Jobs migrated out of the United States because where the average labor for US was $10 to $12 an hour compared to rates in Mexico at $10 to $12 a day. For example, the company Fruit of the Loom Inc. would benefit more and increase their revenue by paying their employee’s less to perform the job. It is also stated that NAFTA was credited with helping crease increase political stability in Mexico. So this could be another reason for the Jobs migrating out of the United States.
Who gained from the process of readjustment in the textile industry after NAFTA? Who lost?
Due to this readjustment in which the United States jobs migrated to Mexico had a major effect on workers in the textile mills in the United States. But indeed had a great benefit on consumers in the US. It stated that employment in textile mills dropped from 478,000to 239,000, employment in apparel plummeted from 858,000 to 296,000. This shows that a great amount of workers were left empty handed searching for new employment. But on the other hand, this adjustment made it more reasonable for people like myself.
Due to textiles moving to Mexico, prices dropped on clothing. Now it makes it easier for consumers to buy clothing at a cheaper price rather than spending a lot of money just to do so. This shows that the market will grow because people can and willing to spend more money at the cheaper rate. In this case, Mexico and U.S will benefit. Mexico would increase jobs as low cost production moves south. And U.S will increase a prosperous market and lower the prices for consumers from goods produced in Mexico. Especially when prices are at a discounted rate.
With hindsight, do you think it is better to protect vulnerable industries such as textiles, or to let them adjust to the painful winds of change that follow entering into free trade agreements? What would the benefits of cost of protection be? What would the costs be?
I have a two-sided opinion on this matter. I feel that in a way we should protect industries such as the textiles because jobs would be lost and wages levels would decline tremendously in the United States and Canada. Mexican workers would emigrate north and pollution would increase due to Mexico’s more lax standards. And also Mexico would also lose its sovereignty which is not an important factor. But on the other hand, we shouldn’t protect because this would prosper in the market & benefit the consumers.