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Wage Insurance for Workers by Roger D. Simmermaker Wall Street Journal - Capital Exchange September 2, 2001 Read the WSJ column...
It is amazing to me that even after admitting the average manufacturing worker laid off because of import competition earns 13% less upon finding a new job, one would still advocate the loss of such jobs. The new position from the free trade corner, wage insurance, is not "smarter" than protecting the jobs as your article claims. Such a position advocates lower wages and therefore less tax receipts collected by our government, as if we didn't already have a huge enough national debt and weren't on the verge of dipping into Social Security funds.
If lower wages for Americans, supplemented with wage insurance, are the answer to a better economy, why don't we all just take voluntary pay cuts let the government pick up 50% of the tab of our reduced earnings? Why would anyone advocate paying higher taxes through wage insurance for the sole privilege of destroying more American jobs? Wage insurance, like free trade itself, is another scheme that is merely a taxpayer-funded program to subsidize imports.
When America was a greater manufacturing power, we paid the highest wages in the world. There are now no less than 12 other nations that pay higher wages to their workers, and 11 of them happen to have a higher percentage of their workforce employed in manufacturing. The key to future U.S. prosperity lies in retaining and creating manufacturing jobs, not voluntarily destroying them.
Your article estimates that the cost of losing 9,700 steelworker jobs is less than the cost to consumers in higher prices, but this figure is deceiving since the loss of each manufacturing job costs four other jobs. This ripple effect means that we will actually lose 38,800 jobs. Also, imports do not always translate into lower prices for the consumer. There is no price difference, for example, between imported and domestically made Levi's jeans or New Balance shoes. Free trade can only benefit the nation if prices fall farther than wages. In any case, we are encouraging a race in the wrong direction -- to the bottom.
Mr. Simmermaker is chairman of the platform committee of the Reform Party USA and author of How Americans Can Buy American.
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