Gone are the days of a robust U.S. economy boasting a predominance of low skill urban/central city jobs paying relatively high wages and the days when the U.S. economy was largely uninfluenced and insulated from foreign labor markets and product competition (Peterson and Vroman 1992). Barkley and Hinschberger (1992) show that American manufacturing is shifting from large “fordist” plants to smaller, more specialized firms. Coupled with this shift are changes in input and location requirements of restructuring companies. Location requirements are shifting from pure cost factors of input–land, labor, and capital–to factors of skilled and adaptive labor, proximity to markets with efficient transportation systems, and business services and communications (Berry 1994; Barkley and Hinschberger 1992).
Harrison and Bluestone (1988), Barkley and Hinschberger (1992), and the National Council for Urban Economic Development (1992) offer these four trends in the U.S. manufacturing sector. First, increased international trade and foreign products in the U.S. market exposed U.S. citizens to wider consumer choices and prices for products. As a result, demand for standardized U.S. products decreased. Second, U.S. firm profitability decreased because of increased international competition. As a result, capital for competitive integrated, mass-production facilities weakly materialized, and U.S. firms fell behind international competitors. Next, technological change and consumer preferences placed limits on product life cycles. This, in turn, further reduced capital outlays for production plant improvements. And finally, labor demand decreased because improved production technology (e.g. microcomputer processing and robotics) reduced efficient production plant size.
Sassen (1994) and Harrison and Bluestone (1988) attribute national and local economic restructuring and distress to the overshadowing, in both value and power, of international trade and productivity by international financial flows (i.e. loans, equities, or foreign currency transactions). Sassen further iterates, “In the 1980’s, finance and specialized services emerged as the major components of international transactions. The crucial sites for these transactions are financial markets, advanced corporate service firms, banks, and the headquarters of transnational corporations” (9). This type of restructuring resulted in three times as much growth in foreign direct investment in the U.S. than in the growth of foreign trade of U.S. exports, and directly translated into an increase in demand for services and a sharp decrease in demand for manufacturing and raw materials extraction (Sassen 1994).