In international economics there is a product life cycle concept. It basically means innovative products that originate in America will eventually be lost to foreign manufacturing. This is mainly caused by cost differences between countries. The only way for the American economic system to stay healthy is to keep being innovative.
The product life cycle has several stages:
- Create and Sell Product Domestically
- Expand Product to Foreign Markets
- Foreign Markets Growth Supports Local Mfg. & Distribution
- Manufacturing & Distribution Cost Cheaper in Foreign Market Export to America
- American Manufacturing is closed
The same company owned both manufacturing facilities, by shutting down the American facilities domestic jobs was lost. However there was an escape plan by migrating labor to services. By moving the American labor force into services, manufacturing could leave America and the US economy can still survive.
Now most of our labor employed is in services. Once again American companies seeking lower cost are creating software products and performing support and administrative services in other countries, exporting those services to America.
There is no product life cycle anymore, we don’t make products. We create many different kinds of services therefore all that is needed are people not physical resources. As each developing country established a service sector of trained tradeable professionals they were able to support the American market. These types of trained professionals are all over the world and growing at an accelerated rate.
This issue is not just the big corporations but all forms of service labor, as an example odesk.com a freelance labor web portal that covers various services from people all over the world, for extremely low prices compared to American rates. A WordPress developer can garner $6 per hr. It is not about getting what you paid for the quality is the same as American labor, the standard cost of living is different in other countries and the wage rates reflect that standard.
Unless something is done to curtail this type of labor wage assault on the American tradeable service sector labor force, there will continue to be massive amounts of unemployment or underemployment which is what we started to experience in the early 2000’s and is continuing today.
The advanced industrial nations are experiencing the emerging service sector life cycle. The time it takes for domestic service sector job being replaced by foreign labor. All tradeable service industries are included in the cycle.