FOR IMMEDIATE RELEASE: April 29, 2004
In a provocative new policy brief released today, Carnegie Endowment analyst Sandra Polaski argues that there is currently a huge global mismatch of labor supply and demand which cannot be resolved by current policies and cannot be addressed by the United States alone. In Job Anxiety Is Real—and It’s Global, Polaski proposes that the United Stated revise its policies and make a concerted effort to get countries to work together to expand employment at the global level. Access the policy brief at www.carnegieendowment.org/trade.
Years of very strong U.S. employment growth in the 1990’s cloaked the evolution of two long-term structural changes. The end of the Cold War threw millions of workers from the socialist bloc, China, and India onto the global labor market without a proportional increase of capital for investment. Second, that market has become integrated by technological changes that permit global outsourcing of service as well as manufacturing jobs. The result is heightened competition for jobs, downward pressure on wages, and growing profits for business.
Many current policies exacerbate the problem. The U.S. needs to rethink the causes of weak domestic job creation and change tack, recognizing that the global scale of the problem demands international solutions. Polaski offers specific policy recommendations to U.S. leaders designed to increase global demand for U.S. products while decreasing labor competition among developed and developing countries. The recommendations include:
- Seek trade strategies that increase employment in developing countries’ agricultural sectors. This is where the majority of workers in poor countries find employment, so this is where jobs must be created. Eliminate agricultural subsidies in rich countries.
- Select partners for trade pacts and negotiate agreements that stimulate demand for labor in both countries. The United States currently selects weak trading partners and pushes through deals that lead to less employment in the target country.
- Strengthen protection for labor rights in trade agreements. Better paid, more secure workers buy more goods and services.
- Coordinate international macroeconomic policy through the G8 and with large developing countries to stimulate global demand. The current lack of coordination slows global economic growth and hurts all countries.
Sandra Polaski is the director of the Carnegie Endowment’s Trade, Equity, and Development project. Formerly, she was the U.S. Secretary of State’s special representative for international labor affairs.