MOYERS: Across the country, many who think of themselves as middle class, like the members of this Lutheran congregation in Tamaqua, Pennsylvania, now feel they are being pushed down into the ranks of the working poor.
PASTOR FRED CRAWFORD: Everybody can't own the company. So some people have to get very rich for other people to make a decent living. And we just don't... we're not those folks.
MOYERS: In fact, the gap between rich and poor in America has doubled in the last three decades. It's wider today than it's been since the Great Depression. One important factor in this growing inequality is the new global economy.
CRAWFORD: Around here you get the idea that no matter who wins, we're somehow gonna lose. Because they're gonna find some way to make something cheaper someplace else.
JOE HARVILLA: Back when I was growing up, everyone had a job around the area. Now it's just everything is moving out of the area, it's going down south or it's going overseas.
MOYERS: Ask anyone around here what's happened to the local economy and they'll blame government policies like the North American Free Trade Agreement, or NAFTA, signed into law in late 1993.
CRAWFORD: I think NAFTA was the straw that broke the camel's back. The jobs had been leaving by that time. Steel had been pretty much shut down in Bethlehem. Mac Truck had moved south, had gone down to the Carolinas. But we still, in spite of having huge losses, we had some major employers in the area and one of those was Morgan's.
MOYERS: Today, the Morgan Knitting Mill, just outside town, is the last of twenty-five textile mills that sustained this community after the demise of the coal industry.
CRAWFORD: We had people in the parish who came out of high school 20, 30 years ago. Went to work at Morgan's and I think they expected to work there until the day that they retired. And I think NAFTA simply hastened the fact that that was not gonna be true.
MOYERS: At its peak, J.E. Morgan Knitting employed over 1000 workers. They produced thermal underwear and other apparel, making what once was considered a modest but living wage. Carol Moyer worked there most of her adult life.
CAROL MOYER: The wages were low but I worked there for 44 years, and I lived within my means. I think that's the whole thing. Living within your means.
MOYERS: Carol was laid off last winter. A total of 350 Morgan workers will be terminated by February. They've been told their jobs, which paid around $9 an hour plus benefits, are going to workers in Honduras, where the hourly rate is around 55 cents. Other work is said to be going to China, where the wages are even lower.
CAROL BOYLE: Offshore seems to be the thing with big business. We can't compete with that here. We have benefits. We can't live on 30, 40 cents an hour and no benefits. We can't do that here.
MOYERS: What happened in Tamaqua was that the multinational Sara Lee company bought the Morgan Mill four years ago for its apparel division. Around here, workers are convinced Sara Lee mainly wanted the patent on the so-called "waffle weave thermal underwear" that was invented at the Morgan plant.
CRAWFORD: We were not what they wanted. We were just part of the package. And we were the expendable part of the package. They wanted the patent to make the material. And once they got that, then we became expendable.
MOYERS: Three years after buying Morgan's, the Sara Lee company announced that the plant would be converted into a distribution center, with just a skeleton crew of employees.
JOAN GERBER: I fault Sara Lee because "Nobody doesn't like Sara Lee." Well, nobody in this area does. They pulled the rug out from under families. They left everybody in this insecure state and they don't look back.
HARVILLA: I'm not knockin' Sara Lee, but they don't know what they're giving up. Quality-wise, and everything else. I mean, it's amazing. You got a group of people that work together, and really try to put out the product. And they're not gonna do that over there.
MOYERS: The Sara Lee company declined to speak for this broadcast. But the company is hardly alone in sending manufacturing jobs overseas. Estimates of the number of jobs moved offshore vary widely, but range from half a million to as many as a million lost in the last 30 months alone.
ROBERT POLLIN: It is a deep problem. And the problem is that manufacturing jobs were good jobs. They were high paid jobs. You could lead a decent middle class life. A lot of them were unionized jobs. And those jobs are precisely the ones that are threatened by the fact that you can produce abroad.
MOYERS: Carol Moyer and other former Morgan workers once had jobs that placed them in the ranks of America's middle class. Now they are struggling to remain above the poverty line.
MOYER: I often thought, in the back of my mind, how could someone be on public assistance? How could someone... what they'd call relief in the old days. That's a shame. They should go get a job. Well, I look at these people differently now.
GERBER: Well, you take a person like myself, who worked all her life, and I had my pension plan put aside. And I always assumed that I would retire from this company when I was of age and then collect my Social Security and use my investments to subsidize that. And now I'm looking down the barrel at surviving on unemployment and a small pension from my husband.
MOYERS: The last 30 years have seen dramatic changes. Manufacturing jobs were the backbone of our middle class in the post-World War II boom years. Up through the 1960s, the average worker got a raise every year and there was less inequality between rich and poor than at any time in the nation's history.
