Title: Outsourcing: The negative effects
Headings: Outsourcing: The negative effects
Outsourcing: The negative effects
Content: Companies are offered tax credits and additional incentives that would lead them to send jobs overseas, thereby achieving a higher profit margin, cost savings, but the biggest downside of it is the loss of jobs in the United States (Wolverson and Gardner). There are two very important factors that have led to the loss of American jobs. One of the factors is automation through the use of technology, particularly in sales and retail, where the need for salespeople has decreased dramatically. However, the biggest factor of all is outsourcing to countries that have lower salaries and little to no environmental regulation. What is not realized is that by companies outsourcing jobs to poorer or developing nations, the income of employees have not increased, while the cost of living has increased significantly and their employers continue to reap the benefits. Companies decide to outsource jobs that Americans need so the practice of Union organizing would be discouraged. The high levels of outsourcing jobs have led the United States from having a Trade Surplus to having a Trade deficit of $56 billion (Cohen). The negative effects of outsourcing are very devastating as it affects the daily lives of the average American family and the operations of the US Government, leading to a decrease in payroll tax receipts, payments to Social Security and Medicare, and sales revenue (Saleem). College professors and economists feel that if outsourcing continues, then the United States will lose its competitive advantage. Yunchuan “Frank” Liu, a business administration professor from the University of Illinois, had co-written a research study with Rajeev Tyagi, an economist at the University of California at Irvine, measuring the effects of outsourcing on the US economy and how it is affecting the competitive advantages of American companies.