OF LABOR

AND CAPITAL

A STUDY IN
INTERNATIONAL
INVESTMENT
AND LABOR
FLOW/
saskia Sassen
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The mobility of labor and capital

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THE MOBILITY OF LABOR
AND CAPITAL

A study in international investment

and labor flow

SASKIA SASSEN
Professor of Urban Planning
Graduate School of Architecture and Planning,
Columbia University

TE CAMBRIDGE
SES UNIVERSITY PRESS
PUBLISHED BY THE PRESS SYNDICATE OF THE UNIVERSITY OF CAMBRIDGE
The Pitt Building, Trumpington Street, Cambridge, United Kingdom
CAMBRIDGE UNIVERSITY PRESS
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© Cambridge University Press 1988

This book is in copyright. Subject to statutory exception

and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without
the written permission of Cambridge University Press.

First published 1988

Reprinted 1989
First paperback edition 1990
Reprinted 1992, 1994, 1997, 1999

Printed in the United Kingdom at the University Press, Cambridge

British Library Cataloguing in Publication data

Sassen, Saskia
The mobility of labor and capital: a study
in international investment and labor flow.
l. Labor mobility 2. Alien labor
L Title
331.12'791 HD5717

Library of Congress Cataloguing in Publication data

Sassen, Saskia.
The mobility of labor and capital.
Includes index.
l. Alien labor. 2. Capital movements.
3. Investments, Foreign. I. Tide.
HD6300.S37 1987 331.12'791 87-14586

ISBN 0 521 32227 8 hardback

ISBN 0 521 38672 1 paperback

Transferred to digital reprinting 2001

Printed in the United States of America

VN
 Contents

List of tables page vii

Acknowledgements x

Introduction I
The classics: overpopulation, poverty, economic stagnation 4
A domestic or an international issue? 6
Outline of the book 9

ı Foreign investment: a neglected variable 12

The growth of direct foreign investment and the uprooting
of people 17
The rise of global cities and the new labor demand 21

2 The use of foreign workers 26

Historical background 27
Migration as a global labor supply system 31
The state and immigration 36
Contemporary trends 43
Conclusion 52

3 The new immigration 55

Background: formation of the low-wage labor supply 56
A new phase in U.S. immigration 62
Immigrant workers: basic characteristics 68
Undocumented alien workers 79
Non-immigrant alien workers 82
Conclusion 83
Appendix 85

A The globalization of production: implications for labor

migration 94
Industrialization and emigration 95
Foreign investment as a migration push factor 98
vi Contents

Employment implications of new growth patterns 105

The feminization of the new industrial workforce 107
The migration option | 115
Conclusion 119
Appendix 121

5 The rise of global cities and the new labor demand 126
Centralizing global management and servicing 130
Capital: the production of global control capability 136
Labor: economic restructuring as class polarization LA)
New York City and Los Angeles: restructured economy and new
labor demand 146
Advanced services, downgraded manufacturing, and
informalization IER
Conclusion 168

6 The reconcentration of capital in the United States:

a new investment zone? 171
Elements for change in the spatial distribution of investment 173
Direct foreign investment in the United States 177
Conclusion 184

Conclusion 186

Notes 189
References 202
Index 221
 Tables

Foreign workers in the main labor-receiving page

countries of Western Europe
Distribution of total and foreign labor force by sector:
Switzerland (1972) and West Germany (1975)
Foreign labor force in Arab labor-importing
countries, 1975
Saudi Arabia: employment of foreign workers by
economic sector, 1975
Immigrants admitted by selected origin, 1960, 1980,
1985
Immigrants admitted by area: Caribbean, Latin
American, and Asian, 1955-1985
Changing entry levels of Colombian and Dominican
immigrants, 1955-1985
Changing entry levels of Filipino and Korean
immigrants, 1955-1985
Top immigration flows from Asia, Latin America,
and Caribbean by sex, 1972-1979
Residential distribution of immigrants: leading states,
1972-1979
Foreign born in the U.S., 1970 and 1980
Population by race and Spanish origin, 1980
Main nationalities of Asian population in the U.S.,
1970-1980
Economic characteristics by race and Spanish origin,
1980
Population by race: Los Angeles Long Beach SMSA,
1980
Population by race: New York City, 1980
Occupational distribution of the foreign born,
1950-1979 (percentages)

vii
 Tables

Occupational distribution by ethnicity, Queens (New

York City), 1980 (percentages) 86
Selected household characteristics by ethnicity,
Queens (New York City), 1980 (percentages) 88
Occupational distribution by national origin and sex,
Queens (New York City), 1980 (percentages) 89
Occupational distribution of major ethnic groups,
New York City, 1979 and Queens, 1980
(percentages) go

Occupational distribution of major Hispanic groups,

United States and Queens (New York City), 1980
(percentages) 9I

529 Selected characteristics of Hispanics in SMSAs of 1

million or more population and 25,000 or more
Hispanics, 1980 92
OECD-DAC countries’ foreign direct investment
position in developing countries, 1970-1976 100

4.2 Average annual growth rate of direct foreign

investment from developed to developing countries,
1960-1978 (in current $U.S.) IOI

4-3 Average annual growth rates of U.S. direct

investment position abroad, by region, 1950-1980 IOI

4-4 Share of exports in GDP in selected developing

countries, 1970-1980 104
4-5 Constant annual growth rates in employment, by
branch of industry, for the economic groupings,
1968-1975 (percentage) 106
4.6 Annual growth rates of manufacturing production in
major emigration countries, 1965—1980 (percentages) 107
4-7 Annual growth rates of output, employment and
labor productivity in various branches of
manufacturing, for major emigration countries,
1968-1974 108
4.8 Constant annual growth rates of manufacturing
employment, value added and labor productivity,
1960-1976 (percentages) I2I
4-9 Annual growth rates of GDP in major emigration
countries, 1965-1980 (percentages) (EA
4.10 Annual growth rates of output, employment, and
productivity in selected developing countries, by
end-use, 1968-1974 (percentages) 122
 Tables

Export Processing Zones in operation in Asia, Africa,

and Latin America, with year of commencement
U.S. imports under TSUS items 806.30 and 807.00,
1966-1980 (in millions of $U.S.)
Value of Haitian exports in assembly industries (in
millions of $U.S.)
Distribution of employment among earnings classes
for each industry and for total United States, 1975
(percentages) 142
Distribution of total U.S. labor force among earnings
classes, 1970 and 1980 144
New York City wage and salary employment by
major industry, 1960-1984 (in thousands) 148
Employment growth rates in mostly producer services
industries, New York City, Los Angeles, and Detroit,
1977-1981 Sta
Employment share of producer services in all
industries, New York City, Los Angeles, and Detroit,
1977 and 1981 154
Foreign-owned banks and other financial institutions,
New York City, 1978-1980 155
Low-wage, unskilled jobs likely to employ
immigrants: select service industries, New York City,
1978
Hourly wages of production workers in
manufacturing industries, New York City, Los
Angeles, and U.S., 1970 and 1982 (in $U.S.)
Employment in the apparel industry, United States
and selected states, 1958-1980 (in thousands)
Domestic shoe industry and imports, 1966 and 1976
Net international investment position of the United
States, 1978-1984 (in billions of $U.S.)
Inward direct investment flows (percentage
distribution among eight countries)
Direct foreign investment position in the U.S. by
source, 1962—1980 (in millions of $U.S.) 180
Foreign-owned manufacturing firms, selected states
and U.S. total, 1980
Foreign-owned manufacturing plants by country of
ownership in the New York-New Jersey Metropolitan
area, 1980
 Acknowledgements

I began research on international investment and migration flows in

1980 while a Fellow ofthe Inter-American Research Program at New
York University, funded by the Tinker Foundation and the Ford
Foundation. The focus ofthis early research was the coexistence in the
U.S. during the 1970s of rapid growth in the export of low-wage jobs
and a high immigration from low-wage countries. For their support, I
am most grateful to the staff of the Center for Latin American and
Caribbean Studies, especially its director, Christopher Mitchell, and
the administrator, Deborah Truhan. Catherine Benamou’s research
assistance was outstanding; I could not have done the work without
her intelligent and imaginative help. While at the Center, I spent
many good hours discussing the subject with Mary Garcia Castro,
Fernando Urrea, Sherri Grasmuck, and Patricia Pessar.
In doing the research on U.S. direct investment abroad, I had
come across evidence of growing levels of direct foreign investment in
the U.S. A fellowship at the Center for United States-Mexico
Studies, University of California, San Diego, allowed me to continue
this research in 1982-83. It became a study on the use of foreign
capital and foreign labor in Southern California. I am most grateful
to Wayne Cornelius, the Center’s director, and the staff for their
support. I also want to thank the Tinker Foundation for funding the
fellowship. While at the Center, I had the opportunity to discuss my
ideas with a number of people, especially Maria Patricia Fernandez
Kelly, Rosalia Solorzano, Leo Chavez and Cassio Luiselli.
The Centro de Estudios de la Frontera Norte de México
(CEFNOMEX), in Tijuana, was of invaluable help for research and
discussions; I am particularly grateful to Jorge Bustamante and Jorge
Carrillo.
During Spring 1983 I did research in Los Angeles. My visiting
appointment at the Graduate School of Architecture and Urban
Planning of the University of California, Los Angeles, gave me ample

X
 Acknowledgements xi
opportunity to talk with students and colleagues interested in
economic restructuring. I am most grateful to Rebecca Morales, Leo
Estrada, Wendy Grover, and John Friedmann. The Research
Foundation of the City University of New York provided funding for
the research.
The research in New York City during 1984-85 benefited from the
first year of athree-year project supported by the Revson Foundation
on the employment of Hispanic women in the electronics and
garment industries in the New York City Metropolitan area.
My single largest debt is to Soon Kyoung Cho. We shared a
relentlessness as researchers and a sense of excitement about the
inquiry that kept us working into the early hours of the morning, with
the University cleaning staff doing their job all around us and often
sharing our findings. Whenever I left New York City and went off
tracking data, Soon joined the effort.
Susan Allen-Mills, my editor at Cambridge, and Lynn Hieatt, the
subeditor, were immensely helpful and gracious in their support. For
their indispensable help at various stages in the preparation of the
manuscript, I would like to thank Escheal Segan, Norma Gayne, and
Eric Canin.
There are many more people and institutions to thank, many
referred to in the text. Three that were particularly helpful, though in
very different ways, were the U.S. Department of Commerce, the
New York Institute for the Humanities, and Asia Labor Monitor
(Hong Kong).
I would also like to thank the following publishers andjournals for
allowing me to reprint segments ofseveral articles and chapters. ‘The
publishers are the Society for the Study of Social Problems, Sage and
Academic Press; the journals, Development and Change, International
Migration Review, Environment and Planning, Social Problems, and Journal
of Ethnic Studies.
And then there is my son, Hilary, who learnt about migrant
workers when he barely walked; by the time he was four years old I
could count on him introducing the subject at any event, appropriate
or not.
 Introduction

Capital mobility has created new conditions for the mobility of labor.
Economic practices and technology have contributed to the form-
ation of a transnational space for the circulation of capital. Policies,
many originating in the United States, delimit, regulate and make
this space viable. What economic theory as well as governments
define as movement between countries is also movement within one
single entity encompassing those countries. The central question
organizing the inquiry in this book concerns the impact of such a
transnational space for the circulation of capital on the formation and
directionality of international labor migrations.
This is a new version of an old question. In the late nineteenth
century some of the leading political economists debated the impact
of free trade on the international movement of labor and capital.
Eighteenth-century free trade theory rested on the assumption of
international factor immobility; the international circulation of
commodities was seen as a process separate from the mobility of
capital and labor. These were considered to have mobility only
within a country. The transformations brought about by inter-
national trade were to be absorbed by the internal mobility of labor
and capital across classes and across occupations. The movement of
capital and labor from England to its overseas territories was seen as
part of the colonization process and, unlike free trade, requiring state
regulation. Debating the impact of free trade on the international
mobility of labor and capital represented, then, an advance over the
discussions of the eighteenth and early nineteenth centuries, which
had excluded reference to such a possibility. Today, much of the
literature about international labor migrations on the one hand and
international trade and investment on the other is characterized by
the same absence of mutual references.
In his landmark study on international migration in the Atlantic
economy of the 1800s, Brinley Thomas (1973) posits that free trade
I
2 Introduction

contributed to the formation of asystem that encompassed England,

Germany, and the U.S.A., and functioned as a single entity. Inter-
national movements of labor and capital from England to the U.S.
took place inside this system rather than between two countries.
Thomas shows theoretically and empirically that free trade did
induce international migration of capital and labor, and he for-
malizes these elements into a central hypothesis: that free trade under
conditions of social stratification — that is to say, immobility of labor
and capital across social classes — brings about emigration. In
Thomas’s analysis, the emigration of capital and labor from England
went to a country, the United States, where there was no such
stratification.
Applied to a different historical period, this same question evinces
novel interactions. The concrete forms assumed by the process of
internationalization today are different. And so are the leading
investment sectors and the spatial organization of investment ac-
tivity. The gravitational force attributed to free trade in the
eighteenth and nineteenth centuries has now shifted to various forms
of the international circulation ofcapital. To the internationalization
of trade, so central to the free trade era and the theory, we now must
add the internationalization of production sites through foreign
investment. The question then becomes what are the specific forms
under which the internationalization of production contributes to the
formation of labor migrations; also the related question arises of what
are the specific forms under which international labor migrations
become incorporated into the internationalization of production?
The book addresses these questions by focusing on processes that
contain pronounced forms of this internationalization. Three stand
out. One, beginning in the middle 1960s, is the development of
production for export in several Third World countries through a
massive increase of direct foreign investment and international
subcontracting by industrialized countries. We are seeing the de-
velopment of an off-shore production sector for these countries,
especially in agriculture and manufacturing but now increasingly
also in clerical work. Export Processing Zones are the most formalized
instance. A second process is the development of major cities into
nodes for the control and management of the global economic system.
These cities become production sites for a wide array of specialized
services, including financial services, necessary for such management
and control and thus produced mostly for export. New York City and
 Introduction 3

Los Angeles are leading examples. A third process is the recent

emergence ofthe United States as the major recipient of
direct foreign
investment in the world, after being the main exporter of capital for
thirty years. In these three locations we can posit an intersection
between the internationalization of production and international
labor migrations. The major task of the empirical analysis in this book
is to document and explain the concrete forms of this intersection.
The crucial period for analysis is the one beginning in the middle of
the 1960s, when there are significant transformations in the magni-
tude and composition of global foreign investment flows. This is also
the period of massive new migrations. The largest of these flows are
the migration from Southern Europe and North Africa to Western
Europe, from the Caribbean Basin and South-East Asia to the U.S.,
and from the Middle East and South Asia into the Arab oil-exporting
countries. The main focus of this book is on the U.S., a central
participant in both the growth of direct foreign investment and the
emergence of new international migrations.
The current migration to the U.S. shares a number ofgeneral traits
with earlier migration phases. But it is also predicated on specific
conditions that arise out of the reorganization of the world economy
over the last two decades. Emphasizing the latter, as this book does, is
not a denial of the weight of the general conditions at work-in most
migrations. It is, rather, an attempt to identify the particular
historical and political context of the current migration phase. It
means, for example, viewing the 1965 liberalization of U.S. immig-
ration policy as but one instance of a whole series of policies, from the
lifting of import-export restrictions to the implementation of the
eurodollar market, that had the effect of internationalizing the
country’s economy. The overall result was the formation of a
transnational space within which the circulation of workers can be
regarded as one of several flows, including capital, goods, services,
and information.
However, the fact that not all countries became large-scale senders
of immigrants points to the need for specifying the manner in which
countries are incorporated into this transnational space. A key
assumption in much thinking about immigration in the U.S. is that
poverty, overpopulation and a stagnant economy are the central
causes for emigration. Most countries in the Third World have one or
more of these conditions; yet most do not have significant emigration
flows. We need to understand whether there are specific kinds of
4 Introduction

linkages between the U.S. and those countries that do become major
senders of immigrants to the U.S. It may well be that particular forms
of incorporation into the internationalization of production coalesce
with basic conditions such as poverty or unemployment to promote a
migration inducing situation.
In what follows I will briefly discuss how these conventional
variables fail to explain the current migration phase adequately and
whence the need to recognize the migration impact of other
conditions.

THE CLASSICS: OVERPOPULATION, POVERTY, ECONOMIC

STAGNATION

Population growth in Third World countries cannot be disregarded,

as it signals the possibility of increased emigration. However, there is
considerable evidence that not all countries with high population
growth have high emigration. A second consideration that needs to
be incorporated into the analysis of population growth and migration
is the relation between population growth and population density.
Some of the countries with high population growth in the Third
World do not necessarily have high density, certainly not compared
with countries such as France, the Netherlands, or Luxembourg. The
assumption that migrants come from countries with very high
population growth where there is simply no room left for them
requires careful examination. Excessive population density may not
necessarily be the main reason for migration. While it would be very
useful to have a criterion as simple and quantifiable as population
growth to predict what countries will be emigration countries, the
migration reality is less tidy and more elusive. The issue of population
growth needs to be placed in context precisely because it has received
so much attention and because it makes intuitive sense to see it as a
key factor promoting emigration.
Once we posit that a country with high population growth may
have high, medium, or low population density and may have high,
medium, or no emigration, then the relation between these de-
mographic variables and emigration emerges as more complex than is
usually assumed or explicitly postulated. It then becomes clear that
we need to introduce a number of other factors into the analysis. This
need to introduce additional factors is evident and generally accepted
in the case of war refugees. Few, if any, would insist that refugee flows
 The classics: overpopulation, poverty, economic stagnation 5
are generated by high population growth and density, even though
refugees may come from countries with those characteristics and even
though these may lead to war. Yet an insistence on demographic
explanations is common in the analysis of labor migrations. Further,
refugee policies acknowledge indirectly that U.S. military activities
abroad make the U.S. accountable, at least to some degree, for the
fate of an ally’s displaced people. Refugee entitlements carry such an
acknowledgement. One might ask whether people displaced because
of commercial developments by U.S. corporations abroad, i.e. large-
scale export crops, are entitled to certain indemnities for being forced
to become emigrants. This kind of formulation is never introduced
into the immigration debate.
There is a similar need for a critical examination of the relation
between emigration and poverty. Poverty is held to be a basic
migration push factor. This raises two questions. First, why are not all
countries with extensive poverty emigration countries? Secondly,
why is it that large-scale emigration in what are today the main
sending countries started when it did and not earlier, since many of
these countries were poor long before emigration commenced? Haiti
was poor long before massive emigration began in the early 1970s.
The Dominican Republic had considerable unemployment, under-
employment, and poverty long before large-scale emigration began
in the middle 1960s.
Finally, it becomes necessary to examine the relation between
emigration and economic growth. Again, one key assumption has
been that emigration is a consequence of stagnant economic growth.
Yet growth rates in employment and domestic product in the main
migrant-sending countries were relatively high during the 1970s,
certainly compared with those of developed market economies. These
high growth rates do not preclude the existence of unemployment
insofar as job creation, even if high, may not be able to keep up with
labor force growth or with unemployment in sectors of the economy
other than those experiencing high growth. But what does need to be
emphasized is that these growth rates were considerably higher than
rates in other countries which did not have high emigration. That is
to say, the long-held assumption that a stagnant economy generates
emigration is not necessarily borne out by the facts in the current
emigration phase. To cite one of the most blatant examples: South
Korea, with one of the highest growth rates in GDP, in general
employment, and particularly in manufacturing employment, also
6 Introduction

was one of the countries with the highest growth rate in migration to
the U.S.
The possibility of migration pressures under conditions of poverty
unemployment, and overpopulation cannot be denied. Yet it has
become evident that by themselves these conditions will not promote
large-scale emigration. It is necessary to identify processes that
transform these conditions into a migration inducing situation. This
distinction may carry significant implications for policy. Given U.S.
attempts to regulate immigration, what may be needed is a
recognition of such intervening processes. Thinking and policies
stemming from this recognition may carry a rather different focus
from current U.S. policies aimed at controlling the border or
reducing population growth and promoting economic growth in
Third World countries. Recognition of intervening processes may
move the focus away from conditions in emigration countries and
invite an examination of processes that link the U.S. to those countries
and may contribute to the initiation of new migration flows to the
U.S. And it would invite an examination of labor demand conditions
in the U.S. that may contribute to the continuation of such flows.
Policies stemming from such a recognition may have to address issues
not usually considered relevant to immigration.

A DOMESTIC OR AN INTERNATIONAL ISSUE?

A focus on high population growth, poverty, and economic stag-

nation easily leads one to view migration as a domestic matter, and
the inadequacy of socio-economic conditions and policies in countries
of origin as promoting emigration. Immigration, in turn, becomes a
domestic matter (or “‘problem’’) for the receiving country. For
humanitarian or more pragmatic reasons, a receiving country, such
as the U.S., commits itself to accept immigrants under certain
conditions. The acceptance of immigrants is based ultimately on
factors internal to the U.S., including a tradition of immigration. If
international factors are brought to bear on immigration policies or
decisions concerning immigrants they are typically not viewed as
pertaining to migration but rather to other economic or diplomatic
ties between the countries involved. Migration simply becomes an
obvious, handy, or unavoidable arena within which these other issues
can also be played out. A classic example is the use of the migration
situation in oil negotiations between Mexico and the U.S.
 A domestic or an international issue? 7

This book introduces international factors into the analysis of

migration, specifically the effects of U.S. foreign policies and activities
in migrant sending countries and in the U.S. domestic economy.
Once we introduce international factors it becomes evident that U.S.
immigration policies and practices address, wittingly or not, both
domestic and international issues that have to be dealt with in the
domestic arena, i.e., inside the territory of the U.S. In its most
extreme version, the current phase of U.S. immigration could be seen
as representing, in addition to all the other dimensions it represents, a
domestic consequence of U.S. activities abroad. One can point to the
active role of U.S. firms in the disruption of“traditional” economies
due to large-scale development of commercial agriculture with its
associated displacement of small-holders and subsistence growers, or
due to massive recruitment of young women into wage labor for
export manufacturing. By “traditional’’ economies I refer to a whole
range of activities, from subsistence and semi-waged types of work to
industrial activity geared to the local or national market, with no or
little foreign investment and typically less mechanized than would be
the case in highly developed countries. As I discuss at length in
Chapter 4, the disruption of these forms of work need not be an
inevitable consequence of the development of agriculture and
manufacturing for export. Yet historically that has tended to be the
case. Furthermore, this disruption does not necessarily generate
emigration. Other objective and ideological linkages need to be
established between the sending and receiving countries. It is here
that the facts of foreign investment and general cultural westerniz-
ation acquire weight, as do a liberal immigration policy and a
tradition of immigration.
In each of the major countries sending immigrants to the U.S.
today, we can find a specific set of conditions which, together with
poverty and unemployment, induce outmigration. As these will be
discussed at length in Chapter 2 in their general form and in Chapter
4 in the forms specific to the current phase, here I briefly touch upon
items that have not received sufficient attention in the debate on
immigration to show the importance of introducing international
factors into the analysis.
Emigration from the Dominican Republic began in the middle of
the 1960s. Subsequent to the election victory of Bosch in the
- Dominican Republic, the U.S. government sent marines to Santo
Domingo. This occupation had, among others, two effects that
8 Introduction

directly bear on emigration: (1) it created a stream of middle-class

political refugees who came to the U.S. and (2) it created objective
linkages with the U.S. Both of these eventually evolved into
conditions that facilitated further emigration of Dominicans to the
U.S. and, very importantly, the emergence of emigration to the U.S.
as an option actually perceived by individuals as available to them.
Further linkages were consolidated via direct foreign investment in
agriculture and manufacturing for export.
In the case of Haiti, insufficient attention has been given to the
change in economic development strategy and the types of upheaval
these brought about. The transition from the older Duvalier to his son
was also a transition from one type of economic regime to another.
There was an opening to foreign investment and large-scale develop-
ment of commercial agriculture and manufacturing for export. The
United States was the key partner in this new strategy. The
development of commercial agriculture, export processing zones, and
manufacturing for export outside the zones, had one thing in
common: they required securing a labor supply. We observe, indeed,
large-scale displacements of small-holders who become laborers on
plantations or in the cities. There is some evidence that the
intensification of police violence in the countryside may be in part
explained by the need to secure wage-labor in the context of a
tradition of subsistence farming and the associated resistance to
becoming wage-labourers.
An aspect of Mexican immigration that is not sufficiently empha-
sized is that a number of studies show the large-scale emergence of
illegal Mexican flows to be associated with a legal program. The
development of the “bracero” program created objective linkages
between the U.S. and Mexico and promoted the whole notion of
migrating to the U.S. Thus an arrangement made by the U.S. with
Mexico had unanticipated consequences. Something instructive
regarding the possibility of initiating guest worker programs with
various countries is that they may emerge as a mechanism promoting
emigration to the U.S. outside the bounds of such programs. This is
particularly significant if such treaties were to be signed with a
country that has not had a history of migration to the U.S. It could set
the stage for the occurrence of new migration flows.
In the case of South-East Asian migration to the U.S., we cannot
disregard the fact that after World War II and the Korean War, U.S.
strategy sought to build up U.S. business in the region and promote
 Outline of the book 9

economic development as a means to “stabilize” the region politi-

cally. U.S. business and military interests coalesced to create a vast
array oflinkages with the Asian countries sending immigrants to the
U.S. over the last decade. The massive increase of direct foreign
investment during that same period reinforces these patterns.

All the above examples accentuate, first, the fact that U.S. business,
military, or diplomatic activities were a strong presence in countries
that have significant migration to the U.S. It is important to
emphasize that not any kind of U.S. presence will have this effect.
Secondly, it is important to emphasize that the combination ofpoverty,
unemployment, or underemployment with the emergence of objective
and ideological linkages probably operates as a migration-inducing
factor. It then becomes necessary to make distinctions: what kind of
U.S. military, political, and economic policies abroad have the
potential, in conjunction with unemployment, or underemployment
and poverty, to create a migration-inducing situation? In this
context, the image of the U.S. as a country of immigrants with
opportunities for all, and the 1965 liberalization of immigration
policy, become significant. In combination with objective conditions
and linkages, the existence of such an open migration policy becomes
truly consequential. Without this context of linkages, it is difficult to
see how such a policy could have generated massive immigration to
the U.S. Thus the 1965 Act should be seen in’ combination
with military and economic policies facilitating a wide range of U.S.
activities abroad. This would explain not only the massive increase in
immigration, but also why the countries that sent most of the new
migrants are not necessarily the ones that should have done so
according to the stipulations of the Act. And it would explain why
most countries in the world are far from using their quota of
immigrant visas to the U.S.

OUTLINE OF THE BOOK

Displacing the locus of explanation away from poverty or economic

stagnation in sending countries and onto the processes that link
sending and receiving country introduces a set of variables into the
analysis not usually thought of as pertaining to immigration. Such
linkages are constituted through processes that are historically
specific. In the current period, the internationalization of production
10 Introduction

is central in the constitution of such linkages, even when there may be

purely political objectives associated with aspects of that inter-
nationalization. A wide array of countries are incorporated as
production sites into a single encompassing system or, more tentat-
ively, a transnational space. The next chapters, particularly 4, 5, and
6, document the concrete forms through which labor migrations
intersect with the more general process of the internationalization of
production as it takes place in key locations.
Chapter 1 is a brief overview of the main lines of conceptual and
empirical analysis in the book. This chapter also describes traits in the
current immigration phase to the U.S. which raise questions about
conventional explanations and suggest the need to introduce ad-
ditional variables. Chapter 2 presents the general historical and
theoretical background for the analysis. It points to the weight of
economic development in the formation of labor migrations. This
chapter also contains an overview of the main labor migrations in the
post-World War II era; this discussion should serve in placing the new
immigration phase to the U.S. in a broader context. Chapter 3
introduces the empirical information for the particular case study, the
new migrations to the U.S. beginning in 1965 and continuing today.
Chapters 4, 5, and 6 are detailed discussions of major locations of the
internationalization of production. Chapter 4 focuses on the main
locations in the development of manufacturing for export; these are in
South-East Asia (used here to describe East and Southeast Asia) and
the Caribbean Basin (used here to describe the nations on and in the
Caribbean). Central to the analysis is the rapid and massive
mobilization of young women into wage labor, a movement that
would not have happened on this scale and at this speed without the
large influx of direct foreign investment for the development of export
manufacturing. Chapter 5 examines the rapid growth of major cities
into global centers for the regulation and servicing of the global
production system, international financial markets and other com-
ponents of the world economy. These cities and their metropolitan
areas are also the main destinations of the new migration from the
Caribbean Basin and South-East Asia. The analysis seeks to establish
whether there is any articulation between the two processes. To that
end it examines the economic base, and particularly the job supply, in
these cities to see whether the absorption of immigrant workers is
associated with the expanding growth sectors linked to inter-
nationalization, rather than merely with declining economic sectors
 Outline of the book II

in need of cheap labor for survival. Does the economic base, often
thought of as post-industrial, resulting from these cities’ role in the
global economy generate a demand for the kinds of workers that
immigrants represent? Chapter 6 focuses on the U.S. as the leading
recipient of global direct foreign investment flows and examines the
composition of this investment by sectors, location and national
origin. The magnitude ofdirect foreign investment in the U.S. since
1981 and the fact that it represents almost halfof global direct foreign
investment makes this a new development. The major recipient areas
are California and the New York—New Jersey region. The organizing
question for the rather preliminary presentation in Chapter 6 is
whether these areas are emerging as new investment zones in a global
marketplace of production sites; changes in the organization of
production alongside a large supply of immigrant workers may make
these areas competitive with locations in the Third World.
 I

Foreign investment: a neglected variable

There is considerable evidence both oirfinternationallabor mig-

rations and on EE ofproduction] But they are
mostly two separate bodies of scholarship. Analytically these two
processes have been constructed into unrelated categories. As socio-
economic givens, there are certain locations where one can identify
the presence of both. Our question then becomes whether there is an
articulation between these two processes and, if so, how we can
capture this analytically. Furthermore, the notion of the inter-
nationalization of production needs to be elaborated in order to
incorporate more of its central components. ‘Theoretical and empi-
:tical studies-of-this_process have focused largely on one particular
component: the massive shift of “jobs to Third World countries
through direct foreign investment, resulting in the development of an
off-shore manufacturing sector.
~ The question about the articulation of these two processes stems
from both a broader theoretical argument on the nature of the world
economy and from the concrete details of the new migrations to the
U.S. Similarly, the need to elaborate the notion of the inter-
nationalization of production stems from that broader theoretical
argument as well as from the concrete details of the U.S. economy
over the last twenty years. In this chapter I briefly review the main
conceptual and empirical lines of analysis that bring these various
concerns together.

The new Asian and Caribbean Basin immigration to the U.S.

reveals patterns that escape prevailing explanations of why mig-
rations occur. Two of these patterns are of interest here. One concerns :
the timing, magnitude and origins of the new immigration. Why did
the new immigration take place ata time of high-unemploymentin
the U.S., including major job losses in sectors traditionally employing
immigrants, and of high growth rates in the major immigrant sending
countries? There are two separate issues worth considering here, to
12
 Foreign investment: a neglected variable ne
wit, the initiation of a new migration flow and its continuation at ever
higher levels. Understanding why a migration began entails an
examination of conditions promoting outmigration in countries of
origin and the formation of objective and subjective linkages with
receiving countries that make such migration feasible. Understand-
ing why a migration flow/continues and sustains high levels invites an
examination of|demand)/ conditions in the receiving country. This
brings up the second pattern, the continuing concentration of the new

specialized service and headquarters activities, an economic base we

do not usually associate with immigrant labor. The questions raised
by these patterns in the new immigration become particularly acute
when we consider that the major immigrant-sending countries are

direct foreign investment in labor-intensive manufacturing and

service
activities.
Ifanything, this combination of conditions should
have been a deterrent to the emergence of new migrations or at least a
disincentive to their continuation at growing levels. Why is it that the
rapidly
industrializing
countries of South-East Asia, typically seen as
the success stories of the Third World, are the leading senders of the
new immigrants? I will briefly examine each of these patterns.
Immigrant entry levels since the late 1960s are among the highest
in U.S. immigration history. Legally admitted immigrants numbered
265,000 in 1960. By 1970 such entries reached halfa million, a level
sustained since then with a gradual tendency to increase over the
years. The overall estimate now is that the combination of all different
types of entry had reached about 1 million a year by 1980 (see INS,
1978; 1985; Teitelbaum, 1985). The highest numbers of immigrants
from 1970 to 1980 came from Mexico,
Philippines,
the and South
Korea, followed by China (Taiwan and People’s Republic). India,
the Dominican Republic, Jamaica, Colombia, and several Carib-
bean Basin countries. New entries and natural growth resulted in the
pronounced expansion of the Asian and Hispanic populations in the
U.S. From 1970 to 1980, the Asian population increased by 100
percent and the Hispan percent (U.S. Bureau of the Census,
by 62 ic
1981). These growth rates were surpassed by some nationalities,
notably the 412 percent increase of South Koreans.
The new Caribbean Basin and South-East Asian immigration, by
far the largest share in the current immigration, is heavily con-
= centrated in cities with high job losses in older industries, and job
14 _ Foreign investment: a neglected variable

growth in high-technology industries and specialized services. Asians

have gone largely to Los Angeles, San Francisco, and New York City;
these have the three largest concentrations of Asians. West Indians
and the new Hispanics (excluding Mexicans and Cubans) have gone
largely to New York City. What conditions in the economies of these
cities have facilitated the absorption of such massive immigrant flows
and induced their continuation at ever higher levels? The fact that
these are traditional destinations and contain large immigrant
communities goes a way towards answering the question. And so does
the fact that declining sectors of the economy need cheap labor for
survival. But the magnitude and new origins of the immigrant influx,
its continuation at ever higher levels and the extent of job losses in
sectors historically employing immigrants point to the need for
additional explanations.
The increase in immigration took place atatime of rather high
economic growth in most countries oforigin. For example, annual
GNP growth in the decade of the seventies hovered around 5 to g
percent for most of these countries. Growth rates in manufacturing
employment were even higher. Massive increases in direct foreign
investment, mostly from the U.S. but also from Japan and Europe,
contributed to these growth rates.
While U.S. direct foreign investment generally accelerated ae
1965 to 1980 and continues to go to Europe and Canada,
ui developed countries. This is a GE
trend, since much of it goes to a few select countries in the Caribbean
Basin and South-East Asia. The average annual growth rate of U.S.
foreign investment from 1950 to 1966 was 11.7 percent for
developed countries EE
1966 to 1973 these rates were, respectively, 10.7 percent and. 9.7
percent, and, from 1973 to 1980, 11.8 percent and 14.2 percent (these
figures exclude the petroleum industry). There has also been a
massive increase of Western European direct foreign investment
during the 1970s, mostly in these same countries. Given the particular
conceptualization of the migration impact of such investment posited
in this book, and briefly described later in this chapter, this increase of
European and Japanese investment in countries sending migrants to
the U.S. is also significant. The average annual growth rates of direct
foreign investment in developing countries by all major industrial
countries were 7 percent from 1960 to 1968; 9.2 percent from 1968 to
1973, and 19.4 percent from 1973 to 1978.
 Foreign investment: a neglected variable 15
Furthermore, a growing share of direct foreign investment in
developing countries over the last two decades has gone into
production for export, mostly to the U.S. As I will discuss later,
export manufacturing and export-agriculture tend to be highly
labor-intensive kinds of production which have mobilized new
segments of the population into waged-labor and into regional
migrations. The main migrant-sending countries to the U.S. over the
last fifteen years all have received large
ge export-ori
export-orieented
nted foreig
foreign
investment. This would seem togoagainst acentral proposition in the
development literature, to wit, since foreign investment creates jobs it
should act as a deterrent to emigration; this deterrent should be
particul strong in countries
arly with high levels of export-oriented
investment because of its labor-intensive nature.
Using Export Processing Zones (EPZs) as an indicator of export-
oriented direct foreign investment, a distinct pattern emerges. These
zones, all built in the last fifteen years, tend to be concentrated in a
few countries, most of which represent the areas of origin of the
overwhelming share of new immigrants. In Latin America, and the
Caribbean, the three countries with the largest number of zones are
Mexico, Colombia and the Dominican Republic. In 1975 they
accounted for sixteen of the twenty-two zones. These are also
countries with large export-agriculture sectors. And they account for
a very large share of all Hispanic immigrants. We find a similar
situation in South-East Asia. The question then is whether there is any
connection between large increases in foreign investment and large-
scale emigration.
While the change in U.S. immigration legislati explain a
good part of the increase in entries to the 1S after 1965, it is
insufficient to explain the magnitude_of_the—increase_and_the
disproportionate—-weigh i j igin. Indeed, the
family reunion emphasis in the 1965 legislation was expected to bring
in largely Europeans because the main immigrant stock in the U.S.
was European. It was not expected that Asian and Caribbean Basin
nationalities would dominate the flow and would do so in such high
numbers. This lack of correspondence between the expectations
associated with the legislation changes and the ensuing reality has led
one historian to call the 1965 Immigration and Naturalization Act
the “unintended reform” (Reimers, 1983).
Though not necessarily addressed directly to these questions, the
migration literature does contain partial explanations as to why
 16 Foreign investment: a neglected variable

migration would occur under the conditions described above.

Elements of answers can be found in explanations that emphasize a
combination sibs sem eae ee as high unemployment in the
sending country; resources for mobility, i.e., it is not the poorest who
migrate; and perceiy rtunity in the country of destination
(Reubens, 1981). Secondly, explanations that emphasize the import-
ance ofan already existing immigrant community as alpull factorjand
as a structure that facilitates access to employment and housing for
newly arrived immigrants (Chaney, 1976; Wilson and Portes, 1980;
Sassen-Koob, 1979). Thirdly, explanations that emphasize the
_ internal differentiation of the labor market in industrialized countries
to explain the co-existence of growing unemployment and relative
labor scarcity in declining and/or backward industries in need of
cheap labor for survival (Piore, 1979; Bailey and Freedman, 1981).
Fourthly, an elaboration of this last type of explanation which
emphasizes the different requirements for control over labor at the
workplace that characterize different types of work organization; thus
it is not primarily the low wages of immigrants but their willingness to
work at certain kinds of job, which explains their obtaining
employment in the face of growing unemployment (Sassen-Koob,
1980). Finally, analyses of immigration policies (Keely, 1979) and of
the role of the state in regulating the labor supply (Bach, 1978). In
sum, the/push) ofunemployment, the pulllof an existing immigrant
community, and the need for cheap labor in declining and backward
industries are elements for an explanation about high immigration in
a period of high unemployment in the U.S.
But the developments of the last fifteen years in international and
domestic aspects of the U.S. economy point toa need for refinement of
existing explanations and specification of additional variables.
Important contributions in this direction, and ones I will draw on,
can be found in the studies on the relation between U.S. investment in
Mexico and Mexican immigration (Cornelius, 1980; Fernandez
Kelly, 1983); U.S. investment in Puerto Rico andemigration{Centro
de Estudios Puertorriqueños, 1979); U.S. investment in the Carib-
bean Basin andemigration (Ricketts, 1983); immigration and foreign
policy (Keely, 1979) and characteristics of the international system as
they affect migration (Portes and Walton, 1981). This body of
scholarship brings to the fore the active participation of the U.S.
through investment and other development programs in creating
linkages that contributed, directly or indirectly, to emigration. The
 The growth of direct foreign investment D
clearest historical example is Puerto Rico where by the late 1940s the
impact of U.S. investment and modernization of the economy had
resulted in the formation of a vast supply of migrant workers (Centro
de Estudios Puertorriquefios, 1979). The book attempts to continue
this theoretical and empirical work, but the focus is somewhat less on
migration and somewhat more on economic restructuring processes
in sending and receiving areas.
The foremost concern is not a full explanation of emigration. Nor is
the focus one that can account for the various stages in international
migrations. Rather, the concern is with capturing the particular
moment in the process of labor migration that links it with-
fundamental processes in the co orary phase of the world
economy. The overall theoretical stance is that to specify the place of
labor migration in a particular historical period, within the general
history of capitalist development, we need to identify the modes of
articulation with the leading economic dynamic ofthat period. This is
not to deny the many general conditions at work in all migrations nor
the different individual reasons for migrating. The specificity of labor
migration in the current historical period lies not in these general
conditions or individual motivations but in its articulation with the
internationalization of production, a dynamic which assumes con-
crete forms in particular locations. The aim is to document the
existence and the details ofthis articulation, the subject of Chapters 4
and 5, and how the existence of an immigrant workforce itself
contributes to new conditions for the internationalization of produc-
tion, the subject of Chapter 6. The next two sections discuss the main
argument briefly. In Chapter 2 I return to a discussion of these
general theoretical and historical issues.

THE GROWTH OF DIRECT FOREIGN INVESTMENT AND THE

UPROOTING OF PEOPLE

The generalization of market relations and the development of

modern forms of production have historically had a disruptive effect
on traditional work structures. This process, discussed at length in
Chapter 2, assumes new forms in the current phase of the inter-
nationalization of production. In Chapter 4 I will focus on the
particular expression of this broader process in the main immigrant
sending countries today. The argument, briefly, is as follows.
The expansion of export manufacturing and export agriculture,
TZ
 18 Foreign investment: a neglected variable

both inseparably related with direct foreign investment from the

highly industrialized countries, has mobilized new segments of the
population into regional and long-distance migrations. I am using
the term “mobilize? somewhat freely to refer to a variety of processes.
First, the transformation
of subsistence workers into wage-labor,
either directly, e.g., through large-scale employment in commercial
agriculture, or indirectly, through rural to urban migration due to
small farmers’ displacement by commercial agriculture. Even if these
rural migrants fail to find a job in the city, they have been mobilized
into an urban reserve of wage-labor. Second, the recruitment
practices offoreign plants, notably world market factories and plants
in Export Processing Zones, have led to a large-scale movement of
young women into waged labor (UNIDO, 1980; Lim, 1980; Wong,
1980; Grossman, 1979). Electronics plants, especially semi-conductor
assembly plants, require highly disciplined workers. Young women in
patriarchal societies are probably among the more controllable
workers (Safa, 1981; Grossman, 1979), at least initially.
One key process mediating between the introduction of these
modern forms of production and the formation of labor migrations is
the disruption of traditional work structures. The mechanisms
involved are quite different in the case of export manufacturing from
those in commercial agriculture. The development of commercial
„agriculture, which is almost completely for export, has directly
EE
This forces them to borers in commercial agriculture
or to migrate to cities. Sometimes the move from sharecropper or
subsistence farmer to rural wage-laborer becomes a move to another
country, e.g., Colombians in Venezuela agriculture or Mexicans in
U.S. agriculture. Sometimes this move becomes a move to an urban
job in another country, e.g., Dominicans to New York City.
In export manufacturing this disruption is mediated by a massive
recruitment ofyoung women intonewlycreated jobs. Themobiliz
ation effect has been particularly strong due to the high degree of
concentration of the employment effects of direct foreign investment
in manufacturing in a few countries. industriali
The “new zation” has
generated domestic andinternational migrations within the region
Sear eee eee g-distance >
migrations. These
Fations have been found to contribute to thedisruption of
t al, often unwaged, employment structures. This disruption
' reduces the possibility of returning if laid-off or unsuccessful in the
 The growth of direct foreign investment 19
job search. The available evidence shows a large mobilization of
young women into waged labor, women who under other conditions
would not have entered waged employment. This has an additional
disruptive effect on traditional employment structures, notably
household production for internal consumption or local markets. The
of the new-proleta
feminiza tion riat has also been found to contribute
to male unemployment and, in several cases, to male emigration. It
does so both directly and indirectly. There is now a female labor
supply competing for jobs with men, a supply that did not exist only a
few_years ago. An indirect emigration inducement among males
results from the disruption of traditional work structures: with the
Massive departure of young women there is a reduction in the
possibilities of making a living in many of these rural areas.
Eventually this disruption of traditional work structures adds to the
pool of unemployed. Finally, the widepractice spre of firing
adthe
new, mostly female, workers after a few years also adds to a pool of
potential emigrants. These women, left unemployed and wester-
nized, may have few options but emigration.
Though these developments are not necessarily a function of
foreign investment per se, it seems important to emphasize the
presence offoreign investment. First, because in the absence of such
D SS eect,

investment the la rt manufacturing and

xport agri e_occurred. Here I want to
emphasize that foreign investment stands for a variety of arrange-
ments, some involving direct ownership, others consisting of sub-
contracting with domestic producers, and yet others being simply
foreign buying groups. The key is that these developing countries
could not have penetrated the export market in the absence of these
arrangements with foreign investors which have access to those
markets. Segond, because the presence of such investment creates-
and objective links with the countries providing
cultural-ideological
this capital. And these are of course largely the highly industrialized
countries which have also been major recipients of immigration from
the less developed countries. Besides the long recognized westerniz-
ation effect_of large-scale foreign investment in the less developed
world, there is the more specific impact on workers employed in
“production for export or in services in the export sector. These
workers are using their labor power in the production of goods and
services demanded by people and firms in the U.S. or any other
highly developed country. The distance between ajob in the off-shore
 20 Foreign investment: a neglected variable

plant or office and in the on-shore plant or office is subjectively

reduced. Under these conditions emigration may begin to emerge as
an option actually felt by individuals.
Foreign plants are a factor establishing linkages with the U.S.,
especially cultural ones. The workers mobilized into wage-labor on
plantations or world market factories probably are only a small share
of those that make use of these linkages. But they are part of the
linkage for potential emigrants. On the other hand, those employed
in services and office work necessary for the export sector are more
likely to become part of the pool of emigrants. The
ideological effect is not to be underestimated: the prresence offoreign
plants notonly brings the U.S. or any other “western” country closer,
but it also “‘westernizes’’ the less developed «coun
ountry and itspeople.
migration to the U.S. emerges as an option. In ‘an “isolated”
country, that is one lacking extensive direct foreign: investment,
emigration would be quite unlikely to emerge as such an option.
This is a highly mediated process, one wherein direct foreign
investment is not a cause but a structure that creates certain
a Lee
conditions for emigration to emerge as an option) Furthermore, it is
important to these-+werkers_actually
differentiate employed in foreign
Fa,
pote S
Tey eer a ee idee
süpphgok
ey are often not the same individuals
Under these conditions, the origin of the foreign cap capital may
matter less than the types of production it goes into. Thus, the large
increase in direct foreign investment by all major industrialized
countries will tend to have similar effects. It is in this context that the
1965 Immigration Act and the continued image of the U.S: as a land
of opportunity acquire their full impact. Whether West German,
Dutch or U.S., foreign investment may well have the effect of
promoting emigration to the U.S.
Continued vitality of the U.S. as an immigration country and the
absence of alternatives acquire particular significance in the context
of a continuing growth of direct foreign investment and its expansion
to additional countries. The general trend is for all the major
industrial countries to increase investment in less developed count-
ries. Though most of this investment is concentrated in a few
counties there is also a trend towards significant levels of investment ‘
in “new” countries. Accepting my analysis ofthe effect of-direct
„foreign iinvestment on the formation of
and on the emergence of emigration as an actual option, it could be
 The rise of global cities and the new labor demand 21
argued that this expansion of direct foreign investment by the major
industrial countries will contribute to additional emigration to the
U.S. Proposed changes in U.S. immigration laws would hardly affect
these countries which probably have under-used entry quotas.
In brief, I examine how significant levels and concentrations of
direct foreign investment are one factor promoting emigration
through: (a) the incorporation of new segments of the population into
wage-labor and the associated disruption of traditional work struc-
tures both of which create a supply of migrant workers; (b) the
feminizati
the new industrial
en-of workforce and its impact on the
work
opportunitiesofmen, both in the new industrial zones and in the
traditional work structures; (c) the censolidation_of objective
and ideological links with the highly industrialized countries where
most foreign capital originates, links that involve both a generalized
westernization effect and more specific work situations wherein
workers find themselves making goods for people and firms in the
highly industrialized countries.
What I posit is a generalized effect that contributes to the
formation of a pool of potential emigrants and, at the same time, to
the emergence of emigration as an actual option. This effect would
seem to be present regardless of whether the direct foreign investment
originates in the U.S. or in any of the other major advanced
industrialized countries. The lasting image of the United States as a
land of opportunity, which can only be reinforced by the current
massive immigration, will tend to have the effect of making “emi-
gration” identical with “emigration to the U.S.”

