Invigorating enforcement mechanisms of the International Labor Organization in pursuit of U.S. labor objectives.

• Author: Seckman, Phillip R.

INTRODUCTION

The purpose of international labor law at the beginning of the twentieth century and a motivating influence behind the formation of the International Labor Organization ("ILO") was the prevention of international competition that exploited the vacuum of labor regulation at the expense of workers. (1) World governments were hesitant to institute greater protections for workers due to a concern that doing so would make their domestic labor more expensive and therefore less competitive with other markets where cheaper labor could be found. (2) Thus, the ILO was created in part to protect national economies by promoting enhanced protections in all member states, thereby ensuring labor protections would be to some extent equivalent between the member states. (3)

In 1944, the Declaration of Philadelphia reaffirmed the purpose of the ILO following the Second World War by primarily focusing on economic and social progress for all workers. (4) In the 1970s, the notion that increasing the protections of workers in developing nations would materially impact the competitive edge of developed labor markets was no longer seen as a primary justification for international labor standards. (5) By the beginning of the 1990s, however, with a new wave of globalization, (6) the proposition that a labor market with significantly greater labor protections is less competitive than labor markets having fewer protections once again became a primary concern of ILO member state. (7)

The first part of this paper will argue that U.S. employers are moving "whitecollar" positions (8) overseas partially because of stronger worker protection enforcement in the U.S. relative to developing countries and partially because the effects of globalization have vastly enhanced the viability of exporting labor. The second part of the paper will explore two possible avenues for enforcing higher labor standards globally. (9) Thus, the discussion in the second part will be broken up into two sub-parts. In the first sub-part, the presumption against extraterritorial application of U.S. labor laws will be explored. The second sub-part will assess whether the ILO can serve as an engine to further U.S. labor objectives. The discussion will survey a number of ILO conventions, argue there is presently a lack of effective enforcement of those conventions, and assess the viability of using the World Trade Organization's (WTO's) dispute resolution process as template for change. Finally, the third part of the paper will argue that U.S. lawmakers should take a leadership role in the ILO, first by ratifying more ILO conventions, and second by working to invigorate ILO enforcement mechanisms in an effort to ensure the U.S. labor market remains competitive with developing markets.

1. WHY U.S. EMPLOYERS ARE EXPORTING LABOR ABROAD

   1. A Brief History

      At the turn of the century, U.S. workers and the labor they provided were seen as mere commodities by businesses. (10) Employers acted swiftly to prevent their workers from forming into unions and the government was complicit in this endeavor. (11) Additionally, the courts at this time were wedded to the freedom of contract theory, which held that when a worker and employer were dickering the terms of the employment contract, the two parties had equal bargaining power. (12) This period is now pejoratively referred to as the Lochner era and pointed to as an example of empty formalism. (13) In truth, the Lochner era worker did not have anything close to equal bargaining power and both the courts and Congress came to recognize that workers needed the assistance of the government to level the playing field. (14)

      Following the U.S. Great Depression, the government adopted a new approach when it came to the everyday worker. (15) Congress passed laws making substantial gains in protecting the ability of working men and women to organize and bargain collectively. (16) Such laws also ensured that workers received a fair wage for their labor and created maximum limits on working hours per week. (17) The substance of these laws represented valuable gains for workers. During the past decade, the protections of equal opportunity, the right to a fair wage, and the freedom to organize gained by U.S. workers generally, have been threatened by the competition of cheap labor abroad. (18) The danger is that the struggle endured to win these rights will amount to a "Pyrrhic victory" because employment protections are worthless if the worker is unemployed. (19)

