Consider this thought experiment. What if offshoring and the long-term shift to a more service-based economy posed a larger political and social challenge than economists are usually willing to admit? And what if, heaven forbid, stronger trade unions might actually be one part of the answer?
The experiment begins with a trip to Las Vegas. If there's one city that embodies the new American economy it's Vegas. It's been the fastest growing US city for 30 years: the population doubles about every decade. Like most successful parts of the country, its growth has depended on a very successful service-based industry, and a lot of new arrivals. It's one of the few places in the US that has carried on creating jobs since 2001. But, more surprisingly still, it's also one of the few places where most of the workers that count are members of a union.
One of them is Bernice Thomas, a mother of eight and grandmother of many. She first came to Las Vegas, from Tallulah, Louisiana, in 1956 - the same year that Dean Martin and Jerry Lewis did their last joint show at the Copacabana hotel. Her first steady job was cleaning rooms at the Mint hotel on Las Vegas Boulevard, known locally as the Strip, and the only street that most tourists see. When the Mint closed down a few years later she went to the Dunes hotel - the iconic rat pack venue - where she worked for 21 years until it too got pulled down in the 1990s. So far, so unremarkable. But in her first job she also signed up to the Culinary Workers local 226, the Vegas branch of the national Hotel Employees and Restaurant Employees Union.
"A lot of people don't understand the union," she told me when I met her recently filming for Newsnight. "They look at their wages and they think they're doing as well as they would with the union. But when the hotel closes they get nothing. If you're in a union you still have all the money that went into a pension. You have security." She also had her own home, a health plan that covered all eight children for a fraction of the cost of most non-union plans, and the chance to see several of them go off to college. When her husband got cancer two years ago she didn't have to pay for the treatment. "He was in the union so we had double cover. When he passed away, I didn't have to pay a penny for the funeral." She spoke of the union in the way that you will hear many Americans of her background talk about their church.
In a country where only 8 per cent of private sector workers are in a union, around 70 per cent of restaurant and hotel workers in Las Vegas work on a union contract, and the share is more than 90 per cent on the all-important Strip. The Bellagio hotel, recently voted the fourth best in the world, is a union shop. So is the MGM Grand, the largest hotel in the world. It's no surprise that Bernice worships the union. What is less predictable is that some of the city's big-time executives have learned to see the advantages as well.
Mike Sloan, vice-president of the Mandalay Resort Group, one of the big four hotel groups on the Strip, says: "There are hotels that have spent more money compensating workers for not being in the union than they would on a union deal. Others just don't want to pay the cost - and maybe they're running 20 per cent cheaper than us. But in the long run they'll pay for it in higher turnover and lower morale."
Employer-union relations are not all sweetness and light here, any more than they are anywhere else. But as someone who's just negotiated a new five-year deal with the Culinary Union, Sloan seems sincere when he explains how unions have something to offer in an industry that depends critically on the quality of its staff. "You take the cost of labour out of the equation if you allow workers to bargain collectively - so we can all compete on who has the best clubs, the nicest hotels, the best entertainment, not on how much we pay. It's worked well for us in Vegas."
Now apply this atypical example to the political debate over the outsourcing of jobs to India and elsewhere, and worries over the US economy's recent inability to create many new ones. Economists say there's nothing to worry about - or nothing that won't benefit everybody in the long run. But everyone else worries that there aren't going to be enough jobs left for ordinary Americans to raise a family on.
The economists are basically right. Not only do the jobs going to India represent a tiny fraction of the workforce, but it is something that's been happening for some time: notably in the 1990s, when the US created 24m jobs. Lawrence Katz at Harvard has calculated that outsourced jobs represent rather less than 1 per cent of today's unemployed, and these job losses pale in comparison to the number of jobs won and lost at home in the regular churning of the labour market. It's hard to see how outsourcing can have more than a small role in the "jobless recovery." And overall, trade in services in the form of call centres in Bangalore really does benefit the national economy, for the same reasons that more traditional goods trade does.
But these arguments aren't doing very well in the US at the moment partly because of the belief that the new jobs that are being created are worse than the ones being lost. There is some truth in this. Using government statistics, the Washington-based Economic Policy Institute has calculated that the industries that have been creating jobs in this US recovery on average pay approximately 13 per cent less than the industries in which jobs are being lost. In the late 1990s, it was the other way around. Median weekly wages for US full-time workers fell, in real terms, in 2003, for the first time since 1996, even as the economy grew by more than 3 per cent.
All of these trends might reverse themselves: the economists are right, again, when they talk about distinguishing long-term structural changes from cyclical ones. But the structural change that everyone agrees about is that the US, Britain and other advanced countries are going to become more and more centred around service sector jobs that can't be done anywhere else. Some of those - the lawyers, the music producers, the estate agents - are already respectable high-paying professions (give or take). But a very large number of them are not. Even if the logic of a market economy suggests that they will ultimately attract higher wages and status, it's not obvious that this will happen quickly or visibly enough for voters to buy into the programme. A recent poll found that even among Americans on more than $100,000 a year, only 28 per cent supported free trade. Five years ago the share was 57 per cent.
It is possible that unions could come to the aid of the market here, by helping to raise the wages and status of a lot of unexportable jobs that are currently considered bottom of the pile.
"There's this myth that manufacturing jobs were always great jobs," said Donald Taylor, secretary-treasurer of the local 226. "But before they were unionised, they were just like a lot of service sector jobs today: crummy jobs with high turnover and bad morale. We have to do the same thing here that we did in manufacturing. These service sector jobs have to become the new middle-class jobs here in America - because they can't move our casinos to Malaysia."
It is easier said than done. Most of the jobs that cannot be exported are still among the hardest to unionise. The Culinary Union has had some unique advantages over the past 15 years: not many unskilled service businesses have made as much money as casinos in Las Vegas have recently, or have been so hungry for smiling personnel. And the average US service sector employer is probably as far from Mike Sloan's union partnership model as it is possible to be. But it is an intriguing idea.
