Offshoring

So DID Mitt Romney Really "Create Jobs" At Staples?

Dave Johnson — Tue, 17 Jul 2012 14:46:44 -0400

Did Mitt Romney really "create 100,000 jobs" with Staples? Simple answer: only if no one else was selling office supplies, stationery, etc. before Staples came along. What Staples did was force many competing stationery, office supply and computer stores out of business, probably shifting their employees into lower-wage jobs. Staples was just one more part of the Wal-Martization of our economy in the last few decades. In our system the wealthy few have the power to lay people off or force pay cuts and then pocket the difference for themselves. We have to come to grips with that, and fix the system.

Job Creator?

Mitt Romney says he should be President because he and his company Bain Capital created 100,000 jobs at Staples and "created jobs" at other companies that Bain took over. So ... did Mitt Romney really "create jobs" at Staples? Or did he and Bain really just follow the Wal-Mart model, using the advantages that come with having large, national chains, putting a number of local, smaller businesses out of business, while shifting a lot of people into lower-paying jobs? Understanding the difference is important because Romney says he will help the country "create jobs" the way he helped "create jobs" at Staples.

He says his experience is just what is needed to solve our national jobs emergency. He wants to apply the methods that "created 100,000 jobs at Staples" to the entire country. He says he will cut regulations and cut government and make the country more "business-friendly." This means we should take a good look at Staples and the rest of the companies Mitt Romney and Bain Capital and others like them operated, and decide if this is really the way We, the People want to go.

Staples

Staples grew into a major chain because they consolidated what different kinds of stores sold, offering a one-stop-shop for stationery products, office supplies, office-furniture, computers, etc. They also were able to be competitive because of the advantages of scale as they grew into a national chain, centralizing functions like accounting, purchasing, legal, marketing, etc. And never underestimate the power of having a ton of cash at your disposal. This is all just smart business, well executed.

As Staples grew it overtook competing chains like Businessland and others. In other words, Staples took business from other, existing stores -- often local retailers. Staples did not “create” jobs, it shifted office-supply jobs from local stores, etc., probably to lower-paying jobs. (The former owners of local businesses certainly were worse off from this.) They likely even lowered overall office-supply, stationery, etc. employment in the larger economy.

Low Wages?

How do these"Romney job creator" jobs stack up against other jobs? Average Staples salaries for job postings nationwide are 51% lower than average salaries for all job postings. The pay at Staples appears to be around $8-10 an hour. That's $16-20,000 a year, certainly not enough to support a family, or even pay rent in many areas, never mind buying food. (The 2012 poverty guideline for family of four is $23,050.)

Wal-Martization

Big, national chain stores like Wal-Mart have tremendous advantages over local businesses because they are able to take advantage of scale. They buy from manufacturers and distributors in mass quantities, which means they can demand lower prices from them, and offer lower prices to customers. They can centralize accounting, HR and other management functions and employ these people in-house instead of contracting with local accounting firms, etc., also enabling them to offer lower prices.

And when they are big enough they can squeeze, and squeeze and squeeze their workers for lower wages and fewer benefits, their suppliers for discounts and other concessions, and even their customers by reducing support and staff, again enabling them to offer lower prices.

This is just the kind of "job creation" that makes a few people really wealthy at the expense of the rest of us, "hollowing out" the middle class.

(Here's an industry secret --those multi-page advertising supplements that come in the Sunday paper are profit centers for the chains, not an advertising expense. The market power of these big chains enables them to demand "market development" payments from product manufacturers and distributors before they can gain shelf space, effectively making the newspaper and other advertising into profit centers instead of advertising costs.)

The Effect On America

I wrote about the impact of this "squeeze them all" business model on the American landscape in Lorain, OH Keep It Made In America Town Hall Meeting:

As you drive from town to town in Michigan and Ohio you see one after another a ring of the "big box" stores and national chain stores around each city. You also see the "brownfields" of rusted-out, closed factories, empty, falling-down buildings. Then you go to the downtown and you see boarded up houses, empty storefronts, deteriorating and deteriorated communities, idle people standing on corners. As you drive into these towns you can just see what is happening in a nutshell.

