Samples Economics Effects of Outsourcing on the American Economy

Effects of Outsourcing on the American Economy

701 words 3 page(s)

Outsourcing is regarded as the process where a company contracts some of its in-house services to an outsider contractor, as a way of cutting down on operational costs. Most of the American corporations are hiring other companies or individuals to manufacture for them products that were previously produced in the company (Cox, 2014). Some of the poorer foreign countries have cheap labor and fair labor laws as compared to the United States. To this end, different corporations in the country have been forced to outsource their services in such countries with the objective of reducing their operational costs. The purpose of this research proposal is to determine whether the government of the United States should intervene and ensure that different corporations do not outsource jobs to other countries, especially those that lack worker’s union and have weak labor laws. It is imperative to note that outsourcing has caused America to lose many domestic jobs to foreign countries where there is low cost of production, thus rendering some Americans jobless. Outsourcing has increased the level of inputs that the manufacturing companies import, instead of manufacturing them locally.

Thesis: Outsourcing of the manufacturing and service industries has led to an increase in the level of unemployment and increased the level of imports in America. This statement is relevant to my paper since it will help me to focus on the reasons why outsourcing should not be encouraged in the United States.

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The audience of the paper will be the U.S. government. This is because the research study will influence the decisions of the American government on the issue of outsourcing. The American government has the power to draft laws that either encourage or discourage outsourcing. The government of the United States is responsibility for protecting its citizens. In addition, the government should ensure that all the taxpayers benefit from the economic growth in the country.

The proposed research study will cover the issue of outsourcing in the service and manufacturing study to determine the relationship between outsourcing and unemployment level in the America-based companies. The outline of the paper include; purpose of the study, research questions, background of the study, aims and objective of the study, scope of the study, limitations and delimitations, literature review (previous research studies on the topic), research design and methodology, time plan, and budget.

Why are there so many skilled laborers who are unemployed in America despite the high economic growth rate? In 2013, about 7.5 million people were unemployed in America as compared to the 14 million jobs that were outsourced (Amadeo, 2018). This trend is shocking as this means that more companies will continue to outsource, thus not creating job opportunities for the locals.

Has outsourcing increased the level of American imports that were previously provided domestically? According to a study by Burke, Epstein, and Choi (2004), the overall import in the manufacturing industry increased by 9.8 percent between 1978 and 2002. This shows that some inputs that were sourced domestically are now being outsourced.
What is the effect of outsourcing on the American economy? Outsourcing affects the American economy since American-based companies receive tax subsidies in their home country yet they do not provide employment for the taxpayers who generate the tax revenue.

Notably, outsourcing is known to help the companies to improve their profitability margins through reduced operational costs. The research proposal is aimed to provide detailed information on why the U.S. government should prohibit outsourcing to people in poor foreign countries. Descriptive and causal quantitative research designs will be used in this study. Employees and employers will be asked questions regarding the level of outsourcing in their industries. The research will seek to collect data through questionnaires applied on the employees and employers in the selected service and manufacturing industries. Moreover, government officials will be interviewed to provide statistics on the level of outsourcing and level of unemployment in America.

  • Amadeo, K. (2018). How outsourcing jobs affects the U.S. economy. The Balance, March 19th 2018
  • Burke, J. Epstein, G and Choi, M. (2004). Rising Foreign Outsourcing and Employment Losses in U.S. Manufacturing, 1987-2002. Political Economy Research Institute (PERI) and Department of Economics, University of Massachusetts Amherst
  • Cox, A. (2014). The causes of major outsourcing failures. IIAPS White Paper, p. 1-7.

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