One of the worst mistakes a Democratic President ever made was Bill Clinton's signing of the NAFTA trade agreement. The impact of free trade agreements—economically and politically—has been terrible for the American blue-collar worker and for the Democratic Party. I don't believe Donald Trump would be in the White House today were it not for NAFTA and the other trade agreements.
As early as 2011, I wrote a post, "Democrats Better Pay Attention to the Needs of the Middle Class." The middle class was clearly hurting due to job losses from globalization and wage stagnation since the 70s. And they were angry. But the Democratic Party paid no attention.
In 2016, the impact of trade agreements became a central issue in the presidential campaign. Trump was vociferously against the trade agreements. But a New York Times editorial, “Rage Against Trade” (August 6, 2016), said the rage was misplaced because, although trade has cost some jobs through cheap imports, the main factor in the loss of factory jobs has been automation.
But I respectfully disagree. While the point about automation was well taken, the editorial made no mention of the loss of jobs caused by shipping American jobs overseas, which has been made possible to a large extent by these trade agreements, as well as by improved technology, such as container ships, which have reduced transportation costs.
It’s not the cheap imports from Asia, as such, that have hurt the American worker. It's that many of these cheap imports are now being made by American multi-national corporations—the loss of jobs results from these American firms replacing American workers with Asian workers. This, in turn, is a result of trade agreements, as American firms can now import foreign-made goods into the U.S. with no tariffs. The American worker has also been harmed by wage stagnation that corporations have blamed on competition from low-wage countries.
These companies have been and are doing well; only American workers are suffering. According to a 2012 Wall Street Journal analysis, “Thirty-five big U.S.-based multinational companies added jobs much faster than other U.S. employers in the past two years, but nearly three-fourths of those jobs were overseas.” In the past 25 years, corporate profits have soared.
But not workers' wages. The competition of cheap imports has enabled American corporations to say that they have to meet the competition and so have provided only token raises to middle-class blue-collar American workers for decades. These workers have thus not just been hit by job losses; those who still have jobs have seen their wages stagnate since the mid-70s.
But that corporate talk is just so much bull. It seems to make sense that corporations must compete with low-wage countries. But when you see that corporate profits have soared during this same period, it is clear that the money was there to increase workers' wages without raising prices, had they wanted to. It would certainly have impacted profits, which would not have pleased investors and thus would have hurt CEOs, but they could have done so if they had wanted to, and the corporations would have remained viable.
The only group left holding the bag has been the middle-class, mostly White, blue-collar American worker. Their plight is huge, not just financially but also socially/psychologically. And as we saw in the 2016 and 2024 presidential campaigns, the political ramifications have been substantial.
I am not an economist. I don’t know what the alternative is at this stage of the game. I do know that we cannot, as Trump suggested, just rip up these trade agreements and walk away from the concept of global trade. That would certainly bring our economy down, which would be bad for everyone, including the aggrieved, non-college-educated American blue-collar worker.
The only resolution I can think of is that since the money is there to provide an increase in wages to the workers, balanced somewhat by a reduction in CEOs' wage packages, without raising the price of the company's products— just do it. That would reduce profits, but the company would still be viable.
I do know that this major group of American workers … and their families … cannot continue to be the fall guy for corporations getting richer and consumers benefiting from cheaper goods.
Ronald L. Hirsch is a teacher, legal aid lawyer, survey researcher, nonprofit executive, consultant, composer, author, and volunteer. He is a graduate of Brown University and the University of Chicago Law School and the author of We Still Hold These Truths. Read more of his writing at www.PreservingAmericanValues.com
