The Bush Shortfall: 8 Million Missing Jobs

February 15, 2005

The Bush Shortfall: 8 Million Missing Jobs
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.

There are 7.7 million unemployed people in America. 7.7 million - 8 million = -300,000 people. So essentially we NEED to outsource! Here's a tip, Jack. Communism is most effectively marketed in economic depressions. Nobody cares about trumped up employment numbers when everyone is gainfully employed.

yeah right we NEED to outsource.. Tell that to the people that lost thier job. Outsourcing is ONLY good for the company. aka sweatshop pricing..

"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."

What a stupid article. If the dollar REALLY tumbles, wal-mart will be out of business. No one will be shopping for a lot of the uncessary shit that they sell if we have a real economic depression.

The US economy will just have to adapt, if we actually hit a very rough time and cannot afford imports, companies will have to switch back to manufacturing.

Do people actually think that the people in all these outsourced jobs are going to pick up the spending habits of americans? A $240 a month like the company discussed above, they wouldn't be able to. The situation is much more complex than just a weak dollar.

hah. Keep telling people how to run their own business im sure it will catch on one day.

Tura wrote:

hah. Keep telling people how to run their own business im sure it will catch on one day.

Regardless, outsourcing is going to be horrible for the US economy in the long run. We may indeed have a free market, but India, china, taiwan, etc do not. Think you can go to India and apply for your old job at their rates? BZZZZT WRONG ANSWER, they don't allow it! Those countries shelter their businesses from foreign influences.

So whats a feesable alternative? To limit how many jobs do get outsourced annually or monthly? I just don't see that flying at all with the business masses here. Sure we could create production here in the US but it would be more expensive.

Tura wrote:

So whats a feesable alternative? To limit how many jobs do get outsourced annually or monthly? I just don't see that flying at all with the business masses here. Sure we could create production here in the US but it would be more expensive.

I'm not saying the government should tell companies what to do, however companies used to have a bit of loyalty to the country they were from. The only thing that is going to stem the flow of this is an economic upheavel that impacts these companies directly.

Remember there is a difference between offshore and outsource. Outsourced doesn't mean your job goes to a guy in Mumbai. I work for an IT/BPO outsourcer in the USA, and I certainly don't work for $240/mo

Edit: Forgot to add this point: Even outsourcing to another company in the USA still removes jobs from the economy. Before being outsourced my previous employer had an IT staff of about 50 people.. today there are around 10 people still doing that work. And instead of doing proactive things for them (which i'm not paid to do any longer...) I'm reading realpoor

Last edited by Frax on 02/16/05 - 13:17; edited 1 time in total

Frax wrote:

Tura wrote: So whats a feesable alternative? To limit how many jobs do get outsourced annually or monthly? I just don't see that flying at all with the business masses here. Sure we could create production here in the US but it would be more expensive. I'm not saying the government should tell companies what to do, however companies used to have a bit of loyalty to the country they were from. The only thing that is going to stem the flow of this is an economic upheavel that impacts these companies directly. Remember there is a difference between offshore and outsource. Outsourced doesn't mean your job goes to a guy in Mumbai. I work for an IT/BPO outsourcer in the USA, and I certainly don't work fro $240/mo

I drive a chevy, hows that for loyalty!

NAFTA=bad there is a start..

And this is Bush's fault how? The reason companies outsource is obvious: get more labor for less money. The Democrats, and particularly John Kerry recently, blasted Bush and the Republicans for giving "the rich" and large corp companies tax breaks. Well, all Bush and the Republicans are trying to do is make the USA a business friendly country by offering incentives to STAY in the USA. (Kinda funny that the Heinz company has 70% of its operations overseas BTW...I wonder if Kerry would take an income cut to bring it all back the USA? LOL). Anyway, outsourcing isnt Bush's fault. He's trying to give companies tax breaks in order to bring jobs back....but the Dems keep crying about it, so it doesnt happen.

myndwarrp wrote:

And this is Bush's fault how? The reason companies outsource is obvious: get more labor for less money. The Democrats, and particularly John Kerry recently, blasted Bush and the Republicans for giving "the rich" and large corp companies tax breaks. Well, all Bush and the Republicans are trying to do is make the USA a business friendly country by offering incentives to STAY in the USA. (Kinda funny that the Heinz company has 70% of its operations overseas BTW...I wonder if Kerry would take an income cut to bring it all back the USA? LOL). Anyway, outsourcing isnt Bush's fault. He's trying to give companies tax breaks in order to bring jobs back....but the Dems keep crying about it, so it doesnt happen.

Heinz also just outsourced their IT department to ACS, Inc.

Outsourcing is not GWB's fault, however , the climate that is being created with the outsourcing of jobs is eventually going to lead to more economic problems when there just aren't any jobs for all of those highly paid IT people . People who work at Wal-Mart can only shop at Wal-Mart because they don't make enough to do much else...

Frax wrote:

myndwarrp wrote: And this is Bush's fault how? The reason companies outsource is obvious: get more labor for less money. The Democrats, and particularly John Kerry recently, blasted Bush and the Republicans for giving "the rich" and large corp companies tax breaks. Well, all Bush and the Republicans are trying to do is make the USA a business friendly country by offering incentives to STAY in the USA. (Kinda funny that the Heinz company has 70% of its operations overseas BTW...I wonder if Kerry would take an income cut to bring it all back the USA? LOL). Anyway, outsourcing isnt Bush's fault. He's trying to give companies tax breaks in order to bring jobs back....but the Dems keep crying about it, so it doesnt happen. Heinz also just outsourced their IT department to ACS, Inc. Outsourcing is not GWB's fault, however , the climate that is being created with the outsourcing of jobs is eventually going to lead to more economic problems when there just aren't any jobs for all of those highly paid IT people . People who work at Wal-Mart can only shop at Wal-Mart because they don't make enough to do much else...

