Wednesday, July 18, 2007

Globalization Not to Blame for Falling Living Standards

Our colleague Sandra Polaski over at the Carnegie Endowment released a policy brief today titled "U.S. Living Standards in an Era of Globalization." We like Polaski's work very much. Read the brief here. In it, she argues that while globalization may have exacerbated unequal distribution of economic gains over the past 30 years, the main cause of the erosion in U.S. living standards is made in America.

Some have argued that technology and the low cost of consumer goods have made life better in America. 30 years ago, I would not have been able to listen to my favorite music on my iPhone and rent movies online, goes the argument. But living standards in Polaski's analysis comprise access to health care, job security, and pensions.

Polaski recommends the following domestic solutions:

• Reform U.S. labor laws to give employees more influence over decisions about their wages and benefits, by fully protecting their rights to organize and collectively bargain.

• Adjust the minimum wage for the 30 million workers—one-fifth of the U.S. workforce—that earn less than the $9.80/hour required for a sole wage earner to keep his or her family above the poverty line.

• Create a modern social safety net to mitigate the impacts of globalization and rapid changes in the domestic economy. This should include better unemployment insurance and job-retraining programs, increased social security taxes to ensure the program’s viability, fully portable pension plans, and universal access to health insurance.

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