Rising Demands of the American Worker and the Shift Toward Offshore Solutions

The American worker needs to be paid more… more than ever. The average yearly income around the world is just $10,000 (1), yet the average yearly salary in the United States as of 2024 is over $63,000 (2). So why does the American worker cost so much more than the global average? There are many reasons, but chief among them is the cost of living.

In highly developed nations like the United States, the cost of living is significantly higher than in many other parts of the world. Housing, healthcare, transportation, and basic goods cost more – and workers demand more just to survive. Wages and hours worked in the US are inflated to reflect this reality. Simply put, American workers want more, and their reasoning is justified. The United States is the 13th most expensive country to live in (3). 

The high cost of living in the United States poses a problem for many businesses. Companies are faced with employees who need higher salaries and more benefits for the same amount of work. Businesses may pull in plenty of money, but they could easily be weighed down by the high salaries needed for their employees.

So, how do American businesses manage this problem? How do U.S. companies find workers who don’t need the same high salaries and extensive benefits that American workers may demand? The answer is offshore labor. By switching to an offshore labor force, a business can find employees who aren’t overburdened by a high cost of living and don’t demand as high a salary as their American counterparts.

The Cost of Living Gap

The monthly cost of living for a single person in the United States is $1,182.70 (4). That’s the amount of money necessary to cover food, housing, transportation, and healthcare. That might not seem like a lot of money, but when compared to other countries, the difference is stark.

So, how big is the gap in cost of living between the US and its competitors?

Pretty big…

It costs more than twice as much per month to live comfortably in the United States ($1,182.70/month) than it does in the Philippines ($566.20/month), and more than three times as much as it does to live in India ($346.60/month).

The gap gets even wider when we shift perspective and just look at the minimum number of hours of work necessary for someone to escape poverty.

With guaranteed government benefits and at minimum wage, it takes nearly twice as many hours for an American worker (80 hours/week) to escape poverty than a Canadian worker (44 hours/week), and nearly six times as many hours as a Japanese worker (14 hours/week).

The difference is massive. Even between the United States and its fellow developed nations, the difference is massive. But why?

The US has a large population that demands a lot from a limited supply. The United States’ privatized healthcare and higher education systems are inefficient and expensive. The lack of readily available public transportation and housing only adds to the expenses.

America is an expensive place to live in, and American workers need more and more just to get by. Businesses need to spend more and more money on salaries and benefits just to make sure that their workers can get what they need.

So, how do businesses get around this?

They switch to offshore labor.

The Offshore Advantage

How do American businesses build a workforce that delivers the kind of price that they need with the same quality they can find right here at home?

Offshore labor is the best solution any business can find to reduce labor costs, increase efficiency, and build a better workforce without sacrificing quality.

In a global economy where the cost of living varies drastically from one country to another, businesses can no longer afford to think locally when it comes to labor. Offshore labor offers the same dedication, skill, and reliability as their domestic counterparts – but at a fraction of the cost. 

The growth of internet-driven work and communication technologies has changed the working and hiring landscape, allowing businesses to tap into new markets and new labor forces anywhere in the world. Even small businesses are capable of spreading their entire workforce across the globe, taking advantage of lower wages and lower costs of living in different nations.

Almost any role imaginable can be filled by an offshore employee, and for less than their domestic competitors. Virtual assistants, accountants, tech support, customer support, software design and development, marketing and graphic design, and more can be found in other countries where they command a far lower salary.

There is no limit to what can be achieved if a business is willing to switch to offshore labor.

Citations:

1. https://www.zippia.com/advice/average-income-worldwide/
2. https://www.wftv.com/news/average-us-salary-by-state/T2PO6X4VIZOBFOOHXKY5L6GZVU/#:~:text=The%20average%20annual%20average%20salary,quite%20a%20bit%20by%20state.
3. https://www.numbeo.com/cost-of-living/rankings_by_country.jsp
4. https://www.numbeo.com/cost-of-living/
5. https://www.voronoiapp.com/economy/How-Many-Hours-of-Work-per-Week-Does-it-Take-to-Exit-Poverty-2159