A Labor Standard for Future Trade Deals: Minimum Half Median

The Bushies want to renew the President’s authority to negotiate trade deals (it expires at the end of June). This gives House and Senate Dems an opportunity to win a long-sought Democratic goal – putting labor standards into all future trade deals.

But what sort of labor standard? If workers in developing nations were required to have the same, or even nearly, the level of wages and working conditions as Americans, jobs wouldn’t go to developing nations. This would be a back-door form of protectionism.

Here’s a better idea. First, borrow from standards already issued by the International Labor Organization – barring slave labor, forced labor, and the labor of young children under 12. ILO standards also recognize the right of free association – meaning the right of all workers to form unions. Much of the world already recognizes these “core” labor standards so it shouldn’t be much of a stretch to require all our trading partners to do so as well.

Step two: Encourage developing nations to raise their labor standards as their economies grow. The easiest way to do this is to require that they set a minimum wage that’s half their median wage. With this “minimum half median” standard in place, more of their people will share the gains from trade.

Of course, this standard would be difficult to monitor and enforce. Most developing nations don’t have minimum wages to begin with, and don’t keep careful track of what people are paid. So we might have to help them. This would be true of most labor standards.

Market fundamentalists will object that establishing any minimum wage in a developing nation will force some poor workers out of jobs and into the black market. But that’s what market fundamentalists argued almost seventy years ago when America first established our own minimum wage. A minimum wage – like minimum health and safety standards – is the hallmark of a civilized society.

The biggest hurdle is that this “minimum half median” standard will force the United States to set and keep our own minimum wage at half our median – which would be about $7.50 in today’s dollars, thirty cents higher than the current minimum-wage proposal in Congress.

This seems reasonable. For many decades, America’s minimum wage was roughly half its median wage; only since the late 1970s has it fallen much lower than that. And presumably Americans have as much interest in a strong middle class right here in America as we do elsewhere around the world, right?