“Those days are behind us”
Last week, Kroger announced that it would open an 80,000-square-foot fulfillment center in Maywood as part of its effort to establish a presence in the Chicago area, where it owns Mariano’s and Food 4 Less stores. Kroger brand stores are largely concentrated in central Illinois.
The company said it would hire up to 180 people at its Maywood facility, which appears to rival Amazon with its advanced technology. The camp has “more than 1,000 bots” zooming around in “huge 3D grids orchestrated by proprietary air traffic control systems,” Kroger officials said in a statement.
Kroger is the largest grocery retailer in America and (other than its various subsidiaries) has no physical presence in the country’s third largest metropolitan area. The Maywood warehouse will supply customers in this metropolis who order Kroger products online. And a plant this critical (Kroger calls it a “hub”) will only employ 180 people?
I have pondered this question in the context of the American Can Company’s old Maywood plant, which once spanned 18 acres along St. Charles Road and employed between 1,000 and 4,500 people in the village at any given point in its nearly 100-year tenure , according to the Chicago Tribune. The beer can maker left Maywood in 1975.
When the last remnants of the massive American Can factory were demolished in the 1990s, the two companies occupying the country in its place — Cintas Corp., a Cincinnati-based multi-billion-dollar uniform rental and supply company, and Aetna Plywood — occupied it Inc. , a wood products retailer, employed about 160 people as of 2005, the Tribune reported at the time.
It took a lot of tax breaks to attract these two employers, but the jobs just aren’t the same. They don’t pay as well as the old, more affluent ones, meaning they don’t create downstream small business economies where well-paid industrial workers can spend their hard-earned cash.
My longtime neighbor, Robert Scales, worked for American Can for almost 30 years. He also served as a Maywood trustee in the 1970s.
Scales told the Tribune what he told me in a casual conversation. Back then, Maywood had two movie theaters and two grocery stores—a Jewel and an A&P. Now there are no theaters or grocery stores.
Economics professor Scott Galloway points out in his haunting 2017 book, The Four: The Hidden DNA of Amazon, Apple, Facebook and Googlethat in our current economy it takes far fewer workers to get rich.
“While billions of people derive significant value from these companies [Amazon, Apple, Facebook and Google] and their products, worryingly few reap the economic benefits,” writes Galloway.
“General Motors has created economic value of approximately $231,000 per employee (market cap/workforce),” he adds. “That sounds impressive, until you realize that Facebook has created a company worth $250 million per employee… or almost 100 times the value per employee of the organizational icon of the last century. Imagine the economic output of a G-10 economy generated by the people of Manhattan’s Lower East Side.”
In 1964, when AT&T was the country’s most valuable company, it was worth $267 billion in 2015 and employed nearly 760,000 people, media scholar Robert McChesney and journalist John Nichols explain in their 2016 book: People Get Ready: Fighting a Jobless Economy and a Citizenless Democracy.
In 2015, Google was the country’s second most valuable company, “doing much of what AT&T had done fifty years earlier and then much, much more.” However, Google had a “market value of $430 billion and employed approximately 55,000 people, which is 7 percent of AT&T’s salaried workforce in 1964. For every Google employee today, AT&T had 14 employees five decades ago.”
From 1970 to 2017, manufacturing’s share of total employment fell from about a quarter of all workers in the United States to just under 10 percent – a decline seen across the industrialized world.
What happened? Economic researcher Aaron Benanav provides what I believe to be a credible explanation.
Benanav disagrees with the widely held belief that artificial intelligence, such as the robots whizzing around Kroger’s 3D grid, and the practice of outsourcing jobs to other countries are largely responsible for this disappearance of industrialized labor.
If anything, argues Benanav, they are symptoms of a deeper cause: global competition (more firms in more countries saturating an increasingly integrated market with the same cheaper goods).
Beginning in the late 1960s, the rate of profit in the United States began to decline due to increasing competition from firms in other countries that caught up with the United States after World War II.
Global competition led to a surplus of goods or overcapacities, which led to lower margins. Lower margins meant less capital investment, cuts in labor costs (which meant companies went to war with unions and chased cheaper labor abroad), and increased automation to discipline workers and boost productivity rates in a world of increasingly declining earnings.
Increasing overcapacities, the author writes in his book 2020 Automation and the future of work“Explains why deindustrialization has been accompanied not only by sustained efforts to develop new labor-saving technologies, but also by the construction of gigantic labor-intensive supply chains – typically with even more damaging environmental impacts.”
The process of deindustrialization might as well be synonymous with economic stagnation, writes Benanav.
“When the growth engine of industrialization has stalled due to the replication of technical capacity, international redundancy and fierce competition for markets, there is no substitute for it as a source of rapid growth,” he argues.
“Instead of a redistribution of workers from low-productivity jobs to high-productivity jobs, the opposite is happening. Workers congregate in low-productivity jobs, mostly in the service sector. As countries have deindustrialized, they have also seen a massive build-up of financialized capital that seeks returns from owning relatively liquid assets rather than investing in new fixed capital for the long term.”
About a decade after American Can closed its Maywood plant, it morphed into Primerica, a financial conglomerate that laid the groundwork for the founding of investment bank Citigroup. You may recall that Citigroup was one of the big banks responsible for the reckless mortgage lending that devastated black and brown communities like Maywood in the 2008 housing crisis.
There was nothing glamorous about factory work, and most workers knew it. Many people hated the work—despite the pay and the perks. Capitalists were cruel, as capitalists always have been. But looking back to the days of American Can half a century later, it’s hard to deny that at least society (meaning the majority of people) got something out of the deal.
My great uncle died last year. He was about 80 years old. While we were cleaning up his Maywood home, I stumbled across his old American Can Co. employee handbook. The pamphlet was among crumpled stacks of paper containing old Pan American Airways tickets to destinations as far away as people with a single blue-collar job around the world able to travel, forming the basis of a life sewn into the fabric of a community – where the factory workers were also the village administrators, the deacons in your church, the coaches in the local youth sports leagues. Back when you knew people who worked in the city‘s huge warehouses. Today the buildings are just empty, impersonal giants.
“Those days are behind us,” former Maywood Mayor Henderson Yarbrough said, referring to the Chicago Tribune’s American Can for that 2015 article.
The big question now is what lies ahead.
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