Undersourcing is the American Way

The Way to Hell is Paved with No Intentions
© Marc Leeds
6/28/2007

Outsourcing is easy to understand. Businesses hire outside firms for tasks that would cost too much to complete in-house. Sometimes those outside firms are just down the street. Lately, the news on outsourcing is all about American firms exporting various processes to subsidiaries or other companies located outside the country. Just last week there was a piece in the news about a U.S. firm that received a government contract for three million American flag patches for various uniforms. The company illegally outsourced the job to Taiwan. Companies are able to save considerable amounts on overhead, but the result is fewer job opportunities for the American worker. Yes, this way lays the globalization debate.

Undersourcing is a different matter. It, too, has its roots in the desire to hold down an employer’s costs. In this case, however, the jobs aren’t going down the street or Madras, India. No, the jobs are just going down in value. How so?

It’s simple. Some employers would rather hire two part-timers than one full-time employee; refuse to offer benefits such as medical insurance or a retirement plan; or offer only freelance positions with little prospect for advancement or enhanced job security.

It’s a slight twist on the “just-in-time” production theory. Hold only enough inventory or production capacity to manufacture according to immediate demand. Businesses are able to tap into a desperate portion of the workforce that scrambles to complete the short-term goals of companies.

Some jobs can’t be exported. The obvious examples are vital services provided by firefighters, police, paramedics and teachers (though Internet-based distance learning is beginning to impact the education industry at the college level).

The prospects for the American worker are perilous. As more people seek satisfying work that fits their busy lifestyles filled with children’s school schedules, PTA meetings, play dates, after-school tutoring, music lessons, sports practice, ballet, orthodontist appointments, caring for aged parents, etc., fewer people will qualify for job-related health insurance and retirement benefits.

There will be more opportunity for off-the-books income, but that negatively impacts future Social Security benefits and the general contribution to the current tax base. Off-the-books income can also negatively impact one’s ability to develop credit-worthiness, a problem faced by potential homeowners and car buyers.

Corporate undersourcing contributes to diminishing the prospects for contract workers. Workers who intentionally seek only short-term contract employment may limit their professional upward mobility, gambling that their future financial capability will take care of itself and that they (and perhaps their family) will not need any more medical care than they can afford out of pocket.

This is a vicious cycle that has its roots in two laudable goals: corporations need to care for the bottom line and workers need to put family and personal concerns at the center of their lives. These goals should not compete with each other. The conflict arises from our job-related health and retirement systems that discourage creative people from working for various employers.

Until all workers and their families are covered by health and retirement systems comparable to other countries (those not spending their nation’s wealth and financial futures on fallacious wars), America will continue to be beset by companies looking to get by on the cheap and workers having to sacrifice family concerns so they can be strapped to a life limited by their cubicled existence.

We need healthy companies. We need healthy families. The current system of employment-based healthcare and the general difficulty of retirement account portability takes a financial toll on employers and workers and negatively impacts the ability of concerned parents from fulfilling their family obligations.

We have reached the point where our traditional employment model has been overtaken by healthcare, retirement, parenting, care-taking for extended family, schooling (especially the troubled-learners and those coming from families with insufficiently educated parents) and a myriad number of other conflicts. Until we come to grips with the idea that undersourcing is immoral due to its anti-family nature, we will continue to expand the number of people living at the margins, and in the long run that means greater costs to the general taxpayer to cover the shortfall of both companies and families.