One of the widely held tenets of free trade is that as countries advance, lower paying, capital intensive jobs move off shore and higher paid, knowledge jobs are created. Over the past few decades, this has largely held true. Things appear to be changing in recent years. Recent data has been showing that lower paying jobs are now replacing good manufacturing and information jobs.
From the Center for American Progress
PROBLEM - JOBS SHIFTING TO LOWER-PAID INDUSTRIES: According to a report released today by the Economic Policy Institute, "In 48 out of 50 states, jobs are shifting from higher-paying industries such as manufacturing and information to lower-paying industries such as retail and hospitality...In California, for example, the average pay in industries that are growing is $34,742, 40% less than the average wage in industries that are shrinking, $57,800."
PROBLEM – MORE LOWER-PAYING JOBS FORECASTED: The EPI report also found "the average wage of new jobs created during the 2004-05 period is forecast to be $35,855, significantly lower than the $43,629 average wage of those jobs lost between 2001-03. The annual wages lost in declining job sectors equaled $182 billion; advancing sector wages are expected to equal only $156 billion, a $26 billion annual shortfall in wages."
Efforts to preserve these high paying jobs is on the rise. A recent article in the Washington Post talks about a paragraph in the Presidents 2005 budget that
prohibits the federal government from awarding certain contracts to companies that will perform the work overseas. The measure expires at the end of September, and industry officials say few contracts are likely to be affected.
But the provision sets a precedent that information technology companies say could stoke a national backlash against them.
Is shifting high paying, knowledge jobs good for the US? Lower cost software, biotech, and call centers should, in theory lead to continued rising living standards here and lower consumer prices. But now that job loss is hitting home to the middle and upper-middle class, more and more people are getting upset. From the post article,
Critics say the trend contributes to the U.S. economy's "jobless recovery," along with the more extensive loss of manufacturing jobs transplanted overseas. Last July, for instance, U.S. firms shipped as many as 30,000 new service-sector jobs to India while eliminating some 226,000 in this country, according to a recent study by researchers at the University of California, Berkeley.
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