Skip to comments.Outsourcing toll mounts
Posted on 03/20/2004 3:43:17 AM PST by MikeJ75
WASHINGTON -- With voters worried about having their jobs shipped overseas, lawmakers are charging into a simmering debate over the loss of manufacturing and technology jobs to cheaper workers in India, China and other foreign lands through corporate practices known as offshoring and outsourcing.
Members of Vermont's Congressional delegation are not immune to those concerns, and have joined the numerous representatives authoring bills addressing the hot-button topic.
There is the Defending American Jobs Act, authored by Rep. Bernard Sanders, a Burlington independent. Another is the Jobs for America Act, backed by Vermont Sen. Patrick Leahy.
They are joined by Rep. Marty Meehan, a Massachusetts Democrat pushing the USA Jobs Protection Act.
Then there are the MORE Jobs Act, the U.S. Workers Protection Act and the Commission of American Jobs Act, a bill instructing the Commerce Department to create a panel tasked with tracking how many U.S. jobs have transferred to foreign workers.
Massachusetts Sen. John Kerry, the presumptive Democratic presidential nominee, is leveraging the proliferation of outsourcing in his marathon campaign to unseat President Bush. The hot-button political issue has prompted a recent flurry of congressional activity.
Political optimism for the once-heralded prospect of lower-priced goods produced abroad by American-based companies and consumed here at home has eroded in the past few years as U.S. unemployment lines have grown.
Since January 2001, Vermont has lost 10,500 jobs - 22 percent of its 2000 manufacturing workforce. Other New England states have lost their share as well. Massachusetts has lost 21 percent of its manufacturing workforce - 87,600 jobs - while New Hampshire has seen its manufacturing dip by one quarter, down 26,000 jobs. Rhode Island has lost 13,500 jobs, 19 percent, Connecticut dipped 17 percent, shedding 39,500 jobs, and Maine lost 16,400, 21 percent of its workforce.
"Are all of those jobs a result of companies shutting down in America and moving abroad? No, it's not," says Sanders. "How much, how many? That's where the gray area is. We don't know that exactly."
The number of outsourced jobs are difficult to quantify. There are no hard statistics on companies that shipped jobs overseas, just estimates and anecdotes.
"It's not as if the companies' tell us," Meehan says.
Sanders says lawmakers rely on common sense: They can see major companies scaling back operations in the U.S., while noticing significant investments by the companies in overseas facilities.
Workers and lawmakers learn the hard numbers only when there is a public flap, such as at the Vermont insurance company, National Life. The company is outsourcing more than 150 information technology jobs, with more than one-third headed to India. Workers there confronted management at a company meeting and drew local media attention.
Sanders says it's those types of white-collar job losses that has recently drawn the media attention and the flurry of congressional action.
"The fear now is that we're just at the cusp of an explosion in information technology outsourcing," Sanders says.
But lawmakers are split, largely along party lines, over outsourcing's detriment to the American economy, drawing into question whether any of the congressional proposals will become law.
While Democrats are eager to blame President Bush and the GOP-controlled Congress for the proliferation of outsourcing, many Republicans criticize the recent proposals as protectionist. They also say the price of goods will skyrocket and warn of a punitive backlash from foreign countries, which could devastate the U.S. economy since the country exports more than it imports.
New Hampshire Republican Sen. Judd Gregg said efforts to hinder offshoring could lead to massive layoffs if foreign corporations employing Americans here suddenly pulled out.
"Forty-five thousand jobs in New Hampshire are tied to businesses which are non-American owned," Gregg said. "One in three workers in the state of New Hampshire, their job is directly related to fact that the product they make is sold overseas. Is it not logical that if we begin to close down our borders that we are basically opening a trade war and we could be potentially closing those jobs too because some nation might retaliate by not allowing outsourcing?"
Foreign-based companies employ more than 223,000 people in Massachusetts and 11,600 in Vermont.
But proponents of clamping down on outsourcing say the rebound from the 2001 recession, unprecedented for its inability to generate new U.S. jobs, is cause for immediate congressional action.
Gregg says it's akin to throwing in the towel.
"Are we a nation that believes that we can compete in the world, or aren't we?" Gregg asks.
And as the congressional plans move forward, business advocates are stepping up their lobbying effort to prevent anti-outsourcing legislation from making its way to the president's desk. They say outsourcing is a form of capitalist competition being mischaracterized by its political opponents.
"People should be concerned, but at the end of the day, it's been over-hyped and overblown," said Harris Miller, president of Information Technology Association of America, which represents 400 computer-software companies.
Miller said his industry's "very, very rough estimate" is that just 2 percent of the technology jobs have gone overseas in recent years.
But congressional Democrats, weary of business's perceived influence over Congress and the White House, are pushing ahead with a multipronged approach to slow the jobs flowing overseas to a trickle.
They're proposing several solutions:
CUT BUSINESS SUBSIDIES
Sanders, the Vermont representative, has authored a bill to end so-called corporate welfare. His plans calls for ending federal grants, loans and guarantees for companies that lay off more workers in the U.S. than they do at plants abroad.
TAX CODE TINKERING
"We need to reward companies that create jobs in America and penalize those who take jobs overseas," says Meehan, who plans to propose several of his own outsourcing remedies in the coming weeks. "To the extent we can find an answer to this, it's in the tax code."
One such plan, backed by Leahy, provides companies with a tax credit for 100 percent of the payroll taxes they pay on new manufacturing jobs they create during the next three years. Under another bill, all domestic manufacturers would be eligible for up to a 10 percent tax break on profits from domestic production depending what proportion of their workforce is based in the U.S.
Senate Democrats, including Kerry, are pushing a plan that would require corporations provide at three-month notice before laying off more than 14 workers and shipping their jobs overseas.
Another proposal would require workers in far-flung call centers to identify where they are located at the start of a telephone conversation.
TIGHTEN U.S. CONTRACTS
The Senate approved an amendment last week that bars the federal government from awarding contracts to companies that would outsource the work to employees overseas. The amendment is tied to a lager bill on European tariffs and is expected to continue until the end of the month.
"Taxpayers' hard-earned money shouldn't be used to bankroll the loss of taxpayers' jobs to overseas workers," says Sen. Christopher Dodd, a Connecticut Democrat, and the author of the amendment.
Sanders, who utters outsourcing as if it were a slur, said the current direction of U.S. commerce is killing the American dream.
"At the end of the rainbow, that pot of gold is being snatched away," Sanders says.
No problem. Let's just pass a law that says if you hire someone you can't fire him. This is not sarcasm. This has been tried and is being tried in many times around the world. When it happens in market economies nobody hires. When it happens with state economies, the state pretends to pay and the employees pretend to work.
We could do it with consumers too, make a law that forbids you to take your business elsewhere once you've bought something at a particular store. But that would limit our freedom, and we only want to limit other people's freedom.
The thing which REALLY has to drop to match those wages is American housing values.
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