Continued job outsourcing by U.S. companies in order to cut costs and maximize profits may be keeping the U.S. unemployment rate at a high 9.8 percent. For the most part, U.S. firms are doing fine during the economic recovery. Just 4 percent of the top 500 U.S.
corporations did not generate profits in 2010 while the stock market is nearing its highest level since the financial crisis began two years ago. Yet, this modest success has not trimmed down joblessness. U.S. companies are hiring, just not on U.S. soil. Many businesses are hiring overseas as they expand their operations there. According to Washington-based think tank Economic Policy Institute, U.S.
companies have created 1.4 million new jobs abroad this year compared to 1 million jobs back home. If those 1.4 million jobs were offered to Americans, then the unemployment rate would have gone down markedly, according to Robert Scott, the institute’s senior international economist. “There’s a huge difference between what is good for American companies versus what is good for the American economy,” he told AP.
As an example, Illinois-based Caterpillar Inc. hired 15,000 new workers this year, half of them outside the country, while UPS is also hiring more workers abroad as the two companies respond to much bigger demand of their products and services overseas. Caterpillar earlier announced that it is building three new plants in China. Outsourcing by U.S. firms is not a new phenomenon and has been around for at least two decades. But over the years, the nature of these jobs have changed from simple to complex. Whereas before clothes and toy production have been the norm, these days computer software, IT services and semiconductor manufacturing are increasingly being outsourced to countries such as India, Brazil and China.