Offshoring In the US Labor Market - Essay Example

?Article Summary The problem under study is the root cause and remedies for low income and income inequality related issues arising mainly from offshoring. The idea is to recommend measures for improvement. The paper written by Alan Blinder focuses on the existing problems associated from offshoring in the US labor market and its various reasons, implications and solutions. This study concentrates mainly on the routine production sector of the US economy and its related sectors influencing earnings of routine producers. This does not criticize offshoring, but in several contexts of the US labor markets’ properties it tries to focus on the related policies (mainly the need for proper education) to be implemented. The work of Robert Reich focuses on different reasons of growing poor and rich discriminations in the US. This paper identifies various reasons and discuses their further reasons and consequences. It then tries to evaluate some policies which are needed to prevent the unexpected situation of income inequality. And the last paper, Roger LeRoy Miller, Daniel K. Benjamin and Douglass Cecil Northfocuses on the various facts and figures of prevalence of poverty in the US and suggests several policies which are needed to be implemented by the government to restrict the situation. The problem of low income and income inequality mainly arises from offshoring and calls for appropriate policies from the side of the government Blinder: The main purpose of his work is to relate the concept of offshoring with the US labor market and to understand its problems and possible solutions and effects. The key question of this paper is how to prepare the future labor force of US in the face of rapid offshoring of US companies. Over the last few years the demand for labour has shifted from technologically low skilled, less educated people to high skilled and well educated people. This led to income inequalities in the US.Hence, policies were needed to be applied. In the 1990s, the United State Congress has used the policy of raising the minimum wage and has increased the Earned Income Tax Credit (Blinder, 2009, p. 9). With the combination of the tight labour market, these policies have raised disposable income of the average workers and have improved their living conditions. But the basic assumption behind this success was that there was not any labour migration during this time of policy evaluation. The major future challenge for the US is “offshoring”. In the US, service sector offshoring has not been that much significantly higher; only 1% of the total services jobs have been offshored so far (Blinder, 2009, p. 10). There can be three basic reasons for more increment in the offshoring of services jobs. First, there are more absolute numbers of services jobs compared to that of manufacturing jobs. Second, technological advancements are more related with the growth of services jobs. Hence, recent developments in technologies have caused this difference in the growth paths. And finally, the labor market of India and China are more consistent with the technologies related to services jobs.The author has distinguished between two types of facts that are responsible for offshoring – personal and impersonal reasons. This is the most important information that the author has pointed out and this is the key idea of the whole paper. In this context the author suggested few points that are needed to be considered while preparing the future labor force of the US- putting more emphasis on education of children, focusing on one link (like technology) at a time and differentiating between novel differences with the traditional differences in jobs.One of the possible implications of these policies is that there would be huge income differences, not in terms of educational level, but also in terms of the skills that workers have. But in the future education will not become constrained. For public jobs, increases in the salary scales can work well in this regard. Again, some o the jobs are lacking proper training and education; hence, those needs can also be provided by the government. These are also the main points of views of the author. The main conclusion is that, with appropriate policies being taken the problem of income inequality and offshoring can be solved (Blinder, 2009, pp. 9-17). Reich: Reich’s work tries to identify the main causes for the US routine workers to earn lower wages for a long time. The key question is how to solve this problem. The basic assumption is that other political aspects are kept constant. In this paper the author has cited the fact that for a person the most important thing is the work that he does, not the kind of official classification of job that he belongs to or the kind of industry that he shares. Americans are used to sharing the same kind of economic structure; when one of them collapses, others follow him. But in the recent past the structure has been changed. The basic reason for this is the growing applications of offshoring that is consistent with the differences in wages across the world. According to the author the main affected workers are the routine producers. These producers have been working under good economic situations, earning high wages and other benefits. But with the advancements in the production technologies and with the international differences in the wage rates, these producers begin to face rapid competition. The demand for labor has been shifted toward them and the American routine workers become unemployed. Hence, the companies started to change their hiring strategies and locations in favor of the cheapest part of the world. This is the most important information of this paper. Again, along with the offshoring and outsourcing these producers have started to face competition from other related industries as well. In the data processing industry these producers have faced rapidly growing competition. Examples of these concepts were American Airlines, New York Life Insurance Company etc. Again in the face of the technological improvements in the computer industry India became the major competitor for the US computer programmers.The important positive implication of this phenomenon was that growing incomes of less developed world have been spent on the developed countries’ products, thus raising developed countries income. But the most negative implication was that the routine workers in the US started to suffer more with low income. These workers were engaged in trade and labor unions that have conducted some agreements that went against the workers. After 1982, these acts and agreements started to be abolished (Reich, 1991, p. 210). In the US the routine production job have vanished where the average wage was consistent with theinflation. The main reason for this was the dominance of seniors in the trade unions. For this the young generations have lost their interest for this industry. The introduction of machines like computers has made the task more difficult for the routine workers to survive.The male workers were the dominant section of routine workers and hence suffered more than the women. As a consequence, in the late 1980s the gender gap between men and women was reduced (Reich, 1991, p. 215). Also the standard of living has been changed rapidly for the US routine producers. In other fields also, such as symbolic analysis, engineers, technical experts etc., there emerges differences in demands. Again the American musicians, artists, sportspersons have also been demanded differently compared to the face past. The basic reason for this was rapid changes in communications and transportations technologies. Hence, the rising demand in these industries has been consistent with the rising income in these industries. This has been the key idea of this paper. Hence, the main problem of lower wages has been solved at a large scale. This is the main point of the view of this paper (Reich, 1991, pp. 208-224). Chapter 13: This paper tries to identify the reasons behind the existence of poverty in the US even after governments’ initialization of several poverty alleviation programmes. There occurs reduction in the growth rate of the poor people living in the country, but the absolute number has not changed much. This is the most important information of the paper. Again, the measurements of poverty in the US are based on the cash incomes of individuals. But the author views that the measurements should be based on the in-kind transfers of goods and services, Medicare, subsidized housing, food stamps etc. In this way it can be inferred that exactly what percentage of American people are living under poverty. This is the main point of view and positive implication of this paper (Miller, Benjamin, and Douglass Cecil North, 2007, p. 75). References: Blinder, Alan. (2009),Will Your Job Be Exported?, What it takes: Writing in College, pp. 9-17 Miller, R. L., Benjamin, D. K., and Douglass Cecil North, (2007), The Economics of Public Issues, USA: Pearson Reich, R., (1991), Why are the Rich getting richer and the Poor, Poorer?, Work of Nations, New York: Knoppf Read More