Good or Bad For America?

Whom does it benefit: Consumer or Business What impact is it having? Helpful or harmful? – For Businesses? Workers? Consumers? – Does it create economic growth? What is the impact on the country outsourced too? – Is it getting them out of poverty? – Are workers treated fairly? How has it changed the US economy? PBS Frontline: Is Walmart Good For America? Good Or Bad For America?

What is outsourcing? Contracting of jobs, services, or manufacturing to companies in other states and/or other countries. Why companies outsource: – Low wages American Worker Cost: $10 + per hour plus benefits Outsourced Worker Cost: Less than $4 per hour + few benefits. Low to no minimum wages. – Less restrictive labor laws: Minimum wages, working conditions, child labor laws. – Lower wages = lower labor costs = cheaper prices and/or more profits Are we sacrificing safety for cheapness? Are we getting quality goods that are safe? Toy Recall of 2007: Lead paint Arsenic Laced Toothpaste from China Aqua-dots: Children’s crafts which, if put in mouth, acted like a date- rape drug.

– 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 – Toys: 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 – New Outsourcing Markets: Eastern Europe (Romania, Bulgaria, Latvia, etc…) – Areas Avoided: Africa and Middle East – Too much danger with unstable governments, civil wars, religious extremism. Western/Northern Europe – High minimum wages, benefits, worker standards, and regulations.

Tax-Free Trade Agreements Between Countries: – Opens up trade markets, but also allows factories to open across borders. NAFTA (North American Free Trade Agreement) – Free and open trade without import taxes and tariffs between the US, Mexico, and Canada WTO (World Trade Organization) – Open and free or low tariff trade with Asian countries. CAFTA (Central American Free Trade Agreement) – Tax and tariff free trade between US and Central American/Carribbean countries – Tobacco, coffee, sugar, fruits, vegetables, livestock Tax breaks and loopholes: – Corporations can get tax breaks for outsourcing. Ex: General Electric pays no corporate income tax and manufactures most to all of its products overseas. GE has also received money back from the US Government. Low Labor Standards Abroad: – Few labor laws and/or low labor standards in low income countries: low to no minimum wages, few to no benefits, few to no child labor laws, factory housing, etc…

Cheaper Labor = Cheaper Costs = Cheaper Prices – Cuts labor costs which cuts production costs, meaning cheaper goods. – American workers are too expensive, “not competitive enough”. Helps Poor Countries – Provides jobs and income; Decreases Poverty and Unemployment – Stabilizes unstable countries – Opens Markets for American Companies: They can buy our goods. Promotes US Job Growth – Moves people from lower paying to higher paying jobs. – Promotes small business creation and self-employment. Promotes Globalization. – Gets businesses into trade with global markets. – Allows American companies to compete in global markets. Levels The Playing Field – Helps us compete with emerging countries (China, India) – Promotes business efficiency.

Creates Unemployment – Outsourced jobs are not replaced: 100,000 jobs lost per year. – Increases government assistance to the unemployed/poor. – Its climbing the economic ladder: No longer the bottom jobs! – Replacement jobs are lower paying, less benefits. (close to half) – Decrease in personal income in the U.S.. Not Fair To Those Outsourced – Workers train their foreign replacement – Workers do not find similar paying jobs, mostly lower paying. – Foreign workers given American names and taught to speak “American” English Its All About The Shareholder – The purpose is to increase profits, which benefits investors, not consumers. – Corporations show record profits, while claiming they outsource to remain in business. It Increases The National Debt – Negative Balance of Trade: More coming in than going out. – Companies pay no tax on income or imports, strains federal and state budgets.

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? – 1 Page Opinion Paper on the subject of Outsourcing.