OFFSHORING JOBS HURTS U.S. ECONOMY
Anyone looking for the nation's unemployment picture to improve substantially in the near future had better not count on some of the nation's largest companies helping out. More and more companies are offshoring jobs to other countries where wages and benefits are substantially lower.
THE FACE of unemployment in the United States is changing dramatically, due largely to sending jobs overseas. Jobs in manufacturing aren't the only ones being lost in today's economy. Considering the fact that since the recession began in 2001, America's private sector has lost 3.2 million jobs, the prospect for losing more doesn't bode well for a recovery any time soon.
Over the course of the next 12 years, an estimated 3.3 million jobs will be moved overseas, according to Forrester Research. For those white collar workers who are under the impression that the move offshore involves primarily manufacturing workers, think again. Software and product development, customer service, accounting and other white- collar jobs are part of the exodus, too. Oracle, Microsoft, American Express, J.P. Morgan Chase and Charles Schwab are among the companies looking to boost their bottom lines by taking jobs to where labor costs are lower.
Are we to fault our standard of living? In the United States, a software programmer earns an average of $66,000 a year. In India, $10,000 provides an above-average income. Someone involved in financial services in the U.S. earns an average of $37,600. In India, the going rate is $5,500. The companies' logic is understandable, but the trend is undermining America's economy and its hopes for recovery.
MOVING JOBS OVERSEAS coincides with another recent but equally despicable trend companies incorporating in low-tax havens such as Bermuda or the Cayman Islands to save on taxes but who still seek and receive federal contracts.
An Associated Press analysis of federal contracts shows that companies incorporated in tax havens received about $1 billion in federal contracts during each of the past two years. The companies include Accenture, an Arthur Andersen spinoff, which received $662 million in consulting contracts in fiscal year 2002, including $515 million from the Homeland Security Department for handling that agency's human resources programs; Foster Wheeler, an engineering company that received $293 million in federal contracts last year; and Ingersoll-Rand, an equipment company that received $7.6 million in 2002 and $40.3 million in 2001.
LEGISLATION THAT WOULD prohibit Homeland Security from doing business with companies that relocate to tax havens but still have their operations and employees in the U.S. has twice been derailed by the House. Opponents of the legislation claim that reincorporating in other countries points to the need for tax reform because the tax structure puts American companies are a disadvantage.
Something's amiss when companies want handouts in the form of government contracts but don't want to pay the costs associated with being based in the United States. Congress needs to act.