Message received: Taking action on American job loss

Message received: Taking action on American job loss

Summary: US workers are angry about the job loss to cheap labor locations. American companies are to blame but we can take action to stop it. Caution: Long post.

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TOPICS: Outsourcing, India
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I've received dozens of personal emails from you readers since my posting of "The current state of technical certification and IT jobs in America" a few days ago. I've heard your voices and it's time to respond. The two most powerful things Americans possess are our votes and our voices. Let's use them to change what's happening. Let's be part of the fix for this problem. Unfortunately, some of our elected officials do not share our offshoring angst. Part of what we need to do is convince them to see our side of things or vote them out of office. It's time to take action against those who give away our jobs, destroy our economy, and those who enable them to do so.

To illustrate how ineffective simple letters and even simpler hope can be in trusting our politicians, there were two bills introduced in 2010 to stop offshoring our jobs, one in the Senate-S. 3816 (Creating American Jobs and Ending Offshoring Act) and one in The House-H.R. 5622 (Stop Outsourcing and Create American Jobs Act of 2010). Both failed. Oddly, the Republicans unanimously voted against the bills, while the Democrats voted for both.

It's disappointing that our own Senators and Congressmen would vote down a bill that would offer protection for US workers and remove the tax incentives that we absurdly give to American companies that layoff Americans and send jobs offshore. In my mind, it's a type of mild treason, if there is such a thing.

I'll allow you to read the Wikipedia and Merriam-Webster versions of the definitions of treason for yourselves.

Especially interesting to note is a line excerpted from the Wikipedia Treason entry: Oran's Dictionary of the Law (1983) defines treason as "...[a]...citizen's actions to help a foreign government overthrow, make war against, or seriously injure the [parent nation]."

Note the phrase, "...or seriously injure the [parent nation]."

By that definition, it is treasonous to injure your parent nation. And what, praytell, has a greater injurious effect on a nation than destroying its workforce? 

Of course, there are those who believe that offshoring is good for America. ABC's John Stossel is one of those who believes it. Admittedly there's not much that I've ever agreed with Stossel about but this really takes my imagination to its limits with him. He states in this video excerpt that America has indeed lost 361 million jobs since 1992 but has gained a whopping 380 million in that same time period.

My question is what kind of jobs have replaced the lost ones? Lower wage jobs? Yes. I challenged my former Congressman, John Sullivan, on this issue. He claimed to have created new jobs in Oklahoma but the jobs he referred to were all low wage jobs. Of course, that's what they call "political spin."

Lou Dobbs interviews Atul Vashistha, CEO of NEOIT, an offshoring company and Vashistha admits that "there's a problem" when you look at the "short term" of offshoring. Lou asks him some tough questions. The bottom line is that Mr. Vashistha is making money from doing his dirty deed and can justify it. 

Vashistha also states that software programmers and engineers need to be retrained. Laughable that. As Lou Dobbs asks him, "Retrained for what?" 

Additionally, you'll hear that the "Asian market is booming" and "The Asian market is the next big thing." But it's false. We are creating that false Asian market boom by sending middle class jobs there. It shocks me that people don't get it. You're building their middle class and destroying ours.

When it comes down to the most empirical view of offshoring, you have to realize that there's almost no job that can't be offshored. But only when it affects the "1 percent" will anyone begin to do anything about it. And then it will be too late to recover.

My view is that if you own an American company and your only bargaining chip is price, then you don't really deserve or need to be in business. Price is not a good equalizer. From the previous discussion above, Atul Vashistha says that offshoring helps companies compete. And he talks about "globalization." Globalization is a buzzterm that means Americans lose jobs to cheap labor markets. Globalization is greed-centered business. What do we get in return? We get cheap labor, right? Wrong. The labor isn't cheaper when you factor in lack of quality, time delays, poor workmanship, low-end technology, faulty infrastructure, the time zone coordination problems, worker turnover rates, and I could go on and on.

The funny thing is that offshoring has pretty much the same effect as destroying rain forest. The slash and burn deforestation in South America to create new farmland doesn't really work. The land doesn't produce well, which leads to more slash and burn destruction and so on. Offshoring doesn't produce the desired results that CXOS think it will of rebounding a company or raising stock prices. It doesn't have that effect. In effect, it drives down the prices that these companies charge their customers, decreasing profits, lowering stock prices, which leads to more offshoring that doesn't produce the desired effect. It's sad. Very sad. And the big losers are the American workers.

