Labor Shift Doesn’t Help Economy
Re: James Flanigan’s “Should We Fear High-Pay Job Shift” (June 22):
The shift to cheaper offshore labor does not in fact benefit the American economy; to the contrary, it is a devastating cancer.
Out-of-work or underemployed Americans do not pay federal, state or local taxes, nor do they pay into EDD [unemployment insurance], Social Security or SDI [disability insurance]. They also cannot invest in the stock market.
Because their consumption of goods and services decreases, the revenue from sales taxes declines as well. This is already evident in the large deficits appearing in every state. Raising the sales tax merely puts more pressure on those who are still working and will result in fewer purchases of consumer goods by those individuals.
If this trend continues (which it will), social service programs such as unemployment insurance will go broke.
The workers overseas contribute nothing to the U.S. economy in terms of tax revenue compared with what is lost. There will be some purchasing of American goods, but because, as Flanigan notes, overseas workers are paid significantly less than American workers, they will simply not be able to afford American products.
Out-of-work Americans can’t afford these products either, so the demand for them will fall, causing prices to fall. Then the same American businesses that exported the jobs will whine and complain that business is bad and demand federal taxpayer bailouts.
Who benefits from globalization? In the short term, only one group: big business.
Monique Bryher
Tarzana
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Flanigan started me thinking about what has happened to businesses in this country. Something that started as a good thing has had unexpected consequences.
Unions with their ever increasing salary demands plus over-regulation by government agencies have brought about the demise of manufacturing. They have priced our workers out the market. What good is it to have a high hourly wage if the jobs have left the country?
Either remove the barriers to business or watch industry go where products are cheaper to produce and there are plenty of educated people eager to work for less pay than are those in the U.S.
Jeanne Manning
Laguna Woods
