OUTSOURCING

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OUTSOURCING OFFSHORING

• How Does It Affect The US Economy?

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

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Whats Whys

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

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What Industries Outsource?

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

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Why is outsourcing possible?

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

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Arguments FOR Outsourcing

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

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Arguments Against Outsourcing

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

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Tell Me What You Think

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