Why are so many American jobs being shipped overseas?

[lawrocket 3]

You know, I keep reading about all these jobs being shipped overseas. True, it's happening. My issue is "why is it happening?"

My belief is that there are several factors at work. Among them is the amazing technological advances over the last 20 years. These technological advances allow:
1) Unskilled and uneducated labor to be more productive;
2) Educated foreigners to do the same work far more cheaply than American workers due to the staggering advances in telecommunications.

Are there big reasons I'm missing? If so, what can be done about this, short of huge tariffs and taxes for international employees?

My wife is hotter than your wife.

[PhillyKev 0]

Well you don't want huge tariffs and taxes, but how about equitable tariffs and texes? In addition to cheaper labor, companies also get tax subsidies in the form of deferred taxation from the US. And they don't just get cheaper, competetive labor. They get exploited labor that doesn't have the same protections against child labor, unreasonably long work hours, safety precautions, etc.

I have no problem with companies using labor in countries that have equitable protection for their workers. But companies shouldn't be able to exploit the sub-modern conditions that foreign workers are allowed to be subjected to by non-democratic governments.

[Trent 0]

One way to help stop the outsourcing may not be too popular, but just may work... would be to make it profitable for companies to let our (US) uneducated and unskilled people do the work. How? Eliminate minimum wage and let the market handle the rest.

As for the educated foreigners working cheaply... giving incentives for US registered companies to bring jobs back, and penalizing the outsourcing of new jobs might work... but that might only be short-term.

Oh, hello again!

[airdvr 200]

Once again you guys are buying into the lib media's portrayal of "outsourcing". Outsourcing isn't necessarily a bad thing. Aks the people of Marysville Ohio who work for Honda, or the folks in Kentucky working for Toyota, or in SC at the BMW plant. None of that would have been possible.

Ten Myths about Jobs and Outsourcing
by Tim Kane, Brett D. Schaefer, and Alison Fraser
WebMemo #467

April 1, 2004 |

The American economy never rests—at this moment, in fact, economic growth is vigorous. Yet every time there is a slight dip in the acceleration of output, jobs, or incomes, the undying myths of a sputtering, backfiring economy rise again. Today, many of those myths concern the ills of outsourcing.

The plain facts, however, lay all of today’s myths about outsourcing to rest. But there is still a real danger that politicians working with incomplete or incorrect information will hobble American competitiveness. Scapegoating poor Third World countries, “Benedict Arnold CEOs,” and free trade will not improve the U.S. economy or labor market, but would likely cause great harm. Robert McTeer of the Federal Reserve Bank of Dallas summed up the promise of government action on outsourcing well: “If we are lucky, we can get through the year without doing something really, really stupid.”

Myth #1: America is losing jobs.

Fact: More Americans are employed than ever before.
The household employment survey of Americans indicates that there are 1.9 million more Americans employed since the recession ended in November 2001. There are 138.3 million workers in the U.S. economy today—more than ever before.

Myth #2: The low unemployment rate excludes many discouraged workers.
Fact: Unemployment is dropping, despite a surging labor force. Not only is the unemployment rate low in historical terms at 5.6 percent, but the workforce has been growing—there are now 2.03 million more people in the labor force than in late 2001. Without a higher rate of unemployment or a shrinking workforce, there is no evidence of growing discouragement.

Myth #3: Outsourcing will cause a net loss of 3.3 million jobs.
Fact: Outsourcing has little net impact, and represents less than 1 percent of gross job turnover.
Over the past decade, America has lost an average of 7.71 million jobs every quarter.[4] The most alarmist prediction of jobs lost to outsourcing, by Forrester Research, estimates that 3.3 million service jobs will be outsourced between 2000 and 2015—an average of 55,000 jobs outsourced per quarter, or only 0.71 percent of all jobs lost per quarter.

Myth #4: Free trade, free labor, and free capital harm the U.S. economy.
Fact: Economic freedom is necessary for economic growth, new jobs, and higher living standards.
A study conducted for the 2004 Index of Economic Freedom confirms a strong, positive relationship between economic freedom and per capita GDP. Countries that adopt policies antithetical to economic freedom, including trying to protect jobs of a few from outsourcing, tend to retard economic growth, which leads to fewer jobs.

Myth #5: A job outsourced is a job lost.
Fact: Outsourcing means efficiency. Outsourcing is a means of getting more final output with lower cost inputs, which leads to lower prices for all U.S. firms and families. Lower prices lead directly to higher standards of living and more jobs in a growing economy.