THE RISE OF GLOBAL CITIES AND THE NEW LABOR DEMAND

Transformations in the world economy, including that discussed in

the preceding section, generate a new or significantly expanded role
for major urban centers, particularly in the highly developed
countries. The technological transformation of the work process, the
shift i areas
domestically and abroad, in part made possible by the technological
transformation of the work process, and the ascendance of the
financial sector in management generally with decli the ne of
producti ent, have all contributed to the con-
solidation of a new kind of economic center, global cities from which
-the world economy is managed and serviced. That is to say, these
22 Foreign investment: a neglected variable

trends have intensified the role of major urban centers as producers

and exporters of advanced services, including finance and manage-
ment and control functions. Alongside the growing decentralization
of manufacturing and office work we see the growing concentration of
high-level servicing, control and management operations.
While the redeployment of manufacturing and office work to less
developed countries has contributed to conditions that promote
emigration from these countries, the concentration of servicing and
management functions in global cities has contributed to conditions
for the demand and absorption of the immigrant influx in cities like
New York, Los Angeles and Houston. The same set of basic processes that
has_promoted emigration fromseveralrapidly industralicing Peunines Nes
also promoted immigration into several booming global cities. The growth
‘conditions in both types of areas will, doubtlessly, become exhausted.
But in the meantime they will have created major transformations in
the economic and population dynamics of the areas involved.
The consolidation of such global centers generates a restructuring
of labor demand. The job supply is shaped by several key trends,
notably (a) the growth of the advanced service sector, including the
financial system, and (b) the shrinking oftraditional
ional manufacturing
industries and their replacement with a downgraded manufacturing
sector and high technology industries, in both of which sweatshops
are mushrooming. The evidence shows that the result is an expansion
of very high-income professional and technical jobs, a shrinking of
middle income blue- and white-collar jobs, and a vast expansion of
low-wage jobs. The expansion of the low-wage job supply is in good
part a function of growth sectors and only secondarily of declining
industries in need of cheap labor for survival. It is in this expansion of
the low-wage job supply that we find the conditions for the absorption
of the immigrant influx.
Immigration can be seen as providing labor for(1) low-wage
service jobs, including those that Service (a) the “expan, Ké
specialized, export-oriented
service sector and (b) the high-income
Hox GL RE Tam Ee LE, e
that sector; (2) the raded manufacturin sector,
including but not SE declinin i chea
labor for survival, as wellas dynamic oe sectors, some of which x
can actually be seen as part of the downgraded sector. A third source
-of Jobs_for immigrants;istheimmigrant community itself (Light,
1972; Chaney, 1976; Portes and Bach, 1980). These jobs include not
 The rise of global cities and the new labor demand 23
only those that are a temporary arrangement until a job in the
mainstream society can be found. They include also a large array of
professional and technical jobs that service the expanding and
increasingly income-stratified immigrant communities in the city
(Cohen and Sassen-Koob, 1982). And they include jobs that produce
services and goods for the subsistence of members of the community,
and therewith contribute to lower the costs of survival — both for
themselves and, ultimately, for their employers.
The redeployment of manufacturing and the associated inter-
national trade in specialized services, contain new business opportu-
nities for major urban centers. There has been a sharp rise in the
national and international demand for specialized services, induced
og by the dispersion of manufacturing and clerical work and by the
tion of work. Thus this growth rests in part
on the crisis of traditional manufacturing. While a city like Detroit
just loses factories, New York and w business
opportunities in their own and Detroit’s factory losses. Furthermore,
unlike what is the case with other kinds of services, production of
specialized services does not tend to follow population patterns. On
the contrary, they are subject to agglomeration economies and hence
tend towards strong locational concentration and production for
export nationally and internationally. Since the highly specialized
service sector is the most dynamic in the U.S. economy, its
concentration in major cities also entails that these come to contain a
disproportionate component of national economic growth.
I
restructuring
will analyze the of the job supply. The timing,
magnitude and destination of the new immigration become par-
ticularly noteworthy when juxtaposed with the pronounced changes
in the job supply in major urban centers. I will be particularly
interested examining the-generation of low-wage jobsin major
growth sectors, the advanced servicesand the downgraded manu-

unionized shops with sweatshops and industrial E and to

the prevalence of low-wage, dead-end production jobs in new
industries, particularly in the field of high technology. What is
notable is that even the most dynamie-and technologically developed
sectors of the economy, such as the advanced servi -
technology industries generate a considerable supply of low-wage
jobs with few skill and language proficiency requirements.
 24 Foreign investment: a neglected variable

Two analytical distinctions important to my argument are (a) the

distinction between job ch nd sector characteristics, and
(b) the distinction between sector characteristic s and growth status.
Thus, backward jobs can be part of the most modern sector of the
economy and backward sectors can be part of major growth trends in
the economy. Use of these two kinds of distinctions allows me to
techn
explain the presence ologi
of immigrants in cally
developed
secto rs and it allows me to posit that the downgraded
of the economy
manufacturing sector— also an important employer of immigrants — is
part of major growth trends. Furthermore, these distinctions also lead
me to a partial reconceptualization of what is often referred to as the
informal sector. As Portes (1983) has discussed, the informal sector
represents a survival strategy for the people involved and a mechan-
ism to transfer surplus to the formal sector of the economy. I will
argue further that the development of informal sectors in major cities
in the U.S. (and Western Europe) is in good part a function of the
characteristics of growth sectors in such cities; the existence
of
migran communities facilitates.thedevelopmental an informal _
sector but does not-cause it, or example, via importation of survival
strategies typical of the Third World. e cee
production, particularly the importa
growing nee—ef-highly c
tomized goods and services, GEELEN OMELET PuFe
small scales of production and labor-intensive work processes. These
are conditions that will tend SEET And in-
__form ali
can easily lead tozat ion
ademand for immigrant workers. `
In the empirical elaboration of the argument I will focus on New
York and Los Angeles. These are the two major producers of financial
and other advanced services in the U.S. They are also two major
producers of a downgraded manufacturing sector and major re-
cipients of the new immigration. And yet each of these cities is an
instance of what are usually seen as two very different configurations
in the 1970s: the declining Frostbelt and the ascendant Sunbelt.
Within the national economy each does indeed contain distinct
trends of decline and growth associated with each of these regions.
However, in the context of the major developments in the world
economy discussed in Chapter 4, what comes to the fore is their role as
centers for the servicing and management of the vastly decentralized
manufacturing sector and for the SE
generally, This role would also explain why both have been major
recipients of direct foreign investment in banking and other advanced
 The rise of global cities and the new labor demand 25

services over the last few years, as I will discuss in Chapter 6. Western
European and Japanese manufacturing is becoming decentralized in
ways akin to those of the U.S., including redeployment to select less-
developed countries and to the U.S. This generates a similar need for
centralized management and servicing. New York City and Los
Angeles seem to fill part of these functions alongside major centres in
Western Europe.
 2

The use of foreign workers

The use of foreign labor, whether slaves or immigrants, has been a

basic tendency in the development ofindustrial economies. In most
accounts of capitalist development, the struggle by employers to
recruit and maintain an adequate labor supply has been over-
shadowed by the problems of realization, most particularly, market
expansion. However, a central precondition for the realization of the
surplus-generating possibilities of a geographic location is the
formation of a politically and economically suitable labor supply. In
the study of centrally planned economies, the securing ofan adequate
labor supply has been more prominent than in that of free market
economies.
This chapter has a dual purpose. First, to document how past and
present dynamic growth situations tend to require drawing on
“foreign” labor supplies. This is significant because today, at a time of
growing unemployment, the general belief is that labor is always in
surplus. In fact, labor shortages and the need to bring in workers from
other areas have been common features in several recent high-growth
situations, such as the post World War II reconstruction in Western
Europe, the vast industrialization programs in OPEC members after
1973, and the U.S. Sunbelt region in the mid-1970s. Furthermore,
socialist economies also experience labor shortages in growth areas
and have relied on various types of foreign labor, e.g., Algerian
migrant workers in East Germany and Finns in the Soviet Union.
The contradiction between the existence of labor shortages and the
existence of large unemployment worldwide is due to various factors
which generate differentiation within the labor supply and in the
demand for labor. Among these factors are the price of labor, the
expectations of workers, the need for certain types of economic system
to secure cheap and docile workers, and the technological transform-
ation of the work process in the last ten years that has not only
upgraded some jobs but also downgraded many more jobs, making
them unattractive to workers with middle-class aspirations.
26
 Historical background 27
Second, this chapter examines how historically the introduction of
modern forms of production generates conditions conducive to
emigration. The generalization of market relations has had a strong
dissolution effect on traditional waged and unwaged work structures
thereby promoting the formation of migrant labor. I will discuss the
main forms historically assumed by this process. In Chapter 4 I will
argue that the development of export-oriented manufacturing in
several countries of South-East Asia and the Caribbean Basin con-
stitutes yet another historical example illustrating the introduction of
modern forms of production and the generalization of the labor
market, two fundamental conditions in the generation of labor
migration.
This chapter sketches the historical background pertinent to the
particular forms assumed by certain processes in the contemporary
phase. It also presents a comparative analysis of traits common to all
immigrant labor and concludes with a brief discussion of the main
labor migrations taking place over the last two decades to help place
the case of the U.S. today in a historical and comparative perspective.

HISTORICAL BACKGROUND

Labor scarcity has historically been a central problem enterprises

have had to solve to realize an area’s surplus-generating potential — a
fact easily forgotten today in countries experiencing high unemploy-
ment. Any situation in which the characteristics of the labor supply
threaten existing or foreseeable levels of accumulation can be defined
as one of labor scarcity (Portes, 1978: 471-482; Sassen-Koob, 1978:
516-518). Included in this definition are absolute shortages such as
those observed in the Arab oil-exporting countries today, and relative
scarcities such as those in many advanced industrialized countries in
the 1960s where successful working-class organization and welfare
state policies had strained the supply of cheap and powerless labor.
Specific tendencies in industrial economies have generated specific
types of labor scarcities. For example, rapid industrialization creates
a need for a direct, quantitative increase in the labor supply which is
only partly offset by labor-saving technologies. On the other hand,
declining profits generate a need for cheap labor in core countries to
offset the victories of organized labor.
The use of foreign labor has taken many forms, varying with a
country’s place in the international division of labor and the
particular mode of specialization prevalent at a given time in the
 28 The use offoreign workers

world system. For example, the use of Chinese contract labor on

Caribbean plantations in the nineteenth century differs significantly
from the use of Irish immigrant labor in England at the same time.
These were different labor-supply systems resulting from different
surplus-generating processes, each of which played a distinctive role
in the division of labor. In the Caribbean, the basic mechanism for
world accumulation was the transfer to the metropolitan countries of
value produced in the colonies by the development of export-oriented
production, e.g., plantations (Amin, 1974; Beckford, 1972; Centro de
Estudios Puertorriquenos, 1979). In England, on the other hand, the
surplus generated was not exported but transformed into further
economic activity and the associated expansion in labor demand.
This accelerated large domestic migrations to the cities and Irish
immigration (Jackson, 1963).
Furthermore, the use of foreign labor in surplus-generating
processes with similar characteristics (e.g., industrialization) may
have a different politico-economic role depending on the mode of
international specialization prevalent at the time. For example, the
rapid industrialization of both the United States at the turn of the
century and the Arab oil-exporting countries today generated a
pronounced need for foreign labor. But industrialization and labor
immigration in the United States occurred at a time when the world
economy was still in the process of formation and the struggle for
hegemony among the leading countries was moving them into a new
phase of the international division of labor. Industrialization in the
oil-exporting countries today is taking place under conditions of
technological dependence and an unusually high incidence of
imports of basic inputs. Furthermore, in the current phase of
international specialization, a certain level of industrialization exists
in most countries and no longer ensures any kind of pre-eminence.
Using location in the international division of labor as a criterion,
one may distinguish four types of instances in the development of
world capitalism which have historically generated significant levels
of labor imports. Fach of these instances subsumes a variety of
concrete historical stages in the development of the international
` division of labor. Hence, periodization is, to a degree, subordinated
for the sake of a more analytic conception of the international division
of labor. To group migrations belonging to different historical stages
into one category clearly has shortcomings. On the other hand, in
light of the prevalence of accounts of single migration streams in the
immigration literature, it seems useful at this point to identify
 Historical background 29
common roots among apparently highly divergent processes. The
purpose here is to provide a general background for the subsequent
detailed discussion of labor migrations.
The first type of instance may be characterized by the association of
labor imports with the expansion ofthe capitalist mode of production
into less- or un-“‘developed” areas. The basic mechanism of accumu-
lation in this case is the international transfer to the metropolitan
centers of value produced in the Third World (Emmanuel, 1972;
Amin, 1976: 133 ff.; Centro de Estudios Puertorriguefios, 1979). One
way of accomplishing this is the development of export-oriented
production, most typically mines and plantations and, today, highly
labor-intensive manufacturing industries. Mines and plantations
entailed the sudden introduction of large-scale production in areas
where pre-capitalist modes of production had been prevalent or
exclusive. Mobilization of the necessary labor force thus required an
equally sudden transformation of subsistence producers into wage-
laborers, slaves, or peons (Schapera, 1947). This accounts, in part, for
the violence of the process of capitalist penetration into the Third
World. In areas where the surplus-generating possibilities exceeded
the local labor supply arid there were economic or technological
constraints upon the substitution of labor by capital, the new
enterprises imported workers. There follow some examples, since I
will not return to this case.
In Ceylon (now Sri Lanka) the labor force required for coffee, and
later, tea production was formed by importing hundreds of thousands
of South Indians. Nearly one million were imported in the 1840s and
1850s alone (Halliday, 1977: 156-157). The labor supply needed for
sugar production in the Caribbean Basin was first formed through the
import of at least one-half million workers from India who typically
came on five-year contracts with free round-trip transportation
(Williams, 1970: 348). Similarly, in Brazil, slave labor was imported
to the mines and plantations and was later replaced by wage labor;
Europeans, particularly from Southern Italy, were offered free
transportation and a subsistence plot if they agreed to be wage
laborers on coffee plantations (Furtado, 1963: chapters 20-24).
African plantations and mines frequently resorted to seasonal
migrant workers recruited from distant tribes, a precursor of today’s
widespread international migrations of workers within Africa
_(Lasserre-Bigorry, 1975; Amin, 1974a; Arrighi and Saul, 1973;
Wolpe, 1975; Wilson, 1976).
In the second type of instance, labor imports are associated with
30 The use offoreign workers

capital expansion and, unlike the first case, a significant level of

capital accumulation in less-developed regions. The large migrations
to the United States in the late 1800s and early 1900s can be seen as a
process called forth by accumulation rather than simply as expansion
aimed at value transfers to the metropolitan centers (Thomas, 1973).
The association between labor imports and capital expansion is even
clearer in the case of oil-exporting countries today. The construction
and operation of a production apparatus financed by oil revenues
could not take place without large-scale labor imports covering the
whole occupational range. However, the association between labor
imports, accumulation, and a changed place in the international
division of labor is more difficult to establish in the case of the oil
exporting countries today than it is for the United States at the turn
of the century. One reason for this difference is that the decision to
launch an accelerated industrialization program has required the re-
injection ofoil revenues into the international economic system due to
the need for the large-scale imports of inputs. Eventually, this has led
to a renewed dominance of these countries by international capital,
only under a different form.! Unlike the mines and plantations
described in the first instance, value transfers to the advanced
industrial countries are here mediated by a program of national
construction involving basic industry. On the basis of this changed
role in the accumulation process, I have tentatively included the case
of the oil-exporting countries in the second instance, characterized by
the association of labor imports with accumulation in less-developed
countries.
In the third type of instance, labor imports are associated with
intense capital accumulation in developed countries.? Examples of
this include the large immigrations of Irish workers into the
industrialized cities of Britain — estimated to have reached 700,000 by
1850 (Jackson, 1963: 11) — and the migrations of Southern and
Eastern Europeans into Switzerland, old Germany, and France
throughout the 1800s and early 1g9oos (see, e.g., Cinanni, 1968: 29).
After World War II, reconstruction generated a large demand for
labor which, in most Western European countries, could only be
satisfied through labor imports. However, even in the cases of acute
labor shortages, such as those in Switzerland, Luxembourg, and the
Federal Republic of Germany (henceforth West Germany), an
important factor determining the desirability of labor imports as a
solution to labor shortages was its profitability due to cost-reducing
and anticyclical effects.*
 Migration as a global labor supply system 31

In the fourth type of instance, labor imports are associated more

directly with the reproduction of capital’s dominance over labor in
developed countries. Labor imports by Western European countries
after World War II as well as several aspects of immigration policy
and practice in the U.S. during the last few decades are examples of
this type of international labor migration.’ Such imports (1) increase
the level of profits of certain firms and, more generally, of capital as a
whole by lowering the cost of labor and the cost of reproduction ofthe
labor force; and (2) operate as an anticyclical mechanism by
facilitating the export of unemployment through repatriation of
immigrants or lack of unemployment compensation; this anticyclical
effect is also furthered by the downward pressure on fluctuations in
the demand for goods and services by that share of the labor force
represented by immigrants due to the low dependency ratios and
minimal consumption levels typical among immigrants.
These, then, are the four types of instances in which labor imports
have historically played a significant role in the constitution of the
labor supply needed for the world accumulation process. As I
indicated earlier, these are not historical stages. At a given time,
different types of foreign labor-supply systems were prevalent in
different locations of the world economy. For example, slavery
became an important labor supply system in Brazil at a time when it
was being replaced by other types of labor in the U.S. On the other
hand, the same type of foreign labor supply system may be prevalent
in different locations of the world economy at different times, e.g., the
use of Indian contract labor in the Caribbean during the last century
and the use of Caribbean contract labor in the U.S. and Venezuela
today.

MIGRATION AS A GLOBAL LABOR SUPPLY SYSTEM

International labor migrations did not evolve as an important labor-

supply system until the consolidation phase of the world capitalist
economy (Portes, 1978; Zolberg, 1978; Centro de Estudios Puertor-
riquefios, 1979). The earlier phases of capitalist penetration and
incorporation of new regions into a single world economy under
European hegemony had generated different types of labor-supply
systems. The most important types relied on (1) forced movements of
people from one area of the periphery to another, and (2) the
- subjugation of indigenous and hitherto autonomous populations and
their forced transformation into laborers through such means as
a2 The use offoreign workers

slavery, mita, peonage, encomienda, and tribal contract labor.” Some of

these persist today in areas not completely transformed by the
generalization of market relations.
Colonizing migrations belong to the early stages of capitalist
penetration.’ They are distinct from forced-labor supply systems as
well as from the international labor migrations that evolved at a later
stage. Unlike both of these, colonizing migrations originated in
developed countries and colonists were viewed as a valuable resource.
Although there are important differences among colonizing mig-
rations (Omvedt, 1973), they have a common root in the process of
capitalist penetration into previously unincorporated, autonomous
regions of the world that was in full motion by the sixteenth century.
In this early stage, when Western Europe was engaged in state
building and colonial expansion, population was seen as a scarce
resource. The ideological context was one of belief in the absolute
value of population. States enforced strong anti-emigration policies
(Hansen, 1961; MacDonagh, 1961) oriented toward a form of
primitive accumulation regarding population: “‘keeping the indigen-
ous population within the sovereign’s possessions, maximizing its size,
while acquiring a surplus from elsewhere in the system or even outside
of it at the lowest possible cost” (Zolberg, 1978: 246). European
mercantilism considered emigrations a resource loss. EvenJ. B. Say,
the foremost follower of the Scottish economists in France, made an
exception to the free-market model when it came to emigration.
Throughout the seventeenth, eighteenth and well into the nineteenth
centuries, this view on population was captured in axioms such as
Rodin’s “Il n’est force ni richesse que d’hommes”’; Sir Joshua Child’s
“The riches ofcity or nation [lie] in the multitude ofits inhabitants”;
and Sarmiento’s “Gobernar es poblar.”
Population was indeed a valuable and scarce resource in the
context of slow demographic growth, labor-intensive production,
labor-intensive warfare, and the increasing economic and strategic
importance of settling uncolonized areas. The population in Western
Europe did not even meet the labor needs generated by internal
industrialization, let alone the massive need for workers in the
colonies. The latter had to be met through large-scale population
shifts from one area in the periphery to another. European states
contributed only a small share of the total labor needs of the colonial
empires, and then only for selected areas. Britain, the dominant
power, had the greatest need for labor. It could not have consolidated
 Migration as a global labor supply system 33
its empire without recourse to millions of workers from the Third
World. This explains the massive population shifts organized by
Britain: millions of West Africans to the Caribbean, millions of Tamil-
speaking Dravidians to Ceylon (now Sri Lanka), and hundreds of
thousands of Chinese and Indians to the Caribbean, Indians to East
Africa, and so on.
The incorporation of most areas of the world into the capitalist
system resulted in the disintegration or subordination of non-
capitalist forms of subsistence (Amin, 1974; Wallerstein, 1974; Centro
de Estudios Puertorriqueños, 1979). Although in colonial areas this
disintegration was less thorough than in Western Europe, it was
sufficient to move large masses of people into the labor market. Here
we find the conditions for the creation of asupply ofpotential migrant
workers. Capitalism transforms land into a commodity. Because land
was the basis for precapitalist modes of subsistence, its transformation
into a commodity created a mass of landless peasants with little
alternative to becoming part of the rural or urban labor reserve. This
was especially pronounced in the colonial areas where the disinteg-
ration of precapitalist modes of subsistence did not arise out of the
expanded reproduction of capital in situ. As a result, the transform-
ation of displaced peasants and farmers into wage labor that took
place on such a large scale in Western Europe and the United States
occurred only minimally in colonial areas.
The generalization of capitalist relations and the corresponding
transformation of land into a commodity gave a “‘voluntary” quality
to the resulting migrations.* This was in contrast to the forced
population transfers of the earlier stage. The disintegration of
autonomous modes of subsistence resulted in the creation of labor
reserves willing to be mobilized into the labor market. There was no
longer a need for the direct, physical subjugation and mobilization of
workers. The new social structure accomplished this by robbing them
of their means of subsistence. This process was not fully completed
until the twentieth century.”
The consolidation of a world system through the subordination of
large areas of the world in the form of a periphery also brought about
a shift in the flow of labor. Henceforth, the major international labor
flows originated in the less-developed countries and went to satisfy the
labor needs of the industrializing countries. The flow was no longer
from one colonial area to another, as was the case in the earlier phase
of penetration and colonization. After the early phase of forced-labor
34 The use offoreign workers

mobilization, the reserves from which immigrant labor was drawn

expanded gradually to encompass more and more parts of the world.
The major Western European countries first imported labor from
their immediate peripheries: Irish went to England; Poles to Ger-
many; Italians and Belgians to France (Castles and Kosack, 1973;
Cinanni, 1968; Hechter, 1975). Then this periphery was expanded to
include all of Eastern and Southern Europe — the main sources of
labor for Western Europe and eventually the United States. As these
reserves were exhausted or their flows interrupted due to wars, China,
Mexico, and North Africa emerged as important labor suppliers. In
the last two decades, the Caribbean Basin and a growing number of
countries in South America, Africa, and Asia have become major
labor suppliers.
An important new pattern of labor flows has been added since the
1960s to the continuing flow from developing countries to developed
countries.'° The export of jobs from the developed countries to the
developing countries in the form of export processing zones, has
brought about new domestic and international labor flows within the
developing countries. Without the development of the new industrial
zones, some of these internal migrations would not have occurred. I
will return to this subject in Chapter 4.
The shift from mobilization of forced-labor and colonizing mig-
rations to international labor migrations reflects the complex internal
differentiation of the world system. The consolidation of the world
economic system has paralelled the strengthening of the nation-state
as the basic political unit. Since the late nineteenth century, the state
has regulated the entry and exit of labor. Zolberg (1978) convinc-
ingly argues that more variance in migration flows can be accounted
for by the geopolitical interests and actions of states than by
individual migrants’ motivations and invidious comparisons between
country of origin and destination.
A state’s position on migration partly reflects its location in the
world economy (Hansen, 1961; Plender, 1972; Thomas, 1973). The
most developed country, Britain, had the most liberal position. Thus,
while Britain relaxed its anti-emigration stance after the Napoleonic
Wars (1812-1815) and introduced the most liberal policy, other
European states such as France, some of the German states, and
Russia maintained strong anti-emigration policies. France, for
example, had sound reasons to be opposed to emigration. Indus-
trialization and the generalization of the labor market were not as
 Migration as a global labor supply system 35
fully developed there as elsewhere in Western Europe." Full-time
farming remained widespread. Small families, however, were a
condition of its viability given the small size of holdings. Slow
demographic growth was further compounded by France’s continu-
ing need for soldiers in its attempt to create a new colonial empire in
North Africa and Eastern Europe. France’s internal economic
structure, the loss ofits colonial empire in North America and Asia,
and heavy war involvement created interests different from those of
Britain (Savage, 1979; Zolberg, 1978).
Furthermore, even within the well-integrated North Atlantic
region controlled by Britain, restrictions on the movement of goods
and people were more commonplace and effective than the laissez-
faire view suggests (MacDonagh, 1961). Britain did not suddenly
abandon its mercantilist position on emigration, but at least three
factors contributed to its decline: (1) a 15 percent population growth
shown in the 1811 census; (2) continued internal migration
supplying labor to the new urban industrial centers; and (3) the
growing influence of the political economists who viewed emigration
and settlement as a way of creating foreign markets for British
goods.'? Nonetheless, attempts to control emigration continued
through regulations, preferential fares, and restrictions.
In the United States, immigration policy fluctuated considerably
throughout the nineteenth century (Hansen, 1961; Plender, 1972;
Zolberg, 1978). By 1819, the economic boom of the early nineteenth
century had collapsed and the government resorted to a law that had
never previously been enforced to restrict immigration. When the
economy recovered it stopped enforcing the law and immigration
grew rapidlyin the 1830s and 1840s. However, by 1850 immigration
was once again closed. The economy began expanding again after the
Civil War, but an economic boom in Europe at the same time
absorbed a growing share of European migrants. This led the
American government to offer incentives to immigrants. The home-
steading program, made possible by further expropriation of Indian
lands, not only drew settlers but also created a supply of industrial
workers from the ranks of would-be settlers who could not acquire
land. Labor shortages in this period were so severe that Congress
passed a law authorizing employers to pay passage for prospective
immigrants. Several states established recruitment agencies in
Europe, and a treaty with China for the import of labor was signed in
1868.
36 The use offoreign workers

The replacement of earlier labor-supply systems by international

labor migrations was a gradual process corresponding to the gradual
transformation of what is today the Third World. In the middle of the
1800s, the labor market in the North Atlantic region was more
generalized than in other areas of the world. While free labor
replaced slavery in areas under British control, slavery actually
increased in areas such as Latin America. There, slave imports rose
from an average of 22,450 a year for the period 1701-1810, to an
average of 29,700 a year for 1811-1870 (Curtin, 1969). Various forms
of labor-supply systems, ranging from slave labor to free labor, were
instituted in different parts of the world. Common to most was the
active participation of the state. Nevertheless, the forms of labor
supply dominant in the capitalist core eventually became dominant
in the Third World, confirming Amin’s (1974) proposition that the
rhythm of expanded reproduction at the center determines the
tendencies of the world system as a whole.

THE STATE AND IMMIGRATION

At first glance, the strengthening of states and the concomitant

enforcement of borders seems to counter the needs of a consolidated
world economy for massive international labor migrations. In fact,
national boundaries do not act as barriers so much as mechanisms
reproducing the system through the international division of labor.
The capitalist world economy consists of a multiplicity of political
units, the nation-states. This ensures that no single political regime
can gain full control over the world economy. “Capitalism as an
economic mode is based on the fact that the economic factor operates
within an arena larger than that which any political entity can fully
control ... This gives capitalists a freedom of maneuver that is
structurally based” (Wallerstein, 1974: 348). National boundaries
are one way of facilitating international specialization and higher
returns on accumulated capital, including human capital. Both are
central tendencies in capitalist development (Amin, 1974; Em-
manuel, 1972).
The enforcement of national borders contributes to the existence of
a large number of countries in the form of a periphery and the
designation of its workers as a labor reserve for global capital.
Border enforcement is a mechanism facilitating the extraction of
cheap labor by assigning criminal status to a segment of the working
 The state and immigration 37
class — illegal immigrants, Foreign workers undermine a nation’s
working class when the state renders foreigners socially and politically
powerless. At the same time, border enforcement meets the demands
of organized labor in the labor-receiving country insofar as it
presumes to protect native workers. Net selective enforcement of
policies can circumvent general border policies and protect the
interests of economic sectors relying on immigrant labor. This points
out the contradictory role of the state in the accumulation process,
especially evident in the consolidation of the liberal state (Petras,
1980; Weinstein, 1968).
While the generalization of the labor market emerging from the
consolidation of the world capitalist economy creates the conditions
for international migrations as a world-level labor-supply system, the
strengthening of the nation-state creates the conditions for immigrant
labor as a distinct category of a nation’s labor supply. That is to say,
immigrant labor is not just any labor. It is a component in the labor
supply with a distinct role in the labor process characterized by: (1)
the institutional differentiation of the processes of labor-force repro-
duction and maintenance; and (2) a particular form of powerlessness,
associated with formal or attributed foreign status, that meets the
requirements of types of work organization based on direct rather
than structural control over the workforce.

The reproduction of the labor force

The process of reproduction takes place in the country of origin; that
of maintenance at least partly in the receiving country. Together they
allow the receiving country to externalize renewal costs (Burawoy,
1976; Sassen-Koob, 1978). This institutional differentiation con-
stitutes the invariant characteristic of any system of immigrant labor.
While both the conditions which produce a particular migration and
the traits of individual migrants may change, the system itself need
not change. Similarly, although the conditions producing and
reproducing the system of migrant labor may vary over time, the
traits of individual migrants may remain the same (e.g., rural,
unskilled, young, and so forth). Finally, although migrants’ traits may
be the same, their place in the receiving country may vary. For
example, a growing number of Mexican immigrants are now
employed in urban jobs in the north-central region of the United
States, though they may have traits similar to those of Mexicans
38 The use offoreign workers

employed in agriculture in the Southwest. An analytical distinction

between the individual migrants, the conditions producing and
reproducing the system of migrant labor, and the system itself can in
this way be maintained.
Institutional differentiation helps lower the cost of the reproduc-
tion of the labor force. This macrosocial effect requires a view of
capital as a whole — as a historical category— rather than of individual
enterprises. Confirming this cost-lowering effect is difficult. Except in
the case of highly trained immigrants, there are no estimates of the
monetary value involved in labor migrations.'* The “brain-drain” is
a small part of all international labor migrations and must be
distinguished from the overall supply of immigrant labor which
typically has a low human capital component. In the case of
immigrant labor, variables other than the human capital represented
by individual migrants have to be used. Macrosocial variables such as
government expenditures for social services and infrastructure are
useful. Some of the best data come from countries with high levels of
control over the recruitment, employment and repatriation of
immigrant workers. For that reason, I have used data on Western
Europe, particularly Switzerland and Western Germany.
Labor importing countries in Western Europe have realized
substantial savings on social services and infrastructure as a result of
their access to foreign labor (Bohning and Maillat, 1974; Salowsky,
1972). Before closing immigration in the early 1970s, West Germany
and Switzerland especially screened immigrants carefully. Recruits
had to pass strict medical examinations and possess a certain level of
education which, though below average in the importing countries
was high for sending countries and required significant outlays by the
state (Castles and Kosack, 1973; Rist, 1978). Many immigrants were
skilled or semiskilled, and many of these were recruited off jobs in
their native country (Bohning, 1975a, 1976; Cetin, 1974; Krane,
1975; OECD, 1974; Paine, 1974; Poinard and Roux, 1977; Schiller,
1974; Simon, 1973). As a result, some labor-exporting countries such
as Algeria, Yugoslavia, Morocco, Greece, and Portugal enacted
protective legislation under pressure from local employers who were
losing workers they had often trained on the job. In short, besides
shifting the costs associated with reproducing a share of its labor
supply to the labor-sending country, the labor-importing countries
have been quite selective in their recruitment and therewith also
benefited from the private and public investments in training in
sending countries.
 The state and immigration 39
The evidence for Western Europe points out that immigrant labor
offers several important advantages to a country. Foreign workers
demand fewer social services than national workers. Immigrants
often occupy vacant workplaces and housing, and their presence does
not require additional expenditures by the government or private
capital. This is especially true in the initial phases of immigration
(Bohning, 1976; Jones and Smith, 1970; Kindleberger, 1967). The
generally low dependency ratios of immigrant workers and their
below-average consumption exert relatively little pressure on the
production of goods and services.'* Immigrant workers produce more
in relationship to what they consume than native workers. Further-
more, some of the foreign workers can be repatriated when they are
no longer needed or when their physical or mental health prevents
them from working. The costs associated with unemployment,
workers’ disability, and medical care can at least be partly exported.
Moreover, social discontent can be exported (Freeman, 1979). In
short, the possibility of repatriation and the below-average demands
of immigrants generally exempt the receiving country’s economy
from the need to build the kind of infrastructure and service
organizations that would be required by an equal number of national
workers. This issue, however, is complicated by the presence of
children born to foreign workers and the number of these workers
who become more or less permanently settled (Rist, 1978), a subject I
will return to in Chapter 5.

The organization of the labor process

Employers not only seek to obtain labor, but to obtain labor that can
be used under specific conditions of organization of the labor process.
The ways labor has been used have varied historically and have
generated distinct components within the overall labor supply. Low-
wage labor, in its many forms, is one such component. In indus-
trialized economies, low-wage labor tends to be employed in firms or
sectors of firms which have shift work, obsolete and hazardous
equipment, and job insecurity. These conditions embody a form of
control over the workforce that presupposes the powerlessness of the
workers. The continuing creation of such jobs is particularly
significant in advanced industrialized economies where organized
labor has attained considerable power and where the more oppressed
native workers have become politicized, are unwilling to take highly
undesirable jobs even if they pay minimum wage, and have access to
40 The use offoreign workers

welfare benefits as an alternative to low-wage jobs. In this context,

immigration can be seen as a labor-supply system particularly suited
to the needs of firms where the organization of the labor process
entails low wages and powerless labor. Such firms are a sizeable
component of advanced industrialized economies (Edwards, 1979;
Melman, 1965; Piore, 1978; Sassen-Koob, 1984b; Bluestone,
Harrison and Gorham, 1984). It is important to emphasize that both
backward and very modern and highly dynamic growth sectors in
advanced industrialized economies generate a vast array of such low-
wage jobs. As I will examine in Chapter 5, the evidence for the U.S.
points to an increase in low-wage jobs since the early 1970s.
The use of immigrant labor reduces the cost for employers directly
through lower wages and indirectly through lower costs for the
organization of production. Their status as foreigners (often as
temporary labor), their lack of familiarity with union politics, and
their frequent segregation from native workers on the job and in
neighborhoods, all combine to make immigrants unusually de-
pendent on their employers and difficult to recruit to working-class
struggles according to some analysts (Castles and Kosack, 1973).
Given the prevalent view of immigrants as cheap labor, it is
important to point out that not all immigrants are at the bottom of
the wage scale and that it is not simply through their low wages that
they have a cost-lowering effect on production. Firms in the
competitive sector of capital derive additional benefits from (1) labor-
supply flexibility (e.g., night shifts and ease of hiring and firing) and
(2) organizational flexibility (e.g., the use of hazardous equipment in
substandard work spaces). These two types of benefits may be quite
significant for firms that operate on narrow profit margins, are
subject to wide fluctuations in demand, and depend for their survival
on meeting demand whenever it emerges. The importance of these
two types of flexibility, in addition to low wages, is evident in the
northeastern United States where firms pay taxes even on illegal
workers (Piore, 1979) and a large share of illegal workers are
estimated to receive minimum wages or above (NACLA, 1979; North
and Houstoun, 1976; Sassen-Koob, 1980). Thus, if we only consider
wages, immigrants are not always much cheaper than low-wage
national workers; it is also their powerlessness which makes them
profitable. The availability of immigrant labor reduces the pressure
on backward sectors of the economy to change techniques of
production or toimprove working conditions unacceptable tonational
 The state and immigration 41
workers (Böhning, 1975; Böhning and Maillat, 1974; Castells, 1975;
Castles and Kosack, 1973; Oppenheimer, 1974; Piore, 1978;
Sassen-Koob, 1980; Wachter, 1978). And it reduces the pressure to
upgrade jobs in modern sectors of the economy (Sassen-Koob, 1984a;
1984b), a subject I return to in Chapter 5.'°
In Western Europe, the availability of an abundant, cheap, and
highly flexible labor supply has been a key factor in the development
of a capital-intensive production apparatus. The supply of foreign
labor prevented slowdowns, bottlenecks, and wage increases during
the reconstruction period after World War II, all of which would
have stimulated inflation (Balke, 1966). It also allowed employers to
postpone costly capital investment, as, for example, in the automobile
industry in France. Eventually, many immigrant workers were
employed in capital-intensive firms in the monopoly sector, belying
the notion that they are only to be found in backward sectors of the
economy. For their willingness to work nights and weekends allowed
these firms to operate at full capacity. Western Europe profited from
the availability of immigrant workers not only because of their
cheapness, but also because they satisfied an absolute need for labor
(except in France and England) and constituted a flexible labor
supply.
It is not sufficient to show that immigrants are more susceptible to
direct personal control to explain why they are more desirable to
certain types of employers than native workers. First we must show
that control is a significant variable in the organization of the labor
process. This is difficult because the literature on work structure views
the labor process as an almost inevitable consequence of techniques of
production, themselves generated by some overall process of tech-
nological development (Nelson, 1975). Such a view tends to ignore the
struggle for control at the workplace. More attention should be given
to this variable, as there is growing evidence that the organization of
work is the product, not only of a technical process, but also of a social
process (Baxandall et al., 1976; Braverman, 1974; Burawoy, 1981,
Edwards, 1979; Marglin, 1974; Montgomery, 1979; Stone, 1974;
Work Relations Group, 1978). Studies of the coal and steel industries
in particular show how the organization of the labor process resulted
in part from the struggle between managers and workers over how
much such organization would reflect or constrain their interests
(Montgomery, 1979; Stone, 1974; Work Relations Group, 1978).
- This struggle for control cannot be reduced to overt conflicts on the
42 The use of foreign workers

shop floor, but must be viewed as a strategic struggle for control

between the historical categories of capital and labor.
Different types of organization of work use different systems to
control workers:
(1) The transfer ofskills from craftsmen to machines historically has
meant a loss of control by workers over the process whereby
labor power is transformed into actual labor (Braverman, 1974;
Edwards, 1979; Montgomery, 1979; Stone, 1974). In produc-
tion work, the standardization oftasks and their performance by
machines generated a type of control that could be described as
“technical” (Edwards, 1979) insofar as it was mediated by the
rhythms of machines (e.g., the assembly line). In the context of
large-scale capital-intensive production, however, this technical
control has resulted in a new kind of control by workers.
Industrial unions were the institutionalized outcome of this
control.
(2) Large firms also developed structural forms of control in white-
collar work. Those components of the work process that could
not be routinized, either through mechanization or standardiz-
ation, were incorporated into an organization of work that
ensured the standardization of the workers themselves. This was
achieved by.imposing specific work behaviors and attitudes that
led to workers internalizing the firm’s goals.
(3) Immigrants, especially in the United States, are often employed
in firms where the system of control rests not on techniques of
production and elaborate organizational arrangements, but on
the powerlessness of the workers. Control is not structural, but
immediate and personal. Employers can respond to workers’
dissatisfaction, complaints, and rebellion by firing them. Given
these means of controlling workers, the powerlessness of immi-
grants is particularly significant (Sassen-Koob, 1980, 1981b).
The selective enforcement of immigration policies further ac-
centuates what is distinctive about immigrant labor. Several studies
on Mexican immigration to the United States have documented how
the state creates a profitable supply of cheap, powerless labor,
through such selective enforcement (Bach, 1978; Briggs et al., 1977;
Burawoy, 1976; Bustamante, 1976; Cardenas, 1978; Jenkins, 1978;
Portes, 1977, 1978). Bach (1978: 539) observes that overemphasizing
the role of policy enforcement in studying the exploitation of Mexican
immigrants assumes that correct policies and correct enforcement
 Contemporary trends 43
will eliminate exploitation: “The conditions of exploitation of the
Mexican immigrant cannot be erased so easily.” These conditions are
rooted in the process of reproduction of capitalist social relations in
general and the state’s participation in this process.'®

CONTEMPORARY TRENDS

Several trends are discernible in contemporary international labor

flows. Some of these represent older trends in a new historical form;
others seem to be novel. First, the advanced industrialized countries
continue to employ immigrant labor as they did in the nineteenth and
early twentieth centuries. But the number of developing countries
supplying labor is growing and immigrant workers are claiming a
larger share of urban service jobs. Second, rapid industrialization in
the oil-exporting countries has generated a major new international
labor flow. Third, labor import and export policies suggest immi-
grants are increasingly being as a commodity. I will discuss
each of these trends in turn.
(1) Most advanced industrialized countries use a considerable
number of immigrant workers. In 1982, immigrants constituted 7
percent of the employed labor force in the major Western European
countries. In the smaller countries, immigrants range from between
1.5 and 4 percent of the labor force in countries such as Denmark and
the Netherlands, and from 17 to 33 percent in Switzerland,
Luxembourg, and Liechtenstein (SOPEMI, 1980; Direction de la
Documentation Frangaise, 1986). Despite several recessions and the
closing of immigration, there are an estimated 11 million immigrants
in the major receiving countries, half of whom are working. These
figures are an underestimate because they exclude seasonal and
frontier workers and illegals (SOPEMI, 1980). These figures also
exclude political refugees and displaced persons after World War II.
The United States, Canada, and Australia have increased their
intake of immigrants since the middle of the 1960s. Legal immig-
ration to the United States increased to 500,000 entries a year in the
1980s, up from 265,000 in 1960." The 1970 U.S. Census recorded 9.6
million immigrants, representing 4.7 percent of the population. The
1980 Census recorded 13.9 million immigrants, representing 6.2
percent of the population (U.S. Dept of Commerce, Bureau of the
Census, 1981c). These figures underestimate the impact ofimmigrant
workers on concentrated, regional labor markets, and they exclude .
44 The use offoreign workers

undocumented immigrants, estimated to range from three to seven

million, a large share of whom are probably employed.
Several new patterns are discernible since World War II (see Table
2.1). The labor-supplying peripheries for Western Europe and North
America have shifted and expanded to incorporate new countries. In
the case of Western Europe, these new sending countries are
Yugoslavia, Turkey, Greece, Algeria, Tunisia, and Morocco. On the
other hand, major nineteenth-century labor exporters such as
Sweden, Denmark, and Belgium have also become labour importers
in the last few decades, while Spain and Portugal have consolidated
their position as major labor exporters. Italy has remained the major
labor supplier since the late nineteenth century, with the exception of
the period between 1926 and World War II when the fascist regime
restricted emigration in the mercantilist tradition. East Germany,
whose territory includes many of the labor-supplying German states
in the nineteenth century, has become a labor importer. Further-
more, some of the traditional labor exporters now have a significant
number of immigrant workers, mostly undocumented; the presence
of North African workers in Spain, Italy, and Greece is the most
notable example.
In North America, there has been a major shift to non-European
immigrants since the 1960s. Asian and Caribbean countries now
provide half of all the immigrants to Canada (Hawkins, 1977). In the
United States, the labor-supplying Third World has expanded to
include a growing number of South American, Caribbean, and Asian
countries. Two recent changes in immigration flows to the United
States are significant. First, low-wage countries have replaced high-
wage countries as the main source of immigrant labor. In 1950, 60
percent of legal immigrants were from Europe and less than one-
seventh from Asia and Latin America (excluding Mexico). By 1970,
these shares were reversed (INS 1981). Second, there has been a
marked increase in immigration. Between 1961 and 1970, there were
1.2 million more immigrants admitted than between 1950 and 1960;
and between 1970 and 1980, 5 million more.
In the main labor-importing countries of Western Europe, immi-
grant labor has consolidated its place in the secondary sector and
expanded its role in the tertiary sector. In the initial phase after
World War II, immigrants were recruited mostly for agriculture and
construction. Today, they are concentrated in the secondary and
tertiary sectors. The cases of Switzerland and West Germany are
 Contemporary trends 45
R
Table 2.1 Foreign workers
a > A SES
in the main labor-receiving countries
A
of Western
Europe
—————— I a UO

Country 1976
As s %%of”
of Total
1979 Labor force

West Germany 2,027,100 2,025,100 9-3

Austria 171,000 175,200 6.4
Belgium 306,300 310,100 8.0
Denmark 39,400 42,867 1.5
France 1,642,800 1,591,900" 75
Luxembourg 49, 100 50,400 33-4
Netherlands 180,500 196,400 , 4.0
United Kingdom 1,665,000" 929,000 3.0
Sweden 235,500 231,999 53
Switzerland 518,000 490,700 17:3

“Excludes seasonal and frontier workers

Estimate made October 1979 using the 1976 figure and annual flow data for subsequent years
f This is an estimate by the European Economic Community Commission. Most immigrants
working iin the U.K. are from Commonwealth members.
4 Based on 1979 Labor Force Survey by the Department of Labor.
Source: SOPEMI (1977, 1979, 1980); Commission des Communautés Européennes (1977);
Lebon and Falchi (1980)

interesting in view of the fact that they tightly control recruitment

(see Table 2.2). This suggests that the levels at which immigrants are
employed actually correspond to the need for foreign labor. A few
years after the immigrant labor force was stabilized, almost 73
percent of immigrants in West Germany (1975) and 67 percent in
Switzerland (1972) were in the secondary sector, with the rest mostly
in the tertiary sector. Immigrants comprised 13 percent of all
secondary sector workers in West Germany and almost 30 percent in
Switzerland.
This pattern is less clear in the United States. Since the 1960s, when
legal immigration has been predominantly from low-wage countries,
there has been a pronounced growth of immigrant labor in low-wage
service jobs. A good indicator of this trend is Mexican immigration,
because it has provided cheap labor to the United States since it
began in the twentieth century. Originally employed mainly in
agriculture, most Mexicans today hold secondary and tertiary sector
jobs.'*
S The growing concentration of immigrant workers in the urban
tertiary sector is a significant trend that has not received sufficient
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 Contemporary trends 47
study. This trend may be an indicator ofcertain limits to the historical
transformation of the international division of labor. The service
sector is labor intensive, but unlike other labor intensive components
of industrialized economies, many services cannot be exported to
countries with large reserves of cheap labor. The growing concen-
tration of immigrants in the service sector of developed countries
complements the growing export of unskilled and semi-skilled
manufacturing jobs from the developed countries to the Third World
(Sassen-Koob, 1981b), a subject I return to in Chapters 4 and 5.
It can be argued that the recent, large-scale capital flight from the
northeastern United States and the recent, large-scale immigration of
workers from the Third World to the same area are two processes with
a common origin. Organized labor’s struggle in the old northeastern
industrial centers resulted in higher wages, a measure of political
power, and a welfare apparatus that supports unproductive labor
and provides an alternative to low wages. These factors helped raise
the cost of labor and the cost of the reproduction of the labor force in
the Northeast. Those components of the economy that could move
did so. Those that could not used the internal reserves of low-wage
labor and, when these became politicized in the 1960s, gained
recourse to immigrants. These same social conditions in the Northeast
explain why legal as well as illegal immigrants there earn higher
average wages than those in the South of the United States. It
suggests that the socioeconomic context — as expressed by the costs of
the reproduction of the labor force — has a greater effect on immigrant
wages than immigrant status. Immigrants are part of the working
class in the receiving country and are subject to the same conditions
that shape wage levels of national workers. The powerlessness of
immigrants, rather than low wages per se, and the consequent
possibility of using them for undesirable jobs and of exercising
considerable control over them makes immigrants a distinct category
within the overall labor supply. Similarly, the export of jobs is not
necessarily directed to countries with the cheapest labor in absolute
terms, but to countries where labor can be controlled, such as
Indonesia and the Philippines.'®
(2) The main obstacle to large-scale industrialization in Arab oil-
exporting countries after 1970 was an acute labor shortage (Halliday,
1977; International Labour Office, all sources; Legum, 1978).
Massive immigration to these countries took place throughout the
1970s and continues today (see Table 2.3). The country studies
48 The use offoreign workers

Table 2.3 Foreign labor force in Arab labor-importing countries, 1975

Total À Employed
Country labour force Nationals (%) foreign workers (%)

Saudi Arabia 1,600,000 51.6 48.4

Kuwait 303,288 30.3 69.7
Qatar 88,346 18.8 81.2
Bahrain 75:753 60.4 39.6
United Arab Emirates 301,500 14-9 85.1
Libya 786,450 57-7 42.3
Total 3155-337 47.1 52.9

Source: ILO (1978a,b,c,d,e,)

sponsored by the International Labour Office (ILO) show that, in

1975, the proportion of foreign workers in the labor force was 39
percent in Bahrain, almost 70 percent in Kuwait, 42 percent in Libya,
81 percent in Qatar, 48 percent in Saudi Arabia, and 85 percent in
the United Arab Emirates.” The bulk of these workers came from
other Arab nations and from India, Pakistan, Bangladesh, South
Korea, and the Philippines.
Although there are no accurate figures, it is generally accepted that
the size of the foreign labor force has continued to increase in the Arab
oil-exporting countries. Officially, the number of foreign workers in
Saudi Arabia in 1980 was 813,000. Yet the Financial Times (April 28,
1980) reported that Saudi government officials informally put the
number of foreign workers at 1.5 million — representing 75 percent of
the labor force (see Table 2.4). There are estimated to be one million
Yemenis in Saudi Arabia. In Kuwait, illegal residents were estimated
to number 300,000 by 1979, far above the official count. Similar
discrepancies between official figures and estimates of the foreign
population and foreign labor force can be found in all Arab oil-
exporting countries. Governments are concerned about this large
foreign presence and have imposed tighter controls, launched drives to
apprehend illegals, and deported foreign workers who strike or try to
organize.”' Yet the continuing need for foreign workers is well
illustrated by the case of the United Arab Emirates, where severe
restrictions on visas for foreigners coincided with the declaration of a
huge industrial complex in Dubai as a free zone where Arab and
Asian workers need no visa or contracts (Legum, 1978).
 Contemporary trends 49
Table 2.4 Saudi Arabia: employment of.foreign workers by economic Sector,
1975

Nationals Foreign Foreign as

Sector Total (%) (of) (%) of all

Agriculture and fishing 585,600 51.7 7.1 9.4

Mining and petroleum 27,000 1.5 1.5 43.0
Manufacturing 115,900 2.1 12.2 81.4
Electricity, gas and water 20,350 0.7 E7 64.6
Construction 239,300 3.5 26.3 85.0
Wholesale and retail trade 192,100 5-9 17.0 68.5
Transport, storage and
communication 103,850 7.1 4.0 29.8
Finance and insurance 12,100 0.5 0.9 57-4
Community and personal
services 503,700 27.0 29.3 45.0
Total 1,799,900 100.0 100.0 43.0

Source: ILO (1978)

Besides construction, several other sectors employ large numbers of

foreign workers — notably manufacturing, wholesale and retail trade,
and many services, including government administration and edu-
cation. Saudi Arabia is a case in point (Table 2.4). Eighty-five
percent of all workers in construction were foreigners, as were more
_ than 80 percent of those in manufacturing and 70 percent of those in
wholesale and retail trades. Labor shortages are so pronounced in
these countries that foreigners claim a significant share of civil service
jobs — one third in Oman (ILO, 1977a) and almost 80 percent in
Qatar (ILO, 1978a).
The main labor exporters in the Middle East have felt the
repercussions. By 1975, labor exports represented the equivalent of 28
percent of the labor force in Jordan, 27 percent in North Yemen, 4
percent in Syria and up to 10 percent in Egypt (ILO, 1978). In one
decade, Jordan has gone from labor surplus to labor shortage; it now
imports workers from Syria, Egypt, and Pakistan"7In Egypt, labor
exports are one of the main sources of foreign exchange (Keely,
1980).”*
This major new labor flow generated by accelerated industrializ-
ation reflects the transformation in the articulation of the oil-
exporting countries with the world accumulation process. This
transformation cannot be explained simply by the rise in the
50 The use offoreign workers

international price of oil. Before the current phase, the transfer of

value from the oil-exporting countries to the center was direct, in the
form of low-priced oil. Now, this transfer is mediated by national
industrialization. Oil revenues are being re-injected into the inter-
national circuit through the long-term constitution of economies
whose production patterns will incorporate imports to an extent
inconceivable before the current phase, especially in the Arab oil-
exporting countries. Accelerated industrialization has led to large-
scale imports of raw materials and machinery, thereby transferring a
large share of oil revenues back to capital in the developed
Countries17 Upper-class luxury consumption could not have gene-
rated such high levels of imports. .
(3) Compared with the earlier phase of international migrations,
especially at the turn of the century, there is a growing tendency to
treat migrants as commodities. This expresses itself in the inclusion of
labor in government-run export sectors and in migration policies.
South Korea is the outstanding example. In its economic transactions
with Arab oil-exporting countries, South Korea has included the
export of workers as a component of its export projects. The labor
shortage in the Arab countries was the initial rationale. However,
South Korea has now formalized this inclusion and negotiated deals
with countries such as Ecuador which do not have a labor shortage.
The Philippines tried developing a similar tactic (Keely, 1980). And
China announced in July, 1980, that it would export labor and
expected to “‘underbid”’ its competitors. Labor transfers to the Arab
countries have been profitable for many private agencies specializing
in this trade, especially in India, Bangladesh, and Pakistan. But these
countries have not quite reached the level of formalization and
government supervision attained by South Korea.?5
South Korea has a higher level of economic development than the
countries to which it exports labor. No developing country sending
labor to developed countries has attained this level of control over its
labor outflow or systematically incorporated labor in its international
economic exchanges. Relevant here is Emmanuel’s (1972) analysis of
international trade: price is determined not by the commodity being
traded, but by the location of selling and buying countries in the
world economy.” The South Korean government can make labor
exports a profitable enterprise; the Jamaican cannot.
Immigration policies in Western Europe and Arab oil-exporting
countries increasingly treat immigrants as a commodity. Western
 Contemporary trends 51
European countries try both to stabilize the resident immigrant
population through family reunion policies and minimize permanent
residence and naturalization of new immigrants. In the Arab oil-
exporting countries, policies minimize permanent residence and
maximize rotation of the immigrant labor force. This is much less the
case in the classic immigration countries, such as the United States
and Canada, but even here there is a growing tendency towards
stabilization through family reunion andjustification of immigration
in terms of labor requirements.
Switzerland and West Germany are extreme cases of this com-
modification. Residence regulations in these countries were liberal in
the nineteenth century, but became increasingly restrictive in the
twentieth century. Since then, extremely tight mobility restrictions
on immigrants have been implemented (Kaufman, 1975; Klee,
1975). In Switzerland, the minimum period necessary to obtain
citizenship was increased from two to six years after World War I.
After World War II it was increased to twelve years. Immigrants
have no legal claim to a residence permit. In 1963, the government
launched a stabilization program which permitted dependents of
already established immigrants to enter but restricted the entry of
non-dependents to those filling specific labor shortages. Finally, in
1970, immigration was all but closed. West Germany also followed a
path of increased restrictions aimed at minimizing any claims to
permanent residence. It finally ended immigration in 1973. How-
ever, dependents and “needed”? immigrant workers continue to
arrive, with a noticeable increase in the late 1970s. The minimum
residence period for naturalization is eight years, though this does not
give the immigrant a legal claim.” There are also restrictions on
immigrant mobility within these two countries. In 1968, foreign
workers in Switzerland were not allowed to change employers,
occupations, or cantons of residence for five years after their arrival.
After the closing of immigration in 1970 this period was reduced to
one year. West Germany imposes similar restrictions. A work permit
may stipulate that special permission for a change of job has to be
obtained for up to five years after arrival. Foreign workers can be
forced to accept new jobs which pay less than their previous jobs or
even less than unemployment insurance. Though both Switzerland
and West Germany have explicitly announced throughout the years
that they are not immigration countries and that labor imports are a
temporary measure, the immigrant population has increased over the
52 The use offoreign workers

last two decades and become a fairly permanent feature of the labor
force.2* Family reunion policies for permanent residents partly
recognize this fact. Other European countries also have imposed
restrictions on foreign workers, but have been less extreme than
Switzerland and West Germany.
The classic immigration countries view immigrants, potentially at
least, as permanent residents and citizens (Keely, 1979). But
Western Europe and the Arab oil-exporting countries have sought to
maximize rotation of the immigrant labor force. In these countries,
immigrants are viewed as a production factor that can be repatriated
when no longer needed. The recognition of a permanent need for at least
some of the foreign workers in Western Europe is what seems to
underlie family reunion policies and regulations aimed at integrating
permanent residents socially and politically. Exemplary in this
regard is Sweden, which has sought to extend all political rights to
foreign workers, at least at the local level.

