Offshoring American Jobs: Good for corporations, bad for everyone else


WASHINGTON, September 20, 2014 — An interesting meme of the faux-conservative cheerleaders of corporatism is the notion that exporting jobs is good for American workers and creates more jobs than it destroys. If this seems nonsensical at first blush, it is. The so-called conservative media landscape is awash in fictional narratives that better suit the interests of Wall Street and the United States Chamber of Commerce, than they do the middle and working class on Main Street. This is one of them.

A study conducted by the University of California system determined that 14 million white-collar jobs are threatened by the off-shoring trend, including office personnel, information technology, accounting, architects, engineering and design, data analysis, customer service and even legal services. You might even be working at one of these offshore companies or others like them.

For those already displaced in our economy, the picture is not the rosy one the propagandists of off-shoring would have you believe. The U.S. Department of Labor reports

“that more than one in three workers who are displaced remains unemployed, and many of those who are lucky enough to find jobs take major pay cuts. Many former manufacturing workers who were displaced a decade ago because of manufacturing that went offshore took training courses and found jobs in the information technology sector. They are now facing the unenviable situation of having their second career disappear overseas.”

What accounts for this impulse to throw American workers overboard? Short term profit driven decision making and the drive to create an ever more favorable imbalance in the supply of workers to available jobs ratio thus cratering wages and income while improving the corporate bottom line.

Construction work, retail jobs, hotel room cleaning, lawn maintenance, hamburger flipping and lettuce picking jobs cannot be exported, but there’s an app for that too. Enter in-sourcing, i.e., creating a powerful magnet for endless streams of illegal migrants. Their lifestyles and habits built around extreme poverty acquired in their native countries condition them to live on meager pay, yet still transfer off-payroll earnings back to Mexico, Central America or China.

The skilled labor counterpart to employing illegal workers is the pernicious scheme of H1B Visas. These Visas are effectively displacing thousands of existing American tech workers with green card migrants whose significantly lower compensation packages enhance the bottom lines of Facebook, Hewlitt-Packard, Google, Apple, eBay and just about any other large tech employers that come to mind.

To add insult to injury, these firms often insist their American employees provide job training to their foreign replacements.

The United States currently maintains a $41 Billion dollar net trade deficit due to cheap imported goods manufactured in overseas factories, often under conditions that could charitably be described as indentured servitude at best and predatory and abusive sweatshops at worst (hourly wages – $1 / hr in China and $2.30 in Mexico, for example).

But it’s allegedly a great for consumers because they can now buy products from companies that have closed American factories for a few cents less at Walmart.

Walmart, by the way, which uses the American taxpayer to subsidize its workforce, considers a metric of only 70% of imported goods, a bit of a failure. There are so many more opportunities out there, especially when there still is a services surplus of $19 billion that is ripe for exploitation.

Leading the crusade in this endeavor is Accenture – that’s right, the sponsor of the Accenture Match Play Golf tournament. Accenture, a spin off of the former Arthur Andersen accounting empire according to the Philadelphia Inquirer, has reaped untold riches (actually $25 billion annually), helping U.S. companies send work out of the country. Far and away the most successful outsourcer, the company is referred to on Wall Street as the “outsourcing giant.”

Accenture doesn’t dispute the claim. The company says its “outsourcing services touch every industry and business process.”

Every year Accenture is voted the “top outsourcing service provider globally” by professionals in the industry, a distinction that a spokesman says the company earns by taking “outsourcing deeper” than others. Probably can’t off-shore professional golfers, but who knows.

One common talking point in the pitch for the righteousness of job exporting is the canard of “free trade.” Curiously absent is any explanation of for whom this trade is free. It certainly comes with a price tag for the unemployed, under-employed and those in the working classes here whose wages have stagnated or dropped dramatically over the past decade or two.

The term “free trade” is actually quite cynical. It is often conflated with “fair trade,” the principals of which are virtually absent from our international trade agreements with regard to fair labor standards, workplace safety rules, environmental standards, and similar concerns.

Our so-called trading partners in the free trade scheme subsidize labor and products to gain leverage against their trading partners (usually the good old U.S.of A.). In the case of India, the subsidized software sector has grown from $10 million in 1985 to upwards of $65 billion last year.

For the icing on the cake, India’s exported tech workers repatriated $70 billion in remittances back to their home country.

The playing field is clearly slanted against the American worker, so much so that when even a whisper is mentioned with regard to establishing a minimum wage or living wage, major corporations rely on their media sycophants to send up the standard hue and cry, warning that “jobs will be lost” or “your Big Mac will cost you $8.”

While minimum wage is a topic best discussed separately, recent experience in cities like Seattle has demonstrated that the sky hasn’t fallen and isn’t falling for businesses or workers.

Is there in fact, an argument to be made that a direct equation exists between exporting American jobs and in-kind job creation in America? Evidently not, because even the ardent champions of this hoax cannot come up with data and evidence to support it other than artifice in the form of anecdotes.

Authors Ron and Anil Hira provide a full debunking of this notion in their book “Outsourcing America”. An example: the cheerleaders of off-shoring like to cite Delta Airlines’ 2003 dismissal of 1,000 American employees in favor of relocation to India, a move that resulted in a savings of $25 million dollars. Because they were able to save $25 million, so the story goes, they in turn, we’re told, hired 1,100 reservation and sales agents in the U.S.

This story is riddled with logical fallacies, the first being that there is any direct connection between the shedding of 1,000 jobs and the creation of 1,100 new jobs. This is not how corporations operate. Try as you might, you will never sit in on an executive level strategy session and hear a CEO or Chairman outlining how cutting their domestic labor force will lead to the benefit of being able to gift to the U.S. economy a 10% increase in new jobs.

The charter of all businesses large or small is to make a profit. They don’t create jobs for benevolent purposes and Delta did not hire 1,100 service jobs out of altruism. They hired them only because they needed them and because the customer service surveys they had been receiving from previous such efforts were so dismal that they knew they couldn’t push them over to Southern Asia. Plain and simple.

Apologists for corporate off-shoring of jobs will point out that it’s perfectly legal. It is legal, but far from perfect.

The ethics of allowing corporations the unfettered benefit of exporting jobs, while we subsidize them with carve-outs in the tax code that exempt them from paying in some cases even one penny in taxes, is a mockery of American exceptionalism.

If you travel for business or pleasure, consider the additional hidden risks of outsourcing highlighted by the air travel industry. Those jets you are flying on are not being overhauled by domestic workers subject to the oversight of the Department of Transportation or the FAA. They are instead, being MRO’ed (Maintenance, Repair and Overhaul) in such places as El Salvador, Singapore, Turkey and China.

Of course, push this out of your mind when your flight hits a nasty patch of turbulence or the flight attendant reviews the safety features of your 737-500. What could possibly go wrong?

Off-shoring? Maybe it’s good for multi-national corporations based in America. But for you, the worker, consumer and taxpayer? Not so much.

One other thing you will never hear discussed in an executive boardroom? That’s right: company officials conferring on the advantages of off-shoring the CEO’s job. Impossible.

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  • JoeThePimpernel

    Get rid of a few federal agencies (EPA, FDA, Departments of Education and Energy, etc.), corporate taxes and labor unions and this country would explode with opportunity and growth.