Why Nike won't solve stagnant wages in America
President Obama chose Nike headquarters in Oregon to deliver a defense of his proposed Trans-Pacific Partnership last week, as the company announced measures to boost its US manufacturing operations. But Nike isn鈥檛 the solution to the problem of stagnant wages in America. Nike is the problem.
Barack Obama delivers remarks on trade at Nike corporate headquarters in Beaverton, Oregon May 8, 2015. Obama on Friday pressed fellow Democrats to support his push for a trade deal with Asian countries, promoting the benefits he sees as attainable in a visit to sneaker maker Nike Inc, which promised the pact would help it create up to 10,000 US jobs.
Jonathan Ernst/Reuters/File
On Friday, President Obama chose Nike headquarters in Oregon to deliver a defense of his proposed Trans-Pacific Partnership.聽
It was an odd choice of venue.聽
Nike isn鈥檛 the solution to the problem of stagnant wages in America. Nike聽is聽the problem.聽
It鈥檚 true that over the past two years Nike has聽, fulfilling the requirements of a controversial tax break it wrangled from the state legislature.聽That鈥檚 good for Nike鈥檚 new design, research and marketing employees.聽
Just before the President spoke, Nike聽聽that if the Trans Pacific Partnership is enacted, Nike would 鈥渁ccelerate development of new advanced manufacturing methods and a domestic supply chain to support U.S. based manufacturing,鈥� thereby creating as many as 10,000 more American jobs.
But that would still be only a tiny fraction of Nike鈥檚 global workforce. While Nike makes some shoe components in the United States, it hasn鈥檛 assembled shoes here聽since 1984.
聽that generated Nike鈥檚聽聽last year. And Nike is moving ever more of its production abroad.聽Last year, a third of Nike鈥檚 remaining 13,922 American production workers were laid off.聽
Most of Nike鈥檚 products are made by聽聽whose abysmal working conditions have made Nike a symbol of global sweatshop labor.
As wages have risen in China, Nike has switched most of its production to聽where wages are聽. Almost聽聽cut and assemble Nike products there.
In other words, Nike is a global corporation with no particular loyalty or connection to the United States. Its loyalty is to its global shareholders.
I鈥檓 not faulting Nike. Nike is only playing by the rules.
I鈥檓 faulting the rules.
In case you hadn鈥檛 noticed, America has a huge and growing problem of inequality. Most Americans are earning no more than the typical American earned thirty years ago, adjusted for inflation 鈥� even though the U.S. economy is almost twice as large as it was then.
Since then, almost all the economic gains have gone to the top.
The President is angry at Democrats who won鈥檛 support this trade deal.
He should be angry at Republicans who haven鈥檛 supported American workers. Their obduracy has聽worsened the potential impact of the deal. 聽
Congressional Republicans have refused to raise the minimum wage (whose inflation-adjusted value is now almost 25 percent lower than it was in 1968), expand unemployment benefits, invest in job training, enlarge the Earned Income Tax Credit, improve the nation鈥檚 infrastructure, or expand access to public higher education.
They鈥檝e embraced budget austerity that has slowed job and wage growth. And they鈥檝e continued to push 鈥渢rickle-down鈥� economics 鈥撀爇eeping tax rates聽low聽for America鈥檚 richest, protecting聽their tax loopholes, and聽fighting off any attempt to raise聽taxes on聽wealthy inheritances to their level before 2000.
Now they 鈥� and the President 鈥� want a huge trade agreement that protects corporate investors but will lead to even more off-shoring of low-skilled American jobs.
The Trans Pacific Trade Partnership鈥檚 investor protections will make it safer for firms to relocate abroad 鈥� the聽describes such protections as 鈥渓owering the risk premium鈥� on offshoring 鈥� thereby reducing corporate incentives to keep jobs in America and upgrade the skills of Americans.
Those same investor protections will allow global corporations to sue the United States or any other country that raises its health, safety, environmental, or labor standards, for any lost profits due to those standards.
But there鈥檚 nothing in the deal聽to protect the incomes of Americans.
We know that when Americans displaced from manufacturing jobs join the glut of Americans competing for jobs that can鈥檛 be replaced by lower-wage workers abroad 鈥� personal service jobs in retail, restaurant, hotel, hospital, child care, and elder care 鈥� all lower-skilled workers face downward pressure on wages.
.聽Government data show wages in import-competing industries (e.g. manufacturing jobs) beat those in exporting industries overall.
Without a higher minimum wage, an expanded Earned Income Tax Credit, affordable higher education, and a world-class system of job retraining 鈥� financed by higher taxes on the wealthy winners in the American economy 鈥� most Americans will continue to experience stagnant or declining wages.
Instead, the Trans Pacific Partnership 鈥� which includes twelve nations, including Vietnam, but would be open for every nation to join 鈥� would lock us into an expanded version of the very policies that have failed most American for the past twenty years.
No doubt Nike is supporting the TPP. It would allow Nike to import its Vietnamese and Malaysian-made goods more cheaply. But don鈥檛 expect those savings to translate into lower prices for American consumers. As it is, Nike spends less than $10 for every pair of $100-plus shoes it sells in the U.S.
Needless to say, the TPP wouldn鈥檛 require Nike to pay its Vietnamese workers more. Nikes鈥� workers are not paid enough to buy the shoes they make much less buy U.S. exported goods.
Nike may be the perfect example of life under TPP, but that is not a future many Americans would choose.聽