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  • Morning Bell: Let's Be Honest About Outsourcing

    Both candidates in the presidential race have been accusing the other of “outsourcing.” It’s one of those words that is loaded with negative meaning, implying that the perpetrator is un-American. But does America have an outsourcing problem?

    What is popularly referred to as “outsourcing” is the practice of offshoring business functions, including building facilities and employing workers in other countries. Liberals often argue that “sending jobs overseas” is harming America’s economy.

    They are missing two important truths: The reality of jobs in America, and the ways to bring even more jobs to the home front.

    Jobs in America

    • The U.S. actually leads the world in manufacturing. Yes, you read that correctly. We produce 21 percent of global manufactured products, while China comes after at 15 percent. According ot the National Association of Manufacturers, “manufacturing supports an estimated 17 million jobs in the U.S.—about one in six private sector jobs.”
    • Big manufacturers are building new plants here. BMW is adding 300 new jobs to its South Carolina plant this year, and Airbus recently announced it will employ 1,000 at a new plant in Alabama. (Both South Carolina and Alabama are right-to-work states, meaning that workers aren’t forced to join unions.)
    • Multinational corporations still employ more Americans. U.S.-based multinational corporations employ 22.9 million Americans—more than twice as many people as they employ in China, Mexico, and all other countries combined.
    • There is no “giant sucking sound” of jobs and money fleeing the United States. According to the U.S. Bureau of Economic Analysis, the total value of foreign investment in the United States exceeds the value of U.S. investments in other countries by more than $4 trillion. Foreign-owned multinational corporations employ 5.5 million people in the United States.
    • “Insourced” businesses are a tremendous boon for the U.S. economy. “Insourced” jobs—jobs brought to America by foreign-based companies—account for nearly 5 percent of private-sector employment. These businesses buy more than $1.8 trillion in goods and services from local suppliers and small businesses in the areas where they locate.

    How to Boost American Jobs Even More

    With an 8.2 percent unemployment rate, America still needs more jobs. There are many steps policymakers could take that would make locating—or relocating—in the U.S. more attractive to businesses.

    A quick look at the Index of Economic Freedom, produced by The Heritage Foundation and The Wall Street Journal, reveals America’s competitive disadvantages.

    Hong Kong, ranked No. 1 in the Index, has an economy that has been growing at 7 percent. That’s astounding. In contrast, U.S. GDP growth in the first quarter of 2012 was a paltry 1.9 percent.

    There are several reasons why Hong Kong is No. 1 and America is No. 10. Hong Kong’s top corporate tax rate is only 16.5 percent, compared to the U.S. rate of 35 percent. Hong Kong’s trade regime is one of the world’s most competitive and efficient, with a zero tariff rate. And its regulatory environment is “highly supportive of business efficiency.”

    Meanwhile, in the U.S., runaway regulations growing by the day make doing business vastly more expensive and difficult. The government is holding back the economy through regulation and its nonstop deficit spending, as Heritage’s Bryan Riley explains:

    Excessive federal spending and the resulting budget deficit continue to be a problem. Foreign investors spent more than $400 billion on U.S. Treasury securities in 2011. This is another way to say that the government borrowed more than $400 billion from foreign investors. Those dollars could have been invested otherwise in the private sector of the U.S. economy or spent on U.S. exports.

    While concern about outsourcing is misplaced, there are many ways the U.S. could attract even more jobs than it already does. Increasing our own economic freedom would spur growth in the economy, bringing greater prosperity and new enterprises to our shores.


    Quick Hits:

    • In a new video exposé, James O’Keefe reveals that union bosses were happy to help get stimulus money for a fake company that would dig holes and then fill them back in.
    • The U.S. Postal Service is warning that it will default on payments to its retiree health benefits fund by August 1.
    • The Government Accountability Office found that the Transportation Security Administration (TSA) “approved flight training for 25 illegal aliens at a Boston-area flight school that was owned by yet another illegal alien,” reports CNSNews.com.
    • In response to President Obama’s “If you’ve got a business, you didn’t build that,” the Chicago Tribune’s John Kass tells the story of his immigrant father building a business over his lifetime.
    • A new study by Ernst and Young “proves conclusively that the President’s tax increase would be devastating to the economy and jobs,” says Heritage’s Curtis Dubay. Read more about how Obama’s tax hike could kill 710,000 jobs.
    Posted in Economics [slideshow_deploy]

    78 Responses to Morning Bell: Let's Be Honest About Outsourcing

    1. glynnda says:

      Outstanding article Amy! The stats you provide are excellent! Mitt Romney or the RNC should be shouting these stats from the rooftops!!!!! There has never been a lack of opportunity, space, drive or resources to be world leaders in this country. The only hindrance I can see is a bunch of idiot politicians who seek power and wealth for themselves rather than putting their efforts into the good of this nation. I'm a conservative first, a republican second….and I've NEVER been a brand loyalist. Hopefully some rinos in DC are reading this and thinking about it, because I want them out just as much as O-Bummer and the leftist crazies at every level of government

      I long for the day when "politics" is just one aspect of the news rather than "the news"…..

