Barking up toy business tree

Michael and Theresa Frasier started a business about a year ago selling dog toys. They stumbled on the idea after their dog, Chloe, choked on the stuffing found inside of a purchased dog toy. Theresa decided that it was time for her to start making her own, safer, toys for Chloe. She decided to make a toy that had no internal stuffing, instead opting for an all cloth toy. After realizing how much her dog enjoyed the toy, she decided that she had stumbled on a great idea. She and Michael decided to sell the toys over the internet, and their business was born. Theresa realized that by subcontracting the toys to a China based manufacturer, she could make a greater profit. The toys sell for $12 plus shipping and handling.

This small business example illustrates the growing burden that companies face when faced with the decision to make their product within the United States or outsource manufacturing to other countries where labor is cheaper. If small businesses are forced to outsource, then what implication does this have for the rest of companies within the United States? Furthermore, What implications does this example have on the unskilled labor force? Does the idea of social cost and benefit limit itself to one nation or on global terms?