Myth #6: Outsourcing is a one-way street.
Fact: Outsourcing works both ways.
The number of jobs coming from other countries to the U.S. (jobs “insourced”) is growing at a faster rate than jobs lost overseas. According to the Organization for International Investment, the numbers of manufacturing jobs insourced to the United States grew by 82 percent, while the number outsourced overseas grew by only 23 percent.[5] Moreover, these insourced jobs are often higher-paying than those outsourced.[6]

Myth #7: American manufacturing jobs are moving to poor nations, especially China.
Fact: Nations are losing manufacturing jobs worldwide, even China. America is not alone in experiencing declines in manufacturing jobs. U.S. manufacturing employment declined 11 percent between 1995 and 2002, which is identical to the average world decline.[7] China has seen a sharper decline, losing 15 percent of its industrial jobs over the same period.

Myth #8: Only greedy corporations benefit from outsourcing.
Fact: Everyone benefits from outsourcing.
Outsourcing is about efficiency. As costs decline, every consumer benefits, including those who lose their jobs to outsourcing. A 2003 study by Michael W. Klein, Scott Schuh, and Robert K. Triest, which includes dislocation costs in its calculations, shows the benefits of trade outweighing its costs by 100 percent.[8]

Myth #9: The government can protect American workers from outsourcing.
Fact: Protectionism is isolationism and has a history of failure. Proposals to punish businesses that outsource jobs, institute tariffs, or change tax rules will carry unintended consequences if enacted. Such measures would injure U.S. firms that export goods and services and erode U.S. competitiveness, often in unexpected ways. Recent steel tariffs, for example, cost jobs in dozens of industries while raising prices for consumers.[9]

Myth #10: Unemployment benefits should be extended beyond 26 weeks.
Fact: Jobless benefits are already working.
The median duration of unemployment is now 10.9 weeks; most workers are covered by existing benefits, which last for 26 weeks. Extending today’s coverage to 39 weeks would cost billions of dollars and have little impact.

Conclusion

America's workers deserve a more informative, less partisan debate on outsourcing. The negative impact of outsourcing on the economy and American employment has been greatly exaggerated, and the benefits of outsourcing almost entirely ignored.
http://www.heritage.org/Research/TradeandForeignAid/wm467.cfm

Please don't dent the planet.

Destinations by Roxanne

[SkyDekker 1,147]

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One way to help stop the outsourcing may not be too popular, but just may work... would be to make it profitable for companies to let our (US) uneducated and unskilled people do the work. How? Eliminate minimum wage and let the market handle the rest.

I don't think that will work, due to the drastic differences in cost of living between the US and some of your popular outsourcing spots around the world.

It really is a direct result of your prosperity. Your accumulated wealth over the years has driven your cost of living up, this has driven up minimum wage (never mind the influence of unions).

Eventually the prosperity in other countries will increase, leveling out the comparable wages and labour will move back to the US.

[nanook 1]

The rest of the world doesn't need us for anything. They can get by without any of our products. With that: The U.S. economy doesn't exist anymore. It's Global. The traditional laborer of yesteryear is becoming obsolete. They will not disappear, there will just be a lot less. We will continue to outsource; other countries will continue to manufacture in the U.S. also. A lot of american workers are building foriegn products here after all(Nissan, Mercedes ect. ect.) Trying to hold on to an old idea will hurt us greatly. If we don't move forward with the rest of the world, everyone else is going to move on without us.

So, the reason why we are outsourcing? CEOs knows this and are jumping in. They have to turn a profit or shareholders/consumers will abandon the company. Laws will do nothing but hurt the country that is trying to impose them.

_____________________________

"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[Trent 0]

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Eventually the prosperity in other countries will increase, leveling out the comparable wages and labour will move back to the US.

True, over the long long term.

However, if there are people NOT working earning 0 dollars... it would be better for them to work earning $4 an hour, right? Also, the market did not determine the minimum wage, people did. If people are willing to work at lower than $5.15 an hour, there will be jobs for them. If the job is such that no one will work at $4/hr, then they'll have to raise the pay.

It could work if there is a group of people who want to work and aren't making anything today. In reality, it might have to be coupled with linking low-paying jobs to the welfare system, so at a very minimum... people are paying part of their own way.

Granted, these folks won't be buying houses and cars right away, but you CAN survive on a very small income in the US... but you have to go to the right places. Trust me, I work on a dropzone... and I'm surviving.

Oh, hello again!

[PhillyKev 0]

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If the job is such that no one will work at $4/hr, then they'll have to raise the pay.

Or outsource to a communist nation where labor is cheaper. Which is what happens now.

[billvon 2,435]

>My issue is "why is it happening?"

