The Immigrant Hands of Silicon Valley

Revolutionary Worker #1026, October 17, 1999

The Silicon Valley, in Santa Clara County on the southern tip of the San Francisco Bay Area, is known worldwide as the center of the computer industry. Newspaper articles trumpet the incredible wealth being created here as the economic engine powering the economy. Gleaming new corporate offices, called "campuses," are constantly sprouting up. Last year the top ten executives in the Silicon Valley received a total income of $442 million.

However there is another side to the Silicon Valley, one that is rarely reported. Beneath the high-tech sparkle lies a hidden underbelly of inequality, environmental devastation, and exploitation.

The top 14 percent of Santa Clara County's wage earners make over half of the total income--as much as the remaining 86 percent. A recent study of the Silicon Valley economy found that hourly wages of 75 percent of Silicon Valley workers were actually lower in 1996 than in 1989. Meanwhile, between 1992 and 1997, income for the top 20 percent has increased by 32 percent. The ten fastest growing occupations in the Silicon Valley paid $10 per hour or less for entry-level jobs. 100,000 people in the South Bay are served by the Second Harvest Food Bank (which provides food to poor families) and 41 percent of the families served have at least one family member who works.

Silicon Valley has 29 "superfund sites"--toxic sites slated for cleanup by the federal government. This is more than any other area in the country. High-tech manufacturing created 24 of the 29 sites; 18 are tied to the computer chip industry. Most of the sites are tainted with trichloroethane, a solvent once widely used to clean chips and now suspected of causing cancer. A study by the state health department found a three-fold increase in birth defects in a neighborhood where leaking chemicals contaminated the water supply.

The area faces a severe housing crunch. Only 29 percent of area households can afford the median-priced home, far below the national average of 55 percent. Between 1993 and 1997 rents in Santa Clara County increased 29 percent after being adjusted for inflation. 28,000 people await federal housing assistance, often sleeping in garages, cars or on a friend's living room floor.

High-Tech's Hidden Labor

"In sharp contrast to Silicon Valley's gleaming labs and sleek cubicles lies a hidden, low-tech underbelly: A loose network of Asian immigrants who are paid by the piece to assemble electronics parts in their homes for some of high-tech's major companies, in apparent violation of labor, tax, and safety laws. Whole families, particularly in the Vietnamese émigré community can be found working far into the night. At kitchen tables and garage workbenches they solder tiny wires, strip cables and load hundreds of different colored transistors into printed circuit boards, painstakingly assembling the nervous systems of high-tech products for as little as a penny per component."

"High Tech's Hidden Labor,"
San Jose Mercury (6/28/99)

In a recent series in the San Jose Mercury, workers in the Silicon Valley and other areas exposed what has become a common practice in the electronics industry: sending work home with employees for assembly in their garages and kitchens and paying the workers piece-rate for their labor.

Companies utilize a variety of arrangements to circumvent labor laws regulating overtime pay, safety, and child labor. Sometimes pay goes directly to the employee, who is treated as an "independent contractor." Pay may also go to a family member to conceal the arrangement. Or payment may come from an outside company that parcels out the work.

One worker told the San Jose Mercury that he would only make an average of $5 per hour for work that his supervisors at Top Flight Electronics asked that he take home, compared with his regular wage of $11.20. Legally he should have been paid time and a half for this overtime work. A Senior Vice-President at Top Line told the Mercury that paying by the piece is "how you motivate people. People work twice as fast as when they're working hourly."

Hoang Nguyen, also interviewed by the Mercury, said that he routinely takes work home from his employer, board manufacturer Mini Comptech in Huntington Beach in Southern California. Nguyen's jobs at home involve soldering as many as 100 parts in place on a dozen or so printed circuit boards and using acid-based flux to help the lead solder bond the components to the board.

Both flux and lead are hazardous industrial materials, which require special handling. At home Nguyen rinses the board in his kitchen sink and then blows it with a hair dryer. "If you don't wash it, the board is dirty and the (component) legs might turn black and then it looks bad," he told the San Jose Mercury in Vietnamese.

Another worker, Betty Morales, complained of the toxic chemicals that she had to breathe when doing home assembly: "When we soldered at breathe all those chemicals." Betty made PC Boards at home for GMI Electronics of Plainfield, NJ for minimum wage.

Quyen Tong, a 51-year-old immigrant from Vietnam, and his entire family--including his 10-year-old son and 18-year-old daughter and her friend work long nights assembling tiny transistors onto printed circuit boards. "Everyone helps," Tong told the Mercury. "If they don't have homework to do they help me."

Tong is paid one penny per component. Each transistor has to be bent and then carefully inserted into tiny holes in the circuit board following a complex chart. Seven boards take 1,500 transistors; the remaining three take 2,380 transistors. The job, which takes Tong and his family two nights to complete, will earn the family $176.40.

Workers often feel compelled to work at home for fear of losing their work. Nancy Hugh, who worked at home on PC Boards for Adaptive Electronics earning less than minimum wage, $4 to $5 per hour, said: "Sometimes if you're afraid that you'll lose the contract with them you'll do whatever they ask you to even if you don't make very good money."

