The Globalization And Offshoring Of U.S. Jobs Have Hit Americans Hard

In recent years, the United States has experienced millions of jobs being relocated overseas. The impact of this trend has been particularly pronounced in the country’s trade relationship with China. Since 2001, the U.S. trade deficit with China has resulted in the loss of approximately 3.82 million American jobs, with manufacturing sectors bearing the brunt of this exodus.

Additionally, India has been a major destination for offshored white-collar jobs, particularly in software and back-offices services, while Mexico is the most popular country for American expatriates, followed by Canada, Portugal and Singapore.

The U.S. stands as a dominant force in global outsourcing, with a significant majority of American businesses embracing this practice. A striking 66% of U.S. companies outsource at least one department. This trend translates to approximately 300,000 American jobs being outsourced annually, reflecting both the scale and impact of this business approach. The economic implications are substantial, as the U.S. market alone generates $62 billion of the $92.5 billion global outsourcing industry, according to data from Radix.

The ongoing migration of jobs brings with it a multitude of issues for the U.S. The loss of employment opportunities contributes to economic uncertainty, while downward pressure on wages forces workers into lower-income positions. This also limits pathways for social mobility among American workers, as economic prospects become increasingly scarce.

The effects of this shift are not evenly distributed across the population. Certain groups, particularly Black and Hispanic workers, have faced disproportionate impacts from globalization and manufacturing declines, a report from the Economic Policy Institute revealed. These changes have reshaped the labor market, intensifying competition for available positions and creating a disconnect between employee skills and employer needs. As a result, workers find themselves struggling to adapt to the evolving demands of the job market.

The Negative Impact Of Globalization In Manufacturing

Over a span of two decades, from 1998 to 2020, the American manufacturing sector witnessed a significant downturn. During this period, 646,500 high-quality manufacturing positions held by Black employees were eliminated, marking a substantial 30.4% reduction in overall Black representation in manufacturing jobs.

This loss was part of a broader erosion of the U.S. manufacturing base, which saw more than 5 million jobs and nearly 70,000 factories vanish. The primary driver of this decline was an expanding trade deficit in manufactured goods with various global economic powers, including China, Japan, Mexico and the European Union, among others, according to EPI.

The repercussions of these losses extend beyond mere numbers. There has been a noticeable shift in the job market toward service-sector positions, which typically offer lower wages, fewer benefits and reduced unionization rates compared to their manufacturing counterparts. This transition has significantly impacted workers without college degrees, who previously could access middle-class lifestyles through well-compensated manufacturing jobs with comprehensive benefits.

Jobs Being Offshored From The U.S.

Information technology and business processes dominate the global outsourcing market. IT outsourcing is expansive, covering a diverse array of services such as cloud computing, web and mobile application development, cybersecurity measures and data management solutions. Similarly, business process outsourcing spans a wide spectrum of operational functions, including marketing initiatives, customer service and call center operations, payroll management, human resources services and logistical support.

In this outsourcing ecosystem, the IT sector stands out as the frontrunner, not only as an industry in its own right, but also as a critical business function across various sectors. According to Statista data cited by Radix, the IT outsourcing market is expected to expand significantly, potentially growing by $812.70 billion by the year 2029.

IT departments, on average, dedicate a substantial 13.6% of their financial resources to roles that are offshored. In 2023, companies spent approximately $132 billion on IT outsourcing on average. More than one-third of IT-related tasks—approximately 37%—are handled by external providers. When it comes to job vulnerability in the face of offshoring, certain IT positions stand out as particularly susceptible: web hosting, software development and administration outsourcing.

Moreover, business process outsourcing is projected to attain a value of $620 billion by 2032.

As jobs disappear, workers may find their skills are no longer in demand, requiring retraining or education to transition to new roles, as they face competition from global workers in many occupations. These issues collectively contribute to economic inequality, reduced social mobility and challenges for workers trying to maintain or improve their standard of living.