Outsourced: Why Jobs Leave The U.S.
American jobs for decades now have been outsourced, destroying numerous communities which relied on manufacturing jobs. Many blame NAFTA and the lack of tariffs, but the real culprit is our government. For those that blame NAFTA, let me remind you that NAFTA was passed by Bill Clinton and it added more jobs than it lost in the 90s. After its passing, unemployment continued to fall at a steady pace during the 90s¹, despite the “disaster” of NAFTA. All statistics will show that NAFTA helped grow our economy and there has been no evidence of it being the main cause of U.S. jobs being outsourced. Most of those jobs which have been outsourced have been outsourced to China, Japan, and India; not Canada or Mexico.
The reason jobs have been outsourced from the U.S. is very simple. The U.S. has the largest corporate income tax in the world, we have some of the most excessive taxation on earth, our laws are unfair and unpredictable, we have too many government fees and mandates, and low skilled labor in the U.S. is too expensive. The corporate tax rate in the U.S. is 39.5%, while China has a rate of 25%. Nations across the world have been slashing their corporate tax rates; some of these nations include Japan, Germany, and South Korea. China doesn’t even have a capital gains tax and their labor is much cheaper. The U.S. tax code is overly complicated and unattractive to businesses, but 20 other nations (like Russia) have simplified their tax codes by issuing one paged flat rate taxes.
The reason jobs leave the U.S. is very simple: America is no longer a business friendly place. We just don’t have the competitive advantage over China, Japan, or Germany. It’s easier and more affordable to do business in those countries. Until the U.S. dramatically reforms its laws and tax system to make the U.S. more attractive to business and manufacturing, you will not see jobs flowing into the U.S. from around the world. Simple reforms, like issuing a one page flat rate tax, or cutting the corporate tax rate in half, or abolishing/reforming the capital gains tax, or even abolishing the minimum wage would help bring jobs to the United States. It really is that simple.
Sources:
1. Bureau of Labor Statistics Historical Unemployment Statistics: http://www.bls.gov/cps/prev_yrs.htm
