Source: WSJ
More and more companies are hiring non-U.S. workers as a larger % of their workforce than ever before. This is due to a number of factors including growth outside of the U.S. in emerging markets, the great income stagnation of the Bush presidency, erosions in U.S. labor laws but also…these multinational companies are taking advantage of existing tax law loopholes that they lobbied furiously for and there are simply no real penalties or extra costs to these companies who are outsourcing jobs to foreign countries.
All of this is not by accident; legislators were bought at a price and multinational companies are raking in the profits…funneling them back up to their wealthy shareholders. There are very few protections any more for American workers (but there used to be) and there are very few penalties or financial disincentives to continue sending jobs overseas.
The WSJ has the story:
The companies cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show. That’s a big switch from the 1990s, when they added jobs everywhere: 4.4 million in the U.S. and 2.7 million abroad.
In all, U.S. multinationals employed 21.1 million people at home in 2009 and 10.3 million elsewhere, including increasing numbers of higher-skilled foreign workers.
The NY Times has the story:
A new Bureau of Economic Analysis report shows that in 2010, the worldwide work force employed by United States-based multinationals grew 0.5 percent, to 34 million workers.
Within these companies, their foreign payrolls grew 1.5 percent, to 11 million overseas workers.
Their domestic payrolls, on the other hand, grew about 0.1 percent, to 23 million workers. That meager growth at home was still welcome news, though, considering that in the same year total private sector employment in the United States fell by 0.6 percent. The United States economy was still reeling from the financial crisis, and a lot of that job growth at home was likely enabled by sales growth abroad.
With all of the challenges that Americans are experiencing relative to the economy…some CEO’s say that manufacturing jobs will be coming back to the U.S. A business cost is a business cost…and even though labor in China is cheaper – the demand for energy is so significant that energy costs are significantly higher here than in the U.S. In addition to the energy advantage that the U.S. has…in China – due to inflation and other factors – Chinese workers are gaining 10% pay increases year over year. Bottom line – some manufacturing is coming back.
”Now the U.S. is going to be much more competitive on the global scene in terms of manufacturing costs.”
~Charles Bunch, PPG Industries chairman & CEO
MSNBC has the story:
According to a survey by the Boston Consulting Group of executives at 106 manufacturing companies with $1 billion or more in sales, 37 percent said they are planning or “actively considering” onshoring. Among companies with more than $10 billion in revenue, that percentage shot up to nearly half. Leading the movement were companies that make rubber and plastic products, industrial machinery and electronics and computer equipment.
Manufacturing executives cite several factors driving their decision, said BCG senior partner Harold Sirkin. The first is that the cheap Chinese labor that looked so appealing 10 years ago isn’t so cheap anymore.
Watch this exchange on CNBC regarding manufacturing jobs coming back from China back to the U.S.
