Deindustrialization

Deindustrialization refers to the structural processes of industrial decline through disinvestment, relocation, or both. It results from corporate decisions to reduce costs and enhance profits by relocating manufacturing facilities to cheaper labor markets elsewhere or simply shutting down in the face of lowerpriced goods from abroad. Increased worker productivity can also cause deindustrialization. Industrial decline may be followed by an increase in the service sector, which then provides jobs for some displaced industrial workers, but these are often lower-paying, impermanent, or dead-end jobs. Deindustrialization causes major problems, especially for industrial workers who lose relatively well-paid and secure jobs. It also impacts their families, their neighborhoods, and the small businesses and institutions that depend upon them and their communities. It can produce extreme poverty and homelessness. The term was first used by the Nazis during the World War II period to describe their policy of stripping conquered regions of industrial activities. In the 1970s, scholars in Great Britain adopted it to describe industrial decline there.

In the early 1980s, American economists Barry Bluestone and Bennett Harrison wrote a seminal study of deindustrialization in the United States, at a time when manufacturing's share of employment fell significantly. They date the process from the economic slowdown of the 1970s, when domestic industries appeared unable to compete in the international market; corporate leaders “systematically disinvested in the nation's basic productive capacity” (Bluestone and Harrison 1982, 6). Some corporations acquired other companies rather than reinvest in their own industry (for example, U.S. Steel acquired the Marathon Oil Company); others, like General Electric, shipped production overseas at the expense of domestic workers. During the 1970s, between 32 and 38 million jobs disappeared as a result of this disinvestment. Besides the loss of their well-paid industrial jobs, the newly unemployed experienced sustained and significant income loss and underemployment, loss of family wealth, and an increased likelihood of physical and mental health problems.

Blue- and white-collar workers alike suffered from deindustrialization. Those most likely to experience longer and more sustained unemployment were women and African-Americans and other minority workers. These patterns resulted from long-standing corporate and union discrimination and from a seniority system that caused workers with the shortest job tenure to be laid off first. Bluestone and Harrison, however, do not link deindustrialization to the period's growing homelessness.