Outsourcing Trend Is Firing On All Cylinders; Hundreds Of Thousands Americans Lose Good Jobs
By Richard McCormack
The offshore outsourcing of American manufacturing and services jobs went into high gear over the past two years, as the economy fell into recession and companies continued to shift their production offshore.
Despite the occasional anecdote in the press about companies "insourcing" jobs back to the United States from abroad, the number of direct job losses due to outsourcing and cheap imports picked up considerably in 2009.
The federal government's Trade Adjustment Assistance program, run by the Department of Labor, approved generous severance, training and health benefits to 201,053 workers in 2009 impacted by trade, a 59 percent increase over 2008 when 126,633 workers were certified for the special unemployment benefits. These workers, notes Secretary of Labor Hilda Solis, "lost a job through no fault of their own and need and deserve our support." The TAA program was created in 1974 to help U.S. workers who lost jobs due to U.S. trade policy.
The federal government has no idea why so many hundreds of thousands of jobs are being displaced by imports and the shift of U.S. production to foreign nations. The Labor Department agency that grants benefits to those who have lost their jobs to imports and outsourcing (the Employment and Training Administration) does not ask companies why they are leaving the United States or displacing their U.S. production with imports. Nor does it analyze the incentives foreign nations are providing American companies to shift production, so that the federal government can counter such offers and keep jobs in the United States.
When asked "do you conduct any type of overview on the reasons why companies are losing market share or why Americans are losing jobs due to foreign competition?" a Department of Labor official said the TAA program "has a very specific mandate" to investigate workers' claims that their jobs were lost due to trade. "We operate the TAA program for the purpose of providing benefits to workers for very specific statutory reasons, so the focus of our investigation and our data collection [from the companies laying off the workers] is on making a determination of whether or not the workers are eligible and whether the specific criteria are met. The whys of the company making whatever decision it has made is not part of that investigation or that mandate. It is an eligibility determination."
Asked further if there is anybody in the federal government that is benchmarking the incentives that foreign nations are offering American companies that lay off workers, the Labor Dept. official said not that they know of. The "official" spoke with Manufacturing & Technology News under the watchful ear of a political appointee in the Labor Department's public affairs division. The PR office required that the interview be "on background," with the stipulation that the person being quoted be referred to as an "agency official."
When MTN asked the Labor Department "agency official" if they were concerned "that the country is losing an integral part of a strong economic base," the PR person jumped in: "This sounds like you are asking for her opinion and she is here really just to state the facts. So if we could stick to that."
Here are some "facts" regarding the Trade Adjustment Assistance program:
In 2009, 4,549 petitions were filed for TAA benefits, an increase of 104 percent over the 2008 total of 2,224. From May 2009 through July 2009, TAA petition filings increased by 288 percent as compared to the same period of 2008.
The number of petitions in 2009 was an increase of 84.5 percent when compared to 2006.
In 2009, the most frequent reason for certification was a shift in production to a foreign country, according to a TAA report filed with the House Committee on Ways and Means and the Senate Finance Committee. The second most popular reason was an increase in customer imports, followed by an increase in company imports.
In 2009, the manufacturing sector had the greatest number of TAA certified workers, at 183,227. Michigan had the highest number of certifications among the states with 24,641, followed by North Carolina with 12,300, Pennsylvania with 10,777, Ohio with 9,690 and Illinois with 8,230.
The program expanded in 2009 to include service sector jobs being outsourced to places like India.
The training portion of the budget (not direct benefits) jumped from $220 million in 2008 to $575 million in 2009, due to a huge increase in funding provided by the Stimulus Bill. The bulk of the funding is for extension of unemployment insurance benefits ("income support"), which comes out of the "mandatory" side of the budget.
It normally takes 40 days for petitioners to get a decision made on their case.
The Bush administration never issued press releases on TAA certifications of companies that laid off workers due to imports and outsourcing. The Obama administration started issuing press releases when companies were certified, but then stopped doing so last May. Since then it has issued one press release on TAA certifications, despite there being hundreds of decisions on petitions.
The TAA office has 53 employees, many of whom collect proprietary sales data and production information from companies laying off American workers. That information is exempted from the Freedom of Information Act (FOIA) because it is "business confidential" information that can do competitive harm to the company. Manufacturing & Technology News submitted FOIA requests seeking information on why specific companies were determined to have outsourced their production, but those requests have been denied. Why should this information be considered private when the taxpayer is footing the bill? "Because in a lot of cases, the company is not fully shut down and they are still trying to do business and trying to compete," says the Labor Department official.
When the Labor Department official was asked, "How has the program changed over the last few years," the PR person piped up, again: "Other than sticking to the historical review of the program, that question is not appropriate."
Starting on page seven are the companies -- and their workers -- whose petitions for TAA benefits were certified by the Labor Department during the month of August 2010. Many of these companies are household names and the jobs that are being cut are among the best in the country, impacting multitudes of other people who depend on them. When analyzing the list, it is striking how many jobs are being lost in sectors that economists say the United States holds a competitive advantage, such as medical devices and equipment, aerospace, advanced materials and research and development.
During the month of August, 63 petitioners were denied benefits. One example was for workers with U.S. Airways in Columbus, Ohio, who stated that they lost their jobs because so few companies were left in the Ohio region that were exporting their products, due to surging imports. They were denied benefits because "the separations at US Airways [were] not related to a shift in services to a foreign country or an increase in imports of services like those provided by the workers," said the DOL certifying officer.
The information provided on the following pages comes from a database search on the TAA Web site.
To run your own search go to http://www.doleta.gov/tradeact/determinations.cfm.
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