ECONOMY: Outsourcing

The list of American companies seeking cheaper labor in foreign markets has been growing at a steady pace since the 1980's. The numbers (which have been hard to calculate) have many economist down playing the effects of off shoring jobs because it�s a seemingly small portion of the overall labor force--estimated at 2.5 percent. Still, the threat of losing a job to a foreign worker is very real to Americans. The reality of today's global labor market is one where more and more Americans are forced to compete with workers who have lower cost of living standards than their US counterparts, and there is real profit to be found for a corporation concerned with their bottom line.

One of the major problems as seen by the democratic ticket is the tax breaks written into the tax code for corporations that move overseas. John Kerry has a plan that will end those tax breaks, and relieve some of the mounting health care cost for corporations, but no one believes that protecting our current industries is enough to make American workers competitive with cheap foreign labor. The expansion of off shoring from manufacturing to tech and lower level clerical workers is evidence that this problem is growing and America needs to change along with the changes taking place in the world economy. John Kerry also addresses the need for innovation in America with his plan to further the cause of energy independence and stem cell research both of which could lead to new jobs in the American market place. If we are in special times as many politicos suggest who has the special policy that will set the world right again for the American worker?

Kerry for President
"We invented and built the cars we drive today - we can invent and build the cars we drive tomorrow, too."--John Kerry


The Kerry/Edwards ticket is offered solutions to the growing job insecurity that Americans feel and an end to the loop holes that corporations are using while at the same time offering new incentives for corporations to create jobs here at home. The human cost being paid by our workers can't be over shadowed by the numbers. When it comes to outsourcing does America need a leader open minded enough to allow technology to grow?

A Strategy for Tomorrow's Economy
Pro-outsourcing

The original theory derives from Adam Smith's competitive advantage. He published his landmark book, The Wealth of Nations, in 1776. Offshore outsourcing is the natural evolution of the industrial and information revolutions that preceded it.

As the planet transitons to a more global economy, outsourcing becomes a means by which American based multinational companies are able to compete on an equal footing.

What of the jobs that have been lost? Global Insight, which was published in March 2004. "The Comprehensive Impact of Offshore IT Software and Services Outsourcing on the US Economy and the IT Industry" found that

The study predicts the US economy will create 516,000 new IT jobs over the next five years. That number would only be 490,000 jobs without global sourcing. Of the 516,000 new IT jobs, Global Insight reports 272,000 will go offshore. That leaves 244,000 new jobs that will remain in the US.
And, offshore outsourcing also creates jobs in other sectors besides IT. The report says the incremental economic activity that follows offshore IT outsourcing created over 90,000 net new jobs in 2003 and probably will create 317,000 net new jobs by 2008.
The report also pointed out that the dotcom debacle caused more IT job losses than offshoring. Global Insight estimates the number of displaced IT software and service jobs due to offshore IT outsourcing as of 2003 was 104,000. This number includes jobs US companies eliminated by replacing American workers with foreign workers as well as jobs that were never created as other US companies expanded their IT activities by going offshore directly. The study says "it is important to note" that the industry has lost 372,000 jobs since 2000. It also says that 10% of all IT software and service jobs have disappeared since 2000. But only 2.8% of the total IT jobs were lost because of offshore IT outsourcing.

based on that evidence, the threat of job loss is not as severe as it seems on the surface.

The amount of money saved by these companies will not only help its bottom line, it will allow our corporations to reinvest money saved into R&D and the like.

I have to agree with FredT here. I also believe we can combat outsourcing by reinstating tariffs again. When this nation started we didn't have income taxes, our government was supported by tariffs.

Tariffs support out national economy and provide income for the government. Free trade is important too, like how FredT pointed out above.

What outsourcing really means is that America's education system has to lead the way and produce highly skilled workers. Most (there are of course exceptions)of the jobs that I see outsourced are low-level, low paying jobs that don't take much education. Highly specialized and trained people will not have their jobs outsourced because no one can replace them. Our new high-tech era just means that everyone has to have high-tech training, and is going to have a very hard time with just a high school diploma.

