Indiana News

Is the U.S. Still Outsourcing Jobs to Other Countries?

1/16/2012

President Obama is trying to turn outsourcing, or the movement of American jobs overseas, into a major theme of his re-election campaign. But a business school professor who helps write an annual report on outsourcing says the issue is more complex than the president, or any of his Republican rivals, care to discuss.

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Dr. Arie Lewin a professor at the Fuqua School of Business at Duke University, says it is no longer true that thousands of U.S. jobs are being exported to China or India every year. China, in fact, is starting to experience its own labor crisis despite, or perhaps because of, heavy government involvement in its economy.

"China is facing the problem that their wage inflation and worker's expectation is such that they will lose their edge in the very low end of manufacturing," Lewin says.

Lewin says manufacturing jobs have recently increased in the U.S., though they are different than the manufacturing jobs that were common in previous generations. That, Lewin says, makes it hard for those who lost manufacturing jobs to go back to work.

"(The jobs) required training, and in many cases these people were not trainable because they didn't have the educational background to learn more complicated industrial machinery," Lewin says.

In fact, the manufacturing jobs of old, as well as other jobs lost to lower-wage countries years ago, proabably aren't coming back to the U.S., something Lewin says should have been part of Obama's "Insourcing" conference last week.

"The jobs that come back are more complex. They are not like the same old jobs, and that's one thing the president did not talk about."

While the president talks about maintaining a lower payroll tax rate as a way to help companies add more jobs in America, Lewin says a bigger impediment is the 35% corporate tax rate, one of the highest in the world.

"If we could give our companies a competitive advantage against their competitors in the Western countries, then we would see more manufacturing come into the United States."

Lewin says the corporate tax rate could be abolished without government revenue being affected. He says that's because there are so many loopholes, many large businesses pay very little, if any, corporate income tax.

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