The growing labor pool will drag wages down
is the first in a periodic series about jobs going out of the country; how it
affects workers here, and how it affects our position in the world. There has
been much said about
are a number of points I will expand on in this series but here are the main
points: 1. This outsourcing trend is built into our
economy. 2. None of the typically discussed remedies will do much to help. 3.
To understand the first point, that this trend is built into our economy, one first has to understand a few things about how a free market like ours works (that is, a free market with large corporate players and access to a large, or even global, labor pool.)
sometimes-better pay for low-level jobs that the
For the most part, in this country, we're not going to get down to low-level workers starving, but that is what the free market will do if totally uncontrolled and there are too many workers. In the 1700s Adam Smith wrote "Wealth of Nations" and became sort of a patron saint of the free market. He said that if there are more workers than there are jobs that some will starve until the number of workers and jobs equalizes. It may be absurd to think of anyone in this country working for $1 per hour, but if the job can be sent to a country where many people live off scraps from the dump, they'll be glad to do it for $1 per day. Even in those countries there's a limit to how low wages will go because companies are only going to farm-out work to labor pools that have the infrastructure and stability to give reliable work. But you can be sure the work will be done at the lowest wages possible.
current situation is that more population groups around the world are joining
the global labor pool. Each time some country or region gears up to entice
companies to use their people the total labor pool gets fuller. When there are
more workers than there are jobs it puts tremendous downward pressure on wages
and conditions. Already work that moved from the
There are policies that can help to soften this, which I will cover. Next time, more about why the size of the middle class we had was not the norm.