David Bacon Peoples World

Bob’s Burgers and Brew, a hamburger joint at the Cook Road freeway exit on Interstate 5, about two hours north of Seattle, doesn’t look like a place where Pacific Northwest farm workers can change their lives, much less make some history. But on June 16, a half-dozen men in work clothes pulled tables together in Bob’s outdoor seating area. Danny Weeden, general manager of Sakuma Brothers Farms, then joined them.

After exchanging polite greetings, Weeden opened four folders and handed around copies of a labor contract that had taken 16 sessions of negotiations to hammer out. As the signature pages were passed down the tables, each person signed. Weeden collected his copy and drove off; the workers remained long enough to cheer and take pictures with their fists in the air. Then they too left.  See full story.

Photo caption: A worker votes to ratify the contract. Credit: David Bacon

Comments:  This article is worth reading for many different reasons.  For one thing, that the workers were successful and for another, how much time and effort it took on the part of workers and their allies to obtain a union and the first contract–set so they could earn $15 an hour!
We focus on one aspect in this note: the role of low wage foreign workers in lowering wages in the U.S.  In this story, Weeden Brothers tried to keep the union from being organized by falsely claiming that the company was short of workers, and attempting to import foreign workers.  It took quite a bit of effort to establish this claim as a lie.

The question in back of this is why are foreign workers’ (in this case from Mexico) wages so low.  We would say that the prevalence of harmful economic systems in the world and their incorporation over time into a capitalist system of production is one explanation of this phenomena. This contrasts with standard theory. The assumption of standard economics, including trade theory, is that the technology of production available is identical, though different arrangements would be used as there are different relative amounts of labor and capital in different countries.  But factor prices would be equalized by trade, according to trade theory. And the implication is that this would happen fairly rapidly as trade theory does not really come to grips long-lasting differences in factor prices in the real world, where wages are very different. This difference is chalked up in standard theory to “differences in human capital” and possibly “a shortage of capital” but these reasons may be something of a deus ex machina. In the real world 1) there do seem to be a large difference in wages in the world, 2) workers’ wages in the United States in industries where foreign trade is possible  have been kept down by substituting foreign production for U.S., and workers’wages in countries involved in trade have been increasing. Yet, in spite of this, there does seem still to be a large available supply of lower paid workers (with enough “human capital”) to continue this phenomenon.
We would say that the prevalence of harmful economic systems in the world and their incorporation over time into a capitalist system of production is one explanation of this phenomena. China, for example, suffered Japanese occupation in WWII, a civil war afterwards.  But a government more committed to the welfare of its people has brought about significant increases in income and other important welfare measures, such as life expectancy, which has increased from about 40 to 70 years.  The Chinese reform measures of the 1980s, which greatly increased Chinese exports incorporated a very large amount goods produced by low-wage workers into the international market.  This low-cost production was sold across the world, including developed countries serving to restrain wages in the U.S. and elsewhere, as some production shifted to China.