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The Great American Job Sell Out
By Paul Craig Roberts
Americans are being sold out on the jobs front. Americans' employment
opportunities are declining as a result of corporate outsourcing of US jobs,
H-1B visas that import foreigners to displace Americans in their own country,
and federal guest worker programs
President Bush and his Republican majority intend to legalize the aliens who
hold down wages for construction companies and cleaning services. In order to stretch
budgets, state and local governments bring in lower paid foreign nurses and
school teachers. To reduce costs, US corporations outsource jobs abroad and
use work visa programs to import foreign engineers and programmers. The
American job give away is explained by a "shortage" of Americans to
take the jobs.
There are not too many Americans willing to accept the pay and working
conditions of migrant farm workers. However, the US is bursting at the seams with unemployed computer
engineers and well-educated professionals who are displaced by outsourcing and
H-1B visas. During Bush's entire first term, there was a net loss of American
private sector jobs. Today there are 760,000 fewer private sector jobs in the US economy than when Bush was first inaugurated in
January 2001.
For years the hallmark of the European economy was its inability to create
any jobs other than government jobs. America has caught up with Europe. During
Bush's first term, state and local government created 879,000 new government
jobs. Offsetting these government jobs against the net loss in private sector
jobs gives Bush a four-year jobs growth of 119,000 government jobs. Comparing
this pathetic result to normal performance produces a shortage of 8 million US jobs. What happened to these jobs?
Over these same four years the composition of US jobs has changed from
higher-paid manufacturing and information technology jobs to lower-paid
domestic services. Why?
During this extraordinary breakdown in the American employment machine,
politicians, government officials, corporate spokespersons, and "free
trade" economists gave assurances that America was benefitting greatly from the work visa programs and outsourcing.
The mindless chatter continues. Just the other day Ambassador David Gross,
US Coordinator for International Communications and Information Policy in the
State Department, declared outsourcing to be an economic efficiency that
works to America's benefit. There is no sign of this
alleged benefit in US jobs statistics or the US balance of trade.
Repeatedly and incorrectly, US corporations state that outsourcing creates
more US jobs. They even convinced a New
York Times columnist that this was the case.
The problem is, no one can identify where the US jobs are that outsourcing allegedly creates. They
are certainly not to be found in the BLS jobs statistics. However, the Indian
and Chinese jobs created by US outsourcing
are highly visible.
On February 13, the Dayton (Ohio) Daily News reported that jobs outsourcing is transforming
Indian "cities like Bangalore from sleepy little backwaters into
the New York Cities of Asia." In a very short period
outsourcing has helped to raise India from one of the world's poorest countries to its seventh largest
economy.
Outsourcing proponents claim that US
job loss is being exaggerated, that outsourcing is really just a small thing
involving a few call centers. If that is the case, how is it transforming
sleepy Indian cities into "the New York Cities of Asia"? If outsourcing is no big deal, why are Bangalore hotel rooms "packed with
foreigners paying rates higher than in Tokyo or London," as the Dayton Daily News
reports?
If outsourcing is of no real consequence, why are American lawyers or their
clients paying $2,900 in fees plus hotel and travel expenses and two days'
billings to attend the Fourth National Conference on Outsourcing in Financial
Services in Washington DC (April 20-21)?
On the jobs front, as on the war front, the social security front and every
other front, Americans are not being given the truth. Americans' news comes
from people allied with the Bush administration or dependent on revenues from
corporate advertisers. Displease the government or advertisers and your media
empire is in trouble. The news most Americans get is filtered. It is the
permitted news. Many "free trade" advocates also are dependent on
the corporate money that funds their salaries, research and think tanks.
Another clear indication that outsourcing of US jobs is no small thing
comes from the reported earnings of the leading Indian corporations that
provide American firms with outsourced IT employees and engineers. During the
recent quarter, Ifosys' revenues increased by 53%, TCS grew by 38%, and Wipro
was up 34%.
On January 1, 2001, Cincinnati-based Convergys Corp
had one Indian employee. Today it has 10,000. Why? Because it can hire Indian
university graduates for $240 a month, a sum that is a small fraction of the US poverty level income.
Many Americans think that an outsourced job is an existing job that is
moved offshore. But many outsourced jobs are created offshore in the first
place. On February 11, USA Today told the story of OfficeTiger, "the
sort of young technology company that once created thousands of high-paying
jobs in the USA, fueling sizzling economic
growth." The five-year old startup business employs 200 Americans and
ten times that number of Indians. The company has plans for hiring many more
Indians to perform "tech-heavy financial services."
Under pressure from venture capitalists who fund new companies, American
startup firms are starting up abroad. Thus, the new ventures, which "free
trade" economists assured us would create new jobs to take the place of
the ones moved offshore by mature firms, are in fact creating jobs for
foreigners.
As a consequence, tech jobs in the US
are falling as a percentage of the total. Clearly, tax breaks for venture
capitalists are self-defeating when the result is to create jobs for
foreigners, not for Americans. Why should the American taxpayer subsidize
employment in India and China?
These developments have obvious adverse implications for engineering and
professional education in America. The
BLS jobs forecast for the next ten years says the vast majority of US jobs
will not require a college education. University enrollments will decline and
so will the production of PhDs as fewer professors are needed.
As India and China rise to first world status, the US falls to third world status where the only jobs are
in domestic services.
This has enormous implications for the US
balance of payments. Americans' consumption of manufactured goods is heavily
dependent on foreign manufacture, whether that of foreign firms or that of US multinational firms that supply their American
customers from offshore. How does an economy in which employment growth is
concentrated in nontradable domestic services pay for its imports with
exports?
Since 1990 the US has been paying for its imports by
giving foreigners ownership of its assets. In the last 15 years foreigners
have accumulated $3.6 trillion of America's wealth.
America has been able to pay for its
consumption by giving up its wealth because the dollar is the world's reserve
currency. As America's high-tech and manufacturing
capabilities decline and its red ink rises, the dollar's role as reserve
currency must end.
When the dollar loses its reserve currency role, America will not be able to pay for the
imports on which it has become dependent. Shopping in Wal-Mart will be like
shopping at Neiman Marcus.
Until recent years, US companies employed Americans to produce the goods
that Americans consumed. Employment supported sales, and sales supported
employment. No more. By their shortsighted policy of moving US jobs abroad,
our corporations are destroying their American markets.
Economists give assurances that the dollar's decline and fall will bring
jobs and industry back to the US. Once
Americans are as poor as Indians and Chinese are today, the process will
reverse. Multinational corporations will locate in America to take advantage of cheap labor
and unserved markets. By becoming poor, the US can become rich again.
You might want to ask the economists and our "leaders" in Washington why we should put ourselves and
our descendants through such a wrenching process.
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan
administration. He was Associate Editor of the Wall Street Journal editorial
page and Contributing Editor of National Review. He is coauthor of The Tyranny
of Good Intentions.He can be reached at: pcroberts@postmark.net