The natives, literally, are restless. Great in theory, globalization isn’t turning out to be all it’s cracked up to be, for those who are losing their jobs. The Organisation for Economic Co-operation and Development (OECD) recently acknowledged growing unease about globalization in its annual labor report and worried about a popular backlash, according to press reports.
Now, the businesses that benefit most from free trade are acknowledging the problem, too. A paper commissioned by the Financial Services Forum sets out several policy options “aimed at cushioning the blow from job losses and other dislocations caused by global trade.” The thinking is that, by helping those on the losing end of globalization, businesses can diffuse growing protectionist sentiment, according to The Wall Street Journal (26 June 2007).
The Financial Services Forum report concludes that:
The aggregate gains from global engagement, large though they are, are not evenly shared and do not directly benefit every worker, firm, and community.
- From the mid-to-late 1970s to the mid-to-late 1990s, the real and relative earnings of less-skilled Americans was poor relative to both economy-wide average productivity gains and also the earnings of their more-skilled counterparts.
- Since around 2000, the large majority of American workers has seen poor income growth.
- Global engagement fosters high productivity in American industries, but typically with substantial churn at the level of individual firms, with pervasive shut-down of inefficient plants and even entire companies.
- Because economic activity tends to be concentrated across American communities, this uneven distribution of globalization’s pressures across workers and firms also means uneven pressures across communities as well.
The bottom line is that today, many American workers feel anxious — about change and about their paychecks. Their concerns are real, widespread, and legitimate.
The typical policy response — retraining — isn’t enough because the relief isn’t fast enough. The report’s new policy ideas include:
- insuring communities against “sudden economic dislocation” caused by a factory closing
- merging all worker-assistance programs (e.g., unemployment insurance and trade-adjustment assistance) into one
- eliminating the payroll tax on incomes less than $32,140
A new survey conducted by the Financial Services Forum and RT Strategies shows that public attitudes towards globalization have dimmed slightly since last year. The most recent poll shows that 49% have a favorable view of globalization, compared with 54% in May of 2006.
However, the survey also found that 67% would have a more favorable view of globalization if policymakers “put in place programs specifically designed to better equip American workers, communities, and firms to participate in, and benefit from, the 21st century global economy, and to help those negatively affected by globalization find new jobs.”