The New Global Labor Market

Before the collapse of Soviet Communism, China’s move- ment toward market capitalism, and India’s decision to undertake market reforms and enter the global trading system, the global economy encompassed roughly half of the world’ s population comprising the advanced Organisation for Economic Co-operation and Development (OECD) countries, Latin America and the Caribbean, Africa, and some parts of Asia. Workers in the United States and other higher-income countries and in market-oriented developing countries such as Mexico did not face competition from low-wage Chinese or Indian workers or from workers in the Soviet empire. Then, almost all at once in the 1990s, China, India, and the former Soviet bloc joined the global economy, and the entire world came together into a single economic world based on capitalism and markets.

This change greatly increased the size of the global labor pool, from approximately 1.46 billion workers to 2.93 billion workers. I have called this “the great doubling.” In this article I argue that the doubling of the global workforce presents the U.S. economy with its greatest challenge since the Great Depression. If the United States adjusts well, the benefits of having virtually all of humanity on the same economic page will improve living standards for all Americans. If the country does not adjust well, the next several decades will exacerbate economic divisions in the United States and risk turning much of the country against globalization.

The promise is that as the world economy grows rapidly, so too will the U.S. economy, creating the opportunity for shared prosperity for all. The danger is that as many firms invest in low-wage labor overseas, low-wage Americans will lose ground in the economy, as they have in the past two to three decades. Many will be unable to afford the health-care plans their firms offer, and many will find themselves in jobs with no coverage. Fewer will have private retirement plans. The sentiments against globalization revealed in the North American Free Trade Agreement (NAFTA) debate in the 1990s and in the debates over ways to deal with illegal immigrants in the early 2000s could combine to lead many Americans to blame the global economy for their woes. But it will not be globalization itself that is at fault, but rather the fail- ure of the nation to choose policies that distribute the benefits of the global economy widely.


2 thoughts on “The New Global Labor Market

  1. Nowadays we can observe that almost evey company produce in Asia where is cheap labour force. I think it’s interantional problem, abusing children to work, paying less than 2 $ per day, many hours of work in inhumane conditions. This is a view from for example manufacturing company in China. Similiar situation we can observe in USA, where emigrants from Latin America work for less money than Americans in the same job. Most of them work illegally, so they can not benefit from the privileges and rights of the employee. In all over the world we can find this kind of issues, the point is that it should be solved as soon as it’s possible, to imporove situation on labour market.

  2. Regarding this comment i have to agree totally. The problem with unskilled and cheap workers from poor countries we have worldwide. Big companies exploit these people and try to get out the most of them for cheap money. I think globally seen, we need changes concerning this.


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