17.4 Impact of Globalization on American Workers and Industries

Globalization has profoundly impacted American workers and industries, reshaping the labor market and business landscape. The shift towards a global economy has led to job outsourcing, wage stagnation, and increased competition, while also creating new opportunities in high-skilled sectors.

American businesses have adapted to these challenges through cost management, innovation, and global market expansion. Meanwhile, the government has implemented trade policies, workforce development programs, and economic initiatives to support industries and workers in navigating the complexities of a globalized world.

Globalization's Impact on Employment

Labor Market Shifts

Top images from around the web for Labor Market Shifts

• 

  Are recent college graduates finding good jobs? - Journalist's Resource View original

  Is this image relevant?

• 

  What will be the effect of coronavirus on gig economy workers? - Economics Observatory View original

  Is this image relevant?

• 

  How the Gig Economy will Boost Global GDP by $2.7 Trillion | Transmedia Newswire View original

  Is this image relevant?

• 

  Are recent college graduates finding good jobs? - Journalist's Resource View original

  Is this image relevant?

• 

  What will be the effect of coronavirus on gig economy workers? - Economics Observatory View original

  Is this image relevant?

1 of 3

Top images from around the web for Labor Market Shifts

• 

  Are recent college graduates finding good jobs? - Journalist's Resource View original

  Is this image relevant?

• 

  What will be the effect of coronavirus on gig economy workers? - Economics Observatory View original

  Is this image relevant?

• 

  How the Gig Economy will Boost Global GDP by $2.7 Trillion | Transmedia Newswire View original

  Is this image relevant?

• 

  Are recent college graduates finding good jobs? - Journalist's Resource View original

  Is this image relevant?

• 

  What will be the effect of coronavirus on gig economy workers? - Economics Observatory View original

  Is this image relevant?

1 of 3

• Outsourcing of manufacturing jobs to countries with lower labor costs transformed U.S. labor market
• Global knowledge economy increased demand for high-skilled workers (technology, finance, specialized fields)
• Reduced opportunities for low-skilled workers in traditional industries
• Job displacement disproportionately affected certain regions and industries
  • Created economic disparities across different parts of the country
  • Example: Rust Belt states experienced significant manufacturing job losses
• Gig economy and rise of contract work partly attributed to globalization
  • Companies seek more flexible labor arrangements to remain competitive
  • Examples: Uber drivers, freelance graphic designers, temporary staffing agencies

Wage and Job Security Effects

• Globalization contributed to wage stagnation for many American workers
  • Competition from foreign labor markets puts downward pressure on wages
  • Example: Average hourly earnings growth slowed from 3.3% in the 1980s to 2.2% in the 2000s
• Increased global competition led to greater job insecurity
  • Many industries face constant threat of offshoring or automation
  • Example: Call center jobs moved to countries like India and the Philippines
• Impact varies by sector
  • Some industries experienced growth due to expanded global markets (technology, finance)
  • Others faced decline (textile manufacturing, low-skilled assembly work)
• Long-term unemployment became more prevalent
  • Workers struggled to find new jobs in changed economic landscape
  • Example: Manufacturing workers in their 50s faced challenges transitioning to new careers

Challenges of Global Competition

Cost and Regulatory Disparities

• American industries struggle with higher labor costs compared to developing countries
  • Difficult to compete on price in global markets
  • Example: U.S. manufacturing labor costs average $29.81 per hour vs.$4.45 in China
• Differences in environmental and labor regulations create uneven playing field
  • U.S. companies adhere to stricter domestic standards
  • Example: Higher costs for pollution control equipment in U.S. factories
• Currency manipulation by foreign governments artificially lowers cost of competing goods
  • Disadvantages American products in both domestic and international markets
  • Example: China's alleged undervaluation of the yuan to boost exports

