Paul Krugman blames policy choices, not automation, for wage stagnation in the United States. Is he right?
Partly yes, but mostly, no. Consider the plight of the coal miner who, like thousands of others, loses his job to a machine. If he lives in West Virginia, his state suffers from poor infrastructure, and the education system is lousy and perpetually underfunded. The national shift to an economy based on human resources isn’t doing him any favors.
If he stays in West Virginia (and he might, as his entire support system is there) he’s going to have great difficulty finding a job that pays him a similar wage. Assume for the purposes of argument that he winds up in a fast food restaurant. Krugman’s theory apparently is that the fast food job doesn’t pay because there is no fast food union. The reality of the situation is that our protagonist is competing for that job with a host of other people, including teenagers, with few skills; in simple terms, low wages in the fast food industry are a product of an oversupply of unskilled labor.
Stagnant wages are a fact of life throughout the developed world, including countries such as Germany that are far more unionized than we are. Legislation is a factor, but automation is a bigger one.