Manufacturing jobs were out-sourced to developing countries because labor rates were cheaper. But labor rates had always been cheaper. The real reason for moving offshore was low cost, fast, reliable transportation. The transportation costs were low enough to make it feasible to manufacture offshore.
More recently, customer service call centers have been moved offshore because international telecommunication costs have come down dramatically. Advances in telecommunications, high speed networks, high voice quality, and much lower costs, have made it feasible to locate customer call centers offshore.
Disintermediation - The Internet disintermediated many markets, cutting out the middleman, or several layers of distribution. Internet companies like Amazon, Ebay, craigslist, Travelocity, Expedia, Zappos, and many others have changed the way we purchase almost everything. WalMart, Costco, and other "big box" retail stores eliminated layers of distribution by bringing warehouse stores and wholesale prices directly to consumers. Gone are the wholesalers and distributors of yesteryear...and with them tens of thousands of jobs.
The Internet disintermediation has sharply reduced the need for jobs like travel agents, stock brokers, music stores, secretaries, admins, presentation graphics, MIS analysts. These jobs have been reduced by software productivity improvements that make it possible for any knowledge worker to make their own travel arrangements, buy their own stocks and mutual funds, purchase music directly, etc.
What is next? Fast, reliable Internet bandwidth is now making it possible to do Information Worker tasks anywhere in the world. Fast, high quality, Internet video enables knowledge workers to connect anywhere, anytime. Inevitably, work tasks move to the lowest cost producer. It happened with manufacturing, customer service, and it is now happening with "knowledge" work. Hmmm, OK, this productivity thing has gone far enough. This is getting too close to home. Too late...there is no stopping progress.
Musical Chairs - Productivity is great when the economy is growing. It allows for increased production and profit. But what happens when the economy lags? Production falls, fewer workers are required, laid off workers don't consume as much, and the economy goes into a tail spin. It is the corporate equivalent of the childhood game of Musical Chairs. When the music stops there are fewer jobs available, and some will be left with no chair to sit in.
Full employment - I am reminded of my first trip to China many years ago. My local guide was taking me around to see the sites when I noticed a gang of 50 men digging a ditch on the side of a dirt road. They had several donkeys or horses with wooden carts to carry away the dirt and rubble. I commented that back home one man on a bulldozer or frontend loader and another man on a dump truck would have that job done in a few hours. My local guide said "Yes, that is true, but then what would the other 48 men do?" Incredulous, I said, they would go do more productive work.
Don't displaced workers just move into new areas that are growing? Some do, many can't. And, when the economy slumps there are very few areas growing and hiring people. Advances in transportation technology made it possible to move manufacturing offshore. Advances in telecommunications and Internet technology have disrupted retail and distribution markets. Now it is the "knowledge worker" or "information worker" that is getting disrupted.
Given enough time people can adjust, retrain, and start new careers. The key to survival today is being multi-talented. Prepare yourself to do several different jobs...simultaneously.
Maybe my Chinese guide had the right idea many years ago. Something to think about on your summer vacation.
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