Why Are Manufacturing Jobs Really Leaving The US?
It’s no secret that many of the international trade deals made by the United States have hurt workers both here and abroad. Several political leaders have targeted deals like NAFTA, and identified them as the source of many labor issues, including diminished safety and environmental regulations, and a horrific race to the bottom for wages. There is more to this story, however, and trade deals which enable international mobility for corporations are only a symptom of a much more sinister problem. In an article originally published on the Huffington Post, Les Leopold, author of Runaway Inequality, investigated the root cause of declining wages, lax labor regulations and fleeing jobs. After an SEC rule change in 1982, hedge fund and private equity investors were incentivized to siphon as much wealth from companies they invest in as possible, so that they could then buy back its stock. This artificially inflates the value of shares and gives hedge managers and private equity managers an instant windfall. “In 1970, before stock buybacks became the norm, the pay gap between the top CEOs and the average worker was $45 to $1. Today it is an incomprehensible $844 to $1. So there’s a co-dependency between [...]