Last week, Kroger announced that it’s opening an 80,000-square-foot fulfillment center in Maywood, as part of its effort to establish a presence in the Chicago area, where it owns Mariano’s and Food 4 Less stores. Its Kroger brand stores are largely concentrated in central Illinois.
The company announced it plans to hire up to 180 workers at the Maywood facility, which seemingly rivals Amazon in its advanced technology. The warehouse features “more than 1,000 bots” whizzing around “giant 3D grids, orchestrated by proprietary air-traffic control systems,” Kroger officials explained in a statement.
Kroger is the largest grocery retailer in America, with (outside of its various subsidiaries) no brick-and-mortar presence in the country’s third-largest metropolis. Its Maywood warehouse will deliver to customers in this metropolis who order products from Kroger online. And such a critical plant (Kroger is calling it a “hub”) will only employ 180 people?
I thought about this question in the context of the old American Can Company plant in Maywood, which once stretched 18 acres along St. Charles Road and employed, at any given point in its nearly century-long tenure in the village, between 1,000 and 4,500 people, according to the Chicago Tribune. The beer can producer left Maywood in 1975.
When the last vestiges of the massive American Can plant were torn down in the 1990s, the two companies that occupied the land in its place — Cintas Corp., a multibillion-dollar uniform rental and supply company based in Cincinnati, and Aetna Plywood Inc., a lumber products distributor — employed a total of about 160 people by 2005, the Tribune reported at the time.
It took lots of tax breaks to lure those two employers, but the jobs just aren’t the same. They don’t pay as well as the old, more plentiful ones, which means they don’t create downstream economies of small businesses where well-paid industrial workers can spend their hard-earned money.
My longtime neighbor, Robert Scales, worked for American Can for nearly 30 years. He also served as a Maywood trustee in the 1970s.
Scales told the Tribune what he’s told me in casual conversation. Back then, Maywood had two movie theaters and two grocery stores — a Jewel and an A&P. Now, there are neither theaters nor grocers.
Business professor Scott Galloway points out in his penetrating 2017 book, The Four: The Hidden DNA of Amazon, Apple, Facebook, And Google, that in our current economy, it takes a lot fewer workers to get filthy rich.
“While billions of people derive significant value from these firms [Amazon, Apple, Facebook and Google] and their products, disturbingly few reap the economic benefits,” Galloway writes.
“General Motors created economic value of approximately $231,000 per employee (market cap/workforce),” he adds. “This sounds impressive until you realize that Facebook has created an enterprise worth $250 million per employee … or almost a hundred times the value per employee of the organizational icon of the last century. Imagine the economic output of a G-10 economy, generated by the population of Manhattan’s Lower East Side.”
In 1964, when AT&T was the country’s most valuable company, it was worth $267 billion in 2015 dollars and employed nearly 760,000 people, the media scholar Robert McChesney and the journalist John Nichols explain in their 2016 book, People Get Ready: The Fight Against A Jobless Economy And A Citizenless Democracy.
In 2015, Google was the country’s second-most valuable company “doing much of what AT&T did fifty years earlier, and a lot, lot more.” Google, though, had a “market value of $430 billion and employed around 55,000 people, which is 7 percent of AT&T’s paid workforce in 1964. For every Google employee today, AT&T had fourteen workers five decades ago.”
From 1970 to 2017, manufacturing as a share of total employment has fallen from about a quarter of all workers in the United States to just under 10 percent — a diminishment that has happened across the industrialized world.
What happened? The economic researcher Aaron Benanav provides what I think is a credible explanation.
Benanav counters the widely held belief that artificial intelligence like the robots whizzing around Kroger’s 3D grid and the practice of offshoring jobs to other countries have been mainly responsible for this disappearance of industrialized work.
If anything, Benanav argues, they are symptoms of a deeper cause: Global competition (more firms in more countries saturating an increasingly integrated market with the same lower and lower-priced goods).
Starting in the late 1960s, the rate of profit in the United States began to fall due to rising competition from firms in other countries that were catching up with the U.S. after World War II.
The global competition led to a surplus of goods, or overcapacity, which meant lower margins. Lower margins meant less investment in capital, cuts to the cost of labor (which meant companies waging war with unions and chasing cheaper labor overseas), and increasing automation designed to discipline workers and eke out productivity rates in a world of increasingly diminishing returns.
Rising overcapacity, the author writes in his 2020 book Automation and the Future of Work, “explains why deindustrialization has been accompanied not only by ongoing efforts to develop new labor-saving technologies, but also by the build-out of gigantic labor-intensive supply chains — usually with a more damaging environmental impact.”
The process of deindustrialization might as well be synonymous with economic stagnation, Benanav writes.
“When the growth engine of industrialization has sputtered due to the replication of technical capacities, international redundancy, and fierce competition for markets, there has been no replacement for it as a source of rapid growth,” he argues.
“Instead of a reallocation of workers from low-productivity jobs to high-productivity ones, the reverse takes place. Workers pool in low-productivity jobs, mostly in the service sector. As countries have deindustrialized, they have also seen a massive buildup of financialized capital, chasing returns to the ownership of relatively liquid assets rather than investing long-term in new fixed capital.”
To wit, about a decade after American Can closed its Maywood plant, it transformed into Primerica, a financial conglomerate that would set the groundwork for the creation of the investment bank Citigroup. You may remember Citigroup was one of the big banks responsible for reckless mortgage lending that devastated Black and Brown communities like Maywood in the 2008 housing crash.
There was nothing glamorous about factory work and most workers knew it. Lots of people hated the work — despite the pay and the perks. Capitalists were cruel as capitalists always have been. But looking back on those days of American Can a half-century later, it’s hard to deny that at least society (meaning the majority of people) got something out of the deal.
Last year, my great-uncle died. He was around 80 years old. While we were cleaning out his Maywood home, I stumbled across his old American Can Co. employee manual. The booklet was among rumpled stacks of paper that included old Pan American Airways tickets to far-off destinations back when people could travel the world on a single blue-collar job that formed the basis of a life stitched into the fabric of a community — where the factory workers were also the village trustees, the deacons at your church, the coaches in local youth sports leagues. Back when you actually knew people who worked in the hulking warehouses in town. Nowadays, the buildings are just blank, impersonal behemoths.
“Those days are behind us,” former Maywood mayor Henderson Yarbrough, referencing American Can, told the Chicago Tribune for that 2015 article.
The big question now is what lies ahead.
CONTACT: michael@oakpark.com
