Outsourced, Research Paper Example

Outsourcing results in the mobilization of factors of production from U.S. where labor costs are high in the automobile industry to countries such as China where labor costs are low in the automobile industry. This results in structural unemployment (Investopedia) for many U.S. automobile workers whose skills may not be a good match to available jobs. Outsourcing does increase U.S. automobile companies’ profitability due to lower production costs and it also leads to economic growth in outsourcing destinations as well as creation of new jobs. Outsourcing also decreases payroll taxes for state and national governments in the U.S (Hasan).

Outsourcing in the automobile industry increases economic interdependency among nations and results in more advanced and complex global supply chain systems. It also helps U.S. automobile companies gain traction in foreign markets. The jobs created by outsourcing automobile production may also benefit the U.S. in return. This is because new jobs created in outsourcing destinations may increase demand for U.S. products due to higher income. Outsourcing lowers cost of living for U.S. automobile consumers who may increase the demand for other local goods and services, thus, producing jobs in other sectors (Dixon). Outsourcing hurt workers with low education in countries including those in the automobile sector from where the job is outsourced while benefits workers with low education in countries which are outsourcing destinations. Outsourcing also helps U.S. automobile manufacturers stay competitive in the global industry otherwise their products may be less affordable by many in developing countries with low income.

References

Dixon, Patrick. The Future Of Outsourcing – Impact On Jobs. 13 May 2012 <http://www.globalchange.com/outsourcing.htm>.

Hasan. How Outsourcing Affects The U.S. Economy! 16 September 2008. 13 May 2012 <http://www.dirjournal.com/business-journal/how-outsourcing-affects-the-us-economy/>.

Investopedia. Structural Unemployment. 13 May 2012 <http://www.investopedia.com/terms/s/structuralunemployment.asp#axzz1up2UmmNs>.