Nine Myths about Jobs and Outsourcing

The American economy never rests - at this moment, in fact, the economy is in great flux. Every time there is a dip in the acceleration of output, jobs, or incomes, the undying myths of a sputtering, backfiring economy rise again. Today, many of those myths concern the ills of outsourcing.

The plain facts, however, lay all of today's myths about outsourcing to rest.

Myth #1: America is losing jobs.
Fact: More Americans are employed than ever before.

Myth #2: The low unemployment rate excludes many discouraged workers.
Fact: Unemployment, per capita, is dropping, despite a surging labor force.

Myth #3: Outsourcing will cause a net loss of 3.3 million jobs.
Fact: Outsourcing has little net impact, and represents less than 1 percent of gross job turnover.

Myth #4: Free trade, free labor, and free capital harm the U.S. economy.
Fact: Economic freedom is necessary for economic growth, new jobs, and higher living standards.

Myth #5: A job outsourced is a job lost.
Fact: Outsourcing resultss in efficiency, not job loss.***

*** Note - Outsourcing is a means of getting more final output with lower cost inputs, which leads to lower prices for all U.S. firms and families. Lower prices lead directly to higher standards of living and more jobs in a growing economy.

Myth #6: Outsourcing is a one-way street.
Fact: Outsourcing works both ways.

Myth #7: American manufacturing jobs are moving to poor nations, especially China.
Fact: Nations are losing manufacturing jobs worldwide, even China..

Myth #8: Only greedy corporations benefit from outsourcing.
Fact: Everyone benefits from outsourcing.

Myth #9: The government can protect American workers from outsourcing.
Fact: Protectionism is isolationism and has a history of failure.

Conclusion

America 's workers deserve a more informative, less partisan debate on outsourcing. The negative impact of outsourcing on the economy and American employment has been greatly exaggerated, and the benefits of outsourcing almost entirely ignored.

Adapted with permission from The Heritage Foundation . Authors: Tim Kane, Ph.D., is Research Fellow in Macroeconomics in the Center for Data Analysis, Brett Schaefer is Jay Kingham Fellow in the Center for International Trade and Economics (CITE), and Alison Fraser is Director of the Thomas A. Roe Institute for Economic Policy Studies, at The Heritage Foundation, www.heritage.org.

(1) Bureau of Labor Statistics, smoothed Household Survey. The 4-month moving average of CPS employment totals reached a peak in February 2004, the latest data available.
(2) Bureau of Labor Statistics, smoothed Household Survey.
(3) Labor Department, BED data series, 1992 to 2003.
(4)Organization for International Investment (OFII)website at http://www.ofii.org/insourcing/ .
(5)Ibid.
(6)Jon E. Hilsenrath and Rebecca Buckman, "Factory Employment is Falling World-Wide," Wall Street Journal , October 20, 2003 , p. A2.
(7)Jeff Madrick, "Questioning Free Trade Mathematics," Economic Scene, New York Times, March 18, 2004, available at http://www.nytimes.com/2004/03/18/business/18scene.html . Michael W. Klein, Scott Schuh, and Robert K. Triest, Job Creation, Job Destruction,and International Competition, Upjohn Institute, 2003, Introductory chapter available at http://www.upjohninst.org/jobs.html .
(8) Editorial, "Steeling Our Wealth," The Wall Street Journal , September 23, 2003 , p. A24; andEditorial, "Steel Trapped Minds," The Wall Street Journal , February 19, 2002 , p. A26