Verizon Communications Inc. consultant Timothy Donovan was told that opening global trade barriers would lift everyone from the mail room to the executive suite, but there he was Wednesday, on strike for the seventh straight day, calling on his employer to protect workers’ jobs, wages and benefits.
If trade agreements could help U.S. workers, Donovan said, he’d be all for them.
“I haven’t seen that happen,” Donovan said, taking a break from the picket line in front of a Verizon Wireless store in Howell. “I’ve seen our jobs go. We get more and more calls that get directed into call centers in the Philippines and Mexico and…the Dominican Republic. That work should be here in the United States.”
VERIZON STRIKE: Workers say they had no choice
As the presidential campaigns press on, trade is emerging as a ripe candidate for all that ails the U.S. economy. Republican Donald J. Trump and Democrat Bernie Sanders are promising at least symbolically to rip up trade agreements and protect American workers. And their message is resonating with workers like Donovan who are keeping up with their neighbors – but only because their neighbors aren’t getting raises either.
It has prompted business groups and economists to say their anger is misplaced. In New Jersey, the job sector that includes retail, transportation and warehousing is the state’s biggest, accounting for more than 20 percent of total jobs in 2015. And trade has dramatically lowered prices on everything from electronics to clothing. Withdrawing from the global economy would surely backfire, they said.
It is part of a see-saw debate over trade, and both sides hold up figures that they say prove their point: A left-leaning group says the North American Free Trade Agreement, enacted in 1994, cost the U.S. nearly 700,000 jobs by 2010. Business groups say trade-related employment in New Jersey grew 6.3 times faster than total employment from 2004 to 2013.
Both sides might agree on this: If you want to blame something for workers treading water, blame technology that has allowed companies to do more with less. But no politician would call on the nation to slow down its advancement in technology and innovation. It makes trade an easy target.
“This is a political issue that (we’ve) been chewing on for more than 200 years,” said Farok Contractor, a professor of management and global business at Rutgers Business School in Newark. “Every political cycle this issue comes up.”
Trade takes center stage
This political cycle has been particularly vociferous.
Trump, the front-runner for the Republican nomination, has gone so far as to promise to repatriate Apple’s manufacturing from China. After winning the New York primary on Tuesday, he told supporters: ”Believe me, we are going to use our great business people to negotiate unbelievable trade deals so we bring our jobs back.”
Sanders, who is giving Hillary Clinton a spirited challenge for the Democratic nomination, sounded a similar note.
“From the very first days, I understood NAFTA and other trade policies were being written by corporate America for one reason,” he said at a press conference last month in Michigan, before citing four reasons. “And that is that corporate America made the decision that they didn’t want to pay workers in this country a living wage, provide health benefits, protect environmental standards, negotiate with trade unions, they didn’t want to do that.”
The message from both Trump and Sanders has appealed to Donovan. The 47-year-old Howell resident has worked for Verizon – and its predecessor Bell Atlantic – for 17 years. He said he struggles to keep up with the cost of living. And he has watched the company send jobs from its call center overseas.
“It’s not right,” he said. ”There’s enough people here who can handle the work.”
New Jersey reaps the trade rewards
The U.S. is squarely in the middle of the global economy. It is a member of the World Trade Organization, which spells out trade rules among 154 countries. And it has its own free trade agreements with 20 countries that are meant to even out the playing field and allow exporters to sell their products cheaper, Contractor said.
Contractor said the benefits are palpable. Americans have access to lower-priced goods, giving consumers more spending power. A recent check of Target’s web site, for example, found a Magnavox 46-inch-screen, high-definition television set on sale for $349.99.
Meanwhile, the impact of trade on New Jersey’s economy is hard to miss. The Port of New York and New Jersey, which includes the Port Newark-Elizabeth Marine Terminal, was the nation’s second-busiest in 2014 behind Los Angeles and Long Beach, California. Newark Liberty International Airport was the nation’s 11th-busiest cargo airport in 2012. Fort Lee has the nation’s fourth-most congested freight interchange at I-95 and Route 4, according to the U.S Transportation Department.
Retailers have built warehouses in New Jersey stocked with products made overseas. (Amazon, for example, opened a 1.2 million-square-foot warehouse in Robbinsville last year.) And foreign companies have set up U.S. headquarters in New Jersey. (Subaru of America, a subsidiary of Japan-based Fuji Heavy Industries Ltd., for example, is building a $118 million corporate headquarters in Camden).
