What the Iconic Labor Battle at Hugo Boss Means for Our Economic Future
Just after Christmas, Germany-based Hugo Boss messengered pink slips to the 400 employees at its Cleveland, Ohio manufacturing facility. The employees were told that they were being laid off, and the plant was being closed.
Not only is the whole company profitable, there is every indication that the Cleveland plant is profitable as well.So why is Hugo Boss shuttering its Cleveland operation and sending 400 American workers onto unemployment lines? Simple. The workers at the plant refused a company demand that their wages be cut by almost a third - from $12 per hour to $8 and change.
Now let's remember that these workers weren't making exorbitant incomes to begin with. Twelve dollars an hour is only about $25,000 a year. The average CEO of a large American corporation (making $10.5 million per year) earns that much in the first five hours of the first work day of the year. No matter, the executives at Hugo Boss think they can make more money if they move the jobs of the Cleveland workers to Turkey and China, where they can get workers to manufacture their suits for even less. If something isn't done to alter their decision, the Hugo Boss plant in Cleveland will stop making suits in April of this year.
Lesson # 1. Every time we allow the executives of international corporations to maximize their own wealth by paying their workers less and less, we allow them to place all of us in economic jeopardy. The root of the current Great Recession was the reckless speculation of a bloated financial sector that was swimming in the money it has squeezed from ordinary Americans who actually produce things for a living. That shift of income from everyday people to corporate CEO's, insurance companies and Wall Street banks left wages stagnant for the last decade. All of the economic growth of the Bush years went to the top two percent of the population. That left consumers without expanding incomes to buy new products, forcing the economy to rely on growing consumer debt and a housing bubble to finance its relatively anemic expansion. The fruits of increased productivity must be widely shared in order to sustain long-term economic growth. A high wage economy is the foundation of a bright economic future - not a Bush era economy where income is concentrated in the hands of a few.The evidence is crystal clear.
The growing spending power of everyday Americans spurred the postwar boom from 1947 to 1973. Real wages rose 81% and the income of the richest 1% rose 38%. Growth was widely shared, but income inequality continued to drop. Compare that to the Republican policies of the Bush years - trade policies that allowed corporations to send manufacturing jobs abroad, and to lower wages at home; policies making it harder to organize unions; and tax cuts for the wealthy.
Of course, throughout the heyday of Reagan's "supply side revolution" and Bush's tax cuts, the Republicans and the right wing intellectual establishment have held fast to their foundational belief that these policies - and especially tax cuts for upper income Americans -- would create private sector jobs.
Well, the great experiment in "trickle down economics" is over and the results are in. The New York Times reports that, "For the first time since the Depression, the American economy has added virtually no jobs in the private sector over a 10-year period. The total number of jobs has grown a bit, but that is only because of government hiring."
These Republican economic policies didn't just produce fewer jobs than advertised. They didn't produce any private sector jobs at all. The whole experiment in handing over money to the wealthiest people in America so they could use it to benefit the rest of us was a colossal - empirically verifiable - failure.
But our economy is not doomed to have more and more low-paying jobs, greater income inequality and economic stagnation. There's a great deal that can be done to prevent corporations from lowering the incomes of American workers in the future - and to stop Hugo Boss from laying off 400 workers in Cleveland right now.
Lesson #2. America's trade policies have to change. The international rules of the economic road must and can be changed. Fundamentally, the rules of international trade must require that wages for employees are not solely subject to market forces. Human beings are not commodities like beans and corn. Most people agree that we need child labor laws, health and safety laws, laws protecting the right to organize, and the minimum wage. That's because without them, "the market"--left to its own devices--would force companies to drive down wages, and incentivize unsafe working conditions.
The same is true of the international market place. The international rules of the economic game that are reflected in trade agreements need to be changed to recognize that human beings are the point of the economic system - not just an "economic input." Labor agreements must have labor and environmental protections - not just protections for the rights of capital and "intellectual property."
Lesson #3. Our tax and regulatory policies need to be changed to reward true economic production and discourage the reckless speculation of the financial sector. It is the exploding financial sector that insists that a profitable company like Hugo Boss produce even more short-term profits - even though it damages the American manufacturing base.
Last year workers at another apparel company, Chicago-based Hartmarx, which makes President Obama's suits, faced their own fight. Thousands of jobs were put in jeopardy when the company's bankers sought to liquidate the company entirely. The workers fought the banks again - and with the help of Illinois State Treasurer and current Senate candidate Alexi Giannoulias they won, too.
The workers in Cleveland realize they must engage in that same type of fight against the corporate greed of Hugo Boss, and they need all of our help.
We should demand that each of the glitterati that attends the Oscars publicly refuse to wear Hugo Boss clothes, so long as the company continues to put its own greed over the interests of American workers.
Each of us should foreswear Hugo Boss clothes until the workers at the Cleveland plant get back their jobs. Retailers should be asked to stop carrying Hugo Boss products.
Investors in the private pension fund Permira should sell their holdings.
All of us should stand shoulder to shoulder with the members of Workers United, an affiliate of Service Employees International Union, and help them demonstrate to America, once again, why a strong labor movement is our country's principal defense against a low-wage economy and economic stagnation.