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 labour costs have led to the shifting of primary manufacturing
industries to other countries where the price of labour 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 labour-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 ForrestResearch 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 Labour Department show that the unemployment
rate for those who received education below senior high was 6.5 per cent in
November 2000 but rose to 9.2 per cent 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.
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 per cent 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 05/09/2006 page4)