      While U.S. workers made great strides in terms of acquiring enhanced labor protections over the last century, there is concern that these protections will be lost, in part, due to the current lack of enforceable international labor standards. (20) The U.S. worker is left unemployed, and history suggests that if they are lucky to find new work, it is often for less compensation than the previous position. (21) Moreover, the foreign worker captures a small fraction of the value their work creates for the multi-national corporation (MNC). (22) Additionally, a U.S. worker may be wary of exercising his or her right to organize when doing so presents the risk that the employer will move operations abroad to take advantage of both cheap foreign labor and the relative absence of labor law enforcement. (23) This state of affairs stymies the rights of U.S. workers, causing a type of "race to the bottom" (24) that the ILO was originally created to prevent. (25)

   2. The Globalization Debate

      There are a number of conflicting views on the actual impact of globalization on the U.S. economy. Recent reports from financial and economic research firms have been cited by mass media news reports for the proposition that millions of U.S. jobs, particularly white-collar positions, are being lost to overseas competition. (26) The fact that a large number of jobs are being moved to other countries, primarily India, is not really in doubt. (27) The actual impact that this new trend will have on the U.S. job market, however, has been interpreted differently.

      One view looks to recent U.S. history, when the offshore outsourcing trend was hitting the American manufacturing sector. (28) Indeed, recent figures compiled by the International Economics Institute show that U.S. manufacturing workers who lost their jobs during that period, and who were subsequently able to find other work, were forced to accept lower wages. (29) This history may support the proposition that a similar fate awaits U.S. workers in white-collar positions currently losing their jobs. (30)

      The other view has looked behind the absolute figures reported by major media sources to show the actual job losses the U.S. labor market is likely to suffer because of outsourcing is closer to 214,000. (31) The point has also been made that the media is looking at figures that tell an inaccurate story. It has been argued that media reports have failed to consider figures spanning the period before and after the U.S. economy went into its recent three-year recession. (32) Therefore, the figures reported by mass media may more accurately be explained by other economic activity aside from the influence of globalization. (33)

      A recent report of the World Commission on the Social Dimension of Globalization (34) (WCSDG) lends support for the argument that the benefits of globalization are being disproportionately captured by MNCs to the detriment of workers, (35) that the situation must change, (36) and one of the changes needs to come in the form of more effective global institutions. (37) The report noted "[p]eople are most directly affected by globalization through their work and employment." (38) Indeed, the report cites the statements of some union leaders in industrialized countries who lament that "[i]ncreased global competition [has] encouraged employers to play 'fast and loose with labor practices,' including the replacement of decent employment with insecure ... work." (39)

      The debate over the true effects of globalization will likely continue to capture the public's attention in the coming months and years. In the meantime, invigorating international labor enforcement would protect U.S. workers most vulnerable to overseas competition by ensuring fair competition between labor markets. The U.S. should assume a leadership role in the ILO to advocate for such change on behalf of its labor market and its workers.

2. Two OPTIONS FOR ENFORCING LABOR STANDARDS INTERNATIONALLY

   As discussed above, U.S. employers often move labor abroad because of the cost savings afforded in terms of lower labor standards. Additionally, globalization has been identified as an unstoppable force, due in part to recent enhancements in technology and the decrease in the cost of moving goods. (40) The benefits of the global economy have, however, been falling into the hands of a small segment of the world's population. (41) Moreover, the competitive edge that developing countries' labor markets currently hold over the U.S. because of lower labor standards is not a salve for their problems. The result of competition where the labor market with the lowest standards wins is that global labor standards are undermined and all workers suffer, (42) with the only true winner being the MNC.

   1. The Presumption Against Extraterritoriality

      This sub-part will focus on the extraterritorial application of Title VII of the Civil Rights Act. (43) While the discussion will be limited to Title VII, it is important to note that this particular statute represents merely a fragment of the overarching regulatory framework in the U.S. Moreover, the presumption against the extraterritorial application of U.S. laws applicable to Title VII is also the scheme applied to other labor laws. (44) This sub-part intends to show that the presumption against extraterritorial application of U.S. domestic labor laws enables U.S. MNCs to take advantage of relatively lower labor protections in foreign...