As UCLA students weigh the agendas of the presidential
candidates for the Nov. 2 election, many looking past graduation
will consider the level of job security each presidential hopeful
says he can provide.
With spin doctors tossing around talking points, many voters
find it difficult to understand the logistics and nuances of
economic problems such as outsourcing and offshoring.
Understanding such economic dilemmas and knowing what solutions
will be effective take time and a good amount of effort ““ and
in the end voters just want to know whether taxes will increase and
their jobs will remain secure.
Offshoring, an economic phenomenon prevalent in any discussion
concerning job security since the 1970s, essentially deals with
U.S. companies moving abroad and leaving U.S. workers jobless.
“In the substantial long-term, it’s good for the
U.S. economy, at least in the sense of remaining
competitive,” said Uday Karmarkar, a professor at the UCLA
Anderson School of Management.
Often voters aren’t concerned with the long-term. Instead,
they focus on the present day.
And the present day involves a $100 billion trade deficit, huge
job losses in manufacturing, and new concerns of job security in
the technology and services industry, Karmarkar said.
Offshoring activities have led to situations in which routine
call centers located in countries such as India provide service
support to American customers. While some students may chuckle at
the thought of speaking to an Indian employee when their computer
freezes, the consequences of companies moving abroad are more
sobering.
“Goldman Sachs (a wealth management company) estimates
that offshoring has accounted for roughly half a million layoffs in
the past three years. Looking forward, perhaps the best-known
projection is by Forrester, an information technology consulting
firm, which expects the number of U.S. jobs outsourced to grow from
about 400,000 in 2004 to 3.3 million by 2015,” according to
“Offshoring Service Jobs: Bane or Boon ““ and What to
Do?” which is an economic thinktanks’ (the Brookings
Institution) policy brief.
Policy makers’ past experiences with the phenomenon of
offshoring do not provide much hope.
“There was a definitive loss of competitiveness, partly
because the U.S. didn’t respond aggressively enough. … Big
chunks have been lost in manufacturing since the 1970s,”
Karmarkar said.
Economists agree that offshoring and the precarious nature of
job security are issues either President Bush or Sen. John Kerry
will have to deal with, once elected.
“The difficulty is that it’s a dilemma where the
fixes are not very easy. It will take a few years to work through
this problem,” Karmarkar said.
And being able to delegate within the Oval Office for the next
four years may depend on how the candidates propose to cope with
the inevitable job loss.
“In the past, the impact on the U.S. labor market
primarily was felt by blue collar workers (often low skilled/low
wage) in manufacturing. The new electronic means affect white
collar workers including relatively educated/high wage type
workers. These are folks who are likely to vote and be politically
active,” said Anderson Professor Daniel Mitchell in an
e-mail.
While both of the two main candidates advocate free and fair
trade, differences arise in how strict their policies will be when
looking at their campaign agendas.
“Neither candidate will advocate policies such as tariffs
or quotas that limit trade. Bush, while not advocating such
policies, nonetheless has been willing to implement them,”
Mitchell said.
“Kerry is likely to advocate including “˜labor
standards’ in trade agreements with other countries which
(former President) Clinton did in the North American Free Trade
Agreement and other arrangements. These in fact have only a
marginal impact on trade,” Mitchell added, revealing the way
in which Kerry would likely deal with international economics.
Bush’s “Agenda for America” plans on combating
the effects of offshoring in a variety of ways, including creating
opportunities for job training, encouraging research and
development, and opening global markets.
Bush focuses on assistance to jobless workers and communities
who have lost “significant portions of their job base”
by creating “opportunity zones,” which would hopefully
encourage businesses to enter these communities and provide
employment, according to his “Agenda for America.”
In addition to job re-training and enhancing free and fair
trade, Kerry advocates removing special tax breaks and rewards to
companies that practice outsourcing, according to the Kerry-Edwards
Economic Plan, which can be found on the Kerry campaign Web
site.
“Kerry will eliminate all the rules that allow companies
to “˜defer’ paying taxes until they bring the profits
back to the United States. This will ensure that American companies
will be taxed on their foreign subsidiaries’ profits just
like they are taxed on their domestic profits,” the
Kerry-Edwards plan states.
What seems critical to many economists is that offshoring will
continue to occur. Open markets are the best way to take advantage
of an increase in global wealth, and that job re-training is
crucial to dealing with mass layoffs.
“Job creation takes time and jobs of the same quality are
not being created. It will take time for job creation to catch
up,” Karmarkar said, adding that the responsibility of
re-training the unemployed will lie on the individual, the
companies, and the policy makers.