Impact of Union Jobs Now Being Outsourced

Union Jobs Being Out-Sourced

In recent years, the outsourcing of union jobs has emerged as a disturbing new trend affecting millions of middle-class workers everywhere. As a result of this devastation, the U.S. manufacturing sector and the permanent loss of millions of high-wage, good benefit, middle-class jobs, are now threatened with extinction (Gibson, 2004). Service jobs are affected, as well as high paying, professional and technical career opportunities due to the growing off-shoring movement. Although corporate America has already moved most of the high-paying manufacturing jobs overseas, even minimum wage jobs are becoming out-sourced.

The labor movement has fought the flawed trade and tax policies of the 1970s, 1980s and 1990s that rewarded companies for shipping American manufacturing jobs overseas. For decades, unions such as the Teamsters, the United Auto Workers and the Steel Workers Union controlled a great deal of this nation’s economy (Gibson, 2004). Researchers have argued that unions do share some of the blame for the now idle factories and manufacturing plants (Gibson, 2004). During the 1960’s the corrupt Teamsters Union controlled the shipment of goods and the threat of strikes, walk-outs, and violence kept wages unfairly high in the labor industry (Gibson, 2004).

When manufacturing jobs started moving overseas in larger numbers, American workers were assured that the high-paying, high-skilled jobs would be kept, while the workers in developing countries would do the actual work of making things. Displaced workers were told to acquire new and better skills and more education in order to succeed in the changing American economy. Many workers did, but found that knowledge and talent could not compete against the chase for higher profits and cheaper labor in the new global marketplace (Kelber, 2004). Currently, many American companies have ceased hiring American workers and have begun to open plants, factories, and call centers in Third World countries.

Recently outsourcing has become big news because white collar jobs in areas such as telecommunications and information technology have been out-sourced to foreign workers (Thornton, 2004). According to a report by the U.S. China Economic and Security Commission, about 400,000 good-paying U.S. jobs in a broad range of service industries, are expected to be out-sourced to China and India (Kelber, 2004). Forrester Research Inc. predicts that American employers will move about 3.3 million white-collar service jobs and $136 billion in wages overseas in the next 15 years, up from $4 billion in 2000 (Kelber, 2004). A survey by Deloitte Research found that the world’s 100 largest financial services firms expect to shift $356 billion worth of operations and about two million jobs to low-wage countries over the next five years (Kelber, 2004).

Lost employment due to off-shoring across many industries has already had a severe impact on the U.S. labor market, has stalled economic recovery and has alarmed policy makers.

Trade agreements must be fundamentally reformed to include enforceable protections for the rights of all workers to form independent unions, bargain with their employers, and reject child labor, forced labor and discrimination. Additionally, more extensive federally funded research must be conducted on an ongoing basis to better understand the full scope of the off-shoring problem, and the federal government must put in place adequate data collection programs on jobs that move off-shore. Education and training programs need to be fully funded, and new approaches must be developed to help highly educated professionals who are made jobless because their jobs have been off-shored. State and local governments must take immediate action on policy initiatives to dissuade corporations from pursuing business strategies that will further weaken the already fragile U.S. economy (Thornton, 2004).

Inaction means that millions of other workers and their families will pay the ultimate economic price of losing their job, their dignity and their way of life. Researchers argue that inaction and out-sourcing means the continued wreckage of the American middle class, and the distortion of the global economy to benefit corporations at the expense of workers everywhere. Outsourcing replaces higher paying jobs in one country with lower paying jobs in another country. Thus, the total amount of wages paid globally increases.

Although the purpose of out-sourcing is to reduce labor costs, it effects the entire market in such a way as to drive wages and benefits down for everyone in the country where jobs are out-sourced. There may be some effect on driving wages up in countries which get the out-sourced jobs, but this effect is relatively small in comparison, since the wages for these workers are also relatively small. Some of the reduction in labor costs from outsourcing does reduce prices, however this reduction is generally very small compared with the increase in profits. This is not a net benefit for most people in the country where jobs have been lost, since their income has decline far more. Since outsourcing greatly reduces labor costs, it also greatly increases corporate profits. Most of the jobs lost are union jobs, and the jobs created overseas and in Third World countries are not union jobs. Finally, the global effect of outsourcing union jobs is the elimination of general employee protections and the proliferation of poorer labor standards.


Black, S. & Lynch, L. (2000). What’s Driving the New Economy: The Benefits of Workplace

Innovation. NBER Working Paper 7479, 7-14.

Choi, I. (2003). Organizing Negotiation and Resistance: Comparison between two Labor Unions

in Korea. Retrieved from University of San Diego Web site:

The Chronicle. (2005). Unions continue to have a big role in local economy. Retrieved January

28, 2005 from The Chronicle Web site: SectionID=16& SubSectionID=101

Dutt, R. (2005). Outsourcing jobs exploit, union leaders say. Retrieved February 18, 2005 from the Indus Business Journal Web site:

Freeman, R. & Medoff, J. (1984). What do unions do? New York: Basic Books.

Gibson, D. (2004). Outsourcing is Un-American. Retrieved February 18, 2005 from American

Daily Web Site:

Kelber, H. (2004). Unions Have No Answers to Outsourcing; Exports of Jobs in ’04 Will Top

400,000. Retrieved February 18, 2005 from The Labor Educator Web site:

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Impact of Union Jobs being Outsourced

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