Intellectual Property and Market Access Issues

• Intellectual property theft and forced technology transfers pose significant challenges
  • Particularly problematic in certain foreign markets (China)
  • Example: Alleged theft of trade secrets from companies like Apple and Tesla
• Trade barriers and protectionist policies in foreign markets limit access for American goods and services
  • Hinders expansion opportunities for U.S. businesses
  • Example: High tariffs on U.S. agricultural products in some Asian markets
• Rapid pace of technological change requires constant innovation and adaptation
  • Challenging for established American industries to keep up
  • Example: U.S. automakers adapting to electric vehicle technology to compete globally

Supply Chain Vulnerabilities

• Global supply chain disruptions exposed vulnerabilities in American industries
  • COVID-19 pandemic highlighted risks of international sourcing
  • Example: Shortages of personal protective equipment during early stages of pandemic
• Dependence on foreign suppliers for critical components created risks
  • Disruptions in one country can affect production globally
  • Example: Semiconductor shortages affecting U.S. automotive production
• Need for more resilient and diversified supply chains became apparent
  • Companies reevaluating global vs. local sourcing strategies
  • Example: Efforts to increase domestic production of essential medicines

Business Strategies for Globalization

Cost Management and Innovation

• U.S. companies embraced offshoring and outsourcing to reduce costs
  • Maintain competitiveness in global markets
  • Example: Apple outsourcing iPhone manufacturing to Foxconn in China
• Focus on developing high-value, innovative products and services
  • Differentiate from lower-cost global competitors
  • Example: Boeing's development of advanced composite materials for aircraft
• Investment in automation and advanced manufacturing technologies
  • Improve productivity and offset higher labor costs
  • Example: Use of robotics in automotive assembly plants
• Adoption of more flexible organizational structures and work arrangements
  • Respond quickly to changing global market conditions
  • Example: Implementation of agile project management methodologies

Global Market Expansion

• Strategic partnerships and joint ventures with foreign companies
  • Access new markets and technologies more effectively
  • Example: General Motors' joint venture with SAIC Motor in China
• Diversification of supply chains and reshoring of critical manufacturing capabilities
  • Increase resilience against global disruptions
  • Example: Intel's investment in new semiconductor fabrication plants in Arizona
• Heavy investment in developing global brand presence
  • Tailor products to local markets to compete more effectively internationally
  • Example: McDonald's adapting menu items for different countries (McAloo Tikki in India)
• Expansion into emerging markets for growth opportunities
  • Capitalize on rising middle class in developing countries
  • Example: Starbucks' rapid expansion in China

Government Policies for a Global Economy

Trade and Industry Support

• Trade policies used to protect domestic industries and negotiate favorable terms
  • Tariffs and trade agreements as tools
  • Example: Steel and aluminum tariffs imposed in 2018 to protect U.S. producers
• Tax incentives and subsidies to encourage job retention and reshoring
  • Keep jobs in the United States or bring previously offshored operations back
  • Example: Tax credits for companies that bring manufacturing jobs back to the U.S.
• Export promotion programs and agencies assist U.S. companies in foreign markets
  • Export-Import Bank provides financing support for U.S. exporters
  • Example: EXIM Bank financing for Boeing aircraft sales to foreign airlines

Workforce Development and Innovation

• Government-funded retraining programs and education initiatives
  • Help displaced workers acquire skills needed in evolving global economy
  • Example: Trade Adjustment Assistance (TAA) program for workers affected by foreign trade
• Investment in research and development through grants and public-private partnerships
  • Support innovation in American industries to maintain global competitiveness
  • Example: DARPA funding for advanced technology research
• Enforcement of intellectual property rights and addressing unfair trade practices
  • Work through international bodies like the WTO to protect American interests
  • Example: WTO case against China for intellectual property violations

Labor and Economic Policies

• Labor laws and regulations aim to balance worker needs with global competition pressures
  • Minimum wage policies and worker protections
  • Example: Occupational Safety and Health Administration (OSHA) standards
• Monetary and fiscal policies to manage economic impacts of globalization
  • Federal Reserve actions to maintain price stability and full employment
  • Example: Quantitative easing during 2008 financial crisis to support economic recovery
• Regional development initiatives to address localized impacts of globalization
  • Target areas heavily affected by job losses due to global competition
  • Example: Appalachian Regional Commission programs for economic diversification