Not so cheap labor

Workers of the world get a raise

Published January 31, 2006 12:52AM (EST)

China: population 1.3 billion. India: a billion plus. The numbers conjure an understandable anxiety in Western workers. How can you compete against that? More people are studying English in China than there are native-born speakers of the language in the U.S. The fundamental fact of globalization is that it ushered some 1 billion new workers into the global labor market. It would seem, on first glance, that such numbers could lead to nothing else but an unending race to the bottom, which ends when everyone except the members of an obscenely rich elite works for a dollar a day, with no unions, no benefits and no hope.

And yet, the news that the CEO of the German software company SAP told a German newspaper that Indian programmers were getting too expensive is zipping around the Net like a grass fire. If labor costs are starting to rise in India, what does that mean for workers in advanced nations? Is there light at the end of the outsourcing tunnel?

In the spring of 2005, a rash of articles noted similar problems in China. Despite the presence of hundreds of millions of unemployed rural workers and peasants in the country as a whole, the southern Guangzhou delta region -- the manufacturing capital of China -- was experiencing a severe labor shortage. Meanwhile, in Shanghai and other coastal cities, white-collar-worker salaries are appreciating at a torrid pace. Cheap labor? Not so much.

Of course, the flip side of those figures is that the countries that stand to benefit from rising Chinese and Indian labor costs are not necessarily the United States or, say, Germany. SAP's CEO noted that the company is looking to hire programmers in Eastern Europe. The Economist reported in April that some big sneaker manufacturers in China are moving production to Vietnam.

So goes the ravenous dynamic of modern capitalist labor exploitation. There appear to always be cheaper workers somewhere, ready and willing to work for pennies seven days a week, 14 hours a day.

But is that really true? The world is a finite place, made smaller every day by the growing links that bind everyone together. If the poorest countries in the world could claw themselves up the economic ladder enough so that the unending supply of workers willing to work for next to nothing finally began to shrink, then workers everywhere would benefit. Which would seem to make the task of helping the developing world catch up with the already developed world the most critical challenge of globalization.

Listening, last week, to Jeff Faux of the Economic Policy Institute talk about his book "The Global Class War," I heard him describe the position that there could be any global focus on solving labor's problems as "utopian." His position, which appears to be popular within a certain segment of the American left, is to focus primarily on problems within the United States or a small group of countries -- like the U.S., Mexico and Canada. On the right, any movement toward global solutions that doesn't simply involve promiscuous tariff lifting and the unregulated mobility of capital gets decried as One World propaganda -- an insidious plot to undermine American sovereignty.

That doesn't leave much of a constituency for a long-term universal fix. But tightening labor markets in India and China still could be reason for hope. There are no other Indias or Chinas waiting in the wings. China's population is already rapidly aging. The best hope of the American worker may be to see those economies keep growing, and then grow some more.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Related Topics ------------------------------------------

China Globalization How The World Works India Unemployment