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Economy Update: Analysts Find Outsourcing Debate Lacking

by Newsteam Staff
July 12, 2012

Call center agents work overnight in Manila's Makati financial district February 6, 2012 (Erik De Castro/Courtesy Reuters). Call center agents work overnight in Manila's Makati financial district February 6, 2012 (Erik De Castro/Courtesy Reuters).


Companies sending U.S. jobs overseas has quickly become a major campaign issue, with both political parties trading barbs on who has been responsible for more job loss and analysts trying to give more context about what the issue actually means for U.S. employment and the economy.

Two stories in the Washington Post on outsourcing have cause a flurry of claims and counterclaims on the campaign trail. In June, the it published a story that raised questions about whether private equity investment firm Bain Capital facilitated sending jobs overseas while GOP presidential candidate Mitt Romney was a partner there. This week, another Post story reports that critics on the left argue that President Obama has not made good on his 2008 campaign promises to stem the flow of U.S. jobs to other countries.

Edward Alden on CFR’s Renewing America blog says while it is “absolutely right that outsourcing by multinational corporations poses a huge challenge to the United States,” the Post’s stories on Romney and Obama are misleading and do not raise the quality of conversation about the problem.

“The debate over outsourcing deserves better than this, though judging by the thousands of comments on the two Post stories, it is clearly a topic of great interest. It should be,” Alden writes. “The United States desperately needs to figure out how to do more to expand investment and jobs in a world where other countries are competing aggressively to do the same.”

Washington Post columnist Robert J. Samuelson notes that there is “a distinction between outsourcing (subcontracting work to another company) and offshoring (moving jobs outside the United States)” and lost in campaign debate is “perspective on how much offshoring reduced U.S. job growth,” which he says isn’t much.

Samuelson says bashing offshoring may be good politics but “the success or failure of the next president in reducing unemployment will depend mostly on how much — or how little — his policies influence Americans to spend, hire, and shed their present pessimism.”

For more on the candidates’ stances, check this issue tracker on The Candidates and the Economy.

Suggested Other Reading:

At Foreign Policy, Vivek Wadhwa says the real U.S. outsourcing crisis isn’t the hotly debated loss of jobs to cheap overseas labor, it is “the thousands of potential entrepreneurs and job creators who are prevented from setting up shop in America because of immigration laws.”

This CFR Backgrounder looks at the impact of multinational companies and outsourcing on the U.S. economy, jobs, and taxes.


1 Comment

  • Posted by johnsmith

    Whether called outsourcing or offshoring the flight of factories and jobs to China, India, Mexico, and MANY other places is certainly causing a lot of unemployment as well as loss of tax base. These New world Order laws and moves will destroy the USA as a nation & it’s proponents know it. They have planned it that way so they can become ever richer and eventually rule all of earth through the UN. Google “the speech that got JFK killed”. I believe they also killed RFK knowing he would follow JFK as President AND I believe they tried to kill Reagan so Bush 1 would become President. It is probably well that Ron Paul lost out because he too would be in danger if electedm