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The Fair Labor Standards Act of 1938 and Entrenched Inequality Between Nations

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During the discussion around my piece calling for international safety standards at the workplace with real enforcement teeth that could implicate American corporations subcontracting with unscrupulous employers, a reader suggested I read Augustine Sedgwick’s March 2012 article in International Labor and Working-Class History. Entitled “‘The Spice of the Department Store’: ‘The “Consumers’ Republic,’ Imported Knock-Offs from Latin America, and the Invention of International Development, 1936–1941,” Sedgwick gets at how U.S. labor law has entrenched unequal standards between nations.

The Roosevelt Administration made sure the Fair Labor Standards Act of 1938 would not cover foreign manufacturers importing goods to the United States. There was a fight over which version of the FLSA would pass. The Roosevelt Administration’s bill, originally sponsored by Senator Hugo Black before his Supreme Court appointment, applied it domestically only, but a House bill introduced by William Connery of Massachusetts eliminated the word “state” from the bill, which would have opened the door to international standards on any product imported into the United States.

Roosevelt pushed hard to squelch Connery’s bill because his administration saw a Latin America developing under U.S. corporate leadership as a good long-term strategy to rebuilding the American economy coming out of the Great Depression. The administration saw inequality as an inherent part of the international economy necessary for profit and thus had no problem writing legislation that encouraged the production of consumer goods for the American market overseas, even if they were produced in conditions that could lead to violent worker revolts. In fact, the exporting of violent worker revolt was a central administration strategy of the FLSA.

Black’s bill won out. The FLSA did a lot of good for workers in the United States, establishing a national minimum wage, overtime pay, and eliminating most child labor. Current minimum wage hikes are essentially revisions to the original FLSA.

The effect of all this on Latin American nations and their workers was highly mixed. It did start the process of industrialization for many nations that wanted to move away from agricultural economies. In order to manage the newly industrialized labor force, governments created social welfare programs that provided benefits to working-class people. On the other hand, it led to increased inequality and significant social dissent that fueled the rise of the Latin American left in the 1950s. Moreover, Sedgwick argues that the American creation of its consumers’ republic was intricately tied with American imperialism in Latin America, at first during the so-called Good Neighbor Policy years and especially in the Cold War.

Sedgwick doesn’t get into working conditions per se or the specifics of how this plays out in individual nations, but we see how the U.S. built significant pieces of the modern globalized economy during the late 1930s. The FLSA intentionally codified differences in labor in order to promote American corporate investment overseas and inexpensive consumer products for Americans. At the time, this was at least predicated on the idea of the American working class growing in consumer power and wealth. So for Americans at least, this program worked pretty well for forty years or so. But by the 1970s, that half of the equation seemed dispensable and instead American corporations simply moved all production to nations with cheap labor under an unequal system long promoted by the American government.

This helps elucidate the present, with downward pressure on wages and working conditions in the United States and dying workers in Bangladesh. I recommend reading Sedgwick’s article if you can, which you should be able to do if you have access to most any university library system. If you don’t, sorry. The academic journal system is somewhat less than ideal for disseminating relevant knowledge to the general population. And we know what happens to those who undermine that system.

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