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Thursday, May 31, 2012

Why Shipping Jobs Overseas Will Change Your Daily Life and What to Do About It

The United States has lost manufacturing jobs for a number of reasons. But, the consequences of this job loss is resulting in a catastrophic effect on the US economy. Its future effects will produce a lower standard of living for most Americans.

Why Manufacturing Job Loss?

Corporate profits has to be one of the most important issues. Manufactured products having a comparatively high labor cost can reap a higher profit if the labor costs can be cut . Because the stockholders want to see higher profits, the logical plan of action is to cut labor costs. Increasing automation or using low cost labor are the key ways to scale back manufacturing costs. For countless products, using foreign workers is the best method to scale back manufacturing expenses.

In order to ship jobs offshore, congress needed to alter tax laws and ease import as well as export laws. With the expectation of higher profits, manufactures could offer incentives to politicians to vote for laws such as NAFTA (North American Free Trade Agreement) that allowed easy outsourcing of manufacturing jobs. NAFTA eliminated trade barriers between Mexico, the United States and Canada. It also removed taxes on imports and exports.

NAFTA was a baby step that allowed manufacturers to shed US employees in favor of cheap overseas workers. Manufacturing and service jobs have fled this country. Just look at the nation your clothes are manufactured in to see the consequences of these kinds of laws and agreements.

What Are the Effects of Massive Outsourcing?

The Education Resources Information Center, a government information agency, predicted the consequences of NAFTA on jobs. It stated 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.\"

The AFL-CIO indicates that since 2000 the US has lost 5 million manufacturing jobs and 850,000 information sector jobs which were shipped overseas.

Once someone loses their manufacturing job, they stop spending and a lot of other jobs are lost. Many people from the grocery store, restaurants, hardware stores, department stores all can lose their positions too. Metropolitan areas where job loss takes place experience 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 cut back their curriculum.

To benefit those displaced workers, the federal government established the Trade Adjustment Assistance program to help in retraining. This program allows for cash payments to workers enrolled in full time education.

It is a fact that when US workers need to compete with lower wage workers from foreign countries, similar US positions cannot pay more. Such competition must lower the standard of living of all workers involved in unskilled and skilled labor jobs.

Effects on the US Economy

Inhabitants of the United States purchase more foreign goods than they manufacture for shipment abroad. This ensures that our national trade balance is 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.

Because of the mediocre economy and the uninhibited spending by the Federal government, 42 cents o f every dollar Congress spends has to be borrowed. Because of this, the United States is the foremost debtor nation of all time.

The upshot of all this is that the economic stability of the United States is starting to become increasingly questionable. The mounting price of gold, a standard of value, demonstrates that the US dollar is swiftly losing value. With hope that the federal government will change course dimming, the future for the dollar and the investments of millions of Americans looks darker and darker.

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