Nike and America's wage problem

Last Friday, President Obama chose Nike headquarters in Beaverton, Ore., to deliver a defense of his proposed Trans-Pacific Partnership.

It was an odd choice of venue.


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.

It's also true that just before the president spoke, Nike announced that if the Trans-Pacific Partnership is enacted, the company would create as many as 10,000 more American jobs.


But this would still be only a tiny fraction of Nike's global workforce. While Nike still makes some shoe components in the United States, it hasn't assembled shoes here since 1984.

Last year, Americans made only 1 percent of the value of Nike products that generated the corporation's $27.8 billion revenue. 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.

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 much of its production to Vietnam, where the minimum wage is less than 60 cents are 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. The company is only playing by the rules.

I'm faulting the rules.

I'll get back to Nike in a moment, but in case you hadn't noticed, America has a huge and growing problem of inequality. Most Americans are earning no more than the typical American earned 30 years ago, adjusted for inflation -- even though the U.S. economy is almost twice as big.


Since then, almost all the economic gains have gone to the top. The so-called economic recovery that began in 2009 has been notable for having had no affect on the wages of most Americans. Jobs are coming back, but wages are still stuck in the mud.

The president is upset with Democrats who won't support his trade deal. He should be angry at Republicans who won't support American workers.

Their obduracy has worsened the potential impact of the deal on the wages of typical American workers, and has contributed to the nation's wage problem.

Congressional Republicans refuse to raise the minimum wage, whose inflation-adjusted value is now almost 25 percent lower than it was in 1968.

They won't extend unemployment benefits, even though millions of Americans remain unemployed.

They refuse to invest in job retraining, which is necessary for Americans to upgrade their skills.


They won't enlarge the Earned Income Tax Credit. They won't improve the nation's infrastructure. They won't expand access to public higher education.

Here's where Nike comes in.

Now, congressional Republicans -- and the president -- want a giant trade deal that protects corporate investors but will lead to even more offshoring of lower-skilled American jobs.

We know that when Americans displaced from manufacturing jobs join the glut of Americans competing for personal service jobs -- retail, restaurant, hotel, hospital, child care, elder care and other such work -- their wages decline.

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

Without a higher minimum wage, an expanded Earned Income Tax Credit, affordable higher education and a world-class system of job retraining, most Americans will continue to experience stagnant or declining wages.


True, the Trans-Pacific Partnership would allow Nike and other American-based global corporations to import their products -- made in Vietnam, Malaysia, Indonesia and other low-wage countries -- more cheaply.

But don't expect those savings to translate into lower prices for American consumers. As it is, Nike spends less than $10 for every pair of $100-plus shoes it sells in the U.S.

Needless to say, the trade deal wouldn't require Nike to pay its Vietnamese workers more. Nike's workers aren't paid enough to buy the shoes they make, much less to buy exported U.S. goods.

It's not Nike's fault. As I've said, Nike is simply playing by the rules. But the rules are tilted against the interests of most American workers, and toward global American corporations.

Which is why, even six years after the start of the economic recovery, wages are still going nowhere.

Robert Reich, former U.S. Secretary of Labor, is professor of public policy at the University of California at Berkeley and the author of "Beyond Outrage," now available in paperback. His new film, "Inequality for All," is now out on iTunes, DVD and On Demand. He blogs at