1. Automation reduces the need for unskilled labor
2. Foreign competition is now as well educated as we are and is drastically cheaper
3. The standard of living here makes it impossible for some forms of labor to compete globally
4. There is no premium placed on keeping low-skill US jobs

One of your reasons:

"advances allow - Unskilled and uneducated labor to be more productive"

I'm not so sure is true. I think it has far more effect the opposite way - advances allow someone who can program a robotic paintbooth to do the work of 25 painters. I think such technology serves to widen the gap between educated and uneducated workers.

[Casurf1978 0]

I think the American consumer has a stake in it too. We want more bang for our buck. Take for example a pair of Jeans. You have one made in China that sells for $75 and lets take a name brand like Lucky which are made in the USA (almost 100% sure they are) and retail for at least $100+. Which one are you going to pick? When people shop at Wal-Mart they shop with their pocket books regardless if the American made product is superior in quality.

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[kallend 1,651]

"The First Thing We Do, Let's Kill All the Lawyers", W.S., from Henry IV.

...

The only sure way to survive a canopy collision is not to have one.

[Trent 0]

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Or outsource to a communist nation where labor is cheaper. Which is what happens now.

Unless, instead of welfare, people are given these jobs to help supplement their public dependency.

But, of course, we just might not have enough willing workers here to do it.

Oh, hello again!

[pleifer 0]

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Myth #1: America is losing jobs.

Fact: More Americans are employed than ever before.
We are just makeing lower wages

Myth #2: The low unemployment rate excludes many discouraged workers.
Fact: Unemployment is dropping,
that is because after 1 year of unemployment, the work seekers are no longer consiterd part of the workforce which unemployment is caculated

Myth #3: Outsourcing will cause a net loss of 3.3 million jobs.
Fact: Outsourcing has little net impact, and represents less than 1 percent of gross job turnover.
tell that to any of my 140 Plus co-workers, maybe it will make them feel better.

Myth #4: Free trade, free labor, and free capital harm the U.S. economy.
Fact: Economic freedom is necessary for economic growth, new jobs, and higher living standards.
A study conducted for the 2004 Index of Economic Freedom confirms a strong, positive relationship between economic freedom and per capita GDP. Countries that adopt policies antithetical to economic freedom, including trying to protect jobs of a few from outsourcing, tend to retard economic growth, which leads to fewer jobs.

OHH oh another study, In my last Homework assignment, i ran a regression of the S&P 500 against a random number generator in Excel and found a strong correlation too, wonder if I can get paid for it?

Myth #5: A job outsourced is a job lost.
Fact: Outsourcing means efficiency. Outsourcing is a means of getting more final output with lower cost inputs, which leads to lower prices for all U.S. firms and families. Lower prices lead directly to higher standards of living and more jobs in a growing economy.

Which we need with our lower paying jobs

Myth #6: Outsourcing is a one-way street.
Fact: Outsourcing works both ways.
The number of jobs coming from other countries to the U.S. (jobs “insourced”) is growing at a faster rate than jobs lost overseas. According to the Organization for International Investment, the numbers of manufacturing jobs insourced to the United States grew by 82 percent, while the number outsourced overseas grew by only 23 percent.[5] Moreover, these insourced jobs are often higher-paying than those outsourced.[6]

I can play with numbers too 82 percent of 1000 is 82 while 23 percent of 10 million is 230,000... ok this is exagerated, but you get the point

Myth #7: American manufacturing jobs are moving to poor nations, especially China.
Fact: you forgot India, Malasia, ectera....

Myth #8: Only greedy corporations benefit from outsourcing.
Fact: With our lower wages we can afford MORE!!!

Myth #9: The government can protect American workers from outsourcing.
Fact: Tell that to NAFTA

Myth #10: Unemployment benefits should be extended beyond 26 weeks.
Fact: Jobless benefits are already working.
The median duration of unemployment is now 10.9 weeks; most workers are covered by existing benefits, which last for 26 weeks. Extending today’s coverage to 39 weeks would cost billions of dollars and have little impact.
FACT:
THe only people it would cost money too is the companies that laid the workers off


America's workers deserve a more informative, less partisan debate on outsourcing.

I agree

_________________________________________
The Angel of Duh has spoke

[TypicalFish 0]

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>My issue is "why is it happening?"

1. Automation reduces the need for unskilled labor
2. Foreign competition is now as well educated as we are and is drastically cheaper
3. The standard of living here makes it impossible for some forms of labor to compete globally
4. There is no premium placed on keeping low-skill US jobs

One of your reasons:

"advances allow - Unskilled and uneducated labor to be more productive"

I'm not so sure is true. I think it has far more effect the opposite way - advances allow someone who can program a robotic paintbooth to do the work of 25 painters. I think such technology serves to widen the gap between educated and uneducated workers.

Also, don't forget that due to benefits-related costs, it is VERY difficult for American companies to compete with a product that is not manufactured here. GM, for instance, absorbs a $1000+ cost on every single car delivered for health benefits alone.