    2. Tim N says:

      Wouldn't importanting outside labour be just as bad as outsourcing. How many illigal immigrants are taking jobs Americans should have? Worse, they pay no taxes yet use our public services. At least oursourced jobs don't cost us twice…

      • Devo Joh says:

        Brilliant observation. Of course they are both harming our economy.

        Proves again our government is so past corruption and honesty they have no idea what they are even saying and doing.

    3. Michael says:

      Thank you for a great article, Amy. We so often hear about China, India, and other countries "taking" jobs away from our shores. It is encouraging to see real data that shows how important the US manufacturing economy is to the world. We are posting portions of this article on our company bulletin board as encouragement to our workforce.

      • muskegonlibertarian says:

        Corporate taxes are only 9% of federal revenue. Does it seem wise to anyone to increase taxes on corporations when 91% of federal revenue comes from other sources? Especially as corporate taxes reduce the rate of economic growth. Lets say we stopped taxing corporations (those who actually are producing things here in the USA). Wouldn't that create more jobs? Instead of encouraging business to "off shore" their production? Makes sense to me. Does it make sense to you?

    4. Informed opinion says:

      You have a confused definition for outsourcing. Outsourcing is the contracting with third parties to perform certain business processes on behalf of the company instead of housing those processes in house. The motive is to gain access to expertise and/or gain efficiencies. Much of that is just transferring the jobs from on entity to another. To the extent the transferred processes are outside the country there are reduced jobs in country.
      In addition being a global economy using foreign infrastructure to manufacture goods for foreign sale is only a logical thoughts process that is to determine the best risk/reward ratio for that business function/process.
      Capitalism was never meant To provide political solutions. That should be for the politicians not the business people. If jobs go over seas that is a failure of the politicians in their rule making, not the businesses.

      It is a disappointment that so many non-business types express their uninformed opinion is such a forceful way, arguing in the court of public opinion and not dealing with the reality

      • Henry says:

        I guess you know how they count unemployment also, you think yoiu know so much. Please tell me how they can look the America people in the eye say that is is 8. what ever when it is well over 23%. Then I will tell you how they count job's add each month. Only in Obama world does this happen.

      • Tom says:

        I'm a business man and believe your comments are one of the better, succinct summaries of the situation that I have seen. Most manufacturing companies today have to compete globally and develop markets in every region of the world. To do this, those countries that have the demand, want local capability, service and support…..just as we do here in the USA. To grow manufacturing in the USA we have to have a competitive cost, strong supply chain capacity, educated & skilled labor (not just college educated, but more skilled trades), production flexibility built to comply with international standards, and be customer focused. We need a clearer corporate tax policy and cannot afford to have the highest corporate tax rate in the world. We also need to stop discouraging US companies from bringing cash home from their foreign locations by taxing it again.

        • Kirk says:

          Those are good points. The American businessman doesn't outsource any business function without serious advantages because there are serious DISadvantages to coordinating those activities in other countries. People keep asking how the government can "create jobs" when they should be asking how the government can "facilitate business".

          One way to do that would be to eliminate the corporate tax entirely. It amounts to double taxation when the business profit is taxed and then the shareholder is taxed again on those same profits when they are passed along as dividends or reflected in capital gains. Compliance with the Corporate income tax actually costs businesses more than the tax collected, not to mention the political lobbying businesses pursue in either self-defense or in seeking advantage over competitors. The incentive to lobby would be drastically reduced if there were no Corporate income tax.

          The combined revenues from the Individual Income Tax and the Corporate Income Tax hovers around $1.3T. The total personal income — not including corporate income at all — is roughly $13T. This means we could afford to completely eliminate the Corporate Income Tax if we were able to collect 10% of all personal income, either through a 10% Flat Tax or by retaining the key deductions but subject to an AMT such that nobody pays less than 10% of gross income. Deductions and credits would never be allowed to reduce a person's tax burden below that 10% level.

          An individual tax rate of only 10% and a 0% corporate rate would make the US the best tax environment for business and investors in the world, yet would collect the same total revenue. The economy would then grow much faster than it has been, delivering larger tax revenues without raising rates.

          Lower tax rates and lower tax compliance costs are only a beginning, however. We need to address every regulation on the books and re-evaluate whether it creates barriers to entry or innovation for businesses. The refrain has been "jobs, jobs, jobs" for three years. The bottom line is that government is getting in the way of businesses creating jobs, from major new obstacles like Obamacare to older hindrances like Sarbannes-Oxley.

