05 December 2009

It’s Time the Government Steps in Concerning Outsourcing

A friend of mine who was working at a large credit card processing company was laid off in July 2008. He’s currently working as a “consultant,” making far less than he was at the company where he worked for 20 years, and he receives no benefits. His job was eliminated because the company decided to outsource it to India, although he only learned this long after he and hundreds of other people were laid off.

His is not the only case where U.S. companies are trying to save money by outsourcing to other countries. The company I worked for, XYZ International, had laid off most of its IT team here in Omaha in August 2008 to outsource the jobs to India. The company was also outsourcing additional jobs to Romania.

I understand that economic times are tough, companies need to reduce costs and layoffs are necessary. But when the country’s combined unemployed/underemployed rate is more than 17 percent, it’s outrageous that companies outsource to other countries just to be able to pay corporate fat cats their bloated salaries. If some of those CEOs would take a temporary pay cut, they could save some American jobs rather than contributing to the casualties of economic recession.

I’m all for outsourcing when the country’s economy is strong and companies legitimately have difficulty finding qualified employees to fill jobs. Then they should certainly expand their searches to include outsourcing. But if a company is outsourcing to India, Romania or Eastern Block countries when its own country’s people are in a situation where there are six job seekers for every job opening, when people who want to work and are completely qualified for positions can't find them, then that company is only contributing to the economic crisis and unemployment rate.

During this time, President Obama needs to confront companies that are eliminating American jobs in favor of outsourcing, and he needs to address the fact that they are contributing to the recession. Although I generally disagree with the government stepping in where it doesn’t belong, I think this is a situation and a time when government intervention is necessary. The government should provide tax incentives for companies that fill job openings with American workers, even going so far as to penalize companies that choose to outsource during a recession.

Sound harsh? Well, it should. When I consider how long I was out of work and how so many people I know are still out of work after more than a year, it angers me that companies are giving our jobs to workers overseas just to save a buck. When I have friends who don’t know how they can provide food for their families — let alone have a joyful holiday season — it infuriates me that CEOs make millions of dollars a year with no concern for the people they are laying off or the lives they are plummeting into chaos.

During tough times, the people of this country should band together to help each other. And eliminating American jobs to outsource overseas is not helping your own country. It’s contributing to and prolonging the crisis.

Furthermore, companies that are contributing to the rate of underemployed workers by creating low-paying “consultant” positions in order to dodge paying full-time employees fair benefits should also be penalized, and those that create actual full-time positions with benefits should be given tax incentives. The government is freely tossing money wherever it thinks it might help the economy (Cash for Clunkers, etc.). It’s time to get a handle on this recession by helping the people who truly need it — the unemployed and underemployed — by targeting the offenders propagating the recession by forcing workers into these situations. It’s time to force CEOs to realize that their ballooned salaries are putting the lives of others in turmoil as they try to make an extra million this year through outsourcing.

Until the government steps in with an incentive/penalty program regarding outsourcing companies will continue their contribution to the recession, and the unemployed/underemployed rate will continue to grow.


Credit Card Machines said...

Really a great post on "It’s Time the Government Steps in Concerning Outsourcing"

Jar(egg)head said...

I sympathize, but remember to be careful what you wish for. Once the government (meaning politicians) gets involved in something in the business market, it's nearly impossible to pry them loose -- and in the long run government meddling can cause far more damage than it mitigates.

I'm no laissez-faire economist -- the late 19th century robber barons and sweat shops pretty well proved that capitalism won't function to the benefit of all without some degree of oversight -- but "limited" government oversight is a very slippery slope. One of the big reasons we're in the mess we're in right now is Congressional meddling in the housing and banking markets.

I agree that cutting top-end overhead of large companies will help to an extent, but against significantly smaller shops even that is not of much use. And large overhead is part of stability and longevity in a corporate economy; you don't want the guy who sold you Widget X going out of business at the first swing in the market.

Outsourcing is, unfortunately, an "easy out," (if you'll pardon the pun), both for companies and for their critics. The economics are always much more complex than what they appear to those not privy to the higher finances of the company, especially if it's publicly traded. All that said, I've little use for many of the "butterfly" CEOs in this country. We've brought that on ourselves with the proliferation of MBA programs -- and the ridiculous, unpractical pablum most of them spew out in the classrooms.

It's no comfort right now, I know, but eventually this outsourcing problem will iron itself out -- no doubt only to be replaced by some other potential evil. Welcome to capitalism: the best of a lot of bad choices on how to manage a national economy.