Those Falling Worker Blues

By Lee Russ

Thursday, February 21, 2008 at 03:30 PM

In the spirit of GM's decision to try to rid itself of all its domestic workers, lets revisit the American employment issue in all its diminishing glory. Take the effect of globalization on America's cherished self image as a place where economic mobility is woven into the national fabric.

The Pew Foundation's Economic Mobility Project continues to publish its series on economic mobility. A recent publication, titled Globalization and Economic Mobility, by Seth Zimmerman of the The Urban Institute, reviews the literature on that subject and finds that globalization "seems likely to lead to income growth (i.e., upward absolute mobility) at the high end of the skill spectrum, but may decrease rates of upward mobility among less-skilled workers both in absolute terms and in comparison to their higher-skilled peers."

Among the report's key findings:

• Changes in trade relationships with less-developed countries decreased the relative wages of high school dropouts by about 10 percent between 1980 and 1995 (Borjas, Freeman, and Katz 1997).
• While approximately 36 percent of displaced manufacturing workers in import-competing industries are reemployed at similarly paying or higher-paying jobs, about 35 percent experience earnings losses of more than 15 percent (Kletzer 2004).

"..about 35 percent experience earnings losses of more than 15 percent"; which means that some of them--who knows how many--experienced losses far greater than 15%.

• Between 2001 and 2003, workers in trade-competing service industries were approximately 75 percent more likely to experience job loss than were workers in service industries that did not compete with trade (Jensen and Kletzer 2005).

The report acknowledges that globalization is not the only obstacle facing American workers today. It notes, in fact, that as far back as the Clinton Administration, the Council of Economic Advisers decided that international trade was responsible for roughly 10 percent of the increase in inequality in the 1980s and early 1990s. That figure was "somewhat more than the amount attributed to (respectively) declining unionization rates and the falling real value of the minimum wage, but far less than the roughly 45 percent attributed to technological change."

Another "important empirical study" by Borjas, Katz, and Freeman (1997) "found that trade with less-developed countries accounted for only 10 percent of high school dropouts’ wage losses between 1980 and 1995, while immigration accounted for between 27 and 55 percent."

Globalization. Replacement of people with machines. Immigration offering employers a cheap, domestic alternative. The resulting imbalance of power that leads to decline in unions. All of which leads to a growing income and expectation gap. But you still have to listen to almost all the Republicans, most of the Democrats, much of the MSM, certainly Fox, telling you that things are fine, you're just imagining that your life and your family are falling apart.

Where's Horatio f***** Alger when you need him, eh?