Abstract
The economy is often discussed in terms of the global market, but this leaves the United States economy in a desperate state. The justifications for outsourcing are linked to the global economy and the increased profits of the wealthiest class in the nation. This paper serves to show that, while there may be positive implications related to the global economy and the large corporations, outsourcing jobs is greatly hindering any progress to the overall conditions of the United States economy and that through these hindrances outsourcing is actually causing a collapse in this economy.
Many companies in the United States have claimed that outsourcing helps to bring more profits to their bottom line, provide jobs to those in underdeveloped nations, and increase the global economic system. However, this is not what this present research is trying to debate. In fact, these statements could be well supported and documented (Taylor, 2005). Yet the economy in question is not the global system but rather it is the United States economy. The profit that is in question is not that of large corporations but rather that of the economic conditions for the American working class. It is the intention of this author to show that, while there may be positive implications related to the global economy and the large corporations, outsourcing jobs is greatly hindering any progress to the overall conditions of the United States economy and that through these hindrances outsourcing is actually causing a collapse in this economy.
According to Pisano and Shih (2009) outsourcing is directly behind the economic downfall in the United States and continues to increase the economic gap between the wealthiest and those who are struggling to survive. While the corporations are able to find workers at a lower cost, the American employees are then put out of work and continue to need to find a way to support their basic needs. Pisano and Shih (2009) explain that this causes multiple reactions as the economy is dependent on the financial maintenance of those who do not only meet their basic needs but also spend their extra income on luxury items. When the American people are barely able to meet their basic needs because they do not have sufficient or any income, then they are unable to support the corporations that are dependent on the sale of luxury items. This then leads to downsizing in these corporations and the downward spiral continues.
Houseman (2007) adds that this is occurring in all industries across the United States as manufacturing, technological, and even business jobs are being found to be sent overseas or even outsourced to contractors in order to lessen the financial burden on the corporations and limit the amount of wages that are being paid. Spence and Hlatshwayo (2012) agree that many of these jobs are going to staffing agencies but continue to claim that the majority of corporations that utilize outsourcing are doing so overseas in order to avoid the restrictions placed on wages by the government in the United States and by the intervention of labor unions. Noting that this process is highly scrutinized by the American public, Spence and Hlatshwayo (2012) explain that outsourcing is legal and the global market has increased its accessibility and usability for more corporations. This means that the smaller business that are often the sole source of income in rural communities can now utilize outsourcing even if through the contracts that they have with larger corporations that supply their materials.
At this point, it has been discussed that all industries, regardless as to whether it is directly or indirectly, are involved in the process of outsourcing in order to minimize their overhead and bring more profit to their bottom line. The question then leads to what happens to the American workers and how this impacts the overall conditions of the economy in the United States. This goes beyond the thought of some people being out of work. This must be considered in a way that shows that all members of the society are affected by the unemployment rate in the nation that has come as the result of the processes of outsourcing. This must be evaluated based on the social and financial burden to the American people and the infrastructure of the American economic system. Hira and Hira (2005) state that those who are still gainfully employed often do not realize that outsourcing is affecting their daily lives and the costs that they pay to live a comfortable lifestyle but that this does not mean that these negative effects are not occurring. Instead, it makes these negative effects far more intrusive as they quietly absorb the income of those who are still employed.
Hira and Hira (2005) go on to explain that the continued rise in unemployment is only softened by lesser paying jobs, those who run out of unemployment benefits, and those who have given up on actively pursuing a job. In other words, these figures are not accurately representing the state of the American economy. However, the need for federal, state, and public assistance continues to be documented and the funds have to come from the tax dollars or increase in the national deficit. This has then caused the money available for the aging population through the Social Security insurance to be depleted and those who have worked and paid into this fund to also fall short on their ability to financially support themselves. As it was previously stated, these individuals who are now dependent on the assistance of others can no longer put money back into the economy and therefore those who are feeling secure in their jobs must realize that this feeling may very likely be a temporary scenario (Hira & Hira, 2005).
Of course, there are those who are in support of this process and claim that the lower costs to the corporations is then passed on to the consumer as many items that are necessary or desired can be manufactured at a much lower cost (Taylor, 2005). Furthermore, Taylor (2005) claims that many of the jobs that are outsourced are selected because of the abilities of the other labor forces to be more productive than American employees and therefore produce even more product which further lessens the costs through the concept of supply and demand. While the costs are clearly less for the corporations, but that is not necessarily passed on to the consumer at an equivalent ration. Also, for those who are unable to meet their basic needs, they are not likely to be able to afford luxury items regardless of how minimal the costs may be. In fact, even the basic necessities often become an issue of prioritizing to determine which is more necessary.
In sum, this paper has provided information to show that outsourcing jobs is greatly hindering any progress to the overall conditions of the United States economy and that through these hindrances outsourcing is actually causing a collapse in this economy. Again, this is not limited to those who have lost their jobs but also to those who are dependent on the aid of the government that is now being more heavily relied upon, those who are having to take lesser paying jobs to meet their basic needs, those who are having to pay higher taxes to offset the financial burden to these services, and those who have paid into Social Security insurance but are now having to choose between food, electricity, and medication. What few positive effects that have been discussed in regards to outsourcing have been limited to benefiting those who are among the wealthier classes in the nation and those in other nations. A global economy is clearly important to the world, but American citizens must be able to provide for themselves or the entirety of the United States economy will eventually dissolve with only the global economy to help to support the basic needs of Americans.
- Hira, R., & Hira, A. (2005). Outsourcing America: What’s behind our national crisis and how we can reclaim American jobs. AMACOM Div American Mgmt Assn.
- Houseman, S. (2007). Outsourcing, offshoring and productivity measurement in United States
manufacturing. International Labour Review, 146(1‐2), 61-80. - Pisano, G. P., & Shih, W. C. (2009). Restoring American Competitiveness.Harvard business
review, 87(7/8), 114-125. - Spence, M., & Hlatshwayo, S. (2012). The evolving structure of the American economy and the
employment challenge. Comparative Economic Studies, 54(4), 703-738. - Taylor, T. (2005). In defense of outsourcing. Cato J., 25, 367.
