Creating Bad Jobs
According to Lind, despite having lost much of its manufacturing sector, the United States remains a world leader in one area: “creating bad jobs with low wages and inadequate hours and no union representation.” Since the 1960s, the share of private sector non-supervisory “goods-producing jobs” associated with higher wages has shrunk from 42 percent to 17 percent. The lost jobs have been replaced with low-wage service sector jobs.
The Bureau of Labor Statistics predicts that of the twelve job categories predicted to have the greatest numerical growth in workers over the next decade, only four pay more than about $29,900 per year. The official poverty threshold for a family of four in 2019 was $27,570. Thus, family caregivers are compelled to enter the workforce as a matter of subsistence.
The loss of the “wage premium” that once came with union membership has been replaced by the college degree as the imagined ladder out of low-wage work. The result is a large group of college graduates who find themselves working in jobs that do not require college degrees, creating another class of undercompensated and dissatisfied Americans.
Lind says that American companies have sent advanced production jobs to lower wage countries to reduce labor costs. This “global labor arbitrage” has wrecked American manufacturing. Our global market share of machine tool manufacturing has declined to five percent. In three decades the United States has lost 70 percent of its semiconductor manufacturing industry. In 2020, China made three quarters of the world’s lithium ion batteries, while our share was eight percent.
The COVID-19 crisis quickly revealed our dependence on other countries for drugs and personal protective equipment. Ninety seven percent of the world’s antibiotics are made in China.
Why would any nation tolerate public policies that would allow its productive economy to decline like this? Lind says that our elites, captured by multinational corporations and global investors, told the public that labor globalization was inevitable, that all Americans would benefit, and those who argued otherwise were bigoted or xenophobic, or did not understand economics.
Lind says that “global labor arbitrage” was a “deliberate policy to cripple or destroy organized labor and weaken the bargaining power of workers.”
A Hamiltonian Strategy
Lind says that America must return to the thinking of Alexander Hamilton, Abraham Lincoln, and presidents from Franklin Roosevelt through Richard Nixon, who presided over programs of national economic development, nurturing promising industries like the internal combustion engine and electricity, and including through federal subsidies like highway construction and rural electrification. And, of course, the Internet began as a Pentagon-funded project to link researchers who had Department of Defense contracts. He says that national economic policy efforts should nurture high-value-added industries with global export potential that employ American workers.
Minimum wage protection is needed for workers in the domestic services sector whose product cannot be exported. Government can also support the development of labor-saving technologies. A ready example is federally funded land grant colleges that have provided research support to agricultural manufacturers and farmers. Lind advocates the establishment of small business boards to help small firms with training and joint marketing activities. All this would make it easier for employers to pay higher wages.
But given the severely weakened unions of today, will productivity gains in export sector firms travel downstream to result in higher wages for their employees? Lind advocates “sectoral bargaining” in which wages are negotiated on an industry-wide basis, as currently takes place under the Railway Labor Act. For the less powerful workers in the domestic services sector, wages could be set by state and local wage boards in which representatives of labor, business and government would together determine industry-wide terms.
Lind abhors the “low-wage/high-welfare” system in which a substantial part of the workforce cannot survive without public assistance. He calls for a “living wage” capitalism in which wages are high enough to pay for a family’s expenses and for their contributions to government-organized social insurance programs like Medicare and Social Security.
Lind calls labor arbitrage a “ponzi scheme,” and reminds readers that all ponzi schemes must eventually end. Absent changes to increase wages, he says that existing social arrangements may harden into a “neo-feudal system run by a more or less hereditary aristocracy” and/or that “populist demagogues” will lead “ephemeral and disruptive rebellions by the marginalized and dispossessed.”