I'll have to disagree with that in a big way. As I interpret it, your argument boils down to more labor supply means lower wages, right?
Consider various changes that result in a large chunk of workers who no longer have jobs:
* foreign cheap-wage workers (as you state)
* technology makes workers obselete (milkmen, toll booth operators, bank tellers)
* population of the world grows
I submit that these trends have been going on for centuries, yet the standard of living has grown substantially. The economy is always in flux, and input costs to create most things eventually decrease secularly, yet real wages grow over the long term. Why is that?
It's because those displaced workers have till now always found new work. Human wants are unlimited, yet we live in a scarce universe. There are always other things people will want that aren't being made today (ex: robot butlers, jetpacks, flying cars...).
At one time, 25% of Americans were farmers. It became cheaper for Americans to buy their food from the cheaper labor of the rest of the world. Those farmers--or at least their sons and daughters--became accountants, teachers, and programmers.
The number of people who can supply computer programming skills to Americans has at least tripled over the last 15 years, yet American programmers are in high demand and their wages have gone up.
The rest of the world coming into the economy is a good thing for Americans overall, and a good thing for the whole world. People will simply have to adapt as they've always done and meet other wants of consumers, which as mentioned above, are endless.
A larger supply of workers can explain temporary rises in unemployment due to the friction of finding a new job, relocating, and retraining, but it cannot explain the sustained economic downturn of the last 3-4 years. |