CONCLUSION

International migrations evolved as an important labor-supply

system with the consolidation of the world economy. The labor needs
generated by the earlier phases of capitalist penetration and
incorporation were satisfied largely through the forced mobilization
of labor from one colonial area to another. The generalization of the
labor market and the incorporation of large regions of the world in
the form of a periphery were the structural processes underlying
international labor migrations.
The consolidation of the world economic system also corresponds
to the formation of nation-states and enforcement of borders, two
developments which would seem to run counter to the needs of a
world system and to pose obstacles to international flows. But in the
world capitalist system, the multiplicity of nation-states becomes a
factor in the reproduciion of the system, particularly through the
international division of labor.
While the consolidation of the world economic system creates the
conditions in which international migrations emerge as a massive
labor-supply system, the formation of states creates the conditions for
immigrant labor as a distinct category within the overall labor
supply. This distinctiveness rests on (1) the institutional differenti-
ation of the processes of labor-force reproduction and maintenance;
 Conclusion 53

and (2) a particular form of powerlessness which meets the control

requirements of a type of organization of the labor process which,
though usually defined as backward, is a significant component in
most highly industrialized countries — most notably, in the service
sector.
The forms that immigrant labor has assumed over time varied,
depending on a country’s place in the international division of labor
and the mode of specialization prevalent at the time in the world
system. In the contemporary phase, two features characterize labor
migration: the growing use of immigrant labor in the tertiary sector of
developed countries and the growing use of foreign and native
migrants in the secondary sector of the developing countries. This
reflects the recomposition of capital at the world level. The require-
ments of capital accumulation have led to the development of novel
ways of realizing surplus. Among these are the export of manufactur-
ing jobs to the Third World (in the form of export processing zones)
and large-scale industrialization in the oil-exporting countries. This
has generated major international migrations within the Third World.
On the other hand, unlike other labor-intensive components of
industrialized economies, service jobs cannot easily be exported.
Thus, the growing concentration of immigrant labor in the service
sector of highly industrialized countries may be pointing to con-
straints in the historical transformation of the international division of
labor, insofar as most service jobs must be performed in situ. This
growing concentration of immigrant labor in service jobs in de-
veloped countries can be viewed as the correlate of the export of jobs
to the Third World.
What is important for my analysis is that the introduction of
modern forms of production and the generalization of market re-
lations has a dissolution effect on traditional waged and unwaged work
structures. This both contributes to the formation ofa pool of migrants
and minimizes the possibilities of their returning to the areas of
origin. In Chapter 4 I will examine what is perhaps a new form ofthe
same process discussed in a historical perspective here, the develop-
ment of labor-intensive export-oriented manufacturing in several
countries of South-East Asia and the Caribbean Basin. Manufacturing
for export is playing the same role in these areas as the development of
commercial agriculture did in several major countries of Latin
America in the generation of large rural migrations to the cities. The
conditions for the absorption of the migrant influx assume a specific
54 The use offoreign workers

form in the contemporary phase. Labor-intensive manufacturing for

export has generated considerable concentrations of jobs in the new
industrial zones. And the transformation of the economies in highly
industrialized countries has generated considerable concentrations of
low-wage service jobs particularly in the large cities. For a number of
reasons, discussed in Chapters 4 and 5, the current internationaliz-
ation in the conditions for the absorption of the new migrations
contains both a continuation ofold forms and the development of new
ones.
 3
The new immigration

Immigration to the United States has changed from a preponderance

of high-wage countries of origin in the 1950s to one of low-wage
countries of origin in the 1970s. This recomposition cannot be taken
for granted, especially since the family reunion emphasis of the 1965
Immigration Act was expected to bring in the relatives of those
already here, i.e., mostly Europeans. Secondly, the data show that
there has been a massive increase in annual entries, even excluding
undocumented immigrants. From 265,000 in 1960, annual entries
reached 570,000 in 1985 and about 1 million if we include all entries,
a level approximating the peak period at the turn of the century.
Thirdly, the data show a tendency toward concentration in a limited
number of large metropolitan areas: New York City is the major
recipient of immigrants from the Caribbean Basin, including several
South American countries, while Los Angeles, San Francisco and,
again, New York City are the major recipients of Asians.
Thus the new Caribbean Basin and Asian immigration can be seen
as (a) backing up two low-wage immigrations that began earlier —
Mexicans to Los Angeles and other West Coast cities and Puerto
Ricans to New York City; and (b) geographically complementing the
large and continuing flow of Mexicans into the Sunbelt.
The new Caribbean Basin and Asian immigration to the United
States represents yet another component in the long history of the
formation and reproduction of the low-wage labor supply. Histori-
cally the formation of the low-wage labor supply has occurred
through the incorporation of a wide diversity of population segments:
rural migrants, youth, women. Only in certain periods was immig-
ration a central mechanism for the provision of low-wage workers. A
number of developments which coalesced in the early 1960s had the
effect of reducing the supply of native low-wage labor. Notable
among these were (a) the end of the massive domestic rural-to-urban
migrations which had provided the bulk of low-wage labor in the
cs
 56 The new immigration

1940s and 1950s, and (b) the politicization of traditional low-wage

workers such as blacks, Puerto Ricans, Chicanos, women and youth
during the 1960s and into the 1970s. This reduction happened in a
context of an expansion in the supply of low-wage jobs.
The growth in the supply of low-wage jobs is a central -trend in
the restructuring of economic activity in the U.S. which began in the i
mid-1960s and became fully evident in the late 1970s. While Mexican
immigration continued to supply low-wage, willing workers to the
Southwest and Midwest throughout the 1960s, this was not the case in
other areas, notably the Northeast. Furthermore, the politicization of
Puerto Ricans in the Northeast and Chicanos in major West Coast
cities along with the expansion ofwelfare benefits significantly reduced
the supply of native low-wage workers in these areas.
Clearly these developments do not fully explain the timing and
destination of the new Caribbean and Asian immigration. But they
add a historical background that is one variable in the explanation.
The reduction in the supply of domestic low-wage workers during the
1950s and 1960s acquires its full significance for immigration in the
context of (a) the increase of low-wage jobs in both major growth
sectors and declining sectors during the 1970s and continuing today
(see Chapter 5) and (b) the post-World War II development of major
linkages, particularly through investment and foreign policy
measures, between the United States and the countries that eventu-
ally became the major suppliers of immigrants to the United States in
the 1970s (see Chapter 4).

BACKGROUND: FORMATION OF THE LOW-WAGE

LABOR SUPPLY

The geographic and occupational replacement of the earlier Eastern

and Southern European immigrants by Southern Blacks beginning
during World War I eventually became part of a much larger
` domestic movement, the massive rural migrations to the cities in the
1940s and 1950s. These migrations were Do percent white. It is also in
the 1940s that the implementation of the Mexican “‘bracero” program
takes place and we see the development of the associated large-scale
undocumented Mexican migrations which continue to supply low-
wage labor today. '
The phase of massive domestic migrations to the cities had come to
an end in the 1960s, substantially reducing an important source of
 Formation of the low-wage labor supply 57
low-wage labor. The 1960s is also the period of heightened politiciz-
ation of other groups traditionally supplying low-wage labor —
women, youth, blacks, Chicanos, and Puerto Ricans. In this same
period, we see the passage of amajor new Immigration Act and the
development of a major new phase in U.S. immigration history, the
new Caribbean Basin and South-East Asian immigration. In this
section I will briefly discuss these factors in the history of the
formation of a low wage labor supply in the U.S.
Immigrants and Blacks have a long-standing relationship in the
labor market, one rooted in their common condition as a low-wage
labor supply. This relationship has been characterized by displace-
ment, replacement and complementarity in different time periods and
in specific labor markets. An early instance of this relationship
occurred in the mid-1800s, before the Civil War, when immigrants
began to displace Northern Blacks from jobs they had held, at times
almost exclusively. There were colonies of free Black workers in the
Northeastern cities, especially New York, Philadelphia and Bal-
timore. Frederick Douglass comments that these Northern Blacks
were “elbowed out of employment by some newly arrived emigrant
.’ and that these White men were becoming “house-servants,
cooks and stewards . . . porters, stevedores . . . brick-makers, white
washers and barbers . . . coachmen . . .,” all occupations formerly
performed mostly by Blacks (quoted in Fishel and Quarles, 1970:
143).
eda only with the large Black migrations to Northern cities
due to the closure of immigration during World War I did this
relationship assume a clear and widely recognizable form. The war
halted the large inflow of Southern and Eastern Europeans which
had provided the vast supplies of cheap labor needed by expanding
industries in the North. Labor recruiters sent by Northern employers
initiated these migrations of Blacks (Drake and Clayton, 1962: 58;
Spero and Harris, 1968: 140-182, 264-267, 257, 337-338).' Labor
flows initiated by labor recruiters answer in part some of the questions
that have been raised as to why the Black migrations to the North
started when they did and why they did not flow westward where
racism was much weaker (Myrdal, 1962: 185-191). But once
established, such migratory channels typically attain a certain
autonomy and recruiters are no longer necessary (€.g., Sassen-Koob,
1978: 516-518). In 1920, half of all Blacks living in the North had
'~ been born in the South and by 19930 this share had grown to 57
58 The new immigration

percent (Bureau of the Census, 1960: 41-44). On the other hand,

immigration which had averaged 1.2 million entries in each of the
two years preceding the war declined to 300,000 a year in 1914-1917
and to 100,000 a year in 1918-1919, and remained well below
100,000 annually in the two subsequent decades.’
The role of immigrants and later Blacks as a supply of low-wage
labor in the North can be seen in the data on occupational
concentration. In 1910 immigrants represented less than 21 percent
of the labor force, yet they were 61 percent ofall nonfarm laborers and
service workers and 31.6 percent of operatives (Wool and Phillips,
1976: 45-54, tables 2.3, 2.4, 2.5). By 1930 almost 56 percent of all
Blacks were nonfarm laborers, service workers, operatives and other
semiskilled workers, mostly concentrated in the northern cities.
Although the actual figures involved were small, the rate at which
these occupational shifts in the Black population took place is
significant. If the northward migration rate of Blacks had continued
at the pre-1915 level, the number of Blacks living in the North by
1920 would not have been attained until after 1970. Furthermore, 57
percent of the native White population in the Eastern North was
urban in 1920, and the share for Blacks resembled that of immigrants,
with 79 percent for each (Forman, 1971: 15-16). Finally, Black
migrants went to the same area, the Eastern North, the destination of
80 percent ofthe "new immigration” from 1880 to 1920. This was the
area in need of laborers, service workers and operatives which first
drew on immigrants and later on rural Southern Blacks. Between
1900 and 1910, for every 15 foreigners added to the population in this
region, one Black was added, a ratio which not only contracted, but
was actually reversed in the next decade, when for every new
immigrant there were three new Blacks,
This geographic and occupational replacement of immigrants by
Blacks continued throughout the 1940s and 1950s but increasingly as
a component ofa much larger process, the massive rural migrations to
the cities which were overwhelmingly White. These domestic mig-
rations dwarfed international migrations to the U.S. Thus, while
immigration reached one million in the 1940s and 2.5 million in the
1950s, rural migrants numbered respectively 10.6 and 9.6 million in
those two decades (INS, 1972: Table 1; USDA, 1973: Table 6). To
this has to be added the rapid growth of the Puerto Rican population,
significant beyond its numbers because it was concentrated primarily
in New York City. In 1940 Puerto Ricans in New York City
 Formation of the low-wage labor supply 59
numbered 70,000; by 1960 they reached 613,000 in that city, with an
additional 250,000 nationwide (cited in Glazer and Moynihan, 1963:
93-94; Bureau of the Census, 1953b). Furthermore, the Mexican
contract labor program initiated during World War II as an
emergency measure was continued long beyond the initial expiration
date and provided several hundred thousand farmworkers annually
until 1964. This contract labor program also indirectly created the
conditions for illegal immigration which grew throughout these
decades and continued after the closure of the labor program
(Samora, Bustamente, and Cardenas, 1971: 18-20, 33-46; Bustam-
ante, 1972; Cardenas, 1976). Mexican immigrants, Puerto Ricans,
Blacks, and a large share of rural migrants provided low-wage labor.’
Except for Mexicans, immigration supplied much less low-wage
labor than at the turn of the century since in 1950, 60 percent ofthe
immigrants were Northern and Western Europeans and only 8
percent were Asians and Latin Americans (excluding Mexicans)
(INS, 1977: Table 14). Moreover, the share of immigrants in the
labor force declined markedly: while they constituted 21 percent of
workers in 1910, this lessened to only 8.2 percent in 1950, and witha
much smaller share of low-wage occupations than in 191!0.*
-It is worth noting that as the numbers of rural migrants to the cities
declined substantially in the 1g60s, immigration both increased
markedly and included more low-wage countries of origin (INS,
1977: Table 14; USDA, 1973: Table 6). Thus, rural migrants
declined almost by half from 9.6 million in 1951—1960 to 5.9 million in
1961-1970 while immigrants increased by 1.2 million over their level
in 1951-1960. As the large cities in the North began to experience a
decline in the sources of cheap labor that had emerged in the earlier
decades — southern Blacks and rural migrants — immigration once
again began to provide cheap labor especially in the late 1960s and
throughout the 1970s.
During the 1960s the decline in the earlier sources of cheap labor
was substantially offset by the entry into the labor force of the baby-
boom generation and of adult White women. Between 1960 and 1970
the share of young White men in the lowest-level occupations
(nonfarm and farm laborers, personal service jobs such as restaurant
workers, janitors, certain kinds of operatives and private household
workers) increased from 18.1 percent to 31 percent, and for young
White women from 12 to 13.4 percent (Wool and Phillips, 1976: 142,
` 183), which means that the major occupational growth at this level
60 The new immigration

was accounted for by young White men. In terms of numbers, young

White men added 720,000 workers to this occupational level, an
increase of 73 percent over the previous decade; young White women
added 100,000, an increase of 50 percent; and adult White women
added 250,000, an increase of 21 percent. These shifts were
accompanied by a particularly sharp increase in the educational level
of workers at this occupational level, with a net gain of 1.2 million
high school graduates. Similar shifts occurred for young White
workers in somewhat less lowly paid occupations, which are nonethe-
less considered low-wage jobs, such as operatives in the garment and
leather industries, hospital attendants, transport operators and so on
(Wool and Phillips, 1976: 153-154). These shifts show clearly that
along with an educational upgrading in the labor force of those aged
16-24 years, there has been a substantial occupational downgrading.
In their detailed study, Wool and Phillips (1976: 102ff.) found that
the share of workers in higher-level occupations declined for each new
educational cohort, with corresponding increases of their shares in
lower-level occupations. That is to say, more persons with a given
educational attainment are in lower-level occupations than was the
case in 1960. Controlling for race, the trend is accentuated for Whites
and slightly reversed for non-Whites — although non-Whites are still
overrepresented in low-level occupations.
A number of trends, some already emerging in the 1970s and others
expected in the next decade, point to new patterns in the composition
of the low-wage labor supply in the late 1970s and 1980s. First, youth
and women account for a much smaller share of labor force growth
than they did in the twoearlier decades. Young workers ( 16-24) willin-
crease by only 18 percent while those aged 25-34 increased by 55 per-
cent between 1970 and 1980. Teenagers (16-19) actually experienced
very sharp decline from a growth rate of 46.4 percent in 1960-1970
to 9.1 percent in 1970-1980, a decline further intensified during
1980-1985 when the full impact of the smaller birthrate will be felt.
The sharp decline in new labor force entrants, besides its direct
quantitative effect, will also have consequences in terms of the
flexibility of the labor supply. The data for 1960-1970 show that
young workers were willing to take low-wage jobs even though their
educational attainments had risen; their declining share may well
mean a labor supply less adaptable to the ongoing demand for low-
wage workers. Furthermore, the Bureau of Labor Statistics also
expects a decline in the growth rate of female labor force participation
as compared with the 1960s rate. This decline along with the struggle
 Formation of the low-wage labor supply 61
for women’s equality further reduces the supply of low-wage labor in
the late 1970s and early 1980s.
Second, although the share of non-White workers is expected to
increase from 10.7 percent in 1970 to 11.6 percent in 1985, due toa
smaller decline in the non-White birthrate, their declining particip-
ation rate in the lower level occupations starting in the 1960s will
continue (Wilson, 1978: 123-143). The trend seems to be towards an
increased participation in higher-level occupations and a declining
rate of entry into lower-level occupations. This is accompanied by a
sharp reduction in labor force participation rates among young
workers, particularly those with less than 12 years of education and
therefore most likely to enter low-wage occupations (Wool and
Phillips, 1976: 138-141, 245-246). Thus, although non-Whites are
still overrepresented in the lowest-level occupations, between 1960
and 1970 there were 630,000 non-Whites who actually left these
occupations; among Whites a million youths and adult women
accepted such jobs at the same time that 280,000 adult men departed
(Wool and Phillips, 1976: 182-183; Wilson, 1978: 126—134).’ Over-
all, the relative occupational standing of non-Whites was 52.7 percent
compared to that of Whites in 1960, and 66.3 percent in 1970 (Wool
and Phillips, 1976: 132-134). These various gains by non-Whites are
severely qualified by the growing hopelessness at the bottom levels
which leads workers to drop out of the labor force or never enter it.
In sum, these trends underlie the Bureau of Labor Statistics
projection for 1985 of a shortage in low-wage service workers and of a
tight situation for nonfarm laborers and operatives. Furthermore, the
recomposition of the economic structure has created a significant
supply of low-wage manufacturing and particularly service jobs
(Sassen-Koob, 1981b). This is especially the case in major cities, such
as New York and Los Angeles, the destination of most of the new
Caribbean and Asian immigration.
The rapid growth in immigration, both legal and illegal,
since the late 1960s can be expected to provide a large share of low-
wage labor. Immigrants in the previous two decades had substan-
tial shares in higher level occupations, not surprisingly given the
prevalence of European countries of origin up to 1960. However, the
figures on legal immigrants underestimate the total share of foreign-
born workers in low-wage jobs because they exclude information on
the undocumented, many of whom are in such jobs. I will return to
this subject in Chapter 5.
62 The new immigration

A NEW PHASE IN U.S. IMMIGRATION

There has been a remarkable transformation in the levels of entries

and national composition of immigration since 1965 compared with
the two preceding decades. As recently as 1960, Europe accounted for
over two-thirds of all entries. By 1985, Europe’s share had shrunk to
one-ninth. Asia, Latin America and the Caribbean now provide the
vast majority of all immigrants. It is worth noting that not only
Europe’s share but also its actual numbers had declined, from almost
140,000 entries in 1960 to 63,000 entries in 1985. This halving in
actual numbers further adds to the impression of a new phase in
immigration.
The fastest-growing nationality group in terms of legal admissions
is Asian. From 25,000 entries in 1960, levels rose to 236,000 in 1980
and to 264,700 in 1985. While these figures include refugee adjust-
ments, much ofthis increase is due to higher immigrant entry levels.
This becomes evident when we consider the main countries in Asia
sending immigrants: the Philippines, South Korea, and India.
Furthermore, even in a year like 1982, when total Asian entries
reached an all-time high of 313,000, Vietnamese accounted for
72,000 entries, a level that had declined to 39,000 by 1983.
The single largest foreign language population in the U.S. is still
the Hispanic, which includes both citizens (native-born and natura-
lized) and immigrants. In addition there are sound grounds to accept
the estimate that the largest undocumented population is also of
Hispanic origin. However, given a common misconception, it is
important to emphasize that the fastest-growing resident foreign-
language population is Asian, not Hispanic (see tables 3.1 and 3.2).
Entries over the last fifteen years describe a bimodal curve: a large
increase after 1965, a decrease in the first-half of the 1970s, and a new
increase in the second half of the 1970s. This pattern holds for each of
the major nationality groups, notably Hispanics and West Indians,
and partly for Asians. Total entries of Hispanics (South and Central
Americans, excluding Mexico) reached about 170,000 from 1965 to
196g, declined to 149,000 from 1970 to 1974, and rose to 368,000 from
1980 to 1985 (INS, 1981; 1984; 1985). In the case of West Indians,
entries reached 351,000 from 1965 to 1969, declined to 318,000 from
1970 to 1975 and rose to 445,000 from 1980 to 1985. There was no
decline in the case of Asians: entries reached 258,000 from 1965 to
1969, rosé to 574,000 from 1970 to 1974 and reached 1,612,000 from
 A new phase in U.S. immigration 63
Table 3.1 Immigrants admitted by selected origin, 1960, 1980, 1985

Selected origins 1960 1980 1985

Europe 138,426 72,121 63,043

Asia 24,956 236,097 264,691
Africa 2,319 13,981 17117
Latin America and
the Caribbean 66,440 186,077 209,718
Mexico (32,684) (52,096) (61,077)
Caribbean (14,047) (73,296) (83,281)
Central America (6,661) (20, 968) (26,302)
South America (13,048) (39,717) (39,058)
Total immigrants admitted“ 265,398 530,639 570,009

“Also includes origins not listed here.

Source: Immigration and Naturalization Service, “Tabulation of Immigrants Admitted by
Country of Birth” (1981 and 1985, unpublished; 1984 Statistical Yearbook of the INS)

Table 3.2 Immigrants admitted by area: Caribbean, Latin American, and

Asian, 1955-1985

West Central South

Indies America America Asia Total

1955-1959 785557 26,825 42,278 98,856 246,516

1960-1964 120,337 43,058 100,131 117,140 381,266
1965-1969 351,806 51,344 119,219 258,229 780,598
1970-1974 318,680 44,159 104,676 574,222 1,041,737
1975-1979 413,715 73,794 1555745 879,178 1,522,432
1980-1985 444,828 144,094 223,683 1,612,396 2,425,001
Total 1,727,923 393,874 745:732 3,540,021 6,397,550

“Excludes Mexico
Source: INS, Tabulation of Immigrants Admitted by Country of Birth, 1954-1979, (1981,
unpublished); 1984 Statistical Yearbook of the INS; 1985 INS, Tabulation of Immigrants
Admitted by Country of Birth (unpublished)

1980 to 1985. This same pattern holds for single nationality groups,
particularly the attainment of the highest levels of entries in the last
five years (see tables 3.3 and 3.4).
The countries providing the largest single flows confirm the overall
regional distribution. The top ten countries are Latin American and
Asian. Considering legally admitted immigrants from 1972 to 1979,
we can see that Mexico with over half a million is by far the largest
single sender of immigrants, followed by the Philippines with
64 The new immigration

Table 3.3 Changing entry levels of Colombian and

Dominican immigrants, 1955-1985

Dominicans Colombians

1955-1959 4,525 7,568

1960-1964 26,644 27,118
1965-1969 57:44! 39,474
1970-1974 63,792 29,404
1975-1979 75:224 42,117
1980-1985 121,908 62,892

Source: INS, Tabulation of Immigrants Admitted by Country of

Birth, 1954-1979, 1985 (unpublished); 1984 Statistical Yearbook
of the INS

Table 3.4 Changing entry levels of Filipino and

Korean immigrants, 1955-1985

South
Filipino Korean

1955-59 10,522 4,990

1960-64 15,573 9,521
1965-69 57:563 18,469
1970-74 152,706 935445
1975-79 186,659 148,618
1980-85 263,482 198,341

Source: INS (1981) Tabulation of Immigrants Admitted by

Country of Birth, 1954-1979 (1981, unpublished); 1984 Statis-
tical Yearbook of the INS; INS, Tabulation of Immigrants
Admitted by Country of Birth, 1985 (unpublished)

290,000, South Korea with 225,000, China (Taiwan and People’s

Republic) 160,400, India with 140,000, Jamaica with 108,400, and so
on. All the countries sending over 100,000 immigrants were Carib-
bean Basin or Asian, with the single exception of Italy. Two
European countries, the United Kingdom and Germany, and
Canada sent about 80,000 each during the 1972-1979 period.
Finally, traditional European emigration countries, Portugal and
Greece, each sent about 80,000 during this period.
When we control for sex, a rather clear pattern emerges (see Table
3.5). The new immigration countries (the Philippines, Korea,
Jamaica, Dominican Republic, Colombia, China, and the smaller
ones) mostly have more females in their flows. The traditional
 A new phase in U.S. immigration 65
Table 3.5 Top immigration flows from Asia, Latin America, and Caribbean by
sex, 1972-1979"

Percent Total
female both sexes

Mexico 49.0 530,378

Philippines 59-9 289,429
Korea (South) 60.8 225,339
China (Taiwan and People’s Republic) 52.8 160,454
India 48.1 139,834
Dominican Republic 52.5 118,147
Jamaica 51.8 108,454
Colombia 56.2 59,829
Trinidad and Tobago 52.7 49,492
Haiti 52.3 44,721
Hong Kong 52.0 40,438

“Includes only flows with over 40,000 immigrants admitted in 1972-1979. Excludes Vietnam
and Cuba because most of them came as refugees, often years before their status was changed to
immigrant, but are counted in year in which that change took place.
Source: Immigration and Naturalization Service, unpublished tabulations

immigration countries, such as Italy, Portugal, and Greece, have

mostly males. Some of the Latin American countries that have not
had strong emigration to the U.S., such as Argentina and Uruguay,
also have a predominance of males in their flows. Males also
dominate the migration from Africa and Asia, except for the countries
of South-East Asia, which are also the main immigrant-sending
countries. Controlling for age, we see that women dominate the
20-29 age group. In the 20-24 age group women outnumbered males
by almost 100,000 (Houstoun, Kramer and Barrett, 1984: 935-937).
In many ways the predominance of females is a continuation of a
pattern that began in the 1930s. But we need to specify the particular
conditions underlying the overall trend. Thus Houstoun, Kramer,
and Barrett (1984) point out the weight of the influx of so-called war
brides in explaining the prevalence of women in certain nationality
flows at a given period. Countries where a significant number of
American servicemen are stationed tend to generate considerable
female immigration, e.g., most of thewomen coming to the U.S. from
Germany are brides of American servicemen. A second important
consideration is the family-reunion emphasis; it has had a generalized
effect on most immigrant nationalities of raising the share of women.
However, the information on age suggests that while a majority of
~ women may enter as dependents, the high incidence of young
66 The new immigration

working-age women points to potentially high labor-force particip-

ation rates."
A third trend we need to consider in understanding the current
immigration phase is the increase in the supply of female immigrant
workers. This category, while small compared with the others (various
kinds of dependent) is growing and indicates independent migration
of women, including women who may be wives and mothers but leave
their families behind. Women represented 45.6 percent of all legally
admitted immigrants in 1972-1979 under the category ofskilled and
unskilled workers in short supply (Sixth Preference) (Houstoun et al.,
1984: 945). It is also worth pointing out that in an old migration like
the Mexican, historically dominated by men, women have become an
of all legal immigrants;
increasingly large share, reaching almost half
a similar trend is taking place in the undocumented Mexican
migration (Warren and Passel, 1983). Finally, women represented
over half of the 290,000 admitted in the non-preference immigrant
category; the non-preference category consists of the spaces that
become available when the preference quotas are not fully used.
What is of interest here is that (a) it was the third largest numerical
category among immigrants admitted from 1970 to 1979 under the
preference system; (b) it covers relatives not included under the
preference system, investors, and workers. That is to say, it could bea
significant vehicle for women to immigrate independently.
There is a pronounced tendency, both in the past and today, for
immigrants to be concentrated in certain areas, a fact which will tend
to add to their labor-market impact. In the early 1900s New York,
Pennsylvania and Illinois attracted most of the immigrants (Immig-
ration Commission, 1911: 105). Until 1975, New York was still the
largest recipient, followed by California, now the main destination for
immigrants due to the large Mexican and Asian influx (INS, 1978:
75). Together, these two states receive almost half of all new
immigrants; New Jersey, Illinois, Florida and Texas together receive
about one-fourth of all new immigrants admitted annually in recent
years (INS, 1978: 75). About 40 percent of all immigrants live in the
ten largest cities which together account for less than 10 percent of the
total U.S. population and where immigrants represented a share
considerably higher than their total share in the U.S. population
(INS, 1978: 76-85). Between 1966 and 1976, New York City received
about one-fourth of all new arrivals, followed by Los Angeles. If we
add the immigrant population of New Jersey, which in the last years
 A new phase in U.S. immigration 67
Table 3.6 Residential distribution of immigrants: leading states, 1972-1974

All immigrants Females

number A number WA

California 812,928 22.6 430,596 22.6

New York 751,519 20.9 384,431 20.2
Florida 236,680 6.6 129,773 6.8
Texas 232,322 6.5 120,115 6.3
New Jersey 223,559 6.2 118,964 6.2
Illinois 213,479 5-9 108,936 5.7
Massachusetts 107,744 3.0 55,732 2.9
Pennsylvania 80,141 2.2 42,891 2.3
Michigan 81,829 2.3 42,204 2.2
Total 2,740,201 76.2 1,433,642 75.2
Other states 752,003 23.7 471,781 24.8
Total 3,492,204 99-9 1,905,423 100.0

Source: Immigration and Naturalization Service, unpublished tabulations

has been the third or fourth largest recipient, then the New York
metropolitan area is experiencing an even more disproportionate
share of the total labor-market impact of immigration.’ Controlling
for sex, the same pattern emerges. Almost half of all immigrant
women lived in California, New York, and New Jersey. Ten states
accounted for over 75 percent of all immigrant women and men
admitted from 1972-1979 (see Table 3.6).
There are two as yet minor trends that need to be brought into this
description. One is the addition of several South-East Asian countries
to the list of immigrant-sending countries. While the numerical levels
of immigrants from Singapore, Malaysia, and Indonesia are very
small, they are growing every year and represent a new development.
The data point to the emergence of conditions that are promoting
out-migration. This incipient trend acquires added significance if we
consider that some of the major immigrant streams are coming from
South Korea, the Philippines, China, and Hong Kong, where we find
highly evolved export economies, a development which is only at an
early stage in Indonesia and Malaysia. Indonesia would traditionally
have had migration streams directed to the Netherlands: thus the
emergence of a migration stream to the United States needs to be
explained. |
Secondly, quite a few of what are today major migrations began as
68 The new immigration

middle-class migrations but eventually created conditions that

facilitate the migration of poorer strata as well as undocumented
immigration. Thus such migrations (for example, that of South
Koreans), perceived as consisting of mostly well-off persons, have by
now become increasingly working-class migrations with significant
numbers of undocumented immigrants and including growing
numbers employed in sweatshops. Undocumented Filipino women
have been found in growing numbers. And even cases of groups of
undocumented Indonesians were identified in Southern California
working at extremely low wages. In brief, what emerges from these
instances is that a growing component ofthe new Asian migration is a
labor migration.

IMMIGRANT WORKERS: BASIC CHARACTERISTICS

The supply of immigrant workers is drawn from three segments ofthe

total alien population: legal immigrants, illegal immigrants, and non-
immigrant aliens. Workers in the first two segments are commonly
referred to as immigrant workers. The third segment includes a
variety of statuses, some entitling work permits and others not.
Workers in this third segment range from international artists and
scholars to contract farm labor. The rate of labor-force participation
in each of the three segments varies considerably. The rate for
immigrants increasingly resembles that of natives while that for the
undocumented is commonly believed to be extremely high because
they come here to work. Among nonimmigrant aliens, participation
rates vary greatly according to the subclasses in this segment. The
differences among these three types of alien workers are substantial
enough to require a detailed discussion of their characteristics to
adequately understand their labor-market impact.
The 1970 Census recorded g.6 million immigrants, of whom 6.2
million had become citizens and 3.4 million permanent residents (see
Table 3.7). Both in numbers and as a percentage (4.7 percent), this is
a significantly lower level than that of earlier decades, for example,
1920 when immigrants numbered 13.9 million and constituted 13.2
percent of the total population (U.S. Bureau of the Census, 1976b;
1973: Table 17). The 1980 Census counted 13.9 million immigrants,
representing 6.2 percent of the total population (U.S. Bureau of the
Census, 1982d).
 Immigrant workers: basic characteristics 69
Table 3.7 Foreign born in the U.S., 1970 and 1980

1970 1980

U.S. total population (a) 203,302,031 226,504,825

Foreign born (b) 9,619,302 13,956,077
(b)/(a) 4:7% 6.2%

Source: U.S. Bureau of the Census, 1980 Census of Population and Housing: Advance Report
(Washington, D.C.: U.S.G.P.O., 1981c); U.S. Bureau of the Census, 1980 Census of Population
and Housing: Provisional Estimates of Social, Economic, and Housing Characteristics (Supplement and
Report) ;States and Selected Standard Metropolitan Statistical Areas (Washington, D.C.: U.S.G.P.O.,
1982d)

The large increases in annual entries of Asians and Hispanics over

the last 15 years are reflected in the 1980 composition of the U.S.
population. The share of persons of Hispanic origin counted by the
Census increased by 62-percent from 1970 to 1980 and that of Asians
by 100 percent. Their considerable concentration in particular
geographic areas and occupations makes the impact of their growth
rates significant even though their shares in the total population are
rather small. Furthermore, the tendency for illegal immigrants to
reside in areas with large concentrations of legals further maximizes
the labor-market impact of this immigration.
The 1980 census counted 14.6 million persons of Hispanic origin
and 3.5 million Asians (including Pacific Islanders), representing
respectively 6.5 percent and 1.5 percent of the total population of
226.5 million (U.S. Bureau of the Census, 1981b and Table 3.8, this
volume). Their geographic concentration, particularly high for
Asians and non-Mexican Hispanics, renders their numbers far more
significant than their shares in the total U.S. population would
suggest. Over 60 percent of Hispanics reside in three states alone:
California, Texas and New York. The Northeastern region with 2.6
million has a much smaller Hispanic population than other regions,
but it is quite distinct in that it is not Mexican. The largest share is
made up of immigrants from South America and the Caribbean
Basin. This is for the most part a very recent immigration that may
surpass the Puerto Rican component if we include undocumented
immigrants. New York with 1.6 million and New Jersey
with half a million accounted for the largest share of Hispanics in the
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 Immigrant workers: basic characteristics ae
Table 3.9 Main nationalities of Asian population in the U.S., 1970-1980

1970 1980 Percent increase

Chinese 435,062 806,027 85.3

Filipino 343,060 774,640 125.8
Japanese 591,290 700,747 18.5
Korean 69,130 354,529 412.8

Source: U.S. Bureau of the Census, 1973, 1981b

Northeast. While they were only 5.3 percent of the total population in
the Northeast, they represented 9.4 percent in New York State and
19.9 percent in New York City.
A comparison of the Hispanic and Asian populations, the other
high-growth immigration, indicates that the size of the latter is
significantly lower but the rate of growth much higher® (see Table
3.9). The Asian population doubled its numbers from 1970 to 1980,
and the INS reports that 1.5 million Asians were admitted legally
between 1970 and 1980. The Chinese increased by 85.3 percent from
1970 to 1980, and are now the largest single Asian group, followed by
the Filipino with 774,600 — an increase of 125.8 percent over their
1970 level. One of the highest growth rates between 1970 and 1980 is
that of the South Koreans, 412.8 percent. Their numbers went from
69,100 to 354,500. Finally, the Japanese, the largest single Asian
nationality in 1970, are now third in size. These growth rates are
unusually high, especially against the overall U.S. population
increase of 11.4 percent and the fact that these figures exclude a share
of illegals.
The 1980 Census data on economic characteristics records a
median income of $14,711 for Hispanics and $22,075 for Asians
(including Pacific Islanders). Median income for Whites is $20,840
and for Blacks, $12,618 (see Table 3.10). The figures for Hispanics
and Asians are problematic in that they most likely exclude
considerable numbers of low-wage individuals and families in the
illegal population.” The share of persons with incomes below the
poverty level follows the same pattern of extreme disadvantage for
Blacks and relatively better status for Asians than Hispanics. Thus,
30.2 percent of the Blacks were below the poverty level, compared
with 13.9 percent of Asians and 23.8 percent of Hispanics. Asians had
the highest share of women in the labor force, over 50 percent
72 The new immigration

Table 3.10 Economic characteristics by race and Spanish origin, 1 980

Asian and
Pacific Spanish
White Black Islander origin

Total labor force 89,339,672 10,573,445 1,751, 494 5944156

Employed 84,134,204 9,300,661 1,665,706 5,421,433
Unemployed 5,205,468 1,272,784 85,788 522,723

Female labor force 37,458,881 5,210,640 801,792 2,366,949

Employed 35»297,665 4,625,693 758,397 2,127,752
Unemployed 2,161,216 584,947 43,395 239,197
Median income ($) 20,840 12,618 22,075 14,711
Mean income ($) 24,279 15,721 25,681 17,360
Persons, poverty status
determined 184,431,365 25,661,955 3,610,970 14,343,741
Income in 1979 below
poverty level 17,301,507 7,752,010 503,089 3,409,754
(9.3%) (30.2%) (13-9%) (23.8%)

Source: U.S. Bureau of the Census, 1980 Census of Population and Housing: Provisional Estimates of
Social, Economic, and Housing Characteristics, [March] 1982d

compared with 40 percent among Whites, 50 percent among Blacks,

and under 30 percent for Hispanics. Noteworthy is the fact that the
similarity in female labor force participation rates among Blacks and
Asians produces such different median incomes.
The two largest single concentrations of Hispanics are in Los
Angeles and New York City; of Asians, in Los Angeles, San Francisco,
and New York City. The next largest concentrations are significantly
smaller. Los Angeles has 2 million Hispanics and New York City 1.4
million. San Francisco has 326,000 Asians and 400,000 Hispanics.
The composition of the Hispanic and Asian populations by national
origin is markedly different in New York City and Los Angeles.
Mexicans are the overwhelming majority in Los Angeles and Puerto
Ricans in New York City with the new Hispanics an increasingly
close second. Japanese are the largest single group in Los Angeles and
Chinese in New York City (see Tables 3.11 and 3.12).
The general trend in the 1970 Census data is for foreign-born
workers to follow with a slight disadvantage the occupational
distribution of persons of native parentage and of second generation
immigrants. The latter were more highly represented among profes-
sional, technical, managerial and administrative occupations than
were natives. They also had higher shares in sales, clerical and craft
jobs, and smaller shares in operative and service jobs than natives. The
 Immigrant workers: basic characteristics 73

Table 3.11 Population by race: Los Angeles~Long Beach SMSA‘, 1980

ba

Race Spanish origin

Total 7:4775503 Total 2,066,103

White 5,073,617 Mexican 1,650,934

Black 943,968 Puerto Rican 36,662
American Indian, Cuban 44,289
Eskimo, Aleut 48,120 Other Spanish 334,218
Asian 417,209
Japanese 116,543
Filipino 99,043
Chinese 93,747
Korean 60,618
Asian Indian 18,562
Vietnamese 28,696
Pacific Islander 17,641
Other 976,948

a H SZ
Standard Metropolitan Statistical Area.
Source: U.S. Department of Commerce, Bureau of the Census, 1980 Census of Population: General
Population Characteristics, California, 1982b

Table 3.12 Population by race: New York City, 1980

Race Spanish origin

Total 7,071,639 Total 1,406,024

White 4,294,075 Mexican 22,577

Black 1,784,337 Puerto Rican 860,552
American Indian, Cuban 60,930
Eskimo, Aleut 11,824 Other Spanish 461,965

Asian 229,789
Chinese 124,764
Asian Indian 40,945
Filipino 23,810
Korean 23,257
Japanese 13,730
Vietnamese 3,283
Pacific Islander 1,712
Other 749,902
eg
EE

Source: U.S. Department of Commerce, Bureau of the Census, 1980 Census of Population: General
- Population Characteristics, New York, 1982c
74 The new immigration

impression is that the occupational distribution of second generation

immigrants is slightly more advantageous than that of natives. When
we control for race and language among natives, this advantage
becomes substantial with respect to Blacks and Spanish-speaking
workers. Similarly, the occupational distribution of the foreign-born,
though less advantaged than that of second-generation immigrants,
is significantly better than that of Blacks and Spanish-speaking
natives. This suggests that the flow of immigrants in the 1940s, 1950s,
and early 1960s did not produce a large supply of low-wage workers.
These differences are reflected in the 1969 family income of each
class. The highest median family income, $11,356, was earned by
second-generation immigrants, followed by that of natives, $9,327,
and finally that of the foreign born, $9,026 (Bureau of the Census,
1973: Tables 8 and 9). Median family income for blacks ($6,035) and
the Spanish-speaking ($7,248) was substantially lower than that ofall
other natives and of first- and second-generation immigrants.
Similarly, the unemployment rates of first and second generation
immigrants are lower than those ofnatives, and markedly lower than
those of native Blacks and Spanish-speaking.
After 1970, the same overall trends recorded by the Census appear
to continue according to the available data. The best available data
for non-Census years on the labor-market characteristics of immi-
grants are those compiled by the INS at time of entry. There are,
however, serious problems with the data (Tomasi and Keely, 1975:
57-72). The INS obtains data for management purposes, not
scholarly ones. Furthermore, the data are based on information
provided by the entrants themselves; this leaves room for distortions
since entrants are unlikely to give damaging, or what they perceive to
be damaging, information. Thus women may claim their occupation
as domestics rather than secretaries because the latter is an obstacle to
entry while the former is not; men may upgrade their skills for similar
reasons. Finally, North and Weissert (1973) found that INS data
consistently underestimate, possibly by as high as 20 percent, the
share of workers among immigrants. This particularly affects women,
who tend to enter as dependents and homemakers and probably were
not, and did not expect to be, in the labor force in their home
countries; once in the U.S., however, economic need and the trend
towards growing female labor-force participation led them to take
jobs. This underestimate of female labor-force participation may be
particularly significant in view of the kinds of jobs a good share of
 Immigrant workers: basic characteristics ap
these women will take and the high unemployment rates among
native women in those jobs.
A comparison of the 1970 Census data on the occupational
distribution of immigrants with INS data for 1970 immigrant
entrants shows that at the time of entry a much higher share of
immigrants listed themselves as professionals, technical, craft and
household workers than did the resident immigrants (INS, various
years: Table 10A). Among the 1970 entrants, almost 30 percent gave
professional or technical occupations and about 18 percent, craft
occupations, as compared to, respectively, 15.5 and 14 percent of
resident immigrants. On the other hand, fewer than 6 percent gave
service occupations upon entry as compared with 13.7 percent of
resident immigrants. North and Weissert (1973) did a follow-up
study on the 1970 immigrant cohort and found that by 1972 their
occupational distribution had changed towards a pronounced simi-
larity with that of resident immigrants recorded in the 1970 census
(1973: Table 35). Thus by 1972 only 17.8 percent were in professional
and technical occupations and 14.5 percent in crafts; on the other
hand, 13.3 percent were in services.
Post-1970 INS data on the occupational distribution of immigrants
at entry show a fairly similar distribution to that of the 1970
immigration cohort. For example, in the 1976 occupational distri-
bution at entry (INS, 1978: 10A) there were more professionals and
technicians (30 percent), and more household workers (4.5 percent),
fewer service workers (8.9 percent), fewer nonfarm laborers (7.8
percent), fewer operatives (13.4 percent), and fewer clerical workers
(9.6 percent), than would have been expected after some years of
residence in the country given the structure of labor-market demand.
The differences between the occupational distribution at entry and
after several years in residence reflect in part the differences in the
social and economic structure between emigration countries and the
USS.
The available 1970 INS entry data and the North and Weissert
(1973) follow-up study suggest two trends: one is that the occup-
ational distribution at entry is bimodal, with concentrations of high-
level and low-level occupations; the other trend is that once in the
U.S., the degree of bimodality diminishes significantly with a shift
of the more highly trained entrants (professions and crafts) to
lower-level occupations (clerical and operatives) and low-wage
` entrants (household and farm work) toward relatively better-paid
76 The new immigration

Table 3.13 Occupational distribution of the foreign born, 1950-1979

(percentages )

Years of ` Professional/ Clerical Craft Other Service Farm

entry managerial sales workers blue-collar workers workers

1975-79 18.1 11.2 6.6 35-4 PUIG 7.2

1970-74 20.3 15.6 11.6 31.0 17.8 :
1965-69 24.0 24.0 12.9 24.7 18.3 3.1
1960-64 30.4 20.9 12.0 21.4 13.0 2.3
1950-59 29.0 19.2 13.8 23.3 13.0 1.8
Pre-1950 27.1 25.4 13.5 16.6 15.4 2.0

Source: U.S. Department of Commerce, Bureau of the Census, 1979 (November); 1983b (April)

occupations (services and nonfarm labor). Clearly, the basic factor at

work is not so much immigrants’ failure or success to carry out their
intended occupations, but the characteristicsol the occupational
structure in the U.S. and the kinds of labor needs it generates.
Comparing the occupational distribution of foreign-born workers
from 1975 to 1979 with earlier periods reveals a decrease in
professional, managerial, clerical, sales and crafts jobs and an
increase in noncraft blue-collar jobs and services (Current Population
Survey). Thus in the period 1950-1959, 29 percent of the foreign born
held professional and managerial jobs. This share had declined to 18
percent for the period 1975-1979. Similarly, while 19 percent held
clerical and sales jobs in the earlier period, this share declined to 11
percent in the later period. On the other hand, while 16:6 percent
held noncraft blue-collar jobs in the earlier period, this share had
increased to 35.4 percent in the later period. A similar though much
less pronounced increase was registered in the share of service jobs.
More detailed studies on particular nationalities, to be discussed
below, tend to confirm these overall trends toward a marked
concentration in blue-collar and service jobs (see Table 3.13).
The 1980 Census data confirm this bimodality in the occupational
distribution of immigrants. Secondly, it shows that immigrants,
especially women, have increased their share of jobs in manufactur-
ing. Thirdly, immigrant women, to a larger extent even than native
women, tend to be concentrated in a limited number of occupations.
Using 1980 Census data and controlling for sex and
native/immigrant status, some sharp differences emerge. If we
 Immigrant workers: basic characteristics 79
consider the five states in which most immigrants reside (California,
New York, Texas, Florida, and Illinois), the sharpest difference in
occupational distribution is between native and immigrant women in
operative jobs: only about 8 percent of native women compared to 20
to 25 percent of immigrant women held such jobs (Bach and Tienda,
1984; Tienda, Jensen, Bach, 1984). Nowhere does the occupational
distribution of men contain this large a divergence between natives
and immigrants. A second large difference among the women is in
clerical jobs: 37 to 40 percent of native women held such jobs
compared with 25 to 30 percent of immigrant women.
About half of all immigrant women are concentrated in two
occupations, operatives and services, with variations by nationality.
Nearly 70% ofall Hispanic immigrant women in these five states held
operative, service or laborer jobs. The figure for Asians was lower; but
among Asians arriving in the 1970s it reached 40 percent, a level that
is higher than is generally assumed. On the other hand, the figure of
all women workers holding these jobs in the U.S. was 29 percent (U.S.
Department of Commerce, 1983). At the other extreme, fewer
immigrant women than native women held professional jobs, g to 10
percent compared to 14 to 16 percent.
The evidence by industry shows a similarly high concentration in
certain sectors (Bach and Tienda, 1984; Tienda et al., 1984). The
share of women in transformative industries (mainly garments,
textiles and food) ranged from 24 to 35 percent in those same five
states. This was about 10 to 15 percent higher than the share of native
women. The second largest concentration was in social services, from
22 to 27 percent compared with 32 to 37 percent of native women.
The differences between native and immigrant women are less
pronounced in the other industry groups. From 23 to 30 percent of
immigrant women are in the producer and distributive services, a
share slightly lower than that of native women. As I will discuss at
length in Chapter 5, the producer and distributive services are a key
component of the economy and one of the most dynamic sectors.
Thus the considerable presence of immigrant women in such jobs is of
significance.
Comparing 1970 and 1980 Census data on the distribution of
women by industry it is interesting to note that a larger share of
immigrant women in 1980 than in 1970 were in extractive industries,
producer services and social services. Within the transformative
industries, a larger share of immigrant women held jobs in the food,
78 The new immigration

machinery, and chemical branches. Comparing these national level

trends with those for the five states with the vast majority of
immigrants suggests divergent patterns: a disproportionate concent-
ration of immigrant women holding jobs in the garment and textile
industries are located in these states, while immigrant women holding
jobs in the machinery and chemical industries are located outside of
those leading states.
The data suggest that by 1980 the industrial distribution of
immigrant and native women has become more dissimilar. Tienda,
Jensen, and Bach (1984) estimated the index ofdissimilarity for 1970
and 1980. In 1970, 12.8 percent ofnative or immigrant women would
have had to change occupations for the two distributions to be equal;
by 1980 the index had risen to 15.6 percent. A shift-share analysis
revealed an increased allocation of immigrant women into low-wage
occupations, notably those that have a declining share in the overall
economy. Thus, while the national trend reflected a relative decline
in the number of laborers and farm laborers, immigrant women
increased their share of these jobs (Tienda et al., 1984).
In evaluating the impact of immigrants on the labor market,
certain facts have to be taken into account. First, spouses, children
and other dependents of working immigrants may have a delayed
impact on the labor market. This impact may be much more
immediate in the case of women who would have been unlikely to
enter the labor force in their home countries and had few expectations
in that regard upon entry, but shortly after taking up residence find
themselves holding a job. The delayed impact of dependents is
particularly significant given the family reunion orientation of
immigration policy and the fact that up to two-thirds of entrants are
dependents. For example, in the 1970s over half of all entries were
dependents, quite unlike the earlier waves of immigrants which
consisted overwhelmingly of men directly entering the labor force
(INS, 1978: 73). At the same time, this greater family emphasis in
immigration also means that the immigrant family will contribute to
consumption in a way that early waves of immigrants did not, and
that a smaller share of immigrants’ income is sent back home. There is
then a growth inducement effect through immigrants’ consump-
tion.'° Secondly, the labor-market impact of immigrants is not evenly
distributed, given their tendency to be concentrated in certain areas.
Thirdly, given the trend for illegal immigrants to follow the stream
and concentrations of legal immigrants of the same nationality, cities
 Undocumented alien workers 79
such as New York and Los Angeles experience an additional labor-
market impact due to the unrecorded concentrations of illegals.

