Workers Rights & The Economy

In Memory of Slain Teamsters Representative J. Gilberto Soto
View the Teamster’s page dedicated to the life of Gilberto Soto

Overview on Workers Rights & The Economy
AFTA & Labor
CAFTA & Labor
FTAA & Labor
WTO & Labor
NAFTA & Labor
Australian FTA & Labor
Thai FTA & Labor
Other Related Materials
Other Organizations Working on Labor Issues
Working to be an Ally

Overview on Workers Rights & The Economy
Trade liberalization is most often sold to elected officials and the public with promises of new jobs and benefits for workers. Unfortunately the real results of the current trade model have been a disaster for workers in the US and the rest of the world. Without enforceable protections for workers, the current trade model has created a race to the bottom for the world’s workers. The ease with which corporations can pack-up shop in search of countries with lower labor standards has pitted workers against each other, competing for poorer and poorer jobs. The quality of available jobs has decreased while collective bargaining power has declined, worker protections have been undermined, income inequality has increased, real wages for production workers have fallen, and employment benefits have shrunk.

Since implementation of the World Trade Organization (WTO) and North American Free Trade Agreement (NAFTA), the US trade deficit has ballooned. The deficit in goods has grown by 600 percent in the past ten years, resulting in the loss of 3 million actual and potential jobs. While NAFTA promoters promised the creation of 200,000 jobs per year, after nine years, NAFTA has cost the US 766,000 actual and potential jobs.

The majority of this job loss has been in the manufacturing sector. Displaced workers who find re-employment are most likely to find jobs in the service industry where jobs are often not unionized, have less benefits, and compensation averages only 77% of that in the manufacturing sector. As manufacturing jobs disappear and the demand for service sector jobs increases, wages of service jobs decline.

Workers in the developing world also suffer at the hand of trade liberalization. In Mexico, while NAFTA created an explosion of 800,000 jobs in the Maquiladora zone, real wages have fallen by about 20 percent and income inequality and poverty have climbed. Mexico is now losing jobs to China where wages and labor protections are even lower.

Competition from cheaper-made imports without the protection from strong trade remedy laws exerts another downward pressure on wages and working conditions. Another factor is the threat of plant relocation and outsourcing. A study commissioned by the US Department of Labor showed that employers commonly and successfully use this tactic to reduce workers’ bargaining power and stymie union drives.

Agreements currently under negotiation, including the Free Trade Area of the Americas (FTAA) and the Central American Free trade Agreement (CAFTA) contain no protections for workers rights, and threaten to further depress working conditions in the US and throughout Latin America.

In addition, new provisions on trade in services within these agreements, and within the General Agreement on Trade and Services within the WTO threaten workers in new ways. These rules, aimed at liberalization of the services sector, could undermine a wide range of labor protections for public and private employees while encouraging privatization, thereby driving down the quality of service jobs from construction to education.