Why has the economic recovery left workers behind? The question keeps coming up, in slightly different versions. As the headline of a recent New York Times article by Michael Powell put it, “Profits Are Booming. Why Aren’t Jobs?” The term “jobless prosperity” – which surfaced in 1993 and again 2002 – now bobs high.
Many journalists argue that globalization is partly to blame for historically low rates of job creation over the last year. Companies in the United States are simply less reliant on American workers – and American consumers – than they once were. Maybe they just don’t need us any more.
Few economists like this argument, but even some mainstream savants like Alan Blinder of Princeton University express concern about the effects of offshoring. And the effects of globalization extend well beyond job loss.
As Harold Meyerson pointed out in The Washington Post, a recent Standard & Poor’s report showed that our largest 500 publicly traded corporations get roughly 47 percent of their revenue from outside the country.
Writing in The Atlantic on “The Rise of the New Global Elite,” Chrystia Freeland provided a vivid anecdotal account of the same phenomenon, letting the chief executive of a green-technology company explain that most of his sales come from outside the United States, and, if he were starting from scratch, most of his workers would, too. A hedge fund manager tells her why the vigorous growth of a new middle class in China and India counterbalances the decline of the American middle class.
A recent Wall Street Journal article by Burton Malkiel warned against “home-country bias,” urging investors to hedge their bets on the American economy by tilting their portfolios toward emerging markets in developing countries.
A recent Time magazine article by Zachary Karabell referred to the new joblessness as a part of a megatrend toward globalization that we just have to live with.
So much depends on who “we” are.
During the 25 years after World War II, the interests of American investors and workers were closely, though not perfectly, aligned. Productivity increases were passed on in the form of higher wages that, in turn, fueled increasing demand for domestically produced goods and services.
Businesses willingly paid taxes to support public programs designed to improve the education, health and security of the labor force on which they relied.
Back in 1953, Charlie Wilson, the chief executive of General Motors, famously expressed the opinion (often slightly misquoted) that what was good for the country was good for General Motors, and vice versa. I doubt that was entirely true then, but it was certainly more true then than it is today.
Large corporations are no less patriotic now than they were then. But their economic incentives have changed. Facing intensified international competition, they have little reason to care about the nationality of their workers, consumers or investors.
Fans of globalization point to many economic benefits: lower-priced consumer goods, rewards for technological innovation and higher living standards for many workers in developing countries.
But however significant these benefits, the other side of the ledger reveals significant costs arising from political realignment and efforts to escape regulation and taxes.
Jobless growth is only one symptom of increased social conflict, intensified economic inequality and weakened democracy. The prosperity in jobless prosperity exists only for the rich.
I am very concerned about "increased social conflict, intensified economic inequality and weakened democracy." I am far from qualifying as a member of the "elite super rich class." I cannot even disdainfully say that I would not join a club that would have me as a member since I will never measure up financially for membership consideration. In fact, I am hanging in there with every creative resource that I can muster. And yet, the working poor regularly knock on my door seeking work. "Your chimney needs fixing or your stoop is crumbling or your siding is peeling. I can fix these problems at a special price."
My heart goes out to these people. They work in the cold grip of winter in Michigan on projects that I should forgoe until subsequent springs. I am on a budget you see. In one case, a house repair assignment that I really did not need helped a worker to pay his rent, buy groceries and provide Christmas gifts for his family of eight. Am I a sucker for a line, a bleeding heart or more likely a regular guy who cares about the other guy? I do not know. What I do know is that I entered into a social contract to give work to a man that is truly down on his luck. Believe me, I do not have the means to spend money willy nilly with everyone who comes to my door. Again, I am blessed compared to their state of misery which is heightened by the snow, the ice, the grey skies and their looks of despair.
My wife helps people to explore their options due to banks foreclosures on their properties. Oftentimes, she reduces or waives her modest fees to help her clients. Who are these people whom she helps? Well, they are our neighbors and friends who lost a job or are the victims of other companies, customers and suppliers who default on their payments. What do they do when their good faith is betrayed because a company within their supply chain decides to stiff them and then take the same business overseas to capitalize on lowering pricing and cheaper labor? These are people who did all of the right things by obtaining MBAs or law degrees, saving for the future and a rainy day, sending their kids to college while living within their means. Plain and simple, they lost their jobs and incomes through no fault of their own. Do they deserve our pity or as one elitist stated ” they need to work ten times harder than their foreign counterparts to command their higher wages.” There is no work for them any longer. They are trying to reinvent themselves to produce an income. Of course, there is a need for nurses and medical technicians; however, there are pre- requisites, qualifications, and educational requirements to fulfill to meet particularly for the RN positions. You just cannot glide smoothly from the factory floor to the OR.
My concern is to alleviate some of the social conflict around me because “intensified economic inequality” visits me periodically. I am not buying people off, nor am I salving my own conscience. As a student of world history, I know that the poor, the displaced workers and the working poor can only take so much before they lash out even within a democratic society.