Offshoring, a Path-Way for Developing Countries and Immigrants to Boost Wage Market

With new investments and jobs making way for more global economic expansion the world economy is becoming increasingly competitive. Integrated production and supply chains are also creating benefits and opportunities. Off shoring is becoming a common path especially for the developed countries, not only minimizing their manufacturing cost but at the same time helping the foreign locale in getting more jobs and revenue.

There is a larger prevalence of off shoring in the US and UK markets, due to an increased market pressure that drove businesses to seek alternatives, cut down on economic competition and production costs, and find a substitute to reduce on the tax system. Nations like USA that are very stringent about their environment and taxes, had to invariably opt for off shoring their business to smaller countries where labor was cheap, taxes were at ease, and standard of living and production was quick. They targeted developing countries like Japan, China, India, Thailand, and Vietnam etc.

Even though off shoring has been a controversial issue with fiery debates among economists it has boosted job opportunity in the destination country, lowering the cost of goods and services to the origin country through free trade, thereby increasing gross domestic product (GDP). On the other end, it is taking a toll on wages in the US. Recent studies shows that US industries exposed to offshoring pressures incur more downward pressure as can be seen on the wage share within the country.

U.S. opinion polls indicate that between 76-95% of Americans feel that outsourcing production and manufacturing work to foreign countries is the main reason for the US to suffer economically; as this has been a major contributor to many locals losing their jobs. There has been a decline in the labor-force as baby boomers are seen in a majority with more Americans due in line for retirement. The young are completing their high school and in between those age groups 25-50 participate in the labor market which is comparatively lower, and due to aging of the baby boomer, the number of older Americans are expected to rise. Companies are left with no other options than hiring immigrants, and getting skilled immigrants has become easy when compared with locals, and hiring them is more cost effective for companies.

The American workers are being greatly hit with the growing labor force and they are facing newer challenges in the market. More immigrants will be hired as there is a gap in the presence of young baby boomers, and MNCs’ who are constant on the look-out of the talented workforce will not hesitate to offshore their business or bring skilled immigrants here.

The US will see more immigrants in the near future, as they will be the key source for the labor industry, more green card applications will be processed by the USCIS in the future and more “foreign race naturalized citizens” will be seen in the USA.