It’s time to stop rewarding companies that send jobs overseas

When the Nielsen Company broke its word and began outsourcing jobs to India, a small Florida community did what Congress didn’t have the will to do: It moved to end tax breaks for the media giant.

When a private company working for Ohio outsourced jobs to El Salvador, Gov. Ted Strickland knew what to do: He signed an executive order banning the outsourcing of services paid for with state dollars.

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No matter what the technical indicators say, the U.S. economy is in terrible shape, and the IT industry is still suffering painful, long-lasting unemployment. I don’t think the government can solve all of our economic problems, but there is one thing it can do: Stop rewarding companies that send jobs overseas.

That could have happened last week. Indeed, such a bill had passed the House, and a majority of the Senate approved, but our political system is so gridlocked, so beholden to corporate interests, the measure never came to a vote. It was filibustered by every single Republican senator with the help of a few Blue Dog Democrats. As a result, the tax dollars of workers who’ve lost their jobs to lower-paid employees overseas will flow to the very companies that fired them.

The twisted logic of offshoring The Creating American Jobs and Ending Offshoring Act would have ended tax deductions for expenses incurred when companies close U.S. operations and send the work overseas. It would also have instituted a new tax on products manufactured by foreign workers that were previously made in the United States.

I have enormous trouble with the logic of those who support tax breaks for overseas outsourcing. On the one hand, conservatives say that government should keep its hands off the economy and that the market will do a better job with less regulation. OK, that’s a defensible point of view.

But the same people argue that ending those tax breaks is intrusive and will damage the economy because all tax increases stifle growth. Wait a minute — if you want government to let the market run itself, you can’t support a tax policy that encourages a particular form of behavior. Either you want the government to remain neutral or you don’t.

Logic, however, isn’t the point; money is. The technology industry spent $111 million to lobby lawmakers and regulators last year, but that $111 million is a mere drop in the bucket. It doesn’t include lobbying and campaign contribution by companies like Nielsen or Parago, which won a contract to administer a state program in Ohio and then sent the jobs to Central America.

And it doesn’t include money spent by the powerful U.S. Chamber of Commerce, which has gone to bat for overseas outsourcing year after year. During the debate over the stimulus, the U.S. Chamber of Commerce fought efforts to include a provision that would encourage taxpayer money to be spent on products made by domestic companies. The chamber, by the way, has made the outsourcing issue explicitly political, saying it may use the vote on the outsourcing bill to determine a senator’s business-friendly rating in the lobby’s annual scorecard. And did I mention that the chamber plans to spend $75 million to back candidates in the mid-term election?

Before going further, I want to be clear that I don’t blame workers in India or El Salvador for taking jobs wherever they can find them. As bad as our economy is, theirs is far worse. Like us, they want to support their families and build a good life. But U.S. economic and political policy should focus on meeting the needs of our own workforce. It isn’t doing that.

Offshore outsourcing kills jobs There will not be a real economic recovery until there are more jobs. You don’t need an advanced degree to understand that consumer spending is the real pillar of this economy, and while people are either out of work or afraid that they will be, they’re going to be frugal. You’d think that the champions of big business would understand that and support measures to put people back to work. At the very least, wouldn’t it make sense not to push tax policies that create unemployment?

One of the terrible ironies of the recession and its impact on IT is the futility of most retraining programs. Back when the Midwest was turning into the Rust Belt, there was talk of retraining blue-collar workers for jobs in technology. I’d say that policy enjoyed, at best, limited success, but there were jobs to be had. Now, with national unemployment hovering just under 10 percent and underemployment much, much higher, what jobs are we going to retrain unemployed IT workers for?

Maybe former coders and developers can shift to green tech. Oops, hold on there — Congress has refused to pass cap-and-trade legislation, which would have made green energy and technology economically attractive and thus created millions of jobs in the sector. Electric cars? Tesla’s new plant in Fremont, Calif., housed in a corner of the GM/Toyota joint venture that once employed thousands of auto workers, has rehired just 30 former employees of the NUMMI joint venture, and management says it is getting 2,000 to 3,000 resumes a month.

I’m not bringing partisan politics into this blog. But anyone who works for living would be nuts to vote for someone — Republican or Democrat — who wants to use their money to put them out of a job.

I welcome your comments, tips, and suggestions. Post them here so that all our readers can share them, or reach me at bill.snyder@sbcglobal.net. Follow me on Twitter at BSnyderSF.

This article, “It’s time to stop rewarding companies that send jobs overseas,” was originally published by InfoWorld.com. Read more of Bill Snyder’s Tech’s Bottom Line blog and follow the latest technology business developments at InfoWorld.com.