Introduction
THE DEFINITION OF OFFSHORING AND OUTSOURCING
There is no commonly accepted definition of “off shoring” in the public debate nor in the economic literature. However, the term “off shoring” is widely used as a particular subcategory of “outsourcing”. The latter has been defined as “the act of transferring some of a company’s recurring interval activities and decision rights to outside providers, as set in a contract”. The typical consequence of such a decision is a decline of employment in the plant/firm that is doing the “outsourcing” and a rise in employment in the plant/firm from which the supplies are sourced thereafter. The vagueness of the term is often related to the fact that it is not made clear if the change in sourcing of supplies refers to the plant level, the firm level or to the national level. The term “recurring interval activities” might include a given level of in-house supplies in a stagnant business environment, but the meaning is less clear in an expanding environment in which additional supplies from the outside do not necessarily result in an absolute reduction of employment but tend to limit its expansion. It is also useful to distinguish between a replacement of the supplies which takes place between plants of the same firm or from a non-affiliated firm (control-ownership), and whether the new sourcing is from plants in the home country or abroad (location). In certain cases, the sourcing decision goes hand-in-hand with new investment abroad, which leads some observers to focus the outsourcing debate on outright plant closures, with output being replaced by new greenfield investment abroad.
Four types of “outsourcing” are reported, using location and control/ownership as distinguishing criteria:
Ø Captive onshore outsourcing implies a shift in intra-firm supplies to an affiliated firm in the home economy.
Ø If the shift in sourcing of supplies benefits a non-affiliated firm in the home economy, one can describe it as non-captive onshore outsourcing. The term “onshore” could be replaced in both cases by “local” or “domestic”.
Ø Captive offshoring describes a situation in which future supplies are sourced from an affiliated firm abroad.
Ø The fourth variant of outsourcing may be labeled non-captive offshoring and refers to the case when the new supplier is a non-affiliated firm and located abroad.
A major problem with the definitions above is that they do not concord easily with officially collected economic data. Outsourcing decisions are made at the micro level of plants or firms, while the official data are generally collected at the sectoral and national level.
Offshoring American jobs have positive and negative consequences to the American community. Some of those consequences of offshoring American jobs include Amer...
Outsourcing simply means acquiring services from an external organization instead of using internal resources (Butler, 2000). By using outsourced resources, organizations can gain a competitive advantage by utilizing contingent staff to accomplish strategic goals without incurring the fixed overhead. By focusing on the leading edge and highly specialized skill sets, outsourcing providers can often offer higher quality services, or at a lower price than the client organization. Typical reasons for outsourcing go beyond simple contingent staffing. Outsourcing providers are able to maintain economies of scale with regard to specialization (...
Mankiw and Swagel (2006) argue outsourcing is not as large a phenomenon as the media describes. Their research indicates outsourcing accounts for very little of job loss in the United States, nor has it made a distinct contribution to the slow rebound of the labor market. They go on to propose that increased overseas employment has actually contributed to higher employment in parent United States companies. They reported that while 30,000 jobs were lost per month in 2004, two million job changes per month were happening as well. They reference the Bureau of Labor Statistics when they report that in 2015 there are expected to be 3.4 million jobs outsourced, but 160 million jobs gained here in the United States. They also claim that there is a rise in net US income by 12-14 cents per dollar of outso...
For advocates of global business, the hope is that outsourcing will help lift the United State’s economic growth and development by lowering the input cost of services (i.e. labor and materials) and by opening new markets abroad. Mainstream economists believe that outsourcing will have ...
As the problem of job outsourcing becomes more of an issue in politics, elected officials like the President and Congress will no longer be able to ignore the dilemma. The war in Iraq has been at the forefront of the presidential race but the importance of outsourcing American jobs seems to have been slightly overshadowed. If the issue of outsourcing is not watched carefully and a definitive plan hammered out, a trickling down of negative effects may occur within the U.S. economy. However, there is a polarized opinion on the effects of this “phenomenon”.
Currently, in the United States, the federal minimum wage has been $7.25 for the past six years; however, in 1938 when it first became a law, it was only $0.25. In the United States the federal minimum wage has been raised 22 times since 1938 by a significant amount due to changes in the economy. Minimum wage was created to help America in poverty and consumer power purchasing, but studies have shown that minimum wage increases do not reduce poverty. By increasing the minimum wage, it “will lift some families out of poverty, while other low-skilled workers may lose their jobs, which reduces their income and drops their families into poverty” (Wilson 4). When increasing minimum wage low-skilled, workers living in poor families,
People will lose their jobs to keep businesses running. Teens and college kids will not have a place in the workforce causing them to start off with financial problems. The economy could fall apart from the cost of living increasing too much too fast. People would argue that it is better to raise the minimum wage but they are misinformed. They want change but the wrong kind. We need to fight for more jobs and better education. If it was easier for these low-skilled people to get more skills then they can get their higher paying jobs without affecting everybody. The only time the minimum wage should increase if because of inflation. There is a point where it does get too low but a dollar or two is very different from six. The minimum wage is low for a reason. Let’s not change something that is there to
This is somewhat related to my second reason on why minimum wage should not increase in the United States. Companies are going to raise their prices on their products. They will increase their prices in order to be able to pay all of their employees. That situation will cause the employers extreme anxiety due to money issues. Companies may have to eventually shut down if they are not able to pay their employees like they need to be paid. If the minimum wage increased and businesses/employers have to pay those higher minimum wages (higher salaries/income) to their employees. To offset them having to pay more money to their employees, they offset that extra cost to the customers or consumers generally who shop with them. It creates a ripple effect for a city, county, or region. Prices have been going up without the increase of minimum wage so imagine when if I does happen to go up. Increasing minimum wage will definitely hurt small businesses more than
A $15 minimum wage will not supply Americans with the change they desire. We catch sight of homeless people on the streets and moms struggling to provide and cannot help to be inspired to lend out a hand and find a solution. The problem is that we need an efficient and non-detrimental way to help people who continue struggling to make ends meet. However, raising the minimum wage to the proposed $15 an hour will not fix the empty stomachs nor pay the unpaid rent. A $15 minimum wage will not work in America for the reason that it will affect further more than just the minimum wage workers, it forces businesses to create loopholes to avoid a downfall and it will change the way we perceive work.
Kibbe, C. (2004, 07 09). Outsourcing: the good, the bad and the inevitable. New Hampshire Business Review, pp. 1A-21A.
As of now, the minimum wage is $8.38. According to fee.com, a single parent would need to earn at least $10 an hour to cross the poverty line barely. Many people have a false accusation that the average person to be assisted by the minimum wage is a teenager. But by a recent survey conducted by go.epi.org , it shows that 87% of people who are benefited by the raise in minimum wage are above 20 and out of those 87%, 30% have kids that depend on them. The other 11% that are not over 20, are teenagers that work to try and help out to pay the bills in their family. Many conservatives think that, raising the minimum wage will shut down business and drop the economy. That is true, only if we raise it well over $15 an hour. Rather than raising the
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Society has seen many benefits and opportunities from technology. Examples of the list of the benefits and opportunities include: keeping in touch with our friends and family, making new friends, learning from a distance, and much mor...