BusinessWeek Debunks the “Great Labor Shortage Lie”
BusinessWeek: A global labor crunch, already being felt by some employers, appears to have intensified in recent months. That’s in spite of widely publicized layoffs, including Citigroup’s plans to shed as many as 15,000 staffers… Corporations are determined to keep labor costs under control, so they’re reaching deeper into their bag of tricks…Some are lowering their standards for new hires or moving operations to virgin territories other outsourcers haven’t discovered…
Economists, of course, will tell you there’s no such thing as a labor shortage. From a worker’s viewpoint, many so-called shortages could quickly be solved if employers were to offer more money. And worldwide, millions of people still can’t find jobs. The strongest evidence that there’s no general shortage today is that overall worker pay has barely outpaced inflation.
SirotaBlog: Politicians…couch their bought-off immigration positions in humane terms – pretending that they care about the plight of impoverished Mexicans. Yet, most of these same politicians aggressively supported NAFTA, which deliberately drove 19 million Mexicans into poverty.
And even more to the point: advocating for so-called “guest worker” programs that provide a legal framework for American employers to exploit Mexican workers without giving those Mexican workers basic labor/human rights afforded to domestic workers is simply not a humane position either for Mexicans or Americans – it’s a position that creates a 21st Century brand of inhumane economic slavery for Mexicans, and embraces the ongoing efforts to drive American wages into the ground.
WOW GREAT POST!!!
How does this all play out between Democrats and Republicans?
About two years ago, I started getting journalists calling me for comment about the “PRD labor shortage” [PRD=Pearl River Delta, between Hong Kong and Guangzhou, a/k/a the world’s manufacturing center].
My response was the same: if it can be solved with money, it isn’t a problem. It’s an expense.
(By the way, wages went up about 25% in the past two years.)
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BusinessWeak— “The strongest evidence that there’s no general shortage today is that overall worker pay has barely outpaced inflation.”
Much too simplistic and categorical. Pay would not rise as fast as overall inflation in a number of different scenarios, the most obvious of which is a sharp increase in productivity (say, the fuller utilization of office networking and inter-office communications).
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SirotaBlog—“ Politicians…couch their bought-off immigration positions in humane terms – pretending that they care about the plight of impoverished Mexicans. Yet, most of these same politicians aggressively supported NAFTA, which deliberately drove 19 million Mexicans into poverty.”
Utter and complete nonsense, totally void of even the most tenuous connection with reality and, naturally, uncluttered with mere facts.
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Fact: Real earnings per work in Mexican manufacturing were 29% higher in December 2006 than in 1993. REAL earnings, after inflation. Nominal earnings were six times higher. Productivity was up 64%, but unit labor costs – the price of employing someone, as measured by output value – was DOWN 21.3%. Latest unemployment is 4%. (Source: http://www.banxico.org.mx/ sitioingles/polmoneinflacion/ estadisticas/laborMarket/laborMarket.html)
Average rate of growth of Mexican GDP per capita in the 1980s was +0.04%. In the 1990s, +1.79% and in the first half of this decade +1.38%. (Source: IMF)
Percentage of Mexicans living in poverty in 1992: 52.6%. In 2004: 47.0% (Source: Bureau of Social Development Technical Committee for the Measurement of Poverty in Mexico)
Gini coefficient, 1992: 0.532 and in 2000 . . . 0.523, and in 2004 . . . 0.498
Average annual increase in compensation per employee, 1994-2006: +10.0%; inflation +7.8% (source: IMF)
That bogus 19 million people in poverty figure? Turns out that is the same as the total increase in POPULATION between 1992 and 2006 . . . oops!
Bottom Line: “reality lite”
David
Your logic escapes me. Why did all the illegal immigrants come here if wages and jobs were growing in Mexico? You can spin the numbers but actions speak louder than words!
John
Free trade with China (I believe) destroyed some of the promises of NAFTA. Now the solution proposed to solve Mexico’s problems is the free flow of people and a NORTH AMERICAN UNION!!! Past promises are immaterial to these people. We are expected to believe the fresh crop of talking heads and are berated if we don’t.
