Question

Do you feel that outsourcing by multinational corporations improves the household buying power of the host country while increasing jobs that were lost? Give an example of increasing jobs, and decreasing employment.

Answer 1

Some critics of outsourcing say that it leads to a general slippage in the labor and environmental standards that apply to the goods and services Americans consume. This is a critique that’s often cited by opponents of NAFTA. If a U.S. company outsources to a country with lower wages, more lax labor laws or lower environmental standards, the resulting good or service may not be up to the standards that the U.S. government has agreed should apply in our country.

Not only is that a problem for U.S. customers who want to feel good about where their products come from. It's also a concern for workers in other countries who are unable to get the wages they need to survive and people who feel the impact of emissions overseas. And, if more goods are manufactured in countries with lower environmental standards, it raises the net contribution to climate change. Outsourcing in developing countries could also crowd out local small businesses and small farms.

Work outsourcing lets U.S. companies make the global marketplace more competitive. This helps them to sell international branches to foreign markets. We keep the labor costs down by recruiting on lower living standards in emerging markets. Which reduces the prices of the products which they send back to the USA. Outsourcing's primary negative effect is that it raises U.S. unemployment. The 14.3 million outsourced jobs are more than twice America's 5.9 million unemployed. If all those workers returned, recruiting the 4.3 million who work part-time but would prefer full-time positions would also be enough.

Imposing legislation that effectively limit outsourcing of jobs may make U.S. businesses less competitive. If they're forced to hire costly U.S. employees, they'd raise prices and raise consumer costs. The incentive to outsource could even cause those companies to move their entire operation, including headquarters, overseas. Others may not be in a position to compete with higher costs and are forced out of business.