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Outsourcing undermines middle class

by Jessica de Bruin, staff writer

We live in a nation that many refer to as the land of opportunity. However, this land of opportunity lost 2.3 million jobs in the past three years, marking the worst job recovery in American history. According to economist Perry L. Weed, in The Washington Spectator (March 15), the cost of living is rising, which erodes the paychecks of those who still have jobs. The U.S. economy has taken a dive and is at its lowest level since 1950. This land of opportunity is facing an end to U.S. economic domination of the world.


Many factors are causing this economic decline. Globalization is resulting in the United States selling its industrial and commercial base to foreign investors. International finances are without effective regulation. Despite an increase of productivity-IBM alone has generated 10,000 new jobs (with more than two-thirds located abroad)-we see enormous job loss due to outsourcing to other countries.

Many families are living beyond their means, increasing their debt not just to buy luxury items, but in many cases, just to live. This is especially true for the 30 million in the United States, who are trying to make ends meet while earning less than $8.70 per hour. Real wages for many Americans are thinning, and forget personal savings when the average personal debt is at $19,000 per household. Bankruptcy has become a way of life, Weed writes, for families as well as some of our largest corporations.

The rising costs of living are putting a huge strain on our pocketbooks. The increase of the median price for a single-family home increased 6.7 percent in 2003 alone. The cost of education in the United States is rising at two to three times the rate of inflation. Health care coverage is on the rise as a typical family plan now costs more than $9,000 a year. Rising health care costs have resulted in more Americans living without health insurance (currently one in five families, according to Weed).

With rising costs, lower job security and wages, declining access to decent homes, declining education and health coverage, and lowered retirement security, middle-class stability is now threatened.

Outsourcing has largely been the cause for the shrinking of middle class income, but there are many other factors contributing to this, one being that we have become a Wal-Mart society. Large fast-food and low-price merchandise chains, such as Wal-Mart, often pay less than a living wage, discourage unionization, and offer limited, if any, health care benefits. Because of this phenomenon, those workers are often subsidized by public taxes and medical benefits, which further drains publicly supported services and therefore, the middle-class taxpayer.

Another threat to the middle-class is the growing loss of higher value jobs. The Bush administration tells us that retraining will be our solution, but retraining for what? Both the student and displaced worker are asking, “What will we do now?”

In addition, illegal and legal immigration also threaten the middle-class as immigrants are not limited to the lower-paying jobs, which increases the downward pressure on wages. Currently, Weed writes, foreign-born workers make up 11 percent of the U.S. population and 14 percent of the work force, resulting in more than half of the total work force growth from 1996 to 2002.

Rather than addressing these issues, the United States has largely looked the other way. The basic strategy of the Bush administration is the big business playbook, which focuses not on labor, but rather investment. Instead of setting up training programs for displaced workers, Bush sets up seminars for executives on how to outsource more efficiently (NPR, 4/04).

So, of the 1.6 million Americans who filed for bankruptcy in 2003, 92 percent of them were in the middle class. Tax cuts benefit the higher class, with the top 5 percent of taxpayers accounting for 43 percent of the $1.7 trillion tax cut. Congress is considering new regulations that will cut overtime pay by reclassifying workers, and we have a $400 billion defense budget, along with a $160 billion pre-emptive war in Iraq.

Washington has become a political fashion show, devoting its time and energy to ensure the incumbents’ re-election and political dominance, and rewarding their supporters, the wealthy and economic elite. So the rest of us are in the land of opportunity, where the federal deficit is growing exponentially, jobs are lost, costs are rising, and revenues have plummeted. And now there is only one question left: can we and will we recover?

Source: Perry L. Weed, “Tightening Our Belts-a Major Issue in the 2004 Election Needs Explanation,” The Washington Spectator, March 15, 2004. Weed is an economist, author, and lawyer with 30 years of Washington experience.


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