The Reason for the Collapse of American Manufacturing Jobs
Friday, October 2nd, 2009I was sitting in my ophthalmologist’s office this week and picked up the current issue of Time magazine. It had an article discussing why Detroit was in such trouble. Part of the blame was placed on the auto industry and auto workers union for joining forces in allowing worker’s wages to rise to unsustainable levels. They almost had me convinced of the correctness of their argument: the workers had brought the collapse of the auto industry upon themselves for demanding wages that allowed them to attain a “middle class” standard of living.
But then I thought about the collapse of the American textile manufacturing and furniture manufacturing industries in my home state of North Carolina. Their non-union wages were about one-third to one-half the level of those paid to the unionized American automobile manufacturing industry workers. And still their jobs had suffered the same fate as the auto workers jobs! So “middle class” wages being paid to American workers is not the cause of the disappearance of America’s manufacturing industry jobs.
Instead it has been the willingness of top managers to diminish the value of the worker’s contribution to the manufacturing process causing the collapse of a multitude of American industries. Whenever the management of a company decides to move its manufacturing off-shore where a desperate worker is willing to work for less than his American counterpart (primarily because that worker is willing to accept a lower standard of living), the value of the worker’s contribution to the end product is diminished.
To make the situation worse, the top manager and his self perpetuating board of directors give themselves raises and bonuses for having reduced the cost of making the product which they continue to sell for the same price. So the gap between the incomes and standards of living of the top managers and the workers (or unemployed former workers) widens.
As the “world economy” developed what should have happened is that those new workers performing the same manufacturing processes should have been paid the same as the American worker producing that same product. This would have resulted in the raising of the standard of living of that developing nation and increased demand for American made products … and a sustaining of the growth of the “middle class” standard of living across a broad spectrum of people all around the world.
American senior managers and government leaders could have chosen to export America’s workers’ high standard of living to the rest of the world. Instead, they greedily chose to import the world’s poverty to the American worker while fattening their own pocketbooks.