The Real Cost of Cheap Labour

The Real Cost of Cheap Labour. By Sohale Mortazavi.

The donor class is comfortably off and is mostly engaged in cultural war issues, but to most of the electorate this economic issue is far more important. The ruling class controls the conversation, so this issue has all but disappeared from the current western political conversation.

Real wages in the United States have been stagnant for five decades. Since 2021, inflation has been outstripping real wage growth, driving down living standards for many American workers.

But mainstream economists and political commentators on both the libertarian Right and much of the liberal Left treat low wages as an unfortunate but unassailable facet of the modern globalized economy. Low wages are the price we pay for free trade, efficient markets, and low prices.

In his new book, Hell to Pay: How the Suppression of Wages Is Destroying America, Michael Lind rejects this status quo. Enabling employers to pay low wages, he contends, is a political choice. Far from being natural or inevitable, low wages are the spoils of a successful war being prosecuted by employers against worker bargaining power. …

He places low wages at the root of the biggest problems plaguing Western countries, especially the United States, where the assault on worker bargaining power has been most extreme. His contention is that low wages contribute not only to poverty but also declining marriage and birth rates, toxic identity politics, partisan polarization, moral panics, loneliness and social atomization, “deaths of despair” caused by depression and addiction, and more.

The argument goes like this: employers suppress wages by reducing worker bargaining power through union-busting, offshoring, bringing in low-wage foreign workers, and various employment practices such as “salary bands, no-poach agreements, non-compete clauses, forced arbitration, and the outsourcing of jobs to contractors.”

These practices have been so successful at retarding wages that many workers are no longer able to survive without public assistance, which Lind reframes as “employer welfare.” Employers need only pay sub-living wages because the government offers food stamps, subsidized housing, the Earned Income Tax credit, and other means-tested benefits. (Lind excludes both universal benefits, such as public healthcare and childcare benefits, and “social insurance” that workers contribute to, such as Social Security, from his definition of welfare.) The taxpayer is left picking up the bill to keep low-wage workers alive.

In Lind’s words, “The business model of 21st century American neoliberal capitalism is privatizing the benefits and socializing the costs of cheap labor.”

Meanwhile, aspirants to the beleaguered middle class find themselves mired in an expensive credential arms race despite diminishing prospects in the face of the slow proletarianization of the liberal professions. Colleges are putting out more graduates than there are good jobs, and the oversupply of graduates exerts downward pressure on wages for those lucky enough to find a professional job at all. …

Lind contends, as have others, that this highly competitive environment encourages the promotion of toxic identity politics by professionals who leverage identity as yet another credential and a weapon for elbowing one’s way past the competition and up the career ladder.

These economic conditions have more and more workers delaying or forgoing marriage and procreation. Much of the working class cannot afford to buy homes or raise kids without further impoverishing themselves. Those aiming for middle-class professions often spend much of their 20s and even 30s in college, internships, postdoctoral study, and the like. Those who don’t come from generational wealth often come out with too much debt to buy homes or start families, thus major life milestones are delayed even longer. Many of those who run the academic gauntlet never secure a good, stable professional career at all. There just aren’t enough professional jobs for all of the college graduates. …

Lind cites polling showing that workers are more likely to reject union representation for political reasons than out of fear of employer retaliation.

Convincing unions to remain neutral on divisive social issues, as Lind suggests is necessary, would not be easy given how enmeshed they are in the wider complex of progressive nonprofits. …

Within the actually existing labor movement, union leadership, professional organizers, and much of the rank-and-file members consider social justice issues non-negotiable. As Lind notes, “Traditional working-class concerns have been yoked to those of college-educated progressive activists in various single-issue movements based in the nonprofit sector and academic leftism: sexual and reproductive rights, environmentalism, racial identity politics.”

This is where Trump and the non-establishment right get their votes from, because at least they talk about restoring prosperity and limiting immigration.