DECEMBER 1997 · VOLUME 18 · NUMBER 12

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L A B O R

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BY THE END OF YEAR FOUR OF THE NAFTA CALENDAR, some 6,472 laid off workers in El Paso, Texas had been officially certified as North American Free Trade Agreement victims. Bienvenidos to ground zero of NAFTA.

THE NAFTA JOBS NUMBER GAME

THE LABOR DEPARTMENT Trade Adjustment Assistance program's (TAA) count of NAFTA-related job losses provides a starting point, but even a study commissioned by the Labor Department concluded that it undercounts NAFTA's victims. Several TAA limitations help explain this undercount: TAA certification requirements are tight, with two in five applications denied; Many of the workers that TAA relies on to file claims and to jump through bureaucratic hoops have limited literacy and English skills; TAA only covers workers who produce certain kinds of manufactured goods; and Only in 1997 did TAA even begin to consider the indirect job losses that occur when a plant relocates to Mexico and the plants that supply it close down. For these reasons, critics such as Public Citizen's Bob Naiman argue that government bean counters miss at least two lost jobs for every one that they certify. official response to these naysayers is that NAFTA has created many more U.S. jobs than it has destroyed. In a July 1997 study of NAFTA's first three years, the Clinton administration estimated that the trade accord created 311,000 U.S. jobs, or roughly twice the number of job losses that TAA has certified to date. The administration based this number on expanding U.S. exports to Mexico and Canada after NAFTA, estimating that a certain number of new workers were needed to supply every $1 million in expanded exports. Using a similar method, state officials estimated that rising Texas exports have yielded 40,000 new Texas jobs under NAFTA, or some three times the state's TAA-certified job losses. Critics liken this method of counting jobs to a magic bank account in which deposits are always recorded but withdrawals are ignored. The Economic Policy Institute (EPI), a labor-backed think tank in Washington, D.C., charges that the Clinton administration pads its numbers by counting job gains attributed to expanding U.S. exports to Mexico and Canada without counting the job losses associated with rising imports from these NAFTA countries. (U.S. imports from the NAFTA countries have risen much faster than U.S. exports to Mexico and Canada.) An EPI study that count both imports and exports concludes that NAFTA has cost the United States a net loss of 394,835 jobs. "A Latino Review of President Clinton's NAFTA Package," a 1997 study put out by the National Council of La Raza (NCLR), the San Antonio-based William C. Velasquez Institute and UCLA's North American Integration and Development Center, concludes that NAFTA's first three years resulted in a smaller net loss of 91,000 U.S. jobs. -- B.M. & A.W.

151,256 PINK SLIPS SERVED

By December 1997, the U.S. Labor Department's Transitional Adjustment Assistance (TAA) program -- which systematically undercounts job losses -- certified that 151,256 U.S. jobs had been lost to NAFTA-related imports and plant shutdowns. The hardest hit sectors were garments, electronics and car parts. Texas topped the job-loss list, with 12,800 stiffed workers, about half of them in El Paso.

At 6,472 certified NAFTA job losses and counting, El Paso is NAFTA's undisputed job-loss capital, leaving No. 2 ranked Syracuse, New York (with 2,619 casualties) in a cloud of Southwestern dust.

El Paso Mayor Carlos Ramirez and local activist Cindy Arnold of the labor advocacy group Mujer Obrera (or "Working Woman") predict that the local NAFTA toll will reach 10,000 jobs once all 1997 layoff claims are processed. Kathleen Bombach, who directs a worker retraining center at El Paso Community College, estimates that another "20,000 jobs are vulnerable to permanently leaving El Paso over the next five years." Noting that the value of traded goods passing through El Paso more than doubled in NAFTA's first four years, Mayor Ramirez recently said, "We on the border who facilitate this trade are not receiving the benefits."

El Paso's unenviable status makes the largest U.S. city on the Mexican border an unwilling testing ground for labor promises that the Clinton administration made in selling NAFTA. President Clinton promised that new funds and institutions would nurse the wounds of workers who would be left behind as trade and jobs reshuffled across international borders. Of particular concern were the families that rely on the kind of low-skilled manufacturing jobs that have been El Paso's mainstay.

TWIN CITIES

Though its 670,000 inhabitants make it the nineteenth largest U.S. city, El Paso lives in the shadow of the 1 million residents of Ciudad Juarez, located just across the border. Juarez is where the first maquiladora twin plant was built in 1968. Under the maquiladora system, Mexican workers assemble U.S. components into finished products that are shipped back to the U.S. market. At the border, U.S. Customs agents only impose import duties on the value of the work that the Mexicans performed.

A low-skilled, low-wage Latino workforce fuels El Paso's economy, too. One-fourth of the adult workforce never completed ninth grade and 66 percent do not speak English. Nonetheless, El Paso manufacturing jobs grew 50 percent in the 15 years prior to NAFTA, fed by abundant cheap labor. Of the 100 largest U.S. metropolitan areas, El Paso ranks dead last in per capita income.

