They are not really immense, once you account for them properly.
Suppose you, an American worker produce 10 gadgets and are paid $10/hour. A Chinese worker is paid $90c and produces 1 gadget per hour. The salary difference is immense: $10 vs. $0.9. But how much cheaper is the Chinese worker? By how much should your salary fall for the employer to break even? Well, the cost of one gadget is $1 vs. 90c. Thus, the Chinese worker in this example is only 10% cheaper.
That is not the whole story. In economics and finance, cash flows, profits and costs are evaluated not only on size but also risk (probability of obtaining them). Until very recently, risk abroad was considerably greater than in the U.S., due to political upheavals, crime, lack of well-functioning courts, etc. Thus, the risk-adjusted differences in labor costs are even smaller than the salaries suggest.
Presently, with our recent turn to socialism, the political instability of the U.S. is considered (by business people) to be quite high, favoring foreign investment. The productivity of our workers is poor due to the lack of proper education, especially in the technical areas. That favors foreigners as well. And, the indirect costs --- those of health-care, pensions, etc. has now skyrocketed here, making our workers even more expensive. The same is true with regard to operational costs as a result of over-regulation. All components of labor costs are thus increasing in this country, pricing our workers out of the market.
This is all our doing, not a natural disaster of some sort. But management is not to blame: they are doing the job that you yourself have hired it to do. The profits that the companies make are not kept in vaults but accrue to the American public (BP, for instance, has 40 million of America shareholders; similar numbers relate to all major corporations --- Goldman Sacks, GE, etc. It's a big secret, even among conservatives, that Wall Street is owned today by the Main Street).
Lol, I’ve been the controller of two different firms, and also worked as a cost accountant. I definitely don’t need your silly lectures on this subject.
And my posts have been totally correct on this subject, particularly as it relates to the outsourcing of skilled, professional work where the salaries of the skilled workers will be the biggest expense in most firms doing this sort of outsourced work. The savings are immense.
And when it comes to unskilled labor, that all depends on how labor intensive it is. The portion of the costs that is labor and any labor overheads would vary significantly depending on the degree of automation. And it is the most labor intensive work that is exported first. Not many shirts and slacks being sewn in the US anymore, and those jobs seldom paid over $10.00 in the US.
And in that case, I knew of many sewing plants that employed 300 or more. Real significant saving to cut costs from around $10.00 per hour to less than $1.00, 2,080 hours per year for 300 employees.
And yes, the savings are still immense when the costs can be reduced to little more than 5% of what total labors costs were in a more affluent nation.