Deindustrialization can be occasioned by a number of reasons. Common among them are the outsourcing of jobs, off shoring and introduction of new methods of production.
Other causes may be related to the improvement in technology, which may lead to workers being redundant and the privatization of industries. The effects of both deindustrialization and downsizing that are evidenced due to changing demographics and changing geographic locations of industries depending on the costs to be incurred have very many negative consequences on both the economy and the society.
The major losses to the economy are evidenced in lost revenue due to the relocation or close down of industries, which results in unemployment. If the regime is seen as being incapable of availing jobs to people, then, the resultant unrest due to instability occasioned by desperate citizens may be very detrimental. Additionally, deindustrialization and downsizing cause inequality in the society with some people earning more than others, which is unhealthy to the economic success of any country.
Perhaps the greatest effects of deindustrialization and downsizing are felt in the society as unemployment rates soar causing some members of the society to be dependant on others. The result is long-term financial difficulties for families and in the United States in particular, some economic experts assert that the unemployment rate affects only a small percentage of the population. However, when comparing statistics, it is obvious that there is an increase in the number of people who have been unemployed for over six months.
This is the time that people exhaust government assistance and their savings as well. After prolonged unemployment, people plunge into more credit card debt, which may result in the reduction in their retirement savings even to the extent of being forced to incur other relocation related expenses. Unemployment therefore contributes to an increased number of Americans living below the poverty line.
People who have been unemployed for a long time may be forced to sell their houses since they cannot afford to pay mortgages. Just like finding employment, it is very difficult to find a person wiling to buy a house as increased unemployment causes the housing sector to be glutted. Therefore, people abandon their houses in search of employment elsewhere. When unemployment occurs on a large scale, then, many people abandon their homes bringing the value of the neighborhood down.
The loss of jobs does not only lead to the loss of wages. In most cases, people lose access to healthcare. A survey conducted by Urban Institute shows that each time the unemployment rate goes up by 1%, there is an increase in the uninsured by 1.1 million (Sack pp2). Even those who have been laid off cannot afford copays and other deductions hence avoid paying them leading to the avoidance of healthcare altogether.
The fact that able-bodied people lack employment opportunities causes many problems in the family setup. Many neighborhoods in the US have been affected by decay. This means that abandoned homes become bases for drug dealers to operate from. Some homes have further been broken into with property being looted and vandalized.
Desperate people take anything that is worth selling from these homes, which means that the properties eventually become derelict and the only option is to demolish them leading to massive losses to their owners and causing further anguish.
In conclusion, it is possible to say that unemployment which is a direct result of industries downsizing and deindustrialization has very many negative consequences on any economy including that of the US as well as on the family setup. It does not only increase poverty levels but also brings with it negative reactions like drug dealing, crime and a recipe for a dysfunctional society.
Sack, Kevin. “Study Warns Job Losses Will Strain Government Health Programs,” New York Times, 29 April 2008. Web. 14 Dec. 2011.