From whom, to whom?
Another random thought on workers and bargaining power: one of the reasons that I think that progressives assume that workers as a class have less bargaining power than employers is that workers with bargaining power generally use it to extract high salaries, whereupon they pass out of the class "worker" and into the class "wealthy".
Progressives don't simply want workers, as a group, to have as much bargaining power as employers; they also want that power to be distributed much more equally within the group. In that reading, one might argue that some significant portion of union redistribution is not from "employers" to "workers" but from "workers with bargaining power" to "workers with less highly demanded skill sets". Though I imagine that progressives would dispute that view.
Question of the day
Here's the question I've been pondering as I watched the strike unfold at GM. Many progressives argue that unions are a necessary counterweight to the bargaining power of employers. I tend to think that power is generally about equally balanced between workers and companies--some workers have a lot of bargaining power, and some a little, but I don't see the power as being particularly asymmetrically distributed between workers as a class and employers as a class. But that's not how progressives feel, and I doubt we'll change each other's minds.
What I find difficult to argue with is that few of the progressives I know ever seem to think that there are any situations where workers have too much power. Even in situations such as the New York City transit strike, where the workers clearly have an enormous amount of employer over their employer both as a bargaining unit and as a voting bloc, progressives always side with the union.
So here's the question of the day for my liberal commenters: can workers acquire too much power? Is there any situation in which you have thought, or can even imagine thinking, that union power might have to be dialed back?
Ve haff vays of making you vork
Was the New York Times too hard on Germany's economy when it said that
Some economists worry that the relatively modest labor market changes have fallen far short of what the German economy needs to assure its long-term competitiveness, and that the government might be well advised to use this time of prosperity to tackle the tough issues. Instead, the long-awaited recovery has led to relief and perhaps even a little complacency.
Dean Baker certainly thinks so:
While this no doubt true, it’s also true that many economists don’t see Germany as facing intractable economic problems. These economists point out that Germany is actually running a substantial current account surplus, which means that it is lending money to the rest of the world. By contrast, the United States has a current account deficit of more than 5 percent of GDP, which means that it is borrowing money from the rest of the world. The position of the United States is clearly unsustainable, as nearly all economists would agree.
The article also misleads readers on the extent of Germany’s unemployment rate. It reports that the rate has fallen to 9 percent, implying Germany still has very high unemployment. In fact, this is the official German measure of unemployment, which counts part-time workers as being unemployed. The OECD measure for German unemployment (which uses essentially the same methodology as the U.S.) is 6.4 percent. Since unemployment is still concentrated in the areas that were formerly East Germany, the unemployment rate in the areas that were formerly West Germany would be approximately the same as in the United States.
This analysis seems rather . . . odd. America was running a healthy trade surplus in the 1930's; I don't think that anyone would have argued that this meant that the economy was in sterling health. On the contrary; a capital account deficit (a.k.a. lending money to the rest of the world) can be a sign that local investors don't think much of the economy's prospects. America's position is undoubtedly unsustainable. But nonetheless, the OECD leading indicators index grew twice as fast over the last six months as Germany's did, even though Germany is coming out of a recession and we seem to be heading into one.
Likewise, though Germany's OECD harmonised unemployment measure is lower than the official measure, it's still much higher than the level in the US: 6.4% vs. 4.6%. In a country with a population the size of Germany's, that's an extra 1.8 million people out of work. And if anything, that understates the problem, since America's social safety net is structured to inflate the stated size of the labor force (and thus the unemployment figure): for many benefits, you can only qualify if you are actively looking for work.
And while Eastern Germany is a problem, it's been almost 20 years since unification; at some point, you have to acknowlege that, whatever its historical problems, Eastern Germany is now part of Germany. America does not, after all, get to throw out Mississippi and Michigan because historical forces have caused them to underperform the rest of the country.
Dean Baker's assertions seem designed to obscure the fact that the big economies of Europe have been underperforming America for more than a decade on almost any measure one might care about, from unemployment to national income growth. It may be true, as Henry Farrell argues, that the evidence for pinning this on European labor markets is underwhelming--although, in the absence of another explanation for persistently higher unemployment rates, structural rigidity still seems the most likely answer. But that still leaves us with the fact that America is pulling away from all but a few small European countries, and the worry about what this means for the future of Europe if this trend continues1.
1 This is, of course, a big if . . . witness all the books from the early nineties mindlessly extrapolating trends to prove that we were about to be relegated to teh dustheap of history by Japan and/or Germany.
America: exporting high wages abroad
I'm always bemused by globalisation doomsday scenarios in which all of our jobs move to China (or India) in order to take advantage of low-wage workers. If we really do lose all of our high-productivity jobs, and no longer make anything worth having, why would the Indians and Chinese continue to ship us software programs and flat screen televisions? Obviously, for individuals this may be traumatic, but in aggregate, if our economy really gets less productive, we won't have to worry about a flood of cheap Chinese goods. Although if the Chinese and Indians do want to ship us their products in exchange for absolutely nothing, I'm willing to talk.
