Kevin Williamson writes What to Do About Wages in The National Review.
There are basically three ways to raise incomes.
The first is through capital investment that raises the value of labor. But capital investment also replaces labor in many instances, and it is just as effective at raising the value of labor in overseas markets. And EPI’s analysts are correct to point out that in the United States wage growth has lagged behind productivity growth, suggesting that deeper investment may not be enough to really move Americans’ wages forward.
The second way to raise the value of labor is through education and the cultivation of skills. Here, EPI’s analysis seems to me grievously mistaken, emphasizing, as it does, that a four-year college degree has relatively little effect on many workers’ prospects: “The gap between wages near the top of the wage distribution and the middle (and, for that matter, between the very top and the top) has grown much faster since 1995 than has the wage gap between those with a four-year college degree and those with a high school degree. This suggests that rising demands for this credential cannot fully explain the growth in inequality.” What it really suggests is that a four-year degree is not a credential at all, and that markets are much better at sorting than are college-admissions committees and the teaching assistants who are entrusted with the grading. After a generation of complete and utter domination of the higher-education system by the Left, many four-year degrees are nearly meaningless, as are many advanced degrees. The evidence suggests that return on in-demand skills in fields such as technology and finance is very high.
The third way to increase the value of labor gets us right back where we started: bigger markets. Workers in fields that have benefited from more efficient international trade have thrived in many cases — but many have not. The so-called race to the bottom in wages is largely a myth — Audi is not going to move from Ingolstadt to Port-au-Prince — but globalization puts pressure on many U.S. workers’ wages, inevitably.
The problem facing conservatives, at least politically, is that the Left’s empty promises about the effects of minimum-wage hikes and the like strike many workers as more plausible than our story about tax and regulatory reform. And the real outcomes of the policies preferred by conservatives are uncertain, too. There are things we can and should do: Don’t have the developed world’s highest corporate income tax rate and its only non-territorial tax system. Don’t have a cumbrous and unpredictable regulatory apparatus that imposes more in compliance costs than U.S. firms pay in business taxes. Don’t entrust the education system to a self-serving cartel of bureaucrats that doesn’t get the job done. Don’t treat people who might be very prosperous welders and mechanics like losers because they don’t have an MFA from Third-Rate State. Don’t traffic in the superstition that wages at the bottom would somehow magically improve if wages at the top didn’t. Don’t structure your social-welfare system in a way that discourages work and eventual self-sufficiency.