The Great Divergence

[kandrathe]

The key word there is 'workers'. There really are many people who are qualified, by ability and/or education (or lack thereof) only to work at such jobs and those jobs are not there anymore. Such people are not 'workers'. I perceive that as a problem.

Well, there are a few solutions. One is to get rid of the minimum wage, and let North American employers hire those low-skill workers at a pittance. I suspect a combination of social pressure and the popularity of minimum wages makes that unrealistic.

The more usual solution is the services sector. As the labour productivity of manufacturing increases, fewer relatively better off workers can purchase more services, creating low-skill, labour-intensive jobs outside those sectors. The "McJobs" aren't exactly spectacular, but they don't suck any worse than making Levis for a living, or being unemployed.

Bringing Reebok manufacturing back from countries that pay a couple dollars a day to a country that pays a minimum of seven dollars an hour is not a sensible solution for anyone. It would hold back any increase in labour productivity for as long as those jobs stayed in the first world, and it would prevent relatively poor countries from manufacturing at all.

-Jester

Or, offer the 7$ an hour jobs to already well trained immigrants from China, Eastern Europe, and Africa. Currently, Chinese Americans compose only 1.2% of the US population. Surely, with some encouragement of better pay and more freedom, we might handle a few million more new immigrants. Nothing will help balance the wage inequality more than opening our borders to encourage those who are energetic and seeking a better opportunity to come here and become new Americans. I'd say we should set our sights on ramping up legal immigration of the best skilled and most productive from about 1 million a year, to more like 10 million. That is what I mean by the power of people.

Minimum wage is not a barrier actually. There is a natural minimum wage due to local living conditions. For example, what I saw happening on Long Island, in NY. There is a high cost for living on the island, and a high cost for commuting to the island, so a store can only afford to employ one checkout person who earns a higher wage, and groceries cost more. There aren't enough people who can afford to do the service jobs, so it's not unusual for the ATM machines to be empty, or stores to open late, close early, or be open fewer days. Minimum wage there doesn't matter, since no one could live there and earn it, and no one could commute there for that wage.

So, then extending that elsewhere, people will only work for a wage that ultimately sustains them. The market can adequately determine the appropriate cost of labor. But, let's compromise. Let's raise the minimum wage we have to reflect a living community wage (determined within each county), but allow employers to petition for temporary reduction of the minimum wage under special circumstances such as temporary unskilled labor, or for new workers with less than 6 months experience.

Socially, where the rubber hits the road is that "Americanization" via education and skills improvements need to be readily available and cheap. The good news is that the number of children needing to be educated is dropping, freeing up space in thousands of institutions, and the internet is proving to be an excellent productivity tool in teaching many courses that were previously live lectures. I think now is a great time to buoy up our melting pot nation with an infusion of new immigrant enthusiasm.