“The arrival of hundreds of millions of cheap, diligent Chinese workers in the global economy saw America trade blue-collar jobs for low cost T-shirts and toasters,” according to a recent (July) article by Tom Orlik in the Wall Street Journal. The lesson in these and other demographic changes for manufacturers today comes as no surprise: brace for change.
In roughly the first decade of this new century, the U.S. manufacturing sector shed nearly 5 and a half million jobs. Meanwhile, China’s labor force is said to have already plateaued in size and will soon start to shrink. Manufacturing wages there have risen over 20% just last year, outstripping productivity improvements. Import prices from China to the U.S. are rising, thus crimping American spending power and gradually fueling inflation. (On the plus side: as noted one of our recent posts, the rising trend in foreign wages has resulted in the return of some manufactureing jobs to U.S. shores.)
Yet, to make matters worse, millions of “cheap and diligent Chinese graduates” will be vying for positions soon in the global labor market, thus exerting further pressures on Americans’ wages and our competitive position. A big increase in the global supply of highly skilled workers in the coming two decades will likely have an even greater impact on the U.S. than the surge in low-skilled workers of the recent past.
As a result, there’s a very real possibility – likelihood, really — that professional wages and employment in the U.S. will come under increased competitive pressures. (Fortunately, language and cultural barriers may dent the impact of China’s professional workers in the global workplace, unlike their factory worker parents did.)
On the other hand, one benefit we may derive from this demographic surge: rising incomes in China, and the other Asian nations with whom we increasingly compete, “should also help U.S. workers by creating more demand for [our] high value exports,” according to Orlik.
Still, the outlook remains clear: brace for change. First, America’s blue collar workers lost their shirts (and jobs), during China’s first stage of recent, major economic development. In the next stage, the U.S. needs to be wary of the same results for its white collar jobs. Is it only a matter of time? Or we will find ways to spur advancements through higher education that will preserve our high-wage, high-value jobs?