THEA LEE, ECONOMIST: I think we're entering a scary era in the United States where inequality is growing.
LEE [CONGRESSIONAL HEARING]: Current trade policies are destroying the American middle class...
MOYERS: Thea Lee is an international economist with the AFL-CIO.
THEA LEE: Wages for the vast majority of workers are stagnating or falling. And a lot of wealth has been concentrated at the very, very, very top of the income scale. And we've got a whole array of policies trade, tax and others that are exacerbating that trend instead of turning it around. And it's something if we don't confront soon, I think we're gonna feel it pretty much in every piece of our daily lives.
MOYERS: Economist Robert Pollin says the very concept of free trade policy depends on government and society finding some way to make it up to the losers, since the loss of jobs at home to global competition is inevitable.
POLLIN: Orthodox economic theory tells us when you have free trade, you're gonna have winners and losers. And the most basic theory says the policy implication is not just free trade. This is Economics 101. It is free trade plus compensation for losers.
MOYERS: The problem, says Thea Lee, is that free trade policies have mainly had the winners in mind.
LEE: If we want to set as a goal of trade policy to protect good jobs here in the United States, to protect workers rights all over the world, to protect the environment, to nurture democracy and protect human rights, we can do that. What we've done instead is written a set of trade policies that are totally corporate-dominated, corporate-oriented, that have helped the multinational corporations make more money, have more mobility, more flexibility. They've weakened national democratic governments at the expense of pretty much everybody else.
MOYERS: The first Bush administration negotiated the North American Free Trade Agreement, and President Clinton fought to get it passed by Congress in 1993. Clinton and Congress also granted permanent trade privileges to China in 2000.
PRESIDENT CLINTON [FROM TAPE]: I think that the evidence is clear that not just in the long run but in the near run we'll have more job gains than job losses out of this…
MOYERS: The idea behind free trade is that corporations compete more efficiently when trade barriers and tariffs are lowered or removed. And as companies prosper, more jobs are created, both at home and overseas in places like Honduras.
But the net result is that agreements like NAFTA have encouraged companies to lay off American workers, produce goods more cheaply abroad, and then import the goods back into this country. Missing from the equation is what happens to the laid-off American workers.
GERBER: I mean, if they're going to ship all these jobs to China and then ship all the goods back here to be sold, not too many people in Pennsylvania can afford to buy them. They're unemployed.
LEE: That is exactly the dynamic, is that companies are firing their own customers. That they're taking a good job with good pay, somebody who has a home and spends money, buys a lot of goods, they're putting that person on the unemployment rolls, they're moving the production to a place where a worker is paid maybe a tenth of what the American worker had been paid. Doesn't really have enough money to consume the good that he or she is producing. And then they bring the goods back in.
POLLIN: It's certainly bad for the workers in the U.S. that lose their jobs. It is not bad for a lot of the workers in the poor countries that get the jobs. And they're poor. And it's good for them to have more job opportunities. Now their jobs aren't always good either. And I... they're under, a lot of them are under terrible conditions. Sweatshop conditions. But if they have decent labor standards, these are good opportunities. So that's the logic. You raise overall efficiency, meaning you have a bigger pie. And so out of that pie, you give a slice to compensate the workers that lose.
MOYERS: But how do you compensate a worker like Joe Harvilla? He's getting laid off by Sara Lee next month, after working 18 years at the Morgan Mill.
HARVILLA: I'm scared. I'm very scared, because I don't know what's gonna come down out of this.
MOYERS: Joe is 54 and has had five bypass heart operations.
HARVILLA: Where do I find a job? You know, if you hit 40, 45, they look at you like, "I want the younger people. They're gonna give me a lot of years." You know, but they don't realize that, like, people my age are harder working than the younger people. I put in 60 hours, 70 hours a week, I mean, constantly. I been working Saturdays and Sundays. You know what I mean? It's just, I don't know what I'm gonna do. I really don't. You know, it's stressful.
REP. TIM HOLDEN (D-PA): Pennsylvania has been the most adversely affected state in the union as a result of these trade agreements that we entered into.
MOYERS: Congressman Tim Holden, a Democrat, represents the district that's home to the Morgan Mill now owned by Sara Lee.
REP. HOLDEN: We've had literally thousands of people, just in this county of 150,000 population, who lost their jobs as a result of these misguided trade agreements.
MOYERS: Congressman Holden says there's evidence that the job loss is due to free trade policies. He points to a federal program called Trade Adjustment Assistance, or TAA, which provides money to retrain workers who lost their jobs to foreign competition.
