by D. David Beckman
Even as a handful of anti-offshore outsourcing measures have failed to gain momentum in the Washington state legislature, lawmakers in Olympia are convening in an attempt to gauge the impact and scope of the outsourcing issue.
“In some respects, Washington state is ground zero,” said Dr. Catherine L. Mann, a senior fellow at the Institute for International Economics, who testified by way of teleconference from Washington D.C.
Members from the Commerce and Labor, Trade and Economic Development and Technology, Telecommunications and Energy committees convened, along with representatives of the State Government Committee, to hear from economics and government policy experts, as well as some often emotionally charged testimony from members of business and labor groups who were called on to testify.
Mann spoke about possible strategies to deal with the dislocation of technology workers due to what she called “global sourcing,” an issue that has gained prominence in the state, where the unemployment rate among tech workers is more than 10 percent, nearly twice as high as the overall unemployment rate in either Washington or the nation.
Reliable figures about how many U.S. jobs have been victims of offshore outsourcing are hard to come by. The U.S. Bureau of Labor Statistics does not track those numbers. Mann cited estimates made in 2002 by Forrester Research, which projects that 3.3 million jobs will move offshore by 2015. Mann said the figure has “reached the status of urban legend” because it has been cited in virtually every study or media story about offshore outsourcing since the Forrester report was released.
While U.S. presidential candidates John Kerry and John Edwards and Senate Minority Leader Tom Daschle have spoken out against the offshore outsourcing of American jobs, Mann said that Washington state lawmakers should take the lead.
“We can hope for policies in (Washington D.C.), but I think that you are going to have to do a lot of it at the state level,” she said.
Mann recommended that lawmakers create worker adjustment policies, such as making Trade Adjustment Act benefits available to displaced technology workers. The TAA was originally enacted in 2002 to provide benefits for manufacturing workers who had lost their jobs when U.S. factories closed or moved overseas. Those benefits can include tuition payments, stipends for living expenses while attending school for retraining and health insurance coverage.
Mann also recommended that legislators pass tax credits for companies that practice what she called “up-skilling,” or investing in worker training and internships.
Finally, she suggested that lawmakers create mechanisms to better track dislocated workers so state and federal governments can better determine the impacts of the dislocations on the economy.
Employment Security Department Assistant Commissioner Marc Baldwin displayed a dozen graphs and tables during his testimony to give lawmakers the most detailed view of labor market trends for both the state and the nation.
“It starts by putting you in a tight spot, namely the job-loss recovery,” said Baldwin of his presentation.
Baldwin, who holds a doctorate in Labor Relations from the Massachusetts Institute of Technology, underscored the nature of the current economic recovery, which continues to shed jobs even as the nation’s businesses earn profits.
“(This is) a job-loss recovery, not a jobless recovery,” he said.
Reasons for the shrinking job market during an economic recovery are increased productivity and offshore outsourcing, Baldwin said. How much offshore outsourcing is responsible for the loss of jobs in otherwise good economic times is hard to determine, he said.
Part of the reason so little is known about layoff statistics is the Bush administration’s elimination of the collection of the layoff statistics program, said Baldwin, although he noted that the program “didn’t really ask many good questions in this area anyway.”
Baldwin displayed a grim sense of humor when he pointed out that Washington state’s unemployment level was consistently higher than the national average. He said the state has endured earthquakes, spikes in electricity rates, droughts, freezes, the events of Sept. 11, 2001 and the dot com collapse.
“I count six,” said Baldwin. “We’re one away from the biblical reference to seven (plagues).”
He pointed out new trends in Washington state employment. Only 12 percent of job openings are new jobs, and just over two-thirds are full-time jobs, while 21 percent are contract job openings.
Bill Center, president of the Washington Council on International Trade, noted that lawmakers should remember that bidding for work around the globe is a two-way street. In recent years, the University of Washington received more revenue as the result of foreign contracts than they spent on outsourcing overseas, he said.
“If we decide to opt out,” he added, “we’re opting out of the opportunities for our businesses to participate in those contracts abroad which are really important to us. All of our enterprises in the state have to compete in the global business environment — and they compete on the basis of cost.”
“One of the unfortunate realities of life in today’s world is that 3.2 billion people live on less than $2 a day. Most of those people have not been to school and will never go to school, and they are more than happy to be able to double their income and work for $4 a day. They’re good, hard-working people, and they need jobs. And companies all around the world are taking care of this large pool of unskilled labor to help lower their cost of production and deliver high quality products to people all over the world.”
Nancy Atwood, policy and legislative director for the American Electronics Association (AeA), said the United States ranks sixth in the percentage of engineering degrees granted to U.S. citizens, behind countries such as China, Japan, Russia and India. About 42 percent of technology-related masters degrees awarded by U.S. universities go to foreign nationals, Atwood said.
Former Boeing Co. technical publications illustrator Stephan Gillyard testified he and about 400 other employees learned last June that they we about to lose their jobs to offshore outsourcing.
Gillyard, who worked for McDonald-Douglas before the aircraft maker merged with Boeing, said he had just moved to the Seattle area from California a year before to take the job. He said at the time that he thought he had a bright future with the company.
“In the 17 years I spent building my skills with (McDonald Douglas and Boeing), I always felt that there was a place for me,” said Gillyard. “Outsourcing has changed that.”
Gillyard, 41, said the relationship between employees and employers has changed since he first started working 20 years ago.
“We’ve always had in this country a compact that we would provide opportunities for talented, skilled, educated people to participate in the American dream.” But now, Gillyard said, that compact seems to have vanished.
Jennifer MacKay, an engineer with Triumph Composite Systems, Inc. in Spokane and president of the Society of Professional Engineering Employees in Aerospace, said SPEEA members have learned that they must engage with state government officials over the outsourcing issue.
“SPEEA was always the group…that watched when everyone else’s manufacturing and textile and steelwork (jobs) went across the ocean, (while) ours remained,” said MacKay. “We were the technical and professional people of America, and we were not threatened. Today we are involved. Today is another story.”
Mackay said that when manufacturing jobs went abroad, those who were displaced returned to school to train for skill-intensive technical jobs. Now, even those jobs are going offshore.
“Outsourcing has impacted and is consuming engineering and high-tech jobs at levels that we never thought would be possible,” said MacKay. “We’re here to tell you that we finally get it. We know we’re in trouble, and we need your help.”
The Washington state government recently put together an incentive package that kept the Boeing 7E7 program from moving out of state. Mackay said SPEEA members understand how important The Boeing Co. is to the state’s economy and how competitive the global market is in which Boeing and other Washington companies must compete. They also understand how important international trade is to other state industries.
“Somehow, we have to find a solution that works for all of us, and that’s what we’re here to talk about,” she said.
MacKay suggested that the state create tax incentives for companies in Washington state who decide to employ state residents. She added that for companies that don’t employ state residents, lawmakers should pass laws that create disincentives, or “clawbacks.” A clawback is a provision where a company may be required to pay back all or part of a tax break if it fails to fulfill its responsibilities required by the tax break agreement.
She also called on legislators to form a joint task force of business, labor and government officials by the end of the year to study the effects of offshore outsourcing in the state. [24×7]