Pro-Is globalization benefiting American workers?
Since economic globalization – the integration of national markets through international trade and investment – emerged in the 1980s, resources have shifted to sectors with competitive advantages, productivity has reached new highs, and innovation has flourished. In turn, globalization has become a vital factor in the economic growth of the United States and benefited working Americans in many ways.
For example, trade now supports nearly one in every five jobs. Workers in globally engaged companies earn more than the average. And globalization has generated an increase in annual income of approximately $10,000 for each American household.
American workers are quickly adapting to globalization by upgrading skills, achieving greater levels of specialization and effectively managing new productivity-boosting technologies. In the process they are becoming more competitive and improving the American standard of living, which is evident in a variety of ways.
–For example, since 1980 more Americans – now nearly 70 percent – own their own home, which is typically larger and outfitted with more amenities than before.
–Average U.S. life expectancy has increased from 73.7 to 77.9 years.
–Greater percentages of Americans are graduating from high school – 85.5 percent, up from 68.6 percent; and college 28 percent, up from 17 percent..
Nevertheless, misinformation persists. For too long, critics have focused on stagnant average hourly wages. This is misleading since wages only reveal part of the picture.
Today, benefit packages have become increasingly lucrative, representing a growing share of total compensation. When benefits are included, private sector worker compensation after being adjusted for inflation has risen by more than a third since 1980.
Additionally, income derived from non-labor sources such as the stock market – a huge recipient of globalization’s capital flows – continues to boost individual wealth.
The Wall Street Journal recently noted that between 1980 and 2005 the share of American workers who owned stocks more than doubled to 52 percent from 25 percent. Thanks to 401(k) plans and IRAs, stock gains have been spread more widely across America.
Yet, claims that the middle class is shrinking may be true – but misleading since the number of middle-class working families moving into higher income brackets has exceeded the number of lower income families moving upward.
Thus, after adjusting for inflation, the share of American households making more than $50,000 rose to 47 percent in 2005 from 38 percent in 1980. This helps explain why more families can afford vacations, cable TV, cell phones, iPods and second cars.
Fears that the United States is de-industrializing or losing manufacturing jobs due to globalization also are misguided. Technological advancements and strong productivity growth – not globalization – are responsible for most American job losses.
In fact, tremendous productivity gains have empowered fewer workers to more than double U.S. manufacturing shipments since 1986, confirming the U.S.
manufacturing sector is alive and well.
However, isolationist policies that are gaining support in Congress have the potential to derail globalization, as well as its advantages.
Federal Reserve Chairman Ben Bernanke rightly points out that “economic isolation and retreat from international competition would inexorably lead to lower productivity for U.S. firms and lower living for U.S. consumers.”
We’ve all heard the corporate advertisement that encourages consumers to compare loan rates online. The company’s jingle sums it up nicely: “When banks compete, you win.”
Globalization likewise increases competition benefiting consumers. It also benefits American producers and workers by motivating them to create better goods and services that, through globalization, can reach world markets. In turn, this creates more opportunity and jobs back home. All Americans are the beneficiaries!