Marginal Industries, Low Wages, and High Risks
Tyler, Gus
In 1956 about two out of every three Americans lived in a metropolitan area. The greatest growth since 1950, however, was not in the central cities themselves, but in the surrounding country....
...These population shifts produce profound changes in living habits, culture, economy, and politics—changes so rapid and radical that unless they are anticipated they can overwhelm the civilization from which they spring...
...These latter can administer prices...
...Talent and taste, brains and brass, services and servicemen, gossip and gospel, museums and libraries and schools, speed and spark and specialists are at the core of these industries...
...So much wordage goes toward discussion of steel, auto, coal and chemicals—the giants of our economy—that the public often forgets that these are not the major employers in America...
...Unions could then negotiate more rewarding contracts because the wage differential between union and non-union areas would be offset by the advantages of the metropolitan climate...
...Uncertainty over the product and the inputs causes a manufacturing establishment to need flexibility...
...A more realistic approach, however, must differentiate between the wages of workers in mechanized monopoly industries and in wage-oriented competitive industries...
...Fourth, New York City is not a center of basic industry in which wage levels are relatively high even for unskilled and semi-skilled labor...
...In a summary statement of findings, Max Hall, editor of the volume, states this central thesis: In all three, the activities which took most readily to the Region tended to be activities resulting in products whose characteristics could not be accurately anticipated—products, that is, which were unstandardized...
...the standardized work seeks the wider open spaces...
...Why, in each, do certain products and certain stages of production gravitate into the metropolitan region...
...But the argument of Made in New York is not the whole truth...
...The 25 per cent profit return on original investment not uncommon in steel and autos as contrasted with the one per cent profit in garments does not derive from an inherent virtue of metal over fabrics, but from the monopoly character of the former and the competitive character of the Iatter...
...A primary step in relieving the oppressive poverty of this one-fifth of the nation (not confined to the South but all too present in the streets of our greatest metropolis) is to raise the Federal minimum wage and to extend its coverage to the millions of workers who are not included under the present provisions...
...This thesis contains a large grain of truth...
...The rural population of America, then, has once again shrunk, both absolutely and also relative to urban population...
...by 1960 many of these newly developed suburban areas were officially classified as urban...
...A high-wage contract, strictly enforced, sometimes means automatic bankruptcy...
...If the products created by low-paid workers are vital to our society—such commodities, for example, as food, fibres, wood, tubes, bulbs, transistors, dresses, overalls, shoes, gloves, and diapers—then society has no right to victimize these workers because their industries are competitive and defy automation...
...Made in New York discusses these three highly mobile industries in an attempt to answer one major question: * Made in New York: Case Studies in Metropolitan Manufacturing, by Roy B. Helf• gott, W. Eric Gustafson, James M. Hund...
...Actually, the South is merely the most militant and effective spokesman for a "rural" point of view that acts as a nineteenthcentury drag on a twentieth-century civilization, as an agrarian weight around the neck of the metropolis...
...Made in New York directs our attention to the millions upon millions of workers who earn their livelihood in the usually undiscussed segments of the economy...
...Fully half of the increase occurred in territory listed as rural in the 1950 census...
...A second step is to encourage rather than discourage unionization outside the already well organized areas like New York...
...Federal (or state) legislation or court actions which hinder union organizing efforts in the generally unorganized sectors of the nation not only keep wage levels low in these sectors but depress wage levels nationally...
...The special response of our society must take the form of planning, partly localized and voluntary but mainly over-all and governmental...
...Harvard University Press...
...11I In most discussions of wages in America, only the average earnings of workers are considered...
...Hence, these industries do not offer competition in New York for the available labor supply...
...In a given industry, such as dresses, coats, toys, novelties, dolls, plastics, the New York wage generally tops the national wage, thanks to the work of unions in these nationally competitive, traditionally sweatshop trades...
...But the vast number of service trades in New York lower the wage level first because these sectors of the economy generally lag behind manufacturing and secondly, because a sizable portion of income in these trades consists of tips and meals rather than wages...
...Styles to steal are as vital to the dress house as voluminous photo agencies to the huckster...
...c) the plant cannot duck and dodge and disappear and reappear to play an endless game of cat and mouse with union organizers...
...Even where the New York wage in services tops other parts of the country, again because of unionization, the high proportion of workers in such trades in the metropolitan region tends to depress the city average...
...Third, these light industries producing easily transportable commodities face national—and international—competition...
...b) the labor factor is relatively small as part of total cost because operations tend to be highly mechanized and automated...
...The answer is that New York is both—the high-wage end of low-wage industries and trades...
...Actually, it ranks 19th among America's cities in terms of wages...
...Lack of unionization in Mississippi or Georgia directly affects earnings in Brooklyn and the Bronx...
...This explains the continuing debate as to whether the metropolis is a high-wage or a low-wage area...
...This tawdry aspect of the New York economy is somewhat obscured by the book's emphasis on the city as a high-wage center...
...Made in New York,* the second volume of this series, places three metropolitan industries under the microscope: garments, printing-publishing, and electronics...
...And the percentage of people living in those great agglomerations known as metropolitan areas has increased, thanks primarily to the urbanization of the suburbs...
...The special character of metropolitan problems lies in their complexity, their inextricable intertwining...
...While part of this redistribution of wealth can be accomplished locally or regionally—through local minimum wage laws, housing, medical services—the ultimate solution must be national, because the root of the problem is not local but national...
...Low wages are paralleled by narrow profit margins, high seasonality, recurrent bankruptcies...
...First, New York is still a port of entry for migrants and immigrants...
