How the American Worker Forces Companies to Ship Jobs Overseas

You reviewed the job description to see if it's something you'd like to do. When it looked like you met all the qualifications, you turned to the compensation and benefits section. They needed someone with a lot of experience, but they're only offering $7.00 an hour with no benefits.

"That's crazy!" You think as you move on to the next job. Health care coverage is expensive, and you have people in the family that might need medical attention. What happens if Joe got sick, or if Amanda needed dental surgery done? And how could they expect to pay you only $7.00?

Multiply that into millions of job seekers and you'll see what employers are up against when looking at the job market. This is normal, it's healthy. Workers will try to get as much compensation and benefits as they can from an employer; and the employer will try to cut as much costs as possible when hiring employees.

Throw politicians into the mix. They push for competitive minimum wages and mandatory health benefits for the employees.

What's a company to do when it has no choice but to raise its minimum wage above what the market would normally set it? Companies and businesses have to deal with revenue and expenses. The higher the business expenses, the less revenue they make for that year. As minimum wage goes up, payroll expenses go up. Companies react by hiring less, and laying off more, people than they normally would.

The problem doesn't stop there. A minimum wage employee earns more, in an hour, than what many people make a day overseas.

Just by moving overseas, a company could drastically cut its labor expense. Overseas suppliers charge less for materials, so that's another expense that goes down. Health insurance in the United States is expensive. The country the U.S. jobs moved to? Chances are great that the destination country's insurance is cheaper. What you pay a month here is more than what some people overseas pay in a year.

Companies pay an overseas worker a fraction of what they pay an American worker. Even if they pay an overseas worker's health insurance, they're still paying less for this worker than what they'd pay a minimum wage employee in the United States.

And get this; hiring cheap labor overseas doesn't come close to "exploitation." Sure, they're making less a day than what many American workers make an hour. But, they get paid a lot better working for an American company than what they would get paid working for a local employer.

This is one reason to why raising corporate taxes, raising the minimum wage, and forcing companies to provide benefits, works against any attempt to prevent American jobs from going overseas.