You used to hear about how Wal-Mart was predatory, how it would show up in an area and after a while the downtowns would dry up, local business-owners would go broke, local business employees would be laid off, and the local people would have to work for low wages at Wal-Mart, while the region's spending money would go off to the wealthy few who run these things.

Well a juicy story of devastation like that one gets around, and there are those who hear it and say, "Hey, that's a great idea, I wanna get me some of that." So the Wal-Mart business model has taken off and now there are any number of these vultures, ringing the cities and towns around the country, so often private-equity owned. They are draining away the lifeblood of the downtowns, fighting off the unions to keep wages down, even demanding tax breaks to move in and "create jobs." You see all the same stores circling every town now, running all of the local and regional businesses unto the ground.

Restructuring?

The changes in our economy that are hollowing out the middle class come from the restructuring that Wal-Martization represents. (And bad trade deals, never forget that.) Big, national chains have natural advantages over small, local businesses. And when they are big enough they have the power to squeeze employees, suppliers and even customers. The same kinds of advantages also hold for other industries.

Big, multinational corporations have advantages of scale over smaller companies. Etc., throughout our system. And big companies have tremendous power to squeeze workers, making them accept lower pay and benefits. They have the power to squeeze suppliers and customers as well.

These giant companies even have the power to squeeze communities and even states, demanding tax concessions with the threat of relocation. This has put our tax base in a downward spiral along with our wages.

These giant businesses have the wealth and power to force changes that move the benefits of business and our economy entirely to a few at the very top.

The Playing Field

As I wrote above, this is all just smart business, well executed. Business are just neutral bundles of contracts that operating on a playing field of laws and regulations. They only do what we let them do with the laws and regulations that we set out there for them to operate under, and those that do that the best and smartest win the game.

But why would We, the People allow businesses to do things the way Wal-Mart and the rest do them with the terrible results we see all around us? Don't we want businesses that benefit all of us? Isn't that the point of having a We, the People country? Don't we want businesses that pay good wages, provide good products and services, and pay us back with taxes that enable us to have good infrastructure, internal improvements, and public structures like good schools, universities, courts, police, firefighters, health care, retirement and a fair share of all the other benefits of modern society?

Why is the playing field defined in a way that is so obviously hurting us and funneling all the benefits of our economy to a very few at the top? This restructuring is occurring the way it is because we let these businesses do these things to us. Businesses are not good or bad -- they can't be, they are not sentient and do not have morals. They are just bundles of contracts. Again, businesses are neutral, operating on a playing field defined by us. We can change that.

Our problem today is that a few people are able to change the rules of that playing field, for their own benefit. Once we allow money to influence our government decision-making and our public attitudes and understandings at all, then of course it will influence that decision making to their advantage, and will do so more and more as they gain more wealth and power from it, until there is nothing left. This is the road we are on.

The playing field is tilting and tilting and We, the People are starting to fall off the edge.

What Can We Do?

Cut to the chase. We currently operate under an economic paradigm, or system, in which the Romneys have so much power they can fire masses of people or force people to take pay cuts, and then pocket the difference for themselves. They can squeeze their suppliers for greater and greater concessions and then pocket the difference for themselves. We have to come to grips with that.

Romney/Bain didn't really create jobs with Staples, they put small office and stationery retailers and other already-existing competitors out of businesses and moved the workers from those outlets into jobs at Staples that pay very little. In other words, they didn't create 100,000 jobs, they lowered 100,000 people's wages.

Romney made his money opertating on a playing field of business rules that let him and Bain and Wal-Mart and the rest do what they do. They were all able to tilt that playing field in their favor using the wealth and power they already had, and they tilted it in ways that gain them more wealth and power.

