Reducing Economic Inequality by Regulating Outsourcing

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There is no doubt that hundreds of American companies outsource work overseas, costing U.S. workers tens of thousands of jobs. Outsourcing is a practice that is contributing to economic inequality in the United States and the best way to combat that is to pass stricter laws that punish corporations for hiring foreign workers.

Companies in the United States choose to outsource for different reasons. Many will look to Chinese or Indian workers, for example, because they are more cost-effective compared to American labor. Outsourcing allows the business to focus on tasks that can only be completed at their American facilities, which streamlines the company’s work.

But outsourcing does not benefit everyone, and most Americans blame the practice for negative shifts in economic equality. A poll by Zogby International (Wittman, n.d.) found 71-percent of Americans think outsourcing is bad for the economy, and 62-percent want harsher laws to keep corporations or even smaller businesses from moving overseas.

Laws that target companies for outsourcing should have one key goal in mind: reward businesses that, in turn, reward American workers, and punish the businesses that do not. The regulations will highlight some major concerns of outsourcing, including keeping critical and confidential data safe as it travels internationally. A bill proposed last year that ultimately failed in the Senate would have gotten rid of tax breaks for companies that ship jobs overseas and helped those that brought jobs back. Meanwhile, California passed a bill this year that will limit outsourcing within the state’s borders. It is an example of legislation that should be considered at all state levels and must also be looked at by the federal government if the United States hopes to reduce its growing economic inequality.


Wittman, R. (n.d.). Americans and the world around them: A nationwide poll. Foreign Policy Association. Retrieved November 25, 2013, from