The other day my colleague on this blog said that jobs lost in 2008 will never come back. While some jobs may not be coming back in the next few years, he's wrong in the long term: we have seen this kind of job exodus in the past, and lot of jobs have actually returned. But it won't make Americans happy, because when those jobs do come back there may not be as many of them, they may not be in the same place and they will probably pay a lot less.
First, the article Mark referenced about the rising middle class across the world is correct: people in the developing world have been enjoying greater prosperity, in large part because American and European companies have been shipping jobs there for decades. As more people are employed in those countries the demand for their labor goes up, so their wages goes up, so more people are enjoying middle class incomes.
But as a result of these jobs being exported to other countries, competition for workers has decreased in the United States. This, combined with the destruction of labor unions, has resulted in stagnant and/or falling wages for the majority of Americans. American tax policies tilted in favor of multinational corporations have expedited job losses. Not only do Americans lose income when jobs are offshored, they wind up having to pay more taxes (or suffer larger deficits and government interest payments) because companies get a tax break for firing Americans.
Now, there are significant costs with offshoring jobs: relocating manufacturing to China has large transportation costs. For example, the United States exports iron ore to China and imports finished steel back from China. Over time transportation, energy and Chinese labor costs will continue to rise. At some point the cost of the energy required for transportation will exceed the labor cost differential between the US and China, the Chinese government will no longer be able to subsidize production, and it will no longer be cheaper to import Chinese steel. Steel production could then move back to the United States. (It could move somewhere else in the meantime, like Africa, if they have the raw materials and build the infrastructure to make exploiting low-wage workers profitable.)
How do I know this will happen? It already did in the automobile industry.
After WWII a lot of manufacturing was relocated to Japan there because labor was so cheap. "Japanese" became synonymous with "cheap," and not in a good way. Over time Japanese corporations began to expand their operations from the simple to the complex. Honda, for example, started out making motorcycles. Then they started making tiny cars for the Japanese market. In the 70s those cars were small and flimsy, but they were fuel efficient. During the energy crisis a market developed in the United States for those cars. Over time the quality of Japanese cars improved, and their exports grew. Then the Japanese made bigger and fancier cars specifically for the American and European markets. Over time time the Japanese standard of living rose to equal or exceed that of America, which meant that wages increased. Japanese auto manufacturers responded by building robots that reduced the number of employees required.
But Japan is an island with almost no resources: no coal, no iron ore, no oil. They have to import almost everything required for the production of automobiles, and then they have to ship all those heavy cars overseas. It became more and more difficult to make cars profitably in Japan, even with robots.
So Japanese car manufacturers started building factories in the United States. Production of cars used to be located primarily in Detroit at unionized factories, but the new Japanese factories were built in the non-union southern states. Toyota and Honda will build 15 million cars in the United States in 2012. Some German car makers also have plants in the USA. Even Ikea has an American factory.
At some point the same thing will happen with other industries that are currently located in China and India. Certain jobs will return to the United States as the rising price of energy drives up transportation costs. As wages in India rise and wages fall in the United States, even jobs like call center techs may move back here because the wage differential is too small to make up for deficiencies of offshoring customer service jobs: time zone differences, language differences, cultural differences, and the difficulties of managing off-site employees. Anyone whose ever called an offshore tech support line knows what I'm talking about...
In the long haul, sources of energy, the location of raw materials and the attendant costs of moving those raw materials and finished products will ultimately determine where jobs go.
There are, however, some jobs that will never come back due to changes in technology: the need for ferriers and harness makers all but disappeared when cars displaced horse-drawn carriages. The need for typists and typesetters has all but disappeared as computers entered the workplace. In the future, as oil supplies dwindle millions of people will lose their jobs in refineries and oil fields.
New jobs will be created as new sources of energy are developed. Because established business is only concerned about next quarter's profit numbers, they are terrible at investing in revolutionary new technologies.
At the same time Republicans are excoriating President Obama for loan guarantees for Solyndra (guarantees which the Bush administration was pushing for as well), the Chinese government is subsidizing renewable energy technologies, positioning themselves to dominate our energy future.
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