Double-Edged Sword

Double-Edged Sword Finance & Development, December 2016, Vol. 53, No. 4

A more integrated global economy is affecting workers around the world

Slideshow: Globalization's Faces Globalization shapes lives in countless ways. Driven by the mobility of people, capital, and ideas and aided by information technology, it brings opportunities for a better life to some, dislocation and hardship to others.

In this article F&D profiles six people on five continents who—for better or worse—have been affected by globalization.

Some are struggling. In the United States, one worker lost his manufacturing job because of foreign competition but managed to land on his feet thanks to government-funded retraining. In Switzerland, new technology and the strength of the Swiss franc are forcing traditional Swiss watchmakers to confront a dual threat—competition from trendy smartwatches and cheaper labor from neighboring France. In Burkina Faso, a farmer’s ability to thrive in the global cotton market has fueled the economy’s growth. Both his livelihood and Burkina Faso’s economy, though, are threatened by competition from richer countries that can afford to subsidize production.

Others are benefiting—but the picture is often nuanced. In the Philippines, relatively low labor costs and a well-educated English-speaking workforce allow outsourcing companies to thrive. Peru has benefited from a dramatic rise in international copper prices, thanks mainly to China’s insatiable demand for metal. And in France, previously disenfranchised workers in a rough Paris suburb are now able to find jobs because of the introduction of ride-hailing applications like Uber.

Second actJohn Powers John Powers rises before dawn and travels 60 miles to his workplace in Pittsburgh, Pennsylvania. Some days, he doesn’t get back until 9 p.m. after a hard day installing electric gates. At age 60, the Air Force veteran earns $12 an hour—and considers himself lucky just to have a job.

“I’ve had five places shut down on me or have forced reductions in my working career,’’ Powers said on a recent Sunday, relaxing in an armchair by the fireplace in his tidy clapboard home in Rices Landing, a small town in southwestern Pennsylvania.

For generations, residents of Rices Landing and other communities along the banks of the Monongahela River were assured of well-paying work in coal mines and steel mills and the network of businesses that supported them, from equipment suppliers to power plants. That started to change in the 1980s, when the steel industry was decimated by overseas competition.

Today, the unemployment rate in Greene County, where Powers lives, is 7.1 percent, one of the highest among counties in Pennsylvania, which has a statewide rate of 5.7 percent.

Among the recent casualties of overseas competition was the zinc smelting plant in Monaca, Pennsylvania, where Powers worked for 18 years repairing machinery. The foundry, which recovered zinc from electric arc furnace dust in steel mills, fell victim to imports of inexpensive galvanized steel, which is coated with zinc.

The owner, Horsehead Corporation, started to lay off more than 500 employees, Powers among them, in 2013 and closed the plant the following year. To compete with imports, Horsehead built a lower-cost smelter in North Carolina and moved production of zinc oxide to a factory in Canada.

“It scared the daylights out of me,’’ Powers recalled. “What was I going to do? I wasn’t 25 anymore.’’

A counselor at the Pennsylvania Department of Labor persuaded him to take advantage of a federal program to help workers displaced by foreign competition. Despite his misgivings about accepting government money for tuition, he enrolled in Pittsburgh Technical College to be retrained as an electrician.

It was difficult going back to school. He took courses in speech, writing, and mathematics along with electronics and physics. “I struggled,’’ he said. “There were things that just didn’t sink in. I had to go over them two or three times.’’ In the end, though, he decided he loved learning and earned his associate degree in 21 months, with a perfect attendance record and honors for high grades.

“When I graduated I was proud,” says Powers, an easygoing man with a toothy grin. “I did something I never thought I would do.”

Powers landed a job at a company that installs fences, where he had earlier worked as an apprentice. His hourly wage is half what he earned at Horsehead.

Many of his former buddies weren’t as fortunate, he says. Some have lost their homes. One, who teased him for going back to school, now makes $10 an hour as a laborer at a dairy farm.

“There’s just not a lot of money out there,’’ Powers said. “If you make $15 an hour around here, you’re doing real well. That used to be a starting salary at the steel mills.’’

He takes pleasure in his job, but the hard physical labor and long commute are taking a toll on Powers, who recently had surgery to replace an arthritic shoulder. In the past few months, he has applied unsuccessfully for more than 20 jobs closer to home, including one as head of maintenance at a municipal sewage-treatment plant.

Family ties keep him from looking farther afield. His father, an 84-year-old retired steelworker, still lives in nearby Beaver County, where Powers grew up. And Powers is engaged to be married, to Alisa Hatchett—a program supervisor at the state labor department who encouraged him to go to school.

All things considered, Powers says he’s fortunate. “Some people grumble,’’ he said. “I tell them, ‘The system did what it was supposed to do. It got you to school. Nobody’s going to guarantee you anything anymore. All they can do is help you.’ And they did.”

Reporting: Chris Wellisz

Photography: Martha Rial

Turbulent timesLionel Parmentier The watch...