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The winds of this economic change are swirling in different directions across the U.S. In the traditional Midwest industrial heartland, employment offices are jammed with discouraged job seekers, FOR SALE signs dot the lawns of once proud neighborhoods, and retail shops are closing because regular customers no longer have extra money to spend. Unemployment rates stand at 14.9% in Michigan and 13% in Ohio, sharply above the national level of 10.2%. Yet in many other areas the rise of high-tech companies has spawned pockets of booming growth: the Route 128 strip around Boston, California's Silicon Valley and the Research Triangle Park area in North Carolina. The uneven distribution of job opportunities is beginning to cause mass migrations reminiscent of other periods in American history. Thousands of young people are heeding the cry of the '80s: "Go West, young man, and grow up with a new industry."
Depressed states and cities are battling back to attract new companies with tax breaks and seed money. Cleveland is launching a $5 million venture-capital fund that will give money to new local companies. Cincinnati has put together a $15 million war chest. Illinois and Chicago set up a ten-story, low-rent "incubator building" in the city for fledgling firms. Last fall, when a group of electronics companies announced plans to launch a joint computer research center that would have an annual budget of up to $100 million, 57 cities in 27 states put in bids to be the new enterprise's home. Bobby Inman, the former CIA deputy director and new head of the operation, last week revealed the winner: Austin. The state of Texas had offered, among other things, to provide Inman's company with low-cost laboratory space at the University of Texas.
The accelerating pace of technological innovation threatens jobs in old industries even as it creates work in new fields. Automobile companies have installed 2,800 robots that perform many assembly-line jobs more quickly and accurately than people can. A new computerized aluminum processing plant built by Alumax Inc. near Charleston, S.C., employs only half as many workers as a conventional factory with the same capacity.
The main catalyst for all this change has been foreign competition. No longer does the U.S. have an insulated, largely self-sufficient economy. Imported goods now account for 19% of American consumption, up from 9% in 1970. Foreign competitors, who once concentrated on simple, labor-intensive products, such as clothing and toys, have quickly climbed up the industrial ladder. The U.S. imports 28% of its cars, 18% of its steel, 55% of its consumer electronics products and 27% of its machine tools. The challenge in these industries, which was first posed by Japan, now also comes from such fast-growing countries as South Korea, Taiwan and Singapore.
Low wage rates overseas are part of the reason for the surge in imports. Average labor costs are $1.53 an hour in South Korea and $1.43 in Taiwan, in contrast