Outsourcing Is Hurting the U.S.

Outsourcing is Hurting The U.S.

The controversial topic of outsourcing has become a major issue in the world today. Outsourcing, which first appeared in the United States during the 1990s, is when a country sends work overseas to the developing world, in order to increase efficiency and save money. Some believe that outsourcing is a great thing, but it also has negative aspects that hurt the economy. Outsourcing hurts the economy through the examples of an increasing deficit, money being held overseas, and the loss of jobs.

Our country has experienced an increasing deficit over the years. A deficit is a gap between how much more a country imports than exports, and a trade deficit means that a country is spending more than selling. Outsourcing has helped cause the increasing deficit since we are importing more from our jobs overseas. The Department of Commerce collected data in 1997 regarding the amounts of importing and exporting. The United States gained $910 billion from total exports, but spent $1020 billion on imports. They also showed that exports associated with 5.2 million average U.S. employees gained $34.8 billion, while the United States spent $39.0 billion on imports associated with 5.2 million average U.S. employees. This created a trade deficit of $4.2 billion, and it is based on outsourcing due to the fact that it involved U.S. employees. Opponents argue that, though the deficit has increased, manufacturing output has grown, as well as the overall Gross Domestic Product (GDP) for the United States.

Another reason outsourcing is hurting the U.S. economy is because outsourced companies are holding their money overseas. A recent Bloomberg survey stated that seventy large U.S. firms are holding $1.2 trillion in cash overseas. Opponents argue that outsourcing is good for the companies and businesses overseas, which is true. For example, a case study on PFW systems states that it saves nearly $10,000 per year due to its use of outsourcing. However, though outsourcing does help business in general, it does not help the U.S. economy or the American people. This is because the money that is saved is held in the hands of the overseas companies, so it does not help out the economy back home.

Outsourcing causes a major loss of jobs at home. It is difficult to measure how many jobs are lost due to outsourcing, but there are three different sources that came up with logical numbers. Goldman Sachs, a global investment banking and securities firm, showed 300,000-500,000 job losses, Business Week magazine showed 400,000-500,000 job losses, and an analysis on economy.com showed 995,000 job losses. Using these numbers to create a range, the job losses due to outsourcing, from when outsourcing began and up until 2004, is somewhere between 300,000-500,00. Opponents have said that outsourced jobs grow quicker than non-outsourced