What You Can Do to Improve Your Standard of Living Even Though Jobs Are Still Shipped Overseas
The United States has lost manufacturing jobs for several reasons. The long term results of these loses is probably going to have brutal effects on the economy is just a few short years. You are expected to eventually see reduced standards of living in your lifetime.
Why Manufacturing Job Loss?
The causes have to start with corporate earnings. Manufactured goods having a comparatively high labor cost can reap a higher profit when the labor costs are cut . Stockholders want to have higher profits and management has no alternative but to respond. This can only be done by higher levels of automation or by reducing the costs of labor. In a lot of sectors moving operations to countries with low priced labor will be the most effective solution.
In order to ship jobs offshore, congress needed to transform tax laws and ease import and export laws. Hoping for higher profits, manufacturers pushed the North American Free Trade Agreement (NAFTA) by encouraging politicians to vote for such outsourcing agreements. NAFTA removed trade barriers between Mexico, the United States and Canada. It also removed taxes on imports and exports.
US companies saw this as a “foot in the door” that gave them permission to outsource all kinds of jobs to low wage countries. Because of this both manufacturing and service jobs in the US have been abandoned. 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 government’s Education Resources Information Center released a report about the effects of NAFTA on American workers. Their examination 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 positions and 850,000 information sector positions which have been shipped overseas.
Once someone loses their manufacturing job, they stop spending and a lot of additional jobs are lost. All sectors from grocery stores, beauty salons, car repair shops, restaurants and so on suffer. Metropolitan areas where job loss takes place 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 cut back their curriculum.
As a consolation to unemployed workers a Trade Adjustment Assistance program is available. This program allows these workers to receive payments and gain education to qualify them for new jobs. Education includes associates and bachelors degrees to help improve skills.
The fact is, today workers in labor jobs have to increasingly compete with low wage workers in Mexico, China and other countries. Such competition must lower the standard of living of all workers involved in unskilled and skilled labor jobs.
Effects on the US Economy
With fewer goods manufactured in the United States, people have to purchase goods produced 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 suppresses the value of the dollar on currency exchanges.
In addition, our financial system is so bad and our political system so shattered that the Federal government must borrow 42 cents for each dollar they spend. Because of this, the United States is the foremost debtor nation of all time.
The export of good paying jobs abroad together with the high trade deficits and an excessive rate of borrowing has made our economic stability questionable. The steady escalation in the price of gold, an indicator of value, has illustrated that the long term future of our financial system in question. With hope that the federal government will alter course dimming, the future of the dollar and the investments of millions of Americans looks darker and darker.
If you are nervous about preserving the value of your IRA and other investments, you ought to contemplate buying gold. Find out how to buy gold bullion and help conserve your assets for a brighter future.
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