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IWS Documented News Service

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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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Congressional Research Service (CRS)

 

Globalization, Worker Insecurity, and Policy Approaches

Raymond J. Ahearn,  Specialist in International Trade and Finance

December 22, 2011

http://www.fas.org/sgp/crs/misc/RL34091.pdf

[full-text, 15 pages]

 

Summary

Today’s global economy, or what many call globalization, has a growing impact on the economic

futures of American companies, workers, and families. Increasing integration with the world

economy makes the U.S. and other economies more productive. For most Americans, this has

translated into absolute increases in living standards and real disposable incomes. However, while

the U.S. economy as a whole benefits from globalization, it is not always a win-win situation for

all Americans. Rising trade with low-wage developing countries not only increases concerns of

job loss, but it also leads U.S. workers to fear that employers will lower their wages and benefits

in order to compete. Globalization facilitated by the information technology revolution expands

international trade in a wider range of services, but also subjects an increasing number of U.S.

white collar jobs to outsourcing and international competition. Also, globalization may benefit

some groups more than others, leading some to wonder whether the global economy is structured

to help the few or the many.

 

The current wave of globalization is supported by three broad trends. The first is technology,

which has sharply reduced the cost of communication and transportation that previously divided

markets. The second is a dramatic increase in the world supply of labor engaged in international

trade. The third is government policies that have reduced barriers to trade and investment. Some

recent research examines whether these trends are creating new vulnerabilities for workers.

 

Some of the vulnerabilities for workers are underlined by changing employment patterns caused

by increased foreign competition, a declining wage share of national income, and rising income

inequality. These trends, in turn, have become a source of economic insecurity for many

Americans and may be weakening public support for U.S. engagement with the world economy.

 

 

To bolster public support for an open world economy, the conventional wisdom is that the

legitimate concerns of those who are losing in the contemporary economic environment need to

be addressed. To what extent the losers should be compensated and how is a matter of

considerable congressional and public debate. Because the relationship between globalization and

worker insecurity is complicated and uncertain, a number of different approaches may be

considered if the goal is to bolster public support for U.S. trade policies, globalization, and an

open world economy. Policies involving adjustment assistance, education, tax, and trade are most

commonly proposed.

 

There appears to be a range of views on the merits of each of these policy approaches and the

extent to which they can be designed and implemented in a way that would reduce worker

insecurity without undermining the benefits of globalization. In the view of many economists,

policies that inhibit the dynamism of labor and capital markets or erect barriers to international

trade and investment would not be helpful because technology and trade are critical sources of

overall economic growth and increases in the U.S. living standard.

 

Contents

Introduction...................................................................................................................................... 1

Trends Driving Global Economic Integration ................................................................................. 3

Technology ................................................................................................................................ 3

Global Labor Supply ................................................................................................................. 3

Government Policy.................................................................................................................... 4

Sources of Worker Insecurity........................................................................................................... 4

Job Losses and Fears ................................................................................................................. 4

Rising Income Inequality .......................................................................................................... 6

Policy Approaches ........................................................................................................................... 7

Adjustment Assistance............................................................................................................... 8

Education................................................................................................................................... 8

Tax Policy.................................................................................................................................. 9

Trade Policy............................................................................................................................. 10

Domestic Standards ................................................................................................................. 11

Free Markets and Limited Government................................................................................... 12

Contacts

Author Contact Information........................................................................................................... 12

 

 

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This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

 

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Stuart Basefsky                  

Director, IWS News Bureau               

Institute for Workplace Studies

Cornell/ILR School                       

16 E. 34th Street, 4th Floor            

New York, NY 10016                       

                                   

Telephone: (607) 262-6041              

Fax: (607) 255-9641                      

E-mail: smb6@cornell.edu                 

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