Crimes of the Times
In the Business section of the New York Times on Nov. 10, Edward Hadas, Martin Hutchinson and Anthony Currie analysed the structure of US manufacturing wages and found them to be too low, American Wages Out of Balance, A more accurate title might have been Creative Ideas on How to Screw the American Middle Class
The piece speaks for itself, but first a hat tip to Massaccio on Firedog Lake for the find.
American workers are overpaid, relative to equally productive employees elsewhere doing the same work. If the global economy is to get into balance, that gap must close.
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The global wage gap has been narrowing, but recent labor market statistics in the United States suggest the adjustment has not gone far enough.
One indicator is unemployment, which has risen unexpectedly rapidly. The 7.3 million jobs lost are more than triple the 2 million during the 1980-82 recession. Some of that huge increase reflects the sharp decline in gross domestic product, but there could be another factor: the recession shows that many workers are paid more than they’re worth. Another possible sign is the huge surge in reported productivity, which has begun while output is declining. That suggests that some production is being outsourced, often to lower-paid foreign workers.
The big trade deficit is another sign of excessive pay for Americans. One explanation for the attractive prices of imported goods is that American workers are paid too much relative to their foreign peers.