THURSDAY, DECEMBER 18, 2008
New book: Most workers lose in global economy

The following appears today at AFL-CIO Now:

Here is one strong reason for the Obama administration and Congress to think big about how to reduce economic inequality and insecurity in the years to come: Most working Americans have suffered steady and significant income losses that stem from current global economic policies, according to a new book.

While the effect of global trade on American workers is often measured in jobs lost, Josh Bivens, an economist with the Economic Policy Institute (EPI), argues in his new book that the vast majority of U.S. workers have been hurt by increased global trade—through diminished wages, as well as lost jobs.

In Everybody Wins, Except for Most of Us, Bivens says global trade likely cost a full-time U.S. worker earning the median wage some $1,400 in 2006. This is as much or more than what median wage-earners lost during the recession of the early 2000s. For workers on its losing end, globalization has felt like a chronic (if largely unseen) recession.

Bivens says policymakers have ignored this hidden recession in a global rush to the bottom. Speaking at the EPI in Washington, D.C., Tuesday, Bivens explained what’s happening:

 Apparel workers lose their jobs because of imports. As the apparel workers go into other jobs, they compete with workers with similar qualifications and pull the wages down in those occupations. Landscapers and nursing home aides, for example, don’t lose their jobs because of imports, but they lose wages because of increased competition for their jobs caused by imports.

While higher-wage workers with college degrees may have benefited from the lower prices of cheap imports, they, too, have lost out because of the way the global economy operates, Bivens says. Even though it’s hard to get a precise figure, he says there is evidence that white-collar workers—accountants, software engineers and others—may not have lost their jobs to offshoring, but they have been scared off of asking for raises by talk of jobs going overseas. It is this “wage threat” coming from the global economy that costs these workers, he says.

Bivens also notes that globalization may well reduce U.S. wages in the future to a much greater degree than experts once thought possible as new technologies make industry that can transfer its output via data lines vulnerable to global competition.

 If the predictions of some very well-credentialed economists about the reach of service-sector offshoring hold true, this could potentially drag on the growth of living standards for a huge number of American workers for decades to come.

There is no silver bullet to fix these problems, Bivens, says, “but there is silver buckshot.” Some major policy changes, which many people do not associate with trade, are needed as quickly as possible, Bivens says:

• Enact universal, affordable health care. The global economy actually makes the need for universal health care greater than before, he says. Globalization shortens the time a worker stays with one employer. The days of a worker staying on the job 20 years is over. But staying with one company was the way workers built up health insurance and benefits. It’s time to break the link between employment duration and access to health care, he says.

• Pass the Employee Free Choice Act. The legislation would restore the ability of workers to negotiate decent pay and benefits, which globalization has pushed down.

• Revise tax policies to require higher wage earners to pay their fair share and not place the bulk of the tax burden on lower-wage workers.

• Finally, we need better trade policies that focus on workers’ rights in other countries and not so much on the concern for the corporate agenda.

^{Copyright © 2008 --  Washington State Labor Council, AFL-CIO}