Lockheed Tariffs might work but then other country`s have already shown that if we put Tariffs on there goods they will do it to ours.....in the end I feel this Becomes a Wash....no one wins. I think the ONLY way to stop out sourcing is to Penalize Countries that send jobs to Mexico And or Over seas.....And Repealing NAFTA and GATT

[edit on 4-8-2004 by Truth_Hunter_1976]

Originally posted by FredT

As the planet transitons to a more global economy, outsourcing becomes a means by which American based multinational companies are able to compete on an equal footing.

Do you see Sony or NEC suddenly upping and moving to America to find workers? With the best education system and workers who are loyal and hardworking we are being taken for a ride by other nations, this is slowly strangling us. What we need to do is offen incentives for businesses to move here, what we lose giving those incentives is just a drop in the ocean compared to what we'd get back. We'd lower the cost of that companies goods too by offering more efficient systems. Other nations are doing this already but we're being left behind.

The study predicts the US economy will create 516,000 new IT jobs over the next five years. That number would only be 490,000 jobs without global sourcing. Of the 516,000 new IT jobs, Global Insight reports 272,000 will go offshore. That leaves 244,000 new jobs that will remain in the US.
And, offshore outsourcing also creates jobs in other sectors besides IT. The report says the incremental economic activity that follows offshore IT outsourcing created over 90,000 net new jobs in 2003 and probably will create 317,000 net new jobs by 2008.
The report also pointed out that the dotcom debacle caused more IT job losses than offshoring. Global Insight estimates the number of displaced IT software and service jobs due to offshore IT outsourcing as of 2003 was 104,000. This number includes jobs US companies eliminated by replacing American workers with foreign workers as well as jobs that were never created as other US companies expanded their IT activities by going offshore directly. The study says "it is important to note" that the industry has lost 372,000 jobs since 2000. It also says that 10% of all IT software and service jobs have disappeared since 2000. But only 2.8% of the total IT jobs were lost because of offshore IT outsourcing.

What do you think would happen if we gave those companies breaks in the most technologically advanced, richest and most democratically stable nation on Earth? The companies would rush here.

So the threat of Job loss isn't actually severe?

Tell that to the 300,000 in Ohio who are now collecting benefits because of George Bush.

[edit on 4-8-2004 by Nerdling]

Outsourcing is real in the mid-west. While some of America can sit back and say its the way of the world, the real human cost of this problem is killing the middle of this country.

Middle Americans are losing income, healthcare, pentions, and eventually their homes. No one believes their job is secure--people are starting to feel the shift.

The jobs are not being replaced. Just how long do we believe we can keep doing this? America needs innovation. We need to be on the ground floor with every new technology that is and can be produced, but with the current administration I don't believe its possible because they lack the spirit of creativity. For every boom that fizzled something took its place--we are looking at nothing right now. We need creative leaders to deal with the changing times. Its not enough to visit middle america and tell us about tax-cuts while corporation after corporation offshores our jobs to foreign markets leaving our towns devastated shells of what middle America used to be.

What is the Bush plan--tax cuts. Well, that doesn't do much for the 500+ RCA workers in Indy that lost their jobs to Mexico this week.

[edit on 4-8-2004 by Saphronia]

Originally posted by Nerdling
Do you see Sony or NEC suddenly upping and moving to America to find workers? With the best education system and workers who are loyal and hardworking we are being taken for a ride by other nations, this is slowly strangling us. What we need to do is offen incentives for businesses to move here,

Hmmm. Take a look at the bottom of your walkman or look at the componets of your Sony Playstation or your TV. Sony and other Japanese companies have been outsoursing for more than a decade. Cheaper labor markets have forced Sony and others to export jobs off of the mainland. They did this to stay compedative. Why not the US? Wages, liability are among the most important things for these companies. No amount of tax breakes is going to make up the difference between a 2 dollar a day worker, versus a $20 an hour worker.

What do you think would happen if we gave those companies breaks in the most technologically advanced, richest and most democratically stable nation on Earth? The companies would rush here.

Doubtfull at best. As I explained above, the wage difference alone is not appealing. Are you suggesting a corporate welfare system were the Local, State, and Frederal governments provide wage subsadies? OR would that money be better spent retraining the effected wokder for new and perhaps even better paying jobs?

