Jobs are a very nice side effect of business activity, but the reason a business is created is to provide a return on investment. A business cannot be created without capital (money). Money is not put into a business without some assumption of an acceptable return on investment. Otherwise, the money goes somewhere else instead and the unprofitable business model is never funded.

Now one of the biggest cost components of most companies is labor. When labor goes up, then either the cost of the products sold goes up or the company becomes less profitable. When labor costs rise, there are 3 more likely decisions a company has to consider.

First, they can raise prices. This will not work unless they have amazing product loyalty or no competitors who can offer the product more cheaply. Most industries have a pretty tight band of acceptable ranges for prices. If they go above this range, then the dropoff in demand is prohibitive. It puts them in a position where they do not do enough volume to cover overhead costs (including the rising salaries) and give an acceptable rate of return to the investors who gave the money to start the business.

The second option is to make the production process less labor intensive. This can be seen in automation in manufacturing jobs or even in the automation of office jobs. For example, since the use of PCs has become widely accepted in the business world, it takes a lot less accountants for most corporations. This new mix between equipment and labor allows the jobs to stay even though labor costs per person rise. Unfortunately, this new mix also reduces the demand for jobs. People are phased out, fired and fewer new people are hired. So the job goes away, but its not like its going to another country. And the company is able to keep a lesser number of jobs in the country and still give an acceptable rate of return to investors.

The third and most unpopular option is to move the jobs to a labor market that is less expensive. This does not just mean moving them out of the country. Mortgage servicing companies moved out of New York years ago and moved to places like Miami and Dallas because the labor costs were cheaper. Also, job relocation involves moving jobs that require largely unskilled labor to another country. Why do they do this? Because at some point the cost of doing business in the USA is not sustainable given the acceptable cost of the end product. If the material costs $15, transportation costs are $5, spoilage and waste is $5, the allocated portion of overhead (Equipment costs, truck costs, building costs, utility bills, etc) is $10, labor costs is $20 and the market will only allow me to sell it for $50, then I am in trouble. I will lose $5 on every item I sell. If I raise my price to $55 so I can theoretically break even, then I will lose enough of my market share that I am no longer covering my overhead costs so I will still be losing money. What should a business owner do in this situation. Should he close the company or move the company somewhere else? Its not about these rich, old, white guys who go to the country clubs, sip brandy, twist thier handlebar mustaches and maniacally laugh as they talk about the latest idea they had to oppress the common man. More often than not, its just a matter of simple algebra.

Now you might say that Americans are the best workers in the world and we can outproduce anyone given a level playing field. To that, I would say that in many instances you are right. A big part of the jobs problem is a federal government that does not aggressively protect our interests with in huge clout. This is not something George W. Bush started. Its not a liberal thing or a conservative thing. For the past 50 years we are happy to allow countries like Japan the right to hypocritically put barriers to entry to their markets when its an industry where they do not enjoy a competive advantage while they insist on a totally level playing field if its to their advantage. There is no reason why the US government does not do more to create American jobs by advocating equal playing fields except for the lack of will among our politicans. And the biggest reason for the politicians lack of will is that we have no made it important to them. I guarantee you that if some focus group told George W. Bush that improvement in this area would get him reelected, then something would happen soon.

Even after we account for opening markets up with free trade efforts, we still come down to the cold hard fact that some products cannot be made here without significantly increasing price. Of course every product's profit equation will be some specific combination of material, labor & overhead, many of these equations do not work in the USA because of the disparity in labor costs. Minimum wage is less than $6 per hour, but thats not the real story. My friends who work for union shops such as GM are a much better benchmark. These guys make $20 per hour easy. Get time and a half for overtime, etc. They get great (and very expensive) pension plans, health insurance, and a host of other benefits. When you couple that with worker's comp insurance rates of something like 20% of the base pay, matching FICA taxes, state unemployment insurance, federal unemployment insurance, and all of the other regulatory costs, then you see the actual cost of employing this guy is a heck of a lot more than $20 per hour. It could easily be $35 per hour or more. Lets compare that to the labor costs of locating the same auto plant in Mexico. I do not have hard numbers, but lets say the total cost is $10 per hour. Considering how big of a percentage of the total cost of making a car is related to labor, the price difference is huge. So any domestic auto maker who does not relocate will be at a huge competitve advantage against the domestic auto makers who do move and against the foreign auto makers who import cars from some cheap labor country.

So what do you do to keep jobs in the country? Do you force all automakers to keep all jobs here. If you do, then you either force them to sell the same product for more than the foreign competition and ultimately go bankrupt or you put protective tarriffs on the imported stuff to even out the playing field. Only problem with that solution is that now you have all of these foreign countries leving tarriffs against the USA to retaliate and we lose a lot of jobs that way too. Do you ask auto workers to work for $12 and take less benefits. Heavens no! Michael Moore would have a siezure and label someone the anti-christ for even making the suggestion. If it does not support a comfortable middle class lifestyle, then its just some greedy rich guy's fault. Don't even worry yourself over issues such as profitablity because thats just a bunch of BS a greedy rich guy uses to confuse you while he is taking your job. lol

If you say the issue of American jobs flowing out of the country is about greed, then you are absolutely right. Some of it is corporate greed because the people who invest money want to see some profit for allowing the company to use its money. In my opinion, the bigger issue is consumer greed. The real culprit in the exedous of American jobs is the American consumer. How many people talk about corporate greed being the reason jobs leave, but still do not check to see where something is made and just buys by some other criteria (Cost, quality or whatever)? As long as people put price over "Made in America", they have no right to complain about jobs leaving because the American Consumers are the problem.

Instead of getting all worked up about how the rich, greedy corporations are screwing you by taking your jobs away even though you buy made in China products, why not focus a little more on constructive solutions? Let Don Quioxte go after the windmills and let us focus on practical ways of improving people's lives. There are a ton of job fields out there that are in short supply. All it takes is education (and I am not saying it has to necissarily be a 4 yr degree) and you can fit the needs of the job market. If we are going to have an acute shortage of nurses in the next 10 years, then doesn't it make more sense to train people to become nurses than it does to pay and extra $15 for a pair of pants so they can be made in the USA?