Has Outsourcing Hampered America´s Economy and Contributed to our Recession/Depression?

[OhioChick]

February 21, 2009

Statistics on outsourcing vary considerably because corporations that outsource are not required to keep statistics on the number of jobs they actually outsource. In March of 2004 congress commissioned a bi-partisan report to try to ascertain how many jobs America had lost since 2000. (Myers, L., 2004) The Bureau of Labor Statistics had accounted for only 4,633 jobs lost in the private sector. The private sector was defined as being companies that employ more than 50 employees. Cornell University and the University of Massachusetts were hired by the U.S.-China Economic and Security Review Commission to track, as best they could, the number of jobs lost to outsourcing across America. The number of jobs lost according to their tallies was far greater than those outlined by the bureau of Labor Statistics. Based on these starkly differing statistics can outsourcing be considered a contributing factor in our market´s decline?

Cornell and U Mass found that in 2001 there were over 201,000 jobs outsourced from America. (Myers, L., 2004) During that same time frame unionized jobs fell by 39% and other production type jobs fell 29%. Many of those were white collar service jobs or IT type jobs. The vast majority of those lost could be captured in India as their employment rate grew by nearly the same number as those lost in the USA. By 2004 the number of jobs outsourced was more than 406,000 and rising. Unionized jobs lost due to outsourcing at that time were over 69% with no abatement in sight. Do you see a disturbing trend here?

Forrester, an independent Boston firm, estimates that we are losing 12-15,000 jobs monthly to outsourcing. (Otterman, S., 2004) Furthermore, they conclude that there will be more than 3.3 million jobs lost in America by 2015 unless we do something to curtail this progression. Can America afford to continue this practice without becoming a third world country ourselves?

President Bush and Alan Greenspan lavished praise on this practice of outsourcing jobs saying it was good for trade. (Otterman, S., 2004) Reasoning behind this came from the belief that if companies could effectively and efficiently cut costs and maintain production it was a win-win situation and would ultimately help our economy here at home. Bush economists said that the jobs lost in America would be regained in other sectors, but that was a one sided argument. Shifting jobs to lower wage countries led to layoffs, greater numbers of persons on unemployment, and a dislocated workforce in America. America and Americans may be paying for those outsourcing mistakes made in the early Bush years in our current economic mudslide as more jobs are shed and more people join the ranks of the unemployed.

The U.S. Department of Labor Trade Adjustment Assistance (TAA) offers some relief for workers who have lost jobs that produce "a product". (Myers, L., 2004) Relief is supposed to come in the form of income support, relocation expenses, job school allowances, and healthcare tax credits. "Product" is expressly defined in their document and may not be as helpful to workers who have lost jobs as anticipated. What can be done now?


Senator Kerry (D-MA) along with Senators Thomas (R-WY), and Voinovich (R-OH) championed legislation targeted at creating incentives for American corporations to keep their business operations within our borders and not to outsource. (Otterman, S., 2004) They also pushed to close the gaps or loopholes that make outsourcing so attractive to businesses, as well as, limiting government outsourcing. Alan Greenspan put the skids to that legislation stating that increasing barriers to trade was not a good thing for America and that the jobs being lost to outsourcing would be replaced. That legislation apparently never made it off the table. Ok, Alan where are those jobs now?

It seems rather apparent to me, that in retrospect, if we had kept close tabulation on the number of jobs being outsourced and the number of persons becoming unemployed across America we may have been able to act sooner in this economic meltdown than we did. Statistically speaking, if we had a handle on those numbers we would not have been blindsided by the economic crisis last fall. Was this an oversight or rampant negligence on behalf of our leaders? Where were the analysts during this time period, asleep or apathetic? Would not a bit of thoughtful analysis have gone a long way toward curtailing this recession by precipitating more rapid action at an earlier time?

Trade is a good thing if it is balanced and not swayed toward those countries considered less developed than we, in America, are. Outsourcing, in and of itself, should not be stopped altogether, but instead limited and balanced with job creation in America. Tabulation of jobless and other employment statistics need be handled my competent organizations with no political stake in their outcome.

Just this week it was announced that Hershey, the largest U.S. candy maker, is closing their Peppermint Patty plant in Reading, P.A.. (www.lansingstatejournal.com) Two years ago Hershey cut 1,500 jobs and more than 1/3 of their production. This most recent plant closing impacts another 300 jobs and households. Those jobs will become a net gain to Monterey, Mexico where Hershey plans to open their new plant. Can leadership in America afford to not act?

Bring back the comprehensive legislation proposed by Kerry-Thomas-Voinovich. Call or write your congressional representatives telling them that America can ill-afford to lose more jobs to outsourcing. The time to act is NOW!

References;

www.lansingstatejournal.com

Myers, Linda. 10/15/04. Bureau of Labor Statistics Grossly Underestimates US Jobs Lost to Outsourcing. Ithaca, N.Y., posted on www.news.cornell.edu

Otterman, Sharon. 2/20/04. Trade Outsourcing Jobs. posted on www.cfr.org

http://www.americanchronicle.com/articles/view/91921

[ixion]

1. Outsourcing and Offshoring have destroyed our economy

by stagnating wages and eliminating good-paying jobs in a variety of sectors: manufacturing and IT among many others.

A good way to start rebuilding our economy would be to bring those jobs back home.

[salguine]

2. Asking "Has Outsourcing Hampered America´s Economy and Contributed to our Recession/Depression?" is

like asking "Has the loss of both of your hands in an industrial accident hampered your ability to play stringed instruments?"

[ayeshahaqqiqa]

3. Does the sun rise in the east

and set in the west?

[izquierdista]

4. Is the Pope a Nazi?

:shrug:

[YOY]

5. Does the pope shit in the woods?

It's pretty much 2 + 2 = 4.

[ananda]

6. There is NO question that outsourcing..

.. of businesses, jobs, and massive amounts
of money have contributed greatly to the
demise of our economy and to global instability.

That along with the insanity of selfish greed
and paranoia that have driven much of these
counterproductive actions.

[ihavenobias]

7. It really is a race to the bottom. n/t

[Joanne98]

8. YES!

[Number9Dream]

9. Hershey moving peppermint pattie to Mexico (2/20/09)

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=175&topic_id=15026&mesg_id=15026