"Stealth Manufacturing"

"Industrial home assembly sounds like something from a bygone era or a distant land. But it remains entrenched in the way many high-tech products get made here because it provides what Silicon Valley needs most: Speed.... Fiercely competitive contract manufacturers shave days, hours even, off the time it takes to get new products to market.... Struggling independent contractors make themselves available for work at a moment's notice. For each manufacturer that outgrows the practice [of paying workers by the piece to assemble components at home], another steps forward to fuel Silicon Valley's faster-than-ever ethos."

San Jose Mercury

In recent years much of the manufacturing that was done in the Silicon Valley has moved to other countries or to areas like the Southwest U.S. where wages are lower and there are even fewer environmental regulations. Intel, the world's largest manufacturer of computer chips, has plants in Puerto Rico, Costa Rica, Malaysia, the Philippines, and China. In Mexico there are 470 maquiladoras (factories owned by non-Mexican companies) involved in the manufacture of electronics and electronic accessories, with over 253,000 employees. In 1997, maquiladora workers earned an average wage of $5 to $7 per day.

A spokesman for Intel said, "I don't think that we'll see much more semiconductor manufacturing in the Silicon Valley in the future." In 1993 Intel opened a $1 billion plant in Rio Rancho, New Mexico, an area that has become known as the "Silicon Desert." New workers at Intel's plant in New Mexico earn $6 to $7 per hour. 70 percent of the line workers (who are the lowest paid and most exposed to toxic chemicals) at high-tech plants in the Southwest are oppressed nationalities, mainly women.

While the more permanent and better-paying jobs in large manufacturing plants are disappearing in the Silicon Valley, other jobs are being created: low-paying jobs for "contract assembly" companies. These firms contract out to the large electronics manufacturers with well-known names like Hewlett-Packard, Apple and IBM to do labor intensive work like assembling circuit boards.

"A new breed of American company is arising out of the relentless drive to reach global markets more quickly," the Wall Street Journal wrote in a recent article. The Journal dubbed these firms "stealth manufacturers" because their name does not appear on the products that they assemble.

Electronics contract manufacturing is a $90 billion dollar-a-year global business growing at 25 percent a year--twice as fast as the electronics industry as a whole. Today contract manufacturing represents 20 percent of the electronics equipment market. But, according to the San Jose Mercury, analysts expect contract manufacturing to account for as much as 65 percent of the market in the next five to ten years.

According to the San Jose Mercury, the Silicon Valley's several hundred contract assembly houses are the largest concentration in the United States and these companies, "occupy a critical niche in high-tech industry." They offer many advantages to the large electronics firms that utilize them: low costs, flexibility and speed. Contractors compete to win their contracts by cutting prices, and worker's wages, to the lowest levels. The manufacturers can place orders on a moment's notice when production demands without having to hire any new workers themselves. And when production needs decrease they can simply cut orders. If the workers lose their jobs the manufacturer will have no responsibility for them. And because they are located in the Silicon Valley turn-around time is very quick in an industry where days and even hours count.

"The Time of Slavery Is Over"

In 1992 workers at Versatronex, a contract assembly plant in the Silicon Valley, went on strike demanding better conditions. The starting wage in the plant was minimum wage at the time, $4.25 per hour. Employees with 15 years seniority earned $7.25. There was no medical insurance. A worker described conditions in the coil room where he worked making electrical coils for IBM, dipping the coils into chemical baths and drying them off in ovens: "They never told us the names or the dangers of the chemicals that we worked with. Sometimes the vapors were so strong that our noses would begin to bleed."

The strike at Versatronex--where there was no union--started after a Latino worker was fired for speaking out at a company meeting. The worker stood up in the meeting and told the company and the supervisors "se acabó el tiempo de la esclavitud," which means "the time of slavery is over." The strike targeted a large company, Digital Microwave Corporation (DEC), whose boards were assembled at Versatronex. During the six-week strike 10 women workers went on a hunger strike, and a tent city was set up outside the shiny corporate offices of DEC. Versatronex closed the plant in January 1993 after workers filed for a union election.

Solectron is the world's largest electronics contract manufacturer and the tenth largest company in the Silicon Valley. It assembles components for Sun, IBM and others. The company had 49 percent annual growth during the latter half of the 1980s. Piece rate and take-home work played a crucial role in Solectron's phenomenal growth, according to the San Jose Mercury. In order to meet rush deadlines and keep costs down the company would often send work home.

Solectron claims that it no longer sends work home or pays by the piece. However, employees told the Mercury News that the company was still sending work home at piece rate in 1996 and the Mercury reported that at least one sub-subcontractor used by Solectron was paying by the piece in 1999. Even if Solectron's claims are true, its profits are still based on low wages: new assembly workers at Solectron start out as employees of a temporary agency and earn $6.50/hour.

Advances in technology have created the possibility of tremendous benefits for humanity. But under capitalism, technological developments are driven by the need for profit, not the interests of the people. And behind the Silicon Valley miracle is the dirty little secret of sweatshops, exploitation of immigrants, and environmental hazards.

This article is posted in English and Spanish on Revolutionary Worker Online
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