Many Americans, influenced by US media, believe that their jobs
are being stolen by competitors from China.
This opinion, which is widely bought by workers in manufacturing
sectors, has great influence on the US Government.
In view of this, it is necessary to analyze the employment
situation in the United States.
The transfer of traditional industries overseas constitutes one
of the major reasons for job loss in the United States.
Expensive US labor costs have led to the shifting of primary
manufacturing industries to other countries where the price of
labor is much lower.
The core competitive edge of the US economy lies in
technological innovation, service industries and high-tech
manufacturing. Transferring traditional industries overseas helps
the country focus on developing the industries in which it enjoys
advantages over other economies.
This strategy can enhance its international competitive power as
much as possible and also brings fat profits to US companies.
But workers in sectors that have become hollowed out have to
look elsewhere for employment, and this is a major problem. When
their old skills fail to meet the requirements of new posts, they
face unemployment.
On the other hand, China is not the only country affected in
this kind of industrial transfer.
The bulk of Chinese exports to the United States are
labor-intensive products. If China stopped exporting such products
to the United States, the Western nation would not engage in making
these goods anyway. And other countries would fill the vacancy.
Scientific and technological progress and the increase of
productivity have robbed many Americans of their jobs.
Since the beginning of the 1990s, US companies have invested
heavily in IT, automation and artificial intelligence technologies,
which have helped raise the productivity by large margins. But wide
application of new technologies and the sharp enhancement of
productivity have led to job redundancies.
Of course, there is still a huge demand for workers in newly
emerging sectors. But the posts created by these new industries are
less than the jobs lost in traditional sectors. This renders the
employment pressure all the more serious.
In addition to those in traditional sectors, many US high-tech
workers have also lost their jobs recently as a result of the
bubble burst of high-tech shares on the stock market.
Worst of all, US high-tech firms, big and small, compete with
each other to transfer IT-related jobs to countries such as India,
where the pay and welfare level are much lower than those in the
United States. They do this in order to cut costs to the minimum
and reap the highest possible profits.
This again costs many Americans their jobs.
Statistics indicate that about 300,000 computer-programming jobs
have so far been transferred from the United States to India. And
the tendency looks likely to continue.
At the same time, some financial institutions on Wall Street,
following the examples of the high-tech companies, have also
shifted some high-salary monetary analytical posts to India.
US research firm Forrest Research predicts that about 3.3
million US white-collar jobs in service industries will be
transferred to lower-wage countries, chiefly India, by 2018. This
is bound to give rise to more serious problems.
The situation is compounded by the fact that many Americans find
it difficult to adapt to new posts once the sectors where they are
working decline, owing to their inability to keep up with the
changing times, or to their low educational or training levels.
Many employment opportunities are therefore missed.
Job hunters have been subjected to higher education requirements
because the United States is shifting from a
manufacturing-orientated economy to a knowledge-based economy over
the last decade or so.
The figures released by the US Labor Department show that the
unemployment rate for those who received education below senior
high was 6.5 percent in November 2000 but rose to 9.2 percent in
January 2003.
Many unemployed people with low education levels are unwilling
or unable to learn new skills, while keeping their job expectations
high and hoping to get posts in their old sectors with generous
pay.
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In the meantime, the US economy is suffering, which drags down the
US public's consumption confidence and their consuming power as
well.
This necessarily results in weak domestic demand, and 70 percent
of the US economic growth is powered by demand.
Insufficient domestic demand makes it hard for the US economy to
recover. This, in turn, worsens the employment situation. Rising
unemployment renders consumption all the weaker. A vicious cycle is
triggered.
Recent statistics, however, suggest that the US economy shows
signs of recovery. It is believed that the employment situation
will take a turn for the better if the recovery maintains its
momentum.
Taking all this into account, the blame on China for robbing
Americans of jobs is unfounded.
Some Americans see only the transfer of funds, technology and
employment opportunities to China but turn a blind eye to the fact
that good and cheap Chinese consumer goods lower Americans'
consumption costs. They also forget that the US-headquartered
multinational corporations are the biggest beneficiaries of the
industrial transfer.
They should realize that the unemployment problem is the
necessary consequence of economic globalization and that the
problem signifies a necessary phase through which the US economy is
undergoing.
The author is a Beijing-based economics researcher.
(China Daily May 9, 2006)
