The American economy is impacted by the negative outsourcing

Source: Wise to social issues
Outsourcing has had a negative impact on the American economy. Economists and government officials who advocate the outsourcing of jobs to other countries stress the overall benefit and long-term advantages of this practice for the American economy. Many who have lost their jobs to foreign competition often learn that the creation of higher paying jobs to replace ones that are lost has not occurred. Providing further training and unemployment benefits to workers until they find further employment is expensive. Outsourcing further contributes to a weakening of the economy because it contributes to the trade deficit and exports the American knowledge base to other countries. Improving the lives of people in other countries who take on American jobs at a lower wage should not be done at the expense of lowering the living standards of American workers argue critics of increased outsourcing efforts. Senator Hillary Rodham Clinton, citing a study by Professor Howard Rubin, challenges the reported cost-savings of outsourcing, noting that businesses reported an average of 44% savings on outsourced jobs, when they really were only saving 20% once neglected costs were factored into the equation. Taking a true assessment of the costs of outsourcing would reveal that keeping jobs in the United States is more competitive than many might think.

Outsourcing has resulted in the loss of American jobs without sufficient remedies to provide workers with further employment opportunities. While proponents of outsourcing contend that high-value jobs will be created to replace jobs lost by outsourcing, projections made by the Bureau of Labor Statistics in 2004 belie that expectation. As CNN commentator Lou Dobbs reports, of the top-ten projected areas of job growth only three categories require a college degree. Dobbs also notes that people take new jobs that provide only 80 percent of their former pay rate. While training has been proposed as a means to better the chances of better employment, such programs are expensive. Frank LaGrotta, a member of the Pennsylvania State Legislature, has struggled with the issue of jobs lost to foreign competition. When a steel company left a property vacant in Pennsylvania, LaGrotta states, "We found a lamp manufacturer to move into the empty building. The new lamp-makers didn't pay as well as the old steel-makers, but 600 jobs was, well, 600 jobs. I say was because those lamps are now made in China."

Beyond its impact on the individual worker, outsourcing has negative consequences for the overall American economy. Although free trade is often cited as a reason for outsourcing, Dobbs suspects that economists like Adam Smith and David Ricardo, who routinely advocated free trade, would hold a different opinion if they realized that decisions like outsourcing were made at the expense of national self-interest. "They also could not have imagined that one nation would effectively risk bankrupting itself by transferring its comparative advantage of knowledge base, expertise, and capital to its trading partners, and then ship its jobs overseas as well," he states. Dobbs further contends that the education and career choices that people are making to adjust to a society that embraces outsourcing weaken the position of the American economy in the world.