Outsourcing myths

America's companies are shutting down factories and offices, and shipping jobs wholesale overseas. That's how the media have portrayed it. In reality, outsourcing has created more, better-paying jobs in the U.S., says Investor's Business Daily.

Consider:

Since 2001, U.S. businesses and entrepreneurs have created a net 9.9 million new jobs; the current jobless rate of 4.5 per cent is below the average in any of the last four decades.

From 1996 to the third quarter of 2006, the United States lost on average 7.83 million jobs each quarter, but it gained on average 8.17 million new jobs.

Assuming that the pace of job creation holds, some 302 million new jobs will be created between now and 2015.

In addition:

A study by two Princeton University economists last year found that productivity gains from outsourcing boosted the wages for the least-skilled workers by 1 per cent a year from 1997 to 2004.

Another study by McKinsey & Co. in 2003 showed a return of $1.12 for every dollar of work sent offshore.

That money doesn't sit idle; it's redeployed in the economy and reinvested, creating more and better jobs than existed before.

Further, outsourcing cuts both ways, says IBD. The United States insources jobs from elsewhere, as a report by the Organisation for International Investment found. Over the last 15 years, the 2004 report said, manufacturing insourced jobs grew by 82 per cent and manufacturing outsourced jobs grew by 23 per cent. That is, the U.S. had a net job gain even on outsourcing.

Source: Editorial, Outsourcing Myths, Investor's Business Daily, June 20, 2007.

For text: http://www.investors.com/editorial/editorialcontent.asp?secid=1501&status=article&id=267145498195664

For more on Economic Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=17

FMF Policy Bulletin 26 June 2007

Publish date: 05 July 2007
Views: 896

Outsourcing, Labour

The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation. This article may be republished without prior consent but with acknowledgement to the author.

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