Saturday, March 12, 2011

War on the Middle Class?

The rhetoric over the state budget battles waging in many states right now is out of hand on both sides. Demonizing public employee unions won't solve the fiscal problems, but neither do these attacks constitute a "war on the middle class." We're about 1/2 or maybe 1/3 through the process of global economic integration and development, and until we've gotten far enough that the developing world is a major market for its own labor and talent (20 to 50 years?), it will be difficult to sustain wage growth at home. The following scene from the moving Outsourced which I streamed on Netflix recently, makes the point better than anything I've seen:

Customer: “You got to be kidding me... I'm buying a freaking American eagle from a company that is supposed to be in America and I get it in India?”
Call Center Worker: “I understand that you're upset, sir.”
Customer: “No, you don't. Last month I lost my job at the plant where I worked for 22 years because the whole operation was moved to Mexico. My brother had to leave town because he had no job.
Call Center Worker: “I know how you feel, sir.”
Customer: “No, you don't. You have a job.
Call Center Worker: “Sir, please don't hang up. I have a solution for you. We understand that all Americans are upset about outsourcing so we have located American made versions of all our products. If you have a pen, I will give you the website of an American company that makes an eagle statue very similar to ours - same size, same material, only theirs are made 100% in America.
Customer: “Well, thanks, I appreciate it. But is the price the same?”
Call Center Worker: “No, sir, theirs is $212 more.”
Customer: “Alright.”
Call Center Worker: “Thank you sir, may I have your credit card number?”

In a world where so many Americans are being replaced by people who will work for so much less (a list that now includes doctors, lawyers, engineers, etc.), it's harder and harder to support the many benefits and working condition protections of public sector workers, no matter how important we think their work is (and make no mistake, I think the work of teachers, police, firefighters, and others like them is worth every penny we could possibly pay them).

I saw a letter to the editor suggesting this debate should not be about "workers rights" but about "human capital" and I think that's exactly right. Framed as a choice between demonizing unions and fighting this war on the middle class, I'm on the sidelines. Framed as a discussion about how to invest in and best use human capital to improve life for all Americans, I'm in.

Let's talk about entrepreneurialism, economic empowerment, worker ownership, public sector innovation, education, infrastructure, etc. - investment in the capabilities that will make American workers worth paying for - and will encourage American workers to support investment in their teachers and first responders. Because until the rest of the world has competitive wages for call center workers and are as likely to buy American-made products as vice-versa, we're not going to solve our problems by tearing down our finest public servants, or by trying to maintain antiquated and uneconomic protective barriers around working conditions that a dwindling number of Americans are able to enjoy.