Do Americans deserve a pay cut?

Is it our fault that unemployment is so high? Some say Americans should be paid less.

By InvestorPlace Nov 13, 2009 4:15PM
By James Dlugosch

James DlugoschIs it any wonder that so many Americans worry about global trade when you see commentary like this recent New York Times article regarding American wages?

Is our whole unemployment problem is the fault of U.S. workers who are paid entirely too much? With foreign workers willing to do the job for less, there is little hope for the job market without a further decline in U.S. wages.

That's right. You and I need a pay cut. Are you kidding me?

The last thing we need in this country is a pay decrease for a majority of our population.

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The gap between rich and poor in this country is already much too big. Many are working more and more and taking in less and less.

This path is a recipe for disaster. To contend that the path need be accelerated is foolhardy.

It is far too simplistic for proponents of global trade to claim that foreign countries can simply make things for less. There are many factors that drive prices and wages, including domestic regulations, wage and labor laws, and currency valuations.

For many years now the United States worker has been competing on a field that is far from equitable. During this time, most of us did not complain due to the incredible advantages that came from our productivity gains and educational advantages.

In other words, it did not matter much that the rest of the world was cheating when it came to fair trade. We could win the battle with our hands tied behind our backs -- and our  hands were indeed tied behind our backs.

The game, though, is catching up to us, and our advantages are no longer so vast. It makes a difference that our foreign trade partners allow companies to produce goods and services without regard to fair wages, the environment or currency values.

It is unlikely that fair wages, labor laws or environmental regulations will be changed in a substantial way to the benefit of American workers. Instead the light at the end of the tunnel has to be with respect to the deflating dollar.

Weakness in our currency, not a decrease in wages, will result in unemployment reversing course. To the extent exports increase, we will see our manufacturing snap back in a big hurry.

Despite utterances in support of the dollar, the Federal Reserve, in tandem with the government, are cheering the greenback's collapse. Prices of certain goods or services may increase as a result, but that is far better than the alternative of further declines in real wages.

If anything, U.S. wages need to increase. A healthy, strong and properly motivated workforce is what will make this country great again.

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