The American Worker Through Fractured Glass

Immigration has come to the forefront as a hot-button economic issue this election cycle, but as the American people debate the costs and benefits of foreign labor to the United States, another portion of that economic issue has been left woefully underdiscussed: outsourcing.

Few politicians have broached the topic, and the media seem to be too preoccupied with more polarizing political issues to do their job by interpreting how all these issues congeal and form a cohesive political reality, instead presenting a fractured and skewed view of pick-and-choose policy.

While immigration and outsourcing may not seem like intimately-tied issues prima facie, when it comes to current policies pushed by conservatives and liberals alike, both have to be taken within the larger context of the labor market. The idea of not filling unskilled labor positions while simulatenously shipping overseas lucrative jobs requiring an education does not make economic sense, nor are its short-term effects sustainable.

Economists have long maintained that competition in a free-market economy is a positive force, driving down prices and making things work more efficiently and lower costs. The same concept applies to labor. It is possible that, in the short term, foreign competition may drive down labor prices, thereby leading to more profits for corporations and growth of the US economy. However, in the long term, eliminating entry-level positions for college graduates and workers with technology expertise will hurt the economy by leaving a large section of the population without jobs.

If outsourcing becomes pervasive and is taken to the extreme, the possibility exists that the middle class of skilled, educated workers would be either severely reduced or eliminated entirely, leaving a dichotomous labor market with the middle class vacuum filled by foreign labor. At the top of the food chain would be business executives and CEOs overseeing global labor forces and reaping the benefits, while at the bottom would be unskilled laborers who pick crops, work in the service industry, or fill odd jobs domestically that would be otherwise impractical and unprofitable to outsource.

When bipolar labor forces exist in a context like this without a middle class to balance to distribution of wealth, it leads to a situation where the rich get richer and the poor get poorer, which presents a political liability to the government, as situations like this almost always lead to corruption. Ironically, the vast wealth gap between rich and poor occurs frequently in Latin American countries. That gap is one of the reasons so many illegal aliens come to the United States in the first place.

Combine the job cuts resulting from outsourcing with a lack of unskilled labor in the form of undocumented workers from Latin America, and a problem develops. If the border with Mexico were shut down completely and all the illegal aliens deported, as some politicians and pundits have suggested, literally millions of jobs vital to the country’s basic needs that were initially performed by Mexican workers in the United States would go undone.

Employment vacancies would pervade in the bottom sector of the aforementioned dichotomous economy and cost the country billions. An estimate in the November/December 2006 issue of Foreign Affairs placed the total contribution of illegal immigrants at $144 billion, and, as reported by the Voice of America in May 2005, the Department of Labor estimates that the number of illegal crop workers is well over 1 million, more than half of the entire workforce in that particular sector of the economy.

Given this dearth of labor in the lower class, a middle class alienated by outsourcing would face rising unemployment rates at the same time. While jobs in the service sector would exist since the immigrant workforce would be eliminated, many fresh college graduates would not work doing the labor that Mexican and other illegal aliens from Latin American countries had done before.

Additionally, eliminating jobs in the middle class which require a college education makes the economic benefits of receiving that college education erode. With tuition rates and the costs of a college education skyrocketing across the country, it is unreasonable to expect a large potion of the population to receive such an education if they will not have opportunities to pay for it by getting a job.

The reason our society values a college education so much is because we see the importance of providing skills to our workers. Consequently, we predicate the costs of receiving a college education on its perceived value. However, foreign competition from places like Ireland and India undercut the value of this education, meaning that increasingly expensive college degrees gradually begin to lose their relevance.

Effectively, by feeding the dragon to try and make our warriors stronger in fighting it, we make their weapons obsolete and set our own people up for failure. We create a system intent on fostering competition and low labor costs that ultimately cannibalizes its own workforce. On all fronts, we refuse people jobs, and this makes for bad economics.

By supporting two seemingly “separate” policies regarding the American workforce and foreign labor – by pursuing a conservative immigration policy while simultaneously encouraging outsourcing instead of regulating it – we effectively shoot ourselves in the foot. The reality is this: trying to fill unskilled positions while deporting our workforce and encouraging workers to get educated for jobs they’ll never get are mutually exclusive goals.

We would paradoxically see both higher unemployment rates in the middle class and higher rates of service sector jobs going undone – a bad situation for our already volatile economy. Given this administration’s penchant for spending beyond its means, particularly with the wars in Iraq and Afghanistan, exerting these additional stresses on the economy is not prudent, particularly at this point in time.

We cannot say that we seek to keep American jobs on American soil while exporting lucrative jobs to the lowest bidder overseas. The issue is not that simple, and to try and paint such a picture is at best naïve and at worst outright hypocrisy. The desire of businesses to pursue the cheapest labor possible, both when it comes to illegal immigration and outsourcing, must be tempered by realities that exist within the US economy.

If progressives – or even Americans at large – hope to accomplish something positive for this economy, then we all need to realize that policy which encourages outsourcing, a phenomenon which eliminates jobs in the United States, and discourages immigration, which provides a workforce willing to fill jobs most Americans would never even dream of performing, will not work.

Politicians insist on controlling our borders more tightly so as to preserve American jobs for American laborers. If that is really the case, then we should show just as much restraint on outsourcing as we do with our immigration policy.