chapter  10
46 Pages

Can globalization lift all boats?

ByJoseph P. Daniels, David D. VanHoose

A controversial aspect of international trade is its effect on the overall level of workers' wages. A related issue is the distribution of wages across different categories of workers. For many US workers, the period between the 1990s and 2008 was a time of higher inflation-adjusted earnings, increased fringe benefits, and (for a time) soaring values of stocks. Since the 1970s, the inflation-adjusted pay of male workers among the highest 10 percent of the US income distribution has risen by more than 10 percent. Some politicians and union leaders have blamed greater US earnings inequality on international trade. A union engages in collective bargaining with an industry's firms over wages and other terms of employment for their members. If a union is the only provider of labor to the industry, it has a monopoly in the labor market. The wage rate is the price that companies must pay to hire labor to produce goods and services.