Globalization, Worker Insecurity, and Policy Approaches Page: 2 of 16
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Globalization, Worker Insecurity, and Policy Approaches
Today's global economy, or what many call globalization, has a growing impact on the economic
futures of American companies, workers, and families. Increasing integration with the world
economy makes the U.S. and other economies more productive. For most Americans, this has
translated into absolute increases in living standards and real disposable incomes. However, while
the U.S. economy as a whole benefits from globalization, it is not always a win-win situation for
all Americans. Rising trade with low-wage developing countries not only increases concerns of
job loss, but it also leads U.S. workers to fear that employers will lower their wages and benefits
in order to compete. Globalization facilitated by the information technology revolution expands
international trade in a wider range of services, but also subjects an increasing number of U.S.
white collar jobs to outsourcing and international competition. Also, globalization may benefit
some groups more than others, leading some to wonder whether the global economy is structured
to help the few or the many.
The current wave of globalization is supported by three broad trends. The first is technology,
which has sharply reduced the cost of communication and transportation that previously divided
markets. The second is a dramatic increase in the world supply of labor engaged in international
trade. The third is government policies that have reduced barriers to trade and investment.
Whether these trends are creating new vulnerabilities for workers is the subject of increasing
research and debate.
Some of the vulnerabilities for workers are underlined by changing employment patterns caused
by increased foreign competition, weak wage growth, and rising income inequality. These trends,
in turn, have become a source of economic insecurity for many Americans and may be weakening
public support for U.S. engagement with the world economy.
To bolster public support for an open world economy, the conventional wisdom is that the
legitimate concerns of those who are losing in the contemporary economic environment need to
be addressed. To what extent the losers should be compensated and how is a matter of
considerable congressional and public debate. Because the relationship between globalization and
worker insecurity is complicated and uncertain, a number of different approaches may be
considered if the goal is to bolster public support for U.S. trade policies, globalization, and an
open world economy. Policies involving adjustment assistance, education, tax, and trade are most
There appears to be a range of views on the merits of each of these policy approaches and the
extent to which they can be designed and implemented in a way that would reduce worker
insecurity without undermining the benefits of globalization. In the view of many economists,
policies that inhibit the dynamism of labor and capital markets or erect barriers to international
trade and investment would not be helpful because technology and trade are critical sources of
overall economic growth and increase U.S. living standards. At the same time, identifying the
most effective policy approach is made difficult by the variety of factors - trade with developing
countries, increases in foreign investment flows, trade and financial liberalization, immigration,
and skill-based technological change - that may be generating job and income trends that are
increasing worker insecurity.
Congressional Research Service
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Globalization, Worker Insecurity, and Policy Approaches, report, February 27, 2012; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc807205/m1/2/: accessed November 17, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.