Anti-Worker Policies Actually Anti-Prosperity
October 9, 2009 - 3:55pm ET
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This chart from the Bureau of Labor Statistics' report on occupational outlooks, with data from 1996-2006 and projections from 2006-2016, shows job numbers for goods-producing industries. You can see the precipitous drops in manufacturing, as well as the declining rate of increase for construction. The job sectors where people make things, including apparel manufacture and all other production work, are doing poorly and are expected to continue to do poorly.
The bright spots are in health care and the service industry, occupations whose work products are in most all cases consumed locally out of necessity and can't be traded to other countries. We're making less, but we still have to buy from somewhere. The only good news for the average American in that equation is that the dollar has long been the world's reserve currency and so we aren't generally hit with bad exchange rates. Though as Ian Welsh points out, the push to use a basket of currencies to buy oil shows, the dollar will probably lose its unique status in 12-16 years.
It isn't because American workers can't make things, in fact, they're pretty good at it. It's that the political dominance of a so-called 'free' trade ideology has prevented politicians from enforcing fair trade rules of the kind they're allowed under international trade agreements, but that are DOA in Washington, DC. Rather, the American investment class stopped wanting to put up with pesky demands that workers be paid fairly, that environmental protections be part of industrial practice, that safety and health standards be kept high.
Yet as noted in the Harvard Business Review, losing manufacturing capacity means losing innovation capacity. It turns out that the process of making things is in itself instructive and leads to new ideas. As Welsh says, there's very little that can be bought exclusively from America, in dollars, that can't be purchased somewhere else in another currency.
There are some who try to be rosy about the US' rapidly eroding production capabilities, but there's little to be genuinely happy about outside the health sector. In theory, those health services could be used to attract overseas visitors and generate international trade, but the first movers in medical tourism have probably already got us beat both in controlling costs and having welcoming travel policies.
Further, where we have been keeping or gaining manufacturing jobs, they've been among a growing force of temporary workers that have no union representation and consequently, lower pay and (usually no) benefits compared to permanent employees. Companies say the want flexibility, but in a vicious cycle, shifting all the costs of flexibility to the indebted American workforce decreases their collective ability to be customers of the businesses they're working for.
The US consumers' purchasing ability is one of the few remaining reasons to keep the dollar as a global reserve currency, and this too is being undermined by the shift away from manufacturing employment that generously rewarded labor investment.
As it's now good news that we're simply losing jobs at a slower rate, we can't expect to continue the optimism-fueled consumption of previous years. Indeed, we are now relying on government stimulus for increases in home and durable goods purchases, rather than on sustained job growth or wage increases that keep pace with inflation.
What did the US workforce do to deserve this? Only be world leaders in productivity, increasing output even as employers shared less of those productivity gains with employees while actively harassing employees who try to form a union and opposing pro-labor policies from the largest business organization in the US, the Chamber of Commerce.
The United States has as capable and inventive a population as any other country, a workforce that has proved able to adjust to many new opportunities and industries. If a business or economic theory can't turn our work into abundance, that's on them, and some businesses are waking up to it.
As a case in point, the same Chamber of Commerce has so heavily opposed using climate change as a chance to create new industries and employment opportunities that even their member businesses are seeing through this self-defeating spin and leaving. Chamber-supported policies that oppose sharing prosperity downwards and flexibility upwards have undermined household, environmental and national well-being at a time when we're losing our ability to paper over this decreased resilience.
Let's hope that in the end, the US government will choose American workers over proponents of an ideology that wastes their talents.
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Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future