The Bush administration wants to renew the president's authority to negotiate trade deals. This is giving House and Senate Democratic leaders an opportunity to win a long-sought Democratic goal -- putting labor standards in future trade deals. But what sort of labor standards?
If workers in developing nations were required to have the same -- or even nearly -- the level of wages or working conditions as American workers, jobs would no longer go to developing nations. Any such standard would be a form of back-door protectionism. But if we set the labor standards too low, there's hardly any point in having them.
Here's a better idea.
Step one is to borrow from standards already issued by the International Labor Organization -- which bar slave labor, forced labor, and the labor of very young children. ILO standards also recognize the right of free association, which means the right of all workers to form unions. Much of the world already recognizes these "core" labor standards, so it wouldn't be too much of a stretch to require all our trading partners to do so as well.
Step two is to 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 standard in place, more of their people will share the gains from trade. America would benefit in two ways by putting this "minimum half median" labor standard into all trade deals.
First, it would enable more people in developing nations to afford to buy our exports. Second, this standard would help these nations build larger middle classes -- thereby providing political stability and laying the groundwork for democracy.
Of course, the "minimum half median" 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 almost any labor standard.
Market fundamentalists will object that establishing any minimum wage in a developing nation would force some poor workers out of jobs or into the black market. But that's what market fundamentalists said almost seventy years ago when America first established its own minimum wage. A minimum wage, like minimum health and safety standards, is the hallmark of a civilized society.
Perhaps the biggest hurdle is that this standard will force America to set and keep our own minimum wage at half our median -- which would be about $7.50 in today's dollars, or thirty cents higher than the current minimum-wage proposal in Congress.
That's a reasonable goal. For many decades, America's minimum wage was roughly half the nation's median wage; only since the late 1970s has it fallen much lower than that. And presumably Americans have as much interest in developing a stronger middle class right here in the United States as we do elsewhere around the world.
Robert Reich is a Prospect co-founder. This column is adapted from Professor Reich's weekly commentary on American Public Radio's Marketplace. His website can be found here and his blog can be found here.
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