Op Ed

How Business Leaders Caused Black Poverty

Union busting, opposition to minimum wage helped drive inequality.

By - Dec 29th, 2019 05:41 pm
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S. 1st. St. Photo by Jeramey Jannene.

S. 1st. St. Photo by Jeramey Jannene.

The Metropolitan Milwaukee Association of Commerce (MMAC) recently acknowledged Milwaukee’s extreme racial inequality and the need to address it. It’s about time.

Several surveys, including a recent one sponsored by the MMAC, conclude that Milwaukee is the worst city in the United States for African Americans. Milwaukee’s corporate leadership has responded with a commitment to hire more people of color. Frankly, that’s not nearly enough.

African American poverty and Milwaukee’s extreme segregation are the result of low-wage, anti-union strategies and public policies promoted and supported by the state’s business community over many decades. Unless these are reversed, people of color will continue to get short-changed and the city will continue to be one of the nation’s poorest and most segregated.

In the early 1970’s Milwaukee black poverty rate was well below the national average. Black family income was well above it. In large part this was because Milwaukee’s African American workers labored in highly unionized sectors of the economy. What happened?

Instead of investing in innovation, profitable, iconic Milwaukee-based firms like Briggs and Stratton, A.O. Smith, Master Lock, Allen Bradley and Badger Meter pursued a low-road strategy. They abandoned and attacked their unionized workforces, moving production to low-wage, non-union states or even out of the country to Mexico and China. Some like the Amalgamated Meatpackers Association actually broke their unions. Others like Patrick Cudahy, Briggs, and Master Lock forced bitter strikes in an effort to slash wages and benefits. And it wasn’t just in manufacturing. Entire sectors of the economy that were unionized like grocery stores and residential construction became non-union and low-wage.

But that’s not all. These very firms, and their CEOs, like Bucyrus Erie’s Tim Sullivan, promoted free trade agreements like NAFTA that encouraged and protected capital mobility, but did not provide any protection for labor or the environment. They lobbied for favored nation status for China. As a consequence, between its passage in 2001 until 2013 Wisconsin lost 56,938 jobs to China, according to a report by the Economic Policy Institute.

Milwaukee’s companies were not following a global trend of busting unions and slashing wages. They were leading it. While companies in many developed countries like Germany located some production abroad, they continued to respect their domestic workforce’s unions and kept wages high. As a result, the United States has among the lowest union density in the world.

Since, “the last hired are the first fired,” Milwaukee’s black workers, who were disproportionately employed in manufacturing, were devastated by this corporate divestment. UWM’s Center for Economic Development was not exaggerating when it reported that Milwaukee’s black community was experiencing a ”stealth depression.” Badger Meter’s CEO, James Forbes, recognized it when he said, “We (corporate Milwaukee) are responsible for the city’s problems (black poverty and the black white employment gap)” in explaining his participation in Sustainable Milwaukee in the early 1990’s.

And let’s not forget that Milwaukee area business leaders like Rich Meeusen successfully lobbied for Wisconsin to become a right-to-work state, that has further contributed to our wage stagnation. They also financed politicians like Scott Walker and Robin Vos who have refused to raise Wisconsin’s minimum wage (currently at inflation adjusted federal rate 1960s levels) for more than a decade and even passed legislation eliminating the right of local government to set living wage standards.

As a result, Wisconsin workers went from being unionized at rates well above the national average, to now nearly 20 percent below the national average. Under these ‘reforms’ Milwaukee’s Black poverty rate soared and Black family income fell to almost 30% below the national average.

For more than three decades the MMAC and its corporate leadership pursued right-wing activist Grover Norquist’s dictum to “shrink” government “down so we can drown it in a bathtub.” They lobbied for reductions in corporate tax and state income tax rates. As revenue declined, they demanded that state and local governments, which employ higher percentages of black workers than the private sector, slash employment, forcing cuts in necessary social investments in infrastructure and public education. And, of course, rather than investing in the Milwaukee Public Schools, the system that educates the state’s largest number of black children, they promoted privatization efforts through voucher schools.

The area’s business leaders have also pursued a number of highly publicized, but largely unsuccessful, initiatives they claimed would address black joblessness and underemployment. The Grand Avenue Mall’s festive marketplace, the Convention Center, the short-lived Initiative for a Competitive Milwaukee, and most recently the Foxconn debacle are just a few of these elite driven projects. None have effectively addressed the damage done by the business community’s pursuit of low-wage, anti-union strategies.

History demonstrates that real social change is never the result of the benevolent actions of the corporate elite. Rather, progress is the result of social movements. As escaped slave and abolitionist leader, Fredrick Douglas, said, “Without struggle, there is no progress.” Father Groppi and the NAACP Commandos successful fight for equal housing legislation demonstrated the power of an organized social movement. More recently the Fight for Fifteen led by fast food workers has led to real change. If Milwaukee’s corporate leadership is sincere in wanting to address the city’s segregation and African American poverty it needs to support the Fight for $15 living wage movement, recognize the right or workers to organize unions and engage in collective bargaining and support increased investments in public and public higher education.

Categories: Op-Ed, Politics

5 thoughts on “Op Ed: How Business Leaders Caused Black Poverty”

  1. blurondo says:

    This is an outstanding piece. In a few paragraphs it summarizes the forces that have made the unfair and troublesome conditions that so many Milwaukee citizens face.
    It should become part of the “Our Story” section of every Milwaukee corporation’s web site.

  2. Barbara Richards says:

    Thanks, Naomi Klein’s Shock Doctrine highlights the three strategies of the Chicago School of Economics( Milton Freedman): Union Busting, De-reguilation, and privatization. All three above here and happening right now in Venezuela.

    I am starting the conversation of “CEO’s for MKE!: Pay it forward”. One pay it forward idea is gifting a % of their salary to fund Free bus passes for low income persons: Vets and SNAP/ WIC card holders receive an MCTS pass.

  3. Billlau says:

    All of these things are true. What other factors are the authors leaving out that also impacted this situation to fit their narrative?

  4. sbaldwin001 says:

    It’s not so simple, and there is another side. The plain fact is that wages in other parts of the world are lower than in the United States, and if we do not utilize this then our competitors will. (We can debate later about “utilize” versus “abuse” and about the role of environmental, health and safety standards.)

    Faced with the reality of a wage differential, many executives decided to outsource low skill jobs in order to keep the high skill jobs like engineering and product development. The alternative was losing the entire business. (Schwinn in Chicago lost its entire American business when its bicycle manufacturing workforce was unionized at automotive manufacturing wages.) Was there an awareness that African Americans would be disproportionately effected when Milwaukee jobs were outsourced? Probably. Was there anything that could have been done? Not a lot, but perhaps more than was done.

    Like Mr. Rosen and Mr. Summers, I lament the unsuccessful initiatives to recover our manufacturing base. However, I strongly doubt increasing the minimum wage to $15/hour is a solution. The cost of living in Milwaukee is very low and the skill set of our manufacturing workforce is not high. Modest wages and a strong work ethic may be our biggest selling points. Consequently, unions would be wise to concentrate on issues like training and the work environment rather than on wages if they want to keep jobs here.

  5. blurondo says:

    Perhaps it is “simple”:
    https://tinyurl.com/qsy8nqu

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