Labor in America the United

Labor in America

The United States of America is currently the largest economy of the globe, with a $15.08 trillion gross domestic product. Despite its major attainments, the American economy is faced with tremendous challenges, such as the still ongoing effects of the economic recession, the aging of the population, the high growth rate in the costs of pension payment and health care or a highly unbalanced national budget. Currently, the United States has one of the largest public debts in the world, representing 67 per cent of its GDP (Central Intelligence Agency, 2013).

An important component of the American economy is represented by its international trade relationships. These commonly include imports and exports, which define the costs and revenues of the country. Some facts about the country's imports and exports include the following:

The exports account for $1.497 trillion, making the U.S. The forth largest exporter on the globe

The imports total up to $2.236 trillion, making the United States the largest importer on the globe

The current account balance is of a negative $465.9 billion

The U.S. mainly trades in consumer goods, capital goods, industrial supplies and agricultural products

The primary sources of the U.S. imports are represented by China, Canada, Mexico, Japan and Germany and the primary destinations for the American products and services are represented by Canada, Mexico, China and Japan (Central Intelligence Agency, 2013).

In order to better understand the status of international trade in the United States, the phenomenon can be assessed through multiple lenses, two of the more notable examples in this sense being represented by the impact of international trade on several economic indicators, such as employment, unemployment, incomes and equality in the country, or the concerns regarding the relationships with several trade partners. The current project seeks out to clarify the aspects of these two issues.

2. The impact of international trade

Employment

The levels of employment within the United States are influenced, among other things, by the levels of demand and offer for products and services. In the case when the domestic demand for U.S. manufactured items and U.S. delivered services is increased, the employment rates for the population are also increased. Additionally, when the demand for these items is increased within the foreign market place, U.S. employment levels are also higher. Still, the negative impacts upon U.S. employment occur when the demand for these types of products and services decreases. More specifically, when the U.S. exports of products are services are uncompetitive within the global market place (generally as a result of higher prices), the demand for workforce in the North American country is decreased. Additionally, when the domestic demand for the locally produced items is decreased, employment in the U.S. will also be negatively impacted. This situation is often encountered as a result of high levels of imports into the U.S., from more cost effective regions (Feenstra, 2000). In the first example then, the employment is negatively impacted as a result of decreased competitiveness of the American exports, whereas in the second examples, the negative impact upon employment in the U.S. is generated by the higher levels of foreign imports within the country.

Unemployment

In terms of unemployment levels within the United States economy, the impact of the country's international trade operations is inverse comparative to the relationship between international trade and employment. More specifically:

When the international trade operations of the United States are characterized by high levels of imports of foreign products and services, then the levels of unemployment within the country are increased. This is explained by the fact that the domestic products and services are less demanded within the local markets, and the need for labor force is decreased, ergo high unemployment rates.

In a different scenario, when the international trade operations are characterized by high levels of exports and internal consumption, this means that the American products and services are competitive, and they are demanded by national and international consumers. In a setting of high demand then, the unemployment rates would be lower, since there is also an increased demand for labor force.

Incomes

At the level of the incomes registered by the employees within the United States, these reveal a similar relationship with international trade as the levels of employment. In other words:

When international trade operations are focused on larger imports, the wages of the domestic laborers are negatively affected

When the international trade operations are characterized by a high level of demand and competitiveness of the services delivered and the products manufactured, the wages of the employees in the United States will tend to increase and witness positive effects.

While the relationship between international trade and employee wages in the U.S. is an accepted one, it is also noteworthy to mention that this relationship is weaker than the one between employment and trade. In other words, domestic and international demand increase employees wages, whereas low demand decreases wages, but the rate is significantly lower than in the case of the impact on employment (Feenstra, 2000). At an overall economic level then, the international trade operations of the United States impact the state of the economy first at the level of employment, and only secondly at the level of the wages.

Equality

Another economic indicator for the U.S. economy is represented by the income equality at the level of the population. Through the lenses of international trade operations, it has generally been concluded that open trade operations stimulate increases in wages. In other words then, in the context of open and free trade (like the U.S. has with countries such as Mexico and Canada), international trade operations tend to have a negative impact upon inequality as they seem to strengthen it.

Still, upon closer research and analysis, it has been concluded that the impact of international trade on income equality depends on the overall level of economic development within the assessed nation. In such a setting then, the open and free international trade operations of developed countries result in decreases in income inequality, whereas open trade within developing nations materializes in an increase in income inequality (Aradhyula, Rahman and Seenivasan, 2007). In the case of the United States then, the impact of the international operations on income inequality is a positive one, with a tendency for inequality to decrease as a result of open imports and exports.

3. Trade relations concerns

Japan

Japan is one of the largest partners in U.S.'s international trade operations, being the source of 5.8 per cent of the American imports and the destination of 4.5 per cent of the total American exports (Central Intelligence Agency, 2013). Past concerns about trade with Japan have mostly been obvious within the automobile industry, where the U.S. manufacturer were sales leaders in the country, but eventually lost their supremacy to imports of Japanese cars. This situation was created as a result of the inability of the American auto makers to understand and adapt to the needs of the customers. For instance, as the international price of oil continued to increase and as the consumers became more environmentally aware, they came to demand smaller size and more fuel efficient vehicles. The American automobile producers nevertheless continued to manufacture large size and luxurious vehicles, which became less popular among the customers (Shimokawa, 2010). The balance as such between Japan and the United States as such shifted, to include more automobile imports from the Asian country.

Mexico

In the case of Mexico, the international trade concerns are more complex, especially given the close relationship between the two countries. Mexico is, as such, the U.S.' third largest trade partner, whereas the U.S. represents Mexico's largest trade partner. The U.S. also represents the largest source of foreign direct investments in Mexico. To the U.S., Mexico is their third largest source of imports (after China and Canada), and the second largest destination of imports, after Canada (Villarreal, 2012).

At the level of the trade concerns, these include high levels of exports to Mexico -- including services -- in the form of outsourcing operations. These efforts are promoted by profitability desires of corporations, but they also generate negative impacts upon the economy, such as the loss of employment opportunities in the North American country. Another concern is raised by the quality of the products imported from Mexico, or the existence of free trade agreements between the states.

Ultimately, the international trade concerns between Mexico and the United States are shaped by the geographic proximity of the two states, the high levels of goods exchanged, the existence of bilateral trade agreements and even the "strong cultural and economic ties that connect the two countries" (Villarreal, 2012).

China

China is the third largest destination of American exports, but the first source of American imports, with nearly 20 per cent of all commodities used in the U.S. coming from China (the Central Intelligence Agency, 2013). One notable concern regarding these trade relationships is represented by the massive export of services to China, through processes of outsourcing, which cause damaging impacts upon the American economy and society. Another concern is represented by the fact that the massive imports from China materialize in cheaper consumer products, which render the domestically produced items less competitive. Other issues include currency fluctuations which impact the fiscal stability of the countries, as well as security concerns, as the Chinese gain more access to American resources (Singh, 2012).

4. Conclusions

The economy of the United States is shaped by a wide array of elements, such as political measures, the economic recession, the access to credits, the socio-demographic changes and so on. One important piece in the economic puzzle is represented by the state of international trade operations completed by the country. In this sense, the current project has assessed the issues of international trade as they relate to the impacts on employment, unemployment, incomes and equality, as well as the national concerns regarding the country's trade partners (Japan, Mexico and China).