UNDOCUMENTED ALIEN WORKERS

There are three kinds of undocumented alien: (a) those who enter the
country illegally, referred to as “entries without inspection” (EWIs)
by the INS; (b) those who enter the country legally but abuse their
visas, typically by overstaying and working without a proper visa; and
(c) those whose documents are fraudulent. It is generally accepted
by INS officials and immigration experts that the vast majority of
undocumented aliens are in the first category, though the second one
has been growing rapidly in recent years. The number of un-
documented aliens is unknown and estimates vary from 3 to 12
million. While immigration scholars tend to agree on a much lower
range of 3 to 6 million (Keely, 1979: 51; National Commission for
Manpower Policy, 1978: 120), the INS generally uses the higher
estimates, in part probably because it supports requests for agency
expansion.
Estimates about the undocumented alien population are derived
from the number of deportable aliens located. Their number, almost
all of which represents apprehensions, has been rising steadily. In
fiscal year 1964, 86,597 deportable aliens were located; in 1974,
788,145; and in 1984, 1,138,566. This represents an increase of over
1,300 percent between 1964 and 1984.'! EWIs represent between 85
and go percent of deportable aliens located each year by the INS.
There are a number of problems with the data base from which
estimates and descriptions of the total undocumented alien popu-
lation are drawn. First, they are not based on individuals located but
on workload figures, which signifies that an individual apprehended,
for example, three times in the course of the year will be recorded as
three aliens. Second, apprehensions follow a distinct pattern, a fact
that is significant because the vast majority of deportable aliens
located represent apprehensions. The INS has shown a preference for
certain methods in its enforcement activities, especially those involv-
ing elaborate equipment such as sensors and helicopters with special
detection devices. Consequently, the vast majority of apprehensions
occur in the border areas and involve EWIs who are almost all
~ Mexican and male.'? Visa abusers are far less likely to be
80 The new immigration

apprehended since they are concentrated in cities; hence apprehen-

sions are far less likely to involve other nationalities and women since
most undocumented immigrants in these categories are visa abusers.
Third, the overrepresentation of Mexicans in apprehension data is
further accentuated by the tendency of undocumented Mexicans to
return home and re-enter the U.S. frequently, thereby increasing
their chances to be apprehended. Apprehension data show that
Mexicans travel home every six months on average (National
Commission for Manpower Policy, 1978: 126-127; Cornelius, 1977;
Bustamante, 1976). Similar data for visa abusers show a much lower
frequency, though here too the amount ofcirculation back and forth
is unexpectedly high; Eastern Hemisphere aliens averaged 1.8 trips
over a cumulative period of 24 years and Western Hemisphere aliens,
excluding Mexicans, 1.4 trips over the equivalent period (National
Commission for Manpower Policy, 1978: 127). These averages may
be skewed insofar as they describe apprehended aliens, and the
chances for apprehension tend to increase with frequency ofre-entry.
This points to a fourth problem in the data base from which
information about the undocumented alien population is drawn. The
data on deportable aliens located do not permit estimates of the
permanent and temporary stock of undocumented aliens in the
country. Some of those apprehended have been in the country for
twenty years without ever being detected. In their survey of asample
of INS apprehensions, North and Houstoun (1976) found that the
average cumulative stay for apprehended aliens was 2.5 years. It is
quite possible that there is a substantial stock of undocumented aliens
who are long-term residents and whose characteristics are unlikely to
be revealed through INS apprehension data given enforcement
patterns.
Until recently the vast majority of undocumented aliens were
Mexicans working in the border states, although there have been
significant concentrations in the Midwest for many years (Cardenas,
1978).'° In the last decade there has been a rapid growth in the
undocumented alien population of the Northeastern cities, made up
overwhelmingly of Caribbean and South Americans, and in the
numbers of undocumented Mexicans in Midwestern cities. There is a
substantial body of data on both old and new Mexican immigration
(Galarza, 1964; McWilliams, 1968; Samora, 1973; Portes, 1978;
Cornelius, 1983), but there is still little on the new Caribbean and
South American immigration (Bryce-Laporte and Mortimer, 1981;
 Undocumented alien workers 81

Dominguez, 1975; Chaney. and Sutton, 1979; Kritz and Gurak,

1985 Papademetriou and Di Marzio, 1986).
The available evidence shows that undocumented immigrants are
mostly male, young and unmarried or separated due to the move,
with extremely high labor-force participation rates, considerably
lower educational attainments than the average native worker and
little knowledge of English. However, the increasing presence of
Caribbean and South American aliens in the undocumented popu-
lation is generating some significant shifts towards a larger share of
women, older workers, families, higher levels of education, and
greater knowledge of English. In their survey of a sample of INS
apprehensions, North and Houstoun (1976: 82) found that 11 percent
of Mexicans were with their spouses in the U.S. and 9.6 percent with
their children while the corresponding shares for other Western
Hemisphere aliens were 27.8 and 20.3 percent, and for Eastern
Hemisphere aliens, 21.3 and 10.7 percent. A similar difference was
found in educational attainment (1976: 117), with Mexicans averag-
ing 4.9 years of school and the other two groups respectively 8.7 and
11.9 years. These educational levels among visa abusers may be
below average since the more highly educated are far less likely to be
apprehended if, as is possible, they are able to get somewhat better
jobs. This is further suggested by the data on the legal South
American, Caribbean and Eastern Hemisphere immigration which
show high levels of education in contrast to that of legal Mexican
immigrants.'*
The shifts in the geographic and nationality distributions of the
undocumented alien population have brought about substantial
changes in the educational, occupational and income distributions of
undocumented workers. Most significant is probably the occup-
ational shift away from agricultural jobs in the border states to
Northern and Northeastern urban jobs. INS data for a sample of
almost 50,000 undocumented aliens apprehended in 1975 show that
although half were employed in agriculture, fully one-fourth were in
light industry, 5.6 percent in construction, almost 14 percent in
services and 3 percent in heavy industry (National Commission for
Manpower Policy, 1978: 136). Given INS apprehension patterns,
agricultural employment is likely to be overrepresented in these
figures. In the Northeastern cities, especially New York and Boston,
there are significant concentrations of undocumented workers in
` services and light industry (Piore, 1979; Chaney, 1976; Chaney and
82 The new immigration

Sutton, 1979; Sassen-Koob, 1981; Papademetriou and Di Marzio,

1986). Income changes associated with this occupational shift are
probably quite significant. Apprehension data show that wages in
every industry are lower for undocumented workers but that there
are, however, marked differences according to industry. Wages in
heavy industry and in construction are much higher than in services
and light industry and these in turn were higher than in agriculture
(National Commission for Manpower Policy, 1978: 138). The lowest
hourly wages recorded were those paid Mexican farmworkers close to
the border, $1.74, which was well below all minimum wage levels in
1975.'° Undocumented workers in nonfarm jobs averaged $2.83 per
hour. Almost 54 percent of those in heavy industry earned between
$2.50 and $4.49 per hour as compared with 27 percent in services and
30.2 percent of all undocumented workers. There are significant
differences by area and by nationality as well. The lowest wages were
paid in the Southwest and hence Mexicans recorded the lowest
hourly wage, $2.34 as compared with $3.05 for Caribbean and South
American undocumented workers and $4.08 for those from the
Eastern Hemisphere. These income differences reflect occupational
and educational differences as well as geographic location rather than
nationality per se. The income figures probably underestimate the
share of undocumented workers earning above minimum wage due to
the overrepresentation of Mexicans in the sample and the smaller
likelihood of apprehension for those in better-paying, urban jobs.
The available evidence suggests that the labor market has the same
leveling effect on undocumented workers as it does on legal immi-
grants. Undocumented workers with relatively high educational
attainment are pushed into jobs at a lower level than those held in
their home country, while a share of those who had been farmworkers
ended up in service and light industry jobs in the U.S. A larger share of
undocumented workers have operative, nonfarm labor and especially
service jobs than would be the case in their home countries.

NON-IMMIGRANT ALIEN WORKERS

In this highly varied class, there are two categories that are
particularly significant in terms of labor-market impact: foreign
students, who may number about 400,000 at any time and who are
often willing to take low-wage jobs; the other consists of temporary
 Conclusion 83
contract labor, involving mostly Caribbean farmworkers, and num-
bering between 25,000 and 50,000 annually in the last decade (INS,
1978: 96-106). There is strong agribusiness interest in expanding the
temporary contract labor program which already has led to displace-
ments of native farmworkers by even cheaper Caribbean workers
(NACLA, 1976).

CONCLUSION

There were periods in American immigration history when most

immigrants came from high-wage countries and the occupational
distribution of the foreign born as well as their median income were
more advantaged than that of native Americans. One of these
periods, of particular concern to my analysis, was that of the 1950s
and early 1960s. During this period the vast majority of legal
immigrants came from European countries; the occupational distri-
bution of the foreign born showed that about one-third held
professional and managerial jobs and their median income compared
favorably with that of natives. But this is also the period of large
migrations of low-wage workers from Puerto Rico and continuing
illegal entries of Mexicans. And it is the period of large rural-to-urban
internal migrations and the mobilization of new segments of the
population, notably women, into the labor force.
On the other hand, the high-immigration periods in U.S. history
tend to contain a disproportionate share of individuals from low-
wage countries. One such period is that begun in 1965, when overall
entries increased to levels that approached those of the turn of the
century. The influx is overwhelmingly from Asia and Caribbean
Basin countries. This is also the period when domestic rural-to-urban
migrations came to an end and traditional low-wage labor supplies
became politicized under the forms of a youth movement, a women’s
movement, a Black movement, an American Indian movement, a
Chicano movement, and a Boricua movement. Furthermore it is the
period when American unions had gained considerable power in
several key industries, in part because of the massive growth trends
fueled by the expansion of internal demand, the jump in U.S. exports
to the whole world and the space race that characterized the
immediate post-World War II period.
Indubitably, the passing of the 1965 Immigration Act was an
important lever in the new migration from low-wage countries that
84 The new immigration

followed. But it is a lever that could acquire such power only because
it operated in a context that had mobilized linkages between the U.S.
and new sending countries. This is particularly so if we accept the
intention ofthis legislation to promote family reunion, besides lifting
discriminatory barriers, which entailed the inflow of persons pre-
dominantly from countries that already had large immigrant com-
munities in the U.S. that is, Europeans.
The available data on the occupational and income distribution of
immigrants show that they are largely in low-wage jobs and that in
this they diverge from immigrants of the 1950s. From 1950 to 1980
there was a decline in the share of immigrants with higher-level
occupations. And from 1970 to 1980 the occupational distribution of
immigrants and natives became more dissimilar. This is particularly
so among immigrant women. Their share in operative and service
jobs has increased and now accounts for 70 percent of all jobs among
Hispanic women and A0 percent among Asian women who arrived
during the 1970s. About a third of immigrant women are employed in
manufacturing and another third in the producer and distributive
services. The labor market impact of immigrants is accentuated by
their regional concentration. In 1980 40 percent resided in the ten
largest cities, compared with 10 percent of the total U.S. population.
Recently proposed changes in immigration law would probably
contribute to the low-wage labor input of immigration, especially
through an expanded contract-labor program and a legalization
program that would bar large numbers of undocumented immigrants
from applying. In conjunction with the proposed sanctions on
employers who knowingly hire undocumented workers, such a partial
legalization program may well have the effect of consolidating a labor
supply with few options but homework.
At the same time, the formation of a low-wage labor supply has a
long history not only in the U.S. but in all industrialized countries.
The characteristics of the low-wage labor supply and its locations in
the economic structure may vary over time and from one context to
another. Yet there always seems to be one. The current immigration
from low-wage countries directed to low-wage jobs in the U.S. needs
to be placed in this broader historical context. The specific structural
and legal factors that shape the current flow cannot override this
larger history.
 Appendix

A CASE STUDY: OCCUPATIONAL DISTRIBUTION OF NEW

HISPANICS IN NEW YORK CITY

The borough of Queens in New York City contains the largest single
concentration of the new Hispanic immigration as well as significant
numbers of the more traditional European immigrant nationalities,
notably Greeks and Italians. In 1980 Cohen and Sassen-Koob
conducted a survey of the six main nationality groups in the borough
in order to obtain information about the new Hispanics and compare
their socio-economic characteristics with those of other immigrant
groups (Cohen and Sassen-Koob, 1982).
It was found that the new Hispanics (excludes Puerto Ricans) had
far higher concentrations in factory and service jobs than the other
ethnic groups in the Queens sample (see Table 3.14). Only 11 percent
of Jews and about 30 percent of the major European immigrant
groups as well as Puerto Ricans had such jobs compared with over half
of the new Hispanics. Within the Hispanic population of our sample
some additional differences emerge. While Puerto Ricans, Col-
ombians and other Hispanics all three show a similar share of
managerial jobs, about 11 percent, a significant difference emerges
regarding professional jobs; only 3.8 percent of Colombians com-
pared with over 13 percent each of Puerto Ricans and other
Hispanics. The other major new immigrant group, the Asians, had
almost 42 percent of members in this stratum. Colombians, on the
other hand, had the highest share in crafts jobs, about 15 percent
compared with 3.3 percent of Puerto Ricans, 7.7 percent of Blacks
and between 6 and g percent for the major European groups. This
would seem to confirm INS data showing a high share of highly
skilled workers among the Colombian and other South American
immigrants. But the highest concentration of new Hispanics is in
operative and service jobs, half of all Colombians and 42 percent of
other Hispanics.
85
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 Appendix 87

Furthermore, the new Hispanics have an above average inciden

ce
of two-job households, about 30 percent compared with 15 to 20
percent among the other ethnic groups in the sample (see Table 3.15).
Both Urrea Giraldo (1982) and Castro (1982) found a very high
iim 9 y mg
incidence of multiple-earners households among Colombians.
Generally, the available data suggest that the new Hispanic
immigration is a labor supply for service jobs and a downgraded
manufacturing sector. Furthermore, they are also a labor supply for
clerical and low-level managerial jobs, especially in small firms
(Urrea Giraldo, 1982). The fact that the occupational distribution of
the new Hispanics in New York City diverges considerably from that
in their country of origin at the time of departure also points to the
extent to which the job supply in the receiving society determines
their occupation. The evidence in this regard is probably most clear
with respect to women (see Table 3.16). Castro (1982) found that
while over 50 percent of the Colombian women in the Queens sample
had jobs in manufacturing, only 12 percent of them had had such jobs
in Colombia. A good share of the Colombian men now in low-level
managerial positions had experienced considerable downward mo-
bility (Urrea Giraldo, 1982); they represent considerable human
capital for a low price to employers. In my earlier fieldwork study
of Colombians and Dominicans in Queens (Sassen-Koob, 1979), I
found a highly stratified situation. The upper-income segments had
experienced what according to standard occupational measures
would be considered downward mobility, from professional to
clerical jobs; and the lower-income segments, upward mobility, from
farm or operative to service work.
Comparing the occupational distribution of Hispanics generally
and other major ethnic groups in the New York City SMSA (data for
1979) (U.S. Bureau of Census, 1980) with that of the new Hispanics
in the sample, we can see that the latter have one of the highest
concentrations in service jobs (see Table 3.17). Blacks have the highest
concentration, due partly to the higher share of transport jobs they
hold, 4.8 percent compared with about 1 percent among the new
Hispanics in our sample. Secondly, all Hispanics and the new
Hispanics in our sample have above average shares of manufacturing
jobs. The considerable decline in the average industrial wage for
factory workers in New York City over the last ten years suggests that
manufacturing jobs are increasingly unattractive even when we
exclude sweatshops and industrial homework as these figures do.
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 Appendix 89
Table 3.16 Occupational distribution by national origin and sex, Queens (New
York City), 1980 (percentages)

Puerto Other All

Colombian Rican Hispanics Hispanics

White Collar, total 100.0 100.0 100.0 100.0

Male 44.4 28.6 41.7 37.0
Female 55.6 71.4 58.3 63.0
Blue Collar, total 100.0 100.0 100.0 100.0
Male 62.5 66.7 55-2 59-2
Female 37.5 33-4 44.8 40.8
Services, total 100.0 100.0 100.0 100.0
Male 44-4 25.0 43-5 36.5
Female 55-6 75.0 56.5 63.5

Source: Cohen and Sassen-Koob (1982)

Comparing the occupational distribution of the new Hispanics in

our sample with that of other major Hispanic groups nationally (U.S.
Department of Labor, 1981a) we can note four major trends (see Table
3.18). First, all Hispanics, including our sample, have a higher share
of blue-collar and service jobs compared with workers generally.
Secondly, the new Hispanics in our sample had the highest share of
service jobs, 34.6 percent, and Puerto Ricans, another major New
York City based group, the next largest. Thirdly, the new Hispanics
in our sample have, together with Cubans, one of the highest shares in
white-collar jobs. Fourthly, the new Hispanics in our sample had a
considerably lower share in manufacturing jobs than was typical for
all other major Hispanic groups, though it was higher than that for
workers generally. Again, here we have to note that the figure for
manufacturing excludes what is probably a considerable share of jobs
in sweatshops and industrial homework.
The 1980 Census data show a somewhat similar picture in that they
reveal a severe disadvantage of Hispanics in New York City
‘compared with other major cities and a high incidence of very low
incomes. A comparison of selected characteristics of the Hispanic
population in major SMSAs of 1 million or more population and
25,000 or more Hispanics shows New York City to rank second in size
of the Hispanic population, but twelfth in family income, second in
numbers of families below the poverty level, thirteenth in terms of the
share of Hispanics 25 years of age and over with a high school degree
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 Appendix 93

(see Table 3.19). Los Angeles, which ranks first in size of the
Hispanic population, shows only a slightly better performance on
these socio-economic indicators. It is worth noting that although the
composition of the Hispanic population in New York City and Los
Angeles differs markedly, they rank rather similarly in terms of
various socio-economic characteristics, and do so in the bottom half of
these fourteen metropolitan areas.
 4
The globalization of production: implications
for labor migrations

W -Why did high outmigration from various countries discussed in the

U recedi cur at a time n_these_countries
{ industrial growth rates and major increases in direct foreign invest-
ment while the U.S. economy was marke wing unemploy-
ment and inflation? The overall levels
evels of
of entries
entries for
for Asian and-
Caribbean Basin immigrants kept growing
rowing in
in the
the 197as,
197Qs, aa decade
oym
was particula
when unempl ent
rly high in the U.S. and the
_recession-was headlined in major newspapers throughout the world.
During that same period the main immigrant-sending countries had `
GEES EE ESTES

grow ercentin GNP and even higher in

manufacturing.
The high GNP growth rates in sending countries were in good part
due to large increases in direct foreign investment from the major
industrial countries. A growing share of such investmentfrom `
advanced industrialized countries isgoing into industries producing
forexport. ere
Sade Eine ren 0
being precisely one of the rationales for locating factories in low-wage
countries. The evidence shows rather high employment growth,
particularly in manufacturing, in several of the Asian and Caribbean
Basin countries that have been major recipients of direct foreign
investment for export-oriented production. These are also among the
main immigrant-sending countries.
The coexistence of such high growth rates and of large emigration
flows needs to be examined. The push factors_traditionall
explain emigration, most importantly lack of economic growth, are
insufficient. In fact, foreign investment and job creation should

further underlined by the fact of higher GNP growth rates in the

sending countries than in the major receiving country, the U.S., and
the redeployment of a share of American manufacturing and
associated service jobs to these countries.
Here [ posit that the coexistence of high growth and high
94
 Industrialization and emigration 95
emigration in the same country can be seen as yet another version of
the expansion of modern forms of production and their impact in the
formation of a pool of migrant labor, the subject of Chapter 2. The
large-scale development of commercial agriculture in Latin America

the
displace
of subsistence
ment farmers and small producers. This
‘displacement created both a supply of rural wage laborers and large-
scale migrations to the cities. For a variety of reasons, in some of these
Countries the migrations became international: Mexicans to the U.S.,
Colombians to Venezuela, and Paraguayans to Argentina. The
migration literature contains a number of studies on the role of
modern forms of production inthe formation-of international labor
migrations (e.g., Portes, 1979; Dinerman, 1982; Cornelius, 1981;
Fernandez Kelly, 1983; Bonilla and Campos, 1982; Centro de
Estudios Puertorriquefios, 1979). These focused exclusively on
Mexico and Puerto Rico.
In this chapter I will examine how the large-scale development of
export-oriented manufacturing in South-East Asia and the Carib-

held by export agriculture in the uprooting of people and the

resulting labor migrations. I will analyze data and studies on
South-East Asian and Caribbean Basin countries concerned with the
development of export-processing zones and world-market factories,
domestic and regional migrations and general employment trends. I
will use this information on major developments in sending countries

by wai) of the mobilizadon ofnewsegments ofthepopulation into

to examine the relationship between industrialization and emigration

wage labor, the associated disruption

of traditional waged and
wageless work structures and the feminization ofthenewproletariat
in export manufacturing industries. That is to say, I will explore the
effect such industrialization has on conditions promoting the form-
ation of a pool of potential migrants and the emergence of emigration
as an option actually exercised by individuals. The period 1960-1980
is crucial for the examination of this relationship, particularly from
1965 to 1975 when these new types of growth emerged ona significant
scale in several countries.

INDUSTRIALIZATION AND EMIGRATION

` `We need to specify the links between the occurrence of rapid export-
led industrialization and emigration, particularly emigration to the
 96 The globalization of production

U.S. The evidence clearly documents the existence of industrializ-

ation in sending countries and of immigration into the U.S. What is
necessary is a conceptual and empirical elaboration of the linkages
between these two processes. Because the analysis presented here is
rather complex, is based on several distinct bodies ofdata, and at times
must rely on inference, there follows a brief description of the main
steps involved in the.conceptual elaboration of the links between
industrializati nd emigration. Each of these steps requires brief
review of the main findings relevant to an analysis of migrations in the
major Asian and Caribbean Basin sending countries. These findings
represent, in principle, one of several possible outcomes in an
~ examination of the relation between industrialization and migration.
First, it is necessary to examine the characteristics of the new
ndustrial growth in less developed countries and to place it in the
context of the country’s overall economic organization. A good part
of these countries’ economic expansion can only b ounted for by
——
increasing exports. Access to the world market is a must given fairly
limited internal markets. The development
of a world market for—
these countries’ exports is intimately linked toa significant growth in ~
direct foreign investment (UNIDO, 1980; ILO, 1980; OECD, 1980).
One distinctive trait about industrial growth in the major new
immigrant-sending countries is the weight of production for export.
While this is a particularly strong trend in the Asian and smaller
Caribbean Basin countries, it is also present in Mexico and Colombia,
two countries with rather developed industrial economies and large

z)
internal markets.
Secondly, it is necessary to examine the employment effects of these
patterns of growth. Export-oriented agriculture requires a large sup-
ply of low-wage workers at crucial periods in the production cycle.
Export-oriented plants are mostly labor intensive and are often
concentrated in a given area for reasons having to do with servicing
and transportation, a fact which may tend to accentuate the labor-
demand impact. Finally, large agglomerations of firms producing for
export generate a range of additional jobs, from packaging for
shipment abroad to construction and operation of airports and
D
harbors.
a

2
\
Thirdly, it is necessary to examine how these labor needs are met?
SE export
export agriculture
a and export-manufacturing have mobilized
large GE of people into wage labor. The large-scale develop-—
ment of commercial agriculture in Latin America and the Caribbean
a
ee a a
 Industrialization and emigration 97
Basin contributed to the creation of a rural wage-labor supply
through the displacement of subsistence farmers and small producers.
This displacement was also central in promoting rural unemploy-
ment and migration to the cities. On the other hand, because it is
highly labor intensive, export manufacturing could conceivably have
contributed to relieve the unemployment problem, particularly
among prime-aged males. Instead, the evidence overwhelmingly
shows that it has drawn new segments ofthepopulation into the labor
force: mostly young women who under conditions of a more gradual
industrialization would not have entered the labor force in so massive
and sudden a way (Lim, 1980; Safa, 1981; Grossman, 1979;
- Fernandez Kelly, 1983).
LL Fourthly, it is necessary to examine the migration impact, if any,
associated with such job creation and labor recruitment. Precisely
because of the significant job-creation effect o rt-manufacturin
and its concentration in a few areas, the extent of the mobilization of
new workers into the labor force has been considerable. This effect has
been further accentuated by the high turnover rates resulting from
the employment practices in the plants and the mental and physical
fatigue associated with these jobs. In areas where the new industrial
zones have been developed on a large scale, extensive mobilization of
women_i r_ force can contribute to the disruption of
traditional work structures in communities of origin: the young men
are left without mates and partners, the househ re left without a
key lab
The disruption of traditional work structures resulting from an
extremely high incidence of young female emigration has further
contributed to increase the pool of unemployed. It has stimulated the
departure of men and women who may not have planned on doing so.
At the same time, the high turnover rates in the new industrial zones
and the pronounced preference for very young women has con-
tributed to growing unemployment among women. Incipient vester
izaton among zone-workers and the disruption oftraditional work
structures combine to minimize the possibilities of returning to
communities of origin. In sum, these developments have induced the
ormation of a pool of migrant workers.
Finally, it is necessary to examine whether these conditions could
promote the emergence of emigration as an option actually felt by
individuals, particularly emigration to the U.S. At this point the
' reality of a strong foreign presence becomes significant. It is not only
98 The globalization of production

the concentration of foreign investment in a few areas; the foreign

presence dominates the new industrial zones objectively and cultur-
ally, thereby creating linkages to the countries where the capital
originates. The continued vitality of the image of the U.S. as a land of
immigrants and the liberalization of American immigration policy
after 1965 acquire added weight in this context.
The next four sections contain a more detailed elaboration of each
of these aspects.

FOREIGN INVESTMENT AS A MIGRATION PUS

Foreign companies and buying groups have domi the dev
export-agriculture
ment of (George, 1977; Burbach and Flynn, (680:
NACLA, 1978). They also dominate the development of export
manufacturing (UNIDO, 1980; OECD, 1980; ILO, 1981). The ways
in which this has come about vary considerably, from direct
ownership of plants and plantations to international subcontracting
with domestic producers. In this context, the development of Export
Processing Zones, in their many guises, represents merely an
intensification of the basic patterns of export production — an
arrangement that maximizes the subsidies to foreign firms through
tax concessions, provision of infrastructure and disciplining of
workers (UNIDO, 1980).'
Foreign
investment per se does not always lead to the
the uprooting cof
eople and the associated
labor migrations. The concrete
forms
which such investment has assumed are of decisivei importance. Nor is
this uprooting always the result of the elimination of jobs accompany-
ing capital-intensive methods of production. While this may be the
case in commercial agriculture, it isnot the case in manufacturing for `
export, which tends to be highly labor intensive. Finally, the evidence
suggests that only significant concentrations of direct foreign invest~
„mentin certain kinds of activities will have this uprooting effect. Since
the case of commercial agriculture, which in developing countries is
mostly export oriented,
has received considerable study as a factor
displacing people, I will limit most of my discussion to the case of
manufacturing. Furthermore, since a large share of direct foreign
investment in the main immigrant sending countries is in export
manufacturing, I will pay particular attention to this development. z
It is_important to di e ht of export
production in the economies of these developing countries and the
 Foreign investment as a migration push factor 99

Berner developing countries

and the firms involved, the development of labor-intensive produc-
tion for export has been a key factor in their growth strategies. In
terms of world trade and imports by developed countries, however,
these exports represent a very minor fraction.’
Since I am concerned with identifying conditions promoting
migrations in developing countries, it is the weight of this form of
growth in these countries, rather than in world trade, that matters for
my analysis. The issue is not whether export-production in develop-
ing countries represents a small or large share of all world trade.
Similarly, the issue is not whether direct foreign investment in these
countries represents a large or small share of all such investment in the
world. Finally, I would not be concerned with such investment and’
export industries if these were evenly distributed among all develop-
ing countries in a manner that would make them a minor factor in
their economies and one that could not generate a large-scale
uprooting of people.
What makes the examination of interest in an analysis of conditions
promoting emigration is the fact that_direct foreign_investment
acc a_signifi vity in several
countries, that production
countries much of itis for export and, finally, that
these countriesare also among the main immigrant-sending countries
and i t rapid growth in emigration.

Major trends of direct foreign investment in less-developed countries

An examination of the magnitude, timing, origin and destination of
direct foreign investment by the major industrial countries reveals
several distinct patterns of importance to my analysis.
First, all major industrial countries have massively increased such
investments over the last two decades. Most of this investment was in
developed countries. However, the level of investment in developing
countries has grown, particularly since the late 1960s, and the annual
average growth rate in these countries during the 1970s surpassed
that in developed countries. Total direct foreign investment (hence-
forth DFI) for all major i veloping countries
increased from $35 billion in 1967 to $76 billion in 1976 (ILO, 1981:
- 2,5). West Germany’s DFI position went from $1.9 billion in 1970 to
100 The globalization of production

Table 4.1 OECD-DAC* countries’ foreign direct investment’ position in

developing countries, 1970-1976

(Dollars in millions) Share of total (%)

OECD-DAC countries 1970 1976 1970 1976

Belgium 765 1,255 1.8 ey

Canada 1,659 2,960 3.9 3.9
France 3,832 5,254 9.0 6.9
Germany (Fed. Rep.) 1,942 5,970 4.6 7.8
Italy 1,245 2,446 2.9 3.2
Japan 1,218 4,979 2.8 6.5
Netherlands 2,247 3,503 5:3 4.6
Switzerland 875 1,657 ont 2.2
United Kingdom 5,912 9,323 13.8 12.2
United States 22,300 36,990 52.2 48.6
Others’ 717 1,872 Dë 2.4
Total 42,712 76,200 100% 100%

“The Development Assistance Committee countries within the OECD

Includes only private direct investment; includes reinvested earnings
“Australia, Austria, Denmark, Finland, New Zealand, Norway, and Sweden
Source: Based on OECD, Investing in Developing Countries (1978a); ILO, Employment Effects of
Multinational Enterprises in Developing Countries (1981)

$5.9 billion in 1976; that of the Netherlands, from $2.2 billion to $3.5
billion; that of France, from $3.8 billion to $5.2 billion; and that of the
United Kingdom, from $5.9 billion to $9.3 billion (see Table 4.1). In
the case of the U.S., it increased from $22 billion in 1970 to $40 billion
in 1976.
The average wth rates of DFI for all major industrial
countries grew significantly (see Table 4.2). They were 7 percent
from 1960 to 1968; 9.2 percent from 1968 to 1973; and 19.4 percent
from 1973 to 1978 (UN Centre on Transnational Corporations, 1979:
5). In the case of the U.S., the average annual growth rate was 11.7
percent for developed countries from 1950 to 1966 and 6.2 percent for
developing countries; from 1966 to 1973 these rates were, respect-
ively, 10.7 percent and g.7 percent, and from 1973 to 1980, 11.8
percent and 14.2 percent (these figures exclude the petroleum
industry).
In absolute values, U.S. direct ‘foreign investment (excluding
petroleum) in developing countries grew from $3.5 billion in 1950 to
$8.8 billion in 1966 and $42.4 billion in 1980 (see Table 4.3).
Furthermore, according to a recent study (Van Den Bulcke et al.,
KR
 Foreign investment as a migration push factor 101
Table 4.2 Average annual growth
rate of direct foreign investment
from developed” to developing
countries, 1960-1978 (in current
$US.)
1960-1968 7095
1968-1973 9.2%
1973-1978 19.4%

“These are the OECD-DAC countries (see

Table 4.1 for a description)
Source: Sassen-Koob (1983); Based on
OECD, Recent International Direct Investment
Trends (1981)

Table 4.3 Average annual growth rates of U.S. direct investment position
abroad, by region, 1950-1980

Amount (millions $) Average annual growth rates

(%)
1950 1966 1973 1980 1950-66 1966-73 1973-80

Developed
countries 4715 27,629 56,303 122,911 11.7 10.7 11.8
Developing
countries 3,567 8,815 16,830 42,413 6.2 9.7 14.2

“Excluding petroleum industry

Source: Compiled from Obie G. Whichard, 1981a, “Trends in the U.S. direct investment
position abroad, 1950-79,” and 1981b, “U.S. direct investment position abroad in 1980”

1979), between 1967 and 1975, American multinationals withdrew

30 percent of their investments from the original six European
Common Market countries through closures of production units or
reductions in the degree of capital participation in their subsidiaries
to below 20 percent and even 10 percent. This disinvestment was
particularly strong from 1971 to 1973.
Second, there is a. ked degree of co i oth in the
origin an ination of DFI from the major industrial countries to
“the developing countries. Though its share has declined slightly, the
U.S. accounts for almost half of all such investments. West Germany,
‘the United Kingdom, France and the Netherlands account for
a ee a, U I
102 The globalization of production
another 31.5 percent of such investment. If we include Canada and _
tee On the other
and, over 50 percent of DFI of the major industrial countries goes to
the same five or six countries. The U.S. is also becoming a major
recipient of DFI from all the main industrial countries, accounting for
almost 31 percent of all direct foreign investment coming from the
seven leading OECD industrial countries (excluding Japan; see
tables 6.2 and 6.3, Chapter 6 below). This is a fairly recent
development. Between 1961 and 1967 the U.S. accounted for only 2.8
percent of all such investment, and from 1968 to 1973, for 13.4
percent. In the last few years, Japan has become a major investor in
the U.S., with a DFI position in the U.S. by 1980 of $4.2 billion (see
Table 6.3, Chapter 6).
In my analysis the relationcharacteristics
between the of DFI ina
given country and that country’s economy is of primary importance.
The absolute value ofDFT 3giver country andthesharethatvale
represents in total DFI in developing countries is, clearly, a simpler
measure; but it is inadequate.
Simplifying, one can identify two distinct patterns. One is DFI in
some
industrialized
of the more developing countries where such
investment is absorbed into an overall process of industrialization
predominantly oriented towards import substitution, e.g., Brazil and
Argentina, two of the major recipients of DFT in the developing
world.
At the other extreme we can find countries where the absolute level
of DFI may be much smaller but the overall impact on the country’s
economy and people, far stronger. The trend of the last decade
toward increased DFI in production for export, particularly in
manufacturing, has had a pronounced effect both in the smaller, less
industrialized countries such as Taiwan and the Philippines and in
larger, rather industrialized countries like Mexico. Export-led indus-
trialization i i n development strategy to replace _
import-substitution industrialization.*
ee ee a

Export-led development
Export-led industrialization has emerged as a development strategy
over the last fifteen years in response to several different conditions.
Central among these are the exhaustion of import substitution as a
model for development given limited internal markets and the search _
 Foreign investment as a migration push factor 103
for cheap labor by multinationals and other firms in view of rising
labor costs in the highly industrialized countries. Countries with
limited internal markets and large reserves of cheap labor were
especially eager to attract foreign investment for export production.
The impact of this type of production is, clearly, much weaker in
countries which already have highly complex economies with
significant levels of import substitution industrialization. On the
other hand, in countries such as Colombia and Mexico, the
concentration of export production in certain areas has been so high
that, notwithstanding their complex and rather developed econ-
omies, the consequences for the population in those particular areas
have been similar to those in countries with much less developed
economies.
xport-oriented DFI is growi i rt-
substitution oriented DFI. This holds for all major industrial
countries investing inthe developing world. Furthermore, the rapid
growth of international subcontracting as a basic investment strategy
Beceem EE
those
countries
where DFI in the 1960s was import-substitution
oriented are now receiving rapidly growing export-oriented foreign
investments. For example, in Colombia DFI flows amounted to
about $25 million annually in the early 1970s; by 1979 they had
reached $130 million, a rise largely attributed to production for
export (Colombia Information Service, 1979). Similar trends can be
observed in Mexico (see also Centro de Estudios Puertorriquenos,
1979):
There are various indicators of the growth in export-oriented DFI.
One set is provided by the individual countries that are the major
recipients of this type of investment, e.g., several South-East Asian
countries where exports account for well over 50 percent of GNP and
where DFI and international subcontracting are overwhelmingly in
manufacturing for export (United Nations, 1978: 259; Il-50; see
Table 4.4).
The weight of export-oriented production in
i the South-East Asian
and Caribbean Basin countries varies, depending on the overall level
of economic development and the importance of import-substitution
industrialization. The share of all exports in total GNP ranges from 8
percent_i > Mexico and Colombia, to 16 percent in
countries such as the Philippines, the Dominican Republic and Haiti,
104 The globalization of production

Table 4.4 Share of exports in GDP in selected developing countries, 1970-80

b
1970" 1975, 1980
Brézl
GDP (millions of $) 79,200 84,880 250,000
Exports (millions of $) 2,740 4,330 20,000
Share of exports in GDP (3-4%) (7-9%) (8.4%)
Colombia
GDP (millions of $) 13,470 14,440 33,949
Exports (millions of $) 79° 1,145 2,860
Share of exports in GDP (5-8%) (7-9%) (8.4%)
Haiti
GDP (millions of $) 1,010 1,060 1,540
Exports (millions of $) 39 42 210
Share of exports in GDP (3.8%) (3-9%) (13.7%)
Mexico
GDP (millions of $) 98,800 107,040 185,660
Exports (millions of $) 1,350 1,620 15,310
Share of exports in GDP (1.4%) (1.5%) (8.2%)
Dominican Republic
‘GDP (millions of $) 1,860 2,070 7:365
Exports (millions of $) 214 320 1,188
Share of exports in GDP (11.5%) (15-5%) (16.1%)
Hong Kong
GDP (millions of $) = 10,350 21,200
Exports (millions $) — 6,020 19,710
Share of exports in GDP — (58.2%) (92.9%)
Philippines
GDP (millions of $) == 21,410 35,180
Exports (millions of $) = 2,290 5,790
Share of exports in GDP — (10.7%) (16.5%)
Taiwan
GDP (millions of $) == == 40,020
Exports (millions of $) — — 19,810
Share of exports in GDP a -= (49-5%)
South Korea
GDP (million of $) — 33,900 56,460
Exports (millions of $) — 6,080 17,510
Share of exports in GDP — (18.0%) (26.6%)

At constant 1970 prices

At current prices
Source: UN, Monthly Bulletin ofStatistics, Sep. 1982, 1982; UN, Economic and Social Commission
for Asia and the Pacific, Statistical Yearbook for Asia and the Pacific 1980, 1982; UN, Economic
Commission for Latin America, Economic Survey of Latin America, 1980, 1982; US Department of
Commerce, International Trade Commission, Foreign Economic Trends and Their Implications
(several issues), 1982
 Employment implications of new growth patterns 105
and reaches over half of GNP in several of the South-East Asian
countries. In the city-state of Hong Kong, it rises to over go percent. A
growing share of these exports consists of manufactures.’

EMPLOYMENT IMPLICATIONS OF NEW GROWTH PATTERNS

The need to examine the relation between industrialization and

emigration is further underlined by the relatively high growth ratesin `
employment, value added and output registered by the major
immigrant-sending countries. A good part of this growth can be
accounted for only by growth in exports.® Access to the world market
is a must given fairly limited internal markets. As I will discuss in
greater detail below, for these countries gaining access to the world
market is intimately linked to a significant growth in direct foreign
investment — be it in the form of buying groups, direct investment in
production or international sub-contracting (UNIDO, 1980; ILO,
1981; OECD, 1980). Of interest here is the fact that this growth in
output has also resulted in significant levels of growth in employment,
especially compared with the developed countries. Thus while
loyment growth rates from 1968 to 1975 were mostly
negative for the developed countries in several traditional industries,

4.5). This same pattern holds when we look at manufacturing as a

whole — a situation where one could expect the developing countries
to be at a disadvantage in the light of a comparative advantage
criterion, i.e., the concentration of high-tech industries in developed
countries. Both in terms of employment and value added the
developing countries fared well. They were, however, at a dis-
advantage in labor productivity gains, a disadvantage that further
points to job creation given overall growth in output.’ (See Appendix
to this Chapter, pp. 121-22.)
All trends hold when we disaggregate the information and focus on
the major immigrant sending countries. Annual growth rates in Gross
Domestic Product from 1965 to 1980 hovered around 6 percent for
most of these countries, though with pronounced fluctuations over
the fifteen-year period. Growth rates in manufacturing were slightly
higher, although again with marked fluctuations (see Table 4.6 and
Appendix). Finally, growth rates in employment, output and
productivity, controlling for end use of product, were similarly high
compared with those of developed countries (see Appendix).
106 The globalization of production

Table 4.5 Constant annual growth rates in employment, by branch of industry,

for the economic groupings, 1968-1975 (percentages )

Developed
Developing market
Branch ISIC countries economies World

Food, Beverages and tobacco Ki 4.8 —0.4 2.3

Textiles 321 5.1 — 2.5 E
Wearing apparel, leather, footwear 322-324 8.7 — 0.3 3-4
Wood and wood products, including
furniture 33 8.1 —0.3 3.4
Paper and paper products, printing and
publishing 34 6.3 — 0.0 1.0
Chemicals 35 8.9 1.0 ERE?
Non-metallic minerals 36 7-9 0.2 E
Basic metals 37 14.4 0.5 2.9
Metal products, machinery and
equipment 38 9-5 1.0 2.8
Light manufacturing 6.2 —0.4 2.8
Heavy manufacturing 9.2 0.8 2.9
Total manufacturing 7.0 0.4 2.9

“International Standard Industrial Classification

Source: UNIDO, World.Industry Since 1960: Progress and Prospects, 1979, p. 239; Based on Yearbook
of Industrial Statistics, 1976 Edition, vol. 1

Other indicators are the rapid increase in Export Processing Zones

(or Free Zones) and the growth of imports by developed countries of
goods assembled in developing countries.
The differences in employment growth between developed and
major emigration countries become particularly marked when we
examine certain industries, notably food, textiles, wood products,
chemicals, basic metals and so forth. From 1968 to 1975, the
developed countries showed mostly declines or slight increases in
employment in these industries. In the developing countries there
were significant growth rates in employment, ranging from 5 to 15
percent (see Table 4.7).
In sum, inadequate as they may be, the data indicate significant
levelsofgrowthinemployment andoutputinmanufacturing iathe
main immigrant-sending countries. These levels are considerably
higher than those registered
in the developed countries. Thus the
question is how a situation of general employment growth created
conditions promoting very high emigration levels. As I discussed
 Feminization of the new industrial work force 107

Table 4.6 Annual growth rates of manufacturing production in major

emigration countries, 1965-1980 (percentages)

£900-70 ag geren op aë ug 78 79 — 80

Colombia 6.4 79 100 98 66 36 75 — 85 46 26

Ecuador 6.0 8.7. 9.0 13.6 12.1 14.0 12.00 — 12.1 10.1 7.6
Haiti 4.4 6,0) A 7,2 98 48 85 op -08 10.8 6.5
Dominican Republic 13.6 17.0 12.9 7.5 g1 61 61 3.2 —0.6 5.1 5.5
Mexico 8.8 E 0m 82 Ze, ZE bt le Trl
Hong Kong e EE Ek O.Oe— 17.0 r28 r8 =< ==
Philippines — 6.7 6.2 13.9 4.8 $5 5.7 T 45 o
Singapore — 18.7) 10:7- 162 3.8 =—o.2 9.5 9.6 11.6145 13.5
South Korea 21.5 18.8 14.0 29.2 15.8 12.6 22.6 14.4 20.7 9.8 —o.1

“First half (=second quarter)

Source: ECLA, Economic Survey of Latin America (various issues), Santiago; ESCAP, Economic and
Social Commission for Asia and the Pacific (various issues), Bangkok; World Bank, World Tables,
Baltimore; The Johns Hopkins University Press, 1980; Banco de la República, Revista del Banco
de la Republica, Bogata: (April) 1982; The Bank of Korea, Economic Statistics Yearbook, 1981
Seoul, 1982

previously, a key variable in this process was the incorporation, often

Ee
and the associated disruption of traditional work structures. In the
EE
next section I will examine the available data on employment
characteristics in export-oriented manufacturing.

