Americans Fear Losing Jobs

GM’s massive layoff announcements come at a time when Americans are worried about unemployment and the overall health of the U.S. economy.

June 20, 2005

The same day the news came that Chinese auto-maker Chery Automotive was planning to export 250,000 cars to the U.S. in 2007, General Motors (GM) announced that it needed to lay off 25,000 U.S. workers by 2008. An economist at the Center for Automotive Research in Michigan estimates that every car-making job supports seven other jobs—from parts suppliers to related services. That means an additional 175,000 jobs are in jeopardy because of the GM decision.

Americans don’t seem too worried about the dominance that foreign companies have over the automobile industry. But they are worried about the unemployment resulting from these trends.

GM’s announcement came shortly after a May poll by the Pew Research Center for the People and the Press found that one of the top economic concerns for Americans is the availability of jobs. Six in 10 surveyed claimed that jobs are difficult to find—a sentiment shared by almost half of those earning $75,000 or more.

Americans have more than one reason to be worried about the economy. Those polled also cited high gasoline prices, the budget deficit, trade deficit, inflation fears, a lack of affordable housing, a stagnant stock market and worsening personal finances as major concerns. The number who reported having good or excellent finances dropped from 51 percent in January to 44 percent in May.

Overall, only about a third of respondents felt that the economy is in good shape and optimism about the future is rapidly declining. Last August, 36 percent felt the economy would improve but only half that many—18 percent—feel that way today. Conversely, those who felt the economy would get worse last August numbered 9 percent. That has now almost tripled, to 24 percent.

This situation perfectly demonstrates the effects of globalization. Asian labor costs are very cheap compared to U.S. labor. As Asian producers become more and more industrialized and offer cheaper products, they gain market share. It becomes increasingly difficult for American companies to compete. What’s happening in the automobile industry is also playing out in several other industries.

The flow of jobs out of the U.S. is one more sign that America’s position as the linchpin of the global economy is in jeopardy.