The boom that began in 1995 benefited nearly all Americans. For the first time since the early 1970s, average real wages and family incomes began to grow significantly. Economic expansion at a time of low unemployment brought rapid increases in wages for families at all income levels. It aided low-skilled workers, especially non-whites, who had been left out of previous periods of growth. By 2000, the number of long-term unemployed, 2 million in 1993, had declined to around 700,000. Yet, despite these gains, average wages for nonsupervisory workers, adjusted for inflation, remained below the level of the 1970s. Overall, in the last two decades of the twentieth century, the poor and the middle class became worse off while the rich became significantly richer.
Between 1977 and 1999, the average after-tax income of the poorest one-fifth of Americans fell 12 percent, and that of the middle one-fifth decreased by 3 percent. In contrast, thanks to the soaring stock market and increasingly generous pay for top executives, the income of the top one-fifth rose 38 percent. The wealth of the richest Americans exploded during the 1990s. Sales of luxury goods like yachts and mansions boomed. Bill Gates, head of Microsoft and the country’s richest person, owned as much wealth as the bottom 40 percent of the American population put together. In 1965, the salary of the typical corporate chief executive officer (CEO) had been 26 times the annual income of the typical worker. In 2000, the ratio had increased to 310 to 1.
Figure 27.1 U.S. INCOME INEQUALITY, 1913-2003
The “Gini index” measures economic inequality; the higher the number, the more unequally income is distributed.
As the graph shows, inequality peaked just before the Great Depression, fell dramatically during the New Deal, World War ll, and the postwar economic boom, and then began a steady upward climb in the early 1970s.
From Bill Clinton,
Speech on Signing of NAFTA (1993)
The North American Free Trade Agreement was signed by President Bill Clinton early in his first term. It created a free trade zone (an area where goods can travel freely without paying import duties) composed of Canada, the United States, and Mexico. Clinton asked Americans to accept economic globalization as an inevitable form of progress and the path to future prosperity. “There will be no job loss,” he promised. Things did not entirely work out that way.
As President, it is my duty to speak frankly to the American people about the world in which we now live. Fifty years ago, at the end of World War II, an unchallenged America was protected by the oceans and by our technological superiority and, very frankly, by the economic devastation of the people who could otherwise have been our competitors. We chose then to try to help rebuild our former enemies and to create a world of free trade supported by institutions which would facilitate it.... Asa result, jobs were created, and opportunity thrived all across the world....
For the last 20 years, in all the wealthy countries of the world—because of changes in the global environment, because of the growth of technology, because of increasing competition—the middle class that was created and enlarged by the wise policies of expanding trade at the end of World War II has been under severe stress. Most Americans are working harder for less. They are vulnerable to the fear tactics and the averseness to change that are behind much of the opposition to NAFTA. But I want to say to my fellow Americans: When you live in a time of change, the only way to recover your security and to broaden your horizons is to adapt to the change—to embrace, to move forward.... The only way we can recover the fortunes of the middle class in this country so that people who work harder and smarter can, at least, prosper more, the only way we can pass on the American dream of the last 40 years to our children and their children for the next 40, is to adapt to the changes which are occurring.
In a fundamental sense, this debate about NAFTA is a debate about whether we will embrace these changes and create the jobs of tomorrow or try to resist these changes, hoping we can preserve the economic structures of yesterday.... I believe that NAFTA will create 1 million jobs in the first 5 years of its impact.... NAFTA will generate these jobs by fostering an export boom to Mexico by tearing down tariff walls— There will he no job loss.
From Global Exchange, Seattle,
Declaration for Global Democracy (December 1999)
The demonstrations that disrupted the December 1999 meeting of the World Trade Organization in Seattle brought to public attention a widespread dissatisfaction with the effects of economic “globalization.” In this declaration, organizers of the protest offered their critique.
As citizens of global society, recognizing that the World Trade Organization is unjustly dominated by corporate interests and run for the enrichment of the few at the expense of all others, we demand:
Representatives from all sectors of society must be included in all levels of trade policy formulations. All global citizens must be democratically represented in the formulation, implementation, and evaluation of all global social and economic policies.
Global trade and investment must not be ends in themselves, but rather the instruments for achieving equitable and sustainable development including protection for workers and the environment.
Global trade agreements must not undermine the ability of each nation-state or local community to meet its citizens’ social, environmental, cultural or economic needs.
The World Trade Organization must be replaced by a democratic and transparent body accountable to citizens—not to corporations.
No globalization without representation!
1. Why does Clinton feel that free trade is necessary to American prosperity?
2. Why do the Seattle protesters feel that the World Trade Organization is a threat to democracy?
3. How do these documents reflect contradictory arguments about the impact of globalization in the United States?
A cartoonist offered this view in 1993 of the results of the North American Free Trade Agreement, suggesting that the United States was exporting manufacturing factories and jobs, and receiving immigrant workers in exchange.
Dot-com millionaires and well-paid computer designers and programmers received much publicity. But companies continued to shift manufacturing jobs overseas. Thanks to NAFTA, which eliminated barriers to imports from Mexico, a thriving industrial zone emerged just across the southern border of the United States, where American manufacturers built plants to take advantage of cheap labor and weak environmental and safety regulations. Despite low unemployment, companies’ threats to shut down and move exerted downward pressure on American wages. In 2000, the United States no longer led the world in the hourly wages of manufacturing workers, lagging behind several countries in Europe. In terms of the distribution of income and wealth, the United States was the most unequal society in the developed world.
High-tech firms did not create enough high-paying jobs to compensate. Microsoft, symbol of the new economy, employed only 30,000 people. In 1970, General Motors had been the country’s largest corporate employer. In the early-twenty-first century, it had been replaced by Wal-Mart, a giant discount retail chain that paid most of its 1.6 million workers slightly more than the minimum wage. Wal-Mart aggressively opposed efforts at collective bargaining. Not a single one of its employees belonged to a union.
In 2000, well over half the labor force worked for less than fourteen dollars per hour, a wage on which families found it very difficult to make ends meet. Because of the decline in union membership and the spread of part-time employment, fewer and fewer workers enjoyed fringe benefits common in union contracts, such as employer-provided health insurance. In “dual cities” like Los Angeles and New York, high-tech computer companies and firms engaging in international finance coexisted with sweatshops reminiscent of the Progressive era, where workers toiled in overcrowded conditions for the minimum wage or less. Poverty was not limited to urban areas. The highest rates of poverty could be found in isolated rural regions that experienced the continuation of the long-term decline in family farming.
Barbie’s Liberty, a satirical work by the artist Hans Haacke, recasts the Barbie doll, one of America’s most successful toys, in the image of the Statue of Liberty to comment on the loss of manufacturing jobs to low-wage areas overseas.
Of the twenty-five poorest counties in the United States in 2000, nine were located in Nebraska and South Dakota.
At the end of the twentieth century, the United States, more than ever before, was a suburban nation. Two-thirds of new jobs were created in the suburbs. Suburbs were no longer places from which people commuted to jobs in central cities—their office parks, industrial plants, and huge shopping malls employed many local residents. Nor were suburbs as racially segregated as in the past. In 2000, one-quarter of the suburban population was black, and Hispanics represented a majority of the population in the suburbs of Los Angeles and Miami. But suburbs remained divided by income—there were rich suburbs, middle-class suburbs, and poor suburbs, with little connection between them.