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butterbean · Joined: 21 Jun 2006 Posts: 2269

9/3/06

Is globalization hurting U.S. workers? YES: Income distribution favors affluent at expense of poor

Labor Day, the first Monday in September, honors the contributions of working men and women in building our country. On this Labor Day weekend, we explore the increasingly integrated global economy and its impact — pro and con — on the United States, as two experts answer "Is globalization hurting U.S. workers?" from their perspective.

'Globalization" is one of the major challenges facing American workers — who include not only factory and office workers, but more than 80 percent of our 144 million-person labor force.
But it is widely misunderstood. Most of the people writing and talking about globalization know little about economics, and of the few who know something, most are dodging the most important issues.

The central issue for Americans facing the global economy is income distribution. Whether it's international trade or investment, or immigration, the main effect on most Americans' lives has been on the distribution of income. And that distribution has gotten dramatically worse over the last 30 years: The rich have gotten a lot richer, the poor have languished, and the middle class has shrunk.

From 1972 to 2001, the bottom 20 percent of wage and salary earners got only 1.6 percent of the increase in this income over the three decades. The majority got less than 11 percent. But the richest 1 percent received 18.4 percent of the increased income — vastly more than went to the majority of Americans.

The "managed globalization" designed by our political leaders has contributed very much to this upward redistribution of income. The key word here is "managed." It is not, as the pundits argue, simply the result of market forces combined with technological changes in communication and transportation.

The architects of the global economy have not thrown their friends and neighbors — the doctors, lawyers, executives and other professionals — into brutal international competition with the tens of millions of highly educated, English-speaking people who would be willing to do their jobs at half the salary. That is why, for example, our doctors earn twice as much as their counterparts do in the rich countries of Europe.

Instead, our political leaders have devoted decades of careful and often protracted negotiations to rewriting the rules of international commerce so that the nearly three-quarters of Americans who do not have a college degree would face lots of global competition. Partly as a result of these changes, the real wage for most workers in the United States has barely grown over the last 30 years — about 9 percent — while productivity, or the amount that is produced by an hour of labor, has grown more than 80 percent.

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