Superior Environmental Equipment Corp. in Wall sells giant boilers that are made in Kansas and are used by hospitals and factories to generate high-pressure steam. It has eight employees in New Jersey.
Todd Miller, its president and a Millstone resident, saw trouble ahead. Many of his New Jersey customers were moving to lower-cost states. To make up for the loss, he began to sell in South America and Mexico, aided by free trade agreements that have reduced tariffs and lowered the cost of his product.
Exports now make up to 40 percent of the company’s sales, Miller said. He thinks it could be more if tariffs in other countries would come down.
“I would love to sell in Cuba, but we can’t, at least for now,” the 44-year-old Millstone resident said. “I’m hoping that changes soon.”
‘A giant sucking sound?’
Trade long has been a tough sell. Rutgers’ Contractor pointed to a letter written to the New Jersey Gazette in July 1787 from a citizen who bemoaned cheap British goods that flooded the market. More than 200 years later, Ross Perot warned of a “giant sucking sound” caused by U.S. jobs going to Mexico if NAFTA was enacted. As a third-party candidate in 1992, he received a respectable 19 percent of the vote.
BUCHANAN: Trump is right on trade
NAFTA, which opened the trade doors to Mexico and Canada, was enacted in 1994. And the debate between labor and business over its impact has been fierce. While Miller’s Superior Environmental Equipment Corp. recently inked a $1.3 million sale to a Mexico City paper mill, Royal Ingredients LLC., a sugar maker and distributor, said last month it would lay off 80 workers in Logan Township.
“The company is consolidating its production operations in its existing facilities in Mexico, the country in which its raw material is sourced,” the company said in a notice to the New Jersey Department of Labor and Workforce Development.
A company official didn’t respond to a request for comment.
Was Perot correct? Did NAFTA lead to job losses? The trade deficit with Mexico cost the U.S. and Puerto Rico 682,900 jobs from 1994 to 2010, including 16,800 in New Jersey, a study by the left-leaning Economic Policy Institute, a research group. (That amounts to about 1,000 jobs a year in New Jersey, a small fraction of the state’s 4 million total jobs).
Business groups don’t agree. The Business Roundtable, for example, said New Jersey between 2009 and 2013 increased its exports of goods by 34 percent and services by 25 percent. It helped the state’s trade-related employment grow 6.3 times faster than total employment from 2004 to 2013.
But even if it has helped to create jobs – after all, the U.S. unemployment rate of 5 percent is lower than it was before NAFTA took effect – American workers don’t feel richer. The median weekly earnings from the first quarter of 2007 to the first quarter of 2016, adjusted for inflation, has risen 0.3 percent a year, said Joel Naroff, an economist based in Holland, Pennsylvania.
“The simple fact is, people don’t see the benefits,” Naroff said. “If I lost my job making $80,000 a year working in a factory, and I’m making $30,000 now, there’s no way cheaper goods makes up for $50,000 in income.”
Giving up low prices
Why aren’t more Americans sharing the rewards?
Contractor said many corporations have taken the profit they’ve generated in the global economy, and, instead of giving workers raises or better benefits, have invested in technology to become even more efficient; rewarded shareholders by increasing dividends; and awarded executives bonuses.
Economists, however, don’t fully blame trade and warn against protectionism. The U.S. raised tariffs on European imports in 1930 to give the domestic economy a boost during the Great Depression, but Europe retaliated, which some economists think prolonged the downturn.
“We’ll have more income, but things are going to cost more,” said Steven Pressman, an economist at Monmouth University in West Long Branch. “That’s the double-edged sword of trade.”
Would you pay an extra, say, $300 if the Magnavox television were made in New Jersey? An extra $500 if the new Apple iPhone were made in California?
Jennifer Kackos, 42, of Lakewood, walked out of Walmart in Howell on a recent day after buying two greeting cards that cost 47 cents each. While she appreciated the savings to her pocketbook, she wasn’t sure if the trade-off was worth it.
“I have no problem paying more, for people to get better-paying jobs,” she said.
Michael L. Diamond; 732-643-4038; [email protected]
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