Question

Why would a decrease in the wage of unskilled workers in the United States due to competition with workers abroad be expected to increase the number of such workers employed relative to the number of skilled workers in a particular industry?

Answer 1

There are many reasons to expect decrease in the wage of unskilled workers in United States . Many skilled workers are outsourced from various countries in some particular industries . These workers are ready to live in low income U.S. dollars too as it is more in comparison to their income in their native countries . Though if the cost of living in U.S. is more expensive, they give priority to other benefits in this developed nation . Cost cutting is prioritized by many companies to reduce loss and increase profit . Generally , cost cutting is one of the factors to handle the pressure of compulsive increase in stock equity value to give returns to their investors.

In some developing countries , more skilled and qualified employees are also willing to work in U.S. as they see it as an entry gate to U.S. in recession period . In some industries , regular supply of skilled workers become more than demand which results into increase in competition of abroad skilled workers with U.S. workers . some developing countries like china have already started skill development programs to make the citizens compatible for global industrial employment  . Skilled workers from Developed countries have also demand in U.S . Obviously the competition becomes more and more tough for unskilled workers . This overall environment becomes unfavorable for localite unskilled workers and increase chances of their cutting wages .