The other issue is that many proponents say that the US wants cheap goods but the goods aren't any cheaper. Even low-end designer clothes are still very high priced and they don't last like they should. What we (The US) has done is commoditize our economy. We've commoditized workers. We've commoditized goods.  We've created a disposable society that's based on greed. We've falsely propped up the Asian economy and workers. Right now, Mexico's labor is cheaper than China's. So guess where American businesses are going to move their manufacturing and assembly? If you guessed Mexico, you're a genius. My prediction is that the next buzz you hear will be the sound of the Mexican market explosion. And it will be a surprise to everyone. Except for me, that is.

So, what can we do to stop offshoring if our politicians can't do it and our American companies don't want to do it? There are some things that you can do to show that you feel that destroying our economy is a heinous and treasonous act.

  • Write letters to corporate officials and voice your concerns about offshoring.
  • Write letters to your Congressmen and Senators. Let them know that you want your voice heard on this issue.
  • Bring it local by discussing this issue with your city's politicians and influencers.
  • Spread the word to others in your circle of friends.
  • Consider purchases and note where your products are produced. Write those companies and voice your issues to them.
  • Visit TechsUnite.org. Learn and connect.
  • Buy American and local whenever possible, even if the price is a little higher. You'll appreciate better quality, better customer service, and you'll support working Americans.
  • Support Ruralsourcing and repatriation of jobs.

In essence, I'm asking you to become an activist. You don't have to wear a Guy Fawkes mask, wave a banner, or march in a demonstration parade but you can make a difference. 

I'm asking for you to approach offshore outsourcing with a rebellious spirit. We have to send a message that our tax money needs to benefit those of us who pay it. American companies need to employ Americans. We need legislation to protect American workers, remove the incentives to offshore our jobs, and prevent the destruction of the middle class. If we allow our middle class to be destroyed, we will be like many other countries who have rich and poor. 95 percent of the wealth will be in the hands of five percent of the population and the other 95 percent of the population will live in poverty.

For your enlightenment on this topic, I'm providing the following reference material. To be fair and balanced, I'm giving you links to information on both sides of the equation. All I ask is, if you're convinced that offshore outsourcing is bad, that you take action.

Additional Material:

Anonymous Message to the Unemployed Americans - A video from hacker group Anonymous.

The Challenges to Offshore Outsourcing - A video that looks like a university lecture on offshoring and its challenges. Informative.

Offshore Outsourcing Mindmap (Video only) - A silent video describing often cited reasons for offshore outsourcing.

America Inc. Outsourced to India - A news broadcast covering the economic shift described in my post.

Myth: Outsourcing is Bad for America - The ABC John Stossel report on offshore outsourcing mentioned in the post.

USA Outsourcing Green Jobs to China - News report exposing job creation stimulus corruption.

Outsourcing: The Bad and the Ugly - Indie video (student project?) that exposes some interesting data and visuals.

Offshoring of US Jobs - The Hidden Truth - An indie video that gives you a good overview of the trend, defininitions, and a very practical look at the practice and its pitfalls.

Offshoring Creates More Jobs Interview - Fox News interview with John Stossel.

Business of offshoring and outsourcing - Ohio State University professor interview discusses the current state of the practice.

Offshore Outsourcing: An Endangered Species - An article by yours truly on NearshoreAmericas.com.

Keep America at Work - An activist site. Very informative. Be sure to watch the third video where a recent college graduate speaks out.

Topics: Outsourcing, India

About

Kenneth 'Ken' Hess is a full-time Windows and Linux system administrator with 20 years of experience with Mac, Linux, UNIX, and Windows systems in large multi-data center environments.

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  • The other thing you have to do...

    ...is to campaign and vote against office holders whom you believe to be acting contrary to the public interest; even if they represent your preferred political party and even if you think they're guaranteed to win.

    The reason why money politics works is that politicians get more benefit from increased campaign contributions than they lose from bad public relations. It's up to voters to change that cost-benefit ratio.
    John L. Ries
    • In a contest between a crook and an honest fool...

      ...always vote for the fool.
      John L. Ries
  • Very ticky situation

    It's a very tricky, very hairy situation. I'm generally a Democrat supporter (registered Green, actually) but I'm also leery of nations enacting trade barriers, or anything that restricts the free international flow of capital and goods.

