The Outsourcing Trickle Essay

1302 words - 5 pages

As esteemed journalist Tom Piatak wisely puts it, “The trickle of outsourcing threatens to become a flood.” His words speak the truth as outsourcing has left United States’ workers jobless, and it continues to increase the unemployment rate every year. During February of 2009, American workers lost a record 651,000 jobs alone, increasing the unemployment rate to 8.1 percent, the highest it has been in 25 years (Katel). Multinational corporations, hoping to cut down costs and stay profitable in the market, outsource by exporting American jobs to third-world countries such as China and India. It may seem noble that outsourcing provides third-world countries with job opportunities, but the United States’ markets and industries are greatly affected. Outsourcing is harmful to the United States’ economy because it paves the way for job losses, decreases product consumption, and widens the gap between the rich and the poor.
With outsourcing, thousands of Americans are stripped from their jobs in many sectors of the industry, negatively impacting local, state, and federal governments. On average, these unemployed workers can only find new jobs that pay 80% of their original wage (Dobbs). Decreased wages diminishes peoples’ living conditions, and Americans are forced to consider multiple jobs, smaller homes, and fewer luxuries. In America, this reduced standard of living means fewer government funds. First, since people that have lower living conditions can hardly afford to pay for their own expenses, governments do not receive adequate payroll tax receipts and contributions to Social Security and Medicare. This means that the federal government can no longer provide adequate benefits for the growing number of unemployed people in America. In addition, when jobs are exported from the U.S. to cheaper countries, the government loses industrial infrastructure. Companies close down U.S. buildings and factories to reduce costs, capital gets exported abroad, and this money can no longer go towards economic expansion. These direct hits on U.S. local, state, and federal governments have detrimental effects on the economy due to fewer unemployment benefits and reduced economic expansion. On the other hand, some critics state that globalization of products “are creating new markets [in India and China] for goods and services,” increasing government wealth (Cooper). Unfortunately, proponents of this argument fail to recognize that globalization benefits are not trickling down to all sectors of the U.S. economy. Recent studies show that lost manufacturing jobs, the sector most affected by outsourced jobs, are replaced by lower-paying jobs in the service sector (Cooper). With these lower-paying industries, the downsized gross domestic income of America impacts the economy and shrinks government taxation. The average American is then greatly impacted because lower tax money means the government cannot provide essential benefits to people. When jobs are outsourced,...

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