1. OUTSOURCING & OFFSHORING
How Does It Affect The US Economy?

2. 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?

3. What’s & Why’s 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)

4. 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)

5. 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?

6. 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.

7. 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.

8. 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.