    One of the guiding principles of capitalist economics is that barriers to trade hurt the nation enacting the barriers more than they do the target of such barriers. That is largely because Ricardo's principle of comparative advantage holds that over-all utility is maximized when individual nation states are allowed to develop and exploit their native economic efficiencies freely. The principle also holds that, even if one nation is more efficient across the board, it will nonetheless focus its economy only on those sectors in which it's comparative advantage is greatest, leaving other countries to develop in other sectors.

    Additionally, one would expect that as under-developed nations develop and grow their economies, they will produce larger and more prosperous middle-classes that will become markets for other nations' goods. In the long run all will equal out and everyone will wind up better off.

    But as John Maynard Keynes notes, in the long run, we're all dead. And what we have now is a situation in which high paying jobs leave prosperous, developed, democratic nations with modern regulatory, safety and environmental regimes and migrate to poor, under-developed, low wage states whose laws show little regard for worker, consumer and environmental protections. Nations are, in many cases, more than happy to poison their citizens, waterways and air and work their laborers to death in subhuman conditions in order to secure jobs and investment from more developed countries. And the situation is exacerbated when, as in the case of China, these are non-democratic autocracies in which ordinary citizens and workers have little say or control over their fates. In China, for instance, there are no legal labor unions that are not controlled by the Communist party. So workers have very little leverage to demand higher wages with which to potentially purchase American made goods and services.

    So what we don't want is a free for all system in which jobs flow from developed nations to the most un-democratic, exploitative, dirty regimes. But at the same time we don't want a system in which rigid trade barriers (including labor market barriers) stifle economic growth, prevent third world nations from developing health middle classes and drag everyone down. Want we want, ideally, is a trade regime that recognizes these issues and facilitates global development in ways that don't reward despots and polluters, but that at the same time, don't make it impossible for lower wage nations to exploit their own competitive advantages to grow their own economies.
    dsf3g
    • "Free Trade"

      "Free Trade" is only "free" if people as well as goods can cross borders. As long as there are selectively porous borders, then companies that make goods using labor will tend to manufacture where costs are lowest, mainly labor and ecological costs, and sell where the price is highest. This, however, is not "free trade" when people cannot cross borders freely. It becomes a system of pens containing low-cost workers in some corrals and consumers in other places.

      There emerges a "race to the bottom" and companies will not blink an eye before relocating when costs become lower somewhere else. The migration cost is very low compared to the ongoing cost savings, in most industries.

      I've been campaigning against corporate globalization for 15 years, since i began to understand it. I lobbied very, very hard upon one single representative from Connecticut, for one single vote, and i did succeed in pushing him to vote against this agenda, once. I spent $1,000 and 6 months of my spare time to do that. And then he turned around and voted for corporate globalization a month later, when i took my eye off the ball for a second.

      He was a Republican, by the way. Not that it matters. The majority of elected officials in high offices support the corporate agenda, not that of the common person or the common worker.

      Yes, they are treasonous, traitors in our midst. Yet it's been that way for a long time and we let them get away with it.

      By the way, Ricardo's comparative advantage is not the issue here. Sure, bananas grow better in Guatemala than Idaho, but clothing can be made in any location, and yet far too many T Shirts sold in the US are made in banana republics. That is not Ricardo's rule. It's the rule of greedy bastards writing the rules of world trade.
      Sage Rad
      • Well said

        "Free Trade" is only "free" if people as well as goods can cross borders. As long as there are selectively porous borders, then companies that make goods using labor will tend to manufacture where costs are lowest, mainly labor and ecological costs, and sell where the price is highest. This, however, is not "free trade" when people cannot cross borders freely."
        bmonsterman
  • Job loss

    Regulation and high taxes are the main causes behind manufacturing job loss in this country. Low wages are also involved, but are less important. GE is building a turbine plant in China. The reason is not cost. They could get approvals in two years in China and were looking at a minimum of five in the US. Bill Gates tried for two years to get licenses for his experimental nuclear power plants, gave up, and now the work is being done in China. It was not about wages in either case. There are a huge number of cases like this. If your competitor can open a plant in two years and it takes five for you, your competitor has capture the market before you open the plant. The US also has the highest corporate taxes in the world. This does not make it a good place for international companies to headquarter.
    hayneiii@...
    • Taxes?