...Dresses subject to style changes, for example, have changing inputs of design, fabrics, dyes, tailorwork, buttons and finishing touches...
...And those portions that are muscular, sweaty, repetitious and uniform, tend to locate outside the Metropolitan Region...
...because they have been shifting industries locationally both within the region and between the region and the rest of the nation...
...In some parts of the country—notably in that great swath running from Alexandria, Virginia, to Portland, Maine—metropolitan areas are gradually fusing into a great super-metropolis, a megalopolis...
...These compose the external economies, the big come-ons for New York...
...In basic industries, wages tend to be higher for three reasons: a) management can establish "administered" prices...
...Uncertainty over the volume of output has a similar effect...
...In exchange, these women work for sub-standard wages...
...The greatest waves in recent decades have been the Negro and Puerto Rican...
...A schmooes at lunch time on the corner of 7th Avenue and 38th Street is as vital to a cloak and suiter as a Madison Avenue address to an ad agency...
...Alongside the men of talent and taste, the hucksters and the artists, there is in the metropolitan area a great reservoir of low-paid, unskilled laborers—and for this there are many reasons...
...the former cannot...
...A national statute would establish a firm base on which to erect a higher wage in areas that offer "external econ omies" to the manufacturer...
...In a city such as Cleveland, with its huge heavy industry plants, light industry of a highly competitive character with a high labor ingredient in its ultimate cost finds it almost impossible to flourish...
...New York has "internal" economies to offer: space and—sadly—cheap labor...
...The marginal and savagely competitive character of these trades places self-executing limits on union contracts...
...Twenty-five per cent of the workers in the United States are in manufacturing establishments employing less than 100 workers and a majority in establishments with less than 500...
...the former cannot...
...Just as small industry must lose out to oligopoly in the struggle for the market so, too, must the worker in the competitive, mobile, lowprofit trades lose his standing relative to the worker in the mechanized, immobile, high-profit industries...
...In more concise language, they can take advantage of external economies...
...While few of these have found their way into the skilled trades of printing and publishing, great hordes have come to garment manufacture and electronics...
...An understanding of the differing positions of competitive and non-competitive industries, of non-automated and automated industries in our economy, explains the curious wage paradox of New York: a high-wage city that ranks nineteenth among cities in the nation...
...Finally, the basic industry, highly automated with its uniformity of product, can rapidly increase its productivity year after year, while the smaller industries are often compelled to operate for decades under a compromised economy precisely because they turn out small lots of diversified goods...
...To foresee and provide for the coming crisis, it is desirable that we have some insight into the inner dynamics of the metropolis...
...11 The problem of the marginal worker arises in no small part from the fact that his marginal industry exists in an economy alongside of oligopolies...
...It is the workers in these latter industries who pose the problem of indigence even in the midst of an "affluent society" and who make up a major part of that one-fifth of the nation that is still ill-fed, ill-clothed, and ill-housed...
...And, like all other newcomers, they compose a low-wage group until such time as they learn skills, the language, and the cultural ropes...
...Edited by Max Hall...
...If you view manufacture as part art and part muscle, part inspiration and part perspiration, part invention and part repetition, part diversity and part uniformity, then those portions of manufacture that are arty, inspirational, inventive and diverse, tend to seek out and stick to New York...
...Thousands have turned to the service trades, culinary trades, hotels, hospitals, etc...
...These three were chosen because they have a heavy specific gravity in the area (28 per cent of the manufacturing employees of the region...
...I Although the essays examine three separate industries they all come to the same conclusion as to what in the New York climate attracts certain products and operations...
...the former cannot afford the same high wages because the profit margin is close, because labor is often a major cost factor, and because the end product is in fierce national and international competition...
...because they produce for national consumption and are therefore not tied to the city by force of a limited market...
...388 pages...
...The latter can guarantee or enlarge their share of the consumer dollar...
...Thus New York represents a high-wage sector of certain national industries and trades, but because of the metropolitan "mix," the relatively light sprinkling of heavy, automated, non-competitive industry, New York appears to rank low...
...The latter can afford higher wages because the basic cost is in equipment, plant and materials rather than in labor...
...These are the forgotten men, a good many of them in New York City, of our allegedly affluent society...
...They reach out for unskilled, often female, labor—offering a special inducement in the form of proximity, late arrival, early departure, and minimal penalties for days off when family life becomes demanding...
...Second, these newcomers tend to settle in ghettoes—by choice or necessity—and to create pockets of cheap labor...
...These industries are marginal, living on marginal populations, constantly threatened by the even more marginal sectors of the same trade living in even more marginal cultures...
...Light industry entrepreneurs (and New York City manufacture is predominantly light industry) tend to set up shop in the midst of or within walking distance of these newcomer communities...
...A third step is to use governmental power to tax the more affluent sector of the society to care for the needs of the less affluent...
...The making of [such] products required materials and labor and services that were not easily determined in advance...
...The workers in the latter industries suffer although many of them possess skills as great or even greater than those required in the basic industries...
...While the New York Region offers "external" economies of this sort, the argument goes, the region outside the Metropolis offers certain "internal" economies—one of which is cheaper labor...
...Rubbing elbows with others of their kind and with ancillary firms that exist to serve them, they can satisfy their variable wants by drawing upon common pools of space-labor, materials and services...
...Put differently, the unstandardized products and operations are city dwelless...
...Establishments for which uncertainty is a normal part of life cannot generally achieve a high degree of self-sufficiency...
...The ten volumes of the New York Metropolitan Region Study undertake to provide such insight—and to suggest the nature of the city's future...
Vol. 8 • July 1961 • No. 3
