Exporting Jobs

The American economy has been in recession since 2001 and is slowly on its way to recovery. The manufacturing sector of the economy has seemingly been hit the hardest. With nearly five million factory jobs lost since 1979, one would think that the American people would be overwhelmingly unemployed or underemployed. (Issues, 2004) However, due to job churning, that number is slightly skewed. Job churning is where you create and destroy jobs simultaneously so there is not much effect. In fact, during the 1990s about eight million jobs were cut, however, over the decade another 24 million were added. (www.economist.com)

"Business advocates say offshoring is nothing more than the latest cost-saving technique and that it will benefit Americans in the long run by allowing companies to be more efficient and to invest the savings in more valuable, cutting-edge U.S. jobs of the future." (Issues, pg. 324) Advocates of offshoring say that it is necessary to ship jobs overseas in order for American businesses to stay competitive in the market. If American companies cannot remain competitive here and in the global market, then they will have to close their businesses here as well. The loss of a few jobs overseas in order to save the entire company here may be well worth the slight inconvenience. Outsourcing also increases profits for corporations which will, in turn, keep shareholders happy and investing in more American companies. The globalization of jobs creates more markets for American goods. India, once a poor nation, now has an emerging middle class that can buy and live like American citizens. With the increased money coming into the American market, companies may be able to expand and create new jobs. (Issues, 2004)

Globalization has the power to drastically reduce prices while spreading new technology over the globe. The lower prices have helped increase American productivity and have added $230 billion of extra GDP to the American economy between 1995 and 2002. (www.economist.com) Likewise, when U.S. companies outsource they tend to receive $1.14 for every dollar going out. (Issues, 2004) Some argue that trade agreements like NAFTA have encouraged the loss of American jobs; however, after ten years studies show that more U.S. jobs have been created than destroyed. (Issues, 2004) When looking at the statistics, one can see that U.S. foreign investment is not in the majority in low-wage paying countries but rather in high-wage paying areas such as Europe with $400 billion. The majority of jobs go to England. (www.washtimes.com)

Opponents of offshoring say that the loss of jobs hurt American workers who are unable to find similarly paying jobs elsewhere. Most are forced to waste the education they have worked so hard for and seek employment in the lower paying service sector. Others are forced to retrain altogether which may take longer than a family can afford. Opponents also argue that offshoring redistributes the profits unfairly. While the business and corporation owners are busy padding their wallets the average American wage earner is seeing less and less on payday. The rich are getting richer and the income gap between the rich and poor is growing ever larger.

In 2003 alone, 516,000 factory jobs have been lost, bringing the total number of jobs lost since 2000 to 2.8 million. (Issues, 2004) These jobs are the ones that pay middle class wages while the service sector jobs that are being taken up in place of the manufacturing jobs tend to pay minimum wage. Another 3.3 million U.S. jobs are expected to be outsourced sometime in the next 15 years. (Issues, 2004)

When looking at the facts, outsourcing creates winners and losers. It has its advantages as well as its disadvantages. It creates new markets for American goods while improving the standard of living in foreign markets. It allows for the sharing of technology around the world and lets each country use its comparative advantage in the most effective way possible. It does, however, lead to the loss of American jobs. It is true that some American employees lose their jobs so they can be sent overseas to by done by cheap labor. It leaves Americans with no choice but to take low paying service jobs that compromise their standard of living. When looking at this issue one cannot conclude that it is altogether good or altogether bad. It is a combination of both and we must learn to adjust to this phenomenon in the best way possible.