Outsourcing in America
Outsourcing Is weakening the nation’s Job-creation engine, and leaving thousands of newly unemployed workers here In the United States in search of work. With the number of companies outsourcing jobs continually Increasing, It becomes a much larger issue for the U. S. Workforce to find a job when so many are being outsourced overseas. Unfortunately this trend is likely to continue to cause serious harm in the United States if it continues to go unmonitored. Foreign and American governments have contributed to the problems caused by outsourcing in a number of ways.
Some of the more visible ways are a lack of monitoring and data gathering, ceasing to enforce any pressure or penalties upon companies outsourcing Jobs, and U. S. Jobs being outsourced due to foreign Incentives. These three Issues are a large contributing factor to the current problem of outsourcing in the united States and its negative impact on the American workforce. The U. S. Federal and state governments are contributing to the problems created by outsourcing due to their lack of monitoring and data gathering on the number of Jobs that are being exported.
Without having the needed statistics on the number of Jobs that are being exported, the full Impact of Job loss cannot be properly quantified. The U. S. Commerce and Labor Departments claim that the lack of monitoring system to record the number of outsourced jobs in America is due to a lack of resources. This thought process seems contradictory as the federal government spends over $130 billion each year on research and development, and a fraction of this spending would be enough to grasp the full scale of this outsourcing issue (52). This prevents any meaningful understanding for the U. S. People on the scale of Jobs being outsourced, the business’s and occupations being affected by outsourcing, and the economy potential responses to the negative impacts of outsourcing. With the absence of this data, corporations are able to continue concealing the number of Jobs that are actually being outsourced. In chapter four, Hair and Hair express that federal, state and local government Jobs are also being outsourced. They further discuss that almost every state government has relocated some form of business abroad through entrants with companies that commonly outsource the work for cheaper labor.
For example, Washington State estimated that there were around 1 50 contracts that had contained at least $50 million worth of offshore outsourcing (50). Since there is no government or Labor Department monitoring, companies continue having no legal obligation to inform state governments of the contracted work that is being done offshore. The government Jobs that are being outsourced could have these needed services performed In the U. S. By the American workforce In order to help spur economic development and growth. Instead, American unemployment rates will continue to rise and further the negative impacts upon the U.
S. Economy. As the U. S. Federal government ceases to enforce any penalties to protect the number of jobs companies outsource, they also fail to exert any pressure to slow down the outsourcing process. In chapter five, Hair and Hair point out that discipline or cost in doing so (76). With that in mind, companies will continue moving jobs offshore, and will have their lobbyists persuade U. S. Congress to have them lower their tax rates, and as well as defer taxes on future income indefinitely. The company’s lobbyists succeeded in convincing Congress to allow them to pay the states no more than a mere 5. 5% tax rate, for which the funds would be used as investment towards Jobs creation (81). However, as the federal government continues allowing companies to extradite their money, there has been no evidence of any Job creation being done with those funds. Rather the U. S. Economy has been missing out on over 29. 75% of corporate tax rates, and the American workforce will continue to suffer. As companies continue making cut-backs, this will impact both the assurance of the American workforces financial security, and also the finances used to maintain their communities.
This happens as a result of the increasing number of people that are losing their Jobs, which leads to having fewer numbers of taxpayers to contribute to tax revenue and the funding of social programs. In order to make sure that there are enough taxpayers to maintain funding, more Jobs will have to be created. When Elaine Chaos, George W. Bush’s Secretary of Labor, was asked for a statement on the failure of Job creation in America, she merely dismissed the question and concluded that the stock market was to blame for it (79).
This response is troublesome in that the country’s Secretary of Labor had exhibited what little knowledge or concern she had for creating Job opportunities. This statement portrays her failure in helping protect the future of the American workforce and highlights the failure to exert any pressure to reduce outsourcing. Lastly, foreign governments are actively pursuing offshore outsourcing of U. S. Jobs by offering an array of incentives as part of their national industrial strategy. Such incentives granted by foreign governments include tax breaks and leniency to operate without serious government control.
In chapter nine, major policy changes were put into effect by the Indian governments in order to free up the markets in the software industry. The policy changes went through so long as it was maintained that there would be full cooperation with all levels of the Indian governments. Indian IT corporations receive tax rates that, when in comparison, are less than half to that of what the state and local governments are providing the American corporations. For instance, the Indian IT company, Astray Computer, has a tax rate of 14. 2%, as to the American IT company, Electronic Data Systems, with a tax rate of 35. 87% (179). The lower tax rates in India make it quite enticing for American corporations to outsource their work, and then utilize Indian IT companies to acquire the tax rate benefits. The Indian federal government key government actor in the growth of software has been the local Software Technology Parks. This allows companies to rely on the local STEP as it provides no restrictions on equity and has various benefits such as duty-free import, duty-free indigenous procurement, and deemed exports (178).
Further proactive policies by the Indian government included offers to companies to set up a satellite-based communications infrastructure. Thus, this led the Indian IT sector to increase from $2 billion in 1994-95 to $40 billion in 2003 and employs over 1. 6 million people and will continue to increase (173-174). While the numbers of Jobs that are promote economic growth, they are doing so at the expense of the American workforce. The implementation of this proactive strategy in India has left a large chunk of the U. S. Record unemployed, and continues to contribute to a larger pool of Americans living off unemployment. As companies continue to outsource Jobs, the U. S. Will find it more and more difficult to reverse the trend. This will continue to leave fewer tax dollars in the U. S. System and leave more of the American workforce unemployed. This also will impact the amount of tax revenues required to fund education, health, infrastructure, and social security systems. There is no question that the American people would like their government to take a stand against companies that send Jobs overseas.
The U. S. Governments, and citizens, should feel obliged to discover new ways of creating more opportunities and Jobs by regulating the amount of outsourced Jobs allowed in the United States. The issues caused by lack of monitoring and data gathering, the need to enforce pressure or penalties on companies that outsource Jobs, and regulation on the number of U. S. Jobs being outsourced due to foreign incentives must be addressed. This issue can’t be addressed until the foreign and American governments take action on the contributing factors to the current problem of outsourcing in the U. S.