The subject of cheap labor is a global issue these days and this is mainly because of the globalization. The whole world is changing into a global marketplace that requires new demands for it in order to work properly. With these new demands, new problems and issues arise as well, and one of these new issues is the issue of cheap labor. Everyone is concerned about cheap labor in one way or another: businesses are implementing it, other businesses are looking into it, citizens of the nations are worried about it and most of the democratic governments welcome it as long as it creates jobs.
Some people say that cheap labor is good as it stimulates the economic growth, while others oppose this concept and say that cheap labor is bad for society as it exploits the human resources. If you think about than both of the sides make sense: an employer is always looking to cut costs because low costs make him/her more competitive, profitable and effective. Employee on the other hand tries to get as much money as possible, because everyone is interested in making as much money as possible. But in real world it is different from the hopes and dreams of many: the employer and employee usually agree to compensation for the labor that is dictated but the market and that is somewhat beneficial to the employer’s side.
The main negative aspect behind the cheap labor is the issue of low wages. To those who earn low wages, this is the most negative outcome of the cheap labor, because with low wages the employee earns little money that was paid for his labor. Many employers also abuse its employees and often engage in deceptive and illegal trade practices that exploit the workers. There are many side effects that can happen as a result of low wages. The primary side effect from the low wages is the low morale; with low morale the problem starts to develop as the worker starts to become less productive and not as efficient as he/she could have been if the morale was high.
America is probably the number one nation that is affected by the globalization and the low wages because it is the leading nation in the world when it comes to business. The core roots of America are the freedom, democracy and the capitalism; these three concepts have shaped America into the number one nation in the world. A nation that other nations look up to and take examples from, is experiencing a change that many are not ready for. Capitalism has made America into the superpower that it is now, but a lot of people afraid that America is losing its power due to globalization and the changes that happen across the world that are related to the production. The imbalance of trade does not seem to slow down and is getting stronger with every year.
Another thing that makes America stronger than most other nations is its currency, which is the American dollar. Not only does the American benefits from the seniority of the dollar but the dollar is also one of the reserve currencies in the world. Almost every person heard and even seen the American dollar at least once in their lifetimes, and they know how desirable it is, and this is due to the fact that the American dollar is stable currency that has little-to-no fluctuations when it comes to its buying power.
One of the earliest examples in American industrial history is Henry Ford which has revolutionized the automotive industry with the application of his assembly line production process. This revolutionary production method has been applied to all the other production industries in all the countries around the world. With the advent of the assembly line, it was evident that such concept was very beneficial to the businesses. Not only was it more efficient than the previous methods, but it also required labor that was not very skilled. Each worker had to do only one or couple of functions that required very little training. Not only did this lessen the learning curve of the job functions but it also introduced consistency of quality, which in turn lessened the production defects.
Another American businessman who has changed the food industry in America and around the world is Ray Kroc. R. Kroc has started out as a paper cup salesman in the early 1920’s, and during the 50’s he has discovered a small restaurant that was like no other: it was a hamburger and fries joint that was ran by brothers Richard and Maurice McDonald. Kroc has witnessed the effect of fast food with his own eyes (by watching the operations for a whole day), how popular it was among the customers due to the low price, great taste and quick preparation. Kroc then bought out brothers McDonald and began to expand the McDonald’s locations nation-wide and then throughout the whole world. McDonald’s has changed how people eat and how the food is produced. No longer did the tasty food had to be prepared in a slow manner, and with the low prices, everyone could now afford to eat the tasty food. Many others such as Glen Bell (founder of Taco Bell), Harland Sanders (founder of Kentucky Fried Chicken), Dave Thomas (founder of Wendy’s) and many more have took the Kroc’s example and shaped their fast food empires that are known throughout the world.
In the 20th century, another very important American idea has emerged: branding. The companies have realized that in order to be profitable and successful, one has to be unique from the rest of the companies. This has pushed the American companies to be more creative and another industry has emerged: the advertising industry. Advertising industry has been very beneficial to companies of all sizes since it promotes the products and services and makes consumers know about these products. Out of top 10 brands for 2010, eight of the brands are American (#1 Google, #2 IBM, #3 Apple, #4 Microsoft, #5 Coca-Cola, #6 McDonald’s, #7 Marlboro and #9 General Electric), with only China Mobile (#8, China) and Vodafone (#10, United Kingdom) being the only foreign brands on this list. All of the modern companies throughout the world understand the importance of branding and how crucial it is for being a successful and profitable.
