Outsourcing has become the focus of increasingly intense debates over the US economy and was a divisive issue during the 2004 Presidential campaign. The downside to outsourcing includes the perceived loss of American jobs while firms and stockholders profit. While outsourcing of white-collar jobs continues to be the focus of media attention, global production shifts have impacted workers in manufacturing more than any other sector. In agricultural manufacturing, which includes textiles and apparel, firms have shut down operations in the US over the past thirty years, displacing workers. The objective of this research is to provide an overview of outsourcing and to examine the role of foreign direct investment (FDI) as an instrument for outsourcing. Additionally, this research seeks to assess the impact of vertical FDI on the US manufacturing sector, including agricultural manufacturing, and on US employment. Four issues are considered while evaluating the impact of outsourcing on the US: 1. overall economic welfare, 2. level of employment, 3. quality of jobs, and 4. job dislocation.