Outsourcing and the US Economy Essay

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Outsourcing – Don't Get Bangalored?

As the world has gotten “smaller” in terms of trade, outsourcing has become a hot topic in much political and economic debate in the United States. An Associated Press-Ipsos poll in May 2004, found that 69 per cent of Americans thought that outsourcing hurts the US economy while only 17 per cent thought it helped . President Bush’s chief economic advisor Greg Mankiw has stated “outsourcing…is something that we should realize is probably a plus for the economy in the long run” . While John Kerry has emphasized, that he is going to stop the outsourcing of American job . With the presidential election coming up, and the candidates giving mixed signals about the effects of outsourcing, it could turn
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Finally, I will also introduce the theory of immiserizing growth.

A glance at staticstics

Is the public concern over outsourcing valid?

The most cited official projection outsourcing is by Forrester. It is estimated that outsourced US jobs will grow from about 400,000 in 2004 to 3.3 million (recenty revised to 3.4 million) by 2015 which seems quite significant. But on a yearly basis this accounts for about 250,000 jobs but in perspective the number is small compared to the total US employment of 137 million. It actually only constituate less than 2 per cent of 15 million Americans who lose their jobs each year . Goldman Sachs estimates that offshoring has accounted for 500,000 million lay offs in the past three years. A study by Ashok Deo Bardhan and Cynthia A. Kroll at the University of California, Berkeley indicates that up to 14 million Americans now work in occupations that are at risk of being outsourced . Forrester also estimated that 300,000 US jobs have been outsourced. While the Commerce Department 400,000 new jobs, which leaves a net result of 100,000 new US jobs . In addition, an Economic Policy Institute in New York announced that 144,000 new jobs were created in August 2004 . Summarizing the numbers, it seems that outsourcing will have a positive effect on the overall US economy.