"I gargle no man's balls..." ussfpa on SOCNET

[Guest]

Uh, where does the $1/2 TRILLION foreign debt figure into this?

mh

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[kallend 1,651]

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Uh, where does the $1/2 TRILLION foreign debt figure into this?

mh

.

Ahem - it came from the Heritage Foundation, don't ask embarrassing questions.

...

The only sure way to survive a canopy collision is not to have one.

[SkyDekker 1,147]

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However, if there are people NOT working earning 0 dollars... it would be better for them to work earning $4 an hour, right? Also, the market did not determine the minimum wage, people did. If people are willing to work at lower than $5.15 an hour, there will be jobs for them. If the job is such that no one will work at $4/hr, then they'll have to raise the pay.

It could work if there is a group of people who want to work and aren't making anything today. In reality, it might have to be coupled with linking low-paying jobs to the welfare system, so at a very minimum... people are paying part of their own way.

Granted, these folks won't be buying houses and cars right away, but you CAN survive on a very small income in the US... but you have to go to the right places. Trust me, I work on a dropzone... and I'm surviving.

You already have many illegal immigrants working in positions that "US Citizens" are unwilling to work in. People on welfare working for below minimum wage may be considered government slave labour.

I'll bet you there are many unemployed IT workers who would not be willing to clean toilets for $4/hr, even if they are making $0 right now.

Your comparison with yourself and not needing much money is not quite valid. Assuming you live on the dropzone, you are partly being paid with usage of their land, hydro, facilities etc.

[billvon 2,435]

>Unless, instead of welfare, people are given these jobs to
>help supplement their public dependency.

Unfortunately, if we paid those people what Chinese workers are paid, they would get far less money than they would get from welfare (and of course would no longer be eligible for it.) Could you live on $50 a month? Can any american afford even food, never mind shelter, clothing, health care etc on $600 a year?

So you end up paying them more (say, a minimum wage) and thus US labor becomes less competitive.

[Trent 0]

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Your comparison with yourself and not needing much money is not quite valid. Assuming you live on the dropzone, you are partly being paid with usage of their land, hydro, facilities etc.

I do not live on the dropzone, rent a house, own a car, and manage to eat occasionally. All on a pittance. It can be done.

As for people not wanting to work... well then that just shoots the whole unemployment argument that some have in the foot. So you're saying that some people choose to be unemployed? Remember that.

Also, there are a lot of people who WOULD work if they had the opportunity. I bet an IT person would take a lower paying call center job until he could find something better to do. I bet a homeless man would clean toilets for less than $5.15 an hour. I bet broke, poor people would work on farms if those jobs weren't filled with illegals. I also bet that if someone's welfare check was tied to their willingness to work... they'd be willing to work. Why would it be slave labor if the welfare office asks people to EARN their money by working for $4/hr and supplementing them the $1.15 extra to bring them up to what they usually receive on the first and fifteenth for doing no work at all?

Oh, hello again!

[lawrocket 3]

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"The First Thing We Do, Let's Kill All the Lawyers", W.S., from Henry IV.

Except for me, my wife and one other lawyer. Hey, one lawyer will have no business. Give me one more, and business will boom!

BTW - I guess I was smart in choosing a profession that hasn't been outsourced.

I understand that demand for physics professors in old Blighty is small, which has necessitated the migration of many to the US, where they can be found near Chicago ghettos. STOP BRITISH OUTSOURCING OF PHYSICS PROFESSORS TO THE US!!!!

My wife is hotter than your wife.

[PhreeZone 15]

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I bet an IT person would take a lower paying call center job until he could find something better to do.

Not if the IT person ever wanted to work for his old wage again. Its unheard of to give a large increase in salery to a new employee if they are coming from a lower job to a new position. I know lots of professionals that once they took a pay cut to keep putting food on the table never saw their pay ever go up again.

Yesterday is history
And tomorrow is a mystery

Parachutemanuals.com

[Trent 0]

No job ever asked me how much I earned at my previous job. I worked full-time as a student and got a HUGE pay increase when I graduated. If you take a pay cut within the same company... maybe, but not if you find a new job.

Oh, hello again!

[ianmdrennan 2]

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No job ever asked me how much I earned at my previous job.

That's a pretty standard question, at least in my industry.

Blues,
Ian

Performance Designs Factory Team

[Trent 0]

I've worked at several financial and consulting companies and not in any interviews ever was I asked what I earned before. I was asked what I'd like to earn.

If they're going to take your word for it, give yourself a raise!

Oh, hello again!

[ianmdrennan 2]

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If they're going to take your word for it, give yourself a raise!

That's pretty standard practice too

Performance Designs Factory Team