Insourcing Jobs

March 9, 2004

Although some U.S. jobs are being outsourced overseas, better jobs are being "insourced" into the United States as a result of free trade, according to the Organization for International Investment (OFII), an industry organization.

Insourcing is the movement of foreign jobs to the United States. Conventionally known as foreign direct investment, insourcing has risen in recent years as more foreign firms set up operations in America.

  • Insourcing, which accounted for 6.4 million jobs nationwide in 2001, has been growing at a faster rate over the past 15 years than outsourcing, but from a lower base, according OFII figures.
  • Outsourced jobs outnumber insourced ones by 3.4 million, according to the Treasury Department's Bureau of Economic Analysis.
  • Insourced jobs pay 16.5 percent more than the average domestic job.

One example of insourced jobs is the 4,300-worker BMW factory in Greer, S.C.

Outsourcing jobs also benefits American workers by reducing the costs of products they buy. According to a report from the Republican Senate Policy Committee:

  • Globalized production and international trade has made information technology, such as computers, some 10 percent to 30 percent less expensive than it would have been, according to trade expert Catherine L. Mann.
  • As a result of such inexpensive computer hardware, Mann estimates that U.S. productivity growth was 2.5 percent to 2.8 percent higher each year, on average, from 1995 to 2002, a gain that in turn added at least $230 billion to the country's total output of goods and services.
  • McKinsey Global Institutes estimates that a dollar spent on outsourcing creates $1.45 to $1.47 in the global economy, with $1.12 to $1.14 returning to the U.S. economy.

Source: Josephine Hearn, "Outsourcing is bad, insourcing is better," The Hill, March 9, 2004; see also "Outsourcing: Meeting the Challenges without Destroying the Benefits," Republican Policy Committee, U.S. Senate, March 3, 2004.

 

Browse more articles on Economic Issues