The Wrong Kind of Magnetism

May 2nd, 2013 by Phil Mattera

In his State of Union address President Obama declared: “Our first priority is making America a magnet for new jobs and manufacturing.” Obama just repeated those words while nominating as Commerce Secretary a billionaire whose family business has pursued a very different goal: accumulating vast wealth on the backs of underpaid and mistreated workers.

Obama praised Penny Pritzker as “one of our country’s most distinguished business leaders,” adding: “She’s built companies from the ground up.  She knows from experience that no government program alone can take the place of a great entrepreneur.  She knows that what we can do is to give every business and every worker the best possible chance to succeed by making America a magnet for good jobs.”

What he didn’t say is that Pritzker, whose personal net worth is estimated by Forbes at $1.9 billion, sits on the board of Hyatt Hotels, which is the best known part of a business empire founded by her grandfather and his sons. Much less did Obama mention that Hyatt has been denounced by the union UNITE HERE as “the worst hotel employer in America,” because it has “abused workers, replacing career housekeepers with minimum wage temporary workers and imposing dangerous workloads on those who remain.” The union also criticizes the company for resisting worker organizing efforts and for taking a hard line in bargaining at those hotels where a collective bargaining relationship exists. UNITE HERE’s corporate campaign against the company is called Hyatt Hurts.

UNITE HERE has also targeted other parts of the Pritzker empire, including a manufacturing conglomerate called the Marmon Group, controlling ownership of which is now held by Berkshire Hathaway. The union blamed the Pritzkers for the decision by Marmon to shut down its Union Tank Car production facility in East Chicago and shift the jobs to Louisiana, where it had been offered some $63 million in tax abatements and infrastructure assistance. The union produced a film about the issue entitled “Show Us the Tax Breaks.”

The sad truth is that the behavior of Hyatt Hotels and the Pritzkers is far from unusual. Large corporations have no hesitation about eliminating or undermining well-paid jobs while shifting investment to areas where workers are weak and where public officials dish out lavish subsidy packages. Take Caterpillar. The company is currently taking a hard line in its contract talks with the Steelworkers union at a mining-equipment plant in Milwaukee it took over as part of its acquisition of Bucyrus International. Last year, Cat got a $77 million subsidy package to open a plant in Georgia that it undoubtedly assumes will operate non-union. Boeing, which built a new Dreamliner assembly line in South Carolina to get away from union workers in Seattle, this year announced a $1 billion expansion of that operation, for which it’s getting another $120 million in subsidies.

Foreign corporations are employing the same southern strategy. Japan’s Yokohama Rubber just announced plans for a $300 million truck tire plant in Mississippi for which the state legislature just approved some $130 million in subsidies. Toyota is getting a $146 million in subsidies for an expansion of its assembly operations in Kentucky.

If there is a manufacturing revival in the United States, it consists mainly of companies taking advantage of cheap, non-union labor and large giveaways of taxpayer money. And whatever growth is occurring in the service sector includes too many substandard jobs like those offered by Hyatt. If this is what Obama means when talking about making the U.S. a magnet for new jobs and manufacturing, that’s not the kind of magnetism the country needs. And we don’t need someone in the Cabinet who symbolizes that destructive process.

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