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Globalization and the Labor Market

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Globalization and the Labor Market HSI Workforce Connections Corpus Christi, Texas March 21, 2003 Richard Froeschle, Director Career Development Resources(CDR) – PowerPoint PPT presentation

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Title: Globalization and the Labor Market


1
Globalization and the Labor Market
  • HSI Workforce Connections
  • Corpus Christi, Texas
  • March 21, 2003
  • Richard Froeschle, Director
  • Career Development Resources(CDR)
  • rich_at_cdr.state.tx.us
  • (512) 491-4941

2
(No Transcript)
3
Why Do We Care About Globalization?
  • Must understand effects of global capitalism on
    the job creation and destruction process
  • To engage employers, must understand the market
    factors they face
  • Better understand what jobseekers face, what
    employers are telling them
  • Better prepare jobseekers to meet the skill and
    attitude needs of employers

4
Defining Globalization
  • The inexorable integration of markets,
    nation-states, and technologies to a degree never
    witnessed beforein a way that is enabling
    individuals, corporations and nation-states to
    reach around the world farther, faster, deeper
    and cheaper than ever before.
  • Thomas Friedman, The Lexus and the Olive Tree

5
Global Labor Market of the 21st Century
  • Creative destructionThe process of simultaneous
    job creation and job destruction as new skill
    sets are required and old skills become outdated.
    The same employers will be both hiring and laying
    off continually regardless of labor market
    conditions to enhance productivity and
    competitive edge. Joseph Schumpeter
  • See Churning in a Hypothetical Economy from
    Technology Workers in the New Texas Economy

6
The New Rules of Globalization
7
The New Rules of Globalization (continued)
8
Globalization of the U.S. Economy
  • Total World Gross National Income (Product) 2001
    31,500,012 million
  •  
  • United States Gross National Product 2001
    9,900,724 million
  •  
  • The FACT is that the United States economy
    represents 31.4 percent of the World Economy.
  •  
  • The REALITY is that the top 20 richest countries
    represent 85 percent of the World Economy and the
    top 10 richest account for 74 percent.
  •  

9
Top 10 Richest World Economies 2001 (in
millions)
  • United States 9,900,724 31.4
  • Japan 4,574,164 45.9
  • Germany 1,947,951 52.1
  • United Kingdom 1,451,442 56.7
  • France 1,377,389 61.1
  • China 1,130,984 64.7
  • Italy 1,123,478 68.3
  • Canada 661,881 70.4
  • Spain 586,874 72.2
  • Mexico 550,456 74.0

10
The IMPLICATION is that U.S. companies have an
opportunity to tap into an additional 68.6
percent of additional world-wide purchasing
power, in addition to U.S. domestic spending.
The QUOTES There are still good growth
opportunities domestically. The economy is still
strong. But American companies dont want to be
shut out of overseas growth.  General Motors
is here because of Chinas growth. Youve got a
15-20 growth in the rate of auto sales in China,
and youve got 1.2 billion people. If you even
look a 1 of that, think of how many people could
buy a passenger car. Rudolph Schlais Jr,
President GM China Operations
11
How Globalization Impacts the Labor MarketThe
Basics
  • Globalization new digital technology opens
    producer/consumer markets around the world
  • Increased customer access to producers leads to
    global price competition, driving employer need
    for greater productivity, lower prices
  • Increased price competition leads to cost
    containment pressures
  • Cost containments leads employers to new supply
    chain practices, concerns over labor costs,
    alternative labor options

12
Impacts of Globalization on Consumers
  • Broader access to a wider variety of products and
    services than neighborhood offers
  • Greater vendor diversity leads to better buying
    opportunities, lower prices eg. comparison
    shopping via Internet
  • Lost allegiance to domestic producers what about
    the union label or U.S. TVs??
  • More volatile labor market with stronger
    competition from global labor supply

13
Impacts of Globalization on Business
  • Businesses with global reach access more
    customers and get exposed in new markets
  • Businesses with regional niche lose local
    customers to a global market place
  • Business is exposed to supply chain opportunities
    to acquire lower cost inputs
  • Business is exposed to new labor supply options
    foreign affiliates (L-1visa), H1B, global
    outsourcing, contract workers

14
An Integrated Corporate World Percent of 2000
Revenue Outside U.S.
  • Texaco 65.9
  • IBM 57.9
  • Motorola 52.5
  • Johnson/Johnson 38.2
  • John Deere 25.1
  • Colgate 69.4
  • Nike 50.3
  • Hasbro 36.0
  • YUM Brands Inc. 34.5
  • General Motors 26.2
  • Ford 30.4
  • Boeing 34.3
  • Intel 58.8
  • Coca Cola 61.0
  • Federal Express 29.9
  • Emerson Electric 40.0

15
Recognizing Growth Potential in a Global Economy
  • To whom does the industry sell and are those
    sectors expanding?
  • Is their cost structure competitive? e.g. are
    labor costs globally competitive relative to
    value added?
  • Do they have Positive Pricing Power in their
    marketplace? PPP results in higher profits!

