Global corporations are increasingly agnostic to the citizenship and location of their workers and will direct jobs and investment capital to the location with the highest potential return. In other words, companies are aggressively reducing labor costs to increase profit and stay competitive. Capitalism at its finest. And no, President Trump can not fix this, but he can make things worse.
A few decades back, economic experts thought that rich high-wage countries should give up low paying manufacturing jobs to poorer, developing countries in exchange for lower-cost goods. Subsequently, affected workers in rich countries would migrate to sheltered, higher paying service related jobs.
The Internet changed all this. IT-enabled breakthroughs have not only revolutionized manufacturing, but it has also transformed many of the best sheltered, higher-paying service industries — such as software programming, engineering, design, accounting, legal, medical and financial analysis. What were once considered “sheltered” jobs are no more.
In an era increasingly dominated by disruptive technologies, the distinction between any type of job has blurred. Slow wage growth and fewer high-level executive jobs in the developed world is a direct outgrowth of this blurring. The percentage of employees that will create an attractive level of wealth over the course of a W2 career continues to decrease, and retirement looks bleak for many.
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- In most of the benefiting countries—China, India, Philippines, Mexico-- weak labor laws substantially reduce the cost and risk of human capital. It's not just about the hourly wage rate.
- Limited to no minimum wage, paid time off, or overtime. “Mules” work 5-6 days a week, 12 hours day.
- Lower costs related to workplace safety, health care, and welfare programs. Limited to no equivalent to our Medicare and Social Security. Most workplaces are not safe.
- Legal recourse for employees does not exist. It’s easy to fire employees that complain or do not perform as well as the other mules.
- Robotics and artificial intelligence contribute negatively to the labor challenges in developed countries. The artificial intelligence wave of productivity is just beginning.
- Everything is getting outsourced! Click on the button below to read an interesting article on MSN.com related to outsourcing.
- Click on the button below for more related information from Bloomberg.