      • Tom says:

        We are the biggest player in the global market and should be the country to benefit the most by global economic growth. It requires government support of business instead of denigrating businesses. We have benefitted from a weak dollar and having an economy that is the 'tallest midget' among western industrialized countries. Government is not all bad and does have a role to play, but redistributing wealth is not one of those roles. Business people make mistakes but, generally and over the long-term, have helped build the USA into the strongest and largest economy in the world.

      • O2BMe says:

        Right. When you fill your own gas tank or check out your own groceries, that job was outsourced to you. You took the place of the gas attendant or check out girl. If a company does not make a profit it goes out of business and that means loss of jobs and tax revenue. Obama and much of congress never ran so much as a hot dog or lemon aid stand.

    5. Bob Ekler says:

      I don't believe or agree with your take on outsourcing. Everything I buy says Made in China on it. I attribute that to Clinton's establishment of Most Favored Nation trade status for China. Now all of our manufactured goods can be produced by essentially free labor. We even have food coming from China now.
      Airlines have moved their maintenance facilities offshore.

      You guys talk about 300 jobs or 1000 jobs here and there as if the mouth is quicker than the eye. Tens on thousands of factories have off-shored. I saw an estimate of 46,000 factories. It has left us with a service economy. The best we can hope for is either a government job or a job serving a government employee.

      For all those "Global" companies that you tout as employing millions of Americans and "insourcing," I don't believe you. Where did you get that information? From the government?

      • Peter Ballard says:

        I agree… In-sourcing is a fantasy compared to what globalism has done to the economy and industry in the USA. I worked for a very large (160,000 employees, $36 Billion) formerly "American" telecom company that after outsourcing ALL the manufacturing jobs at the end of the 90's and early 00's, they then began outsourcing ALL of the engineering jobs. By 2009, they were down to 10% of the engineering staff that used to be employed in the USA and it was ALL due to allowing China into the WTO and giving them normal trade status. They are communists. That company I formerly worked for for 13 years let me go 3 days before Thanksgiving in 2009. They are now a "global corporation" and employ 23,000 employees of which the majority are either in the corporate head quarters in Schaumberg, Illinois or Tanjain, China. They are now supposedly worth $13 billion. All because of a "Giant Sucking Sound" that began with NAFTA, continued with WTO, and the results are clear. American manufacturing, high tech, and most every large industry is GONE except for a few energy companies that are being squashed by this government..

      • Mike Freeman says:

        Click the links…that's the problem with knee-jerk reactions, they often result in a direct short-circuit between the hind end and the keyboard.

        • Bob Ekler says:

          Insourcing …4.7 percent of private sector employment. Yippee skippy! Insourcing, the reality, retail sales guys selling trade goods from "slave states." Is that what they are really talking about when they try to run the insourcing scam?

      • Wayne Peterkin says:

        Amy produced a number of facts and figures in her article while you have done none of that. Therefore, you have little credibility unless you can show some hard figures that contradict this article.

      • misterbill says:


        Are you going to believe Amy or your own two eyes?

        NAFTA has cost us almost 700,000 jobs. If you look at the trade deficit, perhaps someone can explain to me why, the more jobs move out , the higher the deficit gets.

        I accept that we lead the world in mfg, but what was the percentage before all these "free trade" agreements were signed?

        Were we 45%? 50%.

        This reads more like a liberal article than a Heritage article.

    6. BrianQ says:

      Le us not forget that this country still imports many billions more than it exports. And that the quantity of manufacturing jobs in this country have been declining for quite some time. Granted, improvements in productivity and automation can account for some of that decline. But implementation Free Trade Agreements, which have increased employment in foreign countries more than here, and the exportation of jobs to low-wage countries account for a larger quantity.

    7. KMart says:

      I disagree with the thought that outsourcing does not impace America and the job opportunities to Americans. 65,000 work visa were giving with millions of Americans out of work. There are qualified Americans to fill those 65,000 positions taken by people from other countries.
      All out sourcing of jobs and manufacturing should be stopped.

    8. I believe Hong Kong has learned from US. They know what is good for an economy to grow and prosper. The left always claims they can help 'the world' while it is the private sector that benefits 'the world.' Nobody wants another government to tell them what to do. It is the private sector that reaches and stimulates our own country and the world. We need the proper balance between the private sector and the government. Our federal government is way too big and way too wasteful. I wonder what all those government employees really devote their time to?

    9. toledofan says:

      It's been pretty clear, for some time, that the governments spending and appetite for more money has been increasing at an alarming rate; just consider the debt Obama has incured upon us all in just three and a half years. The entire tax philosopy in America has to be addressed and we have to develop sounder fiscal responsibility. I fear, as long as the Democrats are in charge, no changes can or will be made. Let's face it freebies get votes and the Democrats have become the premier givers so they can get re-elected.

