OFFSHORING BENEFITS AMERICANS
February 8, 2005
Contrary to what is often presented in the press, offshoring jobs benefits Americans, according to a new study by economist Tad DeHaven, Economic Policy Analyst for the National Taxpayers Union (NTU).
The United States is not disproportionately affected by offshoring, and job losses, while painful, help the American economy in the long-run, explains DeHaven:
- Globalization may increase offshoring but the United States still maintains a large trade surplus -- about $74 billion in 2002 -- in private services with the rest of the world.
- In 2002, gross U.S. service exports were over four times higher than India's and China's combined.
- Every dollar of U.S. labor cost redeployed offshore adds 12 to 14 cents of net value to the U.S. economy.
Moreover, job losses aren't pervasive: of the total 10 percent of lost U.S. information technology software and service jobs since 2000, just 2.8 percent were attributable to offshoring.
Thus, instead of perceiving the phenomenon as a bogeyman in times of tough economic times, DeHaven says offshoring should be viewed as a win-win situation.
Ironically, DeHaven contends, American firms that don't offshore, "place themselves at a distinct disadvantage to global competitors and endanger U.S.-based jobs that the companies provide."
Source: Editorial, "Study Busts 'Offshoring' Myths," Dollars & Sense Vol. 35 No. 6, National Taxpayers Union, December 2004; and Source: Tad DeHaven, "There They Go Again: The Truth About "Exporting Jobs," NTU Policy Paper 115, National Taxpayers Union and National Taxpayers Union Foundation, Sep 29, 2004.
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