This Day in Labor History: January 1, 1994

On January 1, 1994, the North American Free Trade Agreement went into effect. NAFTA intended to bring down trade barriers between Canada, the United States, and Mexico. After a long fight against NAFTA’s passage by labor, environmental groups, Mexican farmers, and many other constituencies, the support of President Bill Clinton clinched its success. Clinton promised that “NAFTA means jobs. American jobs, and good-paying American jobs. If I didn’t believe that, I wouldn’t support this agreement.”

While judging the precise impact of NAFTA itself upon the number of employed Americans is complicated, NAFTA has had a highly negative impact upon high-paying blue-collar union jobs, a very bad environmental record, and did a great deal to spur the migration of Mexican farmers from the countryside and into the United States.

Even since the creation of the Border Industrialization Project in 1965, U.S. firms have had great incentive to move their operations to the Mexican side of the U.S. border. The Mexican government created BIP because it brought jobs to their country. American industry began lobbying the U.S. government to brush aside all barriers to globalization. As Jefferson Cowie shows in his fantastic book Capital Moves, American corporations had never bought into the Grand Bargain of the mid-twentieth century and looked to move away from unionized workplaces as soon as possible. When new factories in the United States, even in the South, proved too open for unionization, opening new factories in Mexico proved irresistible.

The passage of NAFTA allowed the fleeing of American manufacturing to enter its peak phase. Between 1994 and 2010, American trade deficits with Mexico were $97.2 billion, displacing 682,900 jobs. Of those, about 80% were in U.S. manufacturing jobs. Overall, since the passage of NAFTA, the United States has lost 5 million manufacturing jobs. Union membership plummeted. Today, only about 7% of American workers in private companies have union representation. In 1994, that number was 11%, down from 30% in 1965, when the Border Industrialization Project began. Companies used the threat of moving jobs to Mexico to force down wages and suppress unionization campaigns. Fearful of losing their jobs, American workers accepted rollback after rollback, but usually the companies eventually closed their American plants anyway.

NAFTA also spurred the migration of Mexicans into the maquiladoras, the cities, and the United States. While some will argue this is good for Mexicans (though anyone visiting Mexico City or Ciudad Juarez may have trouble making this argument), the reasons for it are really bad. American farm subsidies, a violation of NAFTA in spirit if not in rule, allowed American farm companies to dump commodities on the Mexican market. Soon, Mexican corn farmers could not compete with American corn and lost their land. Since 1994, approximately 1.3 million Mexicans have lose their farms or farm jobs. The states of central Mexico, including Jalisco, Guanajuato and Michoacan, where a huge number of farmers lost their land, have also been the states that have contributed the most migrants to the United States. In 2003, 1/3 of the Mexican migrants residing in the United States came from these states. Numbers of migrants have skyrocketed from the southern state of Oaxaca, largely again with agricultural workers moving north. Were the United States to have included humane immigration laws in NAFTA that might be one thing, but instead we have forced them into the desert to die.

American unions have tried to reach across the border and create transnational alliances between workers. When the textile industry moved en masse to Mexico, unions like UNITE sent delegations of workers to meet maquila workers in Mexico and gave them organizing advice and funds. But the major unions are part of the corporate structure of the Mexican government and have not exercised much if any independent action since the early 20th century. There are independent unions that struggle to survive, but between government discouragement, local intimidation of activists, and the same and worse anti-union activities by employers that you see in the United States, they have had a very difficult time getting off the ground. And the same threats of moving factories if workers form independent unions that provide real representation for labor that worked so well against American workers have been used in Mexico. After all, there are a lot of Hondurans looking for work, not infrequently because they have also lost access to the land and traditional farming economies.

While one may argue that NAFTA and American deindustrialization has created cleaner American environments, the Mexican environment has been severely denuded and degraded, particularly with the dumping of toxic chemicals and other pollutants. American environmental laws of the 1960s and 1970s forced companies to deal with pollutants responsibly. These companies did not see their profits depreciate significantly for this, but maximizing profit took priority to social and environmental responsibility. NAFTA also forced remaining Mexican farmers to depend ever more greatly on agrochemicals with poison both the land and the farmworkers who handle and are sprayed by them in the fields. Although it predates NAFTA, Angus Wright’s The Death of Ramon Gonzalez is a good primer on this issue.

The loss of manufacturing jobs due to NAFTA, other free trade agreements, and globalization more broadly has, I believe, helped contribute to the longevity of the economic downturn and threatens larger problems in the future. The promise of NAFTA was cheap products and information-based jobs that were easier on our bodies and allowed us to use our minds. But those jobs have hardly replaced well-paid manufacturing jobs and have left millions of older and poorly educated (disproportionately people of color) Americans behind. We managed to keep the charade of a successful new economy going for awhile, through the housing bubble and personal debt, but both have busted. Now we don’t know how to put people back to work. We have literally dismantled the infrastructure that would allowed us to put people to work in industrial labor. If the information economy doesn’t work and if there is little to no incentive for industries to open factories (or a government that doesn’t make it a priority), what is the long-term employment solution?

This series has also covered the merger of the AFL and CIO in 1955 and the Homestead Strike of 1892.