MADE IN THE USA

The garment industry developed an early appreciation for El Paso's low-cost workers. In a labor-intensive industry with well-established technology, apparel companies were among the first to shift jobs overseas. Between 1962 and 1989, U.S. apparel employment fell 14 percent. This job flight was accelerated by a pre-NAFTA tax break that allowed garment sweat shops to function like maquiladoras. So long as foreign workers assembled garments from U.S.-cut fabric, customs agents just taxed the imports on the value added abroad.

During this period of garment job flight, El Paso's garment employment more than doubled, as this border city developed a reputation as the cheapest place to sew clothes with a bona fide "Made-in-USA" label. Blue jeans in particular were internationally equated with the "USA" label, and El Paso became the largest U.S. jeans producer and the third largest U.S. garment worker employer (eclipsed by New York and Los Angeles). As recently as 1991, Levi Strauss, Lee, Wrangler and Sun Apparel emerged from a U.S. recession and invested in major plant expansions in El Paso. An economic analysis of El Paso published by DRI/McGraw-Hill a few months after NAFTA took effect optimistically called apparel one of the few El Paso industries "capable of competing in the world market."

Not so.

JOBS GONE SOUTH: States With Most Nafta TAA-Certified Layoffs
Texas	12,800
Pennsylvania	12,788
New York	12,032
N. Carolina	11,901
California	7,773
Georgia	6,586
Indiana	6,077
Tennessee	5,786
Arkansas	5,397
Ohio	5,012
Source: U.S. Department of Labor

Under NAFTA, garment jobs have fluttered to a heap on El Paso's cutting room floors. El Paso's minimum hourly wage of $4.75 is more than the minimum daily wage just across the river. NAFTA did not create this wage gap, but it did eliminate import duties on Mexican garment imports and assure investors that the economic terrain, in both Mexico and the United States, would not change any time soon. While importers used to pay a tax on the value added by Mexican assembly workers, under NAFTA no import duty is charged on garments assembled in another NAFTA country. Predictably, NAFTA has shifted garment jobs to Mexico from Central America, the Caribbean and El Paso.

LEAN, MEAN JEANS

El Paso's worst blow hit on November 3, 1997, when the world's largest brand-name apparel maker announced the closure of 11 U.S. plants that employ 6,395 workers. El Paso is home to three of the doomed Levi Strauss & Co. plants, which employed more than 1,500 workers. "This is not job flight," Levi Chair Bob Haas said, blaming the shutdowns on excess capacity and sluggish demand. Nonetheless, after the layoffs the company will have more foreign than domestic workers for the first time. Levi handled its latest shutdown wave carefully, after having been caught with its dungarees down in a 1990 closure of a Dockers pants plant that employed 1,150 workers in San Antonio, Texas. Mexican-American women there, who say their jobs were exported to Costa Rica, charge that they received no notice of the layoffs, in violation of the 1988 Worker Adjustment and Retraining (WARN) Act. The laid off San Antonio women organized Fuerza Unida ("United Force"), an advocacy group that uses boycotts and demonstrations to back demands for a better severance and retraining package. Their favorite placard says, "Zip up Levis, your greed is showing."

This time, Levi promised its latest round of laid off workers a $200 million benefit package, almost twice the $105.8 million compensation package that the company paid to departing President Tom Tusher in 1996. The package for lower-level employees works out to an average of $31,274 a worker in career counseling and severance pay.

Calling Levi's new package "good," Fuerza Unida organizer and former Levi worker Viola Casares says her group has asked the company to negotiate a similar package for its former workers in San Antonio.

Levi spokesperson Celso Martinez declined a request for a Monitor interview. "The deck is often stacked against my company," he said. "I'm not sure that participating in something like that would be in the company's best interests."

Mujer Obrera also is organizing some of about 200 workers who were laid off in August 1997 by Sun Apparel, which produces clothes for the Arizona, Polo, Sasson, Fila and Hunt Club labels. The group is demanding that Sun finance six months of health insurance, severance pay to workers with a five years or more with the company and bilingual training programs.

Sun's personnel manager, Doris Nelms, says the company has shut down El Paso plants before and does have plants in Mexico, but the recent lay off was just seasonal. "We've recalled some of those workers back, but that's hard to do now under NAFTA because they're all in school and don't want to come back," she says.

Asked if the company provided severance packages with layoffs, Nelms asked, "Where you calling from, again? In Texas, we don't have anything like that."

"But," she adds, "we did offer completion bonuses" to workers laid off from the shut-down plants.

"I know Mujer Obrera says NAFTA is a failure but you can talk to other people who have been through NAFTA [the Transitional Adjustment Assistance program] and have been retrained and gotten a better job," Nelms says. "A lot of garment people don't speak English or have a high school diploma. They're just not offering enough training for people to change their lives. We offered English classes at various levels, but the participation just wasn't there," she says. "Whoever did NAFTA, the theory was good, but they didn't look at the language barriers. I don't think it occurred to them." Nelms declines to comment on Mujer Obrera's demands of Sun Apparel.

