Taylor Brann: White-Collar Outsourcing

As the United States has shifted to a service based economy, there has been a decrease in blue-collars jobs as work has been outsourced to developing nations aboard for lower wages. However, within the past decade, many white-collar jobs have also been lost to offshoring, and the number will only grow in the future if no restrictive measures are taken.

Corporations make several arguments for the benefits of outsourcing, but the benefits do not outweigh the losses. Companies argue that millions of American jobs are destroyed every year, but millions more are created, so losing a few hundred thousand white-collar jobs overseas makes little difference. However, jobs in the professional and information technology sectors lost overseas have been a significant portion of the total job loss in those areas, and job creation continues to stagnate in these industries. They also claim that America gains more from foreign investment than it loses from American investment overseas. However, while foreign investment in the U.S. supports some jobs, there is little new job creation. American investment abroad has also made the national trade deficit worse. Supporters say that only low-end jobs are outsourced, allowing American workers to find better jobs and forcing corporations to improve technologies and goods. However, in the information age, any work can be outsourced as long as the service is deliverable over a phone or online connection. Outsourcing saves companies money, and outsourcing supporters argue that the money will be used to invest in more productive American activities. However, companies are not required to use those profits to support jobs in America. Corporations also claim that they send work overseas because America lacks skilled workers. However, work is not offshored because there is a lack of skilled workers in the U.S., but because other countries have skilled workers who will work for less.

Outsourcing supporters argue that losing jobs overseas is a natural process and is good for the economy of the United States and that policy changes to inhibit outsourcing would be costly and counterproductive. However, they ignore that the loss of American jobs is not happening within a system of neutral politics. Many state and federal policies aid and reward the destruction of American jobs with tax breaks and government contracts. Policymakers should reform policies that support job destruction and create new policy solutions that encourage the creation of new jobs.

Some solutions to offshoring include removing incentives to ship jobs overseas, rewarding job creation in the United States, collecting data on the number of jobs lost overseas and informing consumers where the products they buy are made, providing expanded aid and entitled benefits to displaced workers, and supporting development, workers’ rights, and aid in developing countries.

Current laws allow companies that send work overseas to defer paying taxes on their overseas earnings and to deduct several expenses involved in moving offshore. This means that offshoring companies get double subsidies, while companies that keep jobs in the United States are essentially penalized. Ending offshore tax breaks would not only remove the incentive to move offshore, but also create billions in yearly tax revenues.

Stimulating stable development around the world aids both the workers in other countries and helps build a balanced global economy. If workers in other countries cannot earn a living wage, they can never buy the goods produced in their own countries, let alone American produced goods. Workers’ rights are key to the development of democratization and the growth of the middle class. Many developing countries struggle to pay large debts with short-term, export-based strategies, which prevent the countries from long-term development and puts competitive pressure on American workers. By relieving large debts and increasing development aid to other countries, the United States would allow other governments to invest in development.

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Outsourcing Humor:

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Sources:
“Advantages of Outsourcing.” Offshoring Times. http://www.offshoringtimes.com/AdvantagesOfOutSourcing.html (accessed April 18, 2009).

Bivens, Josh. “Truth and Consequences of Offshoring.” Economic Policy Institute. http://www.epi.org/publications/entry/bp155/ (accessed April 18, 2009).

“Corporate Myths About Shipping Jobs Overseas.” AFL-CIO.org. http://www.aflcio.org/issues/jobseconomy/jobs/outsourcing_myths.cfm (accessed April 18, 2009).

“Exporting America: The Problems.” AFL-CIO.org. http://www.aflcio.org/issues/jobseconomy/exportingamerica/outsourcing_problems.cfm (accessed April 18, 2009).

“Exporting America: The Solutions.” AFL-CIO.org. http://www.aflcio.org/issues/jobseconomy/exportingamerica/outsourcing_solutions.cfm (accessed April 18, 2009).

“Walt Handelsman Editorial Cartoons: 2004 Archive.” Newsday.com. http://www.newsday.com/news/opinion/ny-walt-2004-cartoons,0,6527316.cartoongallery?index=177 (accessed April 18, 2009).

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