The Fall of the Blue Collar Worker - Jake O’Malley

“Made in America”, a term that many used to associate with the historic industrial might of the United States, now has become a bittersweet reminder of the once booming industrial economy. Following the start of the second world war in 1941, U.S. war production began providing allied power nations with military supplies under the Lend-Lease Act. During this time, the US became the largest producer of the war, as the nation’s industrial production skyrocketed (Marshall). Under the War Productions Board, the production of privately owned factories had shifted to fulfill the needs of war, under a system of contracts assigned by the government. Factories that had once produced automobiles and steel were converted to produce aircrafts, ships, vehicles, and weapons for the military (Wilson). According to the Iron Age steel manufacturing publication, in 1944 the United States became one of the largest producers of steel in the world, with over 15 million tons of steel produced in 1944 alone (setting new production records over a four year span). The Allegheny Ludlum Steel Corporation had reported that in 1943 the company's production job was rated at over 250 million dollars with only 12,500 employees (Deventer). The war was able to effectively raise the GDP by 72%, lowering unemployment rates across the nation by 7.5%, along with improved infrastructure to support a post-war economic boom (Fishback). With thousands of veterans returning from war, the overhauled wartime factories were ready to produce for a post-war consumer economy. At this time, automobile production was reaching all time highs while consumer production was similarly increasing, causing manufacturing employment to increase at an average of 0.46% per year following the end of the war until 1980. With over 19.6 million manufacturing jobs at the time, it marked pivotal point in history as this had been the peak of industrialized jobs in America that was followed by a steady decline. (“Employment, Hours, and Earning” & Wessel). The decreasing of foreign manufacturing costs that have led to the outsourcing of domestic labor has been a primary catalyst for deindustrialization in the United States from 1980 to the present while governmental trade policies and innovation in manufacturing automation and technology have attributed to this economic transition.

The decreasing of foreign manufacturing costs starting in 1980 has resulted in the outsourcing of domestic labor which has played a pivotal role in driving the economic transition towards deindustrialization in the U.S. economy. China is a prime example of a foreign country that can outcompete domestic labor sources as they are able to offer lower costs to U.S. companies, turning the nation into the primary exporter of goods to the U.S. . The Chinese labor costs can simply be determined by supply and demand. With a population of over 1.3 billion Chinese citizens, there is a strong demand for employment, however, the lack of job supply is unable to meet the demand of the worker surplus, leaving a large percentage of workers without jobs. In 2009, one in seven out of the 20 million migrant workers in Beijing were not able to find work, creating a power imbalance between the employers and employees, driving wages down (Scheineson). In addition, many Chinese manufacturing corporations have prioritized the profitability of their businesses over the well-being of their workers, with violations of labor regulations, health and safety protocols, as well as engaged in involuntary labor. In 2002, according to the Chinese Household Income Project Survey, it was revealed that over 80 percent of rural migrants worked seven days a week where diseases such as tuberculosis could easily spread, creating a public health risk (Scheineson). As a result, China’s manufacturing output increased by over 678% from 2004 to 2021, which has been accompanied by a significant cost reduction in comparison to U.S. manufacturing plants, making foreign manufacturing significantly more lucrative for U.S. companies (“China Manufacturing Output”). Apple, a large U.S. corporation, has benefited greatly from the outsourcing of its manufacturing to Foxconn, a Chinese corporation at the center of Zhengzhou, a poor suburb of Beijing. According to the management of private recruiting in the city, the government is heavily involved in the factories' recruiting process in order to drive their economy, paying subsidies to each recruited worker (Barboza). By sourcing the most cost efficient, quality, and available parts from over 9 different countries to be sent to the FoxConn factory, Apple is able to benefit from the cost reductions of manufacturing in China. While a U.S. manufacturer would be able to produce an iPhone for roughly $240, leaving a 52% profit margin, FoxConn, a Chinese manufacturer is able to produce the same product for $229, leaving a 62% profit margin for Apple (Cheung). From the perspective of a consumer, this may not seem like a large difference, but from the perspective of many U.S. corporations, it makes all the difference between making a product domestically or abroad. In the U.S. from 2000 to 2016 alone, factory employment decreased by over 5 million workers due to the outsourcing of labor jobs. Plant closures throughout the United States have been widespread across many industries as foreign competition has increased (Autor). The decline in s a result of the outsourcing of foreign countries, and the comparative advantage gained by these foreign manufacturers has contributed to the decline in manufacturing employment, transforming America into a deindustrialized nation.