    10. Mary says:

      Everytime I hear Obama talk about Romney outsourcing jobs while at Bain I want to barf. How about countering with "what about GENERAL ELECTRIC" (plus they paid zero taxes) and the fact that GE's Jeffrey Immelt traveled to China with Obama to outsource even more jobs?? I'm afraid that Romney's campaign is a McCain re-run. I am terrified for our Country.

    11. Johncdavidson says:

      On Monday, local newspaer posted the stats for the largest employers in the local county centered in Mansfield, Ohio. In 60's, Westinghouse 4000; GM 3000. 2012; Hospital 2500; County 900.

      The service industry cannot survive if we don't produce products first.

    12. K. McGilvry says:

      Hear about the surge in Americans "visiting" Canada to work in the oil industry there? These are our citizens seeking the plentiful jobs in a booming market helped by their pipeline construction. Isn't our own president outsourcing jobs by his refusal to approve the Keystone pipeline??? Capt. Ken

      • muskegonlibertarian says:

        Canada offered to sell oil produced by tar sands to the US. One reason being that we have the refineries needed to convert the tar sands oil into useful fuel. Obama and the environmental Democrats told Canada we didn't want the oil. So Canada will build a pipeline to the Pacific and sell the oil to China… Doesn't it appear to you that there is something seriously wrong with this type of thinking?

    13. Vince Picarello says:

      I have heard that the present administration has outsourced this election vote count to a company in Spain. If this is true it is just one more reason to make a change in the administration. Join me in this effort by signing up at http://www.oustobamacoalition.com

    14. charles fisenne says:

      US produces 21 % of world manufacturing; But how much of it is for armaments – ours and abroad
      Where would we be if peace reigned?

    15. Jeanne Stotler says:

      Where have our textile mills gone?? I used to buy DanRiver yardgoods and DanRiver Sheets, this mill was in Danvile, Virginia and made quaity material that wore like iron. I miss this and other material made in USA mills.

      • Dave says:

        I had the same thought. Back in the 90's the Carolina's had a thriving textiles business. To see the "no outsourcing" just look at the empty buildings and plants. Where did the manufacturers go? They went overseas because the business environment did not allow for American competition even then. DCS

    16. Lloyd Scallan says:

      "Let's be honest"! Is that a joke? Since when has Obama, the Dems, and most of all, the main-stream media, ever been honest with the American people?

    17. Chelly says:

      I am a medical transcriptionist working from home in this industry for more than 10 years. In the last 2 years, this industry has gone way downhill. Our rates have been cut to compete with offshore companies willing to do it for less money. Used to make a good living with this job, now have to work 2 jobs to make ends meet. We're told to accept less money and do more work or we'll have to send the work offshore. Also, it is so hard to find products anymore that say "Made in USA", I see "made in China" on the majorty (especially at my only small-town local store). I will go out of my way and pay more to find American-made products. Something needs to change.

      • Jeanne Stotler says:

        You can blame unions for a lot of this, without so. amer. and oriental companies making clothes, we, middle class, could not afford to buy clothes, shoes etc. Every time the union gets a raise or increase in benefits, this means that the end product has to cost more. Thank God for right to work states. In 1951 you could buy a brand new Chevolet fot $600, a Buick for $800, a 1 bedroom, NEW apartment rented for 62.00 a mo. including util. (suburbs of D.C.) Same apartments now rent for 1200.00 and up plus elec and extra if A/c, new apartments are $1400.00 a mo and up. House we bought in 1954 was 11,900, today same house sells for over $100,000.00 3 br, 1 bath. We need to, stop unions and get back to a balanced budget both gov't. and homes.

    18. Good Grief says:

      There is a faction in this country and around the world that actually want to minimize manufacturing globally. These are pro UN Agenda 21 groups which include many politicians, "green" groups, wildlife groups, "sustainable" movements, etc. To them manufacturing pollutes and is therefore bad. We all need to keep informed on the goals and what meeting those goals will mean to our country and way of life.

    19. Kevin Finlay says:


      You missed the new Caterpillar facility being added to Georgia (another right-to-work state). When the facility is fully operational, it will add 1,400 jobs directly and possible a few thousand more with factory suppliers and support.

    20. Former IBMer says:

      No argument with the statistics on manufacturing! HOWEVER, many good paying jobs have been offshored permanently. I am a victim of this along with many others. My position was supporting sales specialists on a global basis with IBM. When IBM elected to move my job in March 2005 along with those if 15,000 others I was unemployed for 3 years while I went back to school to retool. I am now making less than half of what I was when I worked for IBM. While I understand IBM's need to be globally competitive, I also know for a fact that due to my significantly reduced income that I spend far less. Thus, the U.S. economy suffers. Anyone who ignores this isn't looking at the whole picture. I'm not complaining and don't believe that anyone owes me anything. However manufacturing jobs are not the entire U.S. economy either!