16
Texas Industries Adding the Most Jobs 1999-2002
  • Absolute Growth
  • Educational Services
  • Food Services/Drinking Places
  • Ambulatory Health Care Services
  • Professional and Technical Services
  • Local Government
  • Specialty Trade Contractors
  • General Merchandise Stores
  • Hospitals
  • Heavy and Civil Construction
  • Motor Vehicle and Parts Dealers
  • Percent Change
  • Warehousing and Storage
  • Management of Companies
  • Financial Investment
  • Heavy and Civil Construction
  • Support Activities for Mining
  • Ambulatory Health Care Services
  • Utilities
  • General Merchandise Stores
  • Educational Services
  • Motor Vehicles/Parts Dealers
  • (NAICS codes)

17
Texas Industries Losing the Most Jobs 1999-2002
  • Absolute Change
  • Agriculture/Forestry Support
  • Computer/Electronic Manuf.
  • Apparel Manufacturing
  • Transportation Equip Manuf.
  • Fabricated Metal Manuf.
  • Chemical Manuf.
  • Oil Gas Extraction
  • Food Beverage Stores
  • Administrative Support Services
  • Federal Government
  • (NAICS codes)
  • Percent Change
  • Agriculture/Forestry Support
  • Apparel Manufacturing
  • Computer/Electronic Manuf.
  • Transportation Equip Manuf.
  • Wood Product Manuf.
  • Misc. Manufacturing
  • Printing and Related Support
  • Oil Gas Extraction
  • Electrical Equipment and Appliances
  • Paper Manufacturing

18
Texas Exports 2001
  • Computer/Electronics 25.7 billion 27.0
  • Chemicals 14.6 billion 15.4
  • Machinery, ex. Electrical 12.8 billion 13.5
  • Transportation Equipt 11.3 billion 11.8
  • Electrical Components 4.8 billion 5.1
  • Petroleum Products 3.7 billion 3.9
  • Fabricated Metals 3.2 billion 3.4
  • Plastic Rubber Prod 2.8 billion 2.9
  • Food Kindred 2.6 billion 2.7
  • Primary Metal Manuf. 2.1 billion 2.2
  • Agricultural Products 1.9 billion 2.0

19
What are the Realities or Side Effects of
Globalization?
  • Globalization presents both opportunities and
    challenges to governments and corporations. Even
    with current geopolitical risks, globalization
    is here to stay. But, what likely phenomena will
    accompany unmanaged global capitalism? At least
    some of the Handwriting is already on the wall...

20
Side Effects of Globalization (part I)
  • 1. Increased wealth inequality- Rich countries
    and rich people get richer. Per capita GDP gap
    between richest and poorest countries widened
    from 401 in 1973 to 721 in 1992
  • 2. Environmental problems are getting worse-
    Unregulated markets encourage cheap waste
    dumping, encroaching on land and displacement of
    farmers.
  • 3. Acceleration of capital movement w/o
    productive uses- 98 of currency trading in 1998
    was for speculation, not investment in plant or
    equipment. Fast moves can undermine a developing
    countrys financial markets and economy
    (Argentina 2001).

21
Side Effects of Globalization (part II)
  • 4. Industry and Occupational Winners and Losers-
    Global economy, comparative advantage causes
    upheaval in traditional industries. In see U.S.
    apparel, steel, call centers
  • 5. Inequality of income based on comparative
    advantage- Countries that specialize in low wage,
    low value-added products gain jobs but fall
    behind on income equality.
  • 6. An interconnected, interdependent global
    economy leads to a domino effect in recession. No
    exports, no earnings. When one country sneezes,
    another gets sick.

22
Side Effects of Globalization (part III)
  • 7. The homogenization of global culture- a.k.a.
    the McDonald-ization World culture and
    diversity is downgraded with spread of American
    pop culture
  • 8. Economic specialization leads to limited jobs
    choices- If you limit the breadth of the economy,
    you limit occupational choices. Is specialization
    really necessary? Should everybody be a
    programmer?
  • 9. Continued economic growth threatens global
    limitations and capacities- Growth in undeveloped
    countries is important but does social inequality
    and environmental costs outweigh benefits to
    developed countries?
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