OutsourcinOutsourcing and The American Economy.
When economists spoke about free trade and about countries leveraging their greatest resources as part of international trade in order to balance their economy, outsourcing was not the message that was being sent. In my opinion, outsourcing cannot be healthy for the American economy, and although, there are some benefits for the country to which these jobs are being shipped, this essay examines the effects on the American economy. Thanks to outsourcing, the unemployment rate has increased tremendously over the past few years. New college graduates now face the dilemma of, not only having to compete with their peers for a smaller potion of the employment pie, but also with an additional 8 million unemployed Americans. And as if that was not enough, as the areas of job growth dwindles one has to wonder whether gaining higher education really equates to a better standard of living.
In his article for the USA Today, John Sweeney noted that because of outsourcing there is a job crisis in America. “Economy.com, an independent research group, estimates 1 million of the nearly 3 million jobs lost have been sent abroad since 2001” (Sweeney, 2004, ). So what started, as a trickle has now become a full-blown flood. Jobs such as information technology, auto manufacturing and customer service, just to name a few, are being moved to countries such as India and Mexico leaving more Americans unemployed. And as if it is not enough to lose your job, in case many of these employees are asked to travel overseas to train their replacements. As the unemployment rate raises, the lines at the unemployment offices around the country grows longer, diminishing that sector of the population know as middle-class America. While, the companies responsible for moving these jobs overseas, enjoy major tax breaks for doing so.
In addition to increasing the unemployment rate, outsourcing has also impacted recent college graduates’ ability to secure jobs in their respective fields of studies, as job growth declines. According to Dobbs (2006)
As for creation of high-value jobs, the numbers speak for themselves, and they are not encouraging. When the Bureau of Labor Statistics [BLS] released its ten-year projections for American job growth in February 2004, seven of the ten biggest areas of job growth were in menial or low-paying service jobs. Here's the BLS projection: 1. Waiters and waitresses 2. Janitors and cleaners 3. Food preparation 4. Nursing aides, orderlies, and attendants 5. Cashiers 6. Customer service representatives 7. Retail salespersons 8. Registered nurses 9. General and operational managers 10. Postsecondary teachers
Only three of these job categories require a college degree. The rest rely on on-the-job training. These jobs of the future hardly qualify as high value. (p. 5)
Gone are the days where higher education equated to upward mobility in one’s field of expertise or simply put a raise or promotion. At this rate, one has to consider whether it is in their best interest to incur a student loan with interest rates as high as six percent, or whether the avenue of starting at a company at an entry level and working up the career ladder is better.
Notwithstanding these valid points, and in their defense, Corporate America is in the business generating profits, for their shareholders and their CEO. Therefore, reconstruction and reorganization of their resources in the form of outsourcing has enabled many of the Fortune 500 companies to increase their bottom line. In many cases the increase in profits is not due to increase in business or market shares. Instead, outsourcing allows companies to lower their expense such as subsidized insurance and other monetary benefits to their employees while revenue remains the same. As such, this translates to an increase in the profit to expenditure margin. “Citibank admitted that it has not increased payments