    21. Jim Long says:

      "Let's Be Honest" is a foreign concept to the Obama administration!

    22. Oscar Brown says:

      Want ot make U.S. business-friendly? The Fair Tax. 0% (that's zero per cent) corporate taxes. And wiping out all but the most sensible regulations and a moratorium on senseless mandates and watch jobs grow here. Couldn't hurt our economic debt/deficit ratio either,

    23. J E Houser says:

      Free enterprise is made possible by getting governmental irons off individual activities, and its impedied by strangulating taxes.

    24. Charles says:

      During the greatest period of economic expansion in US history, post Civil War, the US employed high tariffs to protect its rapidly developing industrial infrastructure and fund the federal government. The US continued to maintain tariff rates to the end of the 1980's which allowed it to sustain high labor content/low skill manufacturing in apparel and consumer products assembly. These low skill manufacturing jobs contributed to the vitality of the middle class and had "trickle down" economic benefits in many rural areas. Certainly the factories added to the tax base in economically depressed areas and the factory wages and salaries flowed through the community. The fact these goods were produced and consumed domestically contributed positively to the national balance of payments.

      The 20 year experiment with lowering tariffs/quotas and offshoring much of the low skill manufacturing base has been an economic, social, and national security disaster. Economically, the balance of payments situation has worsened. The lower middle class has been hard hit given the service economy has not provided the jobs to replicate the standard of living they enjoyed with low skill assembly jobs. Many communities have been decimated when their textile, furniture, or other assembly industry departed with nothing coming in to take up the slack. Many once economically vibrant small communities are populated with the chronic unemployed and suffer the consequences in high crime, poor health, and drug addiction. There is a huge social cost to removing low skilled jobs for workers with poor education and training from the economy. Those workers move from being independent productive members of society with opportunities for upward mobility to wards of the state. The cost of dependency to the state and federal taxpayer is enormous as demonstrated by the burgeoning cost of entitlement spending.

      With respect to economics the statistics are in. The standard of living of the average American family is declining for the first time in US history and that decline is over a decade in duration. For the first time in US history parents cannot look forward to their children enjoying a higher standard of living than they enjoyed.

      Finally national security. The US today would be unable to fight WWII. The industrial infrastructure is no longer in place for a number of key industries. Furthermore, many manufactured components used in today's domestic factories are sourced overseas. Supply chains for critical military equipment are no longer 100% made in America. While the final product may be assembled in this country, the components produced outside our borders represent a strategic vulnerability.

      Call it outsourcing, offshoring, or whatever. We been doing it for 20 years and its negative economic and social impacts far outweigh the benefits. If I pay $5.00 less for a shirt because it is made in China instead of North Carolina but pay $10.00 more in combined federal, state, and local taxes because I'm now paying the government to provide social services for the workers who formerly made the shirt in the US, not to mention the bureaucratic administrative structure, I am worse off.

      From an economic perspective, the free traders have received a free ride. The social costs, as well as the costs government deficit spending resulting from higher social costs, have been born by the taxpayer and not the architects/beneficiaries from the transfer of production to other countries.

      • Jacqueline says:

        Good comment. However, most of what you stated was the intent in the first place by the ruling class. We have been on a clandestine, destruction course for many years but in more recent times the pace has accellerated to a point that clearly is exposing the underlying motive and who is responsible. The Giant has awakened! It must be difficult for the big bankers to sleep at night.

      • RichinNC says:

        Excellent post! I've lived in many different states and can attest to the shuttered factories that once were thriving with activity. Textile mills, steel mills, furniture factories, and other manufacturing buildings sit empty or have been renovated into apartments, malls, or simply torn down. Cities and towns in the northeast such as Manchester, NH, Claremont, NH, Lowell or Lawrence MA, or High Point and Winston-Salem, NC are just a few examples where manufacturing was key to not only the local economy but the state economy as well. Over the past couple decades some of these communities have managed to revitalize their downtown areas, but many continue to show the signs of decay and fight an uphill battle just to survive.
        There's always going to be unskilled or low-skill workers who need jobs, and without the manufacturing base to provide these blue collar jobs, many areas will continue to experience high unemployment and high social costs.

    25. will says:

      Outsourcing is neither right nor wrong… it just is. From the beginning of the Industrial Revolution manufacturers were faced with the decision… make or buy. How well they made those decisions had a great deal to do with their success. Imagine how much a GM vehicle would cost if GM chose to make every part in-house, instead of relying on the mega efficiencies of the supply chain. Same goes for value-added services. Yes, those early decisions were often from which state to get the parts or service, versus which hemisphere, but the business imperative is the same… get the most value. Outsourcing is neither right nor wrong… it just is.

