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HomeUncategorizedGlobalization and Outsourcing

Globalization plays a significant role in modern society. Thanks to globalization we benefit in many ways that used to be impossible. One of those benefits takes form in what is known as a trade agreement. Trade agreements, in short, are deals that allow us to trade with other countries. These agreements also allow us to establish factories overseas where the cost to produce goods is lower than it would be on homeland. Therefore, we can acquire the newest clothes, cell phones, and other technology for cheaper prices almost anywhere around the world. However, this benefit has some serious draw backs. In my essay I plan to discuss the adverse effects that free trade has on working people through outsourcing. I will explore the job loss from developed countries through trade agreements, poor working conditions created in developing countries, and job exploitation because of globalization.

Perhaps one of the biggest topics of discussion in the most recent United States presidential race was about the enforcement of the Trans-pacific partnership (TPP). This point of discussion was arguably the deciding factor in this election. The rust belt had been devastated by job outsourcing from large corporations, and trade deals like the TPP were responsible for it. Research from the Economic Policy Institute states that “In 2015, the U.S. deficit with TPP countries translated into 2 million U.S. jobs lost, more than half (1.1 million) of which were in manufacturing” (Scott and Glass, Trans-Pacific Partnership, currency manipulation, trade, and jobs, Economic Policy Institute). Deals like the TPP make outsourcing a more financially beneficial option to large corporations, which proves to be incredibly detrimental to people who used to have those jobs. Trade deals give big businesses the opportunity to ship their jobs overseas to countries that have lower wages. As a result, the people at home lose their jobs to the country that allows lower wages. Additionally, competition with low wage countries forces companies to take part in what is known as “the race to the bottom” where corporations everywhere lower their wages as much as possible to stay competitive with the competition, which brings me to my next point.

Countries like China and India have a much lower minimum wage than the United States do, which encourages larger corporations to move operations over there so that they can lower costs. The problem with this is that these wages are significantly lower than a wage that would be offered in the United States to the point where the employee work is borderline slavery. China Labor Watch reports that in 2016 the monthly minimum wage went “from $304 USD to $330 USD in April”. A $330 a month wage is nowhere close to a living wage, and companies like Apple, for example, take advantage of it. At Pegatron Apple factories, after the $304 to $330 raise “Pegatron managed to control labor costs by cutting welfare and sharing insurance payments with workers. As a result, workers’ total income decreased after the raise. Pegatron’s attitude toward workers is evident here. In 2015, workers’ hourly wage was $1.85 USD. In 2016, workers’ hourly wage increased to $2.00 USD, and after deductions, this amounts to only $1.60 US.” Clearly, in this scenario, Chinese workers are getting the raw end of the deal all in the name of higher profits for Apple. Unfortunately, low profits are not the extent of their mistreatment either.

Employees of outsourced jobs are often subjected to horrible working conditions. In 2012, a Bangladesh factory that makes clothes for global retailers like Walmart and Sears had burned down killing 112 people because of negligence on the factory’s behalf. “Fire officials say the fire broke out in the open-air ground floor, where large mounds of fabric and yarn were illegally stored” (Manik and Yardley, Bangladesh Finds Gross Negligence in Factory Fire, nytimes) The problem could have been averted if the building was following the Bangladeshi law that “requires that such flammable materials be stored in a room with fireproof walls.” To make matters worse, “on some floors, managers ordered workers to ignore a fire alarm and stay to work.” Clearly this is no way a business should operate, but corporations know that they can get away with this kind of conduct overseas. Sadly, these are not isolated incidences either. Just to name a few instances, in the year 2016, Bangladesh had factory deaths of 23, 34, and 24 on 3 separate occasions. Obviously, people should have better treatment than this, but the ability to outsource to less successful countries results in the people being taken advantage of.

Overall, everyone but the company and its consumers are adversely affected by the decision to outsource its jobs. For example, people in the United States either lose their jobs overseas or are forced to compete by accepting lower wages. Then the people overseas accept the jobs, but are then forced to work for low wages because they do not have the kinds of protections that more developed countries have. Lastly, to make matters worse, the factories of bigger corporations are less safe than they should be because the corporations do not feel pressured into making their factories safe. Sure the consumer will be able to purchase products for less, but it comes at the expense of the employee.

Source by David Randolph


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