Last week's release of employment numbers confirmed what most Americans already knew: the U.S. job market is still weaker than it should be. While the population grew by 220,000 in September, the economy added only 96,000 jobs – certainly not enough to provide any real expansion of employment opportunities.
With numbers like these it is no surprise that the American public is concerned with jobs moving overseas. Yet while offshoring, or overseas outsourcing, remains a very real threat for employees in many sectors of the economy, very little has been done to address this sort of job loss.
It is true that globalization is here to stay and that offshoring is a byproduct of the connected world we live in. It is just as true, however, that there are steps policymakers can and should take to alleviate the negative side effects that occur when jobs move abroad.
Last week, the Center for American Progress released an offshoring agenda that laid these steps out. Some can take place in the short-term. Most, though, require a long-term commitment from policymakers to increase American competitiveness and ensure that the United States is an attractive location for both workers and businesses.
Historically, the nation's strong productivity and its fair and prosperous employment climate have been the engines for middle-class growth and economic development. These attributes have not occurred in a vacuum, however. Creative policies like the GI bill in the aftermath of World War II and strong and innovative research and development policies in the 1990s helped foster economic expansion. There is no reason to think that today's woes cannot be overcome through similar policies, but thus far this Congress and administration have been reluctant to pursue them.
As a first step, policymakers should tackle offshoring by creating a bold new support system for American workers who lose their jobs. Extending unemployment benefits and providing trade adjustment assistance to service workers are responsive policies, but both are temporary band-aids that fail to address the underlying wounds that offshoring creates. A new system should be comprehensive and include healthcare, retraining, and wage insurance benefits that truly address the myriad problems laid-off workers face. Such a comprehensive approach would provide the unemployed with the supports they need to quickly move back into the workforce and continue to make a contribution to our nation's prosperity.
Congress and the administration also need to address health care costs and energy inefficiency, both of which are hurting American workers and companies. G. Richard Wagoner, the chairman of General Motors, recently said that "spiraling [health care] costs affect our country's competitiveness in a big way." Most American workers would likely agree that these outlays are a major problem – over the last three years alone the employees' share of health insurance premiums for family coverage has risen by 27%. Meanwhile, at least five million fewer jobs provide health insurance in 2004 than did in 2001.
Energy inefficiency is nearly as big of a drain on competitiveness as health care costs. For example, over one-third of U.S. energy consumption comes from office buildings, yet there are significant barriers and few incentives for builders to use energy-efficient technologies when constructing them. Meaningful reform is necessary before energy efficient buildings are commonplace. In addition, high oil prices are having a ripple effect on the economy and are driving up business expenses. To move the United States away form its reliance on oil as an energy source, the federal government should launch major new initiatives to deploy hybrid vehicles and harness biomass fuels.
Finally, the federal government should make the needed investments to improve the American research and technology climate. It is one thing when jobs go overseas because labor costs are low. It is quite another when technological advances play a role in offshoring decisions, as is happening now with the United States falling behind in critical areas like broadband penetration (the U.S. currently ranks 11th worldwide in that statistic; four years ago it was 4th). To address this problem, policymakers should develop a credible broadband national strategy aimed at achieving universal access in five years and substantially increase investment in National Telecommunications and Information Administration (NTIA) grant programs to encourage technological partnerships between businesses and local governments.
The United States should also invest heavily in research and development, beginning by doubling the National Science Foundation budget. The government's share of research funding has fallen in recent years, and the administration's most current five-year budget proposes cuts in the inflation-adjusted research and development budgets in 21 out of 23 science agencies. That is the wrong direction for the United States to head in as it tries to attract new investment and create prosperous middle-class jobs.
There is no reason to think that offshoring is an insurmountable barrier to U.S. economic growth. Ensuring that it is not, however, will require innovative policy choices – choices that our leaders must be prepared to take.
John Lyman is a research asssociate for national security and economic policy at the Center for American Progress.