      • alex says:

        The one and only reasoned response in this entire discussion, Thank you so much. Every idiot who tries to blame the Government for all the ills in this country fail to understand that we live in a Democratic Republic. Every law, regulation, policy decision is made by people WE the voters chose to represent us. The failure in American education appears to be lack of Civics. The trade deficit isn't created by the Government, it's created by consumers (us) who choose to buy things for less. The Government didn't make Walmart the country's largest retailer. Let's also remember that all that insourcing statistics Miss Sunshine tries to blow up your butt is for products sold to American consumers with the profits going overseas – still a net minus. In the memorable words of Mark Twain, "Lies, damned lies, and statistics."

    26. Harold says:

      Amy, Go and try to buy something made in the USA!

    27. Mystwood says:

      The way this article is presented, there is no problem with outsourcing, at least in manufacturing. However, in IT (Information Technology) outsourcing is a huge problem. In the Chicagoland area, hundreds of IT jobs have been outsourced to Indian companies and the American workers laid off.

      Ironically, many of the jobs are still located here, but they are no longer performed by U.S. citizens. The Americans laid off were good at their jobs and cared about their companies; unfortunately they weren't considered as cost-effective as the contractors brought in to replace them.

      The companies that I and my husband worked for that outsourced almost all of their IT over the past decade slid from being the top companies in their respective fields to middling. Is there a connection? I think so. Employees care more about their company than contractors do. If a company goes under, the consulting company will find a contract elsewhere. Their contractors will still have jobs. Employees would not. (Before anyone accuses me of sour grapes, both my husband and I survived the cuts.)

      So saying that outsourcing is not a problem, at least for the thousands of IT professionals in the Chicagoland area, would not be a winning campaign slogan.

    28. Gilbert Mauk says:

      My experience is in the service industry so i'll confine my comments to that industry. We read very little about some of the main drivers of service industry outsourcing. Labor cost arbitrage was an early driver. Well educated off shore labor once cost 10 to 20% of US based labor costs. Americans demand cheaper services and share holders demand acceptable ROIs. Is it unreasonable to think that American business would pursue outsourcing off shore to meet the demands of both consumer and shareholder? American labor (at least in the service industry) long ago lost the value proposition (cost versus production). America needs to examine what it needs to do to once again become competitive on the world stage. We cannot ignore too the burden of excessive regulation and taxes. The solutions are simple at a 100 thousand foot level- reduce regulation, lower taxes, and reduce the loaded cost of American labor. Unfortunately the devil is in the details.

    29. Ben A. says:

      Reminded me of what Obama asked of Jobs if he could bring back the Apple ipad/pod/computer manufacturing jobs back to America. The answer was a big no. After all, where can you setup a factory literally over night in order to change the display surface of an ipad from plastic to glass? In addition, after the glass display was made, the bosses woke up workers in the middle of the night and each person was given a biscut and after finishing it, they were set off to replace the plastic display so Apple won't miss the first ipad launch date.

      If this were USA, you bet the regulators and not to mention unions would scream bloody murder.

    30. samnjoeysgrama says:

      If outsourcing is giving US jobs to citizens of other countries, what do you call giving US jobs to citizens of other countries WHO HAPPEN TO BE IN THE US ILLEGALLY? Oh, yeah, we will make that OK with amnesty.

    31. Jerry Borgen says:

      Is there anyone who knows what President Obama means by everyones fair share?
      What are the specific financial figures?
      What is the minimum number of dollars the lowest group will recieve and what is the maximum amount of the top group can keep?

    32. Wayne Peterkin says:

      Good article. I have been arguing for some time now that a business tax rate of ZERO would be perfect. Why take money from businesses before that money can be used to expand and create jobs? The government always gets its pound of flesh at the end with taxes taken from individuals paid by that business, so let businesses use their money to better the economy and postpone the taxation until later. Regulations are the other other major issue with growing jobs in this country, but that can be fixed with a sensible government instead of the fools we have today.

    33. Pamela says:

      When are people going to wake up in this country. when a people that THINK they are getting a deal from UNIONS going to stop thinking that. They are THE MIDDLE MAN and they get paid for being the MIDDLE MAN and thugs. NO ONE BUT NO ONE in this country should HAVE to join any union!!! It's call freedom. Why on GODS GREEN EARTH do you all think we keep getting illegals to come here????? To escape dictators and have freedom to do what ever it takes to make it. Stop unions and more employers can afford to hire more people and pay them good wages (hopefully) if O is gone and government stays out of the lives of the people of this country and protects us by allowing our military to build back up and stay here and stay out of the business of country's that will NEVER NEVER get along.