After the fall of the communism in the December of 1991, the face of the Eastern Europe changed forever. Russia, Ukraine, Belorussia and twelve other republics began a new life as independent states and each of these republics faced common problems among themselves. The major problem that each of these republics faced was how to be capitalist. The concept of free market economy was foreign to these ex-communist republics that did not had any real-life experience, rather than the theories and concepts from the textbooks that were never applied to use.
The break of the Soviet Union presented many opportunities for business and the qualities of life, and many Russians took advantage of these opportunities. One of the earliest Russian businessmen was a mathematician by the name of Boris Berezovsky. Berezovsky figured out that he could make a huge amount of money by being the only distributor of Avtovaz cars to foreign markets and then importing them back to Russia, since Avtovaz cars sold twice as high in Russia than abroad. Several years later, Berezovsky not only was the sole distributor, but also the owner of the Avtovaz Company. The purchase of Avtovaz was illegal because Berezovsky put the company in debt by exercising a lot of illegal business practices. Many people labeled Berezovsky as a Robber Capitalist because he basically took the money from people, pocketed in his own interest and went away to Great Britain.
Although the example of Boris Berezovsky is not the ethical one, it does illustrate that many of businessmen in Russia are unethical and engage in illegal business practices. Most of the Russia’s businesses are small businesses and they rely heavily on the cheap labor. A common modern term in Russia these days is the word “Gasterbeiter” which translates from German as a “guest worker”. A guest worker may be legal but is usually illegal immigrant from one of the ex-Soviet republics, mainly from the southern nations that are based in the Caucasus mountain region and even from China. The workers and laborers come to big Russian cities such as Moscow and St. Petersburg because they can earn much more in Russia than in their home countries. The laborer usually engage in jobs such as constructions, factory productions, street market workers and other jobs that are less desirable by the Russian citizens who want to be paid more than these guest workers are getting paid.
In the modern world China has become a very serious nation not only in business but also within the field of politics. It is no doubt that China is #2 nation in world in terms of importance. This is greatly has been influenced by the abundant cheap labor that exists in China. From its roots in Imperial times in China, trough the Maoist Communist China to today, China has grew its population to over one billion and is currently #1 nation in terms of population. Chinese people have always been industrious as well as laboring throughout the history and I think that The Wall of China, which is often called the 8th Wonder of the World, is the monument to the Chinese population’s labor.
With the vast population, the field of agriculture has also expanded in China since the land is utilized for either factories/production or for the agricultural purposes. These days China is #1 world producer (in term of output) of garlic, potatoes, cabbage, apples, peaches, apricot and many more of fruits and vegetables. If you go to any supermarket in the America and then chances are that over 68% of the produce that is on the shelves will come from China. Also take a look at the canned fruits and vegetables and there is a high chance that it also came from China. Brands like Polar (canned fruits) have figured out that they can lower the prices on its products by sourcing the supply of fruits as well as the canning production to China and still make profit from it.
Technology, Research & Development as well as the heavy industries are also on the rapid growth in China. Companies like Geely have voiced their plans to the world that they are serious about their products and the supply of it to the whole world. Geely is a Chinese automobile producer that has rose-up to a very popular demand in China and the company is fairly young: it was started in 1986. During its early years the company was centered on R&D and from the 1998 it began to manufacture its cars. In the 1998 its sales were low: just under 200 vehicles. The popularity of Geely cars has grown and the company has sold over 329,000 cars in the year of 2009. Geely not only engineers and assembles the cars, but it also produces its own engines and transmissions which makes the prices low and attractive to the buyers. Just recently, Geely has bought the Volvo brand from the Ford Motor Company and has plans to expand outside of China. This all said shows that China is mowing up within the world market and presents a serious threat to many American industries.
Mexico is America’s southern neighbor and when the NAFTA was put in effect in 1994, a lot of American companies started to produce goods in Mexico, and import them into the USA without any duties. This was attractive for both the Mexico and to America; for Mexico it created new jobs that utilized the local labor resources that were mostly from the central part of Mexico, and to America the NAFTA was beneficial because the cost of production fell down and the manufacturing costs were less, and therefore this reflected on the final price of goods. Majority of the Mexican population is located in the central part of the nation, which is based around the Mexico City. When the American factories started to be built, they were located near the American border, which was convenient to the American companies. The labor force had to migrate up north from the central Mexico so the workers would be employed at the newly-built factories.
