Outsourcing Jobs Causes Negative Economic Effect

2,060 words/9 pages

Outsourcing Jobs Causes a Negative Economic and Social Effect on American Workers

Do you work at the same company your father does? Does your father work at the same company your Grandfather did? Few companies employ multiple generations these days. Have you wondered what happened to all the jobs? One reason for the decrease in jobs could be attributed to outsourcing. Merriam-Webster's Third New International Dictionary defines outsourcing as the procurement by a corporation from outside and especially foreign or nonunion suppliers of parts it formerly manufactured. To American workers, the definition means, you are unemployed. This paper will look at some economic and social effects that job outsourcing have on American workers. For American workers to continue to be viable members of society, outsourcing jobs to foreign countries must end.

Jobless rates caused by outsourcing affect the economy on a sizeable level. The United States, Canada and Mexico created the North American Free Trade Agreement (NAFTA) in January 1994. NAFTA formed the largest free trade area in the world. NAFTA started the onslaught of manufacturing jobs flowing to Canada and Mexico. The Federal Department of Labor has estimated that since NAFTA took effect, more than 500,000 jobs have left the United States (Federal Department of Labor, 2004). The U.S Department of Commerce shows an economic loss of $78 billion in manufacturing wages from January 2001 to January 2003 (Department of Commerce, 2004). Disappearing wages result in decreased local and state tax revenue. Reduced income equate to fewer consumer goods and service purchases. Fewer consumer goods and service purchases amount to lost corporate profits could cause a domino effect that may result in the inability to employ workers. Losing unemployment benefits is more worrisome.

The Social Security Act of 1935 created unemployment insurance. Each state must fund insurance from state and federal taxes paid by employers. Unemployment insurance pays temporary income to eligible employees who have lost their jobs. Unemployment insurance is regulated by the federal government, but each state can create their own rules as long as it is in compliance with federal guidelines. Unemployment benefits only average 26 weeks for most states. Extended periods of joblessness are significant: long-term unemployed face financial, personal, and health care problems as well as loss of unemployment insurance benefits.

The inability to meet financial obligations can lead to loss of the home. Record numbers of Americans are losing homes to foreclosure due to job loss. Some families are forced to combine households to survive. When financial strains become too much, bankruptcy is a road many travel.

In 2004, the U.S. Bankruptcy Court received 1,654,847 bankruptcy applications (U.S. Bankruptcy Court, 2004). The number of applications received in 2004 was 43,579 more than in 2003; an increase of 2.7 percent. Bankruptcy can make it difficult to obtain credit, buy a house, car, or get other financing in the future. Future financing could come with a higher interest rate which could be viewed as a punishment for falling on hard times. The stigma of filing for bankruptcy can live with the petitioner for many years; bankruptcy can stay on the debtor's credit for ten years.

Many displaced workers spent years and money to acquire their current level of skill. What about assembly line workers with jobs requiring little or no training at all? When assembly line workers lose their jobs, there is no place for them. They either remain unemployed or take lower wage jobs, unless they are willing to spend time and money learning new skills. Age is also a factor to be considered in seeking future employment. As retirement age looms closer, it becomes near impossible to find employment as companies do not want to invest time and resources into a worker that will be leaving the employer in a couple years. Full-time employment also seems to be becoming a thing of the past.

It is healthier for the corporate bottom line to hire part-time workers. Companies are not required to provide full benefit packages to temporary or part-time employees. Terminate a few long term employees and replace them with temporary workers at lower wages. Temporary or part-time workers generally receive little or no benefit packages at all.

How do you search for a job when you have been out of the market for the past 20 years? More and more jobs today require college degrees. Many assembly line workers started their jobs right out of high school, therefore, very few have college degrees. It is harder to compete in today's job market. The insecurity of finding employment is ever looming.

There are jobs that can be had rather quickly; i.e., low wage jobs like fast food or retail. It is impossible to support a family on a minimum wage. Converting middle wage jobs to foreign countries leaves a smaller job pool workers must fight to get into. Once those jobs are gone the only thing left are high wage positions that require degrees or low wages jobs that do not furnish enough income to be above poverty level. How does this affect employees of the future?

There is a clichÐ"©' that says, customer loyalty starts with employee loyalty. Working for an employer that is outsourcing jobs around you creates a sense of mistrust. Employees that mistrust the company will not feel loyalty to the entity that provides the weekly paychecks. Lack of loyalty can take on many forms: employee sick days, inventory loss, inferior products and even embezzlement. Ambivalence exists today with many workers. Some experience nagging anxiety and self-doubt and have trouble trusting their new employer or believing their triumph was earned fairly (Richardson, 2004). Employees like this do not have a tendency to stay long. The Partnership for Public Service states, "In 2002, the Bureau of Labor Statistics reported the median length of time an employee spent in a private-sector job was about three years". The cost of employee turnovers can be significant. Job screening, interviewing, selecting, orienting, and training new workers can be costly.

Stress of job loss can cause a breakdown in mental and physical health. Each person handles stress differently. For some, stress may be a blessing in disguise. It may energize the individual into aggressively seeking employment. Unfortunately more often,