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Why Nike Is the Problem, Not the Solution

By       Message Robert B. Reich     Permalink
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Reprinted from Robert Reich Blog

From youtube.com/watch?v=lHCaZwSDLjM: President Obama will deliver Remarks at Nike World Headquarters Live from Beaverton, Oregon.
President Obama will deliver Remarks at Nike World Headquarters Live from Beaverton, Oregon.
(image by YouTube)
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Tomorrow President Obama will be giving a speech promoting the Trans-Pacific Partnership. Paradoxically, he's chosen to give it at Nike headquarters in Oregon.

Nike isn't the solution to the problem of stagnant wages in America. Nike is the problem.

It's true that over the past two years Nike has added 2,000 good-paying professional jobs at its Oregon headquarters, fulfilling the requirements of a controversial tax break it wrangled from the state legislature. That's good for Nike's new design, research and marketing employees.

But Nike's U.S. workers make only a tiny percent of Nike's products.

In fact, Americans made only 1 percent of the products that generated Nike's $27.8 billion revenue last year. And Nike is moving ever more of its production abroad. Last year, a third of Nike's remaining 13,922 American production workers were laid off.

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Most of Nike's products are made by 990,000 workers in low-wage countries whose abysmal working conditions have made Nike a symbol of global sweatshop labor.

As wages have risen in China, Nike has switched most of its production to Vietnam where wages are less than 60 cents an hour. Almost 340,000 workers cut and assemble Nike products there.

In other words, Nike is a global corporation with no particular loyalty or connection to the United States. Its loyalty is to its global shareholders.

I'm not faulting Nike. Nike is only playing by the rules.

I'm faulting the rules.

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Trade agreements like the Trans Pacific Partnership protect corporate investors but lead to even more off-shoring of American jobs.

They make it safer for firms to relocate abroad -- the Cato Institute describes such investor protections as "lowering the risk premium" on offshoring -- thereby reducing corporate incentives to keep jobs in America and upgrade the skills of Americans.

If the Trans Pacific Partnership goes into effect American wages will be dragged down by further losses of manufacturing jobs.

All workers with similar skill levels face downward wage pressure when Americans displaced from better-paying manufacturing jobs join the glut of workers competing for non-offshorable jobs.

Jobs being lost to imports pay Americans higher wages than the jobs left behind . Government data show wages in import-competing industries (e.g. manufacturing jobs) beat those in exporting industries overall.

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http://robertreich.org/

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.


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