Everything was generally fine in Mexico up until the September of 2001; this was the time that the World Trade Organization has accepted China as a member of WTO. This has affected Mexico drastically because China received the WTO trade benefits and the duties on Chinese imports to the USA have been lessened, and combined with the low Chinese labor costs, this has turned the production of the goods that have been imported to the America to China’s favor rather to Mexico. A lot of factories started to close in Mexico as a result and many workers found themselves with no means of earning money, and many of the workers had families back in the central Mexico that relied on the financial support.
With no jobs and no income, a lot of laborers decide to cross the Mexican-American border and head to USA illegally for the opportunities that promise even better income than that what they had in Mexico. Since the closed factories were very close to the border, it made sense to the jobless workers to go to America, since the risk of being caught was low and the potential illegal earnings were high. This trend of illegal immigration has risen-up throughout the years and has presented itself as a serious problem for America. Not only does the unemployment was a serious issue for American citizens, but with added illegal immigration of Mexican citizens to the USA this has put the extra stress and the job losses to the Americans.
Illegal workforce existed all throughout the history and still exist to this day, and most likely it will never go away because of so many people are interested in profiting in ways that are prohibited by the law. Because of the modern times the travel restrictions have eased-up and the growth of the tourism has flourished, it is now easier than ever to travel abroad. In today’s world it has become very affordable to travel abroad because of the advancement and abundance of modern technologies: air travel, shipping and land-based methods of transportations have promoted the traveling in many ways and all this added with unemployment and income opportunities in foreign countries have increased the popularity of illegal immigration. This issue is now the global issue, that every nation as well as groups of nations try to resolve it anyway that they can, because the problem is not going anywhere but is getting worse to some extent.
Oil has become the world’s #1 commodity in terms of demand and supply. Modern nations of the world require a constant supply of oil that the demand is growing steadily for. The supply of oil is always diminishing as the resources are getting depleted each day due to increasing use of oil not only as a fuel but also as an ingredient in production of goods. A lot of nations have increased their wealth due to the demand for oil; this has reflected on their citizens and the wages as well, salaries as well as the standards of living have increased due to the inflow of funds. This is a good thing in my opinion, since not only does the oil industries bring funding, better wages and provides more jobs but this also reflects on other nations and pushes them to follow whenever possible.
Every business is always looking to cut costs and the cheap labor is one of the primary factors that decide what the price will be for a product. I am not suggesting that the workers should be punished by being paid less; I am only suggesting the concept of cheap labor as one of the factors that will reduce costs. I personally believe that employees should be rewarded for their labor, but businesses stay competitive by lowering their costs, which the labor being one of them.
The idea of “fair” wages varies from one individual to another because every person has their own understanding of what “fair” is. A minimum wage is a fair wage to certain extent, since when the state government officials determine the minimum wage for their states, they in turn average-out the needs and wants of the citizens so that they can live, but this way makes it difficult for a person to obtain other wants and sometimes leaves one with no funds for recreation and entertainment. The minimum wages are wages that a person can live on, and the people who frequently oppose it because they want more and are frequently the one who spend the money on unnecessary goods that are not needed for one’s survival, or frequently make wrong priority spending decisions.
Shelter, food, medical access and clothing are the main needs for every person within any society, since in order for one to live, he or she is subjected daily to these 4 issues. All of the said this that are talked about below can be agreed upon the people universally because the whole world relates to them irregardles of social status or earnings. These are the four issues that form the the core essentials that is impossible to live without:
Every person through the world must have some kind of a shelter, because a person without a home is pretty much homeless. The first thing about the shelter is that it should be safe to live in; this not only make it safe for the occupants but it also make the people that are living in the shelter happy. One of the primary spending’s from the responsible employee’s money usually goes out to pay for the shelter-related expenses; such as mortgage payments, rent, utilities and the maintenance expenses. A proper shelter is the one that is kept well and maintained accordingly to the personal needs and to the structure’s well-being. Many people in the world have little to no means to properly maintain a place of residents but the other people who have the means; they frequently ignore the problem and fail to address it properly. A lot of things around the house are very simple to solve, take for instance painting the walls or fixing a leaking faucet; many think that you need a professional to fix these problems, but in reality you just need to have a will and show some effort.
