Article Abstract:
Economic Policy Institute
Offshoring
The challenge the U.S. policy makers is facing is making sure the US workforce can share the benefits reaped from offshoring and trade in services. US workers should be compensated for the huge risk they now bear, through fierce competition from foreign workers. This compensation should take the form of a large social insurance program as well as ensuring the service-sector workers displaced by trade are eligible for some form of trade-adjustment assistance.
Fear of offshoring to developing countries has always been a concern to the American people; however, the scope of the workers affected was significantly less. With the increase of technology, white color workers, with four-year-degrees are the next sector of the American workforce to be hit. Traditionally it was more common to offshore workers in the service industry because of the tangible flow of products through the countries. Recently, with the increase of technology, white-collar computer software workers jobs have been heavily outsourced. The BLS reports that a programmer in Silicon valley-an area especially vulnerable to offshoring tech jobs-earns about $78,000 annually, including benefits, a comparable job in India pays around $8,000.
Perhaps, this compensation should take the form of a large social insurance program as well as ensuring the service-sector workers displaced by trade are eligible for some form of trade-adjustment assistance. The best way to reduce inequality would be to increase blue-collar wages, not to suppress white-collar ones. Unless white-collar offshoring has the potential to reduce the prices of goods consumed in large part by the blue-collar labor.
Bottom line- The consistently big winners from trade (especially offshoring) are capital-owners—those who derive a significant portion of their income from profits. The United States imports almost $500 billion more than it exports in manufacturing and the trend is growing to include white-collar workers as well.
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