Annotated Bibliography

Annotated Bibliography

Higher Productivity, Deeper inequality

Productivity of workers has increased while wages being cut or outsourced. Output in both automobile manufacturing and amount of air transportation have increased while both industries have experienced huge wage, health care, and pension cuts. Both of these are examples of a steady weakening of people’s incomes while productivity keeps increasing. According to the Economic Policy Institute, in 1973-2004 output per employee hour rose 76% while median incomes rose only 22%. There was no gap like this in the previous 20 year interval. This also had to do with the historical circumstances surrounding that time, but also there was less immigration and international competition. Since America isn’t a developing nation, they lack a comparative advantage in terms of labor costs which developing countries now have and many industries are making use of. The bureau of labor statistics has shown the average weekly earnings in nonfarm industries have been steadily decreasing since the 1970s, most likely due to the increase in lower paying industries. Also other advanced and developed countries have their health, pension, vacation, and other benefits less closely linked to the private sector and more related through their government’s legislation. In terms of labor and a countries people, increasing productivity indefinitely should not be the primary concern if people’s wages are suffering.

High Wage America
Low wage Americans have found themselves disempowered this article suggests that a different arrangement of political forces could change wages and career opportunities in America. First myth is that American ingenuity will create good jobs to replace the manufacturing and service jobs that have gone to lower wage countries. However, the trading system as it is benefits investors over workers. The second myth is that the larger wage inequality and rise in low wage jobs are the product of a deficit in skills of workers which is exacerbated by the high demand for skilled work. However, this report demonstrates that even workers with great skills are being displaced into lower wage jobs. Better education and training does not necessarily ensure low wage jobs will be replaced with good ones but America needs a better system of basic education- economically, and for the sake of having a better society. Improving the skills side of workers only however will only produce more frustrated and over educated workers unless they are paired with good jobs. This requires changes in polices also. Unions put the low wage job problem in the center of national debate. Unions result in having wage premiums that allow for better wages and working conditions, not to mention skills training and the idea of having a career. The higher wage premiums tend to be offset by less turn over and increased worker productivity ( a better paid worker works better).

The Working Poverty Trap
Almost a quarter of the nation’s workforce in 2001 earned less than $8.70 an hour. 42% of these workers never attended college and are at the official poverty line. Wages for women without college degrees have not changed in real dollars in the last 30 years. The average purchasing power of men without college degrees have fallen since the 1970’s while the average purchasing power of men with college degrees have increased. Mangers have reported that pressures to cut costs and increase quality have increased greatly in sectors all across the economy. Increases in technology in firms have gotten rid of many low skill jobs due to the additions of advanced automated technologies. The jobs that are left over however require a higher skill set. Skills that non-college educated workers don’t have, i.e. reading graphs on computer screens. Larger factories often offer training courses for basic math and computer literacy. The workers who don’t have these skills or low wage workers who don’t work for firms with these training courses lose their jobs. This increase in technology also is causing a shrink to the amount of low skill jobs around. Also many firms don’t have the willingness to pay these premiums for worker to learn these new technologies. All these firms find them selves along a diverse spectrum of sophistication. The firms on the lower end of the spectrum are already finding themselves struggling to find their niche in the markets and thus pressure to keep costs down are incredibly high since their profit margins are so low. If costs are too high, customers can easily find a new supplier (car parts, generic plastic spoons, etc). This results in having the lowest wages and benefits in the industry. In the auto industry, suppliers must have the ultimate technological edge and production capabilities because the prices for parts are set by the automobile companies which suppliers have to try and match. If not, the contract for a certain part will just go to one of the many other car part suppliers. Also car parts now have “zero defect” requirements since automobile companies down inspect parts before they go onto the assembly line. This requires exact numbers of parts delivered within a 30 minute time frame. Pressures like these have caused changes in human resource. This includes more resistance to unionization, increases in the need for more qualified workers, and less low skilled workers. Also there is increased outsourcing since labor costs are lower outside of the United States. Thus low skilled manufacturing jobs are decreasing in the United States. It has been steadily decreasing since 1992 and the BLS has projected it to keep decreasing. Manufacturing productivity however has been rising, especially for people with higher skill levels. Even though employment has fallen, the total U.S manufacturing output has greatly increased and has projected to increase even more.