THE FEMINIZATION OF THE NEW INDUSTRIAL WORKFORCE

AAAA aaaea O lllae

Women have a distinct place in both the development of export

agriculture and export manufacturing. Export agriculture has led, in
certain areas, to male emigration and to what Elsa Chaney (1980) has
called the feminization o small-holder farming. In other areas,
export agriculture has led to the proletarianization of women who
ee once independent producers (Boserup, 1970; Nelson, 19745
Dauber and Cain, 1981; Petritsch, 1981). The particular socioecon-
omic and cultural configurations that contribute to these diverse
patterns have received considerable attention in the anthropological
and general development literature.
Overall, the data for the 1950s and 1960s show the prevalence of
female rural-to-urban migration in Latin America and of male rural-
108 The globalization of production

Table 4.7 Annual growth rates" of output, employment and labor productivity in
various branches of manufacturing, for major emigration countries, 1968-1974

Dominican South
Branch ISIC Colombia Republic Ecuador Mexico Korea Singapore

Food, Beverages,
Tobacco 31
Output 7.6 9.6 8.2 AA 14.5 4-5
Employment 4-9 5-7 6.5 2.7 8.0 2.3
Productivity 2.6 SES 1.6 Go 6.0 2.2
Textiles 321
Output 8.0 3.8 9-2 8.5 21.8 24.2
Employment 7.0 3.8 3.6 4.4 7.2 24.1
Productivity 0.9 0.0 5-4 3-9 13.6 oi
Wearing apparel,
leather, footwear 322-324
Output 4-4 18.4 10.5 7:3 39-5 12.2
Employment 8.0 7.0 6.8 4-4 t77 14-1
Productivity — 3.3 10.7 3-5 2.8 EE =LI
Wood and wood
products,
including
furniture 33
Output 8.4 10.7 13.4 5.0 7.0 5.5
Employment 5-9 15.7 3.3 1.0 3:3 10.2
Productivity 2.4 — 4.3 9.8 4-0 3.6 — 4.2
Paper and paper
products, printing
and publishing 34
Output 11.0 SET 4.2 6.6 10.3 9-3
Employment 6.5 10.8 3.6 1.4 5-4 73
Productivity 4.2 5.7 0.6 5.1 4-7 0.9
Chemicals 35
Output 9. 12.8 14.5 8.2 15.8 ` 6.5
Employment 8.1 10.9 6.3 5.2 10.3 9.0
Productivity tat ey 7-7 2.9 5.0 —2.3
Non-metalic
minerals 36
Output 9-9 13.2 11.2 9.0 11.9 3.5
Employment 3.5 16.3 6.2 2.5 3.2 5-5
Productivity 6.2 — 2.6 4-7 6.3 8.4 —1.9
Basic metals 37
Output 4-7 1252 25.2 8.4 30.1 6.4
Employment 16.8 76.3 12.2 1.8 8.9 2.6
Productivity — 10.4 — 36.3 11.6 6.5 19.5 3:7
Metal products,
machinery and
equipment 38
Output 11.4 35.8
5- 13.2. 9.1 34-3 25.8
Employment 6.9 20.9 GE) 6.3 17.0 326
Productivity 4.2 12.4 5-7 2.6 14.8 -6.5

“Computed as compound rate of index numbers for 1968 and 1974

Source: UNIDO, World Industry Since 1960: Progress and Prospects, 1979, pp. 236-237
 Feminization of the new industrial work force 109
to-rural and rural-to-urban migration in Asia and Africa (Chaney,
1984; Nelson, 1974; Herrick, 1971; Byerlee, 1972; Orlansky and
Dubrovsky, 1978; Petritsch, 1981). This divergent pattern has been
explained in part by the lesser role of women in agriculture in Latin
America as compared with Africa and Asia (Boserup, 1970). There is
disagreement in this respect. Several recent studies suggest that
women’s contribution to agriculture in Latin America has been
underestimated due to deficiencies in data gathering (Recchini de
Lattes and Wainerman, 1979). The absence of opportunities for paid
employment in rural areas is probably a key factor inducing the
greater female rural-to-urban migration (Orlansky and Dubrovsky,
1978).
The large-scale development of export manufacturing in several
regions introduces a new variable into the inquiry. The available
evidence strongly documents the overwhelming presence of women
among production workers in export manufacturing (Lim, 1980;
Safa, 1981; Grossman, 1979; Fernandez Kelly, 1983; Multinational
Monitor, 1982; UNIDO, 1980; Salaff, 1981; Wong, 1980; Cho, 1984;
Arrigo, 1980). Furthermore, there is a high incidence of manufactur-
ing jobs among women in countries or regions within countries where
export manufacturing is a key sector of the economy. In these cases
there frequently is a growing incidence of manufacturing jobs
alongside adeclining tcidence ofservice jobsThis trend diverges
from what has been typical in the highly industrialized countries,
both in the past and today, as well as from the prevailing pattern in
Third World countries over the last two decades where service jobs
have tended to proliferate.
This new pattern also diverges significantly from what most of the
literature on female migration i Third World found to be typical
in the 1950s, 1960s and well into the 1970s. The general pattern
discerned was that most iti nt
in domestic service and in informal sector activities (Boserup, 1970;
Schmink, 1982; Delaunoy, 1975; Shah and Smith, 1981; Orlansky
and Dubrovsky, 1978; Recchini de Lattes and Wainerman, 1971;
Youssef, 1974; Jelin, 1979). Furthermore, the evidence points to a

ing women become modernized, more capita intensive andoperate

on larger scales of production (Petritsch, 1981; Dauber and Cain,
1981; Tinker and Bramsen, 1976; Boulding, 1980; Parra Sandoval,
1975; Institute of Social Studies, 1979; Ahmand and Jenkins, 1980;
Caughman and Thiam, 1980). The same pattern is evident in the
IIO The globalization of production

development of heavy industry: as the latter becomes an increasingly

significant component ofa given country’s or region’s manufacturing
base, the share of jobs held by women in manufacturing declines; for
example, the share of women holding manufacturin g in Brazil
jobs
declined from 18.6 to 11 percent from 1950 to 1970, a period during
which heavy industry developed (Schmink, 1982: 6).
The prevalence of
ol: women iin manufacturing together with the high
incidence ol. ong women in countries or
regions where
w this type_o: ion is prominent raises
a number of
“questions about the nature of this development. One element for an
explanation is the marked
concentration of branches that historically
have employed women- electronics, garments, textiles, footwear and
toys. The expansion ofthese industries has induced major changes in
the sex composition of internal migration flows in these areas.
Women, not men, now predominate in rural-to-urban migrations in
the Caribbean Basin and Asia (World Bank Staff, 1975; Standing,
1975; Arrigo, 1980; Kelly, 1984). For example, Standing (1975) notes
a tendency to substitution of male labor within the non-agricultural
sector in Jamaica over the last two decades, with the share of women
in manufacturing increasing from 23—24 percent in the early 1950s to
35 percent in 1973 (Standing, 1975: 1).
These trends point to the need for certain distinctions to gain an
adequate understanding of the place of women in export manufactur-
ing, and more generally, in export-led development. We need to
EE EE
manufacturing: the evidence shows that women's share of jobs
“declines_as_an-industry_modernizes. However, if we consider the
developments in the new industrial zones, perhaps a better formu-
lation would be one that distinguishes between labor-intensive and
capital-intensive forms of production. This would incorporate both
theearlier instances of female employment in certain industries and
contemporary cases as diverse as electronics and garments. Further-
more, this distinction overcomes the inadequacy of conceiving of
certain industries, notably garments, and certain forms of organiz-
ation of the work process, notably sweatshops and industrial
homework, as pertaining to the “traditional,” non-modern sector.
This notion can easily be read to mean that these forms will become
increasingly insignificant as modernization takes place. On the
contrary, the growth of labor-intensive manufacturing in Third
World countries with rapid industrialization as well as the growing
 Feminization of the new industrial work force III

use of sweatshops and homework in highly industrialized countries,

all point to the viability óf these forms in “modern” or “modernizing”
contexts. Such a reading of current developments carries con-
siderable implications for an analysis of women’s participation in
paid employment. While earlier trends suggested both a tendency
toward “modernization” in industry and a corresponding displace-
ment of women from manufacturing, these new trends point to
growing participation.
One of the better bodies of data on employment characteristics in
export manufacturing is that covering Export Processing Zones.
These zones represent an institutionalization of ke rns underly-
ingmanufacturing.®
export Although they account for only a part of
all such manufacturing, their traits tend to be typical. Thus the more
exhaustive data on such zones can be used to obtain a profile of
general employment conditions in export manufacturing.’
Although an increasing number of co ies are developing EPZs,
Hong Kong, South Korea, Singapore and Mexico have the largest

Malaysia, Colombia, El Salvador and Haiti representa sort of second _

phasein the global development of such zones and export industries
generally. A third phase is represented by countries in the Middle
East (Syria, Egypt and Jordan) and Africa as well as in Asian
countries such as Sri Lanka and India. This third phase can be seen as
the penetration of export-oriented development into countries hith-
erto not particularly dominated by export-led industrialization as a
development strategy or into countries with generally undeveloped
industrial sectors where export industries may come to play an
important role. In this regard these countries bear similarities to some
countries in the second phase and, as in both cases, export industries
may come to represent a significant share of total GNP.
Besides geographic concentration,
zones have_a very high indus-..
trial concentration. Electronics, textiles arments account for u
to 80 percent of all production i NIDO, 1980). These two
types of industries represent very different characteristics of produc-
tion, one with low levels of mechanization and the other with high
levels of mechanization. Yet both are labor-intensive and need
abundant supplies of cheap labor, one because it is technologically
backward, the other because its technological sophistication has
permitted the incorporation of tasks into machines and a fragmen-
tation of the production process that allows the use of unskilled
 112 The globalization of production

workers. Other industries located in zones are toys, footwear, leather,

sports goods, plastic articles, miscellaneous light consumer goods _
AE EE?
optical and photographic equipment. In one way or another the all
represent a type of production or assembly that allows the use of
unskilled labor even when the components being worked on are the
result of high capital intensity and high levels of technical expertise.
About half of the total labor force in Asian zones is employed in
electronics (Ho Kwon Ping, 1980: 18; Grossman, 1979; UNIDO,
1980; Lim, 1980; Safa, 1981). But there are variations among
countries. Electronics dominates in Malaysia and Singapore and
textiles and garments in South Korea and the Philippines. And new
industries move in. Thus in 1975 virtually all firms in zones in the
Philippines were in textiles and garments and footwear (UNIDO,
1980); beginning in 1976, electronics moved in (Snow, 1977).
In Central America and the Caribbean Basin there is a similar
concentration in electronics. For example in 1975, almost half of all
workers in factories producing for export in Mexico and El Salvador
were employed in electronics. Textiles and garments accounted for
another 26 percent. Figures for the Border Industrialization Program
in Mexico reveal a similar pattern, only more accentuated. Thus in
1978, 60 percent of the BIP industries were in electronics and
electrical assembly and 30 percent were in textiles and garments
(Fernandez Kelly, 1983).
Electronics and garments and textiles dominate both in countries
with well-established export industries, such as Hong Kong and
` Mexico, and in those where this is a more recent development, such as
the Philippines, Taiwan, Malaysia, Thailand and Indonesia.
Besides geographic and industrial concentration, zones are also
characterized by a very high concentration of women workers (Lim,
1980; Safa, 1981; Salaff, 1981; Wong, 1981; Fernandez Kelly, 1983;
Grossman, 1979; Kreye, 1977). About 70 percent of all workers in
zon n and up to 8o percent of duction and assembly
workers in zones are women. This level varies from country to country
but is uniformly high. Women are 95 percent of all workers in zones in
Malaysia (Lim, 1980) and in Mexico’s Border Industrialization
Program (Fernandez Kelly, 1983).
This high incidence of female employment rises even more if we
look at the electronics and textiles and garments industries alone. In
ectronics of all production workers and almost all
assembly workers are women (Lim, 1980: 15). It is interesting to note
 Feminization of the new industrial work force PIS
that in an industry such as toys, which has been expanding its off-
shore sector, go percent of all workers in plants in South Korea and
the Philippines are women. The high incidence of female employ-
ment is not peculiar to the zones. It holds for export industries
generally, particularly electronics, textiles and garments, and toys. It
is estimated that American_electronics—firms—employ_over—halfa
American
million
less-developed
workers in countries (NACLA, 1977: 15),.with
women accounting for over go percent of all workers (Lim, 1978:
122).
It is worth noting, for example, that in a rather developed state
such as Singapore, the largest single concentration of women workers
in the late 1950s was in services. By 1978, it was in production and
relate jobs. Although
d in absolute numbers service-sector employ-
ment has increased, its share of all jobs declined from 34.7 percent in
1957 to14.9 percent in 1978, aresult ofthe quintupling of production
jobs, which accounted for almost 36 percent of all jobs in 1978 (Wong,
ig80: 9). This is clearly a function of the expansion of export_
production. The conjunction of the weight of this type of production
and the distinct employment patterns it promotes have generated an
additional pattern that contrasts with what is typical in highly
developed countries: there is no bimodality in the age composition of
women workers. The labor force participation rates of women 20 to
24 years of age is very high, yet there is no resurgence in participation
in women aged 40 and over (Wong, 1980: 8). A similar pattern holds
for other countries with export-led development.
Available evidence shows no difference in wages between zones and
the rest of the economy in these countries. Recent surveys on wages
paid in EPZs as reported in the International Labor Office Yearbook
(1982) show that semi- and unskilled workers earn an average of less
than $0.50 per hour. Only a few countries are above this level:
Mexico, Colombia, Panama, Jordan, Syria and Egypt. Average wage
levels are between 16 and 57 times less than in the U.S. Furthermore,
there are a variety of malpractices that contribute to lower wage>
levels, notably the fact that a high share of employees are classified as
rainees for excessively long periods of time. High turnover dier and
firing practices further promote a high incidence of “trainees” and
hence unusually low wages. These low wage levels are particularly
remarkable in view of the relatively high productivity levels in ex-
port manufacturing where highly mechanized assembly plants
predominate.
In some of the areas with high concentrations of export industries,
 114 The globalization of production

the preference for young women and high turnover rates have created
shortages of desirable workers. One possibility could be that this
would lead to a gradual recruitment of more men into these jobs.
However, the evidence Sp E e aa E
vaster supplies of young women (Lim, 1978; 1980; Pineda-Ofrenēo;—
19827 UNIDO, 1980), or bring in migrant women from neighboring
countries, e.g. Malaysian, Thai and Filipino women in Singapore
(Wong, 1981).
In brief, female labor-intensive employment ischaracteristic of
both (ran nd native firms producing for
export.'? As a consequence, in those countries where export industries
are a large component of total industrial activity, this pattern of
female employment in export industries has contributed to a
feminization of the industrial proletariat and to an unusual pattern of
women’s employment characterized by a growing incidence of
manufacturing rather than clerical and service jobs as “develop-
ment” proceeds. Furthermore, a good share of the clerical and service
jobs are directly related to export manufacturing as well.
The central role played by export manufacturing in female
employment is a characteristic that distinguishes it from the historical
evolution of women’s entry into wage labor in what are today highly
industrialized countries. It puts thes i nin a highl
vulnerable position given (a) the hiring and firing practices in many
of these new industrial zones and (b) the disruption of traditional
TAES A Ta CUZ E a
minimize the possibilities of successful reincorporation in the work
lives that preceded employment in the zones. We see ‘here the
conditions for the formation of a supply of women migrants. The
liberalization of American immigration policy and the vast demand
for low-wage workers in the U.S. acquire their full weight in this
context.

A new trend?

Besides a strong trend toward locati ants in new areas with

_even cheaper labor and even more concessions on the part of host
governments, there is also a slowly growing trend of retrenchment of
existing facilities. In Puerto Rico this has been evident for many
years, especially in garments and electronics. But it is now also
beginning to happen in places such as Singapore and Hong Kong in
 The migration option 115
the electronics industry. It is generally seen as the result of two factors:
(a) competition among developing countries to attract foreign
investment via offering more and more subsidies and concessions
(UNIDO, 1980); and (b) a search for even cheaper and more docile
labor, since the evidence suggests that there is a general trend toward
rising wages and workers’ struggles in the zones, notwithstanding the
blocking of unionization and other workers’ rights (CCA-URM,
1981; Pineda-Ofreneo, 1982; Lim, 1978; 1980). There is evidence
(Sassen-Koob, 1987) that a third factor may be playing an increas-
ingly important role. This is illustrated by what I have called the
structuring of a new industrial zone in Southern California, which is
emerging as an alternative to the zones in less developed countries.
Very briefly, the reasons for this are: (a) the vast supply of cheap and
powerless labor represented by immigrants from Mexico and,
increasingly, from Asia; (b) the need to have certain assembly and
production operations close to technical centers at particular stages of
product development — that is to say, certain components in the
electronics industry may be the first phase ofa new product cycle; and
(c) the desire to secure access to the American market which may
make location of high-tech industries in Southern California with its
vast supplies of cheap and technically proficient labor attractive to
foreign companies, these being a major component in the accelerated
growth of high-tech industry in the region. I return to these issues in
Chapter 6.

THE MIGRATION OPTION

Precisely because these countries have had large-scale direct foreign

investment and considerable growth rates in employment, par-
ticularly manufacturing employment, traditional migration push
factors seem inadequate to explain the high levels of emigration
registered over the last decade and directed to areas with much lower
overall growth rates. Apparently there are a number of intervening
factors that along with considerable employment growth, transform
the situation and promote emigration. j nd
that the direct displacement of small farmers by commercial agricul-
ture can generate out-migration, this is less clear in the ca -
intensive j hich creates jobs.
Do these developments induce emigration in the areas where they
take place? That is to say, besides conditions inducing emigration
116 The globalization of production

among population sectors not affected by such developments, can we

infer here the existence of a specific dynamic that facilitates emig-
ration both as an objective process and as a culturally viable option?
New and highly labor-intensive export manufacturing conceivably
could contribute to solve the unemployment problem, particularly
among prime-aged males. Instead, the evidence overwhelmingly
shows that it has drawn new segments of the population into the labor
force: mostly young women who under conditions of a more gradual
industrialization would not so massively have entered the labor force.
Largessceleserea ortOf\GhsPonce tae eee ee
EE ae is
E
effect has been further accentuated by high turnover rates due to
employment practices in the plants and the mental and physical
fatigue associated with these jobs. This results in ongoing recruitment
of new cohorts of young women.
The absence of expected outcomes and the creation of new,
undesirable outcomes have to be taken into account when examining
the employment implications of the development of export industries.
First, the large-scale mobilizati f young women into wage
has had a diisruptive effect on traditional waged and unwaged work
structures. Second , employment in the new industrial zones bas

communities of origin. Together these two processes pose objective

and ideological barriers to these women’s return to their family
homes and the work they would traditionally perform there for the
household or the local market. At the same time, long-term
employment in export factories is highly unlikely. All the evidence
points to average tenure being around five years. After that, for a
number EES possibility of being
employed in another firm, given the preference for women between
sixteen and twenty-five years of age. These women, laid off and
westernized, have few options. They add to the ranks of the
unemployed. The disruption of traditional work structures due to the
extremely high levels of young female emigration has further
contributed to increase the pool of unemployed. It has stimulated
male emigration and the emigration of women who may not have
planned on doing so.
Under these conditions, emigration for both women and men may
be the only option. At thid pointthefactofastrong Torsion Geer
becomes crucially significant. The foreign investment presence is
 The migration option 117
concentrated in a few areas and foreign firms also dominate the zones
objectively and culturally. Finally, it is the fact-thatthe—workers
"er services_are
applying their lab e
gear
toed
foreign
countries. Year after year, day es day, these manual and service
workers are engaged in activities that meet demand in the U.S., or
West Germany, or Japan. In other words, they make things of use to
people and firms in countries with much higher levels of development
than their own. One could infer, then, that these workers may feel
capable of using their labor power effectively in these developed
countries as well.
The relation between urban and rural spaces in this process of
mobilization of people into migration streams assumes a variety of
“forms.It cannot be reduced to a linear movement of displacement.
Thus, ee
displacement ofsmall farmers who are then forced tomigrate tothe
cities, access to cash income through employment in commercial
agriculture may make possible continued ownership of a plot of land.
Owning such land, in turn, may contribute to lower their cost as
wage-workers in commercial agriculture (Deere, 1976). Though
under a different form, the rise in the use of homeworkers in rural
areas to produce manufactured products for the export market may
have the same effect in terms of facilitating continued ownership of a
plot of land and even further lowering the cost of labor in export
manufacturing (Pineda-Ofreneo, 1982). These developments will
tend to counteract the disruption of traditional work structures
resulting from commercial agriculture and export manufacturing.
However, they do entail an articulation between these traditional
work structures and modern forms of production. One concrete
expression of this is a reduction in the share of workers’ subsistence
costs that needs to be met by wages. An extension of this development
-migr
is represented by the sent by
remittances antsa which `
broad
contribute to continued land ownership in the country of origin
(Grasmuck, 1981; Pessar, 1982; Mines, 1978). Thus, the same
conditions that promote the disruption of traditional work structures
may eventually also generate possibilities, i.e., through access to
money, for delaying or counteracting this disruption.
Besides this highly mediated effect on the formation of a pool-ef
are Soccer rae disruption oftraditional, often unwaged,
employment structures, the massive and concentrated foreign
See eege
118 The globalization of production

presence facilitates the emergence of emigration as an option. This

would be far Jess likely in an “isolated” country, one Jacking a mas- _
siveforeign_presence and the resulting structural and ideological
links with “the West.” It would then also follow that the emigration
impact will be much stronger in countries without a large and
complex industrial base where direct foreign investment can be a
relatively measured, discreet presence. A growing share of direct
foreign investment by the major industrial countries is going to
smaller countries with less complex economies and increasingly into
production for export. Under these conditions direct foreign invest-
ment becomes one of the central variables, along with those
traditionally cited in the migration literature, contributing to the
development of linkages that facilitate emigration flows.
In brief, what I posit is a generalized effect that contributes to the
formation of a pool of potential emigrants and, at the same time, to
the emergence of emigration as an actual option. This effect would
seem to be present regardless of whether the direct foreign investment
originates in the U.S. or in any of the other major advanced
industrialized countries, including Japan. What matters are the
characteristics of both foreign investment and the receiving economy.
Thus the increases level of Western“ Puropean’ and Japanese
investments in export-oriented labor-intensive production contri-
GEET E
potential migr e of emigration as an option.
gainst this background, the changes in immigration legislation in-
1965,tonether withthecontinued image ofthe OSes an immig.
rationıcountry, acquire their full significance. Under such conditions,
Western European direct foreign investment could stimulate emig-
ration to the U.S. by contributing to conditions that further
emigration in the sending countries. Though Western Europe was a
major target for labor migrations after World War II, it has not
emerged as another “land of opportunity”, an alternative to the U.S.
The guest-worker orientation ofits immigration policy may have had
something to do with this, besides the more fundamental fact that the
Western European nations were not built by immigrants as was the
U.S. The closure of immigration in Western Europe can only
reinforce this pattern.
The j i
D
e U.S. as an immigration country and
the absence of alternatives acqui rticular significance in the
context of continued growth of direct foreign investment and its
AES aE ee rE NEN SNE TIM i SN Bera ie ‘ek
 Conclusion 119
expansion to additional countries. The general trend is for all the
major
industriatcountrie
to increase
s investment in less developed
countries. Although most ofthis investment is concentrated in a few
countries, there is also a trend towards significant levels of investment
in “new” countries. Accepting my analysis about the effect of direct
foreign investment on the formation of a pool of potential emigrants
and on the emergence of emigration as an actual option, it could be
argued that this expansion of direct foreign investment by the major
industrial countries will contribute to additional emigration to the
US.

CONCLUSION

The generalization of market relations has historically had a

dissolution effect on traditional work structures and promoted the
formation of labor migrations. Chapter 2 discussed the historical
development of conditions promoting labor migration. In this
chapter I have focused on the particular forms assumed by these
conditions in the main immigrant sending countries today. The
expansion of export-oriented manufacturing and agriculture, both

~ Direct foreign investment can be conceived of as a mediating

structure, one that operates indirectly in a highly complex manner
both ideologically and structurally. The 1,000 percent increase in DFI
in developing countries from 1950 to 1980 (and mostly concentrated
in a few of these) creates various kinds of linkages with the capital-
sending country(s).
The employment effects of direct foreign investment are con-
siderable and highly concentrated. The rather high levels of annual
growth in employment, output and value added in manufacturing in
the main immigrant-sending countries are significantly higher than
in the developed countries. These employment effects, grouped by
type of investment — export or import-substitution oriented — by
country and by sector, can serve as an indicator of the impact of such
investment on the mobilization of people into wage labor and into
migration streams. The available evidence shows this impact to be
pronounced in the case of countries where export-oriented invest-
ment is a major component not only of foreign investment but also of
120 The globalization of production

the country’s GNP. The available evidence also indicates that the
rates of immigration to the U.S. from these same countries increased
significantly throughout the 1970s: for example, a 125 percent
increase in legal Filipino entries from 1970 to 1980, a 400 percent
increase in entries of South Koreans, a 250 percent increase in entries
from Singapore and Malaysia (see Chapter 3). Finally, the available
evidence also shows a growing trend toward direct foreign investment
in export industries in more and more of the less-developed countries,
a development which can be expected to promote new migration
streams.
In brief, in this chapter I have examined significant
how levels and
concentrations of direct foreign investment are one, and only one,
[Raa
EE arn SL ES Eee ee `
factor promoting emigratio -{a) the incorporation of new
segments of the labor and the associated
disruption of traditional work structures both of which create a

workforce
and its impact on the work opportunities of men, both in
the new EE en and
(c) the consolidation ofobjective andideological links with thehighly
industrialized countries wher eign capital originates, links
that involve both a generalized westernization effect and more
specific work situations wherein workers find themselves producing
goods for people and firms in the highly industrialized countries.
 Appendix

Table 4.8 Constant annual growth rates" of manufacturing employment, value

added, and labor productivity, 1960-1976 (percentages )
GE

Employment Value added Labor productivity

Economic 1960- 1968- 1975- 1960- 1968- 1975- 1960- 1968- 1975-
grouping 1975 1975 1976 1975 1975 1976 1975 1975 1976

Developing Countries 2o 7.0 — T Oe E 204 EE es

Developed market
economics 00.. 0.45 20:0 m7 T A1 8.9 48 37 89
World average 28 20 — SEI 6.5 6.7 et 3.5 Ee

“Calculated using regression on time

Source: UNIDO, World Industry Since 1960: Progress and Prospects, 1979, p. 223; Based on UN,
Statistical Yearbook 1977; Yearbook of Industrial Statistics, 1976 edition, Vol. 1, and data supplied by
~ the United Nations Statistical Office

Table 4.9 Annual growth rates of GDP in major emigration countries,

1965-1980 (percentages)

Average,
beet Gg 72 e 94 7h S76) 77 78- 79- 80

Colombia 5.8 58 78 71 6.0 93.55 4.6504.00 8.9 51 4:2

Ecuador 5.6 By 0B 12,7, 09 "8.4.8 OB E 15.3
Haiti 1.8 Be e S8 A3 H, ZER EE
Dominican Republic 7.8 ga 12.5 “8:0 7.5 “51 96.4 4:4 Aaa e488 5.2
Mexico 6.9 id 75 RE As Ee 32) er 0.0) 84
Hong Kong 7.8 3.2 7.2 14.2 2.2 3.3 16.7 9.8 10.0 10.5 10,1
Philippines 5-4 — 48 87 49 66 75 56 58 5.8 4.7
Singapore 12.5 12.5 194 115 Ogag 7:57:90 8.6 9.3 90
South Korea GC? oo 7.4 17.1 88 88 14.6 10.0 11.3 7.4 —4.5

“At constant factor cost

Source: ECLA, Economic Survey of Latin America (Various Issues, 1975, 1977, 1980), Santiago
(1977, 1979, 1980); ESCAP, Economic and Social Survey of Asia and the Pacific (various issues, 1976,
1978, 1980); Bangkok; ESCAP (UN), 1977, 1979, 1981; Banco de la Republica, Revista del Banco
de al Republica, Bogota, April 1982, p. 94

121
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 Appendix 123

Table 4.11 Export Processing Zones in operation in Asia, AIfrica, and Latin
America, with year of commencement
ee
oe Commence- Export Commence-
rocessing ment of Processin a
Country Zone operation Country Zone j SC

ASIA
Bahrain Mina Sulman 1972,
Hong Kong po a ee 1965 Bupyong n.a.
Juan n.a.
Tsuen Wan/ Juan n.a.
Kwai Chung Syria Damascus n.a.
Sam Ka Tsuen Taiwan Kaohsiung 1966
San Po Kong Nantze 1970
Cheung Sha Wan Taichung 1971
Chai Wan
Wong Chuk Hang AFRICA
India Kandla 1965 Egypt Port Said 1976
Santa Cruz 1974 Mauritius Plaine Lauzun 1971
Jordan Aqaba Port n.a. Coromandel 1976
Lebanon Beyrouth n.a. Senegal Dakar 1976
Malaysia Prai 1973 Togo Lomé n.a.
Prai Wharves 1972 Tunisia Mégrine n.a.
Bayan Lepas 1972 Ben Arous n.a.
Sungei Way 1972
Ulu Klang 1974 LATIN AMERICA
Tolok Paligma n.a. Brazil Manaus 1973
Batu Berendam 1972 Colombia Barranquilla 1969
. Tanjong Kling 1972 Buenaventura 1973
Philippines Bataan 1973 Palmaseca 1973
Singapore Singapore 1967 Cúcuta 1974
Bunkit Timan Domin. Rep. La Romana 1969
Jurong Town S. Pedro de Macorís 1973
St Michael’s Santiago 1974
Tiong Bahru EI Salvador San Bartolo 1975
Redhill Guatemala S. Tomas de Castilla 1975
Ayer Rajah Haiti Port-au-Prince 1974
Tangling Halt Mexico Zona Frontera 1966"
Kallang Basin Tijuana
Toa Bayoh Mexicali
Ang Mo Kio Nogales
Chai Chee Ciudad Juarez (2)
Bedok Ciudad Acuna
Indus Road Piedras Negras
Woodlands Nuevo Laredo
South Korea Masan 1972 Reynosa
Iri 1974 Matamoros (2)
Gumi 1973 Panama Colón 1975,
Gurudong n.a. Puerto Rico Mayagüez 197
eee
E EE S E EE

_ “Freeport in operation since 1960

Export-oriented industrialization since the beginning of the 1950s, production for the world
market by foreign firms since the mid-1960s.
‘Production for the world market by foreign firms since 1967.
Start of production for the world market by foreign firms.
Free port in operation since 1948
Commercial activities since 1961
Source: Fröbel et al., 1980: 308-309
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anjea anyea anjea BOCH anjea OCH on[ea anyea anyea
oL aay-Ainq əƏAqennq Gig aait-A1n0 ` z2qeung TROL say-Aing s2qeung
©
9461
0g61
9961
(s1wyop e ur)
0961—9961 fo
mom "o0o/Zop puv SASLsway 909ok syogunpun AQEL SIE e
Table 4.13 Value of Haitian exports in assembly industries (in millions of $
U.S.)
Products made of Products made of
locally produced imported Total
components components gross

1967 1.5 2.3 3.8

1968 2.9 4.0 6.9
1969 27 5.8 8.5
1970 3.8 8.1 11.9
1971 4.5 11.9 16.4
1972 5.8 18.4 24.2
1973 6.5 32.1 38.6
1974 16.4 61.4 77.8
1975 12.4 58.0 70.4
1976 10.6 84.5 95-1
1977 13.3 91.0 104-3

Source: U.S. Embassy, Port-au-Prince, Commercial Section (unpublished data); Adapted from
Leslie Delatour, “The Evolution of International Subcontracting Industries in Haiti”
(Presented at UNCTAD Seminar, July 16-26, 1979, Mexico) [Mimeo]
 5
The rise of global cities and the new labor
demand

The developments described in the preceding chapter contribute to

explain the emergence of new migration strea i tates.
The developments addressed in this chapter contribute to explain the
continuation of these migrations at increasing levels. That is to say,
the preceding chapt identified conditions for the formation of a

chapter focuses on the conditions influencing the demand for an

immigrant workforce in what have become key destinations of these
migrations.
The new
new industrialization 1N
industrialization in several
several Asian
Asian and
and Caribbean
Uaribbean count-
count-
ries is in good part the other si l s
deindustrialization. These shifts are one aspect of the_territorial_
decentralizati f ly. Decentralization
and the technical transformation of work have contributed to the
development of a new i l dustrialized
countries. This new core consists of highly specialized services, the
corporate headquarters complex, and high technology industries,
and it promptly evokes images of high-level, specialized Jobs,
However, this is only part of the actual situation: the new economy `
has also generated a massive expansion in the supply of low-wage
jobs. ja ee. SS eee
a S
For a number of reasons, these new trends are particularly
accentuated in major urban centers, which are also the destination of
the vast majority of new immigrants. They have intensified the role of
major cities as producers and exporters of specialized services and of
high-level managerial inputs. The technological transformation of
the work process, the shift of manufacturing to less-developed areas
‘domestically
and abroad, in part made possible by the
technological
transformation of the work process, and the ascendance of the
financial
sector in management, have all contributed
tothe consolid-_
ation of a new kind of economic center — the global city from where
m_a pce

126
 The rise of global cities and the new labor demand £27
the world economy is managed and serviced. That is to say, the
domestic and international dispersion of manufacturing, clerical and

decentralization in ownership and control. This did clearly not take

place. The pertinent literature generally analy continued
the zes
centralization of control and ownership in terms of the power of the
large
corporations. Insofar as the concern in this book is with jobs and
labor demand, the question here is how does this continuation of
centraliz rol over a geographically dispersed economic system
translate into jobs. Rather than a focus on the power of the large
corporation, this question brings to the fore what could be described
as the practice of global control and specialized servicing: the activities
involved in producing and reproducing such centralized control and
specialized servicing. From this perspective, what matters in the
examination of specialized service industries is not only the final
output, e.g. a financial package or technical advice, but the whole
range of jobs involved in the production of that final output, from the
experts to the cleaners of the buildings where the experts work. The
expansion of this sector has contributed to a growth of both very high-
income and low-income jobs.
The locational concentration of this expanding sector of specialized
services and corporate headquarters in major cities has emerged as an
important source of low-wage jobs, both directly and indirectly. The
direct effect is through the occupational structure of these sectors. ‘The
indirect effect is through the ancillary sectors and the consumption
structure underlying the lifestyles of the new high-income
professional/technical workers.
To this source of low-wage jobs we need to add (a) the ongoing
growth of the consumer services sector catering to the population at
large and (b) the growth of certain types of manufacturing, notably
electronics, and certain forms of reorganized manufacturing, notably
the proliferation of sweatshops and industrial homework. For various
reasons, large cities tend to facilitate the growth of ancillary services,
consumer services generally, and sweatshops. Thus also in these
sectors we see a tendency towards locational concentration. The
overall outcome is a large supply of low-wage jobs in major cities like
New York and Los Angeles.
Of central importance to the argument I develop in this book are
the following hypotheses which I examine in this chapter, First, the
highly dynamic sectors of the economy directly and indirectly
- 128 The rise of global cities and the new labor demand

„generate low-wage jobs, and these sector

major cities. Second, the dynamic growth sectors in these cities are
one key factor in the expansion of what could be described as an
informal economic sector both iin production and in retail business; an
example is the increasing demand for highly customized products,
from clothing and furniture to renovation of building interiors, which
induces the proliferation of small, labor-intensive, full-service oper-
ations. Third, the expansion of the low-wage job supply is taking
place infocations which are-strategic nedal-and productive points for
the _management_and_control_of the global economic system.
Furthermore, it is happening at a time, the 1970s, when central
components of the native supply o -wage labor are characterized
by political alienation, increasingly weak labor-market attachments,
rising expectations, and so on. In this context, availability of
immigrant labor that is low-wage and considered to be highly
disciplined acquires added significance: it offers a solution to the
cheap-labor question in strategic locations of the economy at a time
when important processes of economic restructuring and reorganiz-
ation are taking place.
This chapter examines two sets of issues. First I will discu
_geographic dispersion of manufacturing, clerical apdeeesantas
service activities has contributed t
“and producers servicescomplex_in-major
cities. The developments
discussed in the preceding chapter are one component of this
geographic dispersion. The technical transformation of the work
process is a key variable facilitating this territorial reorganization
consisting of new forms of dispersion and new forms of centralization.
I will also discuss how this restructuring contains inducements for the
informalization of a growing range of economic activities located in
major cities. Finally, I will examine the growth of foreign investment
in the U.S., a subject I return to in chapter 6; this is a development
that has played an important role in the consolidation of key
components in the new economic core of major cities.
Second, I will analyze how this economic restructuring has
wrought major changes in the job supply. Iwill beparticularly
interested in examining the generation of low-wage jobs in major
growth sectors, notably in the producer services, in high-technology
industries and in other components of the downgraded manufactur-
ing sector. The most extreme case is that of the_producer services
sector,
RE a generator of very high-income professional and technical
 The rise of global cities and the new labor demand 129
jobs which also generates a considerable supply of low-wage jobs with
few skill or language proficiency requirements and no history of
unionization. That is to say, even the most dynamic and technologi-
cally developed sectors in the economy generate jobs that can
conceivably be held by unskilled foreign-language workers.
Two analytical distinctions basic to my argument are the distinc-
tion between job characteristics and sector characteristics and the

the economy and backward sectors can be part of major growth

trends in the economy. Use of these two sets of distinctions also leads
me to a partial reconceptualization of what has been called the
informal sector, another source of low-wage jobs. I will argue that the
emergence of an informal sectorin- major Ameriean-cities is largely a
function of the kinds of growth trends presently concentrated in such

unemployment per se or an import from the less-developed world

brought in by the massive immigrant influx.
The timing, magnitude and destination of the new immigration
become particularly noteworthy when juxtaposed with the pro-
nounced changes in the job supply in major urban centers. In the
empirical elaboration of the argument I will focus particularly,
though not exclusively, on the cases of New York Ci
Angeles. These are the two major producers of financialand other
adva ices- They also contain two of the largest `
downgraded manufacturing sectors ofanycity. And they aremajor `
recipients of the new immigration. Yet in the middle of the 1970s each
of these cities was a consummate instance of what are usually seen as
two very different configurations: the declining Frostbelt and the
ascendant Sunbelt. Within the national economy they each do indeed
contain distinct trends of decline and growth associated with each of
these regions. However, in the context of the major developments in
the world economy discussed in the preceding chapter, what comes to
the fore is their role as centers for the servicing and management of the
vastly decentralized manufacturing sector and for the globalization of
economic activity generally. This role would also explain why both
have been major recipients of direct foreign investment in banking
and other advanced services over the last few years, particularly from
Western Europe and Japan. Western European and Japanese
manufacturing is becoming decentralized in ways akin to those of the
 130 The rise of global cities and the new labor demand

U.S., including redeployment of plants to select less developed

countries and to the U.S. This generates a similar need for centralized
management and servicing. New York City and Los Angeles also
seem to fill part of these functions for Western European economies
alongside major cities in their home countries.

CENTRALIZING GLOBAL MANAGEMENT AND SERVICING

The decentralization of the manufacturing sector, together with the

transnationalization
of capital genraly, have contributed to a sharp
EE EE for advanced services.
Many factories left major urban centers. But the services, particularly
management and control operations largely remained_there and
“expanded. Furthermore, the transnationalization ofcapital generally
has induced a sharp expansion in the financial system. The produc-
tion of highly specialized services, including the vastly expanded
financial system, tends to be concentrated in major world centers.
New York City remains the leading such center in the U.S. and the
world; Los Angeles is, today, the second in the U.S.
Several trends have d for an expanded production
of the
organizational commodities that make possible centralized control,
management and specialized servicing. They are (1)the geographic
dis ersion of manufacturing and office work; (2) the m of large
corporations intot rvices sector; and (3) the increasing
size and product diversification of large corporations. These trends
EE the importance of planning, marketing, internal
administration and distribution, control over a wide variety of types
of information, and other activities that entail centralization of
management, control and specialized servicing.' While large corpor-
ations are a key agent for this intensified role of centralizing activities,
it is important to note that governments too face an increasingly
complex situation and can make use of some of these organizational
commodities.” The actual production of a wide range of these inputs
takes place in a market of free standing specialized service firms. The
smaller share of production occurs within the large corporation. Thus
eventually foreign governments and small firms here and abroad
have also emerged as buyers of these organizational inputs.
R all these trends the decentrali of manufacturin
zatio gn-has
d most attention and become almost synonymous with the
notion of capital mobilitty. There is a vast and excellent literature
 Centralizing global management and servicing 131
ranging from studies on deindustrialization at the core to studies on
direct foreign investment and the new international division of labor.
The_spatial reorganization of production has become the pivot
around which these analyses move, it being one of the more distinct
traits in the current phase and one that has brought the issue of
capital mobility to the fore.
Besides consisting of a spatial reorganization of production, the
decentralization ofmanufacturing is
alsoconstituted intechnica and
social terms. Different kinds of processes have fed this decentraliz-
ation. On the one hand, the dismantling ofthe old industrial complex
c
with its strong organized labor component was an attempt to
dismantle the capital-labor relation around which production had
On the other haand, the decentralization of produc-
beenorganized.
tion in high-tech industries was a result of the introduction of new
techno ogies where design separated low-wage, routine tasks from
highly skilled tasks, therewith maximizing locational options. Re-
locating and setting up rubber tire production to open shops in the
Sunbelt or automobile assembly plants to Mexico involves the
recomposition of old industries, while setting up low-wage semi-
conductor assembly plants in South-East Asia involves the organiz-
ation of a new industry. Both, however, entail an organization of the
capital_labor relation that tends to maximize the use oflow-wage
labor and to minimize the effectiveness of mechanisms that empower
labor vis-a-vis capital. Thus the term decentralization, while suggest-
ive of a spatial aspect, clearly involves a-complex political, social, and
EE
CEET this transform-
ation in the organization of production. Plant closings in old
industrial centers and reopenings in open-shop
regions, notably in the
Sunbelt, areprobably themost dramatic instance.” Disinvestment,
eg represent mechan-
isms for deindustrialization which, while not as direct as plant
closings, entail a severe erosion of the old industrial complex. From
1969 to 1976, shutdowns are estimated to have eliminated 22 million
jobs in the U.S. (Bluestone and Harrison, 1982: 29), and this trend
continues. Plant shutdowns in 1982 alone resulted in 1.2 million jobs
lost (Bureau6 onat Affairs, Inc., 1982). During this same period,
U.S. direct-foreign investment in low-wage countries more than
quadrupled; from $8.8 billion in 1966 to $42.4 billion in 1980
(Whichard, 1981a; see Table 4.3), most of it for manufacturing and
132 The rise of global cities and the new labor demand

associated services. A growing share of this investment is for

production or assembly of components imported from the core and
exported back after processing or assembly. A partial indicator of this
is the value ofgoods entering the U.S. under Tariff Items 806.30 and
807, which increased threefold from 1966 to 1978. The value of such
products coming from less developed countries represented only 6.3
percent ofthe total in 1966 butincreased to 44 percent in 1978. These
production units are distributed among 80 Export Processing Zones
and a large number of world market factories. (See table 4.12 in
chapter 4.)
The concrete territorial and social organization of production
underlying these figures is characterized by, first, a vast expansion in
the spatial organization of production to incoyrporate, via relocation `
or first-time location, domestic and foreign areas with low-wage
labor. Low-wage labor here may mean skilled and unskilled workers
in the American Sunbelt, unskilled workers in South-East Asia, skilled
workers in Ireland, or highly trained engineers in Israel. Second,
there is a reorganization of the work ss resulting from the new
spatial oganization ofproduction aswel as the expanded use of
orga
certain types niza
of tion
of production and the work process,
such as small plants, sweatshops, industrial homework and generally
the fragmentation of production into multiple separate assembly and
processing operations.
A major new pattern in the organization of work is the decentraliz-
ation
office of jobs. It involves the shipping or transmission of routine
tasks to various foreign or domestic ‘‘off-shore’’ locations, whether
low-wage countries or suburban homes at the core.
Mechanical decentralization — shipping out data processing work
to be key-punched or put on discs and returned via air transport
began fifteen years ago. In many ways this form of decentralization
limited the possibility of using off-shore locations to very large data
entry jobs with no immediate deadlines. eae the us ite
transmission broade j be shipped abroad
andminimizes theweightofdistance bothin termsof o time andcost.
The work is typed into a computer in one location andtransmitted
via satellite to another. For example, Pacific Data Services, a Dallas
company, recently opened a data-entry business in China which will
have op computer terminals operating during three shifts a day. A
crucial cost factor was that of earth stations and equipment. Once
installed and given the growing market, the costs of transmission have
 Centralizing global management and servicing 133
declined.* New developments such as the word processor are
replacing traditional data-entry work as documents are being
prepared directly in electronic form. In conjunction with the
development of satellite transmission, this will broaden the range of
possibilities.
The cost of labor is clearly a key factor in this decentralization.

overseas office work because of overall high literracy and English-

lish-
speaking populations. In the early 1980s employees earned about
$1.50 an hour for work which in the States pays from $4 to $12 an
hour. Within the U.S., the suburban labor market may also assume
increasing importance for less routine tasks because of the large
number of highly educated women who, due to child-care re-
sponsibilities, may be unwilling or unable to hold a full-time job
outside the home. The push to get individuals to buy computers for
personal use acquires added meaning: garment homeworkers provide
their own sewing machines and the clerical homeworkers their own
computers.
Another factor that needs to be considered is that the international
flow of these types of items fits into the expanding trade in services
generally. No tariffs are levied against international flows of com-
puter data. The U.S. government has for years tried to prevent other
countries from levying such tariffs. There is great resistance to such
tariffs at various levels, from U.S. Congress formulations regulating
international trade in services to GATT negotiations aimed at
ensuring and maximizing the free flow of services (U.S. Senate,
1982). In this context it is interesting to note that services are the most
rapidly growing American export (DiLullo, 1981).°
As happened with manufacturing plants, governments from
various countries are trying to draw firms to locate offshore service
EE deg
tors, including the training of workers for the facilities. For example,
the government in Barbados has subsidized the training of employees
for a U.S. data firm. The facility is located in a factory building, it is
referred to as a factory and it is run as a factory.
A thirdarea that has contributed to the expansion of centralized
_management and control operations is the move by large corpor-
‘atio etailing of consumer services. The globalization of
markets and production together with product diversification
demand the investment of greater resources in planning and
134 The rise of global cities and the new labor demand

marketing to reach the consumer. Advertising and consumer finance

have become increasingly important components in the final product
or service. The possibility of economies of scale in the delivery of such
services and the expanding market for such services have led large
corporations to produce for the open market consumer services that
were usually produced only by small entrepreneurs. ‘This has brought
about what Levitt (1976) has called the “‘industrialization of service.”
Standardization and economies of scale in production and delivery
of services are predicated upon shifting certain components away
from the actual service delivery establishments and to headquarters.
These come to centralize planning, development, franchising, pur-
chasing and other such functions. The result has been_a growth of
large new firms or divisions within firms engaged in service delivery
via
multiple retail outlets and centralization of specialized functions.
This fragmentation of the work process, parallel to that in manu-
facturing, is evident in hotels, restaurants, various kinds of repair
services, movie theaters, car rental, and photo development agencies,
retail outlets for a broad range of consumer goods, from food to
flowers, and a vast array of other service activities which used to be
largely the domain of small, local entrepreneurs.
A fourth factor that has contributed to the expansion of centralized _
management and control operations and the advanced services sector
isthe very size ofcorporations. The large national or transnational
corporations have been key agents in the restructuring of economic
activity. The increasing size and product diversification of the large
corporation in turn have intensified the importance of planning,
marketing, internal administration and distribution, and other such
activities. The organization of production on a global scale with a
large number of plants or service outlets requires a vast expansion of
the control and management apparatus. This has generated a large
demand for highly specialized services produced both within the
corporation’s headquarters and bought from outside firms.
_ The decentralization of manufacturing and of office work, the

the growing size and product diversification of large corporations

have all intensified the role of management and control operations
and of the advanced services in economic activity generally. The
technological transformation of the work process has made possible
and in turn been further induced by these developments.
In theory, the decentralization of production units can represent
 Centralizing global management and servicing 135
more than one type of ownership organization. Indeed, subcontract-
ing has expanded greatly, both domestically and internationally.
And there has been a significant growth of small, highly specialized

technologies and new products. There even were predictions that the
shift to a service economy would reduce the average size of firms and
the influence of large firms over the economy (Fuchs, 1968). But
ultimately it is a limited number of
corporations which control a large

decentralization ofeconemic activity and the associated_ global labor

force create new requirements in terms of planning, or anization,
distribution, marketing, and finance. The result is an expanding
central apparatus needed for the control, management, and servicing
of the decentralized production process and the global labor force.
This operates both at the micro level of individual corporations and
at the macro level of the system, that is, in the realm where the state
intervenes to regulate and organize the increasingly complex system
that has a local, national, and international arena of operation. All of
these feed into the importance and expansion of centralized manage-
ment and control operations.
Correspondingly, there has been a growing demand on the part of
the various agents, from governments to corporations, for highly
specialized services which have become a key input.® The develop-
ment oftheadvanced services KasTarther reinforced these various
trends which in turn have generated a growing need for this input.
The changing structure of production affects the demand and supply
of various services (Caves, 1980), a fact that has not received sufficient
attention in statements on the shift to a service economy. In the
current phase, the need for a vast apparatus for control and

the shape of the service sector. Once only a support structure, today
the producer services have become a sort of new basic industry.’
The evidence, though inadequate, is quite useful in documenting
some of the issues of concern here. The evidence points to the growth
and locational concentration of economic activities that generate key
inputs for firms, particularly large corporations (U.S. Bureau of the
Census, 1976a; 1981a; Singelmann, 1978; Stanback and Noyelle,
1982). The evidence also shows the pronounced growth in the export
of such inputs and how these exports are associated with the growth of
an off-shore manufacturing sector (U.S. Department of Commerce,
 136 The rise of global cities and the new labor demand

1980a; Economic Consulting Services, 1981; DiLullo, 1981). There is

also evidence showing that a few core cities produce such inputs for
export to other domestic areas (Conservation of Human Resources,
1977; Drennan, 1983; Cohen, 1981; Stanback et al., 1981).
The concentration of these activities in major cities and the
corresponding internationalization in the economic base of such cities
has brought about a pronounced reorganization in the capital-labor
relation. The manufacturing sector, once the economie-base-and
key
export sector in major cities, no longer shapes the organization of this
relation. One indication of this reorganization is the increasing
polarization inthe occupational and income distribution ofthe labor
force. The evidence shows a sharp expansion in a stratum of very
` high-income workers, including as a key component what I call the
new cadres in control, management and servicing operations.
Secondly, it shows a shrinking of middle-income workers, a function
of the expulsion from the production process of a wide range of white
and blue-collar middle-income jobs. And thirdly, the evidence points
to a vast ex ion in the supply of low-wage jobs, a function not only
of EE primarily of growth
sectors.
First I will discuss the evidence pointing to the emergence of major
cities as sites for the production and export of producer services and
management and control operations. Next, I will discuss the evidence
on the restructuring of the job supply and work process as an
indicator of the reorganization of the capital—labor relation.

