Exodus Of Manuacturing Job From The Us

The Exodus of Manufacturing Jobs from the United States

Americans like to believe that we are a self-sufficient country that can produce anything and everything that we need faster, better, and cheaper that anywhere else. This sense of pride makes Americans want to buy merchandise labeled "Made in America". The expansion of the global economy has forced many American manufacturing companies to move some or all of their operations to other countries to take advantage of lower wages, tax breaks, and weaker regulations. In 2003, the pace of job creation was at its lowest point since World War II. Between 2001 and 2003, businesses have cut about three million jobs and have laid off more than one million workers (USA). These jobs losses and layoffs are created because of the mass movement to foreign locations. It is estimated that in the next decade as many as six million jobs will be lost to foreign soil (Rodriguez).

Domestic capital and technology are being reallocated to the employment of foreign labor resulting in less domestic labor to employ. With this practice, either unemployment can result or the remaining capital is spread much more thinly with the decline in labor productivity and real incomes. As industries move offshore their suppliers are often forced to follow causing the domestic economy to become less efficient. This deficiency results from domestic skills being diluted by the offshore movement of jobs.

Outsourcing is a problem because all tradable goods produced as well as service jobs are capable of being outsourced. The higher the value added, the greater the incentive to outsource to India or China. In these countries, there is an enormous excess of supplies of labor which guarantees relatively low wages for years to come. This excess will cause domestic wages and salaries to fall long before India's or China's will rise. This will also result in declines in employment in the United States and declines in real wages in the United States.

American companies need to remain competitive and keep costs as low as possible, but at the same time need to be aware of the effects of outsourcing jobs oversees. According to a survey conducted by the University of Michigan, nearly seventy five percent of participating companies have outsourced or plan to outsource and nearly forty percent have already outsourced (Rodriguez). These companies have the free will and ability to accomplish this, but the government must not encourage this behavior. Companies