In the American federal system, states actively compete for jobs, business investment, and factory locations. Labor costs have played an important role in such interstate competition since the days of the pre-Civil War plantation economy. In recent years, however, global economic trends have put added pressures on businesses and government to reduce labor costs. At least, that is what most politicians, the media, and the business community believe.

Globalization and the Politics of Pay examines the economic, political, and social causes and consequences of declining wages in the United States. It challenges the conventional wisdom that globalization is to blame for the decline in workers' earnings. Susan B. Hansen presents a comprehensive analysis of the many factors affecting labor costs and concludes that many of them result from choices made by the states themselves through the laws and policies they enact. In addition, free-market ideologies and low voter turnout have had greater effects in keeping wages down than globalization. In fact, foreign trade and investment can actually result in higher pay in the state labor market.

In this rigorous yet surprising study, Hansen develops new measures of state and federal labor costs to test competing theories of the consequences of reducing wages and benefits. Most economists would argue that higher labor costs cause higher unemployment, and that reducing labor costs will lead to higher levels of job creation. But citizens and elected officials must weigh any employment gains in lower-wage jobs against slower state economic growth, declining personal income, and a less-competitive position in international trade. Cutting state labor costs is shown to have adverse social consequences, including family instability, high crime rates, poverty, and low voter turnouts. The book concludes with policy recommendations for state governments trying to balance their need for more jobs with policies to enhance productivity, living standards, social stability, and international competitiveness.

Susan B. Hansen is a professor of political science and women's studies at the University of Pittsburgh and author of The Politics of Taxation: Revenue without Representation.

CONTENTS
List of Tables
List of Figures
Preface
Acronyms and Abbreviations
Chapter 1. Globalization, Interstate Competition, and Labor
 1.1 Globalization, interstate competition, and labor costs
 1.2 Theoretical foundations
 1.3 Labor costs: why so low in the U. S.?
 1.4 The impact of competitive federalism on labor costs
 1.5 Plan of the Book 
Chapter 2. The State Role in Labor Costs 
 2.1 States and labor costs before the New Deal
 2.2 New Deal efforts to nationalize labor markets
 2.3 Taft-Hartley and State Right-to-Work Laws
 2.4 Contemporary state efforts to restrain labor costs
 2.5 Measuring state and federal labor costs
Chapter 3. Explaining State Differences in Labor Cost Trends
 3.1 Convergence or divergence in state labor costs?
 3.2 States in the international economy
 3.3 Economic and demographic trends and state labor costs
 3.4 State labor costs, labor unions, and partisan trends 
 3.5 Public preferences and ideology
 3.6 Voter turnout and trends in state labor costs
 3.7 Comparing economic, international, and political factors
 3.8 Conclusion
Chapter 4. The Economic Effects of Cutting Labor Costs
 4.1 Previous research on state labor costs and economic development
 4.2 State/local taxes and state economies
 4.3 State economies and federal policies
 4.4 Data and measures
 4.5 The economic effects of state labor costs
 4.6 Exports, FDI, and State Economic Trends
 4.7 Conclusion
Chapter 5. Social and Political Consequences of Declining Labor Costs
 5.1 Possible consequences of reducing labor costs. 
 5.2 Testing for the consequences of trends in state labor costs
 5.3 Economic consequences of declining labor costs
 5.4 Social consequences of declining labor costs
 5.5 Labor costs and population trends
 5.6 Trends in turnout and state labor costs
 5.7 Policy consequences and declining state labor costs
 5.8 Testing for the independent effects of declining labor costs
 5.9 Conclusion 
Chapter 6. Conclusion
 6.1 The economists' preferred alternatives: investment in human capital 
 6.2 A new role for organized labor?
 6.3 Changing health care
 6.4 Increasing workers' wages
 6.5 Creating better jobs
 6.6 European alternatives to the low-wage strategy
 6.7 Triumph of the low-wage strategy?
Appendix A. Explaining state differences in labor costs 
Appendix B. Time-series analysis of state economic outcomes, 1970-2000.
Appendix C. Analysis of social consequences of declining labor costs
References
Index
LIST OF TABLES
 Table 2.1 State Right-to-Work Laws
 Table 2.2. State Minimum-Wage Laws, 2005
 Table 2.3. State Labor Costs, 1970, and Percent Change, 1970 - 2000
 Table 3.1 Convergence in State Labor Costs and Taxes, 1970-2000
 Table 3.2 States in Top Quartiles on Exports, FDI, and Immigration
 Table 3.3 Exports, FDI, Immigration, and Trends in State Labor Costs
 Table 3. 4. Links Between Economic and Labor Supply Variables and State Labor Costs
 Table 3.5. Links Between State Party Dominance, Ideology, Partisanship and Declines in
 State Labor Costs. 1980-2000
 Table 4.1. Prime Defense Contracts by State, 2000 (in Billions)
 Table 4.2 Predictions of State Economic Outcomes, 1970-2000
 Table 4.3 Combined Impact of Exports, FDI, and State Labor Costs on GSP, Personal
 Income, Unemployment, and Job Growth
 Table 5.1 States Grouped by Change in Labor Costs and Size of Labor Force, 1980-2000
 Table 5.2. State Labor Costs, Job Creation Rates, and Economic Trends
 Table 5.3. State Labor Costs, Job Creation Rates, and Social Trends
 Table 5.4. State Labor Costs, Job Creation Rates, and Population Trends
 Table 5.5. State Labor Costs, Job Creation Rates, and Political Trends
 
 
 Appendix Tables
 Table A.1. Pearson Correlations: Economic and Labor Supply Variables and
 State Labor Costs
 Table A.2. Pearson Correlations: State Party Dominance, Ideology, Partisanship, and 
 Change in State Labor Costs, 1980-2000
 Table A.3. Predicting the Change in State Labor Costs, 1980-2000: OLS Regression Results
 Table B.1 Regression of State Labor Costs on State Economic Outcomes, 1970-2000
 Table B.2 Combined Impact of Exports, FDI, and State Labor Costs on GSP and Personal
 Income
 Table B.3 Combined Impact of Exports, FDI, and State Labor Costs on State
 Unemployment and Labor Force Growth
 Table C.1. Pearson correlations: State Labor Costs, Job Creation Rates, and State
 Economic, Social, Demographic, and Policy Trends
 Table C.2 Testing for the Impact of Labor Cost Trends on State Social Outcomes
LIST OF FIGURES
Figure 1.1 Labor Costs, 1970-2003.
Figure 1.2 Employment, 1970-2003.
Figure 2.1 Average Manufacturing Wages, 1970-2000.
Figure 2.2 Percent of Labor Force Unionized, 1970-2000.
Figure 2.3 State Unemployment Benefits, 1970-2000.
Figure 2.4 State Workers' Compensation Benefits, 1970-2000.
Figure 2.5 Trends in State and Federal Labor Costs, 1970-2000.
Figure 3.1 Trends in Labor Costs and Percent Democratic Legislators.
Figure 3.2 Declines in Voter Turnout and State Labor Costs.
Figure 3.3 Explanations for the change in state labor costs, 1980-2000.
Figure 3.4 Explanations for the change in state labor costs, 1980-2000.
Figure 5.1 Declines in Labor Costs and Voter Turnout. 
Figure 5.2 Trends in State Crime Rates, 1980-2000. 
Figure 5.3 Trends in Voter Turnout, 1981-2002. 
Figure 5.4 Trends in Percent of Children in Poverty, 1979-1999.