How Does Outsourcing Affect the U.S. Economy?
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How outsourcing affects the US economy is a matter of great debate. For those to the political right, this practice will have an overall positive effect on the US economy, since it saves money for companies, opens up opportunities for greater entrepreneurship in the US, and leads to more Americans holding higher level jobs. Critics suggest hiring foreign workers has an immediate effect on the US economy by stripping many Americans of jobs they would have performed, particularly by semi-skilled or skilled laborers. The way that companies are taxed based on outsourcing may decrease a corporation’s tax debt and thus decrease federal spending.
Both sides on this issue and all those who try to navigate a middle road between the two sides, have some valid points. It is true that outsourcing has led to job loss in the US, and has had a detrimental effect on those people who may be only minimally qualified to work. It’s also the case that there are plenty of skilled labor jobs being outsourced to foreign countries. The loss is not only to people with minimal job skills.
A problem for those Americans who are impoverished, and might take minimal skill jobs is that it is now much harder to get jobs of this type. When President Clinton enacted the Welfare to Work plan in the 1990s, he was attempting to encourage people to get back to work so as to reduce government spending in welfare. Unfortunately, with fewer jobs available for unskilled workers, people may find themselves in exceptional poverty. Poverty does not benefit the US economy since it reduces consumer spending and tax revenues.
Even in the middle classes, there are plenty of jobs that are now outsourced. This has been particularly the case in the computer and technology industry. Again, inability to find work means inability to purchase homes, spend money, and profit companies. When people don’t buy, corporations that produce things don’t make money, which can thus “trickle down” to fewer jobs available and a greater desire to outsource to make things more cheaply so they will be more attractive to consumers.
Those supporting outsourcing say that lowering expenses of corporations will create jobs. There are plenty of government agencies that outsource some of their work, saving them millions of dollars, a direct effect on the US economy and on federal spending. A common theory contends that being able to pay people lower wages for work means that companies will be able to produce things with less expense and transfer this saving to consumers. Lower prices may mean more consumer spending, and companies will be able to hire more workers in the US because they’re paying less for workers outside of it.
Further, many argue that giving jobs to workers in less developed countries improves those countries economically and increases trade for US products. It also increases a country’s ability to pay back debts to the US, and may promote better political relationships. Companies economically benefit by selling their products in other countries. This means they can hire more people in the US, lower their prices on products for US consumers.
There is another “side” to the issue of outsourcing that needs to be addressed. Not all people in other countries economically benefit from outsourced jobs, and some companies aren’t dedicated to providing humane working conditions. Outsourced work may be performed by children, or in inhumane working conditions. Abuses of foreign employees might not benefit US trade or political relationships.
Outsourcing remains a difficult issue, but it does remain. Virtually no one, on any side of the argument concedes that outsourcing can be eliminated completely. There are those who feel that corporations are evading taxes and depriving the government of needed money and suggest corporations should be taxed for outsourcing, and rewarded for keeping jobs within the US. Others feel the temporary loss of jobs will be followed by greater economic growth in the US and will ultimately be worth the cost.
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Actually you can blame Bush all you want, but the seeds of our current economic nightmare were sewn in the late 60's by LBJ, then enhanced by Nixon. Every president since has had a chance to change things, but they don't care. They are part of a power elite whose kids get to grow up in luxury with tutors. The kids get into the finest schools, move into a first career, then run for office at some point. Special interests control Congress. Major corporations have swallowed up everything, and a true free market doesn't exist.
Rick, your tale is a sad one. Our economy is much, much worse than they tell us. We are in trouble. - anon49789
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I'm sorry that happened to you Rick. I agree with you that Bush helped to destroy the American dream and many many lives. Unfortunately, I find that many people still believe the lies about free and open markets (which don't exist anywhere). - anon47121
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Feel for you man - anon36363
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Much of what I read here matches my own experience, but I don't think the discussion goes far enough. I didn't see anything here about what happens to you when your job is shipped overseas. What are the options available to you, when you can no longer find work in the field you are educated in? I'm sure that many of you think that you just find a related field and go to work there, but it didn't happen for me. Many of you think that you can get retrained and just change careers, but it didn't happen for me. Many of you think that anyone should be able to avoid Foreclosure by simply selling your house, but guess what; many can't do that unless they are able to pay thousands of dollars to have someone take it off their hands and profit from their loss.
