Job outsourcing allows companies in America to be more competitive in the global marketplace. U.S. companies use overseas branches to make products or perform a service the company once made or performed itself at a cheaper cost. They keep labor costs low by hiring in emerging markets with lower standards of living. When jobs move overseas, there tends to be less demand for American workers who might have once filled those jobs. Usually, when they move jobs overseas it is because workers there require less pay than American workers do. By paying worker a lesser wage, businesses in turn make a larger profit on their goods and services. “With lower standards of living, third world companies can offer their services at a rate greatly reduced from those in countries with higher standards of living” (McFarlin, 2018). Many companies will use this advantage for their own production, Apple being one of many. Apple has outsourced various functions in terms of manufacturing, assembly and logistics. This is mainly because foreign companies can perform several value-creation functions at a lower cost due to low-cost location and other competitive advantages.
In United States people are losing their jobs due to outsourcing. Developed nations have outsourced manufacturing and white-collar jobs. That means decline jobs for the American people. This is due to manufacturing jobs being outsourced to countries where the costs of manufacturing goods and wages are lower than it is in the U.S. “This has affected many workers in the United States as well as other large countries as more companies embrace the outsourcing trend” (McFarlin, 2018). While outsourcing has created employment opportunities for the workers in under developed countries such as India and Mexico and improved their living standards, the workers in the United States have had to lose their jobs.
The job losses in the United States have significantly affected the low skilled workers. Outsourcing has placed pressure on the wages of American workers, significantly shrinking what they earn. “The Economic Policy Institute researchers noted that when workers are laid-off from jobs that have been outsourced, they often accept lower wages to find work in jobs that are impossible to outsource—landscaping or waiting tables, for example” (Team, 2016). Low-skilled workers especially, have had to watch as their job options dwindle and wages decline.
Outsourcing creates a population of underemployed, unemployed, and severely affects the middle-class purchasing power. It takes service-producing jobs from Americas middle class affecting their lifestyle because of unemployment and lower incomes. This causes a downgrade in life value and a decreases motivation. Also, it diminishes consumer spending putting a strain on the economy. “The debate over outsourcing has been morphing, and today there are growing numbers of people who think that what started as a sensible, globalized extension of sending some work outside a firm to specialized companies may in fact be creating long-term structural unemployment in the United States, hollowing out entire industries” (Pearlstein, 2012).
In conclusion, the United States growing unemployment rate is largely related to American based corporations outsourcing. Corporations have moved their operations to foreign nations in order to benefit exclusively their profit and core capabilities. It is true that there are some short-term benefits, such as cost savings that are evident. However, the intangible consequences such as how outsourcing will influence the U.S. economy in the subsequent years ahead, are overlooked. The sudden increase in outsourcing highly skilled professional jobs may be suspending our position in the world as a lead economic power. Corporation must realize that although outsourcing may reduce the cost of products, it is pointless when Americans cannot afford to buy them.