The President’s recent focus on job creation is on target with 15-20 million Americans currently out of work. His bus tour earlier this month was well timed and the President said a great many powerful and logical things to an important group of voters. He has thankfully latched on to the single most important topic facing America today. Unemployment. However his job creation efforts are facing some very strong headwinds. Case in point: State and local governments are shedding jobs because of budget shortfalls and the private sector continues to expand the practice of offshore outsourcing. In essence, while President Obama helps to promote jobs coming in the front-door, the private sector continues to outsource jobs through the back-door.
Job Losses: Information Technology & Government
By most estimates America lost over 1 million IT jobs since 2000, which was due in a large part to offshore outsourcing. In addition, federal, state, and local entities have reduced their payrolls by approximately 500,000 to 750,000 since the start of the financial crisis. With the Federal deficit projected to be around 1.3 trillion dollars for 2012, it is not likely that Washington will go on a hiring spree any time soon. In addition, the states are projected to have a 125 billion shortfall over this time period and expected to hemorrhage 15,000-25,000 jobs per-month over the next 12-24 months.
IT Jobs & India
The sad fact remains that American companies are accelerating their use of offshore outsourcing to places like India while millions of Americans remain unemployed. However, Washington can make important changes by imposing a tax on companies who fire American workers and replace them with foreign hires. Washington could impose a tax on the company outsourcing an American job, which carries with it a one-time charge of one year’s salary of the employee. For example, if a Java programmer on Wall Street making $55,000 was replaced by a person in Mumbai, then the company in question would be required to pay an up-front fee of $55,000 to the Federal government. The new tax would help to slow down this practice, while adding needed dollars to the Federal coffer. Why should Washington continue to allow private companies to give away domestic jobs to foreign workers, or move them to foreign nations? There is little question that a strong lobby group hired by the outsourcing companies has had a great deal to do with it, but now with the 2012 Presidential Election coming up, it could be an excellent political topic to run with.
Presidential candidates from both parties have an excellent opportunity to bring the outsourcing topic into focus from now until November 6, 2012. While many consider it a political football, it will no doubt spark voter interest. Bottom line, it is time for Washington, both Democrats & Republicans to act and not turn a blind eye to this unfortunate practice.