Tell that to the 300,000 in Ohio who are now collecting benefits because of George Bush.

Nerdling, lets take a look at the unemployment situation without the Spin eh? Unemployment in Ohio is sitting at 5.8%. That mirrors nationwide unemployment at 5.8%. Japan who outsourses most of its low end electronics and other activities to Taiwan, China, Indonesia etc. has an rate of 5.3% Hmmm one of the biggest outsourcers has a rate close to the US's???

A little more digging:
Figures are from: www.nationmaster.com...
Lets look at Europe's Unemployment Rate:
Spain 10%
Germany 9.8%
France 9.1%
Italy 9.1%
UK 5.2%
Dennmark 5.1%
Austria 4.8%
Portugal 4.7%
Sweden 4%
Swiss 1.9

With the exception of the Scandanavian countries, (and the Swiss) the economic powerhouses of Europe are sporting a much higher rate than the US. The UK is pretty close. To blame Bush for the number of Unemployed is simply not correct.

Lets look at Ohio during the glory years of the Clinton Administration:
Unemployment during one of the biggest economic booms in modern times was anywere from 3.9-5%. Bush who inherited a recession, has managed to keep that rate to its current 5.8%. Given the global economic slump, the releative rates are actually pretty good. All of these facts were taken from the State of Ohio web site. 300,000 people out of work is shocking, but when you look behind the numbers, to blame Bush is simply misleading. Nor can you blame all of those jobs on Outsourcing.....



[edit on 4-8-2004 by FredT]

Your figures are misleading Fred.

The unemployment rate is based on those people who are registered and collecting benefits. The recent dip in unemployment is due mostly to the fact that many people's benefits ran out. I see this alot here in this region, many people are no longer offically classified as unemployed, because they no longer recieve benefits. But trust me, they are still VERY unemployed.

The unemployment rates also do not count for the multitudes of people who are now working part time jobs, sometimes two of them, to make ends meet. The shopping malls and stores are still full of Boeing engineers, computer wizards, and other educated persons, who can no longer find work in their old jobs because someone in China with the same education can do it alot cheaper.

I fail to see how outsourcing really gives companies an advantage. For example, when I go to Wal-Mart to buy personal hygiene items, I see, lets say, a pedicure set there. I look at it, it costs 10 bucks. It is made in China. I see next to it, another pedicure set, with similar items, some even better quality. It sells for 10.35. It is made in the USA. 35 cents is a competitive advantage for a company? I dont think so, not from the consumer's point of view. If the item looks better and has a big made in the USA sticker on it, a consumer is not gonna miss that 35 cents, especially if the item looks like it is WAAY better.

I have seen quite a few examples in other items, and the price difference between items made in the US and those made overseas is hardly worth any notice. Sometimes, I see stuff made in the USA that is actually a little cheaper. And sometimes, the foreign made stuff is, well....crap. I saw lawnchairs at Wal-Mart (I go there often for many things I need, since I am one of those victims of outsourcing, and have a limited income). The ones made in China were like 5 bucks. They were kinda shabby, didnt look that sturdy of comfy. I saw some made in the USA that looked alot better, of better construction and materials, that sold for like 8 bucks. Since the cost of having to keep buying cheap lawnchairs would overspend the cost of buying one well made one, the American lawnchair is a better investment.

Another example came from Iowa, with Westinghouse and their refridgerators. They laid off a whole bunch of people at their plant and sent their jobs to Mexico. The refridgerators did not get cheaper. The fridges still sold for 2000 dollars. So, to the consumer, they were paying the same for a Mexican made, or American made, fridge. the only difference here is that Westinghouse is getting to keep an even fatter portion of the profits.

Outsourcing is not about competition. It's about greed, and a very costly greed. Just look at the no-mans lands of Detroit, Gary indiana, and soon.....Seattle.

