Eight years ago, Harry Browne wrote an article called “The ‘Exporting Jobs’ Scam”. He pointed out that American wages have always been much higher than wages in many other countries, yet American companies weren’t exporting jobs 30 or 40 years ago to the same extent.
He blames the exporting of jobs on U.S. regulators who “won’t quit heaping more and more demands on American corporations”. I think this is a major point that is still lost today. While China is still considered a communist country, there actually are a lot less bureaucratic regulations for businesses to follow. Property rights are still not as strong there as in America, so it makes sense for an American company to stay in America while exporting jobs to China.
I think wage differentials do matter, but only to the extent that it benefits a company. If a company can have something done cheaper overseas, everything else being equal, then it is likely to “export” the job.
It is also important to remember the consumer in all of this. People talk about jobs being exported overseas, but they are simply focusing on the American worker. Besides benefiting someone in another country, it is also benefiting the American company and, most of all, the American consumer.
Let’s use a ridiculous example and say that workers in China and India are willing to work for just one cent per hour. If Chinese workers are willing to work for virtually free, this will benefit American consumers. You would pay that much less for an iPad or a television.
American companies hire foreign workers because it is cost effective. A big factor in this is probably U.S. government regulations as Harry Browne said. But regardless of the reason, it is a benefit to the American consumer (which is virtually everyone living in the U.S.) to have less expensive products and services.
People were complaining about jobs being “exported” eight years ago when Harry Browne wrote that article and they are still complaining about it today. Some things never change.