American children sing “We are the world,” but the world does not listen. Children in Iran burn American flags. Children in Iraq throw stones at American soldiers. Children in China write hateful essays about the “evil” American ways. American politicians attempt to spin how third world countries embrace Western ways while the terrorist alert is heightened to acknowledge another international threat. Increased globalization has elevated the risk at the domestic and international levels for US government military and civilian personnel.
According to the Forrester Research, approximately 3.3 million U.S. jobs and $136 billion in wages could be moved overseas to countries like India and China by 2015. Therefore, many organizations will need to change their strategies in order to meet the international challenges ahead.
Let’s look into the future. Many developing countries will continue to grow strongly over the next decade. In fact, these countries steadily shift to consumer-led growth instead of export-led growth. The dollar spirals downward and foreign currency goes upward. China and India have added millions to their labor force creating products as well as outsourcing their services abroad at a fraction of what American workers can provide.
These upstart countries are positioning themselves to become the next Super Power. For example, China passed Japan as the world’s second-largest economy. According to the World Bank estimates, China could surpass the US by 2020. China’s gross domestic product (GDP) spreads across 1.3 billion people ($3,600 per person) while the US GDP covers a smaller population ($42,000 per person). Yet, China will continue to fuel the world’s economy due to its thirst for raw materials and products in order to meet its own demand.
Globalization continues to transform our organizations. Today, many American businesses have a global focus. The S&P 500 companies now generate 46% of their profits outside the US. In fact, some of the largest companies are higher. For example, Coca-Cola has become a very successful brand abroad, with operations in 206 countries. Over 80% of the company’s revenue comes from abroad. Coca-Cola CEO Muhtar Kent explains, “We are a global company that happens to be headquartered in Atlanta.
Do the math! American businesses are headed offshore for increased profitability. Companies gain from this foreign exodus the benefits of accessing more lucrative markets, new technologies, easy credit, and quality, cheap labor. When American businesses cut jobs, it has impacted the standard of living for today’s families.
Columnist Fareed Zakaria highlights the dilemma: “Capital and technology are mobile; labor isn’t….And this is a country with one of the highest wages in the world, because it is one of the richest countries in the world. That makes it difficult for the American middle-class worker to benefit from technology and global growth in the same way that countries do.”
Economist pundits and political opportunists paint globalization as the best thing since sliced bread yet hide the realities of global competition from the general public. The forecasted outlook for the full-time worker is bleak. Clearly, technology and outsourcing are making the contingent (temporary) and other forms of flexible labor (independent contractors, on-call workers, temporary help agency, part-time, and contract workers) a reality for future employment opportunities.
As a matter of fact, Charles Handy theorized that unemployed or spare workers would create their own new work in the future. Business executives express little moral remorse as they keep American workers at bay. Therefore, a different type of U.S. business model will need to be developed for global competition in the near future.
How do US organizations compete globally with the realities of outsourcing and create an American labor force that is clearly energized and motivated in the process? What will happen to the quality of life for the middle class as global averages impact American wages?
© 2011 by Daryl D. Green