Sydney: It is obviously very difficult for U.S. corporations to compete with corporations in these countries. The main reason is that wages in China, India, and Mexico are so low compared to American ones. The obvious solution would be to cut wages, however this is not a good idea because it would put further financial pressure on American families and reduce the standard of living.
It would also hurt American corporations even more because Americans wouldn’t have as much money to pay for the products produced by these corporations. American corporations could move their operations offshore and reduce their costs but this would lead to job losses in America so that is not something that should be encouraged. The real key to increasing competitiveness is to innovate. By doing things more efficiently and implementing new ideas American corporations can produce cheaper and better goods that are more competitive. We also shouldn’t forget that as the population of these other countries become more wealthy they will demand better working conditions and higher pay. As a result they will become less competitive than they have been in recent years. China, however, is a special case because as long as its currency is pegged to the American dollar its goods will be cheaper.
Michigan: Not much thought needed here. NO. The average hourly wage and benefit package for a U.S. factory worker is $31.79. The same worker in China earns about $1.36 per hour. Since 2001 the U.S. has lost 2.8 million manufacturing jobs to China. We may not agree as to how other countries conduct their business but we can never compete with it.
RMC3: With things as they are today, American corporations cannot compete with low wage countries like China, India, and Mexico. Businesses here can’t pay hourly wages of $8 or $10 or $12 or more and effectively compete with manufacturers in Mexico that are paying $2 per hour. The off shore companies can sell their products to retailers or consumers at a much lower price than U.S. producers. The cost structure has just made U.S. manufacturers and other companies uncompetitive.
There are only a couple of ways that U.S. companies can compete. First, abolish the minimum wage and let companies hire workers for $2 per hour. But, no one in America is likely going to work for $2 per hour, so that isn’t going to help. Second, have the federal government subsidize manufacturing in America. We don’t have the financial capacity to pay our bills as it is, so there’s no money for that. Third, get in a trade war with China and Mexico by instituting tariffs on imports. That’s only going to hurt the consumer and the economy. Fourth, manufacturers here in America need to invest in and develop technologies that enable production domestically at a cost comparable to production in other low wage countries. This eliminates a lot of jobs in manufacturing here, but it may help some U.S. companies survive and compete efficiently. Unfortunately, the technology either doesn’t exist or it’s too expensive to be economically viable.
I know I’ve been talking a lot about manufacturing, but it’s more than that. We’ve got call centers that have been outsourced to India. That’s a service business, but here again, U.S. companies can’t compete with the low wages in India. Across the board, I think we’re going to continue to see outsourcing of jobs to low wage countries. There are certain things here in the U.S. that can’t be outsourced, waitresses, plumbers, teachers, etc., but everything else is going to go away. It’s simple economics.
Cartwright: Nope. Ross Perot was right back in the 1990s when he said that NAFTA would make a giant sucking sound on the economy. Factories moved to Mexico by the scores, taking jobs from American manufacture workers. Then along came China and India with huge workforces that are willing to work for slave wages by our standards here in the U.S..
But you know what? If it weren’t China, India, and Mexico, companies would move their operations to low wage countries in Africa or South America. There’s always going to be people throughout the world willing to work for wages that we here in America wouldn’t accept because of our standard of living. And businesses here in the United States using domestic workers and paying a fair, livable wage to the workers cannot compete with the cost structure of a factory in China. It is nearly economically impossible to compete with them. So, those jobs have gone away and they’re not coming back here anytime soon.