Question:
How does outsourcing American jobs benefit the U.S?
?
2010-12-31 14:11:45 UTC
How does outsourcing American jobs to the third world benefit the U.S?
Five answers:
amber
2011-01-01 16:38:49 UTC
It may benefit America in several ways.



1. Outsourcing jobs to other countries increases incomes in those countries, increasing demand for American-made products abroad. Strong East Asian economies might demand American IT services, healthcare innovations, and a variety of other products that America is very good at producing. If other countries remain poor, demand for American exports remains low.



2. Outsourcing increases the competitiveness of American businesses by lowering per-unit costs of production. Company X is probably less likely to go bankrupt if they offshore jobs to Asian countries with lower labor costs, because their products will be cheaper to buy. If I work in marketing, accounting or engineering departments at Company X, I am better off if they offshore the manufacturing, because my job is ultimately safer--since the company is less likely to go out of business.



3. American companies tend to offshore jobs that add lower amounts of value to the product that is being produced. American companies tend to keep jobs at home that add lots of value. When an iPod is built in China, only a tiny portion of the wages go to Chinese factory workers. Most of it flows to American engineers that design the product and American workers that quality test them, do the marketing for Apple, etc. This is true for many products that are actually manufactured in Asia but have their roots in American research, design, engineering, marketing and distribution services.



As a sidenote, be careful not to conflate outsourcing with offshoring. You are presumably asking about offshoring, which is, literally, American companies employing foreign workers. Those workers can be either part of the company (i.e. paid directly by the American company) or they can be employees of an Asian factory (i.e. like Mattel, who just hires a factory and the factory pays the employees). The first case is one of offshoring. The second case is one of offshoring AND outsourcing.



Outsourcing is when companies pay another company to do a job. I worked for an American outsourcing company for awhile, and it was based in America. Major American companies would pay us to handle their customer service--rather than hiring Indian call-center agents, they hired call-center agents in Utah. So you want to ask about offshoring, not outsourcing, it would seem. My answers were geared toward that question.
simplicitus
2011-01-01 17:10:15 UTC
In theory, outsourcing jobs means the goods produced by those jobs become cheaper and the people who were doing those jobs can now move on to do more valuable work.



This breaks down when, such as now, the economy is in a recession and there are no other jobs to work at. That means that we are seeing the lower prices but also seeing higher unemployment - a mixed blessing at best.



As for the other answers:



- Other countries are outsourcing jobs without seeing the rich getting richer. Income inequality is rising rapidly in the U.S. but it is not rising rapidly in northern Europe or Japan, which are also outsourcing jobs.



This suggests that the problem with income inequality is not outsourcing per se, but U.S. economic policies in general.

http://rodrik.typepad.com/dani_rodriks_weblog/2008/03/american-politi.html

http://economistsview.typepad.com/economistsview/2010/09/the-great-income-shift.html

http://www.rawstory.com/rs/2010/09/poll-wealth-distribution-similar-sweden/



- The world and the U.S. have seen many other periods of outsourcing. For example, the textile industry left the U.S. for other countries many years ago. Still, the U.S. saw full employment for the decade before 2007 when the crisis began.

http://www.miseryindex.us/urbymonth.asp

If outsourcing all those jobs caused unemployment, how could the U.S. have had full employment all those years before the housing bubble burst?
ocularnervosa
2010-12-31 14:14:03 UTC
It makes rich people richer. Higher unemployment means American workers will stick to their jobs even when the employers force them to work longer hours, cut their benefits and eliminate health care. And it means instead of getting quality made items you get to buy cheap cr@p from China that falls apart in a couple of years and you have to buy new, making rich people even richer.
anonymous
2010-12-31 14:16:40 UTC
It benefits the greedy businesses who do it to save money from the cheap labor in some countries, but it hurts the US because we lose jobs.
anonymous
2016-04-25 12:33:20 UTC
H Ross Perot sent hundreds of his highest paying jobs to Mexico where he now pays a fraction


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