Reduction of manufacturing jobs in the United States is due to a number of factors. The future results of those loses is likely to have harsh effects on the economy in only a few short years. Its future effects will result in a lower standard of living for many Americans.

Why Manufacturing Job Loss?

Corporate earnings has to be one of the most important issues. Manufactured goods with a comparatively high labor cost can reap a higher profit when the labor costs can be trimmed. Stockholders want to see higher profits and management has no alternative but to act in response. This can only be done by higher levels of automation or by decreasing the cost of labor. In lots of sectors moving operations to countries with low cost labor will be the the optimal solution.

The next step required was to approve tax and import/export laws that will permit outsourcing of manufacturing. With the expectation of more 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. NAFTA eliminated trade barriers between Mexico, the United States and Canada. It also eliminated taxes on imports and exports.

NAFTA was a baby step that permitted manufacturers to abandon US employees in favor of low cost overseas workers. Manufacturing and service positions have fled this country. Just look at the country your clothes are manufactured in to finally see the effects of these types of laws and agreements.

What Are the Effects of Massive Outsourcing?

The Education Resources Information Center, a government information agency, predicted the effects of NAFTA on jobs. Their investigation 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.”

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

Manufacturing job loss extends into numerous other sectors. Many people from the grocery store, restaurants, hardware stores, department stores all can lose their positions too. Metropolitan areas where job loss occurs suffer a reduced tax base that erodes city services and the quality of schools. Right when children of former workers need the best education available, the schools suffer and have to reduce their teaching curriculum.

To help those displaced workers, the federal government created the Trade Adjustment Assistance program to help in retraining. This allows them to get an associates or bachelors degree to upgrade skills.

The fact is, today workers in labor jobs have to increasingly compete with low wage workers in Mexico, China and other countries. This will eventually lower the standard of living of workers in all sectors of our economy.

Effects on the US Economy

People of the United States purchase more foreign goods than they manufacture for shipment abroad. This ensures that our trade balance is alway a trade deficit. We sent $46.3 billion more abroad for goods in January of 2011 alone. This means there is certainly a flood of US dollars going abroad. This excess of dollars lowers their value on currency exchanges.

In addition, our financial system is so bad and our political system so shattered that the Federal government has to borrow 42 cents for each dollar they spend. Doing this has made the United States the greatest debtor nation on the planet.

The upshot of all this is that the economic stability of the United States is becoming increasingly questionable. The mounting price of gold, a standard of value, demonstrates that the US dollar is quickly losing value. With optimism that the federal government will alter course dimming, the future for the dollar and the savings of millions of Americans looks darker and darker.

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