If you are wondering what the world will be like after the recession has finally run its course and all those Americans who have lost their jobs go back to work, you may find a clue in this article from Fortune magazine: “Americans Are Overpaid.”
“U.S. workers are overpaid, relative to equally productive foreigners doing the same work. If the global economy is ever to get back into balance, that gap needs to be closed.”
The authors of the article, Martin Hutchinson and Edward Hadas, cite the unusually high unemployment rate in this recession as itself proof that a shakeout in American wages is underway, that a shakeout presumably — since the market doesn’t err? — is necessary and proper.
“The global wage gap has been narrowing, but recent U.S. labor market statistics suggest the adjustment has not gone far enough.
One indicator is unemployment, which has risen unexpectedly rapidly in this downturn. The 7.3 million jobs lost are more than treble the 2 million of the next worst post-war recession, in 1980-82. Some of that huge increase reflects the turbulence of an unusually sharp decline in GDP, but there could be another factor: the recession has revealed many workers are paid more than they are worth.”
The authors also cite increasing American productivity while output is declining as evidence of outsourcing to countries with lower wage workers, and they point likewise to the growing trade deficit as a sign of “excessive pay” for American workers.
They suggest that the best solution for avoiding Depression-level unemployment rates may be “a combination of moderate inflation to reduce real wages and a further drop in the dollar’s real trade-weighted value.”
Why is no one talking about a national industrial policy, a plan for restoring American industry, and halting the war on the American middle class?
If Hutchinson and Hadas are right, we are heading into a much different world than the one that so recently collapsed, a world in which the best we can hope for is to share the pain equally.
But then, the pain is never shared equally, is it?