Outsourcing U.S. Jobs Abroad: Why?

Abstract

Although the United States is the world’s biggest proponent of capitalism and free trade, the time has come to address what global economic pressures have done to America’s labor force. From the Second World War to approximately the late 1990s, the U.S. labor market was robust and “full employment” without inflation appeared to be feasible. However, the rapid spread of global technology provided the means by which all resources, including labor, could be transferred or utilized around the world with ease. From the 1980’s forward, the American government began to favor deregulation, less government regulation on business, as well as more favorable business taxes. From 2000 to the present, the U.S. government “encouraged” the exporting of American jobs to other countries that provided less expensive labor as well as other favorable political and economic incentives. This was done by passing favorable domestic tax legislation for those firms that wished to outsource production.

This paper addresses the dilemma that the U.S. economy now faces with high unemployment and its contribution to slow economic growth. Some of the economic, legal, and political factors that have encouraged the outsourcing of jobs are also addressed. A brief review of some of the suggested ways to help reverse U.S. job losses due to outsourcing is also explored.