Will Americans be able to sustain their life style?
For the complete report from the NYTimes.com click on this link
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. Americans take advantage of the higher productivity that makes their country rich: better education and infrastructure, abundant capital and a strong work ethic. But how much higher should American wages be? The answer depends in large part on two measures: the difference in productivity in making goods that can be traded across borders, and the quantity of such goods. Both measures point to a narrowing wage gap. Many factors are raising productivity in poor countries. Fast development, cheap capital and more efficient shipping all help. Cheap communication via the Internet reduces costs and makes it easy to trade many more goods and especially services. The global wage gap has been narrowing, but recent labor market statistics in the United States suggest the adjustment has not gone far enough.
Global wage convergence is great for the poor but tough on the overpaid. It’s possible to run the numbers to show that American manufacturing workers should take average real wage cuts of as much as 20 percent to get into global balance. The required cut may be smaller. But if American wages get stuck above global market-clearing levels, as in the 1930s, the result could well be something approaching Depression-era levels of unemployment.
No comments:
Post a Comment