When this started, I was working for a wholesale distributor of books in LaVergne, TN. They had been spending on new construction like crazy and developing new systems at a dizzying pace. All at once, the bottom of the stock market fell out. Bush was just getting started.
The company first announced huge cuts in benefits and wages. Soon after, they announced the beginnings of huge lay-offs and actually thought that we would understand them sacrificing our lives to make them richer. Now they should have known better, because they do market to people of all economic tiers.
Now this company wasn't actually trying to outsource our jobs overseas. No, this company was trying to cut jobs altogether. Their plan was to get rid of their Mainframe computers, lay off their Information Systems people and then buy software packages, letting the software vendors maintain the systems. I'm not sure they ever completed that plan but I had connections there for years after I left and never knew them to complete that plan.
I was 58 when I left and I didn't see anyone who was laid off with me getting jobs, so I tried to start my own business. The little job searching I did back then resulted in my being told that they only hire from overseas, now. I was told that no training was available to me, because they didn't have any money. It failed and I was never able to make any money at it, while I tried to keep my head above water from the $20K fun-job salary my wife was bringing in. I also took some Temp jobs during that time. Maybe a couple of years went by before we bottomed out. I remember being surprised that despite my education, no one was willing to allow me to use it in another field.
I went through my 401K's just to make my bills, and this was at a time when the 401K's were being devastated by the economy. I think I got less than half of what I should have been able to get back out and I even got penalized on the first payment, because I had yet to reach 58 1/2.
At that time, the wife decided to bail on me and insisted I file Bankruptcy. That was so that she could walk away from the marriage without having to be burdened by my problems.
I had tried to break into the IT world -- the client-server world since maybe 1996, but employers were reluctant to give main-framers a chance, thinking incorrectly that the concept was too different for them. I took a lot of courses and seminars, hoping to make that transition without success.
After I was forced to sell off most of my possessions and move out of my four-bedroom home, which I had bought in 1997 and which had not appreciated, I moved to Oklahoma. I moved here out of necessity, because I found a nice garage apartment for $350 a month (I actually could have found much cheaper apartments here, I found out later) and that was maybe half or less than I could find in the Metro.
When this all first started, I got so depressed that I started seeing a Shrink for the first time. The stress at work had become intolerable and of course losing my career right after didn't help any.
When I got to Oklahoma, I only had two nibbles for jobs. The first was as a truck driver, and I took and passed the CDL 'A' test, and had a trucking company lined up to pay to teach me to drive and put me to work, but the state of Oklahoma said, Whoa! We can't let you drive a commercial truck because you take anti-depressants and that makes you prone to road-rage. I actually found myself being evaluated by a Psychiatrist every six months just to keep my regular driver's license until they eventually decided that I was okay and didn't need to do that any more.
I have since been weened off the medicine and vow to never talk to another Shrink, as they are down-right depressing people.
That left me but with one choice -- I went to work for McDonalds Hamburgers when I was denied the CDL for $5.15 an hour. I had once made $45 an hour as an independent contractor and as much as $40 an hour with benefits working for others. I couldn't even find work as an office clerk.
Now there are only two things I want out of life - Love and Respect, but guess what? You don't get either as a 62 year old man cleaning bathrooms in a fast-food restaurant.
When I reached 62, I started drawing Social Security. Mickey D's would have supplemented my SS nicely, if not for the respect requirement and I just don't need any more reasons to be depressed. I quit that job and doubled my income at the same time.
After two years of this, I find that I can't maintain my truck or buy clothes or actually do much more than eat (not as much as I want), pay bills (barely), and my only outlets are church and a couple of community bands that I play in.
I started looking for work again but it is even worse than before, without a single nibble.
Can you picture Bush who is my age having to live this life? - WagonerRick
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Written by
Tricia Ellis-Christensen
Last Modified: 22 October 2009
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