The Pros And Cons Of Outsourcing

4410 Words 18 Pages
Register to read the introduction… There are many people that believe that outsourcing does not cause harm to America's workforce. In some cases, supporters believe that it even benefits it. A study done by Mary Amiti and Shang-Jin Wei (2004) shows that the United States workforce is not at risk from outsourcing. In their study, they show that while the US is a large exporter of jobs to international markets, they are also the largest importer of outsourced services from foreign countries. Amiti and Wei's research shows that only 0.4 percent of the total gross domestic product or GDP of the US was earned from business service imports. Rather, they found that underdeveloped countries outsource more jobs that they received. Another stance that supporters in the international outsourcing community take is the belief that outsourcing creates new positions domestically. By moving 1,000 jobs to India in 2003, Delta Airlines was able to reduce cost by $25 million. They then used this money to fund 1,200 new reservation and sales positions in the United States (Weidenbaum, …show more content…
This level of outsourcing mostly involves the computer and technology industry, but as shown above it goes far beyond that. The million-dollar question seems to be just how does outsourcing affect the efforts to rebuild the limping American economy.
If outsourcing in these areas continues to be carried out by big corporations it will not leave enough jobs for qualified Americans. If a person does not have a job then they cannot purchase homes or spend money. When people can’t or don’t buy then producers can’t make money. With all the outsourcing being done the government also experiences a loss in income, which in turn could raise tax rates. Less jobs being maintained in the USA does not help with the contribution to our Social Security and Medicare programs. By outsourcing, not only skilled labor is lost but monetary gains too.
What must be understood is that service jobs do not pay as much as manufacturing jobs do nor do they create national wealth. On the other hand, they absorb wealth. Manufacturing jobs have by far the greatest impact on national economy, in terms of losing skills and the time taken to retrain such a force. Another thing is the loss of industrial infrastructure with the closing down of United States factories and then exporting the capital abroad. This money is then not available for the expansion of the United States

Related Documents