Anyone who has watched any of the election coverage over the past month now realizes that outsourcing may well be one of the issues that determines the outcome of the election in November. The insensitivity of the Bush administration to the loss of so many American jobs to workers from other countries and John Kerry's pledge to try to bring some of these jobs home has highlighted the importance of this issue to the American economy at the beginning of the 21st century.
Although it has become a hot political topic, the definition of outsourcing remains a little vague. Different companies and economists - and politicians - use it to mean widely differing things. Outsourcing may be said to refer to any contracting out of any portion of a company's business to a third party. Nearly every company does this. A large company like Sears, for example, is likely to hire a printing company to produce its catalogues because it is more efficient and cheaper for a printing company to print a catalogue than for Sears to set up a print shop that it will only need a few times a year. Such contracting out of specific services that are not central to a company's major work has been standard since well before the Industrial Revolution and reflects basic business practices (and good common sense) about the utility of specialization and the division of labor.
However, the rate and degree to which American companies are likely to outsource work is growing today, and it is this increase in outsourcing and in particular an increase in the particular kind of outsourcing known as offshoring that is becoming controversial. Offshoring, or offshore outsourcing, refers to the practice that many American companies have of using non-American workers because these workers can be paid less than their American counterparts, who are covered by U.S. and state minimum wage laws as well as (sometimes) union contracts and who will simply not work for salaries that canno...