To hear President Donald Trump tell it, America’s trade deals with countries like Mexico, China and elsewhere have been a “disaster.” Trump’s supporters also say the president’s critics have conveniently ignored the Chinese economic threat and growing authoritarianism.
Try telling that to millions of workers around the world. Global poverty rates have plummeted in the 25 years since the North American Free Trade Agreement (NAFTA) kicked off a wave of freer trade agreements. That’s according to the latest report from the International Labor Organization (ILO).
The number of workers in extreme or moderate poverty has nearly halved since NAFTA was signed, from 1.3 billion to 700 million.
The number of workers in extreme or moderate poverty has nearly halved during that time, from 1.3 billion to 700 million. That’s despite the sharp rise in the global population. One billion more people around the world have jobs, and the numbers in the poorest countries have doubled.
But hasn’t that also made America (and other Western countries) poorer at the same time? Hasn’t this represented a massive, “disastrous” transfer of wealth from U.S. workers to laborers in other countries? Not when you look at the data.
The International Monetary Fund reports that U.S. gross domestic product per capita — our national income per American — is 50% higher today than it was in 1993, when NAFTA was signed. And, yes, that is in constant dollars — after accounting for inflation.
That doesn’t even fully reflect some of the real gains. Some of the things that millions of people use today had no price tag in 1993 — because they didn’t exist. Take, for starters, the super-computer (or smartphone) manufactured in Asia that’s sitting in your pocket.
The International Monetary Fund reports that U.S. GDP per capita — our national income per American — is 50% higher today than it was in 1993.
If Main Street feels short-changed, it’s not because America overall is poorer, experts say, it’s about where all this extra national income has gone. As America and other western countries have grown richer, the lives of hundreds of millions in poor countries has been transformed, the ILO reports.
Real, inflation-adjusted wages “tripled in low- and middle-income countries” between 1999 and 2017, it says. Jobs for women have risen at about the same rate as jobs for men. In poor countries there is little or no social “safety net,” the ILO adds, so when people there get a formal job they often get access to benefits, such as health care, that they otherwise wouldn’t have.
Hundreds of millions have swapped subsistence incomes as farmers or casual labors for formal, structured work as “employees,” the ILO reports. The number of waged or salaried employees worldwide has risen 70% since 1993, it adds.
Today, such employees make up 52% of global workers. And the rise has been faster among women than men. Half of the world’s female workers are now waged or salaried employees, says the ILO. That can transform their economic, social and political situation.
Many low-income workers in the informal economy are just scraping by, often at desperately low wages, with no income security and no benefits.
More young people are staying out of the workforce for longer because they’re staying in school. The ILO adds that global “productivity growth during 2019-2021 is expected to reach its highest levels since 2010, surpassing the historical average of 2.1% for the period 1992 to 2018.”
It’s certainly not all roses. Far from it. The ILO stresses several remaining challenges. It says poor working conditions for vast numbers of workers are at the top of its list. Meanwhile, about 2 billion workers, or 61% of the total, are still in the informal economy (that is, jobs not included in a country’s GDP).
Many or most of those workers are just scraping by, often at desperately low wages, with no income security and no benefits. In poorer countries, one quarter of the workers are earning less than the equivalent — in U.S. terms — of $3.20 a day. That’s unimaginable for U.S. workers.
Too many of these people who work and remain mired in poverty have been displaced by the global collapse in the number of farming jobs. Growing numbers of people are dropping out of the labor force altogether. That’s especially true among the less educated.
While the number of working children has been falling over the last several decades, there are still 114 million children age 5 to 14 who work worldwide — and they’re not doing paper routes. Some 55% of the world’s population lack social and economic protection, the ILO estimates.
The gender wage gap is a global problem. Women continue to have fewer jobs, and earn substantially less money when employed. Poverty, poor jobs and minuscule incomes remain especially widespread in sub-Saharan Africa and southern Asia, the ILO adds.
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