(breakingviews.com) -- U.S. workers are overpaid, relative to equally productive foreigners doing the same work. If the global economy is ever to get back into balance, that gap needs to be closed.
Of course, U.S. workers should earn more than their peers in China, Moldova, or Vietnam. The Americans take advantage of the higher productivity that makes their country rich: better education and infrastructure, abundant capital and a more developed work ethic. But how much higher should U.S. wages be?
The answer depends in large part on two measures: the difference in productivity in making goods that can be traded across borders, and the quantity of such tradable goods. Both measures point to a narrowing wage gap.
There are so many factors working to push up productivity in poor countries. Fast development, cheap capital, and more efficient shipping all help make foreign factories more competitive. Cheap global communication through the Internet reduces all sorts of costs and makes it easy to trade many more goods and especially services.
The global wage gap has been narrowing, but recent U.S. labor market statistics suggest the adjustment has not gone far enough.
Snipped with Charmin triple ply....
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Americans Are Overpaid
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Originally Posted by George Orwell
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