By: James Skinner
With unemployment now at 7.8%, and unemployment among 20-somethings much higher than that, the American business community’s tendency to shift their operations and employment opportunities overseas has drawn criticism from President Obama and former Governor Romney. Both Presidential candidates have accused each other of encouraging the outsourcing of these “American jobs.” Obama has pointed to Romney’s former company Bain Capital as a big outsourcer. Romney has fired back at the President, saying that during his term there have been larger numbers of outsourced jobs than there were before. While they may disagree about who is to blame for outsourcing, both agree that it is bad for Americans. Unfortunately they are dead wrong – outsourcing creates the profits necessary to promote higher-paid, more skilled work in America.
Outsourcing happens when businesses contract out some of what they do out to other companies. In particular, American companies in recent years have outsourced more and more manufacturing and low-level customer service jobs to places like China and India. Many Americans think this is terrible because businesses typically contract with foreign companies that provide services or manufacture items much more cheaply than their American counterparts. Many politicians and citizens vehemently oppose businesses that outsource because it seems to them that foreigners benefit at the expense of Americans.
In reality, outsourcing has positive effects that are often not immediately apparent. American companies outsource when foreign companies can successfully complete tasks at lower cost, freeing up money for the American company to invest in other ventures. Americans benefit from this in two ways. First, companies keep in America only the jobs that Americans can complete by successfully meeting the most efficient combination of high quality and low cost that businesses naturally value. As a highly developed and particularly well-educated society, the jobs that companies keep in America typically favor more skilled, higher-paying work. Second, lower costs for foreign labor leads to lower costs for American consumers. Allowing companies to outsource to foreigners who can produce products more cheaply causes prices for those products to be reduced as companies compete for consumer dollars, all while allowing America to specialize in jobs that Americans are better suited for, and that Americans generally find more attractive.
Rather than condemning outsourcing, Americans and especially 20-somethings should ask themselves — what sorts of jobs do we want to pursue? Most of us would prefer jobs that are high paying and allow us to actually utilize the skills that we have spent most of our lives developing. We do not want to take menial, lower paying jobs. Outsourcing those jobs creates the profits necessary to promote better jobs for us here. It may not seem like it now with the economy in a slump, but trying to pressure companies into keeping jobs in America even when it is not the best place for them is no way to get out of the current mess.
Graphic Credit: Emily Rose Romano
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