El Paso Apparel Jobs Unravel After Nafta
Company	Layoffs
Levi Strauss & Co.	1,600
Sun Apparel	950
East West Apparel	425
Farah	400
El Paso Apparel	400
Stephanies	315
Sierra Western	250
Tex-Mex Apparel	230
Eagle Garment	205
DP Cajal's	188
Shaneco	160
Final Finish	100
Stitches	90
Superior Solutions	70
Adrian	70
MBCA	40
Christian Fashions	50
WTTC	40
Border Apparel	38
Wrangler	30
Southwest Cutting Service	30
Jar-Car	30
ADA Garment	30
Contract Apparel	25
Cutting Services	20
Source: Mujer Obrera [NOT TAA NAFTA-CERTIFIED]

FIRED NOT REHIRED

Low-skilled U.S. workers who have received NAFTA pink slips say that they are not being rehired to fuel a NAFTA export boom. "A Latino Review of President Clinton's NAFTA Package," a 1997 study by the National Council of La Raza (NCLR), the San Antonio-based William C. Velasquez Institute (formerly the Southwest Voter Research Institute) and the North American Integration and Development Center at the University of California-Los Angeles, concurs. It found that:

• NAFTA preys disproportionately on low-skilled, minority workers who cannot qualify for new jobs without substantial investments in training;

• Language barriers and poorly designed TAA training programs have failed to prepare Latinos for new job markets; and

• At most 20 percent of certified NAFTA victims return to work within 60 days of being laid off.

The very people that the TAA program is supposed to benefit are among the program's fiercest critics. In 1995, Farah moved an El Paso garment plant to Mexico, leaving behind 340 certified job casualties. One of them, Maria Fernandez, broke into tears in November 1997 as she told a Texas Senate NAFTA committee about the impact of losing her job of 23 years.

"There are many workers, the majority of whom are women, who have lost their jobs because of NAFTA," Fernandez testified. "When they laid us off, they told us that they were going to teach us English and help us get a GED [high school Graduate Equivalency Degree] as well as give us training for another job." But these promises have unraveled, she said.

"Now [these laid off workers] are exhausting their benefits, but they can't find a job because they didn't receive adequate training. Many of these workers are about to lose their homes or are having their utilities cut because they don't have any income," Fernandez testified. "This isn't what we were told would happen with the program," she said.

"We have had to survive and provide for our families on an average of $100 a week for nearly two years because we know that we need training to get a job," testified fellow El Paso NAFTA casualty Emma Duarte. "I get $82 a week and sometimes my check has been held up for up to six months."

Duarte and Fernandez gave Texas senators a scathing review of a retraining program the women were finishing that was supposed to move unemployed garment workers into child care jobs. "We have had to constantly demand that it be redesigned to meet the demands of child care employers who don't want to hire us -- older, Spanish-speaking displaced women workers -- unless we have much more training than the younger native English-speaking workers," Duarte testified. She estimated that program participants need 16 months of training to land a child care job, but the Texas Workforce Commission, which administers the program, would only fund it for three and one-half months.

"Texas was not prepared for the numbers of people affected in such a short time," says Bill Arballo, of the local UNITE garment union. "There was insufficient staff and training at the Texas Workforce Commission. People were lost in the shuffle and gave up on filing" for benefits, says Arballo.

After spending $18 million on retraining in El Paso in NAFTA's first three years, the federal government has pledged another $4.5 million to take another shot at training laid off workers for new jobs. Kathleen Bombach, director of El Paso Community College's worker retraining center, told Texas senators that TAA's 18 months of income support and 24 months of educational benefits "is a workable solution for a laid off auto worker with a high school diploma and native English-speaking capacity." But "it has proven to not work for the dislocated worker population in El Paso."

NAFTA's "burdens have not been taken seriously by the federal government," state Senator Eliot Shapleigh, D-El Paso, said at the hearing. "What we've done is NAFTA on the cheap."

"There is no doubt but that we need to continue to put pressure on the Clinton administration to live up to the commitments made before NAFTA," agreed committee chair, Senator Carlos Truan, D-Corpus Christi.

Trinidad Muñoz of the Consumers Group of El Paso says this criticism is misplaced. "Companies like Levi Strauss had these shutdowns in mind for many years," he says. "These companies should retrain these workers before they put them out on the street. Instead, they wait until the last minute and then clamor for federal retraining money."

BROKEN PROMISES DERAIL FAST TRACK

The perception that the Clinton administration failed to deliver on its NAFTA-related environmental and labor promises is widespread among Democrats and Latinos. This view helps explain why the administration, which lined up the needed NAFTA votes in 1993, failed to win the "fast-track" authority that it sought in 1997 in order to extend NAFTA to countries throughout the Americas. Two "commitments the Hispanic community had previously gotten from the administration didn't materialize," noted NCLR President Raul Yzaguirre, explaining why fast track failed to attract the Latino support that NAFTA did four years earlier. "One was adjustment assistance, which is a way of retraining individuals who had lost their jobs through free trade. And the other was something called the North American Development Bank [NADBank], which is a way of creating jobs for those areas that were negatively impacted by free trade. None of those came into being."

Bill Medaille is a member of the Democracy Teach-In Council, which is hosting nationwide teach-ins on the rise of corporate power in the United States. Andrew Wheat is associate editor of Multinational Monitor.