FTC: Made In The USA Comments Concerning WPON Radio--P894219
July 2, 1997
Office of the Secretary
Made in USA Policy Comment, FTC File No. P894219
Many of my listeners and I urge you not to change the standard by which manufacturers are allowed to use the unqualified phrase "Made in USA" on their products.
These few words and letters, "Made in USA," are the last bulwark that ordinary working people have to protect semi-skilled manufacturing jobs in the United States from going to low wage countries overseas, and you, the Federal Trade Commission, are the ultimate protector of that bulwark.
Manufacturing jobs matter, and the only way the people have to protect manufacturing jobs in the USA is to purchase products with the phrase "Made in USA" knowing that it means precisely that, that all or virtually all of the parts and labor come from the United States.
Since 1973, average real weekly earnings for nonsupervisory workers on private nonfarm payrolls have fallen from $511.55 to $419.87 as of May 1997, a decrease of $91.68 per week or 21.8%. As of April 1997, there were 83,566,000 American citizens and legal residents in this classifcation, almost 80% of the civilian workforce.
A decline of this magnitude in real wages over a 24 year period for 80% of American workers is unprecedented in the history of the United States! Not even the Great Depression was as bad as this.
Manufacturing jobs have declined from 21,040,000 in 1979 to 18,302,000 as of April 1997, a decrease of 2,738,000 jobs or 13.0%.
What makes these declines in real wages and manufacturing jobs so startling is that they have taken place during a period of both strong Gross Domestic Product (GDP) and population growth.
Why has this lowering of the standard of living for almost 80% of the civilian workforce and of the number of manufacturing jobs occurred?
It has occurred due to the ability of large multinational corporations to manufacture goods in low wage countries and import them back into the United States at little or no tariff.
In other words, the culprit is the so-called "free trade" policies of our government.
I saw this for myself on a two day sojourn to Juarez, Mexico in 1995 where I found that over 300 factories were busy everyday manufacturing goods for export into the United States and paying their workers anywhere from $.50 to $.98 an hour. My understanding is that two years later there are now over 400 plants in Juarez and wages in real terms are even less than they were in 1995.
Working conditions in the 6 or 7 plants I was able to gain entry to were excellent. The problem is not worker abuse or sweatshop conditions. The problem is the low wages paid to the workers for manufactured goods that are consumed in the United States. This is what has put downward pressure on wages and the standard of living in the U.S.
Mattel employs over 10,000 Chinese making Barbie dolls in two factories at wages around $.25 an hour and imports those dolls here at no tariff.
Would you tolerate your child, wife, husband, or companion working for $.25 an hour at a factory in one of the poorer neighborhoods in Washington, D.C. and then your going out to an upscale mall in Georgetown to buy a Barbie Doll at $49.95 that they had made? NO, of course you wouldn't.
But changing the standard for what "Made in the USA" means supports exactly that.
Each average manufacturing job in the U.S. accounts for about $115,000 of GDP.
In 1993, we had a manufactured goods suplus with Mexico of $1.664 billion dollars. In 1996, after three years of NAFTA, we had a manufactured goods deficit with Mexico of $16.202 billion dollars (exports - imports). This means that, no matter what the proponents of NAFTA claim, we would have had 16.202 billion / 115,000 or 141,000 more manufacturing jobs in the U.S. had we made everything we bought here and exported nothing to Mexico.
The same sort of thing has happened with China under GATT only the number of lost manufacturing jobs is even higher since our manufactured goods trade deficit (exports - imports) with that country in 1996 was $39.517 billion. This represents 344,000 more manufacturing jobs.
These manufacturing job losses are a direct loss, but equally important, if not more so, is the loss of the highly paid service or "knowledge" jobs that are linked to manufacturing. High technology is not a free floating academic activity. It supports in large measure the manufacturing processes for thousands of products.
Supporters of free trade are fond of saying that it is a natural progression to go from an industrial to a knowledge based economy, and they frequently use as an example the decline in the number of farmers and the move from agriculture to manufacturing as a natural progression.
Nothing could be further from the truth. We did not ship the production of agricultural products overseas. We automated and mechanized the production of agriculture by creating hundreds of thousands, if not millons, of high technology service jobs that support agriculture so each farmer is now tremendously more productive. We need to do the same thing in the manufacturing sector, not let the actual manufacturing of hard goods go to other countries.
If we allow manufacturing jobs to continue to go overseas, we will see, sooner or later, a decline in the number of high tech service and knowledge jobs that support the manufacturing process because they will be gone also.
I would urge the Commission to visit Detroit and see parts of this city that have returned to a feral state after losing manufacturing jobs. Take the train from Detroit to Ann Arbor and see closed factory after closed factory after closed factory. See the desperation on the faces of the people that live in these areas.
Vice-President Gore, in his debate with Jack Kemp last fall, used the example of Mrs. Joan Crowder as someone who was helped off of welfare by the government's Renaissance program. What he didn't tell us is why Mrs. Crowder was on welfare in the first place.
I spoke to her personally, and she told me she had to go on welfare after 12 years of working for Flexible Controls, a manufacturing company, because they moved the factory from Detroit to Mexico and no other comparable jobs were available in the Detroit metro area.
I am not asking the Commission to stop the insanity of our "free trade" policies. That is up to the people and the Congress.
However, since the people never had a chance to vote directly on NAFTA and GATT, the only vote we have at the current time to keep what semi-skilled manufacturing jobs still remain is to use the "Made in USA" label as our ballot to preseve manufacturing jobs in the U.S. and give this huge class of nonfarm, nonsupervisory private workers a decent chance at a better standard of living for themselves and their children.
The large multinationals know their costs to a gnat's eyelash, and they know where they buy their subassemblies from and their cost. Therefore, there is no need to provide them a "safe harbor" of 75% domestic content with the last substantial transformation in the U.S. as you propose in Part A., Section VIII of the Text of Proposed Guides as published in the Federal Register May 7, 1997.
If the total cost of their product, parts plus labor, is 75% domestic, they can label their product "75% Made in the USA." If their total cost is 45%, they can label it "45% Made in the USA" or whatever other percentage it might be.
This would not be misleading, would represent de minimis work for the manufacturers, would be the truth, and the phrase "Made in USA" would remain what it is, an effective tool for the average American to vote for a better standard of living for themselves and their children.
We urge the Commission not to change the standard for "Made in USA."
Donald P. Selkirk