    34. sgl says:

      The H1B visa system has severely cut the IT industry and most high paying jobs are being diverted to lower paid personnel here and (outsourced) overseas. When H1B workers enter the country they are thankful for the excellent wages, even though the people they have replaced earned significantly more. Not only have they replaced our jobs, but effectually lowered our wage structure. Good for businesses bottom line. Not good for the US workers, at all. The problem doesn't lie with the visa workers; it remains firmly in the lap of the corporations employing them and the total manipulation of the H1B visa system.

      • Mary says:

        As HR and a recruiter for a very large engineering company, we were forced to recruit overseas (South America, Europe, Asia) to fill specialty engineering positions we were unable to fill in the US. We advertised nationally and offered relocation to no avail. I personally will NEVER again be involved in the H1B visa system for any company as it is the most onerous, time consuming process I have ever been involved with. It EXTREMELY expensive for the employer and places federal penalties at every step for any mis-steps to the employer and anyone (in this case me) involved in application, administration and monitoring of the program. ALL ENGINEERS HIRED WERE PAID EXACTLY the same salaries as others who held the job(s) formerly or those who were currenly working. The professionals we were able to obtain visas for (remember there are annual quotas for every country) were excellent and all were hoping to get green cards, understanding that it would be YEARS and thousands of dollars before that would/could happen. Yet, we allow mainly uneducated illegals to cross our borders, some of whom may even be terrorists, with no penalty. WHAT A SLAP IN THE FACE TO THOSE WHO ENTER LEGALLY!

    35. Dr. Henry Sinopoli says:

      Eliminate the bureaucratic mess, life-long, blood-sucking politicians, cut corporate taxes, defuse criminal union influence and we will not have to worry about jobs leaving the U.S. Another thing, let Barry & Michelle 'the bell' leave the country as soon as possible.

    36. Bob says:

      Obama will be directing his comments to those people who have been displaced by outsourcing and offshoring. You can't bring back the days when the U.S. was the only game in town but conservatives/GOP present globalization and it's effects as an unmitigated success at their peril. People have been hurt by it and cheap tee shirts at Walmart is not sufficient compensation, particularly when they were probably paid for via home equity loans during the housing bubble or credit cards. Our economy has been becoming more and more unbalanced for decades and those of us that seek a conservative, truly market based economy better at least acknowledge the pain and frustration of those left behind.

    37. Elizabeth Villalobos says:

      I am not sure about your information. Where did you get your info from. What also concerns me is the quality of
      workmanship that goes into some of the products that are out in the marketplace. They don't last. I would like to see products from other countries. China make a lot of junk,Mexico, and many other countries that we purchase our products from are junk as well. What happened to pride in the products that are sold in America.

      I am very disappointed in what choices we have when it comes to buying anything. Most everything is labeled made in China. Cheap quality products. Good quality is hard to find now days.

    38. I find your comment misses the point of outsourcing. Outsourcing doesn't add American jobs. It's mathematically impossible to take something from something and have MORE.. ____We don't need to revise our tax code, we need to get rid of it. It is based on a flawed principle. That principle is, if you wish to increase an action you give it consequences and if you wish to decrease action you reward it, by taxing economic success and paying people not to produce. ____

    39. As well as Hong Kong and China are doing, they could do better and so could we, if we stopped punishing economic success by taxing it. ____We need an non regressive national consumption tax and repeal the 16th ammendment. Any income taxation takes the fruits of one labor before they can decide how to use it to invest, save or spend.____

    40. You say there is no sucking sound of money going out? That is blatantly false. There is close to 15 Trillion dollars now off shore because of our tax code. Making America a safe haven for income would bring most of that back into this country for investment. ____Your suggestions are still the same old tired half way measures that keeps government in control of our wealth through taxing income prior to our deciding how to best use what WE labored for. You support an immoral and impractical tax code. 78,000 pages of corruption and cronyism would be wiped out with ONE tax on New retail only.. and still bring in more money by capturing the underground economy. ____Doing this also places Social Security and Medicare on a much broader foundation. Pimps, hooker, druggies don't report all of their income. Under the FairTax they would now be taxed everytime they purchased new retail. .. ____God Bless, __Gary "Father" O'Malley

    41. Andrew says:

      Amy, my job got where I worked (and others) was outsourced to China back 2009. Other former co-workers lost their jobs in the months since I lost mine. There are some hi-tech jobs available, but they are mostly short term contract jobs doing almost the same kind of I did when working full time.

      Since Obama got into office, the un-employment rate has stayed above 8%. Obviously your cheery picked stats have it wrong. But don't let the truth get in the way of your massaged message.

      Another type of out sourcing not covered by anyone is the outsourcing of older workers for the younger, cheaper workers. Yep, I'm a older worker with tons of experience but no one wants to hire me. And I know I am not the only too!!!

    42. Pam B says:

      I know many companies are moving or consolidating their technology centers to states that have no State Revenue Tax. I think it's crazy that liberals keep voting their jobs overseas or to right to work states.