Bill
This policy is a race to the bottom!
Mr Konop,
Don’t worry about it; it isn’t hard to miss the point when the blinders slip down over your eyes.
The questions I addressed, as you will note in rereading my post, had ZERO to do with immigration. That’s why you got confused: different subject altogether.
[I can feel the sheepish grin crossing your face right now!]
The topic under discussion here was the BusinessWeek and SirotaBlog items, above.
My comments were addressing the subjects in the articles:
—The concept of labor shortages (cf my PRD comment);
—The simplistic analysis of the reason why real pay might or might not rise (cf my “BusinessWeak”); and
—the effect of NAFTA on the Mexican economy, and particularly employment and poverty (cf the rest of the post).
There, see? Not a single word about immigration. No number spinning required.
So, take off the blinders and look around. Not every subject is related to your pet peeve.
By the way, there is no way of determining, from the information in the article, nor from the statistics I researched and quoted whether the growth in Mexican jobs, incomes and the economy were sufficient to generate enough jobs, paying good enough wages, to satisfy growth in the labor force and demand for higher pay.
Inadequate information on which to form the conclusion you so readily embraced.
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Bill,
Reality check: the US, Canada and Mexico – either together or individually – do not have free trade with China. Never have.
Oh, and in response to Mr Konop’s No. 5 above, the distance between where we are and the bottom has expanded vastly since NAFTA began. Verifiable fact.
David
But we are working in that direction. Sorry for the confusion. Do you think Bush should be given a blank check for additional treaties with Fast Track authority extended?
Bill,
There is no blank check involved in Fast Track authority, either in the fiscal sense or in any other.
Fast Track simply says that Congress shall, quickly, vote yes or NO on a bill, without added (subtracting) anything.
No earmarks, for example.
If Congress doesn’t like the bill, it won’t pass.
David
Sen. Sherrod Brown, Fair Trade over Free Trade
You wrote a book titled Myths of Free Trade: Why American Trade Policy Has Failed. Is that a sentiment that will find supporters in the new Congress?
The overwhelming number of Democrats… think our trade policy has gone in the wrong direction. They think that our trade policy encourages companies to leave the country. They think our trade policy has caused more and more businesses to outsource. I am certain that we will see a very different Democratic Party, and a very different Republican Party, when it comes to trade.
A lot of Republicans voted for me, frankly, because of my position on trade. The voters in both parties understand our trade policy really has betrayed the middle class.
Will any new trade agreements make it through Congress?
There will be no major bilateral trade agreements that pass the House and Senate, unless there are solid environmental and labor standards [in the agreement].
There’s simply no reason that this Congress and our government should protect the drug companies, but not protect workers, that they should protect Hollywood films, and not protect the environment. That’s an overwhelming sentiment in this freshman class, in both parties, in both houses. And it’s an overwhelming sentiment now in the majority in both houses overall.
The North American Free Trade Agreement was passed under the administration of former Democratic president Bill Clinton. Will “Clinton” Democrats slow your efforts to change U.S. policy?
The so-called Bill Clinton wing of the Democratic Party has evolved into the mainstream Democrats, which [is what] we are. There has been an evolution since China in the late ’90s, there’s been an evolution among almost all Democrats, that these trade agreements simply need to be constructed in a different way, for fair trade, not for free trade.
Is there common ground with Republicans on trade?
I think there’s tremendous common ground on trade … [with Larry Craig (R-ID)] … with Lindsey Graham (R-SC) in the Senate, with Walter Jones (R-NC) in the House. We will find lots to work on. So I think we come down in the same place, in opposition to bad trade agreements and in support of good trade agreements.
David
But if Congress keeps rubber-stamping legislation without knowing what it contains people are gonna get REAL MAD!!!
And why should legislation be crafted from the top down?
Remember the Patriot act?
Bill,
The GOPers in Congress have been rubber-stamping for about seven years.
This year, there was a sea change, remember?
No more rubber stamp, right?
David
Is Sen. Sherrod Brown lying?