The US worker is accustomed to expanding incomes and protections from government. Traditionally, the US worker does not have to compete with foreign labor markets which require more productivity, lower wages, and reduced benefits; in other words competition to be a less expensive source of labor. Globalization has had the effect of moving jobs to the locations which offer greater profitability by reducing labor costs.
Global and National Trends
Approximately five years ago the Brookings Institution did a comprehensive study on economic growth. They found that nearly 90% of world economic growth was centered in three countries: Brazil, China and India. They challenge that they presented in their remarkable conclusions were for nations to align themselves with world growth such as developing underutilized resources by connecting them to world growth. In the years since that study, growth has leveled in those nations and over the entire world as a general assessment. Today, looking forward to 2013 and beyond, new engines for world growth will be needed if nations are to align with a path to create more jobs in the future.
A. Impact of the Economy on US Labor
A quick glance at the federal and State labor law posters near the entrance or employee area at nearly any business will show a wide array of worker protections. These include minimum wages, nondiscrimination, safety and health, and many points of access to legal protection to enforce employee rights. The US labor movement once inspired by European guilds and craft unions has been an inspiration to labor groups around the world. But organized labor has been in retreat in the US since the 1980’s with the rise of the open shop and right to work philosophy among business owner groups. Now all groups of US employees seem to be under pressure of declining numbers of jobs.
1. Trends in the U.S.
The forces that have driven labor markets around the globe seem to be much more visible in the US than in recent decades. Americans are not accustomed to competing for jobs on a global basis. The US worker is also among the more valued consumer groups and this is a distinction that may prove to be a vital difference. It may also be part of a counter-cycle. Employers also include retailers and manufacturers of consumer goods, the model of the US automakers is instructive- they sell millions of units to employees.
There has been a trend line away from blue collar careers in the US and the loss of these jobs especially in the manufacturing sector has corresponded with the rise of Asian Republics and China as global leaders in manufactured goods.
2. U.S. Statistics Show Gradual Improvement
The current unemployment rate in the US is 7.8% after more than three years above 8% after the Great Recession which peaked six years ago. Extremely high rates of youth unemployment, and millions of long term unemployed workers remain as the unfinished business of the US recovery. There are some new forces in the US labor market: self employment has trended upwards; and a healthy underground economy has emerged of barter services and goods.
However, it has been estimated that as much as $2 trillion in productive investment capital remains out of the marketplace. Much of this has been moved into paper trades. Derivatives trading has become a preferences for investment capital over more risky high tech ventures, brick and mortar retail, and manufacturing. This represents a challenge for public policy to encourage reinvestment.
3. Statistics do not tell the human story
Growth in jobs, unemployment data, none of these tell the human story of families in states of struggle. Compassion is balanced with concerns over structural national debt.
We see in India and China a growing middle class and demands of goods and services- new affluence creates markets. Wage demands will also increase and there is the point of friction. Employers may wish to limit wages but as sellers in the marketplace they also have a common interest in increased disposable income. There is tension then on several fronts and this dynamic process will affect government policies in the foreseeable future.
B. The impact of global economy on Labor
Global economic slow growth is a drag on national economies. However the dynamics are similar: a sharp increase in investment can translate directly into a sharp increase in employment. The cycle upward would begin with increased consumer demand following increased employment. Global impacts of climate change, international efforts to improve vital infrastructure, and trans-national efforts to improve health and deliver medical services all have potential to improve conditions in developing countries as opportunities for investment by developed countries and their international institutions.
There is a demonstrated need for concerted action by governments to rapidly increase job creation. As populations expand, the need grows and the gap widens between demands for employment and available jobs. On a global basis, there is a widely recognized need to provide sustainable sources of food, water and energy. This need can be translated into effort by deliberate plans and actions, but also by the individual actions of developed nations to grow their economies. This would tend to increase demand for goods and materials from developing nations, therefore favorably impacting employment.
The US economy has not done so in a definite way, but it has the ability to reverse a pattern of three decades of job shrinkage. It has the ability to fund infrastructure and needs to create employment in a mix of public and private sector jobs. If one includes high speed rail, infrastructure maintenance and repair, and infrastructure and modernization in high risk areas for storm and flood there is an easily reached potential to create more than two million jobs plus an additional one million person years per year in construction jobs that will phase in and out over the period of five years. The manufacturing impact will be felt in many ways including machinery, machine tools, energy related materials and equipment. Technical innovations will be spurred to create redundancies in energy, food supplies, fuels and water resources in events such as Hurricane Sandy which devastated highly populated areas in the North east US. The needs have been clearly shown, the economic impacts are severe and justify proactive efforts which in turn will create economic activity and jobs.
As an employee herself, Ivy Liu pays primary attention to his employment rights and studies the employment laws whenever possible. Ivy Liu likes to share her findings and help those who are concerned on employment issues through writing articles on employment posters, minimum wage, workplace security and other topics. For more details, please pay attention to her twitter: https://twitter.com/MandatoryPoster.