CAPITAL: THE PRODUCTION OF GLOBAL CONTROL

CAPABILITY

The industrial recomposition in the economic base of major cities is

not simply a function of the general shift from a manufacturing to a
service economy. Thus, while all cities contain a core of service
industries, location quotients for different size Standard Metropolitan
2a pue ee eS ee cae show the largest to have
a disproportionate concentration of certain types of service industries,
such as producer and distributive services 8These two account for a
third of the GNP and are, together with nonprofit services, the
fastest growing sector in the economy (Stanback et al., 1981;
Conservation of Human Resources, 1977). Secondly, the production
of services for export to the world market is disproportionately
 Capital: the production of global control capability 137
concentrated in a few major cities (Drennan, 1983; Cohen, 1981;
Sassen-Koob, 1984b), at a time when services are the fastest growing
and largest U.S. export (DiLullo, 1981).
Though inadequate, there are various types of information that
can be used to document the new economic base in major core cities
and the fact that it is distinguis
from that
hableofother core cities, I
will use evidence on the characteristics of production and locational
patterns of various industries, particularly the producer services, a
key input for the global control and management capability of
capital. Secondly, I will discuss the evidence on the internationaliz-
ation of the economic base in these cities, larly in the service
sector. This can be done using data on the export of services, the
locational concentration of large corporations with high export
activity, and the levels and locational concentration of foreign
investment.
In a classification of the 140 largest SMSAs for 1976, Stanback and
Noyelle (1982: 20-26) found a distinct relation between size and
functional specialization. Of the 16 largest SMSAs (population over 2
million), 12 were centers for the production and export of producer
and distributive services and the other 4 were government and
educational centers. Of those 12, 4 were global centers and the
remaining 8 were regional. Furthermore, controlling for type of
service export, the authors found a direct relation between size and
type of service export. Thelarger theSMSA, thegreater theweight of
producer services compared with distributive services. It should be
noted that the larger As were once predominantly centers for the
production and export of manufactures.
On the other hand, the group of smaller SMSAs (population under
one million) had the highest single concentration of “production
centers,” mostly in manufacturing. Indeed, the authors found that
comparing the location quotient of manufacturing in the smaller
SMSAs for 1976 with 1959, the importance of manufacturing had
increased. This was sharpest in SMSAs with populations under
250,000 where the manufacturing quotient went from 92.8 in 1959 to
113.0 in 1976. In contrast, in the largest SMSAs this quotient went
from 99.0 in 1959 to go.5 in 1976. In terms of employment shares, the
share of manufacturing rises as the size of the SMSA declines.
However, the share of the “corporate headquarters complex”
declines with size, ranging from 20 percent in the largest SMSAs to
- 8.7 percent in the smallest.
 138 The rise of global cities and the new labor demand

The RES Ee
generally and the development of the modern corporation make a
distinction between local, regional and global service firms increas-
ingly important. Thus, the 8.7 percent employment share in the
“corporate headquarters complex” in the smallest SMSAs most
probably describes regional or local market firms. I find the term
“corporate headquarters complex” (cf. Conservation of Human
Resources, 1977) inadequate when dealing with such a wide range of
sizes in the SMSAs. Any city has legal, accounting and banking
services. But only afew major service firms are global in their operation
and derive a significant share oftheir earnings from the export oftheir
services. These firms also handle the business for most of the large
corporations and they are concentrated in major cities.
The locational concentration of these growth sectors is particularly
significant if we consider that the overall
ofservicesin.
share GNP has
hardly grown, rising by only 12 percent from 1948 to 1977, from 54
“to
percent.
66 Indeed, except for producer, nonprofit and distributive
services, the GNP shares of all other service categories had declined
(Singelmann, 1978; Stanback et al., 1981). Iņ terms of employment
shares, producer_and nonpr services doubled their shares of
employment while that ot consumer services had declined. The
outcome of this is that the production of services as final outputs,
notably consumer services, is actu lining. Consequently the
production~of services-as-intermediate_outputs, Le producer_and
distributi s ing (Denison, 1979; Stanback et al.,
1981; Singelmann, 1978; Myers, 1980). This shift from Griet
consumer to intermediate services is another indicator of the
restructuring. i
The locational concentration of producer services is in part
explained by the characteristics of production of these services. These
characteristics, in conjunction with the ascendance of such services in
economic activity generally, both domestically and worldwide, are
helpful in explaining the centralization of management and servicing
functions that have fed the economic boom in global cities like New
York and Los Angeles. Producer services, unlike other types of
services, are mostly not dependent on vicinity to the buyers. Hence
concentration of SEELEN both
domestically and abroad, are feasible. Agglomeration economies
induce locational concentration in roduce sernioes Production oF
these services benefits from proximity to other services, particularly
 Capital: the production of global control capability 139
when there is a wide array of specialized firms. Agglomeration
economies occur to such firms when they locate close to others which
may be sellers of key inputs or necessary for joint production of certain
service offerings (Stanback and Noyelle, 1982: 17-18). This would
contribute to explain why, while New York City continued to lose
corporate headquarters throughout the decade, the number and
employment of firms servicing such headquarters kept growing
rapidly (Conservation of Human Resources, 1977; Cohen, 1981).
Another kind of agglomeration economy, consists in the amenities and
lifestyles that large urban centers can offer the high-income personnel
employed in the producer services. In brief, independence of
proximity to buyers in combination with the existence of agglomer-
ation economies makes feasible concentration of production in
suitable locations and export to other areas domestically and abroad.
As a result we see the development of global centers, e.g., New York
and Los Angeles, and of regional centers, e.g., Denver and Houston,
for the production of such services.
Whether the production of these services is internalized by a firm or
bought on the market depends on a number of factors. The available
evidence shows that the freestanding producer services industry is
growing fast and accounts for a significant share of GNP. Thus we
know that a large share of these inputs are bought. In what has
become a classic on the services industry, Stigler (1951) posited that
the growing size of markets would increase both specialization and
the realization of economies of scale on the production of such
services. Stanback et al. (1981) note that Stigler failed to see that
specialization preceded the possibility of realizing economies of scale.
The increasing specialization ofservice functions which arose first
within the large firm indicated to entrepreneurs that there was a
market for these services, whence we see the development of a
specialized producer services industry. Greenfield (1966) argues that

pushing towards externalization. Eventually, a large demand reduces

the price of such producer services and extends the market of such
services also to small firms which otherwise would have been unable
to buy them. This in turn further expands the specialized services
industry largely concentrated in major cities. The development of
such a market entails a specialization of inputs in the production of
services and a standardization of outputs — that is, these services can
be sold to a large number of firms. The specialization of inputs
 140 The rise of global cities and the new labor demand

explains why there is a freestanding market of such services with a

large number of small firms. The standardization of outputs with its
corresponding expansion of the market points to the possibility of
large corporations also moving into this market, as they did with
consumer services. This would entail a shift of highly specialized
functions to headquarters and the downgrading of what are now
producer services firms to outlets for the sale of such services. But at
the current stage, it is the high specialization of the inputs which
explains the externalization of these types of production on the part of
large corporations, a trend that is currently still in a growth phase.
The SE HET L
that facilitate locational concentration also make possible their
“production for export. There has been a massive increase in the
‘international trade of such services and in direct foreign investment in
services ~ another form of the export of such services. The data
illustrate major patterns. At the national level, the 1980 U.S.
international trade balance recorded a $21 billion surplus in the
service account. From 1970 to 1980, service exports increased at an
average annual rate of 19 percent to $121 billion in 1980, making it “
decade of unprecedented expansion in these transactions” (DiLullo,
1981: 29; U.S. Senate, 1982; see note 5). Direct foreign investment in
services also has increased significantly, reaching 28.4 percent of all
such investment by 1981 (Whichard, 1981b). For example, the top 14
` American accounting firms had 746 affiliates in developing countries
by 1978 compared with 895 domestic offices (Economic Consulting
Services, Inc., 1981). It is important to distinguish among the various
categories included in the account. For example, receipts of income
on American investment abroad increased at a faster rate than
receipts for other services: they grew from $8.2 billion in 1970 to $36.8
billion in 1980 (DiLullo, 1981: 42). Though more slowly, many of
these other services, such as technical and consulting services have
also grown as a result of the increase in American direct foreign
investment abroad (U.S. Department of Commerce, 1g80a). Such
investments are one component in the decentralization of manu-
facturing and ancillary services. The appropriation of the returns on
these investments, on the other hand, contributes to activities feeding
the centralization of global management and advanced servicing.
Data on individual service industries provide another indicator of
the sale of services abroad. The earnings from such sales were found to
be rather high for ten major industries in a U.S. Department of
 Labor: economic restructuring as class polarization 141
Commerce study (1980a). For example, for the top 83 advertising
firms in the U.S., gross income from sales abroad represented 37.6
percent of their totalsincome in 1980; for the top ten this share was
51.7 percent (Economic Consulting Services, Inc., 1981: 85). The top
eight American accounting firms earned 40 percent of their income
from sales abroad in 1977, and in 1978 the two largest derived over
half their revenues from such sales (U.S. Department of Commerce,
1980a: 13-15).
Banking, a key service industry, has expan
its international
ded
operationsat an accelerated pace over the last few years. From 1971
to 1981 foreign branch assets of U.S. banks increased sixfold, from
$55.1 billion to $320 billion. A United Nations Centre on Trans-
national Corporations Study (1981) found that transnational banks
of six countries accounted for 76 percent of the assets of all such banks
in 1978. U.S. banks held the leading position. And within the U.S.,
New York City and Los Angeles are the two major financial centers.
The functional
specialization
within the early factories finds a
contemporary counterpart in the pronounced spatial and organiz-_
ational fragmentation of the work process with its corresponding need

and planning. The development of the modern corporation and its

massive participation in world markets and foreign countries has
made planning, internal administration, product development and
research increasingly complex and important. Diversification of
product lines, mergers, transnationalization of economic activities,
all require highly specialized skills and have increased the importance
of elaborate organizational structures (Chandler, 1977). What were
once support resources for major corporations have today become key
inputs in corporate decision making (Cohen, 1981), The decentraliz-
ation of m ce work has brought about the need
for new types of lanning iin production and distributiion, new types of
con as well as the
need to regulate and control a highly diversified and geographicall y
dispersed
Dëse workforce.

LABOR: ECONOMIC RESTRUCTURING AS CLASS

POLARIZATION

This structure of economic activity has brought about changes in the

organization of work and in labor demand. These are reflected in a
142 The rise of global cities and the new labor demand

Table 5.1 Distribution of employment among earnings classes for each industry
and for total United States, 1975 (percentages)
a
Earnings classes

1.60 1.60 1.20 0.80 0.40

and to to to and
above 1.20 0.80 0.40 below

All industry (total U.S.) 12.0 22.2 27.8 28.4 9.6

Construction 2.5 17.2 61.1 18.8 0.3
Manufacturing 20.4 17.4 45.0 17.2 —
Distributive services 32.2 27.8 30.3 9.3 0.4
TCU 20.9 41.0 36.1 2.0 —
Wholesale 48.5 8.8 21.9 19.8 1.0
Retail = KÉ: 32.9 57.1 2.9
Producer services 13.5 38.0 2.8 45-7 ==
Fire 5.2 46.0 2.3 46.5 —
Corporate services 24.6 27.3 3-4 44.7 —
Consumer services = 4.1 NGG) 16.8 65.4
Nonprofit services 6.8 34.1 10.7 48.4 ==
Health met 2.3 24.2 56.3 =
Education == 54-6 2.1 43-3 =
Public administration 22.1 50.6 20.9 6.4 ==

“Earnings class intervals make use of earning indexes in which the index of the 1975 average
arnings for all industry is equal to 1.0
Each line adds up to 100 percent
Source: Thomas M. Stanback, Jr. and Thierry Noyelle, Cities in Transition. Totowa, N.J.:
Allanheld, Osmun Publishers, 1982; Based on U.S. Bureau of Labor Statistics, Survey ofIncome
and Education, 1976

pronounced change in the job supply witha strong polarization iin the
income and occupational distribution.
th of middle-income jobs in major cities while ization
activities have generated SE of very high income andlow-
wage jobs (see Table 5.1)
There are significant diff
distributions of industries. Some, like the distributive services, have a
preponderance of medium- and high-income jobs while others, like
retailing, are heavily weighted towards low-income jobs.
Three trends come to the fore in examining the available evidence
on occupational and earnings characteristics by industry. First, in
view of the major shift to services, it is important to note the
differences-among-ndividual service industries. For example, while
r i t of jobs in nonprofit
services,
See
they account for only 3.3 percent in distributive services and
EE EE
 Labor: economic restructuring as class polarization 143
I percent in retailing. And while service workers account for only 1
percent of jobs in wholesale trade, they account for 12 percent in
corporate services and 44 percent in consumer services.
Secondly, earnings vary not only according to occupation but also
according to industry for a given occupation (U.S. Bureau of the
Census, 1976c). The differences in average earnings among industries
can only be partly explained by differences in the occupational mix of
each of these industries. A ranking of average earnings in each of the
occupations for the major industrial groups shows considerable
variation. In professional occupations the index varied from 2.02 in
manufacturing and 2.11 in producer services to 1.28 in education.
The national average for professional occupations was 1.62 in 1975.
Among service workers, for example, the index varied from 0.33 in
manufacturing, 0.59 in producer services and 0.90 in Transport,
Communications and Utilities.
Thirdly, the overall result of a different occupational mix and
different average earnings for occupations in different industries
provides an earnings profile for each industry. Some industries,
notably ege
they havelow average pay across occupations and a high incidence of
low-paid occupations. Distributive
services and public _administ-
ration, on the other hand, have few poorly paid jobs. Among
producer and nonprofit services there is a polarization with concent-
rations in both well and poorly paid jobs and occupations. Stanback
and Noyelle (1982) ranked the average annual earnings for each
industry and occupational’subgroup and found distributive services,
manufacturing and public administration to have—the highest
average rank. The producer services ranked somewhere in the middle
while consumer services and retailing were the lowest. The data on
earnings classes show a very high incidence of the next to lowest
earnings class in all services, except distributive services and public
administration. Almost half of all workers in the producer services
were in this earnings class, compared with 17 percent of manufactur-
ing and 18.8 percent of construction workers. The other half of
workers in producer services are in the two highest earnings classes.
On the other hand, half of all construction and manufacturing
workers are in the middle earnings class compared with 2.8 percent of
workers in the producer services. The highest single concentrations in
the top earnings class are in wholesale and in corporate services.
Stanback and Noyelle (1982: 33) find that “for the services as a
144 The rise of global cities and the new labor demand

Table 5.2 Distribution of total U.S. labor force among earnings classes, 1970
and 1980"

Earnings classes” Distribution of total U.S. labor force (%)

1970 1980

Total Female Male Total Female Male

1.60 and above 11.3 Sc 7-5 9-4 12.9 )= 4.8 11.0

1.59 to 1.30 20.9 32. 18.6 18.9 SL 14.5 20.7
1.29 to 1.00 18.9 8 21.5 23.1 12.8 24-5 12.8 15.6
0.99 to 0.70 16.9 35: 10.5 14.3 Die 4 15.8 17.0
0.69 to 0.40 22.8 Gas 13.5 IERT 25.2 eg 16.7 11.8
0.39 and below 9.2 32. 28.4 19.0 13.3 ; 35-4 23.9

“Civilian workers 14 years and over by total money earnings

Earnings classes are derived from the application of 1975 average earnings for each major
occupation within each industry group. A basic assumption is that the relative income at 1975
levels for each occupational-industrial subgroup is constant— in this case from 1970 to 1980. I
followed the method used by Stanback and Noyelle (1982) in their comparison of 1960 and 1975
earnings for industry-occupational cells. The total earnings distribution obtained is then
divided into sixtiles. The major industry groups are Manufacturing, Construction, Distributive
Services, Retail, Producer Services, Consumer Services, Nonprofit Services (Health and
Education), Public Administration. Not included are Agriculture, Fisheries and Mining. The
major occupational groups are Professional, Technical, Manager, Office Clerical, Nonoffice
Clerical, Sales, Craft Workers, Operatives, Service Workers, Laborers.
Source: Based on U.S. Bureau of the Census, 1982. Money Income of Households, Families and Persons
in the United States: 1980. (Current Population Reports: Series P-60, No. 132); and U.S. Bureau
of the Census, 1972, Money Income of Households, Families and Persons in the United States: 1970

whole, the important observation is that there tend to be heavy

concentrations of employment in better-than-average and in poorer-
than-average jobs. In contrast, in manufacturing and construction
the distributions are more heavily weighted toward medium and
above-average income jobs.”
The different occupational and earnings distributions of industries
in conjunction with the changes in the industrial mix of the economy
express themselves in a growing income polarization among workers
over the last decade. Comparing the distribution of earnings for 1970
and 1980 on the basis of Census data, I found a significant reduction
in the two middle earnings classes (see Table 5.2). The share of
national income of the two highest earnings classes increased from 32
percent to 37 percent, that of the two middle classes was reduced from
35-8 to 24.5 percent and that of the two lowest earnings classes
increased from 32 to 38.5 percent.
Several trends that contribute to additional expansion _i
supply of low-wage jobs particularly in global cities, bring about
 Labor: economic restructuring as class polarization 145
greater income polarization. First, the existence of a critical mass of
very high-income workers provides the conditions for a rapidly
expanding process of high-income residential and commercial "een.
trification.” This entails not only a physical upgrading, but also a
reorganization of the consumption structure, both of which generate
a demand for low-wage workers. Many components of high-income
gentrification are labor intensive: residential building attendants,
workers producing services or goods for specialty and gourmet food
shops, dog walkers, errand runners, cleaners of all sorts, and so on.
The demand for low-wage workers to service the high-income
lifestyles of the rapidly expanding top-level workforce is one key
factor in the expansion of an informal sector in cities like New York
and Los Angeles. Part of the goods and services produced in the
informal sector circulate through the modern sector of the economy
that caters to these high-income lifestyles. It would explain why the
expansion of an informal sector is most developed in major urban
centers experiencing very dynamic growth and not in cities like
Detroit.
Second, there has been an expansion of low-wage jobs in the
manufacturing sector as a resultreorganization
of(a) the social of the
work process,
process, notably
notably the
the expan
expansion of sweatshops and industrial
homework; (b) the technological transformation of the work process
that has downgradéd a variety of jobs; and (c) the rapid growth of
high-technology industries which are characterized by a large share
of low-wage production jobs. These three trends have resulted in
what I call ee at It is important to
note that the downgrading of the manufacturing sector is part of major
growth EE ofhigh-tech indusiries, thetech:
nological transformation of the work process (which has also
upgraded a large array of jobs), and the growth of an informal sector
that contains a large number of sweatshops. Sweatshop work and
electronics production are often considered to be two very different if
not opposing developments, one representing backwardness and the
other modernity. Yet both have a similar outcome; an expansion in
————— EN

the supply of dead-end low-wage jobs. Furthermore, they entail a

— E E m

. Wem wel

“disenfranchisement’’ of workers, notably the drop in levels of

ufiionization most visible in areas with rapid growth in high-tech
industries such as Los Angeles and Orange counties. Finally, the
expansion of sweatshops and industrial homework is not only
associated with the garment industry (Waldinger, 1983). It is
occurring in electronics as well (New York State Department of
146 The rise of global cities and the new labor demand

Labor, 1982a, 1982b; Sassen-Koob and Benamou, 1985; Solorzano,

1983).
The politicization of the traditional low-wage labor supplies
during the 1960s and early 1970s and the above-average wage levels
typical of major urban centers such as New York and Los Angeles
acquire added significance in the context of (a) their expanded role as
centers for the management and servicing of the global economy, and
(b) the increase in the supply of low-wage jobs resulting from major
growth trends. This was not simply class struggle as usual. It was
class struggle in a moment of major restructuring and concentration
of key economic sectors.

EE
The large influx of immigrants from low-wage countries over the

1970s cannot be understood apart from this restructuring. It is a

mistake to view t j i ase as a ostly of the
new | j d ing absorbed primarily in declini ctors
of the economy. The expansion in the supply of low-wage. jobs
generated by major growthssectors is one of the key factors in the
continuation at levels ol the rent immigration. It
reinforces the emigration impact of economic restructuringoccurring
in sending countries (see Chapter 4).
New York and Los Angeles, two major arenas for the consolidation
of these trends, contain a disproportionate share of the new immi-
grants compared with their share of the native population. They have
the largest Hispanic population, including Mexicans and Puerto
Ricans, of all SMSAs. The latter are, furthermore, much larger than
the Hispanic populations that follow in size. Chicago and Miami each
have about 580,000 Hispanics compared with 2 million in Los
Angeles and 1.4 million in New York. These two cities, together with
San Francisco contain the vast majority of Asians. And New York
City is the leading recipient of West Indians.
The next two sections focus on these two cities for the empirical
elaboration of the various trends described.

NEW YORK CITY AND LOS ANGELES: RESTRUCTURED

ECONOMY AND NEW LABOR DEMAND

The configuration of decentralized manufacturing, technological

transformation of the work process and centralization of global
servicing and management contains major growth trends that have
fed the economic boom in New York City and Los Angeles, as well as
 New York City and Los Angeles 147
a number of other major urban centers. These growth trends have
given that boom a distinct content that makes these urban centers
increasingly similar: the vast expansion of their role as centers for the
production of advanced services and management control, with a
growing presence of foreign investors in both of these activities.
Yet, according to other criteria, these were two very different cities
in the 1970s, ene nus thedeclining Frosthelt-and theother
the rising Sunbelt; one c aracterized
by high-technology industries
and the other by a backward
and rapidly declinin nt industry;
EIER
and decaying infrastructure; one with declining overall employment
levels throughout the 1970s and the other with an explosion in overall
employment.
I will argue that the sharp differences characterizing these two
cities have a similar outcome in terms of the socioeconomic structure
of the job supply, notably an expansion inthe supply-of very high-
inéome jobs, a shrinking of traditional middle-income, blue- and
white-collar jobs and an expansion of low-wage jobs. I will argue that
this outcome isnot accidental, but is, on the contrary, an expression of
systematic patterns that transcend certain domestic configurations,
such as Frostbelt and Sunbelt, and that have to do with a basic
restructuring at the national and global levels. That is to say, the
EAGLE ARATE oniroih trends in the U.S.
economy, also feed decline trends. The massive expansion in the
supply of low-wage jobs is as much a function of growth trends as is
the large expansion in the supply of very high-income professional
and technical jobs.
It becomes important, then, to elaborate on the pronounced
differences between New York City and Los Angeles before examin-
ing the similarity i job supply.
There is a vast amount of evidence that shows a relentless decline in
Ee reduction in absolute employment
eyels and in population size, growth of inner-city poverty, an old and
inefficient building stock and a severely decaying infrastructure. In
this context, major growth trends in such cities pose problems
analytically because we have inherited a conceptual framework for
the evaluation of these data that is rooted in a past phase of the
development of major centers. The fact that New York City clearly
had a boom of some sort as suggested by massive high-income
gentrification and large-scale construction in the 1980s emerges as a
paradox.
 148 The rise of global cities and the new labor demand

Table 5.3 New York City wage and salary employment by major industry,
1960-1984 (in thousands )

1960 1970 1977 1980 1984

Manufacturing 946.8 766.2 538.6 498.7 429.6

Construction 126.9 110.1 64.2 74-7 94-5
Transportation, communications and
public utilities 318.1 323.3 258.2 257.2 237.0
Wholesale and retail trade 744.8 735-4 620.1 614.9 630.5
Finance, insurance and real estate 384.4 458.2 414.4 445.8 500.5
Services and miscellaneous 609.2 787.3 784.6 890.4 1,005.8
Government 408.2 562.8 507.8 516.6 535.6

Total 3538-4 3743-3 3187-9 3298.3 3434-9

Source: The Port Authority of New York and New Jersey, Regional Perspectives: The Regional
Economy 1981 Review, 1982 Outlook, 1982, p. 18 and the City of New York, Office of Management
and Budget and Office of Economic Development, Report on Economic Conditions in New York City,
July-December, 1984, 1985.

The masse expansion omanehan aaa Anan ed

toNew Korg Ctyoccurred inacontex oiaracea eae
_office jobs in the entire Northern and Northeastern region. New
‘York City wasdisproportionately affected bytheexodus of jobs
abroad and to the Sunbelt. The aggregate data for New York City
from 1970 to 1980 show major decline trends: a decline in the absolute
level of employment from 3.7 to 3.3 million, a 35 percent loss in
manufacturing jobs, a 41 percent loss of headquarters’ office jobs, a 15
percent overall decline in office jobs, and the departure of a
significant share of corporate headquarters. We can include in this list
the decay in the infrastructure and the fiscal crisis. Furthermore,
there were particularly large job losses in sectors of the economy likely
to employ immigrants. Netzer (1974) estimated that between 1968
and 1972, New York City lost 334,000 goods handling jobs and
99,000 retail and consumer services jobs. Between 1969 and 1977,
Manhattan’s central business district alone had a 30 percent decline
in factory employment, down from 570,000 to 400,000 (Tobier, 1979:
15-16). Table 5.3 provides general information on New York City’s
employment distribution over the last two decades.
Los Angeles presents at first glance a strikingly different situation.
It had one of the nation’s highest growth rates in manufacturing
employment during the1970stothepoint thatthegreater Los
Angeles area, including Los Angeles, Orange, San Bernardino,
Riverside and Ventura Counties, has become one of the largest
 New York City and Los Angeles 149
metropolitan industrial regions in the world (Soja, Morales, Wolff,
1983). Between 1970 and 1980 when New York City lost over a third
of a million manufacturing jobs, the Los Angeles region added
225,000. This represents, furthermore, a significant share of the total
net national increase of one million manufacturin jobs
g from 1970 to
1980. Orange County alone, one of the highest growth poles in the
Los Angeles region, had reached a total manufacturing employment
of 255,000 by 1980, a figure higher than Houston’s 251,600 for that
same year (California Business, September 1982). Again, unlike New
York City, where total population and total employment declined in
the decade from 1970 to 1980, in Los Angeles population grew by 1.3
million and employment by 1.3 million as well.
Furthermore, the particular content of the major growth sectors in
manufacturing in Los Angeles — high-tech j ies — could
hardly
contrast
more with New York City’s manufacturing base, the

tronics industries, the high-tech core in the region, represent the

largest such concentration in the country and perhaps in the world.
In the decade of the seventies this cluster grew by 50 percent.
Employment growth in high-tech industries has been larger than
total growth of manufacturing employment in other major Sunbelt
cities. Total employment in electronics in the Los Angeles region is
higher than in the leading high-tech center in the country,
Silicon Valley in Santa Clara County. The Los Angeles region has
increased its share of total U.S. employment in all these industries
except for aircraft and parts where it declined from 22 to 19 percent.
Finally, the infrastructure of both these cities contrasts sharply, _
perhaps epitomized by Los Angeles’ post-World War II highway
system and New York City’s pre-World War II subway system. The
typical New Y ity i j Hding—=
generally consi w Yor
City’s industrial base will not recover from itscollapse. Los Angeles
has a sprawling modern factory complex that extends into the whole
e EE industrial centers. The
possibilities of expansion are such that the Los Angeles region is fast
becoming the largest industrial center in the world. To this should be
added nearby San Diego County with its 62 percent growth in
manufacturing over the last few years and massive projects of
__, industrial parks under construction for both American and foreign
companies.”
150 The rise of global cities and the new labor demand

When we disaggregate some of the economic data for these two

cities, we find major growth sectors amidst New York City’s massive —
decline trends.and major declines amidst Los Angeles massive growth ,
trends.'® While overall employment and population inNew_York
in-
City declined in absolute terms, there was a 17 percent increase
employment in the nine major white collar industries. Similarly,
Son es le H .
while _overall s in manufacturing gen nd garments
particularly declined, there has in fact been a major expansion i
manufacturing jobs but mostly in forms of organization of work that
are not easily recorded in official figures, notably sweatshops and
industrial homework, including homework in electronics.
On the other hand, Los Angeles has experienced a massive_decline,
in its older, established industries, notable the automobile industry,
once second only to Detroit, rubber tires and a cluster of industries
associated with the automobile industry (California, 1981b, c; n.d.;
1983). But it also has had decline in aircraft and parts. There has been
an associated rapid decline in the share of unionized workers which
had fallen to 19 percent by 1980. Interestingly, the sharpest decline,
down to 13 percent, occurred in Orange County which also had the
sharpest increase in high-tech industries (Soja, Morales, Wolff, 1983).
An examination of the job supply in high-tech industries shows a
massive expansion in low-wage assembly line jobs, mostly not
unionized and held by immigrant or native minority women. Finally,
well over a third of the net addition of jobs from 1970 to 1980 was in
garments. Both in garments and electronics, sweatshop and industrial
homework have expanded massively. I will return to all these issues in
detail. e
When we examine the effects on the job supply of these very
different configurations represented by New York City and Los
Angeles, what emerges most strongly are two trends that point to
fundamental similarities in the restructuring of labor demand, the
issue of primary importance to my analysis. First, there has been a
pronounced expansion i igh-income professi d
technical jobs associated with the growth of the advanced services
and headquarters complex in both cities, further fed, in the case of Los
Angeles, by research staff in high-tech industries.'! Besides the inc-
rease of such jobs associated with the growth of these sectors, the
technological transformation of the work process has upgraded a vast
array of what used to be middle or lower-middle income jobs. Second,
there has been a pronounced expansion of low-wage jobs associated
Pe ED RST a Tae
 Advanced services, downgraded manufacturing, informalization 151
with the recomposition of industry, an outcome of (a) the tech-
nological transformation of the work process which has, besides
upgrading, also downgraded a vast array of jobs through the transfer
of skills into machines (b) changes in the industrial mix, notably the
decline of older established manufacturing industries in Los Angeles
and the rise of high-tech industries, and (c) the transformation ofthe
organization of the labor process, notably the shift of certain jobs from
unionized shops to sweatshops or industrial homeworkers.!?
The next section provides detailed
informat on
ioneconomic
restructuring in New York City and Los Angeles. The discussion is
organized intatwo para TTIEfiat aTa on the expansion ofthe
advanced services and headquarters complex; the second on the
recomposition of the manufacturing sector.

ADVANCED SERVICES, DOWNGRADED MANUFACTURING, AND

INFORMALIZATION

Disaggregated data on employment in New York City and Los

Angeles reveal four kinds of trends which point to an economic base
capable of generating a demand for an expanded immigrant work
force. First, there has been a major expansion in the advanced
services, particularly after 1976 (U.S. Bureau of Labor Statistics,
SS - ` D D .
1981b). The functioning of this sector requires an infrastructure oflow-
wage jobs which often involve night and weekend shifts and are
generally undesirable. Second, foreign investment in New York City
and Los Angeles increased significantly after_1976 and played a
central role in EE sectors of the New
York City economy (Port Authority New York and New Jersey,
1981) and the major expansion of the Los Angeles economy. Third,
the flight of manufacturing capital from New York City and the
Northeast generally has not affected all components of labor-
intensive industries equally. In fact, there has been an expansion of a
downgraded manufacturing sector — that is, one where sweatshops
and industrial homework are key forms of production. The increase in
sweatshops and industrial homework has affected not only the
garment industry, but also the toy, footwear and electronics indus-
tries (New York State Department of Labor, 1982a; 1982b; Sassen-
Koob, 1984b). F ourth, the massive growth of high- ndustries in
the Los Angeles region has generated a vast supply of low-wage
assembly work and has spawned the growth of sweatshops and
industrial homework even in the most advanced industries such as
152 The nse of global cities and the new labor demand

microprocessors. I will discuss these various trends in the next two

sections, one dealing with the advanced services complex and the
other with the downgraded manufacturing sector.

The advanced services and headquarters complex

Less well known than the scale of New York City declines and losses is
the scale of the growth trends. As was pointed out earlier, along with
the major losses there were significant growth trends, notably an
GEES
1980. Within these industries, some had employment growth rates of
over 50 percent (computer services) and others hovered around 20 to
30 percent (management consulting and public relations, engineer-
ing and architecture, accounting, protective services, securities, etc.)
(U.S. Bureau of Labor Statistics 1982a).'*
Two-fifths of the jobs in these industries are in the higher-pay,
higher-status professional, technical, managerial, and administrative
occupations (U.S. Bureau of Labor Statistics, 1980; 1981b). Between
1977 and 1980, employment increased by 7.7 percent in finance,
insurance and real estate, by 9.4 percent in communications and
media, and by 24.7 percent in business services. Also, employment
expanded by 8.9 percent in educational services and. research
institutions, by 7.4 percent in entertainment, culture, and tourism,
and by 3.9 percent in social services (U.S. Bureau of Labor Statistics,
1982a).
Data on employment growth in various service industries shed
some light on the different economic evolution of a manufacturing
center like Detroit and the “new” global centers like New York City
and Los Angeles whose economies were once based on manufactur-
ing. These data are inadequate as an index for industrial growth
insofar as employment is an imprecise measure particularly when
dealing with highly capital-intensive industries like some of the
advanced services. The ratio between employment share and GNP
share varies considerably from one service industry to another. Based
on the analysis of Stanback et al. (1981), it would seem that the ratio of
employment share to GNP share is 1:2 in the case of producer
services, and almost the opposite in the case of consumer services.
Secondly, some of these industries produce both final and inter-
mediate outputs, e.g., banking. Contextual characteristics will make
for significant differences in the weight of each. Thus, while New York
 Advanced services, downgraded manufacturing, informalization 1 53
City and Los Angeles both have a large consumer banking sector by
the mere fact of the size of the population, the greater weight in
economic terms comes from the banking industry as a producer of
intermediate outputs. This is less the case in Detroit. But these
differences notwithstanding, the data show that employment growth
in mostly producer services industries between 1977 and 1981 was 11.8
percent in Detroit, 20.1 percent in New York City and 30.4 percent in
Los Angeles. The percentage of total workers employed in producer
services industries in these cities in 1981 was 12.6 percent, 30.7
percent and 24.9 percent respectively (see tables 5.4 and 5.5).
These growth rates, together with the decline in office and
manufacturing jobs, point to a recomposition of New York City’s
economy. In r950, manufacturing supplied almost onejobinthree
while services supplied one in seven. By 1980, these figures were
reversed. There was a parallel loss of Bice jobs particularly
headquarters’ office jobs which declined by 41 percent between 1969
(highest employment) and 1980 (Ehrenhalt, 1981: 46).
The banking and financial system, including foreign branches and
companies located in the city, expanded massively (see Table 5.6).
Foreign investments in banking increased, and in December 1981
International Banking Facilities were established. Of the 140 IBFs
announced that month, 100 were in New York City. IBFs facilitate
international transactions of domestic banks and branches of foreign
banks by removing Federal Reserve regulations or reserve require-
ments and interest rate ceilings. IBFs which locate in New York City
are also exempt from state and city taxes (City of New York, 1982:
18). We can expect a continuing growth in domestic and foreign
banking operations in the city.
Another fact that underlines the coexistence of decline and growth
trends in New York City is that while a large number of Fortune 500
firms moved their headquarters out of the city, those which remained
showed higher growth, especially in international activity, than those
which left. Profits of the 81 city-based firms on the list rose from 19
percent in 1978 of all Fortune 500 firms to 25 percent in 1980; in 1980,
inflation adjusted profits of city-based firms rose 12.6 percent
compared with a 4.6 percent decline for the Fortune 500 list as a
whole (City of New York, 1982: 29). The absence of steel and
automobile company headquarters in the city can account for only
„part of this difference.
Similar developments have taken place in Los Angeles. Once a
154 The rise of global cities and the new labor demand

Table 5.4 Employment growth rates in mostly producer service industries, New
York City, Los Angeles, and Detroit, 1977-1981

New York
SIC Industry City Los Angeles Detroit

60 Banking 20.9 44.6 4.1

61 Credit agencies 29.1 16.0 13.3
62 Commodity brokers 34.1 14.5 — 1.4
63 Insurance carriers 8.4 5.7 -7-3
64 Insurance agents 21.8 24.7 13-7
65 Real estate EI? 43-9 — 3.6
66 Combined R.E. and insurance 98.2 — 30.0 —0.2
67 Holding, investment office Ja 33.8 =
73 Business services 24.7 33.2 =LI
731 Advertising 17.3 12.6 — 17.8
737 Computer and data processing 65.4 41.2 88.2
81 Legal services 28.3 48.7 31.3
86 Membership organizations —0.1 13.8 4-7
89 Miscellaneous business services 38.0 64.7 20.2
891 Engineering services 65.0 75.5 —
892 Research organizations 13.2 29.8 —
893 Accounting, auditing 17.8 51.3 —
Average growth rates 20.1 30.4 11.8

“Standard Industrial Classification

Source: Based on U.S. Bureau of the Census, County Business Patterns, New York, 1977 (CBP-77-
34); County Business Patterns, New York, 1980 (CBP-80-34); County Business Patterns, New York, 1981
(CBP-81-34); County Business Patterns, California, 1977 (CBP-77-6); County Business Patterns,
California, 1980 (CBP-80-6); County Business Patterns, California, 1981 (CBP-81-6); County Business
Patterns, Michigan, 1977 (CBP-77-24); County Business Patterns, Michigan, 1980 (CBP-80-24);
County Business Patterns, Michigan, 198: (CBP-81-24)

Table 5.5 Employment share ofproducer services in all industries, New York
City, Los Angeles, and Detroit, 1977 and 1981

New York City Los Angeles Detroit

1977
Employment share 28.1% 22.7% 11.3%
Employment in all industries (n. in thousands) (3,188) (1,367) (490)
1981
Employment share 30.7% 24.9% 12.6%
Employment in all industries (n. in thousands) (3,340) (1,398) (395)

Note: producer services include SIC 60-67, 73, 81, 86 and 89.
Source: Based on U.S. Bureau of the Census, County Business Patterns (Various Issues); Advance
Estimates ofSocial, Economic and Housing Characteristics, California (1983); Advance Estimates ofSocial,
Economic and Housing Characteristics, New York (1983); Advance Estimates of Social, Economic and
Housing Characteristics — Michigan (1983); City of Detroit, Planning Department, Annual Overall
Economic Development Program Report and Program Projection (1983)
 Advanced services, downgraded manufacturing, informalization 155
Table 5.6 Foreign-owned banks and other financial institutions, New York
City, 1978-1980
S3990>020—0—®—Q050505555
aauaaeoa
5—
Cumulative inventory Change from
1978 1979 1980 1978 to 1980

Foreign banks 68 77 81 +13 20%

Foreign bank agencies 54 61 62 + 8 14%
Subtotal: combined foreign bank
branches and agencies 122 138 143 +21 Si,
Foreign-owned trust companies 19 20 23 + 4 19%
Total: bank branches, agencies and
trust companies 14! 158 166 +25 18%
Foreign-owned investment
companies 6 6 6 — ==

Source: New York State Department of Banking, Foreign Banks Division; The Port Authority of
New York and New Jersey Planning and Development: Department of Regional Research
Section

collection of suburbs, today it contains the second largest advanced

services and headquarters complex in the country. As in New York
City, foreign investment in key sectors of the city’s economy as well as
the internationalization of domestic firms have been important
elements in this expansion. Foreign banks have expanded their
operati . Of the 78 foreign agents of international banks in
California — second only to New York as an international banking
center in the U.S. — 57 are based in Los Angeles. The largest presence
is Asian, particularly Japanese. Four of the leading eight inter-
national accounting firms (all British owned) are located in down-
town Los Angeles. It is estimated that at least 21 of the 75 most
valuable real estate properties are owned by foreign-based companies
(The Los Angeles Times, April 25, 1982). Japanese and Canadian
capital have interests in major hotels, insurance companies and other
service-sector industries.
By 1980, the Los Angeles region was second only to the Greater
New York Area in total deposits and savings in financial institutions.
And although the difference is still significant, $294 versus $104
billion, the trend is toward a narrowing. Eleven of the twelve largest
U.S. banks headquartered outside California have their sole Cal-
ifornia office in Los Angeles.
Finally, by 1980 Los Angeles had increased its number of Fortune
500 firms to 21, still far behind New York City’s81 but a signifi-
cant concentration nonetheless (California Business, 1982). The Los
156 The rise of global cities and the new labor demand

Angeles region contains, furthermore, 60 percent of California’s lar-

gest industrial firms (The Los Angeles Times Roster of leading Cali-
fornia firms, May 18, 1982).
As in New York City, the major components of this growth are
highly specialized professional firms such as law, engineering,and
accounting concerns, as well as research, development, and services
firms associated with high technology industries. Employment in
finance, insurance EE
and real estate
which issignificantly higher than the32percent increase nationally.
“Even larger increases in employment were registered in various
business services, especially in management, consulting, and public
relations.
These maj lso were reflected in a sharp increase
in construction activity. In the last two years there has been a massive
expansion in construction, mostly of office buildings. Total construc-
tion activity in New York City was up 7.1 percent between 1980 and
1981, compared with 1.2 percent nationally (Port Authority, 1982:
14). In 1981, contracts awarded for office construction in
Manhattan amounted to over $600 million in addition to $700
million in 1980. The demand for office space has been very strong in
Manhattan: in 1981, for a third consecutive year, the amount of space
that was pre-leased exceeded the current inventory of available space,
a fact reflected in the 14 percent increase in the average rental price
from 1981 to 1982 (Port Authority, 1982: 15-16).
In Los Angeles there was a 50 percent increase from 1972 to 1982 in
high-rise office space, amounting to an addition of 30 million square
feet. A similar boom has occurred in smaller scale office building
space. An additional 20 million square feet of office space were under
construction in 1982. There has been an associated jump in rental
values, and though these are still well below those prevalent in
Manhattan, they are among the highest in the country.
In both New York Ci Los Angeles, foreign capital has played
EE CR high-rise residential construc-
tion boom of the late 1970s. In Manhattan “much of the construction
of the first hotels to be built in fifteen years . . . can be traced to the
influence, direct and indirect, of investors, visitors, and new residents
Se abroad” (Goldmark, 1979). Furthermore, there has been a
increase—in_the~number of foreign banks and in foreign
ee of major retail establishments, such as Saks Fifth Avenue in
Manhattan. From 1978 to 1980, twenty-one new foreign bank
 Advanced services, downgraded manufacturing, informalization 157
branches and agencies were added in New York City. This represents
an increase of 17 percent and brought the total number to 143 (see
Table 5.6). Assets of all foreign banks and branches increased by 42.6
percent over that same period, going from $79.1 billion in 1978 to
$112.8 billion by June 1980 (Drennan, 1983).
A central element of my argumentis that major growth sectors in
these cities’ economies ate low-wage jobs that can conceivably
Ee require low skill
levels, minimal language proficiency, and often include undesirable
night or weekend shifts. In other words, contrary to prevailing
opinions it is not merely the declining sectors that are likely to
generate types of jobs for which immigrants are a highly desirable
labor force.
While it is easy to show that the-growth of sweatshops results in an
expans of low-wage
ion jobs, this is not the case with the advanced
services and headquarters complex. To argue that the expansion of
this sector, one of the most technologically advanced and requiring
large shares of very highly trained personnel, has also generated a
supply of semi- or unskilled, low-wage jobs goes against much
accepted lore.
And yet, a detailed empirical examination of the major service

any skill and language requirements and no history of unionization —

in brief, jobs that both demand the existence of and contribute to the
expansion-of an-underclass.
Using the data from a New York State Department of Labor (1979;
1980) occupational survey of major service industries, I identified the
full array of such jobs.'* These data have many limitations. First, only
establishments covered by New York State Unemployment Insur-
ance are represented in the sample. Secondly, the sample was drawn
in 1978, a time when the high growth trends in the advanced services
had only begun after the financial crisis of the middle 1970s. Thirdly,
the sample excludes restaurants, hospitals, and private households,
all of which furnish low-wage jobs likely to attract immigrants.
Fourthly, the subsample underestimates the availability of low-wage
jobs because some jobs identified were too broad in terms of income
range for inclusion in our low-wage subsample. Many of these jobs,
such as cook or waiter/waitress, are held by immigrants. Finally, the
sample’s universe covered only one-third of all of New York City’s
` officially counted jobs.
158 The rise of global cities and the new labor demand

These data limitations notwithstanding, the results are suggestive

(see Table 5.7). First, there is an abun of danc e or,
low-wage unskilled
semiskilled service jobs lacking language proficiency requirements
ARES ERENT DEE all
occupations in all the service industries covered by the sample, 16.7_
percent weree identified as low-wage
-wage jobs: of these, 10.8 percent were
in finance, insurance andreal estate; 23.9 percent were inbusiness
services, and {8.9 percent were _in the remaining service industries.
Secondly, the highest incidence of such jobs is found in one of the
fastest-growing employment sectors in the city (and in the nation asa
whole) — that is, business services.'® General studies on the structure of
the service sector show that, contrary to much that has been said, "he
services are characterized by a larger proportion of workers at the
lower end of the earnings scale. . >? than non-service employment
(Stanback, 1979: 4).
The expansion of the advanced service sector also generates an
increase in the category of very high-income workers whose life styles,
in turn, generate a demand for low-wage workers. Many of these jobs
fall outside any of the major industry counts, not so much because
they may involve illegal immigrants, but because they are part of that
expanding category usually referred to as “‘off-the-books jobs”. The
expansion of low-wage jobs that service the high-income lifestyles of
the rapidly expanding top level workforce in the advanced services
and other high-income occupations is a key factor in the expansion of
an informal sector in cities like New York (Sassen-Koob, 1984b). Part
of the goods and services produced in the underground economy
circulate through the modern sector of the economy that caters to
these high-income lifestyles: the preparation of specialty and gourmet
foods, the production of decorative items and luxury clothing and
other personal goods, various kinds of services for cleaning, repair,
errand-running, etc. The demand generated in the modern sector of
the economy, together with the downgrading of manufacturing,
stimulate the expansion of an informal sector. This also explains why
this type of configuration is most developed in major urban centers
experiencing very dynamic growth and not in cities such as Detroit.
Ins e existence of a major growth sector as is the advanced

ea EE high-
income lifestyles of those therein employed.
Ee ee re es. eR
 Advanced services, downgraded manufacturing, informaltzation 159
Table 5.7 Low-wage, unskilled jobs likely to employ immigrants: select service
industries, New York City, 1978

Select service industries

Finance, Other
insurance Business service
real estate services industries Total

Managers, professionals and technical 104,460 65,800 140,600 310,860

` Services
Low-wage jobs 30,520 52,430 40,900 123,850
Total 36,980 54950 83,520 175,450
Maintenance
Low-wage jobs 9,150 1,980 19,590 30,720
Total 12,700 15,880 45,510 74,090
Clerical
Low-wage jobs 1,420 5,020 3,450 9,890
Total 201,630 102,140 80,710 384,480
Sales 23,890 10,180 4,490 38,560
Total low-wage jobs’ (n) 41,090 59,430 63,940 164,460
% of total 10.8% 23.9% 18.9% 107%
Total all occupations 379,660 248,950 354,830 983,440

“This is derived from a survey by the New York State Department of Labor (1980, 1979). The
sample was drawn from establishments (only those covered by New York State Unemployment
Law) in select service industries. Excluded from the sample were the following service
industries: educational services (SIC 82), private households (SIC 88), and the hospitals
industry sub-group (SCI 806). Private households and hospitals contain significant numbers of
low-wage jobs known to be held by immigrants. Excluded from the sample were establishments -
and activities which include significant numbers of low-wage jobs known to employ
immigrants, notably, restaurants.
j SIC codes 61-65
pic codes 73, 81
SIC codes 70, 72, 75-80, 83, 84, 86, 89
“The jobs identified as low-wage are only a segment of all low-wage jobs. They are those that
lack language proficiency requirements, are not part ofa well-defined advancement ladder and
are not usually part of a highly unionized occupation.
Source: Based on New York State Department of Labor, Division of Research and Statistics,
Occupational Employment Statistics, New York State, April-June, 1978, 1980, and New York State
Department of Labor, Division of Research and Statistics Occupational Employment Statistics:
Finance, Insurance, and Real Estate, New York State, May- June, 1978, 1979

The downgraded manufacturing sector: reorganizing the labor process

When we disaggregate the data for the manufacturing sector we find,
behind the remarkably different industrial profiles of these two cities,
a parallel restructuring of the job supply. Notwithstanding the
distinct industrial mix characterizing each of these cities, both have
 160 The rise of global cities and the new labor demand

had a major expansion in the supply of low-wage jobs. This expansion

is a function of several developments that increasingly present
themselves as integral to advanced industrial economies. Technology
has_made_possible_the downgrading
of a vast array of jobs,
~ transferring the skills from the worker to the machine. Thus hi h-tech

operations, many of which have in fact been redeployed to less-

developed countries (as discussed in the preceding chapter). Further-
more, the transformation of the industrial mix has entailed a decline
of older, established manufacturing industries with higher rates of
unionization and higher shares ofwell-paid, skilled jobs. Finally, the
transformation of the organization of the labor process associated
with these two developments has facilitated the expansion of forms of
production that rely on cheap, powerless labor, notably sweatshops
and industrial homework.
The concrete expression of these developments in the cases of New
York City and Eeer
of adowngraded manufacturing sector. First, in the case of New York
City, not-all components of labor-intensive industries were affected-
equally by capital flight from the city. Inthe garment industry, the
city’s largest employer, the bigger shops with mechanized production
were the ones to move (NACLA, 1978). The less mechanized
branches and small shops as well as the industry’s marketing and
design operations have remained in the city. Secondly, in the case of
Los Angeles, the two major components_in the net growth of
manufacturing jobs, high-tech industries and garments, contain a
Ea otlowaage, mee E Thirdly, the
-expansion and consolidation of a d sraded manufacturing sector

unioniz i oduction and

organization of the work process. Though inadequate, the evidence
points to a massive growth of sweatshops and industrial homework in
garments, toys, footwear and, increasingly, electronics in both cities
(New York State Department of Labor, 1982a, b; Sassen-Koob,
1987). Fourthly, small-scale immigrant-owned operations have
grown in number rapidly in view of easy access to cheap labor and,
more importantly, a growing demand for their products in these
cities. Finally, foreign investors have shown considerable interest in
both areas. Thus, of all the new factories acquired or started by
foreign investors from 1976 to 1980, New York State had the single
 Advanced services, downgraded manufacturing, informalization 161
largest increase, 196, followed by 161 in California, the second largest
(Port Authority, 1981; Conference Board, 1981; Sassen-Koob, 1981b).
The following discussion treats these various issues in greater detail.

