Anti-offshoring bill lacks Silicon Valley support
A proposal to discourage U.S. companies from sending jobs to cheaper labor markets overseas has yet to see support from Silicon Valley's three members of Congress, Reps. Mike Honda, D-San Jose, Zoe Lofgren, D-San Jose and Anna Eshoo, D-Palo Alto.
Aides said to Reps. Honda and Eshoo said they were not familiar with the legislation.
"Congresswoman Lofgren has not yet read the bill and will not take action dealing with outsourcing until a report from the General Accounting Office is presented," says a spokeswoman for Ms. Lofgren. The GAO is investigating how extensive job outsourcing has become and its impact on the U.S. economy.
Since the peak of the high-tech boom in 2000, Silicon Valley has lost more than 200,000 jobs. It has never been determined how many of those jobs were sent to India, China and other overseas locations where highly educated work forces will toil for a fraction of what American workers will accept.
The legislation by Rep. Bernie Sanders, Ind.-Vt., would bar companies from receiving federal grants, loans and loan guarantees if they lay off a greater percentage of workers in the United States than they lay off in other countries.
"In my view, it is an insult to the middle class of this country, that American taxpayer dollars are being used to provide loans, loan guarantees, grants, tax breaks and subsidies to huge and profitable corporations who then say to the American people: 'Thanks for the welfare, chumps. But we're closing your plant and taking your job to China," Mr. Sanders says in a written statement.
Rep. Pete Stark, D-Fremont, has signed on as a co-sponsor of the legislation, dubbed the Defending American Jobs Act of 2004.
"The idea that in this tough economy an American corporation can lay off thousands of employees, move those jobs overseas and still collect fat subsidies from the taxpayers is not only irresponsible, it's obscene," Mr. Stark says in a written statement.
The congressman cites a recent study by the Haas School of Business at the University of California, Berkeley, which says 14 million white-collar service jobs, most notably in the information technology sector, are in imminent danger of being outsourced to other countries. This constitutes 11 percent of Americans working today in non-farm payroll jobs.
"There are strong signs that the economy isn't done hemorrhaging jobs," Mr. Stark says. "We've shed 3 million good-paying manufacturing jobs in just the past three years. Just around the corner, we could see an estimated 14 million more jobs outsourced overseas, mostly in the high-paying technology sector. That kind of job loss would be staggering."
Mr. Stark was joined by Reps. Barbara Lee, D-Oakland, and Lynn Woolsey, D-Petaluma and 48 other members of Congress in endorsing the proposal.
In February, N. Gregory Mankiw, the chairman of the White House Council of Economic Advisers, stirred controversy when he told reporters: "Outsourcing is just a new way of doing international trade. More things are tradable than were tradable in the past, and that's a good thing."
And therein lies Silicon Valley's future, says job outplacement expert John Challenger, chief executive officer of Challenger, Gray & Christmas Inc. He says American small business -- the nation's largest creator of new jobs over the last decade -- may become the largest outsourcer of jobs to foreign countries.
"It is a matter of survival for these firms, especially those in the information technology sector where the company's highest costs can be payroll. One venture capitalist even told our researchers that it would be virtually impossible to start a new IT or software company in Silicon Valley without offshore outsourcing," Mr. Challenger says.
© 2004 American City Business Journals Inc.
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