OUTSOURCING OFFSHORING How Does It Affect The US

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OUTSOURCING & OFFSHORING How Does It Affect The US Economy?

OUTSOURCING & OFFSHORING How Does It Affect The US Economy?

Is it good or bad for the American Economy? Ü Whom does it benefit?

Is it good or bad for the American Economy? Ü Whom does it benefit? Ü The consumer? The company? Both? Ü What impact is it having on the economy? Ü Is it doing harm to workers in the U. S. ? Ü Is it allowing for growth and development of our economy? Ü What impact does it have on the country it outsources to? Ü Is it allowing them to get out of poverty? Ü Is it treating workers fairly? Ü How has it changed the US? Ü What impact has it had on us as consumers? Ü What impact has it had on Corporate America?

What’s & Why’s What is outsourcing? Ü Contracting of jobs, services, or manufacturing to

What’s & Why’s What is outsourcing? Ü Contracting of jobs, services, or manufacturing to companies in other states and/or other countries. Ü Companies outsource manufacturing jobs to other countries to take advantage of: Ü Low wages Ü American Worker Cost: $10 + per hour plus benefits (Vacation, Sick Days, Retirement, Insurance) Ü Outsourced Worker Cost: Less than $4 per hour and less or no benefits. Ü Less restrictive labor laws: Ü Low/no minimum wage, working conditions, child labor, work weeks, etc… Ü Outsourcing lowers labor costs, which lowers the price of the good or service, and increases company profits. Ü Are we sacrificing safety for cheapness? Ü Are we getting quality goods that are safe? (Toy Recall, 2007, Toxic Toothpaste)

What Industries Outsource? Ü Many different industries have and do outsource to other countries.

What Industries Outsource? Ü Many different industries have and do outsource to other countries. Ü Food: Mexico, Central America, Caribbean Islands Ü Textiles (clothing): Mexico & Central America, SE Asia Ü Prescription Drugs and Pharmaceuticals: Caribbean Islands Ü Computers and software: China, Japan, India Ü Electronics: China, Taiwan, Japan Ü Cellular service: India Ü Toy manufacturers: China, SE Asia Ü Household appliances: Asia, Eastern Europe Ü Automotive: Canada, Germany, China, Mexico Ü Telemarketing and Customer Service: India, SE Asia Ü Household Goods: Eastern Europe, South and SE Asia Ü Newest Outsourcing Market: Eastern Europe (Romania, Bulgaria, Latvia, etc…) Ü Avoided Countries: Africa and South America (too dangerous), Western/Northern Europe (too expensive)

Why is outsourcing possible? Ü International Trade Agreements allow it: Ü Free-trade agreements (no

Why is outsourcing possible? Ü International Trade Agreements allow it: Ü Free-trade agreements (no tariffs or taxes) between countries allows for factories to move across borders. Ü NAFTA (North American Free Trade Agreement) Ü Tax-free trade between Mexico, the US, and Canada Ü WTO (World Trade Organization) Ü CAFTA (Central American Free Trade Agreement) Ü Tax-free trade between the US and Central American countries Ü Tax breaks and loopholes: Ü Corporate Tax codes can reward companies for outsourcing. Ü Few labor laws and/or low human rights standards in low income countries. Ü How does the U. S. get other countries to pass laws protecting workers?

Arguments FOR Outsourcing: Ü Cheaper labor means cheaper products. Ü Cuts labor costs which

Arguments FOR Outsourcing: Ü Cheaper labor means cheaper products. Ü Cuts labor costs which cuts production costs, meaning cheaper goods. Ü Makes it cheaper to produce overseas and ship here than to manufacture here. American workers are expensive. Ü Outsourcing improves conditions in low income countries. Ü Provides jobs for people in poor countries, providing them with income they can then buy our goods. Ü Decreases poverty and unemployment, and stabilizes once unstable governments and economies. Ü Outsourcing promotes job growth in the U. S. . Ü Moves people from lower paying to higher paying jobs. Ü Promotes small business creation and self-employment. Ü Outsourcing promotes globalization. Ü Gets businesses into trade with global markets. Ü Allows American companies to compete in global markets. Ü Outsourcing levels the playing field with other countries. Ü Helps us compete with the cheap prices in emerging countries (China, India) Ü Promotes business efficiency.

Arguments Against Outsourcing Ü Outsourcing creates unemployment. Ü Outsourced jobs are not replaced with

Arguments Against Outsourcing Ü Outsourcing creates unemployment. Ü Outsourced jobs are not replaced with new jobs. Ü Average number of jobs lost per year: 100, 000 Ü Unemployed people cost taxpayers money: Ü Unemployment, Welfare, other Government Assistance. Ü Outsourcing also affects higher paying jobs. Ü Lost jobs are climbing the economic ladder no longer just manufacturing jobs: higher paying, higher better benefit jobs. Ü Jobs replacing lost jobs are lower paying, less benefits. (close to half) Ü Result has been a decrease in personal income in the U. S. . Ü Fairness to the worker is not considered. Ü Outsourced workers have had to train their foreign replacement before losing their job. Ü Laid off workers do not find similar paying jobs, mostly lower paying. Ü Foreign workers are given American names and taught how to speak in “American” English. Ü Corporate shareholders benefit more than consumers. Ü The overall purpose is to cut costs and increase profits, which directed at investors, not consumers. Ü Many corporations have shown record profits, even though they claim they need outsourcing to remain in business.

Tell Me What You Think Ü What do you believe about this issue? Ü

Tell Me What You Think Ü What do you believe about this issue? Ü Is it good or bad for the American economy? Ü What are the disadvantages and advantages of outsourcing? Ü Does it matter in our economy? Ü 1 Page Opinion Paper on the subject of Outsourcing.