Globalization and Wages

The Effects of Globalization on the American Economy

The twenty-first century has brought with it a slew of difficulties that have taken over the world. Some examples include, but are not limited to, increased use of technology, ease of conducting business all over the world, development of transportation and communication infrastructure, and global health improvement. Globalization has piqued the interest of both proponents and detractors in the world's economic sectors.

Impact on Wages and Employment

While its proponents have emphasized the positives of globalization, its opponents have questioned its economic impact and advocated for its diminution in today's society. The concern raised in America is that the increased globalization that is taking place in the world is significantly influencing the wages of the modern day employee. Given that globalization is taking place in the world, there has been a decrease in the income and earnings inequality in the United States (U.S), influenced by an increased number of imports and foreign nationals in the country.

According to Ebenstein et al., the United States’ economy has been affected by the increased globalization between 1983 and 2002, caused by the significant rise in offshoring and the increased number of imports of manufactured goods from low-income countries of the world (581). This significant rise in globalization has subsequently affected the manufacturing sector of the nation that over time led to the losses in jobs and opportunities of employment since all the work could be done overseas and at a cheaper cost of production (Ebenstein 582). The rise in globalization has affected the employment opportunities area quite significantly making it impossible to find jobs in the country in the 21st century. Since employment is not required in most industrial sectors, there have been increased layoffs and downsizing of staff to meet the required needs of the firms, which have been minimal. Alternatively, the increased employment rates in the country have been responsible for the sharp decline in the country’s economy, due to the lack of a productive workforce in the society. Additionally, unemployment has threatened the nation’s security since most of the unemployed citizens are susceptible to being involved in crime and breaking the law to find ways to provide for themselves and their families.

Income Inequality

Another concern to the rise in globalization is that it has significantly affected the income and wages of the people in the country. As noted by Dreher and Gaston, despite the importance of globalization on the social and political dimensions, it is important to identify its effects on the income inequality in a majority of both developed and developing countries of the world (516). Income inequality is the unequal distribution of the individual and household incomes in the society that is often across various participants in an economy. The common associations with the causes of income inequality in the U.S have been the improvements in technology that is creating obsolete workforce in many firms, the increased trading capacity of most organizations and the ability to expand to other countries, and the competitiveness of institutions to achieve gains by utilizing only efficient methods (Dreher and Gaston 526). These factors have been enhanced by the increased globalization levels in the world since the availability of low paid staff is in abundance and the improvements in technology are ever rising, which affects most of the employees in the firms. According to Cunat and Guadalupe globalization has changed the labor markets since trade and imports from developing to developed countries have risen due to the trade agreements present and the availability of expat jobs in most states that neglects the country's domestic workers (182).

Impact on the Transport Sector and Foreign Professionals

The rise of foreign competition within the American society has been a result of the reduction in trade barriers in the country, which have been influenced by the rapid industrialization, taking place in the world (Cunat and Guadalupe 181). Globalization has increased the number of imports to several countries around the globe, which has brought up the reduction in the transport fees for shipping and transfer of goods from port to destination to encourage the importation of products. However, these cuts have affected the wages of those in the transport sector since they have to work as much to receive better income while the miles for transportation services have not changed. Another concern is that the transport sector has become competitive due to the rising numbers of importation to the ports of several countries, which has also affected the wage structure of those in the transport sector. Cunat and Guadalupe point out that imports penetration has changed the income of various households due to the increased competition and imported goods that have been brought about by the rapid globalization being realized in the world (184).

Moreover, globalization has deprived the American community skilled and experienced professionals who cross the borders in search of better opportunities. The increased number of American professionals in the countries of the world is also an area of concern that has been enabled by globalization since other nations attract the expats with better salaries than those they are paid in the U.S. The low wages in the U.S is also influenced by the effects of globalization due to an excess in the number of skilled professionals from other countries moving in the United States (Ebenstein et al. 591). However, the American public affected by the increased globalization effects has expressed continuous concerns to the government on the need for a strategic policy towards globalization. Plans to cap the increased importation of goods to the country and to improve the wage structure, ensure that the manufacturing industries in the country do not suffer from competition from abroad that is usually cheaper to encourage consumers to use their products.


In conclusion, the rise of imports and the number of foreigners in the country has been a consequence of increased globalization witnessed in America today. These impacts are affecting the American economy, which is increasingly being faced with unemployment, industrial layoffs, collapsing of manufacturing companies, crime and terrorism, and of most concern the wages and income of the American worker. It is important to note that the realization of proper legislative laws that ensure that the American citizen is not affected but stands to benefit equally as their foreign counterparts can minimize the effects of globalization. The integration of the economy of the U.S with that of the world through globalization has significant consequences to the public that the government should consider. The issue of terrorism, for example, is costing the lives of the citizens in the U.S and can be traced to the increased number of foreigners in the country. Therefore, to improve the economy and secure the homeland, the federal government needs to manage the issue of globalization to mitigate the effects it has on the income of the citizen in the nation.

Work Cited

Dreher, Axel, and Noel Gaston. "Has globalization increased inequality?." Review of International Economics 16.3 (2008): 516-536.

Cuñat, Vicente, and Maria Guadalupe. "Globalization and the provision of incentives inside the firm: The effect of foreign competition." Journal of Labor Economics 27.2 (2009): 179- 212.

Ebenstein, Avraham, et al. "Estimating the impact of trade and offshoring on American workers using the current population surveys." Review of Economics and Statistics 96.4 (2014): 581-595.

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