For me the issue isn't what the domestic labor is doing, services or manufactures, but how much capital is being invested in it. My concern is that we are engaging in division of labor with other nations without the proper free market framework (which our Constitution provides for the 50 United States), and in so doing causing capital that would otherwise be invested in domestic labor to be invested in foreign labor - the exact OPPOSITE of what Smith identified as the most efficient use of a nation's capital for the purpose of increasing national wealth. As a matter of policy, we should promote domestic industry and domestic capital investment, and discourage activity that would cause that capital investment not to occur. I don't pretend to know what that industry "ought" to be doing, but I damn well want it to be doing it with American labor. Not, mind you, because I have any illusions or delusions of grandeur about labor per se, but because I (selfishly) want to live in a wealthier, more prosperous country. Call me silly.
It's something to be looked at and watched today, but I wouldn't sound the Red Alert until or unless our annual trade deficit is LARGER than our annual domestic GDP growth. In 2002 it was 3.6% foreign deficit versus 4.7% domestic growth. Reverse those numbers and then you'll have a valid point (presuming that it isn't too late by that time).