Mitt Romney gained his wealth and power on that playing field, and is campaigning with a promise to further tilt that playing field in favor of the few who already have great wealth and power.

We can change those rules. We can demand better pay, higher taxes at the top, better products, better service, and all the things sensible people would demand if We, the People were really in charge.

Note - while researching this post I came across Jonathan Tasini making a number of these points in the LA Times in January, in Not all jobs are equal,

Even if he's telling the truth by some measures, the fact is that private equity buyouts often enrich those who arrange them by sharp cost-cutting, including dismantling pay and benefits for most of the workers who remain or new hires who join the more "efficient" enterprise. It's simple math: To service the huge debt taken on in virtually every buyout, workers take cuts. And the new jobs aren't necessarily a path to the American dream.

Take Staples, which Romney trumpets as one of his successes. The company certainly pays some of its employees well: Staples Chairman and Chief Executive Ronald L. Sargent received a total pay package of more than $15 million in 2010. But jobs in retail — one of the fastest-growing job sectors in recent decades — tend to pay poorly, and Staples jobs don't seem to be an exception to that rule.

Romney and the Rise of the Superpredator Corporate Class

Richard Eskow — Sun, 24 Jun 2012 23:14:56 -0400

Remember the "superpredators"? They were the supposedly super-violent youngsters of dark complexion that conservatives kept screaming about in the 1990s. We were told they were about to unleash an unprecedented wave of vicious crime any day now.

Those superpredators don't exist, and never did. But the myth of the "superpredator" offers us a new (and, admittedly, partially ironic) lens through which to view today's corporate executives, a class of people which is apparently remorseless about the harm it causes in the pursuit of self-enrichment.

Let's be clear: No group of human beings is uniquely predisposed toward evil. But society and government are supposed to discourage people from from acting on their worst impulses, and when it comes to the corporate class they - and we - have failed.

Now the rise of the Corporate Superpredator Class could culminate in the election of one of its own to the highest office in the land.

Fear of Children

The myth of the juvenile "superpredator" was promoted by conservatives in the 1990s and 2000s. As Fairness and Accuracy in Media reported in 1998, politicized professors and mainstream commentators were terrifying the public with stories about the "remorseless brutality" we can expect to see from the "teenaged time bomb" that TIME Magazine's scare piece described as follows: "They are just four, five and six years old now, but already they are making criminologists nervous."

But those superpredator children never existed. In fact, juvenile crime rates have declined "significantly" since the early 1990s, according to FBI statistics. But the fear engendered by superpredator scare tactics has distracted millions of Americans from their economic plight, and the forces behind it. Maybe that's why ALEC and other corporate-sponsored organizations have funded the "Stand Your Ground" laws that led to the death of Trayvon Martin and a number of other young people.

If stoking fear of our minority children was a tactic to divert attention from the behavior of corporate leaders, it's been remarkably successful. Stories that "superpredators" were preying on the survivors of Hurricane Katrina helped distract the public temporarily from the real horror taking place there - the horror of government neglect.

The "superpredator" described in now-discredited sociological works was a person who was inherently amoral and criminal because he lived in a social milieu which lacked both a moral framework and a means of restraining and punishing bad behavior.

Which gets us to Mitt Romney and today's top corporate executives.

One of Their Own

A highly wealthy American is now running for the highest office in the land with a nomination bought and paid for by his ultra-wealthy backers. The corporate class finally has the chance to elect one of its own, rather than depending on the compliance of someone else in that office.

Am I saying that the country's top executives, some of whom I have known and worked with, are the real-life equivalent of those mythical, ultra-violent young people described in the "superpredator" scare stories? No. Many of them are good, decent people who are doing the best job they can.

But there is a new culture of corporate leadership, one that's been growing over the last thirty to forty years. This new culture is less moral and more selfish then the leadership culture that preceded it, and it is almost sociopathically indifferent to the effects of its own behavior on other people.