      As a former Chicagoan I'm not sure what will motivate the people of Illinois vote in officials who create and maintain budgets that don't bankrupt their cities, towns and counties. Their tax system is so oppressive to their local economy. I find the Union people I know only care about the sports teams. They have no clue about Greece & the EU or the size of their state deficit.

      Union people are in direct competition with international workers. As an IT family we have accepted the fact that we are competition with Asian workers. This is not going to change with a Presidential election. I'm not big on Romney but America needs to be open for business.

    43. Lee Niemela says:

      As an ex-financial controller, I can tell you that all major businessses must "outsource" to stay competitive. We hear of this in all the political bickering designed to confuse the general public about the other candidate. This is not new. Whether a corporation buys a foreign product for sale, or makes part, or all of it, offshore it costs American jobs. You can make laws not to do it, but then foreign countries end up with a worldwide advantage. I only wish they would make "support" services American jobs, instead of India and Bangladesh, and then I could understand what their talking about.

    44. Jacqueline says:

      Amy, you are not living in the real world or else those statistics are false. Try to sell this story to the 30 million Americans and counting that are unable to find a job……I know a few PhDs who are out of work and diligently looking for over 4 years and who have been turned down by department stores as over qualified…..Then, perhaps you know where to shop for clothing, housewares, bone china, gifts, etc. that are made in America and not in China because I am having a terrible time finding clothing made in America. Then, GM is moving their engineering to China…ooops there goes more professional jobs not manufacturing to third world countries. Then, I have to hunt and peck for American grown produce……Give me a break and get real. Our sovereignty is slipping away…..

    45. Mike says:

      In one of his Town Hall meetings, President Obama was asked when we'd start getting jobs back that we lost overseas. He said that maybe we didn't want those jobs back and maybe those jobs were ones that Americans should not be wanting to have. There's an example of outsourcing from our President that should be publicized.

    46. Wee Willie says:

      Good perspective. But I am disappointed that you have fallen into the media trap and not used a proper definition of "outsourcing". That is an age-old and worthy practice of getting company tasks done with people who work for another company. It is frequently done for tasks such as security and cleaning services. In manufacturing it is often done by buying sub-assemblies from someone who does it better. It is often a way to lower costs and reduce company overhead expenses. It may or may not "ship an American job overseas". That would more properly be called "off-shoring".

    47. Tom says:

      So why does it seem that 90+% of everything I buy is labeled "Made in China"?

      • Daniel Hunter says:

        Because USA consumers, in general, demand the cheapest product that gets the job done. Made in the USA products can still be found, but require time to find.
        However, I am willing to wager as soon as people start consistently purchasing said, the ease of finding them will increase substantially.

    48. Devo Joh says:

      The computer industry, in which I used to work, has been completely devastated by bringing foreigners into America to take the jobs and outsourcing. I don't know how anyone can look at our current unemployment situation and not blame this as part of the problem.

    49. Blair Franconia, NH says:

      He's right.

    50. merold says:

      Good article on outsourcing!

    51. J Gromer says:

      Who ever wrote this piece has been spending too much time hanging with intelligencia and not talking with people who live in he real world. Anyone who is involved very much with manufacturing and understands the value created by manufacturing knows most of this was B.S. Take a drive through the South side of Chicago or Michigan or Menphis. The sucking sound is gone but you can still hear the rust happening.

    52. Jim Lewis says:

      GO to several stores (different types), get 2 baskets,put chinese made products in one basket, put USA made products in the other basket, (good luck finding any). Then let us know if you still believe the USA mfgs. more than china.

    53. The real "outsourcers". When I go into a retail store in this country that sells anything, from que-tips to airplanes, I am faced with buying a product that is either made from another country or made in this country totally or made using some parts that are made in another country. Just about all other manufacturers here and around the world do this as common practice.
      When you or I go into a store and buy something based on its price only and do not look or care where its made "we" become the main (outsourcer). We are "outsourcing" our dollars to other countries and if this practice is heavily one-sided in buying products from other countries we are basically responsible for putting our own people out of work and in some cases we could be responsible for putting ourselves out of work.
      If we are stupid enough to believe that we don't have to buy American made products to keep American companies in business then we are destined to join the bread lines with those business people when our financial collapse comes.

    54. Tom Cooper says:

      This guy is comparing the US Economy to the Hong Kong economy??? Does he think we are idiots.
      Anyone can derive numbers to suit their argument that way. It is like comparing the US economy and budget situation to that of a family of four. The issues just do not translate logically. Yes, families cannot go endlessly into debt because families do not have endless resources and employment and revenue generating opportunities.

    55. Its insane, that is what i can say concerning this post. Because this def is what the whole thing is about right? Keep it up!

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