Forcing Firms To Keep Jobs Stateside Could Hurt Georgia

February 20th, 2004 by Leave a Comment

By Benita Dodd

Efforts to thwart outsourcing of jobs and services abroad have reached at least 14 states, including Georgia, according to the National Conference of State Legislatures. While well intended, legislation that forces jobs to remain in the United States will prove a shortsighted attempt at micromanagement that backfires on government, policymakers and ordinary Georgians.It’s difficult to spot the silver lining when blinded by outrage over American jobs “lost” offshore, but greater harm is done at home when we hinder business from seeking cost-effective options abroad. When U.S. companies site jobs abroad, they do so to save money and improve profits. Such cost efficiency leads to American jobs saved, not lost. The lower cost of doing business is a catalyst for economic opportunity: Better profits encourage companies to diversify and grow, and more jobs are retained at home instead of companies moving abroad wholesale.

The nation’s slowing population growth, along with an aging population, is expected to produce worker shortages in the near future. One research firm, Evaluserve, in a report prepared for India’s National Association of Software and Services Companies, predicts a shortage of 5.6 million U.S. workers by 2010. Offshore outsourcing, Evaluserve told the association, is essential to U.S. economic growth. Additionally, for every $100 worth of work sent abroad by U.S. companies, it predicted that $130 to $145 will be reinvested in the U.S. economy.

The process can help government, too, by cutting costs ­­­­­­­­­– as long as cost doesn’t take precedence over quality of services. Globalization and free trade were never intended to be a one-way street or confined to our corner of the globe. Government is doing taxpayers a disservice when it does not enable outsourcing whenever and wherever it can save taxpayer dollars, promote a competitive marketplace for agency services or enhance government services. Consider the benefits of a round-the-clock government helpline without having to pay overtime, cost taxpayers more or disrupt Georgia government workers’ social and family lives.

The potential is high for unintended consequences when policymakers interfere with the ability of state agencies to purchase lower-cost services, purportedly to protect jobs in Georgia. For example, in an era of rising health care costs, a cash-strapped Grady Memorial Hospital would be prohibited from such logical cost-saving measures as allowing lab results or X-rays to be read by qualified technicians or radiologists in India at a lower cost. The hospital’s inability to tweak its budget amid rising costs could further reduce its ability to treat indigent patients.

It could prevent a struggling MARTA from inviting bids from France or Canada on, say, refurbishing of rail cars, restricting competition and inviting higher prices from a shrinking pool of bidders. It could reduce competition and raise the cost of government by eliminating scores of companies from bidding on contracts or renewing current contracts. Georgia government’s current business vendors include Office Depot, American Express, Delta Air Lines, Discover and Citicorp, and they all are involved in offshore outsourcing, according to www.whosoutsourcing.com.

Charities plead daily for Georgians to help Third World countries. Why hinder an opportunity for those countries to help themselves by advancing their workers and growing their economies? Accra, in Ghana – one of the world’s poorest nations – is where New York City’s handwritten parking tickets are digitized.

Overreacting to this inevitable process in a global economy sells Americans short, revealing an insecurity that overlooks our proven potential for innovation and resourcefulness. The focus for the few Georgians who may lose their jobs should be on education: increasing the pool of creative, knowledgeable workers who can fill high-paying jobs so that we reduce the number of lower-skilled workers whose repetitious jobs can be done elsewhere.

From a foreign policy perspective, allowing other countries to become wealthier can reduce the chance of conflict, improve their environment and is the right thing to do in a globally competitive world. The United States has earned notoriety for selective support of free trade, reflected in our penchant for imposing tariffs abroad and subsidies stateside. State efforts to impose more barriers on free trade could harm Georgia by inviting retaliatory protectionism from abroad. In fact, “American companies sell three times more IT services to the rest of the world – more than $10 billion – than they buy,” notes Dan Griswold, assistant director to the Cato Institute’s Center for Trade Policy Studies.

Take it from www.outsourcingsurvival.com, a Web-based outsourcing resource: “The biggest danger to U.S. workers isn’t overseas competition. It’s that we worry too much about other countries climbing up the ladder and not enough about finding the next higher rung for ourselves.”


Benita M. Dodd is vice president of the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (February 20, 2004). Permission to reprint in whole or in part is hereby granted, provided the author and her affiliations are cited.

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