The most obvious and often disturbing part of sending jobs overseas is that it affects jobs at home. It’s difficult to get any exact numbers, according to the Center for American Progress, but in the 2000s, big brand-name companies reduced their workforces in their own countries by about 2.9 million and increased overseas employment by close to 2.4 million.
Slows Job Growth
It’s those big, multi-national companies that do most of the hiring in America too. So when the U.S. economy struggles to gain back jobs lost in a recession, many of those new opportunities are going overseas. The Center for American Progress reports that as the big dogs added jobs in 2010 and 2011, three-quarters of the new positions were in other countries.
Squeezes Out the Middle Class
When unskilled jobs in manufacturing and production get outsourced offshore, workers often can improve their skills by going back to school or move into more lucrative jobs that require additional training. It’s when the jobs going overseas are held by the middle class that the American economy suffers most. Jobs in Internet technology, for example, are increasingly moving overseas. Companies like Apple send all their IT work overseas, so that even the educated middle class have to turn to lower paid service work or retrain for another career.
Lowers Tax Base
When jobs are sent overseas, the companies that create the work pay fewer unemployment taxes. Workers who lose their jobs don’t pay taxes at all and instead must tap into the unemployment insurance funds until they find more work. New jobs created overseas rob local and federal communities of much-needed income taxes.
Creates Less Spending
The trickle-down effect is staggering. Not only do local communities lose significant taxes and the United State's government feels the pinch in its coffers, those same unemployed workers have less money to spend on consumer goods, creating a snowball effect on local and national economies. Small businesses can’t afford to hire more people when they’re selling fewer products and services. Sales tax revenues are reduced on top of lower income taxes. More businesses shut down and economic growth gets stifled by the stream of reductions.
Linda Ray is an award-winning journalist with more than 20 years reporting experience. She's covered business for newspapers and magazines, including the "Greenville News," "Success Magazine" and "American City Business Journals." Ray holds a journalism degree and teaches writing, career development and an FDIC course called "Money Smart."