U.S. multinational companies have taken advantage of lower trade barriers over the past 15 years to shift jobs and production to lower-wage countries, a practice generally known as outsourcing. That’s cut costs for consumers and helped those companies grow, which can support employment in the United States. Still, it has also raised fears that the United States is permanently losing the kind of high-paying, manufacturing jobs needed to support a healthy middle class.
Where they stand:
President Barack Obama has proposed giving tax breaks to U.S. manufacturers that produce domestically or bring back jobs from overseas. He also wants U.S. companies to pay taxes on more of their overseas earnings. Currently, U.S. corporations don’t pay U.S. taxes on overseas profits unless they bring that cash back to the United States. Obama argues that this encourages outsourcing. Many Republicans say his proposal would raise taxes on U.S. companies and encourage them to move their headquarters overseas so they would no longer be considered U.S. corporations.
Mitt Romney says he wants to make the United States a more attractive place to do business by cutting corporate taxes and reducing regulations. Romney also says he’ll discourage companies from moving operations to China by pushing that country to let its currency rise in value. That would make its exports more expensive.
Why it matters:
With unemployment painfully high, it’s not surprising that fears over outsourcing have returned. Unemployment topped 8 percent for 43 months from February 2009 through August 2012, the longest stretch since the Great Depression. It dipped to 7.8 percent in September.
Also fueling fears is the decision by Apple and other high-tech companies to manufacture many of their goods in China. That suggests it isn’t just low-skilled jobs in industries such as textiles that are being lost.