Both New York City and Los Angeles experienced a severe loss in
their older, traditional manufacturing industries during the decade of
the seventies. New York City lost 160,000 garment jobs, the city’s
largest single manufacturing employer. Since 1973, the printing
industry, another key industry in the city’s economy, has shrunk by
over a third. Los Angeles has had an accelerated decline in its older
industries, particularly automobile production, rubber tires, and the
auto-related glass, steel and steel products sector. Since_1978, 75
percent of the workers in these industries have lost their jobs. These
were also the most unionized industries and those containing a high
share of well-paid manufacturing jobs. Even the aircraft and parts
industry declined slightly in the decade. On the other hand, the
garment industry in Los Angeles had a net gain of 80,000 jobs —
probably an underestimate since it excludes sweatshops and
homework.
Two pronounced
trends-arethus-evident_in
these cities’ manu-
facturing bases over the last decade. One is the large loss in
manufacturing jobs associated with the closure or shift of plants in
traditional manufacturing industries. The other is the pronounced_
expansion ing sector, either involving
the same branches, but using different forms of production and
organization of the work process, or involving new, often high-tech,
industries. These developments were accompanied by a considerable
decline in average wage levels for factory production workers as a
share of the national average (U.S. Bureau of Labor Statistics, 1979;
1985). From 1961 onwards it held at about 94 percent of the
national average in New York City, reaching an all-time high of 101
percent in 1970. By 1982 it was down to 87.6 percent, probably a
significant overestimate since it excludes sweatshops and industrial
homeworkers. In Los Angeles, it declined from 109 percent to 101
percent of the national average (see Table 5.8). i
The garment and electronics industries, two extremes in the
technological spectrum, are both key components in the expansion of
a downgraded manufacturing sector. The same characteristics of
production that explain this expansion have also made possible their
large-scale redeployment to South-East Asia, the Caribbean Basin,
162 The rise of global cities and the new labor demand

Table 5.8 Hourly wages of production workers in

manufacturing industries, New York City, Los An-
geles, and U.S., 1970 and 1982 (in $U.S.)

1970 1982

U.S. Average (A) eh 8.50

New York City (B) 3.35 7-45
B/A (%) (101.2%) (87.6%)
Los Angeles (C) 3.60 8.56
C/A (%) (108.8%) (100.7%)

Source: U.S. Department of Labor, Bureau of Labor Statistics,

Employment and Earnings (various issues)

and Mexico. They were the first two industries to undergo major
internationalization in their production and are today the most
internationalized. Up to 80 percent of workers employed in Export
Processing Zones around the world are employed in these two
industries. Los Angeles, with its major growth in electronics and
garments, is a microcosm for these various trends and production
characteristics.
Since the electronics industry was discussed in the preceding
chapter to explain how its production characteristics made possible
the employment of workers in less developed countries, here I will
focus principally on the garment industry. Like the footwear industry
(also briefly discussed), the garment industry contains a number of
trends that are quite illuminating in terms of the facility for and the
constraints to relocation as well as of the restructuring of the job
supply that emerges from such relocations and the ensuing increase in
import-trade jobs.
The garment industry, one of the first to undergo internationaliz-
ation, shows a variety of patterns: (1)
development
the oflarge, rather —
automated operations, mostly in the Southwest, that have come to
incorporate the jobs once existing Nee YorkCity; (2) the loss of|
medium-sized operations, typically unionized, that constituted the
core of the city’s industry; and (3) the growth of sweatshops and
industrial homework. I will also briefly discuss the case of the
footwear industry, one important to the Northeast as a whole and one
where a polarized mode of recomposition has been developing,
entailing large, mostly mechanized factories that monopolize domes-
 Advanced services, downgraded manufacturing, informalization 163
tic production, coupled with an expansion of sweatshops and
industrial homework. The medium-sized plants, mostly unionized,
are the ones that have disproportionately experienced closings. Of
added significance to New York City and Los Angeles is the fact that
the replacement of a large share of domestic production by imports
has generated service jobs associated with import and distribution
activities, many of which are located in these two cities.
Capital emigration did not affe ents of labor-intensive
industries equally. In the case of the garment industry, the produc-
tion of shirts, undergarments, and work clothing moved to the
Sunbelt, but branches more tied to fashion, with higher seasonal
requirements, demanding more tailoring skill, remained in the
North. These often very small shops employ between 5 and 30
workers, are subject to intense competition, and specialize in highly
fashionable or very cheap, fast-selling garments. Highly specialized
finishing work also remains in New York City. (For more detailed
data see Council on Wage and Price Stability, 1978; NACLA, 1978;
Sassen-Koob and Benamou, 1985.) The experience of the garment
industry over the last twenty years shows that components of labor-
intensive industries with high overall rates of emigration tend,
nonetheless, to remain in the old manufacturing centers, as indicated
in Table 5.9.
A key variable explaining both the emigration of garment industry
jobs and their continued presence in old centers is the nature of the
production process. The possibility of deskilling a share of the jobs,
lowering ratios of fixed assets per worker, and limited economies of
scale can dramatically alter the nature of the production process. In
other words, it is easy to move an apparel factory because the
necessary investment is relatively small; it does not require a highly
skilled labor force; and those components of the production process
that demand high skills can be separated from the rest.
One requisite for internationalization is the possibility of breaking
down production tasks to isolate low-skill operations for export to
cheap labor areas. First, the very simple, basically unchanging
technology of the industry has two important consequences. The
basic fixed asset is the sewing machine, which makes possible a
pronounced fragmentation of the production process (unitized
production) without sacrificing economies of scale. It makes econ-
omic sense to open up a plant with 5 or 30 sewing machines, an
impossibility in many types of industry where scale determines
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 Advanced services, downgraded manufacturing, informalization 165
economic feasibility. Furthermore, the practice of subcontracting
and section work, which started in the late 1800s, created a type of
organization of work that later facilitated the export of certain jobs.
Subcontracting and section work entailed the replacement of highly
skilled workers who prepared a whole garment by semi- or unskilled
workers who massproduced one piece. This practice permits taking
advantage of dispersed production sites.
From this derives the second consequence: the possibility of starting
an apparel factory with a small amount ofinitial capital. The typical
garment shop has 50 production workers with about $6,000 in fixed
assets per worker — figures proposed by the government as those
needed to establish an efficient operation. But a NACLA study (1978)
found that apparel factories can start on as little as $10,000. In the
late 1970s a large apparel factory, which is rare, could have as much
as $15,000 worth of fixed assets per worker; this contrasts markedly
with the situation in advanced industries, where fixed assets per
production worker range between $40,000 and $70,000.
In addition to unitized production and skill standardization — two
conditi ion — the weight of labor costs
is important in explaining internationalization. Though in recent
years a few large United States apparel companies have become more
automated, for most of the 15,000 apparel companies labor accounts
for about 27 percent of production costs. Thus, this factor is of major
significance for profit levels, and partly explains the continued
decline in wages over the last thirty years as a means of maintaining
profit levels. In 1947, the average wage of apparel workers was 95
percent of average manufacturing wages; by 1977 it had declined to
64 percent (Council on Wage and Price Stability, 1978: 27). It is the
nature of the production process (one in which labor costs play such a
significant role) that explains this decline in wages, not simply the
availability of cheap immigrant labor per se.
The same characteristics of the production process which explain
the facility and desirability-of plant_relocation_in_the garment
this industry can
industry also explain why certain branches ofskilled
conti i ity. Highlyor fashion-
linked components of the production process can be isolated and
carried out on a small scale and with minimal initial investment. This
also makes possible production of cheap garments for a mass market
given the availability of an abundant low-wage labor supply that can
be drawn into industrial homework and sweatshops. The same
166 The rise of global cities and the new labor demand

Table 5.10 Domestic shoe industry and imports, 1966 and 19 76

1976 as a
percentage of
1966 1976 1966

Total employees 241,500 169,000 70

Number of companies 675 376 56
Effective capacity 782,952 568,404 73
(000 pairs)
Census production 641,696 413,087 69
(000 pairs)
Imports 96,135 369,814 384
(000 pairs)
Value of shipments 2,474 3,482 141
(millions of $)
Value of imports 158 1,448 916
(millions of $)
Average weekly $71.81 $70.22 98
earnings

“The figure for 1966 is gross average weekly earnings in current dollars. The figure for 1976 is
gross earnings deflated by the change in the consumer price index from 1966 and 1976.
Source: Evans (1979): 319. Based on American Footwear Industries Association. Footwear Manual,
1977, tables 10, 11, 37, 38; AFTA Statistical Reporter, Quarterly Report, 4th Quarter, 1977-

characteristics also explain how during the last few years the garment
industry could begin to expand again in a place like New York City,
with its outmoded physical plants, its fiscal precariousness, its scarce
and high-cost commercial space, and so forth.
Another form of this differential impact of capital migration in
labor-intensive industries is illustrated by the footwear industry, until
recently a significant component of the Northeast’s economy. The
replacement of U.S.-manufactured shoes by imports, in part the
result of American investment abroad, has had a devastating impact
on the domestic footwear industry. Between 1966 and 1976, shoe
imports increased by 916 percent in terms of dollar value, and by 384
percent in terms of units (pairs of shoes). During that same period,
domestic employment in the shoe industry declined by 30 percent,
average weekly earnings declined slightly (even controlling for
inflation), production of units dropped by 30 percent, and produc-
tion capacity fell by 27 percent (Evans, 1979: 318-320). As Evans
points out, the U.S. shoe industry was not becoming more modern
and less labor intensive, it was simply losing its production base (see
Table 5.10).
A more detailed examination reveals selected processes of industry
 Advanced services, downgraded manufacturing, informalization 167
recomposition that make for a more complex pattern than that
represented by a generally declining industry (Evans, 1979). First,
the largest firms in the U.S. shoe industry had higher profit levels
between 1970 and 1973 than between 1963 and 1966. Secondly, a
high degree of concentration characterizes the footwear industry: a
few companies account for a large share of total output, and over half
of all small companies have disappeared (300 out of 517). By 1976, 21
large companies produced half of the country’s total output. Thirdly,
some of the larger companies have invested heavily in plants abroad
(in Taiwan and South Korea) and have become importers as well as
U.S. producers, thereby exercising control over both a large share of
domestic output and imports. Fourthly, other large domestic pro-
ducers have become heavily involved in import trade. Finally, in
certain styles, such as heavy leather footwear and casual shoes,
American producers dominate. This is also the case in higher-priced,
fashion-linked lines. The enterprises that have suffered most from
high imports and relocation of plants abroad are the small manu-
facturers producing large volumes of low-priced |
footwear. Larger
producers are becoming more competitive in this line through their
involvement in the import trade.
In sum, the overall picture that emerges in the case of the footwear
industry is one of a growing concentration where a few large
companies control the market through domestic production, produc-
tion abroad, and control over imports. Some domestic footwear
industry firms are thriving; others are declining severely. Insofar as
domestic producers are heavily involved in the import trade, certain
components of the industry are expanding.
The overall relevance of this discussion to my central argument is
that disaggregated data on capital emigration from the Northeast,
especially from New York, show that (1) certain branches within
labor-intensive industries such as apparel and footwear continue to
operate in the Northeast and are actually expanding; (2) types of
are also conduc-
that make relocation easy and desirable
production
ive tO continued operation in places like New York City which have
highly skilled and cheap unskilled labor pools available; and (3) the
severe shrinking of the production base of an industry such as
footwear due to expanding imports may generate a whole range of
jobs associated with the import trade. This development may be
particularly significant to New York City as a commercial center
~ because the transfer of production jobs from an area outside New
 168 The rise of global cities and the new labor demand

York City to foreign countries has generated a new set of jobs within
the city. These three trends do not by any means overcome the
devastating impact of capital emigration from New York City during
the last two decades, but they are elements of an explanation that
seeks to resolve the apparent contradiction of the coexistence in one
place of a massive job loss and a massive influx of immigrants.

CONCLUSIONS

These two very different areas, New_York City and Los Angeles,
contain a number of major growth trends that result in similar socio-
economic ‘conditions: an increased skill and income polarization in
the workforce, the expansion of a downgraded manufacturing sector,
and the growth of an informal economy. These two cities, which are
the major producers of financial and other advanced services, are also
major era
gen oftor major
s andrece
low-wage jobs iverofthesgen.
immigration. They represent two major instances of economic
~ restructuring both in terms of economic activity and the organization
of the work process. The massive immigrant influx and the cor-
responding transformation in the social and political composition of
` the labor supply needs to be understood in this broader context.
Major world centers have become the loci for new forms of the
concentration of economic growth and the associated new forms of
economic inequality.
The contrast is made more remarkable by the fact that in the 1970s
each of these two cities constituted a consummate instance of what
were usually seen as two very different configurations: the declining
Frostbelt and the ascending Sunbelt. There was a tendency to
associate the first with irreversible decline and the second with high-
technology growth.
The notion of economic decline adequately describes what is
happening in several industries that were central components of
the Northeast economy. However, it fails to capture the emergence
of novel kinds of manufacturing, the expansion of sweatshops, and,
more fundamentally, the expansion of highly specialized services.
The notion of capital flight adequately describes what is happening
with many of the manufacturing firms and corporat
that had traditionally operated from New York City, but it disregards
the new trends in capital investment for which New York City is a
suitable and desirable location: professional services; banking; hotels
 Conclusion 169

and restaurants; the construction of offices and luxury high-income

residental building, with all of their associated services; specialized
manufacturing firms directed toward a small, identifiable clientele;
the buying and selling of art and antiques; and so forth.
On the other hand, what dominates in the case of Los Angeles is
modernity, newness, and high technology. Yet underneath these we
find a massive expansion of sweatshops in garments and electronics,
and an increase of low-wage assembly jobs in high-technology
industries. We observe the large-scale employment of non-unionized,
often immigrant and female workers in the new industries and the
decimation of the old, established and highly unionized industries.
Areas with the highest growth in manufacturing have experienced
the sharpest decline in levels of unionization. Finally, we also see a
large section of the city in total decay and one of the most ghettoized
cities in the country, while at the same time there is the beginning of
high-income gentrification in areas once occupied by middle- and
lower-middle income people.
This pattern of internal differentiation of the growth and decline
trends in Los Angeles and New York City can also be applied to the
composition of immigration. To say that immigration provides cheap
labor is correct, but this oversimplifies the supply and demand
relationship. Low-wage jobs are common in declining sectors of the
economy. As the migration literature has shown, firms in this sector
often depend on low-wage immigrants for sheer survival. Higher-
wage workers would contribute to the closing of such firms. But low-
wage jobs are also numerous in highly dynamic growth sectors of the economy. It
is this fact which partly resolves the lack of correspondence between
the size of immigration and that of the job loss. If we juxtapose the
large immigrant influx during the last fifteen years in New York City
and the large job loss over that same period, then it would seem that
low-wage jobs in the declining sector of the economy would not suffice
to absorb the immigrant influx. Yet, the available evidence for New
York City shows that a majority of immigrants find employment in
rather low-wage jobs. The mistake lies in assuming that low-wage
jobs are predominantly a function of decline and backwardness.
The expansion of the low-wage job supply as a function of major
growth sectors, notably the advanced services and headquarters
complex and the downgraded manufacturing sector, contributes to
explain two characteristics of the new immigration: (1) its continued
‘concentration in New York City and Los Angeles, and (2) the
170 The rise of global cities and the new labor demand

continued increase in entry levels, much higher in the late seventies

than in the late sixties. As I discussed earlier, important elements ofan
explanation can be found in the change of legislation after 1965 and
the prior existence of immigrant communities in both cities. How-
ever, they are not sufficient
to explain the continuity of the flow and
its increasing magnitude in view of rising inflation and unemploy-

sufficient toexptairr thepersistently disproportionate-concentration

<
in major cities now that these are no longer the centers of light-

SS A
 6
The reconcentration of capital in the United
States: a new investment zone?

There is today a global marketplace of production sites. The decade

of the 1970s saw the massive and rapid development of such
production sites in select areas ofSouth-East Asia and the Caribbean
Basin. And towards the late 1970s cities such as New York and Los
Angeles emerge as major
the-placement-efinternational
locations for
financial investments and for the production of specialized services for
the world market. To these two developments I would add a third
pattern, becoming evident in the 1980s: the possibility that several
regions in highly in iali i becoming
competitive
with industrial zones in the Third Worlda locations for direct
investment, both foreign and national. Reasons for this can be found
in new locational constraints due to technological requirements,
protectionist policies, notably in the United States, and rising
political and economic costs of production in Third World export
manufacturing zones. These changes involve mostly the United
States. Techni itical constraints along with
changes in the territorial organization of production and the
availability ofa low-wage immigrant work force make certain regions
in the U.S. internationally com otite and Thurpartof theglobal
markelplace ofproduction sites. Some ofthe less industrialized
countries in the developed world, such as Spain and Ireland, are also
emerging as investment zones for world capital.
One indication of this new pattern can be derived from the
pronounced changes in overall flows of direct foreign investment since
the early 1980s. From being the leading exporter of direct foreign
peaking in 1979, the
investment throu SEENEN
e by 1981. In
EE
EE EECH it reached 48 percent (UN
- under. a percent of global flows; in 1981
Centre on Transnatio nal Corporatio ns, 1985; U.S. Department of
171
172 Reconcentration of capital in the United States

Commerce, 1984; OECD, 1981). Alongside the U.S. the fastest

growing recipient areas are the South-East Asian nations discussed in
Chapter 4. The main losing areasare the large Latin American and_
major Western European countries-which received most of the direct
foreign investment taking place in the 1950s and 1960s. In all these
areas, direct foreign investment tends to be concentrated in certain
regions and sectors. This is a trend that has increased in the case ofless
developed countries. In 1970 the twenty leading recipients accounted
for two-thirds ofall direct foreign investment; by 1981 this share had
increased to go percent (U.S. Department of Commerce, 1984; UN
Centre on Transnational Corporations, 1985). Investment goes to
three sets of activities: development of oil resources and other
minerals; production geared to domestic markets in the receiving
country; and assembly and production of manufactures for export.
Most countries in the Third World have not received much if any
direct foreign investment even when governments offered significant
incentives. EE EE
the less industrialized European countries that have experienced
rapid growth in direct foreign investment inflows, particularly Spain
and Ireland. And it is evident in the United States, as will be discussed
below in detail.
The notion of a global marketplace of production sites is further
suggested bythree trends. Oneisthemassive increase in global direct,
foreign inve ws, from $60 billion in 1960, $213 billion in
1973, to almost $600 billion in 1983 (U.S. Department of Commerce,
1984; OECD, 1981). Europe, Japan and the US all had rapid
increases in their absolute levels of investment abroad. Secondly, ~
since the-+96es direct foreign investment has increasingly been

exempt _fro 10 constraints typical of raw

materials production. And thirdl nsnational corporations of the
developed countries accounted for over go percent of all flows
throughout much of the post-World War II era and continuing
today. The combination of these three trends indicates that much of
the global flow in direct foreign investment represents the inter-
nationalization of production on the part of transnational corpor-
ations. In this context it is worth noting that before World War II
portfolio investment was far more important than direct foreign
investment in overall foreign investment flows. It is this inter-
nationalization of production, rather than the mere internationaliz-_
 Elements for change 173

ation of financial investments, under the umbrella of transnational

corporations that contributes to the expansion of centralized man-
agement and servicing operations discussed in Chapter 5. The
internationalization of production continues, especially in South-
East Asia, the Caribbean Basin, and some of the less industrialized
European countries. And the U.S. continues to export capital but has
now itself become a site for internationalized production.
This is the general argument underlining the more detailed
discussion on foreign investment in the U.S. I will first briefly
examine some of the technical, political, and economic constraints
that may be contributing to a reconcentration of capital in the highly
industrialized countries, mostly the United States. This discussion
will focus on industrial capital, the subject of financial capital having
been discussed in the preceding chapter.

ELEMENTS FOR CHANGE IN THE SPATIAL DISTRIBUTION OF

INVESTMENT

Over the last few years a number of regions in highly industrialized

countries have emerged as attractive locations for foreign investors.
In the United States, Southern California, Texas and the New
York-New Jersey Metropolitan Area have become key recipients of
foreign investment in manufacturing. Furthermore, one of the central
factors in the rapid growth trends of the late 1970s in New York City
and Los Angeles was a pronounced increase in foreign investment in
several important industries: banking, real estate, hotels and restaur-
ants, and manufacturing. The importance of this for New York at a
time of massive departures by domestic capital and an all-time low in
employment levels, has increasingly been recognized by government
officials and the private sector (Port Authority, 1981; 1982; City of
New York, 1982; The Conference Board, 1981; Goldmark, 1979).
There are good economic_reason ign investment in th
United States generally. Firms with sizeable exports to the United
States may benefit from direct production here to consolidate and
expand their markets and to avoid import restrictions, especially in
view of continuing U.S. merchandise trade deficits. The declining
value of the dollar during the 1970s made U.S. investments,
a cquisitions, and construction of the plants in the U.S. relatively
‘more profitable to outsiders. Finally, one factor that cannot be
et
174 Reconcentration of capital in the United States

disregarded is the intense competition and active lobbying on the part

of local governments to draw investors, both domestic and foreign.
But the magnitude ofthe increase in foreign investment is sufficient
to raise the possibility of some more basic trend at work in these shifts.
There is some evidence pointing to technically and economically
induced locational constraints_in the more advanced sectors of
———————

manufacturing. On the other hand, the consolidation of a large

supply of immigrant workers in combination with the severe losses by
organized labor, lowers the cost of labor-intensive activities in both
advanced and “backward” sectors of the economy. We may be seeing
the operation ofa threshold effect whereby the conjunction of new or
increased locational constraints and the availability of a large supply
of low-wage workers have made investment in several economic
sectors competitive with what were once preferred locations in the
Third World and Western Europe.
In the particular case of manufacturing, the argument is that
several regions in the United States contain a combination of.
resources that makes them competitive with Third World areas
producing for export, notably Export Processing Zones. This would
mean that behind the massive increase in direct foreign investment in
the U.S. beginning in the late 1970s, lies a shift in global investment
patterns. This shift has also involved U.S. investment patterns. The
particular combination of resources that makes such regions in the
U.S. competitive is not necessarily the same as that which makes
Third World countries competitive. Rather it is the emergence of
various technical, economic, and political constraints that are
inducing a transformation in the territorial organization of produc-
tion in several industries. On the other hand, rising demands by
workers and host governments in Third World countries that
received most of the foreign investment for export production have
reduced their competitive edge.
Among the key developments that have contributed to this
competitiveness are the following. First, there are new technical and
economic constraints that promote agglomeration economies and
disincentives towards vertical integration. Notable among these are
the requirements of production in (a) the most advanced sectors of
high-technology industries, and (b) the expansion of commercial
applications of microelectronics. Both, even if involving at times very
different kinds of production, require vicinity to centers of research,
control and design, as well as to intermediate buyers. The overall
 Elements for change 175
result is a tendency towards a clustering arrangement of a broad
range of firms, some specializing in similar and others in com-
plementary lines of production.
There are two consequences of interest to this study. One is that
insofar as the centers for technical control and design tend to be
located in the highly industrialized countries, and especially in the
United States, the latter emerge as desirable sites for production
facilities. In this context, the availability of an abundant supply of
Third World labor inside the United States acquires added signific-
ance. A second consequence one might infer from these tendencies
towards clustering, is that certain regions in the United States will be
more adequate than others. Besides access to technical resources and
suitable labor supplies, this clustering arrangement presupposes
access to a rather large, somewhat contiguous territory. Space
becomes a resource only on the collective level: the category
“adequate space” cannot be reduced to the land needs of a single
establishment. While localization economies have probably been a
factor in many different economic periods and sectors, such econ-
omies are not the same for establishments with high levels of vertical
integration as for clusterings of small firms with high levels of vertical
disintegration. If we introduce such an elaboration of the category
space, then one can argue that certain regions with the appropriate
combination of resources can be conceived of as investment "zones,"
for foreign and U.S. capital (Sassen-Koob, 1987).
Secondly, the large availability of an immigrant workforce in
combination with changes in the consumption structure are inducing
a reconcentration of small-scale, labor-intensive manufacturing in
large cities. As was discussed in Chapter 5, the tendency towards
income—polarization
in large cities has brought about a parallel
segmentation in the consumption structure. There has been an
expansion in the demand for customized, highly priced goods and
services. And there has been an increase in the demand for extremely
Sa
ee Re Ts eee
cheap goods and services. The first has brought about ein
S ing shops catering to specific clienteles; standardiz-
ation and mechanization of production are not feasible or profitable
under these conditions and neither is vertical integration. These small
shops need to be located in large cities, since this is where their clients
are located and access to suppliers is adequate. In the case of the
growing demand for extremely cheap items, what we are seeing is that
(he existence ofa critical mass of workers willing to work at home or in
 176 Reconcentration of capital in the United States

sweatshops has made cities like New York and Los Angeles competit-
ive with Hong Kong or Taiwan as locations for the production of
extremely cheap garments, footwear, bedding, toys, and a range of
household items. The central issue here is not so much the fact that
foreign investment, including small-scale investments by immigrants
who arrive with some capital, has been a significant factor in the
constitution and viability of this type of manufacturing. More
important is the fact that such a sector is developing and expanding in
the midst of what are often thought of as “‘post-industrial”’ cities. An
integral part of this development is the formation of an informal
sector, encompassing the production of both highly priced cus-
tomized goods and services and very cheap ones. The expansion of
small, labor-intensive shops relying heavily on immigrant workers
and including a growing informal sector, makes large cities in a highly
industrialized country like the U.S. a competitive location for certain
types of labor-intensive manufacturing. If this hypothesis is correct, it
represents a development that analyses of advanced industrialization
have typically not foreseen.
Thirdly, the EE
zones (Export Processing Zones, or Free Trade Zones) in the Third
World may make investment in these relatively less attractive than it `

pressures by the governments on foreign compani erating in their

territories to transfer more advanced technologies and more
re capital-
intensive production, while it is_precisely the more labor-intensive
and simpler segments of production that have typically been located
in these zones; (b) labor shortages in some_of the better established
Zones, largely due to the marked preference for employing young
women and the high turnover rates; (c) growing militancy among
workers employed in these zones and export industries generally,
notwithstanding the government’s ruthless disciplining of workers
and various repressive measures; (d) a consistent trend towards rising
wages which may be reducing the relative desirability of locating
plants off-shore, especially given a growing supply of immigrant
workers in the U.S. and the severe defeats suffered by organized labor.
A fourth factor of considerable weight to foreign investors is access
to theUS. market and,inthecaseSTCertain industries access a
high-level technologies through the acquisition of U.S. firms. The
U.S. is still the largest single market in the world and one which a
range of foreign firms want to secure in the face of rising pressures
 Direct foreign investment 177
towards protection against imports. Acquisition by foreign investors
of U.S. manufacturing firms as a way of gaining access to the U.S.
market and to advanced technology has accelerated since the late
1970s if we use the figures on acquisitions as an indicator (Sassen-
Koob, 1987). There may of course be a number of other reasons
inducing such acquisitions, including the relative decline in the
attractiveness of investing in the Third World.

DIRECT FOREIGN INVESTMENT IN THE UNITED STATES

Total foreign investment in the U.S. stood at $874 billion in 1984.

This represented a doubling from the $416 billion in 1979. The 1984.
figure is not insignificant considering a GNP of $3.6 trillion in 1984
and a national budget of about $800 billion. Indeed some analysts
maintain that foreign investment financed part of the economic
recovery in the early 1980s. Data Resources, Inc. for example,
estimates that foreign investment financed 26 percent of U.S.
corporate capital spending in 1984, which would represent a
doubling from the 1980 level and an unprecedentedly high share.
Besides direct foreign investment, major categories of foreign
investment are private portfolio holdings of U.S. stocks, bonds, loans
and government securities, private deposits in U.S. banks, and
foreign government holdings. The fastest-growing category and the
largest in volume by 1984 was private portfolio holdings and private
deposits. It more than doubled since 1979 and reached almost $500
billion in 1984. Pri overnment holdings, which as recently as
1978 were the largest single category, gréw little over the last five
years, reaching $106 billion in1987 GeeTable 6.1).
It is almost impossible to obtain precise measures of the national
origin of this investment. Approximately $400 billion came from
Western Europe, a doubling of the 1979 figure. Canada and Japan
each provided about $180 billion, also a doubling of their 1979 levels.
Finally, Latin America and other countries also doubled their 1979
levels, reaching over $50 billion each.
Until the middle of the 1970s, U.S. direct investment abroad grew
more rapidly than direct foreign investment in the U.S. From 1954
through 1966, such investment in the U.S. grew from $4.6 billion to
$11.8 billion, or by 257 percent, while U.S. DFI abroad grew from
$17.7 billion to $67 billion, or by 379 percent. This trend began to
~ reverse in the 1970s. U.S. DFI grew from $67 billion in 1969 to $148.8
178 Reconcentration of capital in the United States

Table 6.1 Net international investment position of the United States

1978-1984 (in billions of8 U.S.)

1978 1979 1980 1981 1982 1983 1984

Net international investment

position 76.2 94.6 120.6 156.5 149.6 105.7 35-2
Assets 447.9 510.6 606.7 716.9 838.2 887.4 908.7
Official assets 72.9 77-4 90.3 8:5 we 108.4 113.0 121.7
Foreign direct investment 162.7 187.9 215.4 226.4 221.5 226.1 232.1
Other private assets 212.3 245.3 301.0 392.0 508.3 548.3 554-9
Liabilities 371.7 416.0 486.1 560.4 688.6 781.7 873-5
Official liabilities 173.0 159.7 176.0 180.9 189.0 193.1 196.1
Foreign direct investment 42.5 54-5 68.4 90.4 121.9 133.5 154-7
Other liabilities 156.2 201.8> 241.7 289.1 377-7 4541 522.7

“Including petroleum industry

Source: UN Centre on Transnational Corporations, 1985: 21; based on United States
Department of Commerce, Survey of Current Business (various issues)

billion in 1977, or by 222 percent, while DFI in the U.S. grew from
$11.8 billion to $34.1 billion, or by 285 percent. After 1977 there is a
rapid acceleration in the rate of growth of DFI in the U.S.,
quadrupling from 1977 to 1984. DFI in the U.S. for the first time
exceeds U.S. outflows in 1981 after 30-plus years of net outflows. In

to 5 percent in 1981, the lowest in the post World War II period

(Whichard, 1982: 11). In contrast, the rate of growth of DFI in the
U.S. reaches 31 percent annually, a level at which it remains
(Howenstine and Fouch, 1982: 32).
Throughout most of the decade of the 1970s, European and
Japanese direct foreign investment increased rapidly and was mostly
directed to the Third World. Towards the late 1970s and early 1980s
most of this investment is directed to the U.S. These shifts are
reflected in the changing distribution of outflows among the de-
veloped countries. In 1970-71, the U.S. accounted for almost 61
percent of all outflows, Europe’s most developed countries for 35
percent. By 1981, the U.S. share had declined to 15 percent, Europe’s
had risen to over 57 percent, and the share of the developed non-
European countries (Japan, New Zealand, Canada, Australia, and
South Africa) had increased to 28 percent. The
distribution of inflows
among the developed coun underwent a parallel transform-
ation, with the world share u ountries
declining from 45 percent in 1970-71 to 27 percent in 1981. The U.S.
 Direct foreign investment 179
Table 6.2 Inward direct investment flows (percentage
distribution among eight countries)
be

1961-67 1968-73 1974-78

W. Germany 24.0 19.3 17.0

Canada 18.0 14.2 Bu)
Australia 17.4 15.1 11.0
Italy 12.7 9.7 5.8
U.K. 10.8 19.3 17.0
France 9.1 9.6 17.6
Netherlands 5.2 10.0 6.9
U.S. 2.8 13.4 30.9

Source: OECD, Recent International Direct Investment Trends (Paris:

OECD, 1981)

share went from g percent to 47.5 percent. And that of the third group
of countries declined from 24 percent to 0.2 percent (UN Centre on
Transnational Corporations, 1985: 18). This transformation is
evident in the distribution of direct foreign investment inflows among
the developed European countries and the U.S. (see Table 6.2). The
largest recipients in the early 1960s (West Germany, Canada,
Australia, and Italy) all had experienced pronounced declines in
their shares by the late 1970s. West Germany, the largest recipient,
accounted for a fourth of all such flows in the developed world during
the 1960s, a share that had declined to 17 percent by the middle of the
1970s. On the other hand, France, the United Kingdom, and the
United States all increased their shares (OECD, 1981). Spain,
Ireland, and Greece also experienced large increases in their direct
foreign investment inflows.
The national distribution of the direct foreign investment position
in the U.S. shows that Europe accounted for 66 percent, a share it
held with fluctuations over the last two decades (see Table 6.3). The
significant changes were the increases in the shares ofJapan and other
countries, mostly accounted for by Latin America. Behind the decline
in Canada’s share and Europe’s unchanging share from 1962 to 1980
lie absolute increases.
By 1980, the stock of direct foreign investment in manufacturing
stood at $25.1 billion, or almost 40 percent of all such investment
(Howenstine and Fouch, 1982). The value of direct foreign invest-
~ ments in plants and equipment has more than doubled since 1973. In
1979 alone, about 400 foreign firms built or bought manufacturing
180 Reconcentration of capital in the United States

Table 6.3 Direct foreign investment position in the U.S. by source, 1962-1980
(in millions of $ U.S.)

1962 1966 1970 1974 1980

Total 7,612 9,054 13,270 25,144 65,413

Canada 2,064 2,439 3,117 5,136 9,810

(27.1%) (26.9%) (23.5%) (20.4%) (15.0%)
Europe 5,247 6,274 9:554 16,756 43,467
of which (68.9%) (69.3%) (72.0%) (66.6%) (68.5%)
UR 2,474 2,864 4,127 5,744 11,342
Netherlands 1,082 1,402 2,151 4,698 16,159
Switzerland 836 949 1,545 1,949 3,682
France 183 215 286 1,139 2,672
Germany 152 247 680 1,535 5,290
Japan 112 103 229 345 4,219
(1.5%) (1.1%) (1.7%) (1.4%) (6.5%)
OPEC = id * 201 576
Other 189 238 370 2,706 7,341
(2.5%) (2.6%) (2.8% (10.8%) (11.2%)

Source: Survey of Current Business (various issues)

* Specific amount not published

facilities in the U.S. (Port Authority, 1981; 1982). In 1981, foreign-

owned firms accounted for about 4.5 percent of manufacturing
employment in the U.S. (Little, 1983). The actual employment
impact is considerably higher given the tendency towards concent-
ration in certain regions and in certain industries. The stock of total
direct foreign investment in manufacturing is largely concentrated in
the Mideast, New England, and Great Lakes regions; foreign
investments for new facilities, however, are occurring primarily in the
Southeast and Far West regions (Little, 1983).
Foreign investors have shown a strong inclination for buying plants
or building new ones in the old manufacturing centers that are in
severe decline. A 1976 study by the Conference Board found that over
one-quarter of all investments by foreign firms between 1968 and
1975 were in New England and mid-Atlantic states (New York, New
Jersey, and Pennsylvania), a region with a high incidence of domestic
capital emigration and with more than 5,000 factory closures over
that period (Bauer, 1980). A 1978 study for the Federal Reserve Bank
of Boston found that, adjusting for differences in population and land
area of individual states, the Northeastern industrial areas had
received the largest share of foreign investments. Furthermore,
 Direct foreign investment 181
foreign acquisitions of U.S. plants in operation, though typically with
the threat of closing down, tended to be concentrated in areas with
high unemployment rates that are losing industry. German, English,
and Swiss firms were the ones most likely to locate facilities in such
areas, while Japanese firms were less likely to do so (cited in Bauer,
1980). Furthermore, rather than leveling off in response to the
worsening situation in the Northern manufacturing centers, foreign
investments actually increased throughout the decade of: the
seventies.
New York and California have been, and continue to be, the major
E EE emeni)
since the early 1980s (Conference Board, various issues). New York
and New Jersey had 18.6 percent ofall foreign-owned manufacturing
plants in 1980. This is not an. insignificant share given the severe
economic decline of this region in the 1970s, and considering that
booming states such as Texas and Georgia have 4.6 and 3.9 percent,
respectively (see Table 6.4). Furthermore, New York had the largest
net increase, between 1976 and 1980, ofall states — 196 plants added,
compared to 161 in California, 87 in Texas, 94 in North Carolina,
and so forth. These figures are undercounts because they cover only
plants employing 50 or more workers. In urban locations, small size is
probably an important variable, and only firms in activities where
small size does not affect profitability will be likely to locate in cities.
We know, for example, that many plants in New York City have
fewer than 50 workers on the payroll; we also know that there are
several plants owned by investors from Hong Kong, not only one, as
shown in Table 6.5.
Little (1983) estimates the relative dependence ofdifferent regions
on foreign investments by industry. The Far West region, which
includes Southern California, evidences a very high dependence on
foreign investment in electric and electronic equipment, as well as
instruments and related products. The Southwest, in contrast, shows
little foreign investment in these industries. In fact, the Far West
region evidences one of the highest levels of dependence on any single
country, in this case Japan. The Southwest shows high levels of
dependence on the Netherlands and France and very low on Japan.
ved asubstan-
Non-electrical and electrical machinery have receiaccou
tial amount of foreign investment in recent years; they nted for9
E EE in 1975 and 17
‘percent in 1981 (Conference Board, various issues; Department of
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 Direct foreign investment 183
Table 6.5 Foreign-owned manufacturing plants by
country of ownership in the New York-New Jersey
Metropolitan Area, 1980
be

Foreign owner Plants (n) Distribution

Germany 81 25.2
Cam? Kingdom 67 20.8
rance
Netherlands > Be
Japan 23 7.2
Canada 22 6.8
Switzerland 22 6.8
Sweden 8 2.4
Denmark 7 2.2
South Africa 7 2.2
Belgium 6 1.9
Italy 5 1.6
Austria
Australia ; e
Norway I 0.3
Saudi Arabia I 0.3
Pakistan I 0.3
Hong Kong I 0.3

Total 322 100.0

Source: The Conference Board, Inc.; The Port Authority of New

York and New Jersey Planning and Development Department,
Regional Research Section

Commerce, 1982). Primary metals and instruments also showed

marked growth in their shares, while fabricated metals, foods and
chemicals declined significantly. Even those industries whose share of
total foreign investment in manufacturing declined, however, in-
creased their absolute levels of foreign investment. In sum, direct
foreign investment in U.S. manufacturing is increasing and it
evidences a pattern of sectoral and regional differentiation.
Using IMF and OECD data, the UN Centre on Transnational
Corporations (1985) estimated that the share of foreign direct
investment ingrossfixedcapital formation intheU.S.hasgonefrom
0.5 percent in 1970-71 to 4.1 percent in 1980-81. While this may
seem very small, it is worth noting that in a country such as South
Africa, considered to be rather dependent on foreign investment, this
share stood at 6.1 percent in 1970-71, before massive disinvestment
reduced this share to 1 percent. The 1980-81 figure for the U.S. is
similar to that of Spain and Ireland, two countries that are becoming
184 Reconcentration of capital in the United States

increasingly competitive as locations for foreign investment in

manufacturing. In those countries closest to the U.S. in level of
industrialization and overall development, notably West Germany
and Japan, foreign direct investment amounts to one percent ofgross
fixed capital formation. One might hypothesize for the case of
Germany that it may eventually experience an increase in this share
for reasons similar to those of the U.S. including a large immigrant
workforce. There are some indications that this may be happening,
especially in areas of Southern Germany (Sassen-Koob, 1987).
Ireland and Spain represent a combination of resources somewhat
similar to that posited here for Southern California: a combination of
highly skilled and of low wage labor in the same location, vicinity to
centers of technical research, control and design, and availability of
industrial land in order to accommodate a territorial organization of
production characterized by clustering of anumber of firms rather
than one single plant with high levels of vertical integration.
Foreign investment in U.S. manufacturing occurs for any number
of reasons, including a desire to gain access to U.S. technology and
management expertise, import substitution to avoid tariff restric-
tions, and problems with domestic market regulation; nonetheless,
lower production costs may provide a significant inducement. Labor
costs in the United States grew more slowly than in most other major
industrialized countries during the 1970s. Whereas the average
compensation of U.S. manufacturing workers increased by 80
percent between 1965 and 1975, it increased by 10g percent, 307
percent, 150 percent, 213 percent, 162 percent and 207 percent in,
respectively, Canada, Japan, Germany, the Netherlands, Sweden,
and the United Kingdom. Furthermore, hourly compensation in
Belgium (6.60), the Netherlands (6.53) and Sweden (7.18) was
higher than in the United States (6.35) in 1975 (U.S. Bureau of Labor
Statistics, 1982a).

