The 2008 Democratic National Convention (DNC) is history and the 2008 Republican National Convention (RNC) is finally underway, the RNC being delayed a bit thanks to Hurrican Gustav.
As I watch the RNC, I wait with bated breath (really!) to hear Senator McCain and how he will reduce outsourcing and turn around the US economy.
But we heard what Senator Obama had to say at the DNC about outsourcing. He said “he will stop giving tax breaks to companies that are sending jobs offshore and instead give them to companies who create jobs in America”.
(Various online newspapers reported responses from CEO’s of Indian companies who have made millions from outsourced US jobs and I had to chuckle at some of them. From claiming that America will be hurt if outsourcing is stopped to claims that America just doesn’t have the skills to meet the demands of the jobs that are being outsourced, there has been some interesting noise post the DNC.)
But there’s another aspect to this job loss for Americans that I want to discuss here. That aspect is that of the H1B Visa and the cap on it.
Not only are jobs moving offshore to countries like India, there is a mass import of low cost labor into the US through the issuance of H1B visas (temporary work permits or visas). There are many who argue that H1B visas don’t create new jobs in the US and thus reduce jobs that would be offshored.
I for one don’t completely understand that argument. When an H1B visa holder comes to the US, he or she is taking away a job that could go to a local worker. This creates increased competition for fewer available jobs and wage suppression due to H1B holders accepting jobs that are lower paying than what an average American would. The H1B workers take lower paying jobs in the US because they still will make more than what they would make in their own countries.
Senator Obama and for that matter Senator McCain have both voted to raise the H1B cap which is currently at 85,000.
But if we raise the H1B cap, doesn’t that means that more low cost resources will be able to come to the US, causing even more competition for US employees?
Is incentivizing companies to create local jobs enough?
To turn around the American economy, don’t we want companies to not just create jobs, but to create jobs that will adequately compensate Americans who have the skills, experience and expertise necessary to get the job done?
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Tuesday, September 2nd, 2008 at 9:57 pm
Thanks for posting the article, was certainly a great read!
Tuesday, September 2nd, 2008 at 9:59 pm
I finally decided to write a comment on your blog. I just wanted to say good job. I really enjoy reading your posts.
Friday, September 5th, 2008 at 1:33 am
I believe its a global economy and in ideal cases people should be free to travel and work anywhere they like.
I am from Israel but happily settled in the US.
Tuesday, September 23rd, 2008 at 9:46 pm
Hi. Great article. I think that what many economic studies are not taking into account is the continuing trend of off shoring and underemployment. When people don’t have decent jobs, they can’t pay their mortgages.
Having worked for several large, multinational corporations I’m sure that a huge amount of products that are supposedly “exported” by U.S. companies are partially or totally engineered and physically made overseas (this includes Research and Development, Software engineering, Hardware engineering, Manufacturing, etc.) so the data we have on what America exports may be highly inaccurate.
I think it may be the case that the U.S. economy is actually worse off than many economic studies indicate. Less products are actually being invented, designed and produced here than most people think. Most multinational corporations favor China as the place to do Research and Development and most of those companies are incorporated in America. Of course, you can’t beat a good old fashioned Communist Dictatorship if you like wage reduction.
U.S. companies are not required to report how many jobs they send off shore and the amount of it that actually occurs is probably vastly underestimated. That information does affect the overall economic picture and it should be taken into account. Off shoring is not a very popular issue now, but the facts on how much of it is going on are not easy to find and it is probably hurting the economy more than is commonly believed.
When off shoring is discussed, manufacturing jobs are usually the only ones talked about, but high tech jobs continue to move off shore in high numbers (including Engineering and Research and Development jobs).
Tuesday, October 7th, 2008 at 11:08 am
Although I agree that oustsourcing can be bad. But Keep a couple of things in mind. 1. China has 500 million people out of poverty and into factories. We can’t compete with that labor force. Second is india with almost as many people. Thirdly with all the regulation on employement it starts to become cost prohibative to employee US workers. We have outsourced some of are IT becuase I couldn’t afford $150,000 salary. It has worked well for us.
Also the people that want to reduce outsourcing need to stop shopping at Walmarts and all the cheap goods. The US consumer is one of the big reasons for this taking place because they want the cheapest price. I have people I know that are in teh union but shop at Walmart and won’t shop at the store that has a union and pays medical benefits for their employees becuase it cost more. doesn’t make sense to me