How Does the Job Outsourcing Affect the US Economy - Term Paper Example

The opponents of the view that job outsourcing has a positive effect on the US economy argue that hiring people outside the US significantly effectively affects the US economy as it strips many Americans of jobs (Kehal, 2006). It is in light of these arguments that this paper will discuss how job outsourcing exactly affects the US economy. Both sides of the debate have valid points. Ching (2009) observes that studies have shown that outsourcing has contributed to the loss of employment opportunities in the US.

This has had a detrimental effect not only on those who are minimally qualified for employment but also on those who have the skills because even skilled labor jobs are being outsourced to other countries (Hira and Hira, 2005). The availability of fewer jobs for unskilled and skilled workers due to job outsourcing has dire economic consequences for the US economy, especially concerning increasing the levels of poverty and reducing tax revenues and consumer spending. Kehal (2006) argues that while job outsourcing may help companies to reduce costs, it may have a detrimental effect on the companies in the end.

This is because the availability of fewer jobs due to outsourcing reduces the spending power of the consumers, thereby reducing companies’ revenues (Hira & Hira, 2005). Nonetheless, job outsourcing seems to influence the US economy positively and it spurs the economic performance of the country. Wood and Maniam (2009) note that it helps lower corporations’ expenses and this may lead to job creation. Its supporters dispute critics’ argument that job outsourcing reduces the availability of jobs.

Most companies and government agencies outsource some of their work, thereby minimizing their cost (Wood & Maniam, 2009). This outcome has a direct effect not only on the federal and companies’ spending but also on the US economy in general. Job outsourcing also helps to lower wages and this means that companies will be able to do production with less expense, thereby transferring benefits to the consumers (Kehal, 2006). This is the point that the supporters use to dispute arguments that job outsourcing reduces the availability of job opportunities.

They argue that lower prices will lead to increased consumer spending and that companies will be in a position to hire additional workers in the United States because they will be paying fewer wages for workers outside the country.