(DV) Gerard: President Bush Must Address Outsourcing

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President Bush Must Address Outsourcing
by Gene C. Gerard
www.dissidentvoice.org
August 17, 2005

In a recent radio address to the nation President Bush said, “Our economy is strong, yet I will not be satisfied until every American who wants to work can find a job.” If Mr. Bush truly wants to ensure that everyone who has lost a job can get back to work, he’s going to need to take a stand against sending jobs overseas. At best, his administration has done very little to address this issue. At its worst, the Bush administration has implicitly encouraged outsourcing.

The manufacturing industry has lost 2.8 million jobs since Mr. Bush took office in 2001. Although it’s difficult to ascertain just how many of these have been outsourced, a study by the Economic Policy Institute estimated that about 60 percent of manufacturing jobs were sent abroad. Almost another million jobs have been lost in the professional service and information sectors. Goldman Sachs estimated that about 500,000 professional service and information sector jobs have been sent overseas in recent years. Although the manufacturing industry has been hit the hardest, job losses in the information technology (IT) sector are a close second.

A study conducted by the University of California at Berkeley found that about 27,000 IT jobs were outsourced to India during just one month in 2003. The employment firm Global Insight estimated that 104,000 IT jobs went overseas between 2000 and 2003, and that the outsourcing of IT jobs will reduce the growth of IT employment in America by 50 percent over the next five years. An analysis of the computer software industry by the Economic Policy Institute concluded that 128,000 jobs in this field were outsourced between 2000 and 2004. Sending jobs overseas is expected to increase in the coming years.

Gartner, Inc., an IT forecasting company, predicts that ten percent of computer services and software jobs will be outsourced by the end of this year. Another study by the Meta Group indicated that 40 percent of corporate IT operations will be sent overseas by 2008. Deloitte Research surveyed 100 large financial services firms and concluded that they would send $356 billion worth of operations and approximately two million jobs to third-world countries during the next five years. Forrester Research expects 3.4 million jobs, totaling $136 million in wages, to be shipped overseas by 2015.

During President Bush’s first term in office his administration viewed outsourcing as business as usual. The Economic Report of the President in 2004 announced, “When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically.” N. Gregory Mankiw, Chairman of President Bush’s Council of Economic Advisors, was asked to defend the findings of the report and he stated, “Outsourcing is just a new way of doing international trade. More things are tradable than were tradable in the past. And that’s a good thing.” But for millions of Americans who have lost their jobs to overseas employers, this is hardly “a good thing.”

Some policies of the Bush administration are supportive of outsourcing. During the first three years that President Bush was in office his administration only brought ten cases before the World Trade Organization for violating trade rules with America. By contrast, during the second Clinton administration, 33 cases of trade violations were lodged with the World Trade Organization. In March of last year a petition was filed with the Department of Labor claiming that China’s continued suppression of workers’ wages and export prices was violating the Trade Act. Passed by Congress in 1974, the Trade Act allows the president to sanction a country committing unfair trade practices that gives them an improper trade advantage. Rather than investigating the complaint the Bush administration rejected it, maintaining that imposing sanctions on China could lead to “economic isolationism.”

In 1974 Congress passed the Trade Adjustment Assistance Act (TAA) to help workers who lost jobs owing to increased imports and outsourcing. The TAA, which provides for income assistance and job retraining skills, was renewed in 2002 due to high unemployment. However, the Bush administration has consistently under-funded the TAA and has purposely failed to promote it. Despite 2.8 million manufacturing jobs having been lost since President Bush took office, few workers have been able to take advantage of the TAA. In 2002, only 233,204 workers were approved for assistance; in 2003, only 197,024 workers were approved. Approvals declined even further last year, to 147,658 workers.

The Bush administration has been limiting approval for assistance, and failing to promote the TAA, in hand with under-funding the program. In his 2006 budget proposal President Bush cut funding for TAA income assistance by $81 million. This was the second year in a row that income assistance was cut. Funding for job retraining skills was cut by $5 million, once adjusted for inflation, in the 2006 budget.

If President Bush wants to ensure that every American has a job, he will have to alter how his administration has viewed outsourcing. The government will have to encourage keeping jobs at home, something it has been reluctant to do in recent years for fear of alienating big business. It must lobby Congress to impose penalties on companies who outsource needlessly. And the Bush administration must provide substantial, widespread assistance to workers who have fallen victim to outsourcing.

Gene C. Gerard teaches American history at a small college in suburban Dallas, and is a contributing author to the forthcoming book Americana at War. His previous articles have appeared in Dissident Voice, Political Affairs Magazine, The Free Press, Intervention Magazine, The Modern Tribune, and The Palestine Chronicle. He can be reached at genecgerard@comcast.net.