The other reason this doesn't work, of course, is that as these economies expand, demand for workers pushes up their wages. That's why we no longer buy cheap gimcrackery from Japan. According to the New York Times today, this is already happening:
For decades, many labor economists said that China’s vast population would supply a nearly bottomless pool of workers. So many people would be seeking jobs at any given time, this reasoning went, that wages in this country would be stuck just above subsistence levels. As recently as four years ago, some experts estimated that most of the perhaps 150 million underemployed workers in the countryside would be heading to cities.
Instead, sporadic labor shortages started to appear in 2003 at factories in the Pearl River delta of southeastern China. Now those shortages have spread to factories up and down the Chinese coast, specialists say.
This summer, Mary Gallagher, a Chinese labor specialist at the University of Michigan, visited five sportswear factories near Shanghai and Guangzhou. She found them all struggling to hire and retain workers. One had shut one of its two main production lines because it had nobody to sew shirts and other garments.
“Basically half the factory was shut down and one dormitory was empty,” Ms. Gallagher said.
In interviews, factory executives across the country complained of being forced to give double-digit raises in order to find and keep young workers at all skill levels. Three or four years ago, said Zhong Yi, vice general manager of a leather-jacket manufacturer in Hangzhou in east-central China, 800 to 1,100 yuan a month ($105 to $145) “was a good salary.”
“Now,” he said, “1,500 is the bottom” ($198).
Chinese officials are quick to say that there is no overall shortage of labor — rather, there is a shortage of young workers willing to accept the low wages that prevailed in the 1990s. Factories in cities like Guangzhou advertise heavily for young workers, even while employment offices consider it a success if someone over 40 can find any job in less than a year.
“Now they’re taking workers into their early 30s,” said Jonathan Unger, director of the Contemporary China Center at Australian National University in Canberra, “but anything older than that and they think they can’t take the conditions, the 11-hour days,” as well as work on weekends, and a tedious life in factory-owned dormitories.
Plant owners’ refusal to hire blue-collar workers over 35 or 40 is colliding with the demographic reality of China’s one-child policy. The number of workers in the 20-to-24-year-old range is already shrinking as more of them go to universities instead of entering the work force after high school, and the International Labor Organization projects that workers in this age range will edge slowly downward through at least 2020.
Stand by for Chinese politicians complaining that America is exporting its high wages and labor standards to countries that don't want them.
One wants to know, of course, how much this is affected by inflation in China. The Chinese government has not been able to perfectly sterilize its interventions in the global currency markets. All else equal, buying foreign currency in order to push down the relative value of your money should translate into domestic inflation; so in order to un-paribus the ceteris, the Chinese government has been taking a number of measures to soak up the extra liquidity, notably selling bonds. But there is a limit to the effectiveness of these techniques, not least because the fragile banking system cannot absorb an infinite supply of government bonds. As it is, the government has jammed more bonds into the system than the bankers want. Moreover, its rather primitive financial system makes monetary intervention less effective than it might be. The result of the currency interventions, and China's rocketing growth rate, has been steadily rising prices. The government is now exploring alternative anti-inflation measures, like price controls, to battle it.
What price labor?
Chris Hayes of In These Times and The Nation writes today on his personal blog:
There are few things that irk me more than when conservatives advocate for increased immigration for low wage workers by saying that immigrants do jobs that Americans don’t want. I don’t want to buy a slice of pizza for $45. It doesn’t mean I don’t like pizza! I’m not particularly interested in writing a book for the total payment of $9. It doesn’t mean I don’t want to write a book!
But what about the demand side of the labor market, she asks? To invert Mr Hayes' formulation, I don't want a job eating live roaches. But at $1 million a roach, or thereabouts, I would take it. The problem is, I very much doubt that anyone thinks it's worth $1 million to see me eat a live roach.
Many of the jobs that illegals do are jobs that cannot economically be done by Americans. It does no good to say that American workers would be happy to gut chickens, or clean houses, or landscape your yard, for $20 an hour, if other Americans cannot afford to purchase those services at that price. If we had no illegals, some Americans would undoubtedly get their jobs at higher wages. Other jobs, such as fruit picking, would probably be automated. Meanwhile, many Americans would have to go without the services that illegals currently provide, such as landscaping, construction, and home care.
One particular consideration I think is underdiscussed is the fact that much of the labor illegal immigrants provide substitutes for women's home labor. And I don't just mean nannies for rich women. I mean cleaning services, and food processing, and dry cleaning, and grocery delivery, and all the other things that make it possible for large numbers of women to work outside the home. In an ideal world, of course, women and men would take equal responsibility for the household. But in the less than ideal world that we actually inhabit, an increase in the price of those services would probably mean that fewer women would find it cost-effective to work outside the home.
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