Outsourcing America

As the country heads out of a recession and into the midterm elections of 2010, one of the biggest questions facing the country is the economy. In fielding these questions about the economy, a question that is at the forefront is outsourcing. Many people view outsourcing as an evil practice that takes jobs from American workers. Business leaders argue that outsourcing is necessary to keep pace in the ever changing business world. Economists say that outsourcing is not a danger to American jobs, but actually will help Americans. The truth to the debate is actually somewhere in the middle. The arguments for outsourcing are vast, but they stem from a root belief that outsourcing American jobs overseas will be the downfall of the United States economy. Taking jobs from American workers will hurt the economy in several ways. First there is higher unemployment. This affects the government and the consumer confidence in the United States which ultimately affects foreign markets. Second, the jobs that are being outsourced are hurting the United States strategic future. By taking the engineering and IT jobs and outsourcing them, the need for those positions to be filled by United States citizens is shrinking. This affects the strategic future of the United States military against foreign governments. Third, the future economy of the United States will be limited to a non manufacturing society completely dependent upon foreign countries for basic manufactured goods. Fourth, a global economy is not the best way for the future. The desire to have a global economy is a downfall of business leaders and economists. Finally, the political advantage gained by outsourcing to countries does not outweigh the costs that outsourcing will have at home. In the end, outsourcing jobs overseas does not have the desired effect and will lead to the demise of the United States economy and potentially the United States if it is not reversed immediately.

For many Americans the prospect of having the job sent overseas is already a reality. According to the Department of Labor, the unemployment rate as of September 23, 2010 is 9.6%. In the last decade, unemployment was as low as 3.8% in April 2000 (United States Depart of Labor). Over the ensuing years, unemployment has steadily driven upwards. This is not necessarily related to offshore outsourcing; however, the connections cannot be discounted. The recession years have pushed the unemployment rates higher and higher. When the unemployment rates rise, it has a ripple effect on the rest of the economy Federal, State and local governments.

The high unemployment rates mean that people are out of work. This is a branching issue for government. People look to the government to provide a stable work environment as well as social programs designed to provide for the good of the people which in turn makes the country more efficient. When people are not working the government now must prepare for less income in taxes and increased spending in social programs. In 2007, income from individual tax returns was $ 1.116 trillion however, in 2008 the numbers had gone down by $84 billion (Mark Robyn, 2010). In 2007 the unemployment rate was 4.6% in 2008 the unemployment rate jumped to 5.8% (infoplease, 2007)When less people are working there is less income generated for the government. With the loss of income for the federal government, the spending did not go down. Spending for 2007 was at $2.729 trillion. In 2008 spending was at $2.983 trillion. The key statistic for the spending though is welfare. In 2007 welfare spending was at $254 billion. That number jumped to $313 billion in 2008 and $407 billion in 2009. (www.governmentspending.com, 2010)The increased spending for social programs is designed to stimulate the economy and provide for the common good of the people. The biggest piece to the welfare spending is that people still have money to buy goods and services so the economy does not completely fall apart. The idea of this is to keep the money coming in to business so that they will create new jobs by reinvesting in the workforce. So even though the income goes down and spending goes up, it is not necessarily a bad thing. However, this affects consumer confidence. When unemployment continues to rise and the economy is weak, people do not feel strongly about the economy or the government. The end result of the loss of confidence is felt worldwide.

The future of the United States economy is gearing towards a non manufacturing society. With an estimated growth of 14.5 million new jobs through 2018 in the service sector (United States Department of Labor, 2009)there is a clear shift in the future of the country. By comparison, the same Department of Labor projects that goods producing industries will stay relatively the same levels with manufacturing jobs continuing to lose. The shift from a goods producing economy to a service economy is difficult to project. While many economists view this as a good thing for the economy, the transformation will leave many without jobs. In a February 20, 2004 article by Sharon Otterman, she noted that "Between 1979 and 1999, the Bureau of Labor Statistics found that 31 percent of workers displaced by trade--mostly in the manufacturing industries--were not fully re-employed. Only 36 percent of workers soon found jobs that matched or increased their wages. Twenty-five percent saw pay cuts of 30 percent or more." (Otterman, 2004)

This evidence indicates that by outsourcing these jobs, the workers affected are not able to quickly reestablish themselves in the workforce. With a shift in the economic focus of the country, these workers will be more affected. Since the decline in manufacturing jobs will not be replaced by similar jobs, any jobs creation that does occur by the cost savings produced by offshore outsourcing will not be able to be assumed by those previously affected by outsourcing, since the new job creation will be in the service industry and many of the workers affected will not be qualified for those positions. These positions would require some sort of training for new employees with the potential earnings for these jobs being significantly less than what many of the workers previously had as was seen from 1979-1999.

This shift from a goods producing economy to a service economy will mean a dependence on foreign goods. This dependence could have potentially dangerous implications for the future. By becoming dependent of another country for goods, we have effectively given any leverage we had away. If a country knows that we are dependent upon them for a particular good, they can now increase prices or dictate policy that benefits them. For example, if we become dependent on country X for supplying us widgets, and we no longer for the infrastructure to produce widgets but we consume them, they can now increase