Internal Devaluation for the U.S.?

September 5th, 2012
in econ_news, syndication

flipping-burgersSMALLEconintersect:  A report out last week from NELP (National Employment Law Project) was entitled "The Low Wage Recovery and Growing Inequality".  The conclusion of the report was that there has been a dramatic shift of jobs out of the middle class and into the lower wage occupations.  Looking back to 2001 the report finds that the effect  transcends just the recovery from the Great Recession, but has been taking place over the past 10 1/2 years.  The lowering of pay by economic and social processes in order to improve international competitiveness is called "internal devaluation".

Follow up:

Here are some of the conclusions from the NELP report:

  • Lower-wage occupations were 21 percent of recession losses, but 58 percent of recovery growth.
  • Mid-wage occupations were 60 percent of recession losses, but only 22 percent of recovery growth.
  • Higher-wage occupations were 19 percent of recession job losses, and 20 percent of recovery growth.
  • Since the first quarter of 2001, employment has grown by 8.7 percent in lower-wage occupations and by 6.6 percent in higher-wage occupations.
  • By contrast, employment in mid-wage occupations has fallen by 7.3.

The three wage levels are defined as for median wages in 366 detailed occupations:

  • Low-wage:  $7.69 $13.83
  • Mid-wage:  $13.84 - $21.13
  • Higher-wage: $21.14 - $54.55

The table below shows the low-wage occupations with the largest employmentn increases from Q1 2010 to Q1 2012:


Seven of the ten low-wage jobs with the largest employment gains have nothing to do with exports.  On the other hand, nine of the fifteen mid-wage jobs could possibly have something to do with exports.  See table below:


Editor's note: So, if internal devaluation has something to do with making exports more competitive, what has happened can not be called internal devaluation.  It is more like internal decay.

John Lounsbury


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1 comment

  1. David Miller says :

    As a High school drop out I never had a problem finding a job. There were many job changes over the years, each time to better my self and my pay. At 47 I earned my GED then entered college and got an associates degree. I held director of maintenance positions at two different companies. My last job was water plant superintendent after studying for and obtaining my state license. None of this would be possible today. Why? Because we have sent our work overseas. As much as I dislike the thought, the only way I can see out of this prediciment is to bring manufacturing jobs back to the US. Protectionism be damned, if that is what we must do to give our people jobs then make it hard on companies who want to move their production off shore. The people on the other hand should be made aware of the fact prices for US manufactured goods will be higher but they must support jobs by buying American. Imported things will be taxed to make them fall in line with American made goods. This measure would take the price of cheap labor out of the picture
    and any incentive for companies to move off shore would be done away with. Not a perfect solution but give me a better one that is as easy and cheaply accomplished and I'll get behyind it.

    We had better do it soon or there will be no turning around for us.




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