I completely agree Frax, especially as one who is IN IT...all I was saying is responding to the original post of how this is somehow Bush's fault...it in no way is.....

myndwarrp wrote:

Frax wrote: myndwarrp wrote: And this is Bush's fault how? The reason companies outsource is obvious: get more labor for less money. The Democrats, and particularly John Kerry recently, blasted Bush and the Republicans for giving "the rich" and large corp companies tax breaks. Well, all Bush and the Republicans are trying to do is make the USA a business friendly country by offering incentives to STAY in the USA. (Kinda funny that the Heinz company has 70% of its operations overseas BTW...I wonder if Kerry would take an income cut to bring it all back the USA? LOL). Anyway, outsourcing isnt Bush's fault. He's trying to give companies tax breaks in order to bring jobs back....but the Dems keep crying about it, so it doesnt happen. Heinz also just outsourced their IT department to ACS, Inc. Outsourcing is not GWB's fault, however , the climate that is being created with the outsourcing of jobs is eventually going to lead to more economic problems when there just aren't any jobs for all of those highly paid IT people . People who work at Wal-Mart can only shop at Wal-Mart because they don't make enough to do much else... I completely agree Frax, especially as one who is IN IT...all I was saying is responding to the original post of how this is somehow Bush's fault...it in no way is.....

He could propose a bill to cut the number of work visas to 10% of what it is currently. That way 10 indians can't rat nest in an apartment for $240 dollars a month each and sending most of their money back to India, in addition to this the f*****s refuse to buy american products and the only money they really spend in america is housing, utilities, food, and a phone to call India.

Frax wrote:

Tura wrote: hah. Keep telling people how to run their own business im sure it will catch on one day. Regardless, outsourcing is going to be horrible for the US economy in the long run. We may indeed have a free market, but India, china, taiwan, etc do not. Think you can go to India and apply for your old job at their rates? BZZZZT WRONG ANSWER, they don't allow it! Those countries shelter their businesses from foreign influences.

I absolutely agree, outsourcing is the reason why IT workers who were making 150k a year and spending it on American goods have lost their jobs and are forced to take a job making 60k if they're lucky doing the exact same work. India's policies are designed to educate every single Indian they can and infiltrate the IT sector of America, which bolsters their economy monumentally (240$ a month is a shitload in 3rd world India) and screws the US with no regrets. It's disgusting and unamerican to allow foreigns to fuckup an entire industry in OUR own country. I would venture to say that outsourcing of high paying jobs is the primary reason our economy went into a slump around the same time Bush took office, but did Bush really have any incentive to protect the american worker? Hell no, his interests lie in pleasing his campaign contributors at the expense of just about everything. Our middle class is taking a large hit while those ontop get a profit increase something around 2 fold? If you're paying 3rd world prices for 1st world services then you're sitting more than pretty as a business exec or a stock holder, but at the same time you're acquiring extra money you probably will never put to a good use, except for campaign contributions perhaps?

He could propose a bill to cut the number of work visas to 10% of what it is currently. That way 10 indians can't rat nest in an apartment for $240 dollars a month each and sending most of their money back to India, in addition to this the f*****s refuse to buy american products and the only money they really spend in america is housing, utilities, food, and a phone to call India.[/quote]


....../boggle

This scenario has nothing to do with outsourcing to other countries...but you bring up a good point about immigration....we need LESS of it and need to close our borders...but thats for another thread :p

Microsoft actually REQUIRES the companies who outsource their tech support (for MSN, Windows, Office, etc) to have an offshore presence.

What's sad about this is that MS puts so much emphasis on CSAT (customer satisfaction), but when a customer calls and gets Apu who is calling himself Jim and Jim here can't speak proper english the customer gets p****d. Asks for one who can, and it gets sent up. Well, CSAT with MS is done based on the last person who is talked to. So when my buddy Joel gets a call from Apu who says the customer is p****d, Joel suffers not only because Apu is too stupid to do his job correctly, but also because if MS talks to this customer Joel gets the bad score. If it happens too much Joel loses his job, no matter what the quality of his work really is.

rajgere2 wrote:

There are 7.7 million unemployed people in America. 7.7 million - 8 million = -300,000 people. So essentially we NEED to outsource! Here's a tip, Jack. Communism is most effectively marketed in economic depressions. Nobody cares about trumped up employment numbers when everyone is gainfully employed.

Lol this chickenshit-to-post under-his-own-name douche is now addressing me in posts where I havent even posted.
I got to this punk in a manner most harsh, hes seeing me everywhere

Jack Crow wrote:

rajgere2 wrote: There are 7.7 million unemployed people in America. 7.7 million - 8 million = -300,000 people. So essentially we NEED to outsource! Here's a tip, Jack. Communism is most effectively marketed in economic depressions. Nobody cares about trumped up employment numbers when everyone is gainfully employed. Lol this chickenshit-to-post under-his-own-name douche is now addressing me in posts where I havent even posted. I got to this punk in a manner most harsh, hes seeing me everywhere

And he loves the cawk!

wellspoken wrote:

Jack Crow wrote: rajgere2 wrote: There are 7.7 million unemployed people in America. 7.7 million - 8 million = -300,000 people. So essentially we NEED to outsource! Here's a tip, Jack. Communism is most effectively marketed in economic depressions. Nobody cares about trumped up employment numbers when everyone is gainfully employed. Lol this chickenshit-to-post under-his-own-name douche is now addressing me in posts where I havent even posted. I got to this punk in a manner most harsh, hes seeing me everywhere And he loves the cawk!

So far hes a very boring one trick pony.
Kbarrs "idiot" has more game than this chode.