Kerry this and Kerry that. Do you know that Heinz Co. has 60% outsourcing. You know who Heinz is right? Do you actually think for one minute that Kerry will tighten the tax breaks? If you do, you are saddenly mistaken. I have lost my job more then once to outsourcing (I'm in IT field) and this a real sore spot for me. Both ,Bush and Kerry ,will not do anything about jobs leaving the country.
I am a registered republican and I'm trying to find a reason to re-vote for Bush. ( I did vote for Clinton twice. )Another thing that has me upset is , why are we paying almost $2.00 per gallon? This is ridiculous. This should never have happenned. The only thing that's pushing me towards Bush right now is his resolve. The next president should take care of business at home first then look abroad to fix the worlds problems. The USA needs some fixing up to do, and until you get your back yard in order don't go looking to fix other people yards. Anyway that's my 2 cents worth of commentary.

Outsourcing work overseas is only partly to blame for our diminishing domestic workforce. More recently multi-national corporations are bringing H-1B workers over from Asia and more notably India. This government sponsored program allows companies to replace high paid American workers with much lower paid "guest workers". This is completely legal and allows no recourse for usurped workers or their indentured replacements. Blatant American complacency allowed this to happen. Now it's time to get up off our asses and take a stand!

Read the whole story at:

www.zazona.comShameH1BFAQ.htm...


[edit on 10/24/2004 by dollmonster]

I think the reason we have so much outsourcing is that America's corporate culture is about looting. Corporate titans are too dependent on lawyers and politicians for their businesses. Mostly, they spend their time figuring out a way to screw over someone else, so they can make an extra buck. These businesses eventually fail, but the executives come out with the cash. Bush's friends at Enron and Worldcom are typical examples of this.

Small businesses develop new technologies, and really drive American growth. They also generally hire locally, and they are generally more concerned about developing new products and businesses than taking the risk of working with someone overseas. All Bush's policies have been to support old inefficient businesses. Even with his tarrifs, he supports steal makers which can't compete because they are less efficient, and shrimpers, who are less efficient.

If the Republican fat cats can't figure out how to make their businesses more efficient, too bad for them. The truth is that corporate MBA haven't really done a very good job managing businesses, but they are the ones who are rewarded by Bush's tax cuts. They then get to decide where to invest a larger percentage of the money.

From website says

Today, small businesses are struggling in a business environment weakened by economic stewardship that puts big business ahead of the small American entrepreneur. Loans are down and naccess to capital has decreased while health care and energy costs have increased - and are still climbing today.

As the former Chairman and current Ranking Member of the Senate Small Business and Entrepreneurship Committee, John Kerry has been a national leader in promoting small businesses growth. John Kerry owned his own small business, a cookie and muffin shop called Kilvert and Forbes that he opened in 1979 with a friend in Boston's Quincy Market, giving him first-hand experience with the obstacles faced by small business owners.

As president, John Kerry will bring to the White House both the lessons he learned from owning and working in a small business and his leadership in fighting to support small businesses in the Senate. Tapping into the ingenuity and inventiveness that drives American business, John Kerry and John Edwards will usher in a new era of opportunity for small business.

I think I would have to agree strongly with Skadi_the_Evil_Elf on the unemployment figures being based on Only those receiving benefits. I would guess it is more like (low) 15% + & probably a lot higher and I can't begin to imagine the figures of those who are Only working part time.

Originally posted by Skadi_the_Evil_Elf
Your figures are misleading Fred.

The unemployment rate is based on those people who are registered and collecting benefits. The recent dip in unemployment is due mostly to the fact that many people's benefits ran out. I see this alot here in this region, many people are no longer offically classified as unemployed, because they no longer recieve benefits. But trust me, they are still VERY unemployed.

The unemployment rates also do not count for the multitudes of people who are now working part time jobs, sometimes two of them, to make ends meet. The shopping malls and stores are still full of Boeing engineers, computer wizards, and other educated persons, who can no longer find work in their old jobs because someone in China with the same education can do it alot cheaper. [end quote]

The Power of the Economic Anvil is being relocated from the influence of the G7 to the Far East/Pacific Rim minus one Japan.

Read all about it at America First!.

Be sure not to miss this episode: The China Syndrome - CBS News / 60 Minutes .

Have a Nice Day,
Deckard

[edit on 27-10-2004 by bladerunner]