CONCLUSION

The processes of capital relocation discussed in the preceding

chapters contribute to the emergence of conditions which may
eventually engender a new or altered logic of investment. There is a
trend towards the concentration of foreign investment flows in the
United States. This process can be conceived of as the development of
investment zones for world capital, including both United States and
 Conclusion 185
foreign capital. The evidence on direct foreign investment patterns
provides an indicator for this trend. After growing rapidly in the
1970s, overall direct foreign investment fell by one quarter in the
developed and by a third in the less developed countries. The United
States was the exception in this pattern. Direct foreign investment
and foreign investment generally reached historic highs. From being
the lead exporter of direct foreign investment in 1979, the United
States became the leading importer in 1981.
It is probably useful to distinguish among the different components
of foreign investment in the U.S. One could posit that what we are
seeing is the development of two types of investment zones: financial
and industrial. The combination of resources represented by New
York City and Los Angeles makes these cities desirable locations for
the placement of financial investments. On the other hand, the
combination of inputs and markets has made certain regions in the
U.S. competitive with Third World areas providing low production
costs and a disciplined low-wage workforce. Southern California and
the New York Metropolitan area are examples of such industrial
zones.
My argument is that technical, political and economic constraints
in combination with a new territorial organizatio
contribute to make certain régions in the U.S. internationally
competitive and therewith part ofa global marketplace of production
sites. This manner of conceptualizing I think of as an analytical
device, not strict empirical description. It aids in understanding
changes in international investment flows as these affect con-
ceptualizations of the world economy that rest on the dichotomy
core-periphery or highly developed-less developed.
 Conclusion

Organizing this book is the attempt to capture analytically and

empirically the articulation of the process of labor migration with
fundamental processes in the contemporary phase of the world
economy. One such process is the internationalization of production.
Commonly this is understood to describe the development of an off-
shore manufacturing and clerical sector. I expand this notion to
include two additional processes I consider central. One is the
development of major cities into centers for global management and
servicing. The other is the recent growth of direct foreign investment
in manufacturing, finance, and related services in the U.S. Major
locations for these three processes are the newly industrializing
countries in South East Asia and several Caribbean Basin countries,
major cities such as New York and Los Angeles, and regions in the
U.S. such as Southern California and the New York Metropolitan
Area. All these locations are also significant for the process of labor
migration. Production for export in South-East Asia and the
Caribbean Basin has generated large internal migrations; most of the
new immigrants to the U.S. originate in these countries; New York
City and Los Angeles are key recipient areas; and the general region
around these cities accounts for a large share of all immigrants. The
preceding chapters document the specific forms of the articulation
between both processes.
These developments can be seen as representing a rather rapid
reorganization of the spatial distribution of growth. The industrial
zones in the Third World, the economic boom in New York City and
Los Angeles, the massive redirection of direct foreign investment to
the U.S., can be counterposed to the loss of jobs in old manufacturing
centers of the developed countries and the loss of foreign investment in
Third World countries that were until recently leading recipients.
Less tentatively one could conceive of these developments as
contributing to the formation of a global marketplace of sites for the
186
 Conclusion 187
production of manufactures, clerical tasks, and specialized services.
It is the concentration and sudden implantation of conditions
creating an equally sudden demand for a large supply of labor which
gives migration its specificity as a process crucial to the formation of
the needed labor supply. A less sudden and concentrated demand for
labor conceivably can correspond to a whole range of processes
inducing the formation of the needed labor supply. The complexity of
migration, which is always the migration of people, cannot be reduced
to this specific aspect. But it is this specific aspect which contains the
articulation of the new labor migrations with the recomposition of
capital as it takes place in the new industrial zones in Third World
countries.
This new territorial organization characterized by the inter-
nationalization of finance, manufacturing, and clerical activities
entails, in turn, new forms of concentration for the control and
servicing of the global production apparatus. The strong tendency for
such activities to be located in major cities makes these into strategic
nodes in the organization of the world economy. The direct and
indirect generation of low-wage jobs induced by the new core
economic sector gives the demand for low-wage workers in these
sectors its specific character, one that distinguishes it from the
demand for low-wage workers in declining or non-strategic sectors.
The context within which this demand for low-wage workers occurs,
however, is one of political disaffection and remnants of the militance
of the 1960s in the minority populations which constitute the mass of
low-wage workers in major cities. The specificity of labor migration in
this instance is derived from its capacity to meet the demand for low-
wage, politically disciplined workers in what are strategic sectors in
strategic locations of the world economy. Again, the process of
migration cannot be reduced to this specific capacity. It is always the
migration of people. Furthermore, migration also provides workers
for declining and marginal sectors. But it is the specific capacity to
meet the demand in strategic sectors which provides the central
articulation with the process of capital recomposition as it takes place
in these locations.
These processes of relocation and consolidation of new core
economic sectors, together with other major components of the
recomposition of capital, contribute to the emergence of new
conditions. These new conditions are not necessarily conducive to the
- reproduction of the arrangements that engender them. For example,
188 Reconcentration of capital in the United States

growing political pressures and declining economic returns in the

Third World make the continuing relocation ofcapital to these areas
somewhat less attractive today than ten years ago. At the same time,
there has been a consolidation of a large supply of immigrant workers
in the U.S., along with a weakening ofthe politico-economic position
of native workers and a general context more favorable to capital
than was the case in the 1960s.
Alongside more purely technical constraints, these political and
economic trends have begun to induce a reconcentration of industrial
capital in the U.S. This process can be conceived of as the
development of new investment zones for world capital. The
specificity of immigration in this case is the capacity to provide a large
supply of low-wage, disciplined manual workers in a social context
characterized by middle-class aspirations or a degree of political
disaffection that becomes problematic in the eyes of employers
searching for low-wage workers.
One question emerging from this reasoning concerns the political
implications of incorporating immigrant workers in growth sectors.
History suggests that workers in growth sectors — and in the U.S. these
have been immigrants in several crucial periods — have possibilities
for organizing which those in declining or marginal sectors lack. The
possibility of raising the economic and political situation of immi-
grant workers would then put in motion conditions that would,
again, not be conducive to reproducing this new arrangement over
time. It would create new diseconomies from the perspective of capi-
tal in a way similar to the growing militance of workers in the new
industrial zones of the periphery after a decade of disciplined hard
work ~— a militance that is one of the conditions contributing to the
reconcentration of industrial capital in core areas.
 Notes

2 The use of foreign workers

1 Rapid industrialization has made possible a very high level of expenditure ofoil
revenues, much of it for imports from the core. Luxury consumption by the elites
of these countries could not have generated such a large-scale re-injection of oil
revenues into the world accumulation process. On the other hand, the higher
price of oil was financed to a large extent by a higher cost of living and a
decline in real wages in the core countries. Inflation, another name for this
process, can then be seen as a mechanism for the transfer of these savings to the
oil-exporting countries and to transnational capital. This suggests that the
interests of the states at the core and transnational capital no longer coincide to
the extent they did at the turn of the century and up to the immediate post-World
War II period. (I have fully developed this argument in Sassen-Koo 1a.) It is
198b,
in this sense that the labor migrations into the oil-exporting countries are to be
distinguished from the classical pattern of immigration into high growth areas.
2 Today’s large-scale labor imports in Western Europe are typically seen as a
reversal of the pre-World War II period and the nineteenth century. But
immigration started long before. Already in 1916 Lenin noted that one of the
“special features of imperialism ... is the decline in emigration from the
imperialist countries and the increase in immigration into these countries from
the more backward countries where lower wages are paid” (1939: 127). He went
on to note that this decline had already started in the 1880s and that Germany,
for example, had 1.3 million foreign workers by 1907. These facts have been
overshadowed in our reading of history by the migrations into the New World,
especially the U.S.
3 For example, of the 15 million Italians who emigrated between 1876 and 1920,
almost half are estimated to have gone to other European countries, especially
Germany, Switzerland, and France (Cinanni, 1968: 29).
4 Employment ofa significant level of immigrant workers in these countries has an
anti-cyclical effect because the possibility of exporting unemployment by
repatriating immigrants in addition to their typically below average demand for
goods and services exempts the economy from the need to build the kinds of
infrastructure and service organizations that would be required by an equal
number of national workers. This will tend to decrease the differences in levels of
consumption, employment and utilization of the economy between cycles of
expansion and contraction.

189
190 Notes for pages 31—38

5 The use ofimmigrants to depress wages and weaken unions can already be found
earlier in the United States. More generally, the emphasis on technological
development as a variable explaining the organization of the labor process has
obscured the importance of the struggle between workers and managers for
control at the workplace in shaping that organization (Montgomery, 1979;
Edwards, 1979). For an analysis of the role ofimmigrant and minority workers in
this process, see Sassen-Koob, 1980.
Encomienda was a system by which Indians under Spanish colonial rule in Latin
America were forced to provide labor or tribute. Mita was a similar system but
without the option to provide tribute.
I am here referring to a specific historical phenomenon. There were, for example,
massive migrations in what is today China, involving many different ethnic
nations and having a strong colonizing orientation dating from the early second
millennium B.c. (Lee, 1978: 20). Furthermore, there are important differences
among colonizing migrations (Omvedt, 1973).
At the same time, a new politically motivated type of involuntary migration
emerged in the nineteenth century on a large scale. With fluctuations, it has
continued since then. After World War II, some of the largest displacements of
people were the result of political and not narrowly economic factors. For an
analysis of the relationship between these movements and the consolidation of the
world economy, see Zolberg (1978).
This consolidation does not follow a fixed, lineal pattern. Rather, it is a historical
process in which changing conditions generate new forms of incorporation. Thus,
migrants in the more industrialized, developing countries today face new
circumstances because the traditional modes of using the rural labor supply in
Western Europe — factories in cities — have been exhausted. McGee (1978) points
out that the countryside, rather than the cities, has absorbed most of the
population increase in highly populated countries in South-East Asia. The
historical nature of this process is further brought out by the technological
transformation of the secondary sector (Singelmann, 1978). Export industrializ-
ation represents yet another phase in this process, a new form of incorporation
(see Chapter 4).
10 The most extreme form of the large-scale transfer of manufacturing plants to the
developing countries is the development of export-processing zones and world
market factories. In both of these, production is mostly for export to the
developed countries where the capital originated. This phenomenon began on a
large scale in the late 1960s. By 1975, there were 79 export-processing zones, most
of them concentrated in South-East Asia and the Caribbean.
II After World War II, with industrialization fully under way, France was one of
the most liberal immigration countries in Western Europe.
12 The growth of the “dangerous poor” expelled from the land and concentrated in
urban centers was an important factor in making emigration acceptable. Besides
providing a means of creating new markets, emigration came to be seen as a way
of applying redundant capital and redundant people to the colonies,
ES For example, the United States saved an estimated $850 million in investment
costs in both 1971 and 1972 by admitting technical and professional immigrants
from low-wage countries (Committee on Foreign Affairs, 1974). The United
 Notes for pages 39-48 Ig!

Nations Conference on Trade and Development (UNCTAD) estimated that the

United States gained a net income of $3.7 billion in 1970 from such immigration.
The size of remittances is a function of this low consumption-to-production ratio.
For example, recorded remittances in 1978 amounted to almost one million
dollars each in Greece, Spain, and Turkey. This excludes money not transferred
through formal channels. A considerable share of these remittances is re-injected
into Western Europe through the import of consumption goods (SOPEMI,
1979).
Immigrants are commonly thought to retard technological development. But a
1973 survey of 719 firms in southwestern Germany, where the use of foreign labor
has been most marked, showed: (1) a greater proportion of firms employing
immigrants (54 percent) had introduced technological innovations than firms
not employing immigrants (40 percent); (2) the higher the share ofimmigrants in
the workforce, the more innovative the firms were; and (3) capital widening took
place more often in firms without immigrants but investments aimed at reducing
labor were more frequent in firms with immigrants, such that the degree of
foreign employment correlated negatively with capital widening and positively
with innovations aimed at reducing labor (Biillinger and Huber, 1974).
Furthermore, in research on 26 branches of manufacturing in West Germany, no
systematic relationship was found between capital or labor intensity and the level
of employment of immigrants in a firm’s workforce (Bohning, 1975). I return to
this issue in Chapter 5.
16 The cost-lowering effects associated with the institutional differentiation of
reproduction and maintenance structures are further accentuated by the system
of class relations within which they take place, insofar as employment of
immigrants weakens the position of a country’s working class as a whole and
reduces the average wage level (Castells, 1975; Castles and Kosack, 1973;
Oppenheimer, 1974).
17 A 1965 amendment to the Immigration and Naturalization Act turned U.S.
immigration policy away from the ethnic preference system and towards family
reunion. Recently proposed changes in immigration law would not alter this shift.
They aim at implementing programs for (a) the legalization of undocumented
aliens who can prove continuous residency as of a given date (typically 1982); (b)
sanctions against employers who knowingly hire undocumented workers; and (c)
expanded use of contract-labor.
(8 There has always been a considerable flow of Mexican immigrants to urban areas
(Cardenas, 1978). Recent data also indicate that agricultural employment is less
central to undocumented workers, especially Mexicans (Jenkins, 1978). This `
supports the view that undocumented immigrants are increasingly going to the
large cities (Chaney and Sutton, 1979).
For a detailed analysis of these issues, and job exports and immigration in New
York City in particular, see Sassen-Koob (1981b).
20 Other oil-exporting countries also rely heavily on foreign workers. Iraq lifted all
requirements, except a valid passport, for the entry of Arab workers; in the late
1970s it became the largest importer of Egyptian labor. The government also
contracted for more selective kinds of labor, such as the import of 200 Moroccan
families as farm settlers. These families were given free land, tools, and other
192 Notes for pages 48-50

benefits. The war with Iran brought about restrictions in various programs. In
Venuezuela, foreigners are estimated to make up about 20 percent of the
population. The government has arranged for labor imports with several
countries and incorporated such imports into its Fifth Development Plan
(1976-80). In addition, Venezuela’s government openly recognizes the need for a
large, undocumented labor force, especially in agriculture (Venezuela, 1977;
Kritz and Gurak, 1979).
21 All these countries have launched drives against illegals. Saudi Arabia, for
example, deported more than 56,000 illegals in 1978, and in Jidda, a city on the
Red Sea, there were about 300 arrests daily in early 1979. There are, in addition,
various ways in which foreign populations are controlled. Kuwait prohibits
foreigners from owning property and recently passed a regulation restricting the
entry and exit of foreigners. In all the Arab oil-exporting countries, the Palestinian
population has become a source ofconcern. In this context it in interesting to note
that, in the last decade, a majority of new immigrant workers comes from South
and South-East Asia — a reversal of the pre-1970 situation.
22 Employers in Jordan now have to pay wages nearly equal to those of the Arab
labor-importing countries. The government bas tried to stop the outflow of
workers through a number of measures, including a ban on advertisements for
jobs abroad.
23 In 1979, remittances supplied 30 percent of Egypt’s foreign exchange. It is
estimated that two million Egyptian workers were abroad in 1980, mostly in the
Arab countries. This would represent about 15 percent of Egypt’s labor force.
Given the importance of labor exports for the Egyptian economy, the growing
presence of South-East Asian workers in the labor-importing countries has
created concern. One specific issue is the greater competitiveness of Korean firms
which bring in their own labor force rather than recruiting in the host country
(Birks and Sinclair, 1979). In general, remittances are an important source of
foreign exchange for all the labor-exporting countries. In 1978, estimated
remittances from the Middle East to South Korea were over two billion dollars;
to India and Pakistan each, 1.6 billion dollars (Keely, 1980).
24 In this context, the price of oil can be seen as a means of extracting savings from
people in developed countries — under the guise of an increased cost of living- and
injecting them into the world accumulation process (Sassen-Koob, 1981a).
25 There are differences in policy among these countries. While South Korea
exports whole projects in which labor is but one component, countries such as
Bangladesh export labor by itself. South Korea sees its workers’ productivity —
from management through to unskilled workers - as a central factor in its
competitiveness. It is willing tovsuffer labor shortages at home for the sake of
building up the export sector. Thus, the government has prohibited the
recruitment of Korean construction workers by foreign firms. Bangladesh, on the
other hand, has included minimum five-year targets for labor exports.to the
Middle East in its 20-year plan for 1980-2000. The government has training
programs geared to the labor export market (Keely, 1980).
26 Here I am clearly taking some liberties with Emmanuel’s theory. This theory
posits the transfer of value from low-wage to high-wage countries through
international trade, even under conditions of free and competitive trade and
 Notes for pages 51-59 193
equalization of profit rates worldwide. Under these conditions, a value transfer
can only occur in the case ofspecific commodities, that is, commodities produced
by only one ofthe trading partners (Janvry and Kramer, 1979). An argument
can be made that labor exports represent a specific commodity.
27 The permanent resident foreign population has increased in these countries,
however, due to family reunion and natural increase. Thus, in West Germany,
the resident foreign population rose from about four million throughout most of
the 1970s to 4.1 million in 1979 and 4.4 million in 1980. After years of stability, we
may be seeing a new trend.
28 The second generation is important here. Migrants under 25 years of age
represent 40 percent of the total foreign resident population in the main labor-
receiving countries. The impact of the second generation on the labor force will
be considerable and, to some extent, makes possible a restrictive immigration
policy, insofar as it constitutes an internal labor reserve for the less desirable jobs.
Political factors may ofcourse intervene in this development, as was the case with
the second generation ofblack migrants in the northern cities of the United States
and with the second generation of Puerto Ricans in New York City.

3 The new immigration

Northern employers advertised in newspapers with a Black readership and used
the Federal Department of Labor to recruit and transport workers from the
South; there were special trains running between Mississippi and Northern
industrial cities (Rossiter, 1922: 56; Chicago Commission on Race Relations,
1968: 86-87). Some local governments in the South reacted by requiring labor
recruiters to buy licenses; others imposed fines orjail sentences on any person or
organization “‘enticing, persuading or influencing” labor to leave (Forman,
1971: 16-17).
Though legislation was passed in 1921 ending the era of open immigration, this
was probably less important in reducing the inflow offoreigners in the subsequent
decades than the emergence of alternative sources of low-wage labor. Although
fears about the introduction of bolshevism and anarchism in addition to growing
prejudice against the new ethnic groups were factors pushing for the passing of
this legislation, they were not sufficient to support its restrictions for the next four
decades.
A 1950 census special study on rural migrants found them to be dis-
proportionately concentrated in lower level occupations, such as laboring and
operative jobs and under-represented in white collar and service jobs. However,
they were only slightly under-represented in professional and technical jobs,
pointing to the high mobility of rural college graduates (Bureau of the Census,
1957: Table 3). Blau and Duncan also found that rural migrants held
significantly lower status occupations than those born in cities (1967: 270).
However, once settled in cities, White rural migrants, unlike Blacks, tend to have
upward occupational mobility and at a faster rate than urban residents with
similar qualifications.
For example, in 1910, immigrants made up 37 percent of all non-farm laborers
and non-Whites, 17.2; in 1950, the corresponding shares were 9.6 and 25.8
194 Notes for pages 61-78

percent (for all occupations see Wool and Phillips, 1976: 46, Table 2.3 adapted
from: Edwards, 1943; Bureau of the Census, 1953a; Hutchinson, 1956; Kaplan
and Casey, 1958).
The share of non-Whites in higher level occupations rose from 15.7 percent in
1960 to 27.3 percent in 1970 while that in the lower level occupations declined
from 44.3 to 29.4 percent (Wool and Phillips, 1976: 106).
General patterns mask differences in labor force participation rates of immigrant
women according to national origin, marital status, household strategies to meet
income and childcare needs, and place of residence (Pessar, 1982; Castro, 1982;
Kuo, 1981; Kritz and Gurak, 1985). While the presence of children is generally
associated with lower labor force participation rates for women, such rates tend to
be higher for women who head households than for those with a spouse as
primary earner. These participation rates in turn have been found to be affected
by place of residence and associated differences in access to public assistance. For
example, the labor force participation rates of Puerto Rican women who head
households are lower than those with a spouse; this may be explained partly by
their concentration in New York City and access to a public assistance program
such as Aid to Dependent Children by women heads of household. Kritz and
Gurak (1985) found a similar pattern in their study of Colombian and
Dominican women in New York City. The authors reason that the high level of
public assistance among heads of household in all three groups suggests that
location may have something to do with it, that is to say, public assistance is a
more feasible alternative to low-wage employment in New York City than in
many other areas of the country.
This over-representation of immigrants in certain areas is further underlined by
facts such as the location of the major voluntary resettlement agencies in New
York City. One result is that New York ranks third among states in recent
Indochinese placements from overseas and continues to receive over 100
Indochinese migrants from other regions every month. The New York Metropo-
litan area also has two-thirds of the nation’s Haitian immigrants and the largest
Cuban community outside of Florida. In many ways this concentration of
Haitians, Cubans and Indochinese in New York is worth examining since
other geographic locations would seem to make more sense.
The return rates are, however, rather different for each of the major nationality
groups, a fact to be considered in evaluating the growth rates of the respective
immigrant populations. Jasso and Rosenzweig (1982) examined the 1971 cohort
of legal immigrants and estimated their cumulative emigration rates as of 1979.
Using administrative and survey data, they found that emigration rates for
Caribbean Basin and South American immigrants in the U.S. were at least 50
percent and could have been as high as 70 percent. Emigration rates for Korean
and Chinese immigrants in the U.S. could not have exceeded 22 percent over that
same eight-year period.
Furthermore, these Census-data-based categories include natives (though they are
largely part of immigrant communities), and, in the case of Hispanics, non-
Western Hemisphere Spanish-language people.
10 The stereotype in popular imagery, that urban areas taken over by immigrant
colonies tend to become slum-like, is in many cases incorrect. For example, in
New York City’s Borough of Queens, which has one of the largest concentrations
 Notes for pages 79-98 195
of Hispanic immigrants, there has been a visible and rapid upgrading in the
Hispanic neighborhoods. Areas which used to be boarded up, poorly kept, are
now thriving commercial districts with nicely kept family homes, a growing rate
of home ownership, streets that are safe at night, and so on (Sassen-Koob, 1981b
1979; Chaney, 1976).
An important factor here is the closing of the temporary contract labor program
with Mexico (generally referred to as the “‘bracero” program) in 1964, which as
late as 1960 provided almost halfa million farm workers annually. As the number
of temporary workers fell, the number of those apprehended rose, pointing to an
increase in undocumented entries which came to replace the “braceros.”
However, long before the “bracero” program was ended, there were very high
levels of undocumented Mexicans reaching well over halfa million in the early
1950s (Samora et al., 1971: 43-47). It is quite possible that the initiation of the
contract labor program created the conditions for undocumented immigration as
well. This is the pattern we find in New York City today, where the mostly legal
immigration of South Americans and Caribbeans in the early 1960s was followed
by large-scale undocumented immigration in the 1970s.
In 1976, for example, of the 875,915 deportable aliens located by the INS,
781,474 were Mexicans and almost all of these were EWIs (INS, 1978: 136).
INS apprehensions of Mexicans outside the Southwest increased nineteen-fold
between 1964 and 1974, and the share of these apprehensions in the total for
Mexicans increased as well (National Commission, 1978: 129).
South American and Caribbean undocumented aliens have a far more elaborate
set of barriers to cross than Mexicans insofar as they have to deal with consular
authorities and formal documentation requirements. This ability typically
requires a certain level of literacy. For a description of how Colombians and
Dominicans manage to reach New York City, see Sassen-Koob (1979: 316-321).
At the time of the survey, 1975, there were three minimum wage levels in effect:
$1.80 for farm workers, $2.10 for most non-farm workers, and $2.00 for persons in
industries that were being transferred to full minimum wage coverage. Using
these wage levels and industry identification, North and Houstoun (1976: rof.)
found that 76 percent of undocumented workers in their sample of INS
apprehensions were paid above the corresponding minimum wage. Their sample
was weighted so as to eliminate the over-representation of EWIs and Mexicans
typical of INS data.

4 The globalization of production

Besides providing various kinds of concessions and subsidies, these zones respond
to structural and organizational needs of foreign companies. In fact, in some cases
the foreign companies help plan and organize the management of such zones.
Finally, in some cases, the foreign companies control the zones, notably La
Romana Zone in the Dominican Republic whose government has given control
over the zone to foreign capital for 30 years. One corporation’s interest in having
a zone in Indonesia led to its involvement in promoting and developing the zone
and subsequently to a management and technical assistance contract to assist in
the running of the Pulo Gadung Industrial Estate. Examples like these are not
uncommon (UNIDO, 1980: 19).
196 Notes for pages 98-102

2 This is a development that may well continue. Thus while some analysts identify
absorptive capacity for imports in developed countries with current levels of
imports and hence argue that future expansion of such imports from less
developed countries is unlikely, precisely because the share of imports is small in
total consumption one might argue that there still is considerable room for
expansion. This is particularly so if the comparative advantage of the less
developed countries cannot be easily overcome by technological developments
(e.g., in garments) or is precisely a function of very modern labor-intensive
techniques (e.g., semi-conductor assembly plants). Secondly, diversification is
another way in which exports can be expanded, one that we see already
happening. The range of goods that are being incorporated in off-shore
processing and assembly operations continues to increase. Thirdly, the expansion
of exports for some countries may be at the cost of others. We are beginning to see
a shift of plants from some of the older newly industrializing countries to other less
developed countries: Malaysia and the Philippines are more recent locations
than Singapore and Hong Kong, but they in turn are beginning to experience
competition from Sri Lanka and African countries. Finally, while the developed
countries are still the major market, the centrally planned and other less
developed countries may eventually come to represent significant markets. It is
worth noting in this regard that imports by developing countries grew at a faster
rate from 1970 to 1976 than imports for the world as a whole, 3.3 percent and 2.6
percent respectively (UNIDO, 1980: 157).
3 Less developed countries accounted for 7 percent of manufactured imports in
developed countries and for 1 percent of domestic sales of manufactures. In the
U.S., textiles and clothing imports were 1.7 percent and 3.3 percent of total
supply in the domestic market. Less developed countries accounted for 32 percent
of all textile imports to the U.S. and 60 percent of all clothing imports. However it
should be noted that the percentage supplied by the less developed countries to
the U.S., Japan and Western Europe in each of several key products rose from
1970 to 1976. The percentage going to the developed countries was always higher
than that going to other less developed countries. The export of clothing reached
a value in 1975-76 that was almost three times its value in 1970-1971; similar
increases took place in chemicals and machinery. Correspondingly, the imports —
though a small share of all consumption — by developed countries also increased
over the same period, e.g., Japan’s imports of clothing increased five-fold from
1970-71 to 1975-76. If we put these trends in the context of the high levels of
concentration of export manufacturing in a few less developed countries, then we
can see that these trends carry a distinct weight in these countries.
4 At one time, the bulk of exports by less developed countries was semi-processed
products (foodstuffs and raw materials) to be processed in developed countries.
Towards the end of the 1960s, the bulk of exports was consumer goods. It is
important to control for rapid increase of price of oil and rapid increase in world
trade to specify the correct weight of consumer goods exports. Thus while both in
1968 and 1974 such exports accounted for 17 percent of all exports, this constant
share actually represents a sharp value increase given the rise in value of oil
exports and the overall rise in world trade. There also was a very high growth rate
in the export of capital goods by less developed countries, averaging about 45
 Notes for pages 105-114 197
percent a year from 1970 to 1976. The top ten exporters provided 86 percent ofall
such exports from the less developed world. (Information based on Commodity
Trade Statistics, various issues.)
Furthermore, given the fact that the bulk of export production from the less
developed countries is imported by the developed countries, the legal arrange-
ments on imports become a crucial variable: only when there are powerful
interests in the developed countries involved in this export production is there
likely to be a favorable tariff structure (Helleiner, 1973: 28). This is particularly
so given the protectionist position assumed by several powerful labor unions in
the developed countries.
The growth in manufacturing employment in less developed countries was high
compared not only with developed countries but also with centrally planned
economies and with historical levels. And the growth in output was higher even
than that ofemployment which points to gains in productivity. However, the gap
in productivity between the less developed and the developed countries continues
to grow. Thus it is interesting to note that the rate of employment growth in the
less developed countries contributes more to output growth than gains in
productivity, something which is not the case in the developed countries where
capital deepening rather than widening is the rule.
Until 1968, the developed countries accounted for 50 percent of world
manufacturing employment while the less developed countries accounted for
26.7 percent. By 1975, the share ofthe latter had risen to 33.1 percent and that of
the developed countries had dropped by over 6 percent. During this period, the
share of the centrally planned economies remained at 23.5 percent (UNIDO,
1980: 224—227). Furthermore, the growth rate in manufacturing employment in
the less developed countries was higher than that of all sectors together in these
countries. Growth in manufacturing employment was thus higher than that in
other non-agricultural sectors, something that goes counter to a common view
regarding less developed countries. This higher growth in manufacturing for the
less developed countries as a whole underestimates the magnitude of such growth
due to the high concentration of manufacturing production in only a few
countries.
This strategy is quite significant if we consider, for example, that the share of
North America in world exports fell from 37 percent in 1960 to 27 percent in
1975, that of Japan rose from 3 to 7 percent and that of the less developed
countries went from 6.9 to g percent and most of it is accounted for by a few
countries (UNIDO, 1980: 37).
There are advantages in such zones for less developed countries seeking to draw
foreign investment. The zones are a device for concentrating a variety of benefits
and subsidies and in this sense are more cost-effective for the governments of the
host countries. Such concentration facilitates planning and installation of
external infrastructure, particularly power, water, telephones, sewers, roads,
airport facilities.
I0 Beneria (1984) shows extensive use of women as homeworkers or in sweatshops by
multinational firms selling to the domestic market in Mexico. Industries covered
in her study were garments, electronics, toys, plastics, and other branches
commonly found in the new industrial zones producing for export.
198 Notes for pages 130-133

5 The rise of global cities

1 Rapid new product development, product diversification and expansion into
new markets generate a vast array of costs usually referred to as transaction and
adjustment costs. (For a detailed classification of these costs see Williamson,
1980). Transaction costs are those involved in bringing together the supply and
demand side of a market; adjustment costs are those involved in increasing the
supply of resources whose production demands time, notably highly skilled labor,
organization structures, technologically advanced machinery, etc. These costs,
particularly transaction costs, involve a variety of services such as advertising,
strategic planning, financial services, public relations and other liaison activities,
lobbying, research and forecasting, etc. These are specialized services produced
for firms either in-house or on the market which have become basic inputs in a
firm’s operation. Case studies of particular corporations have found that these
kind of costs have become increasingly important with the growing size of firms
and greater product diversification.
2 Chandler (1977: 6) notes that the organizational characteristics of today’s large
corporations “appeared for the first time in history when the volume of economic
activities reached a level that made administrative coordination more efficient
and more profitable than market coordination.” There is a noteworthy dynamic
here. Given the large size of firms it becomes more profitable for a firm to
internalize transaction and circulation costs. At the same time this new expanded
organization structure generates a rapidly growing need for highly specialized
services which given their degree of specialization are most profitably produced
on an open market rather than internalized. This has given rise to a free-standing
market of producer services.
3 The actual closing and moving of factories is only one component of the
relocation of manufacturing, probably a relatively small one. More significant in
terms of actual job losses are various kinds of disinvestment that amount to a
gradual contraction of the manufacturing base: (a) the shift of profits and savings
of a given plant to plants in other locations, or their investment in other types of
activities; (b) gradual moving of equipment and jobs, without necessarily closing
the plant; (c) no new investments for plant maintenance or new equipment
acquisitions.
4 A development that may further speed the decentralization of office work is
deregulation of the telecommunications industry. Until 1982 companies that
needed satellite data-transmission facilities had to purchase these services from
one of the international carriers, such as ITT or AT&T. These are basically re-
sellers of these services because the only one that can sell international satellite
services in the case of the U.S. is Comstat, the U.S. representative in the Intersat
system. Comsat has a monopoly on international satellite services and until 1982
could sell those services only to the international communications companies.
Since 1982, the FCC has ruled that companies can now purchase these services
directly from Comsat, a fact that lowers the costs of acquisition and facilitates
access. Now companies can develop their own transmission system.
5 The data on the international trade balance are inadequate. There have been
growing surpluses in “invisibles.” But these cannot be fully attributed to the sales
 Notes for pages 135-149 199

of services. On the other hand, some of the receipts of service industries are
reported under the merchandise account. A full analysis on sources of inform-
ation on service exports can be found in Economic Consulting Services (1981)
and the U.S. Department of Commerce (1980a).
The technological transformation in manufacturing and the possibility of
centralizing the management of a dispersed manufacturing base also means that
the development of manufacturing in Third World countries can rely on the
import of advanced services from the highly developed countries. The case of
OPEC members is of interest here. After the 1973 increase in the international
price of oil and the decision to transform the large influx of oil revenues into vast
accelerated development programs, there was an immense rise in the import of
services by these countries. From 1973 to 1978, overall oil revenues for OPEC
members were $700 billion. During that same period the value of imports
reached $530 billion, of which well over a third was for services.
Producer services do not fit neatly into standard classifications. Viewed as
intermediate outputs, they include finance, insurance and real estate, wholesal-
ing and a wide range ofbusiness services. These three account for a large share of
the intermediate outputs sold by all service firms (Greenfield, 1966; Stanback,
1979)-
Standard classifications of economic activities have become increasingly prob-
lematic with the technological transformation of the work process. Here I use the
classification first developed by Browning and Singelmann (1978), further
elaborated by Singelmann (1978: 28-36) and Stanback, Jr, et al. (1981). In this
classification, producer services refer to industries that provide services mostly to
producers of goods or property related operations. They are then a type of
intermediate output (Greenfield, 1966: 11; Machlup, 1962: 39-40). They include
banking, credit and other financial services; insurance; real estate; engineering
and architectural services; accounting and bookkeeping; miscellaneous business
services; legal services (Singelmann, 1978: 31). Producer services represent the
following SIC branches: 60 to 67, 73, 81, 83 (after 1974), 86 and 89.
The magnitude of the increases in foreign and domestic investment and in the
construction of industrial parks in adjacent San Diego county is clearly beginning
to outpace growth in the Los Angeles area. The available evidence suggests that
this represents in good part an expansion of the Los Angeles industrial complex.
Of significance here is the nearby 38,600 acre Mesa de Otay, half each on either
side of the Mexico-U.S. border, which it is expected will be developed as a twin-
plant zone. To this should be added a novel kind of development, the relocation
of plants away from areas that have been major recipients of such plants, notably
Taiwan, Hong Kong and Mexico, and into San Diego County. It seems that
these relocations respond to two kinds of constraints: the fact that Southern
California has a plentiful supply of immigrant labor, and second, problems of
quality control which require vicinity to technical centers. The combination of
resources in an area like Southern California — a large supply of cheap and docile
labor and of highly trained technical personnel and researchers — points to the
development of regions like these as industrial zones for world investment that are
an alternative, under certain conditions, to zones in the Caribbean Basin or
South-East Asia (Sassen-Koob, 1987; San Diego, 1981; 1983).
200 Notes for pages 150-157

10 It should be noted, however, that this brought the actual number of manufactur-
ing jobs in the Greater New York Area to 1.3 million, that is, the same as in the
Los Angeles Area. The similarity in this level reflects a 19 percent decline from
1970 to 1980 for New York City and a 23 percent increase for Los Angeles over
that same period. The increase for the U.S. as a whole was 5 percent. The high
absolute number of jobs in manufacturing in these two areas and the
characteristics of these jobs are of significance in explaining the absorption of a
good share of the large immigrant influx. Marshall (1983) notes the increasing
relative and absolute participation of immigrants in manufacturing in New York
City during the 1970s.
II There are different locations for various segments of the highly paid new
professional stratum. Engineers and technical personnel linked directly with
high-tech industry and the associated research operations are clustered in various
key high-tech or research locations: Silicon Valley, Orange County, Austin, the
Route 128 area around Boston. These are, in some ways, to be distinguished
from those employed in the advanced services. The first are ultimately the new
cadres of what is today’s basic industry, the development and production of
microprocessors. The second are involved in control, management and servicing
functions. The locations of these two sets of activities frequently are distinct, but
at times they overlap, e.g., in Los Angeles, a site for both the production of
control, management and servicing functions and a site for the production of
engineering and technical operations. These distinctions bring to mind some of
the work done on the manufacturing sector that views the geographic distri-
bution of industry as a spatial division of labor (Storper and Walker 1983).
12 In a study on the auto industry in Los Angeles, Morales (1983) found
considerable restructuring in the auto-parts branches: a shift from native to
immigrant, including undocumented, workers and a shift from less to more
automated forms of production which allowed for the incorporation of cheaper,
often immigrant workers and expulsion of more highly paid workers. Similarly,
see Balmori (1983) on the construction industry in New York City. See also
Christopherson (1983) on the regional specificity of segmentation in different
immigrant labor markets.
A more detailed analysis of the service sector shows that the highest growth rates
were in computer services (51.8 percent), personnel agencies and temporary
employment agencies (65.6 percent), management consulting and public
relations (31.1 percent), engineering and architecture (24.2 percent), accounting
(18.8 percent), protective services (19.9 percent), securities dealers (19.5
percent), theaters (excluding movie theaters) (21.0 percent), and in out-patient
care facilities (48.4 percent) (U.S. Bureau of Labor Statistics, 1982).
14 Among the low-wage jobs included in the subsample are the following (as listed in
the study): maid, cleaner (light and heavy), janitor, porter, baggage porter,
bellhop, kitchen helper, pantry, sandwich/coffee maker, food service worker,
room service attendant, ticket taker, stock clerk (stock room, warehouse, storage
yard), washer, machine washer, dry cleaner (hand), spotter (dry cleaning,
washable materials), laundry presser, laundry folder, rug cleaner (hand and
machine), shoe repairer, delivery and route worker, parking lot attendant,
exterminator, packager, etc.
 Note for page 158 201

15 The biggest components of New York City business services are advertising, legal,
building maintenance, research and development, and management and
consulting services. The above cited survey on major service industries lists
advertising and legal as two separate industries.
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 Index

adjustment costs, 198n requirements for, 16, 37, 41, 42, 47, 53,
analysis, 1-3, 10-11, 12, 15-16, 16-17 Loop
categories, 12, 147 at workplace, 16, 37, 41, 42; types of, 37,
conceptual and empirical, 10-11, 12, 42
15-16, 16-17, 28, 147, 185, 186-188 customized products, 128, 175-176
of immigrant labor supply systems, customized services, 175-176
36-43, 47
of industrialization and emigration, decentralization
95-98 of clerical/office work, 127, 130, 132-133,
anticyclical, 30, 31, 39, 18gn 141, 198n
automobile industry, 41, 131, 150, 153, of manufacturing, 127-130, 140, 141,
161, 200n 146, 196n-197n, 199n
of ownership and control, 127, 134-135
capital-labor relation, 37, 42, 131, 136, territorial, 126, 141
186-188, ron dependency ratio, 39, 191n
Caribbean Basin, definition, 10 directionality of migrations, 1, 10, 14, 23,
centrally planned economies, 26, 196n, 33> 34, 44, 49, 169-170
197n disinvestment, 100-101, 131-132, 161-163,
cities 166-168, 183, 188, 198n
as global centers for control, 2, 10, 126,
128, 146, 147, 152, 186, 187 earnings classes, 142-144
economic base in, 10, 13, 136-141, 149, electronics industry, 18, 110-113, 114, 115,
151, 152-157 127, 145, 149, 151, 160, 161—162, 169,
role in global economy, 2, 10, 11, 126, 181, 197n
136, 187 emigration countries, 17, 38, 44, 48, 49,
commercial agriculture, 5, 7, 18, 95, 98 62-65, 67, 94
women in, 107, 109, 117 comparison of growth with developed
construction, 44, 49, 96, 143, 144, 156, countries, 105-106, 121, 196n
1g92n, 199n, 200n economic growth in, 5, 6, 14, 94, 105,
consumption, (Bon, 1g1n, 196n 107, 115, 119, 121-122
structure of, 127, 145, 175 employment growth in, 5, 6, 94,
segmented, 175 105-107, 108, 115, 119, 197n
and lifestyle, 158 exports, 67, 196-197
contract labor, 83, 84, 191n, 195n manufacturing growth in, 14, 105-107,
Caribbean, 31, 83 196n
Chinese, 28, 35 main, to the United States, 13, 62-65
farm, 68, 83, 195n productivity growth, 105, 108, 121-122,
Indian, 31, 29 192n, 197n
Mexican, 8, 195n value-added growth, 105, 108, 121-122
tribal, 32 working- and middle-class emigration
control from, 67-68
of global economic system, 2, 10, 36, employment practices, 97, 113-114, 116
126-130 encomienda, 31, 190n
222 Index

export-led development, 102-105, 111 socio-economic characteristics of, 71-72,

growth of, 103, 196n—-197n 74-79, 85-93
export processing zones, 2, 15, 10, 18, 34, immigration policy, 6, 21, 34, 35, 38, 42,
53, 95, 98, 111-114, 132, 174, 176, 43, 50-52, 57, 68, 78, 83, 84, 98, 118,
1g0n, 195n, 1970 146, 191n, 193n
industrial concentration in, 111-112 control, 6, 45
list of, 123 in different countries, 34, 35, 38, 43»
management and design of, 195n 50-52, 118, 1g0n, 191n-192n, 193N
regional concentration, 15, 123 enforcement of, 42-43, 191n
wages in, 113 fluctuations in United States, 21, 35, 84,
exports igin, 193n
share of gross national product, 103-105 historical context of, 3, 34, 35, 57, 84
weight in a country, 98-99, 102-105, restrictions, 34, 35, 48, 51-52, 193n
196n—197n role of state in, 34, 35, 36-39, 42-43,
weight in world trade, 99, 196n-197n 50-52, 189
import substitution, 102, 103
footwear industry, 110, 112, 151, 160, income polarization, 142-146, 175
162-163, 166-167, 176 industries
foreign investment advanced, 127-128, 165, 174
broad definition used here, 19 backward, 16, 40, 147, 174
destination of, 3, 11, 14, 24, 101-102 declining, 10, 22, 136, 146, 147, 150,
in export agriculture, 7, 98, 119 151, 160, 167, 168, 169
in export manufacturing, 7, 98, 118-19, fixed assets per worker in different, 165
124, 125 growth, 21, 136, 149, 150, 167, 169
growth of, 3, 14, 100-101 job losses in, 12, 13, 14, 131-132,
industrial homework and, 117 147-149, 153, 167, 168, 169, 186, 198n
land ownership and, 7, 117 labor costs in different, 165
LDCs access to world markets and, 19, informal sector, 24, 109, 128, 129, 145, 151,
op 158, 168, 176
logic of, 184 international trade, 1, 23, 50, 133, 140,
origin of, 3, 14, 100-102 153, 188-190, tg2n, 1g6n—197n, 198n
regional concentration of, 14, 98 internalization of production, 2, 3, 9, 12,
weight, in a country, 99 17, 84, 161-162, 163, 165, 172, 186,
weight, globally, 99 187
foreign policy, 6, 7, 8, 9, 19, 56 incorporation of countries into, 3, 4, 10
tariff schedules, 124, 132, 133, 184, locations of, 10, 12, 17
197n internationalization of servicing, 10,
126-130, 132-133, 137-141, 153-155,
garment industry, 110-113, 114, 133, 145, 186, 187, 198n—199n
147, 150, 151, 160, 161, 161-166, 169, investment zones, 11, 184-185, 186, 188
176, 196n, 197n financial, 153, 154, 185
geographic concentration of immigrants, industrial, 34, 48, 54, 98, 110, 171, 185
13, 66-67,
69-71, 72, 73 new, Il, 114-115, 171-173, 175, 188,
global marketplace, 11, 171, 185, 186-187 197n, 1990
high-technology industries, 14, 126, 128, labor, organized, 23, 39, 40, 42, 47, 83,
131, 145, 147, 149, 151, 160, 161, 168, 115, 129, 131, 145, 150, 151, 157, 161,
169, 174, 200n 162, 169, 176, 188, tgon, 197n
homework, 23, 87, 111, 117, 127, 132, 133, labor, sources for low-wage
145, 150, 151, 160, 161, 162, 165, adult white women, 59-61
175-176, 197n Blacks, 56, 58, 61, 193n, 194n
household, 19, 87, 88, oun Chicanos, 56
contract-labor, 83, 84, 1g1n, 195n
immigrants, by sex Mexican contract labor, 59
index of dissimilarity of, 78 rural migrants, 56, 58-59, 83, 193n, 194n
in manufacturing, 77-78, 87~89 Puerto Ricans, 56, 58, 193n, 194n
in producer services, 77 young white men and women, 59-61
 Index 223
labor demand, 6, 11, 14, 28, 126, 127, 141, redeployment, to LDCs, 34, 53, 94, 126,
146, 150, 151, 169, 187-188, 198n 130, 165, 190n, 196n; to the United
labor market States, 25, 130, 160, 167, 199n
differentiation in, 16, 26, 20on small-scale, 24, 175-176, 181
generalization of, 17, 27, 32, 34, 36, 37, value-added, 105, 108, 121-122
52, 53 migration, see specialized topics in, e.g.
regional, 43 emigration countries, immigrants, by
socio-economic context of, 47 sex, refugees, undocumented
labor needs, 26, 32, 34, 35, 52, 96 immigration
labor recruitment, 7, 57, 116, 193n mita, 32, 190n
labor shortages, 16, 26, 27, 30, 35, 41, 47, mobilization
49, 114, 176, 192n definition used here, 18
labor supply, 7, 21, 29, 35, 39, 44, 87, 115, forced, 31, 32, 33, 34, 52
168, 169, 1gon, 198n into migrations, 15, 18, 33, 52, 95, 117, 119
in centrally planned economies, 26 into waged jobs, 31, 33, 83, 95, 107, 116,
and demand, 198n 119
distinctive traits of immigrant, 37-43, 47, of women, 7, 10, 18, 83, 97
186-188
flexibility, 40, 41, 60 office work
forced, 32 shift to LDCs, 21, 22, 23, 132-133, 186
formation of, 31, 35 off-shore manufacturing, 2, 12, 22, 135,
as scarce resource, 32; mercantilist view 186, 196n-197n
on, 34, 35, 44, 1gon off-shore clerical sector, 2, 21, 22, 132-133,
systems, 28, 36-43, 52; for foreign, 32, 36 186
land oil-exporting countries, 26, 27, 28, 30, 43,
as a commodity, 33 47-50, 53, (Don, 191n-1g2n,
199n
expropriation of Indian, 35 organizational structure, 16, 39, 198n
industrial, 174-175, 184, 1901, 1911n,
ownership and DFI, 117 peonage, 32
language proficiency, 2, 23, 129, 157, 158, population
159 mercantilist view on, 34, 35, 44, 190n
linkages, 4, 6, 8, 9, 10, 21, 56, 96, 117-118, as scarce resource, 32
120 product cycle, 115 `
logic of investment, 184 production
costs of, 171, 185
management, 22, 200n, 201n fixed assets per worker in, 165
contract, 1g5n labor share in costs of, 165
expertise, 184, 200n locational constraints in, 171, 172,
finance focused, 21 174-177
global, 126-130, 135 modern forms of, 27, 53, 94-95, 117
production focused, 21 sites and locations, 2, 10, 171-173, 175;
manufacturing 184, 185, 196n, 200n
and associated services, 19, 131-132 social organization of, 37, 42, 131-132,
in cities, 24, 175-176, 181 145, 159-168
decentralization of, 127, 128, 129, 130, and spatial distribution of growth, 186
140, 141, 146, 196n-197n, 1991 spatial [territorial] organization of, 10,
downgraded, definition of, 23 131-132,
149, 165, 171, 174-177,
for export, 7, 10, 18, 19, 27, 53, 95» 184-185, 186, 200n
105-107, 123-125, 137, 171, 1gon, structure of, 39-43, 135, 141, 158,
196n 159-168
growth in DCs, 105-106, 121, 148-149, technical constraints in, 171, 173, 174
150, 196n
growth in LDCs, 14, 105-107, 121, 196n reconcentration of industrial capital, 11, 114
and job losses, 13, 14, 131-132, 147-149, refugees, 4, 5, 8, 43, 62, 1g0n, 194n
153, 167, 168, 169, 186, 198n regulation, 1, 10, 198n
and plant closures, 131, 180, 198n of emigration, 1, 35
productivity, 105, 108, 121-122, 192n, of labor supply, 16, 50-52
197n
224 Index

restrictions on movement of people, 34, 35, traditional work structures

48, 51-52, 193n definition used, 7
return rates of immigrants, 194n disruption of, 17, 18, 19, 21, 33, 53, 95)
97, 107, 114; countertendencies to 117
services return to 97, 114
consumer, 127, 133, 138, 148, 152; transaction costs, 198n
employment/GNP ratio in, 152;
finance, 134; large corporations in, undocumented immigration,
130, 133-134, 140 circulation of, 80, 195n
export of, 2, 47, 126, 133, 135, 136-137, origins of, 80-81
140-141; service jobs, 43, 53, 132-133 problems in data, 79-80
international trade in, 23, 133, 153-155, socio-economic characteristics of, 81-82,
198n-199n 195n
occupational/income structure in, 127, types of, 79
142-144, 152-153, 156 urban-rural spaces, 117—118, 1gon
off-shore services, 132-133
producer services, 126, 127, 128, 129, women
135, 136-141, 142-144, 152-155, 198n, in capital-intensive manufacturing,
199n; definition of, 1ggn, 200n; 10g-111
employment/GNP ratio in, 152 contrasting employment patterns of,
production of, 2, 47, 130, 134, 137-141, 76-78, 87-89, 113-114
200n; agglomeration economies in, 23, immigrants in producer services, 77
138-139; locational patterns in, 127, in labor-intensive manufacturing,
136-141; scale economies in, 134, 139 109-111, 114
small-holders, 7, 18, 107, 115 in migration, 64-66, 67, 71-72, 76-78,
feminization of, 107 87-89, 107, 110, 114; in Latin
South-East Asia, definition used, 10 America, 107, 110; in Africa, 109; in
state Asia, 109-110, 114; in the Caribbean,
in border enforcement, 36-39, 42-43 110, 114, 120
in migration policy, 1, 34, 35, 36-39, recruitment of, 7, 10, 18, 57, 83, 97
42-43, (Bon, 190n in urban-rural relationship, 117
subcontracting ; work process
domestic, 19, 135, 165, 197n control in, 16, 37, 41, 42
with foreign buying groups, 19, 98 immigrant labor in, 37
international, 2, 98, 135 organization of, 16, 37, 39-43, 53, 110,
subsistence growers, 7, 18, 29, 33, 95, 97; 115, 132, 134, 136, 141, 145, 159,
117 “",159-168, 163
sweatshops, 68, 87, 111, 127, 132, 145, 150, technological transformation of, 2, 126,
151, 157, 160, 161, 162, 165, 168, 169, 128, 131, 132-133, 134, 146, 150, 199n
175-176, 197n world system
border enforcement in, 36-39, 42-43, 52
tariff schedules, 124, 132, 133, 184, 197n consolidation of, 31, 33, 37, 52, 1g0n
textiles, 110-113, 196n incorporation of areas into, 10, 33, 52, 1gon
toy industry, 110, 112, 113, 151, 160, 176, internal differentiation of, 28-31, 34, 36,
197n 185
trade labor-supplying peripheries, 28-31, 44
international, 1, 23, 50, 133, 140, 153; oil-exporting countries in, 27-28, 30,
187, 192n, 196n-197n, 198n—199n 49-50, 1ggn
theory of, 1, 2, 192n States in, 34-36, 36-39, 42-43
In this empirical study, Saskia Sassen offers a new understanding of the
processes of international migration. Focussing on immigration into the US
from 1960 to 1985 and the part played by American economic activities
abroad, as well as foreign investment in the US, she examines the various
ways in which the internationalization of production contributes to the
formation and direction of labor migration.

“Any author aspiring to say something new on the subject of migration

faces great competition. Classic studies by Max Weber and WI Thomas
have ploughed this furrow. Social scientists from around the world have
had a go at it. . . In this short and densely written volume, Saskia Sassen
succeeds at the all important challenge: she develops a new idea.”
American Journal of Sociology
“This is without doubt one of the most thought-provoking books on inter-
national migration to be published in recent years... The theorizing
contained in this book is made all the more interesting because it is
accompanied by much empirical detail.” Environment and PlanningA
“This book probes an interesting set of problems and, by challenging
conventional ideas, will stimulate further research.”
Journal of Economic History
“In a major contribution, Sassen uses a detailed case study of US economic
evolution, 1960—85, to illustrate the integral links between investment
flows, both foreign and domestic, and the influx of migrant labor . . . The
richest recent case study . . .”” World Development
‘... quite simply the most important writing being produced by any
scholar in the US today on the subject of the ‘new immigration.’ ”
Professor Bennett Harrison
Massachusetts Institute of Technology
. probably the best book in the field that I have knowledge of in many
years. Professor Sassen is one of the most innovative researchers in the area
of urban political economy.” Professor Manuel Castells
University of California, Berkeley
. an intelligent combination of theorizing and relevant data which is the
mark of a good book.” Professor Immanuel Wallerstein
State University of New York, Bingham

Cover illustration: painting by Flora Natapoff (courtesy The Carson Gro

Art Consultants, Denver)

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