Volume > Issue > A Case Study: Laying Off American Workers, Gouging Mexican Workers

A Case Study: Laying Off American Workers, Gouging Mexican Workers


By James W. Donovan | January-February 1992
James W. Donovan, who has been a Visiting Professor at the Universidad de Las Americas in Chotula, Puebla, Mexico, is Assistant Professor of Accounting at Incarnate Word College in San Antonio, Texas

In January 1991 the Green Giant unit of the British conglomerate, Grand Metropolitan PLC, laid off 375 workers at its processing plant in Watsonville, California: The jobs resurfaced in Mexico at a place called Irapuato. The displaced workers were earning about $7.50 an hour. Their replacements receive $4 a day.

As we enter the second decade of Reaganomics and neoliberal economics, this may not startle us at all. Things work best, we are told, when firms go where and do as they please. And the Mexican workers are no doubt pleased to have the work. On the other hand, Thomas Aquinas said, “business and finance have the duty to be faithful trustees of the resources at their disposal. No one can ever own capital resources absolutely or control their use without regard for others and society as a whole.”

Discharging the Watsonville workers was a serious matter. The U.S. Catholic bishops have recently said that, “unemployment takes a terrible toll on the health and stability of both individuals and families. It gives rise to family quarrels, greater consumption of alcohol, child abuse, spouse abuse, divorce, and higher rates of infant mortality…. Very few people survive long periods of unemployment without some psychological damage even if they have sufficient funds to meet their needs. At the extreme, the strains of job loss may drive individuals to suicide. In addition to the terrible waste of individual talent and creativity, unemployment also harms society at large….” Pope John XXIII probably had these consequences, along with the dignity of man, in mind when he declared that people have a right to employment.

When the wage rates indicated above are adjusted for overhead, we can estimate that Grand Met is saving about $7.5 million a year from the move. But Pope John Paul II said that the rights of workers take priority over the maximization of profits. The bishops added that wages paid to workers are but one of the factors affecting the competitiveness of industries, and that it is unfair to expect workers to make sacrifices if managers and shareholders do not do the same.

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