Economic policies of the United States have also made major contributions to the deindustrialization of the nation. Enacted in 1994, the North American Free Trade Agreement united trade between the three most dominant countries in North America–Canada, Mexico, and the United States–under a duty-free economic system. Under this open trade system, aviation, maritime, and telecommunications trade would be qualified for tax exemption, making the importation of foreign goods more feasible for American corporations (“North American Free Trade Agreement”). While these trade policies have reflected the capitalistic values of America, boosting the economy's gross domestic product, they have been a main contributor to the U.S.’ growing trade deficit. This has driven out many U.S. jobs, as the outsourcing of manufacturing has become more accessible and lucrative for companies looking to improve their profitability. This was the case with Carrier Air Conditioning in 2016 when the company announced that it would be moving 1,400 of its manufacturing employees from Indianapolis, Indiana to Mexico. Upon the relocation announcement on February 11, 2016, the management staff of the Carrier factory declared that it was “strictly a business decision” in front of all of the workers erupting boos and curses throughout the audience. Nicole Hargrove, a 14-year Carrier worker, originally was uncomfortable with the tightening of the Mexican border but expressed her concern with the free trade policies when the Carrier layoffs had affected her ability to provide for her family (Tavernise). Prior to the implementation of the North American Free trade agreement, American corporations had to account for the financial implications of import tariffs when considering outsourcing their production to benefit from cheaper labor sources. With the free trade agreement, companies have been able to profit from the cheaper availability of labor in regions with lower costs of living with the removal of these tariffs. Furthermore, bilateral trade agreements between the World Trade Organization and the United States in 1999 allowed China to form permanent normal trade relations with the United States, which helped to facilitate China’s integration into the world economy. These trade relations marked a predictable and strong relationship between these two nations in order to foster strong economic interdependence. During this time, China’s industrial tariffs fell from an average of 24.6% in 1997 to 9.4% in 2006 (“WTO Ministerial Conference in Seattle”). With over 1.4 million job losses in the manufacturing industry alone from 1995 to 2008 , America began to grow out of its manufacturing dominated economy. The once booming auto industry of Detroit, Michigan, known as the “Motor Head” of America, has fully received the impacts of globalization, with a 53.9% overall decrease in manufacturing jobs alone from 1990 to 2009 (Autor & “Manufacturing Sector”). Detroit is now a vacated city of empty factories and manufacturing plants with globalization and comparative advantages of foreign competition. While free trade policies may provide consumers with a wide variety of foreign goods at a lower price, they capitalize on the lucracy of foreign importation, putting American workers on the line.

Innovation in manufacturing automation and technology has similarly contributed to the deindustrialization of the American economy throughout the past decades. With the advancement of robots and automation in the manufacturing sector, economic productivity has increased significantly, while employment rates have plummeted. An industrial robot working in assembly line production in the U.S., the FANUC M-1ia has allowed manufacturing plants to transfer up to 100 parts per minute while a human may only be able to transfer 2 to 3 parts per minute. Robotic automation has a wide range of applications across industries in the manufacturing sector from welding, painting, assembly, and material handling. This improvement in technology has grown to significantly outperform the work of a human. Between their efficiency, production rates, and lifespan, many companies believe that their high costs are an investment over the use of a labor force (“How Robots Increase Productivity”). This manufacturing transition has had a detrimental impact on the jobs of many laborers across America. One industry in particular that has seen the largest production transition is the automotive industry. These technological advancements have put a severe burden on the blue collar workforce of America, as many workers with lower education levels have had to battle in the “Race Against the Machine ''. With this increase in technology, manufacturing plants have significantly improved with the replacement of simple tasked jobs with robots and an influx in highly skilled positions. This transition has led to a loss of over 400,000 jobs from 1990 to 2014 due to the increased usage of automated robots in factories across the country (Brynjolfsson). Ultimately, innovation of technology in the industrial sector has had a profound impact on the usage of labor in many industries which has taken away job availability and contributed to deindustrialization throughout the nation.

In conclusion, this economic transition has had many adverse effects on Americans across the nation, as a nation that was once largely categorized as a blue collar workforce has diminished at a steady rate. The industrial jobs that once produced a large share of jobs for Americans provided many with economic stability, as they received decent pay and benefits to retiring when they turned 65 and securing everyone’s “American Dream”. Although, throughout the turn of the century, these jobs have diminished rapidly, which has led to the heightened the divide between wealth classes in America. The once thriving middle class of America has evolved over the past few decades, as the industrial jobs have declined and service sector jobs, requiring education have increased. This has greatened the financial gap for many workers throughout the country as they struggle to make ends meet, unable to earn the cost of living without a college degree. The impact of this transition will continue to have a profound impact on citizens across the country, as they struggle to adapt to the changing economic landscape, creating great financial hardship for many individuals and families.