The United States has lost manufacturing jobs for several reasons. But, the implications of this job loss is resulting in a catastrophic effect on the US economy. You are likely to eventually see lower standards of living during your lifetime.
Why Manufacturing Job Loss?
Corporate earnings has to be one of the main issues. Manufactured products having a relatively high labor cost can reap higher profit when the labor costs are cut . Since the stockholders want to see higher profits, the logical course of action is to reduce labor costs. Increasing automation or using inexpensive labor are the main ways to scale back manufacturing costs. In lots of sectors moving operations to nations with inexpensive labor is the the optimal solution.
The next step required was to pass tax and import/export laws that could permit outsourcing of manufacturing. With the expectation of higher profits, manufactures could offer incentives to politicians to vote for laws like NAFTA (North American Free Trade Agreement) that permitted easy outsourcing of manufacturing jobs. This law removed tariff taxes for imports and exports and removed barriers to trade between Canada, the US and Mexico.
US corporations saw this as a “foot in the door” that gave them authorization to contract out all kinds of jobs to low wage nations. Manufacturing and service jobs have fled this country. Regardless of whether it is your clothing, electronics, or help desk support personnel, many laborers making products for the US market are foreign.
What Are the Effects of Massive Outsourcing?
The Education Resources Information Center, a government information agency, predicted the effects of NAFTA on employment. It indicated that the “North American Free Trade Agreement (NAFTA) will result in lower wages, fewer jobs, and generally reduced living standards for the majority of U.S. workers.”
While the federal government doesn’t want to admit it, we have lost many jobs. The AFL-CIO compiled figures by ZIP code that indicated that since 2000 we now have lost 5 million manufacturing jobs and 850,000 information sector jobs.
Once a person loses their manufacturing job, they stop spending and a lot of additional jobs are lost. Many people from the grocery store, restaurants, hardware stores, department stores all can lose their jobs too. Cities where job loss occurs suffer a reduced tax base that erodes city services and the quality of schools. Just when the former workers and their children need education the most, schools having a declining tax base must reduce their curriculum.
As a consolation to displaced workers a Trade Adjustment Assistance plan is available. This allows them to obtain an associates or bachelors degree to upgrade skills.
It is a undeniable fact that when US workers must compete with lower cost workers from foreign countries, similar US jobs are not able to pay more. Such competition has to lower the standard of living of all workers involved in unskilled and skilled labor occupations.
Effects on the US Economy
People of the United States buy more foreign goods than they manufacture for shipment abroad. This implies that our national trade balance is always a trade deficit. We sent $46.3 billion more abroad for goods in January of 2011 alone. This means there is a flood of US dollars going abroad. This reduces the value of the dollar on currency exchanges.
In addition, our economy is so bad and our political system so broken that the Federal government has to borrow 42 cents for each dollar they spend. Because of this, the United States is the greatest debtor nation of all time.
The result of all this is that the financial stability of the United States is becoming increasingly questionable. The increasing price of gold, a standard of value, shows that the US dollar is rapidly losing value. With hopefulness that the federal government will change course dimming, the future for the dollar and the investments of millions of Americans looks darker and darker.
Anyone with money in an IRA, mutual fund or savings plan should certainly consider purchasing gold. Find out how to buy gold bullion and help conserve your assets for a brighter future.