San Jose Mercury News
, January 30, 2004 Friday
Offshore job losses on voters' agendas; Kerry, Dean compete to stress hot
By KARL SCHOENBERGER, Mercury News
With the next round of presidential primary elections coming up Tuesday,
billboards are popping up across South Carolina with a political message
that might resonate with any Democratic contender: ''Lost your job to free
trade and offshoring yet?''
The issue of employment is high on the agenda in this political season.
President Bush can take credit for an economic recovery, but he is
vulnerable when it comes to jobs. The stock market is up, but job growth is
dismal -- only 1,000 jobs were created in December, a fraction of the
300,000 new jobs the Bush administration projected.
As the temperature rises over disappointing job growth, the practice of ''offshoring''
-- sending jobs overseas to cheap labor markets -- has worked its way into
the rhetoric of the presidential campaign trail.
Sen. John Kerry of Massachusetts, the Democratic front-runner after
victories in Iowa and New Hampshire, has been denouncing the Bush
administration for rewarding ''Benedict Arnold CEOs'' who move ''profits and
jobs overseas.'' Howard Dean, the populist former governor of Vermont, has
told his audiences that America needs a president ''who doesn't think that
big corporations who get tax cuts ought to be able to move their
headquarters to Bermuda and their
There's no consensus among economists and experts over the long-term
significance of the trend toward offshoring, jargon that combines the words
''offshore'' and ''outsourcing.'' It generally refers to the export of
white-collar jobs in information technology and other professional fields
such as accounting and banking services.
But blue-collar workers have borne the brunt of the pain.
South Carolina, a key battleground state for
the Democrats, has been hit hard by overseas outsourcing in the textile
industry, and has lost about 64,000 manufacturing jobs over the past three
years, according to the American Manufacturing Trade Action Coalition, the
Washington-based lobbying group that paid for the billboard ads.
Offshoring statistics are fuzzy at best. One report estimates that 300,000
of the 2.4 million jobs lost since the beginning of the recession in 2001
can be attributed to offshoring. Future projections are all over the map:
One predicts 3.3 million service-sector jobs will go overseas in the next 15
years, while a University of California-Berkeley report estimated 14 million
U.S. service jobs are at risk.
''I think the issue is going to be exaggerated and manipulated by both sides
in the political debate,'' said Dean Davison, an analyst at the Meta Group,
a technology research and advisory firm in Stamford, Conn. ''There are
distinct differences of opinion in what corporations should do to take
responsibility, and what kind of public policy should be implemented.''
Legislation has been introduced in Congress to address the issue, some of it
intended to stir up debate rather than win passage. Kerry introduced a bill
in November that would require call-center operators to disclose their
physical location to consumers who phone in for customer service or
technical help, ostensibly to discourage U.S. companies from moving such
On the other end of the ideological spectrum, Sen. Craig Thomas, R-Wyo., won
passage for his amendment to the Senate's omnibus appropriations bill last
week that bans some federal contracts to vendors using offshore labor. News
of this caused a furor over the weekend in the New Delhi press, on the
assumption the lucrative Indian industry in back-office contracting
operations was threatened by congressional sanctions. But that was a false
Few firms affected
The ban applies only to a relatively small number of U.S. companies bidding
for contracts under a Bush administration program to privatize certain
federal government services, such as architectural design work, explained
John Palatiello, a Washington-based lobbyist representing domestic companies
bidding for privatization contracts. The strategy, he said, was to prevent
federal unions from claiming their jobs were being sent overseas.
''The motivation wasn't to stop offshoring per se,'' Palatiello said, ''but
rather to get it out of the debate on privatizing federal services.''
Antipathy to offshoring has deep political roots. Manufacturers in the toy
and apparel industries have gone overseas for decades to produce their goods
from contractors using cheap labor. Gradually, electronics makers and
Silicon Valley's computer brands all followed -- and more recently software
and professional services.
Presidential wannabe Ross Perot immortalized this inexorable force of
globalization as the ''giant sucking sound'' from Mexico when he campaigned
against the North American Free Trade Agreement in the 1992 election. Twelve
years later, many of those Mexican manufacturing jobs have moved to China.
The fuss over job loss in this presidential election year is of particular
concern in India, the nation that is benefiting most from the offshoring
boom. A Jan. 19 article in the Times of India, headlined ''Why is the U.S.
running scared?'' captured the dismay: ''The issue has become a political
hot potato. It has even entered the presidential debate, with Democrat
Howard Dean attacking his rival contender Wesley Clark for being soft on it.
Why the big hoopla over outsourcing?''
Rafiq Dossani, a consulting professor at Stanford University's Asia/Pacific
Research Center, published a study of companies moving operations to India
last year. He is a proponent of the business efficiencies of offshore labor
markets. But even he is concerned about the long-term political
''This may be a problem in the minds of some politicians now, even before
there's been sufficient analysis of what is going on,'' said Dossani, a New
Delhi native. ''But I think over the next five years this is going to have a
huge impact. The range of jobs that can be offshored is mind-boggling.''