The subject of food is also important in today’s world because everyone has to eat on daily basis. Food varies across the world not only in tastes and cultural dishes but also in prices. In the developed nations the food tends to be more complex in its ingredients but also the prices are higher than in the third-world countries. In the photo book Hungry Planet: What the World Eats by Peter Menzel, there is huge difference in what families across the globe spend weekly on the food-related expense: a family in Chad spends only the equivalent of $1.23USD while a family in Germany spends the equivalent of $500.07USD on food per week. In America the weekly cost of food tends to range in between $200.00-$300.00 per family. One of the important factors when buying food is to be a savvy customer and to use promotional sales as well as promotional coupons in order to lessen the cost and maximize the value of food-related expenses. Most of the citizens do not exercise this opportunity, but many families, especially with many children; do take these promotional opportunities to effect. One of these examples is the “Coupon Queen” Jill Cataldo, who maximizes the promotional sales in coupon to the extent that she paid only $5.15 for 108 boxes of breakfast cereal.
I could write a whole paper on the issue of medical access due to its complexity and scale, but for this paper I will only address it in one paragraph. Throughout the whole world the healthcare is generally accessible to the people and it is only in the United States of America that it is so expensive and prohibitive for many, that they have to rely on the expensive health insurance. I personally believe that three factors here play a role on why the healthcare is so expensive. The first factor is that the doctors turned themselves into businessmen and businesswomen rather than the doctors. The majority of the doctors throughout the world are not like this, they are either state-sponsored; which means that the government is behind them and supplies them as well as pays their salaries, or the doctors are in for their job for the moral obligation for the society; that is to keep the people healthy.
The second factor here is the health insurance companies: the companies are not concerned about the wellbeing of the people but rather with the profits. The doctors rely heavily on the health insurance companies because most of the time they are the ones who pay the doctors, so doctors and health insurance companies do really go hand-in-hand and have a symbiotic relationship: if something happens to either of them then the other industry will most likely to suffer as well.
The third and the last factor in the healthcare “equation” is the pharmaceutical industry. The pharmaceutical industry is interested in maximizing profits as much as possible, just like the doctors and the insurance companies. The pharmaceuticals companies are interested in as much of sick people as possible because they represent the demand for which the pharmaceutical companies have the supply.
The last need is the subject of clothing; every person wears all kinds of clothing every day, and this make clothing an important factor in everyday life. The clothing industry goes hand-in-hand with the fashion industry that sets the trends, fads and promotes the hottest garments and products. Don’t get me wrong, I am not suggesting that the fashion industry should be eliminated but what I am suggesting is that every person that buys clothing should be informed, knowledgeable and savvy about the products and the retail establishments that one buys from. The retail industry today is the most complex throughout the whole time, but at the same time it is also easier than ever to be knowledgeable, informed and savvy than ever before; all thanks to the internet. I think that the most important thing that I have learned is how to be a savvy customer. I know this for a fact because I can really measure the amount of money that I have saved (I have various spreadsheets and lists on my computer) by buying the products that I wanted and needed by being a savvy customer. Three of the best things in the retail are the promotional sales, clearance sales and the promotional coupons/codes (for online retailers). It is often possible to combine the coupons with sales. A rule of the thumb for a good deal is to find something for 75% off and then apply the coupon to it.
I hope that you enjoyed reading this paper, was not bored and found all this text to be informative. I after all I think that the main question within the issue of cheap labor is “How low a cheap labor could be until cheap labor turns into something bad?” or in other words “How cheap is too cheap?” . While thinking about this I concluded that cheap labor will never be a bad thing or get to such an extent that it will be truly bad, all this while the governments still has some kind of interest in the citizens of their nations. After all, the governments are there to stand for the people and their well-being.
So in general the cheap labor is good but it has to be regulated by the governments so the cheap labor does not go bad and exploitative that the workers would not feel enslaved. The governments (federal and state) should both be interested in serving the people; employers and the employees, and should work on the solutions that will help everyone. In this competitive world, the employees should have as equal help as the businesses get from the governments. If the government will ignore the employees that work for the private employers then it will mostly end up that the employees will take the matter into their own hands. A well-balanced government that exists in the nations such as America does a better job than any other government system that tries to help the employer and the employees. Republican Party is more on the employer’s side but the Democratic Party is also there to help, but it is mostly for the employees.
I think that it is possible to balance the wages and salaries to such an extent that both, the employer and employee are satisfied with the outcomes. Although there are many factors that will determine this outcome, the main thing is that the both parties would be content with it. With everything said, I still think that cheap labor is good and that it adds up to the production, economy and the competition.
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