Question

Many U.S. manufacturing jobs have moved abroad to cheaper labor countries. Can trade agreements be modified to change that trend? Technology also destroys and creates jobs. What can the federal government do to replace lost jobs or wages-if anything.

Answer 1

Many manufacturing jobs have been moved abroad from the USA to various developing countries because of cheap labors in these countries. Cheap labors reduce the cost of manufacturing and provide a global competitiveness to the products of US firms. Therefore, even though jobs have been a loss in manufacturing, the increases competitiveness of US firms have created jobs in other sectors such as services. Moreover, any effort to save manufacturing jobs will increase the cost of manufacturing and create economic inefficiencies. Many studies have shown that the cost of saving one job is higher than the cost of unemployment. Therefore, it is not desirable to try to save manufacturing jobs. Rather the workers who lost jobs need to be upskilled so that they can take up other jobs.

Technological change often disrupts ongoing production and economic systems and create new and more efficient systems. This creates new jobs and destroys old jobs through the process of creative destruction. In USA technological innovations such as automation and robotics have destroyed many manufacturing jobs. This has made the production system more efficient. In addition, many new jobs in the fields of machine learning, artificial intelligence, data analysis, etc. have been created. So, job loss due to technological disruption is a natural economic process and we need to live with that. The government can help people who lost jobs to acquire new skills and adapt to the new economy and look for new jobs which are being created.