South-Western - Management  
Outsourcing jobs: Is it bad?
Topic Global Business
Key Words Outsourcing
InfoTrac Reference A108784406
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News Story

Economists and workers are debating how the increasing shift of white-collar jobs to overseas countries will affect domestic unemployment and the U.S. economy overall. The article summarizes two opposing views.

Critics of outsourcing point out that outsourcing is now hitting skilled professions, such as software development, IT, medical, business and finance services, all of which were once thought to be "safe." As soon as work can be made routine, the job can potentially be outsourced. Service jobs are particularly at risk, because their move requires the setup of only little infrastructure. If one includes manufacturing jobs, it is estimated that one out of three private-sector jobs is now at risk of being outsourced.

This trend will put strong downward pressures on wages of U.S. workers and force many of them to frequently switch careers. Possible remedies include tax credits for companies who keep jobs in the U.S. and increased education and training of the U.S. workforce.

Proponents of outsourcing argue that the U.S. still has a distinct competitive advantage in innovation, which will always create new high-paying positions. They further point out that there's little evidence that educated workers, overall, are worse off than they were after the last recession. In fact, the unemployment rate for college-educated workers has been stagnant during this last recession, wage growth has been stronger for high-skilled workers, and jobs in software and computer-systems design have grown by 70% since 1995. The U.S. still has the best-educated workforce among the major economies.

The authors suggest that the U.S. should stop worrying about other countries taking our jobs, and focus more about developing the next innovation.

Questions
1.

Is outsourcing good or bad?

2.

What, if anything, should the government do?

Source Kathleen Madigan; Michael J. Mandel, "Outsourcing jobs: Is it bad?" Business Week, August 25, 2003.
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