Costs of Outsourcing
Judging by how rarely we hear about it these days, worrying about outsourcing seems to have gone out of fashion. Of course, there is a new crisis every week in America these days, and with massive riots, ISIS, and Ebola constantly dominating the headlines, it can be easy to forget the fundamental issues that have been contributing to so many of the problems we are facing as a country. Outsourcing is one of these issues, and in all the talk about jobs and the economy that have happened since 2008, there has been very little focus on this extremely serious problem.
There is a concept that economists have been speaking about with increasing frequency in recent decades called structural unemployment. This refers to a base level of unemployment that will always exist simply due to the systematic structure of the American economy. This term is important because, even when the economy is booming and we are being told about how many new jobs are being created, there are always still huge numbers of Americans who are unable to find work. The questions are why does structural unemployment exist, and what can we do about it?
The single biggest contributor to the United States’ structural unemployment is American business’s love affair with outsourcing. In the simplest sense, outsourcing happens when a company looks for outside expertise to streamline part of their business. Historically, this often meant a company would employ outside contractors who could complete a part of the necessary work. This could have been hiring an outside accounting firm to balance the books, or hiring another company to manufacture the products that the original company designed.
However, there is a trend that began in the late 1970s that we are still in the grips of today, in which corporations began trying to squeeze more and more profit out of every business venture, regardless of what they had to do to get it. In better days, businesses were relatively small and family-owned, and the owners and management had personal connections to their workers. Now most companies are either huge corporations, are owned by Wall Street, or both, and they could not care less about the welfare of the people who work for them. As a result, they make decisions that can squeeze a few more pennies on the dollar out of their businesses at a huge cost to the American workers who made them successful in the first place.
These days, outsourcing generally means that a company has moved some vital part of their work to another country with less restrictive labor laws or more permissive regulations. They can often pay these foreign workers a fraction of what they would need to pay American workers, and can often cut other costs associated with things like environmental regulations or safety conditions for their workers. In the end, Wall Street gets a few more dollars while more and more working and middle class Americans are left without work.
But this is only the most obvious effect of outsourcing. Even Americans who do not lose their jobs have to deal with negative consequences. For example, when companies move their manufacturing offshore, the quality of the products generally suffer. Furthermore, if a consumer requires replacement parts to repair their purchase, these parts are generally of an even lower quality. Another serious consequence for Americans is that these workers who lose their jobs to outsourcing no longer have an income to contribute to the economy, and it has been proven over and over again that a dollar in the hands of a regular working American is much more likely to stimulate the economy than a dollar in the offshore bank account of a wealthy Wall Street investor.
Outsourcing is one of the single biggest threats to the continued success of America. We need our political leaders to take a stand against Wall Street and say that enough is enough. We need to keep our jobs here! If you care about rebuilding American’s economy to create wealth and opportunity for us all, I urge you to please cast your write-in vote for me, Art Drew, in the 2016 Presidential election.