It is a combination of factors that lead to this, I will just give you a quick example, please note that I will not cover all factors.
* Product X is made by 3 companies in the US. It costs them $20 to make the product and it is sold for $30-33.
* Government increases minimum wage, which leads the cost to go up to $23 (e.g. cost of raw material is impacted, labor, etc), the producers increase the price to $33-35 while still taking a personal hit in their returns.
* Unexpected economic disruption or shortage in a certain raw material leads to increased costs to $25 and increased consumer price to $36-38
* Government implements a new legislation that impacts customer demand negatively and increases cost of production to $28. This leads to increased consumer price to $39-40
Throughout this process, supply/demand dictates that the increase in prices may impact negatively the demand for the good produced.
* One of the companies realize that it can produce the goods in a country called Melo for $5. It shifts a good portion of its production there, allowing it to sell the goods to consumers for $20.
* Customers sensitive to price will flock to the cheapest good. All the other companies decide to move their production to Melo country to remain competitive.
In part, consumers are willingly exchanging a few jobs here and there so that they can get goods & services at a cheaper price. Economics is full of trade-offs, understanding them is essential for a country's long-term success.
So essentially you're saying, between rising minimum wage, other government involvement, various economic reactions, competition between companies, and the customers desire for cheaper products drives production overseas?
If American society insists that we legislate ourselves into a more comfortable environment (higher min wage, better working conditions) then I think we'll have to accept that certain production will just never happen here.
Automation is similar to outsourcing, in that you have a black box that you put in $.20 of resources and get out an item with no US labor. Even if you can solve the issues with outsourcing that probably doesn't help the majority of the problem.
The other thing with tariffs is if you put tariffs on steel that hurts automakers (since foreign ones have cheaper steel). You can then put tariffs on cars, everything, but then everybody puts tariffs on you. Also things like computers are more expensive which might hurt productivity. Most economists don't seem to think the whole thing is worth it, and there's countries like Brazil that do big tariffs and it doesn't seem to help them any.
Without tariffs, you can pick between work not being done here, or a race to the bottom against dictatorships and oligarchies that have no concern for the welfare of their citizens.
We're currently pursuing option #1, but neither one sounds fantastic to me.
There's not much difference (from the perspective of the US economy) between outsourcing to China to make a widget for $.20, and automating it in the US to make it for $.20/item. Each of them are a black box where you put in $.20 of resources and get an item, with no US labor.
I think legislation like minimum wage is only a small part of the story too. Lots of people get paid more than minimum wage and we couldn't just put min. wage at $100/hr.
I think the fundamentals we are looking for are productivity and macroeconomic policy. Traditionally, the Gov. and central bank stimulate the economy until it reaches full employment, then slow it down when inflation is high.
Productivity will determine how much people produce/consume (in total) when everyone is working. Of course there's issues of how those goods are distributed (which is probably not quite as bad as the wealth gap, the rich put a lot of money in stocks etc instead of consuming it).
There's also structural problems where the job locations/skills don't match with the workers. While I don't see why in the long-run we can't just produce more of what people want (health care, going out to eat, housing, vacations, etc), if millions of people are displaced rapidly by online shopping, self-driving cars etc I think it will be hard for people to adjust quickly.
Also maybe most worrying is some of the macroeconomic stuff that has been relied on to keep the economy closer to full employment is in uncharted territory. The central bank has less ability to stimulate the economy to get us out of a recession than maybe it's ever had, and the alternative of fiscal policy (gov. spending) is controversial so I'm not sure how much it can be relied on in the US either.
It is largely incorrect to blame loss of US manufacturing jobs to minimum wage legislation. If a company is paying $20/hour in the US, well above the minimum wage, and can outsource an equivalent job for $6/hour, that's just what it will often do.
Minimum wage doesn't come into it. No employee earning $20/hour is going to accept that tomorrow she'll get $6/hour for the same job. (One reason is pride. Another is information asymmetry. As an employee being offered a $14/hour wage cut, you can't know whether the company is telling the truth about the equivalent cost of labor in China, or is just trying to cut your wages.)
* Product X is made by 3 companies in the US. It costs them $20 to make the product and it is sold for $30-33.
* Government increases minimum wage, which leads the cost to go up to $23 (e.g. cost of raw material is impacted, labor, etc), the producers increase the price to $33-35 while still taking a personal hit in their returns.
* Unexpected economic disruption or shortage in a certain raw material leads to increased costs to $25 and increased consumer price to $36-38
* Government implements a new legislation that impacts customer demand negatively and increases cost of production to $28. This leads to increased consumer price to $39-40
Throughout this process, supply/demand dictates that the increase in prices may impact negatively the demand for the good produced.
* One of the companies realize that it can produce the goods in a country called Melo for $5. It shifts a good portion of its production there, allowing it to sell the goods to consumers for $20.
* Customers sensitive to price will flock to the cheapest good. All the other companies decide to move their production to Melo country to remain competitive.
In part, consumers are willingly exchanging a few jobs here and there so that they can get goods & services at a cheaper price. Economics is full of trade-offs, understanding them is essential for a country's long-term success.