Foreign firms operating their U.S. subsidiaries are important players in the domestic market. Sometimes they mitigate the vagaries of a business cycle. In the past decade and a half, employment in all manufacturing companies plunged 33 percent. During the same time, payrolls in foreign subsidiaries dipped just over 5 percent, and they actually rose in the two years preceding the Great Recession, easing the overall pain. Work in U.S. affiliates also pays well: wages averaged $86,800 a year in 2011, quite a bit more than compensation paid at all U.S. companies.
Foreign entities that operate in the United States compensate generously because they are efficient. Our markets are rich and large but they are also highly competitive. It is fair to say that only the very fit would dare take the plunge and put down roots in America. Deploying sophisticated engineering in turn requires technical and managerial talent that is productive, and hence ought to be well paid.