      In 2010 G.E. made $14 billion in profits and paid $0.00 dollars in Federal taxes. The idea that U.S. corporations are over-taxed is a myth made possible by relying on only the most superficial reading of the U.S. tax code:

      http://www.nytimes.com/2011/03/25/business/economy/25tax.html?ref=butnobodypaysthat&_r=0
      dsf3g
      • Re: Taxes?

        dsf3g - I read that article you linked to at the nytimes - a perfect example of the level of greed (& lack of loyalty) demonstrated by American companies. Disgusting to think they pay no taxes while I pay 20% tax rate year in & year out. I hate politicians.
        bump911
      • Oh give it a rest already.

        Is 2010 the only year GE operated?
        ye
        • 2010

          2010 was hardly the only year they used accounting tricks to avoid taxes. The problem is, it's very difficult to determine how much they do pay. That's because, while they hire lobbyists and right wing shills to decry the supposed 35% corporate tax rate, they guard the actual amount they pay as a closely guarded secret:

          http://finance.fortune.cnn.com/2012/02/29/ge-taxes-2011/

          And if you think it's because they pay a great deal then I've got a bridge to sell you.
          dsf3g
          • As long as they're complying with the tax law I see nothing wrong with it.

            In fact roughly 47% of tax filers use "tricks" to avoid paying any federal income tax. How is GE any different?

            If you disagree with their use of tax reducing tactics then perhaps you should look for a reason why. I'll give you a hint:

            "Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world..."

            Hmmm...maybe there's a connection there?
            ye
          • Ridiculous

            47% of Americans are too poor to owe Federal income tax. Many of our most prosperous corporations are, apparently, too rich to pay taxes. You seem to think that the real injustice is that we haven't found a way to squeeze more tax dollars out of the single mom working two waitressing jobs to put her daughter through college, or the auto mechanic with disabled child. I'm far more concerned about the billionaire sheltering hundreds of millions in offshore accounts while spending millions more promoting bogus think tanks that produce studies arguing that the rich are over taxed.
            dsf3g
      • You seem like a reasonable person, so think about this...

        Who the heck do you think pays corporate taxes?

        Think the matter through and come up with a good answer.

        Hint: corporations don't pay THEIR taxes. So, who pays the taxes?
        adornoe
    • Regulations...

      take a look at the air in China.

      Personally, I like my lungs.
      msalzberg
    • Labor costs

      It's about labor cost. Why are iPhones made in China? Mainly the low labor costs. Sure, lower environmental standards are a small part, too. But mainly it's that FoxConn can get low-paid workers to make the devices for less than Apple can do it elsewhere. Simple as that. Why turn this into an ideological smokescreen?
      Sage Rad
  • How about

    that 35% tax rate. That might have something to do with it too.
    timspublic1@...
    • nope

      Very few corporations pay anything close to that rate.
      dsf3g
      • No matter what the rate, or the amount, corporations shouldn't have to pay

        any taxes. Period!!!

        Taxes are a huge burden on corporations, even if they end up paying 1% or 5% or even 35%. When there are other countries without corporate taxes, or corporate taxes that are way below what U.S. corporations have to pay, then it's a no-brainer that, paying nothing or less wins every time.

        Think about it: 1% of $1 billion in gross earnings is still a lot of money, and the big corporate guys aren't going to pay even $10 if they can help it.

        But, try to answer the question I posed to you earlier in a post before this. Who pays the corporate taxes?

        Also, there is another form of "taxation" in the country which sends a lot of countries running to other countries for their production and for the cheaper labor. It's called "regulations", and it oftentimes ends up costing more than the corporate taxes. But, regulations don't just cost more; they also create a lot of hurdles and burdens which hamper production and increases labor costs.

        Also, it's undeniable that, labor costs in the U.S. are higher than in most other countries where our businesses have decided to ship production to. If an item can be produced at a fraction of the cost in the U.S., then, it would be idiotic to not get it done in that other country.
        adornoe
  • If only this could work.

    Unfortunatley all this political action plan is mostly wishfull thinking. Few years ago CNN had a piece about small town in the MidWest where most of the people lost their jobs because Briggs and Straton engine manufacturer shut down a plant and moved production to China. With the plan shutdown manu local businesses also went bankrupt. Despie this people in the town were still buying in WallMart products that were mostly made in China. In fact WallMart was doing fine in the town
    marchel@...
    • Vote with your dollars

      And make sure that what you produce is worth at least what your boss is paying.
      John L. Ries