September 16, 2012

LAY OFF A WORKER, HIRE A SUIT!:

The case for outsourcing jobs (Steve Hargreaves, September 14, 2012, CNNMoney) 

Cheaper prices for consumer goods are often the first thing cited by defenders of outsourcing. Indeed, many items such as clothing, toys and electronics are getting cheaper, even without adjusting for inflation.

But the efficiencies extend beyond the cash register.

Companies can use the cost savings to staff up in other parts of their business, said Steven Leslie, a financial services analyst at the Economist Intelligence Group.

For example, if Apple can knock, say, $100 off the cost of producing the iPhone by making it in China as opposed to the United States, the company is then apt to spend that $100 in hiring people in other parts of its businesses -- such as sales, marketing or design.

A forthcoming paper in the American Economic Review looked at 57 American industries from 2000 to 2007. The study found that even though some people lost jobs due to outsourcing, the greater efficiencies the industries realized allowed them to hire even more people in the United States than were laid off.

Which is how globalization and technology helped fund three decades of white collar boondoggling.
Posted by at September 16, 2012 8:21 AM
  

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