OUTSOURCING JOBS

Bringing Jobs Back to the USA/ High Unemployment Rate from Outsourcing Jobs



Bringing Jobs Back to the USA/ High Unemployment Rate from Outsourcing Jobs

Introduction

Before the mortgage sub prime crisis, followed by the Great Recession in 2007, the US unemployment was running at extremely low rates since the last ten years. In November 2004, it was recorded at 5%, often considered to be an optimum rate for full employment. And this was due to the solid comeback by the US economy after the serious early 2000s recession, after the dot com bubble (Braun & Scheffel, 2007).

The country was gaining traction in the post dot com bubble era, and that showed in the improved unemployment rates, especially in the construction sector. Though the black cloud was already accumulating over the head of the Americans who faced severe debt issues, after the crisis. This impeded consumer expenditure and the gross domestic product (GDP) growth rate of the US economy, although the economy was cushioned by the increasing foreign direct investment (FDI). It must be noted that the US unemployment rate was still clocking below 5.5% in 2005 and 2006.

But soon we were reaching the era of the Great Recession and that was spurred by the US housing estate bubble in 2006. During the first quarter of 2007, the economy grew by only 1.2%, and 2.1% in 2007. Needless to say, the unemployment rate started to ratchet up steadily, crossing the 7% mark by December 2008. The US unemployment rate continued to rise up to 9.9% in April 2010, when the Great Recession was officially supposed to be over. The construction, manufacturing and wholesale trade sectors were primarily affected during this time.

The interesting thing to note here is that the current US unemployment rate is around 9.1%, as recorded in July 2011. Even one year after the Great Recession, the US unemployment rate still shows no signs of reverting back to pre-recession levels.

Main Problem

The main problem here is that producers or employers are looking for better profitability in an unstable environment.

The US real GDP increased at a mere 1% annual rate, as recorded in the Q2 of 2011, against 0.4% increase in the first quarter this year. Although things are changing in the non-residential fixed investment, exports, domestic consumption expenditure and government spending, this is still not enough and most economists are already sketching out the chances of a double dip recession.

At this stage, it is hardly expected of the private businesses to start being a wastrel, increase their inventory, hire new employees and go on a bankruptcy tour in the end. US businesses are doing just what is expected of them at the moment - lay off American employees and hire cheap labor abroad.

Market of Foreign Labor

The main problem is with the various H-1B, H-2B, L-1, OPT, J-1 and B-1 work visas, which allow the foreign workers to enter US with around six years time limit. This not only gives them the time to learn the job, but also end up bagging the ...