Wednesday, August 04, 2010

The Fundamental Problem: Labor As Commodity

"They keep piling more and more work on us, but they want to pay us less and less. It’s a slap in the face." - Michelle, an employee at a Mott’s apple juice plant in Williamson, N.Y., where 300 workers have been on strike since May 23 over company demands for a $1.50-an-hour wage cut.

Comment seen on Facebook: "So? [What is she supposed to do] quit and go find another job? Oh, wait, the economy stupid, you can't find another low-paying shitty job. Or CAN you?"

One more anecdote that captures the fundamental problem faced by the American workforce -- globalization. Indeed, when a company can get good labor for $4 an hour in Mexico and $2 an hour in China making apple juice, for example, there appears to be little competitive advantage remaining in the United States, at least as a manufacturer. Of course, there are exceptions, e.g., certain high-tech manufacturing operations and manufacturers servicing other U.S. manufacturers that require just in time delivery or inure to the benefit of geographical proximity. But they are just that - exceptions to a general rule.

The fundamental problem for the American worker is the great leveling, where most labor is pure commodity in the global marketplace and, like the price of gold, it must the same in Dubai as it is in Mumbai as it is in New York.

The government can intervene (and has) to avoid the inevitable which will only act to delay it. And the inevitable is that the market decides what gold is worth on any given day, and it so decides what labor is worth on that same day.

That is immutable truth and nothing you do, I do, or the government does will change it.

In the end, each individual who wants to survive this great leveling must develop a skill set that, even on a global playing field, is in demand. Such is the primary rule of the market.


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