I wanted to look into whether the increase in firms in the US offshoring over the last decade has had a impact on the US economy. One article that I found Economic damage to US economy from offshoring jobs may be exaggerated, argues that offshoring hasn't had that large of an impact on the economy. His argument was that offshoring has actually made the US firms more efficient because the savings made from offshoring get redirected into new products, research, and development. The article talks about how offshoring hasn't taken as many jobs as the public would think also.
Only around 0.60% of the 60 million jobs have been lost due to offshoring. One more argument that can help people relax is that Americas largest industries such as catering, tourism, retail, hotels and restaurants cannot be off shored, therefore that is millions of jobs that the US labor force cannot lose out on as firms continue to offshore to other countries to reduce costs.
Compared to a lot of the world the US have a fairly well educated labor force and this is another reason not to be worried about offshoring, the majority of jobs that are off shored are unskilled jobs that anyone could do, the high skilled jobs are more difficult to offshore and these are the ones most American citizens want as they will generally pay a higher wage. In my opinion offshoring is needed for the world economy as is help developing countries build their economies, and improves their welfare with increase technology, jobs and training.
This post reminds me of what the politicians feel are the driving issues with the economy that they can dumb down to a general level to get votes from the American public. The less than 1 percent jobs lost isn't too big of a deal when we think that we are getting closer and closer to full employment which is a 4 percent unemployment rate. It almost seems to me that the money saved by outsourcing would be put back into the company in terms of R and D or another field. I think it would be extremely difficult to actually quantify the jobs lost to gained due to outsourcing because of theories such as the one described in your post
ReplyDeleteInteresting article and a good post. This supports what we have seen in class that offshoring is not severely harmful but that politicians would have you believe otherwise as it is an easy political point to score. However the benefit to consumers due to offshoring is a more affordable product and therefore greater disposable income. Also, as you pointed out, due to the education of the American workforce it is typically unskilled labour that is displaced - freeing the American labour force to work in more skilled jobs.
ReplyDeleteI also believe that it it hard to estimate how many jobs are being outsourced, compared to the one your post describes. The article I wrote last on said it was hard to come up with an official number and how, like James said, it is typically unskilled labor that is displaced.
ReplyDeleteI think offshoring is a big reason why Donald Trump won the election. Looking at the data from the election, I noticed that the unskilled labor force voted heavily for Donald Trump, most likely because of his stance on China. The unskilled labor force feels like they have lost their jobs due to trade with China and the offshoring that resulted. Trump promises to increase trade restrictions with China which would benefit that group of voters.
ReplyDeleteI think offshoring is a big reason why Donald Trump won the election. Looking at the data from the election, I noticed that the unskilled labor force voted heavily for Donald Trump, most likely because of his stance on China. The unskilled labor force feels like they have lost their jobs due to trade with China and the offshoring that resulted. Trump promises to increase trade restrictions with China which would benefit that group of voters.
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