these areas if they expect to be taken seriously in future elections.

Roots of Insecurity: Why American Workers and Others Are Losing Out

Source: Horst Brand, Dissent, Winter 2007

In 2004 the International Labor Office (ILO) published a voluminous though mistitled report called “Economic Security for a Better World.” This is in face a treatise about the economic insecurity that has been affecting the world’s working people for the past several decades. It is also an argument criticizing the “liberalization context” of insecurity and the policies that have deliberately fostered it. Liberalization, says the ILO, is the objective of policies formulated by international financial institutions in concert with the U.S. treasury – policies that are based on the “Washington Consensus.”

The ILO defines liberalization in terms of certain “key policy commitments,” all of which affect the situation of the workers, though at times only indirectly. One of the crucial commitments is a reduction in the size and role of the public sector of given countries, which usually results in cutbacks in public employment and productive public assets and the elimination of much of the state’s regulatory capacity. Other key commitments include unobstructed capital mobility, regardless of the effects in the value of a country’s exchange rate and ability to finance domestic business (hence to sustain employment levels), and labor market “flexibility,” a euphemism for removing (or restricting) such labor market “distortions” as trade unions and minimum wage laws and, in brief, subjecting workers to the dictates of supply and demand.

International Labor Solidarity: The New Frontier by Jeremy Brecher, Tim Costello, and Brendan Smith

Once employers were mostly local; so were unions. When local companies became national corporations, unions too had to go national. Now capital has gone global. Unions have made intermittent efforts at international cooperation, but the obstacles are considerable. To overcome them, bridge building and information sharing across borders need to start long before individual campaigns begin, cementing relationships, fostering solidarity, and developing enough strategic knowledge for unions to provide mutual aid in the global arena.

New Labor Forum
Vol. 15, no. 1, Spring 2006