Greg KonigesLaura GronewoldENEX 101. 37 May 12, 2005 An American Economy Globalization is a very pressing issue in the American culture today. Within any economy, globalization will cause many problems while at the same time solving many others. This is true because there are many factors involved with globalization, one of the most important being job outsourcing. While at first glance and from what the media reports, job outsourcing is definitely not healthy for the economy. However on upon closer inspection, the reverse may true.
Job outsourcing, though initially stressing on the workforce, is helpful in creating a strong economy. Job outsourcing creates an initial job loss to the area in which it concerns. This happens because in a global economy, the idea is to move ones workforce to the most efficient location. Of the outsourcing that occurs in the US, less than 30% was even sent overseas (Reed Business Information, 7), meaning that the jobs are moving from one US city, to another.
That's just smart business because often times, depending on the business, other parts of the country are cheaper than others. Often times however, the workforce is not moved but simply replaced by a similar but cheaper one available in a low-wage country. The old workforce is now out of work and must relocate or retrain. This concept is often thought of as a heartless one because people are interested only in the immediate negative effects and not with the possible positive outcomes. Take for instance IBM.
In January they announced plans to lay off 5, 000 American workers while moving their jobs overseas to low-wage countries. Two things happened after this. The media and politicians attacked IBM for its un-American policies, the other event was IBM's high second quarter profits that allowed for a one-third reduction to their lay-offs. Though that may not seem like a big deal, it is considering that when they announced their 5, 000 layoffs, they also announced their addition of 5, 000 other American jobs to the payroll. No one heard their second announcement through all the fuss over the companies outsourcing.
With that taken into consideration however, IBM actually increased the number of American workers, making a healthier economy. The attack of the media and politicians on IBM is not even close to new. Any company with plans to cut costs by moving jobs over seas is seen as an evil monster creating a permanent job loss. The permanent job loss is an idea that has been around for some time. In the eighties and early nineties, there was a lot of doubt over our economies ability to recover from the departure of our manufacturing jobs. Then, starting in the mid to late nineties was the panic over e-commerce and dot.
com companies destroying old economy jobs. The fact is, our economy is always changing and there will always be a permanent loss of jobs. That's what happened when the US changed from an agricultural economy to an industrial one and from an industrial one to a technological one. Now it is happening again as we change from a mostly local economy to a very global one. In order to keep the economy strong, people must be willing to change as our economy changes. Plain and simple, right? Not exactly.
The changing economy in the US is very difficult for the average worker but it has little to do with jobs being moved overseas anyways. Not including seasonal jobs, there were roughly 182, 000 workers laid off in 2004 (Haffenreffer, 1). Only 2. 5% of those come from outsourcing jobs overseas and the 70% majority comes from bankruptcy. The collapse of businesses each year is what the country really needs to be worrying about. The reality is that outsourcing is not taking American jobs away but simply exchanging them.
Some have referred to job outsourcing as more of a business trade because the jobs are not being destroying, they are being traded. The Information Technology Association of America (ITAA) expects that between 2003 and 2008 500, 000 new jobs will be created in the IT field, with half of those ending up stateside (Sosbe, 4). The theory is that the outsourcing will create a cost savings that will ripple down and eventually create even more US jobs. And it's a very plausible idea considering what has happened in the last few years. Information from the Government Accountability Office referring to data from 1997 to 2002 reported "annual imports of business, technical and professional services increased by $16.
3 billion. However, during that same half-decade, exports of those services increased by $20. 5 billion a year. (Dre nzer, 8) " That's a very substantial increase for an economy that the media claims is weakening every year. Outsourcing has never been a problem in the American Economy and it likely will not be one in the future. This is not to say that the American people can relax though.
Outsourcing jobs is helping our economy rather than hurting, but failing businesses and changing economic values are. As the country moves into a global economy, the American people and the government need to work together to keep our economy strong by being informed and educated of the changing demands in the workforce. Works Cited Drezner, Daniel. "Job outsourcing? No crisis here; The U. S. and the global economy II." International Herald Tribune.
Oct 1, 2004: page 8 Haffenreffer, David. "Outsourcing & Job Losses." The America's Intelligence Wire. June 10, 2004 Reed Business Information. Material Handling Product News...
July 2004: v 25: i 12: page 7 Sosbe, Tim. "Lost in Translation." Certification Magazine. February, 2005: page 4.