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Tuesday, February 20, 2007

Robert Reich: Minimum Half Median

Robert Reich is trying to broker a deal: renewed trade authority for the president in return for labor standards on future trade deals:

A Labor Standard for Future Trade Deals: Minimum Half Median, by Robert Reich: The Bushies want to renew the President's authority to negotiate trade deals... This gives House and Senate Dems an opportunity to win a long-sought Democratic goal -- putting labor standards into all future trade deals.

But what sort of labor standard? If workers in developing nations were required to have the same, or even nearly, the level of wages and working conditions as Americans, jobs wouldn't go to developing nations. This would be a back-door form of protectionism.

Here's a better idea. First, borrow from standards already issued by the International Labor Organization -- barring slave labor, forced labor, and the labor of young children under 12. ILO standards also recognize the ... right of all workers to form unions. ...

Step two: Encourage developing nations to raise their labor standards as their economies grow. The easiest way to do this is to require that they set a minimum wage that's half their median wage. With this ... standard in place, more of their people will share the gains from trade. ...

Market fundamentalists will object that establishing any minimum wage in a developing nation will force some poor workers out of jobs and into the black market. But that's what market fundamentalists argued almost seventy years ago when America first established our own minimum wage. A minimum wage -- like minimum health and safety standards -- is the hallmark of a civilized society.

The biggest hurdle is that this "minimum half median" standard will force the United States to set and keep our own minimum wage at half our median -- which would be about $7.50 in today's dollars...

This seems reasonable. For many decades, America's minimum wage was roughly half its median wage; only since the late 1970s has it fallen much lower than that. ...

    Posted by on Tuesday, February 20, 2007 at 06:18 PM in Economics, International Trade, Politics, Unemployment | Permalink  TrackBack (0)  Comments (44)

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