REP. HOLDEN: We had 36 companies that were declared eligible for Trade Adjustment Assistance. Which means that the Department of Labor, which was pro-NAFTA and pro-permanent trade status for China, agreed that these jobs were lost as a result of these trade agreements.
MOYERS: In the last nine years, some 31,000 Pennsylvania workers qualified for retraining. But the funds are never enough and they keep getting cut back by Congress. Last year, Pennsylvania alone was $20 million short of what was needed to retrain workers under the program.
They had more people that were out of jobs than they had anticipated.
MOYERS: Paula Breiner used to work at the Morgan Mill. She almost missed her chance to be retrained as a medical assistant.
BREINER: Three days before I was to report to school here, they received a phone call here and I received a phone call saying the state was out of money and I could not go to school. So, my thing was I had to pay for my first semester.
MOYERS: After being laid off by Sara Lee, Liz Mihalick missed getting any retraining money when her previous school cancelled classes with no explanation.
LIZ MIHALICK: The time limit was up that I had to be enrolled. So, I lost all my benefits. So, I had to get a job and I'm still working. I work third shift and I'm putting myself through school.
MOYERS: Liz works the night shift at a direct mail company to pay for her retraining. She gets barely four hours of sleep a night.
MIHALICK: The poor always can get help. The middle class... it's like you make just a little over you can't get any type of help, financial help, medical help. And the rich always... they have the money to take care of themselves. So, it's like the middle class is kind of left out, I feel.
MOYERS: Even after being retrained, Paula and Liz can't expect to make as much as they did at the Morgan Mill.
MOYERS: While for the older laid-off workers, retraining is often simply impractical.
GERBER: My age limits what I can do. To be a CNA and have to move patients and lift patients, it's not gonna work for me.
HARVILLA: I want to go to school, but I can't. I have to find a job right away. I've got a family, wife and a daughter. And I have to find something to take care of my family.
CAROL BOYLE: If we still get out of school, where are we gonna go for a job? There won't be any jobs. You see? You know where I'm coming from on that?
MOYERS: The real problem with retraining is that, increasingly, the jobs simply are not there, and it's not only manufacturing that is going offshore.
LEE: Now we're starting to see the service jobs and the high-tech jobs also start to move offshore as companies start to take their back offices, call centers, accounting, legal, financial, architectural services are beginning to move offshore. And I think that's a very troubling trend.
PRESIDENTIAL CANDIDATE GEPHARDT [DEMOCRATIC CANDIDATE DEBATE]: Remember what Henry Ford said? "I gotta pay my workers enough so there is somebody to buy the cars they are making..."
PRESIDENTIAL CANDIDATE DENNIS KUCINICH: Cancel NAFTA, cancel the WTO.
MOYERS: We've been hearing many voices today being raised in favor of rolling back the clock on free trade and for revoking NAFTA and trade privileges for China. Economist Robert Pollin disagrees.
POLLIN: Because NAFTA has accelerated a process that's gonna happen anyway. What we have to do is think of ways to expand those types of jobs that are not exportable and turn them into decent jobs. There's no reason, for example, why working at Wal-Mart or the Wal-Mart equivalent has to be a lousy job. Historically, it's a lousy job while working in a steel mill's a good job because steel mills were organized and that took a long time. And so you had labor laws that promoted that. And if you had labor laws that promoted organizing at Wal-Mart, Wal-Mart could be a decent... why shouldn't it be a decent job? Why shouldn't it be a decent job to be a waitress? Why shouldn't it be a decent job to clean my university office? Those are the kinds of jobs that aren't going anywhere.
MOYERS: Pollin argues that the minimum wage needs to be a living wage and that labor laws need to be stronger and enforced so that it's not only multinational corporations and their shareholders who end up with bargaining power, but workers as well.
POLLIN: Unions have been hurt by globalization because businesses can say, like Sara Lee, can say, "You know what? We're moving to Honduras." And even if they don't move, they can say, "You know what? Unless you take lower wages and get these unions out of our hair, we're gonna move to Honduras." If we can create decent jobs through full employment policies and decent labor standards, then the needs for preventing the movement outward of jobs will be diminished.
MOYERS: Unless our political and business elites find a way to compensate globalization's losers, the future of places like Tamaqua, Pennsylvania appears to be an empty one.
HARVILLA: This'll be a ghost town in a few years. I really believe. You know, and it's a shame to say.
CRAWFORD: There aren't enough jobs to support all the people who are training. So they're either going to be trained and then underemployed, or they're gonna have to either drive a long way to work. Or they're gonna move. So, just because they're retrained is not necessarily going to be a big benefit for the local community.
BREINER: You have the shareholders, they do the free trade, they send everything over. They make the money while we lose our jobs.
Read Sara Lee's response.