Spotting a Superpredator

The now-discredited theory laid out the characteristics of those mythical teen superpredators. DeIulio said each generation of predator would be "three times as dangerous" as the generation that preceded it. They would, said DeIulio, be amoral, "radically impulsive," and "brutally remorseless. "

Consider the evidence regarding corporate America:

No current bank CEO has expressed remorse for the global impact of their misbehavior: tens of trillions of dollars in lost wealth, hundreds of millions of un- or under-employed people worldwide (and roughly 24 million of them here in the US), millions of foreclosures, nearly one home in three underwater, and a steep rise of families (including children) living in poverty.

Many of these bank CEOs are second- and third-generation bankers. But then, as John DiIulio wrote, "kids of whatever race, creed, or color are most likely to become criminally depraved when they are morally deprived" in their upbringing.

Superpredators in Everyday Life

The near-sociopathic disregard for others isn't limited to Wall Street, either. When I flew from New York to Los Angeles on Saturday I stood in a crowd of people for over an hour waiting to pass through security. The temperature was high, there was no water, no place to sit, nobody coming through to check on the well-being of the people in line (some of whom were elderly, disabled, or carrying small children). This radical disregard for customer well-being on behalf of an entire industry would have been considered unthinkable a couple of decades ago.

Other companies, including cable television outlets, provide inferior service and then force customers to sacrifice hours out of their day in order to correct a mistake which was not theirs to begin with.

Facebook is in a category of its own. Its interface is badly designed. It treats its customers' privacy with arrogant disregard. It hasn't provided a real innovation since it was first conceived, an idea which was not what it ultimately became (and which was not exactly original to Facebook's founders). Like other corporations of the corporate super-predator class, Facebook believes that its customers (like other members of society) are there to be used, not served.

The corporate-superpredator mentality isn't limited to customers, either, or even to innocent bystanders. Shareholders, once considered the true owners of a publicly traded company, are now considered just another class of human being to be bilked, swindled, and misled. That viewpoint has been encouraged by the SEC, through the collusion of the Justice Department, which has often allowed investor fraud to be settled with no criminal charges for the wrongdoers and a big settlement that's paid by ... the swindled shareholders themselves.

Personal Testimony

Maybe you can relate to this. I actually found myself saying this, or something like it, to somebody working at a router company's call center:

"For the love of God, as one human being to another, I have already gone through your scripted process with other employees for two and a half hours. On behalf of the souls within each of us, please do not start the twenty-minute script that begins, 'First unplug your router and wait twenty seconds' because I've been through that four times already."

As you might imagine, there was a confused pause. Then he said: "First, unplug your router and wait twenty seconds."

That router company was exhibiting one of the characteristics of the Corporate Superpredator Class: a near-pathological indifference to its own customers' humanity. It doesn't have to be that way.

"Je ne regrette rien ..."

John Iulio: "(T)he super-predators are radically self-regarding. They regret getting caught."

The only banker who has publicly expressed real remorse at what the industry has done is former Citigroup chair John Reed, in his thoughtful interview with Bill Moyers. But Reed's a member of the earlier, non-predatory breed of corporate executive who believed in the executive's traditional mission: to deliver a service or product well, to build a company that will last for the long haul, and to treat everyone fairly in the process.

That's the ethic that typically motivated executives across political boundaries. Even industrialists like Howard Hughes and Henry Ford, both of whom became virulently right-wing (Ford also became publicly anti-Semitic), were genuine engineering and business innovators. That distinguishes them from the executives in today's bloated financial sector, or predatory executives in non-innovative businesses.

So too did Steve Jobs' dedication to creating the best possible products for his customers. His offshoring practices brought him well-deserved criticism from me and others, but his success was built on creation and not predation.

It's unlikely that a new Steve Jobs could succeed in today's super-predator business economy. Today's corporate model is Mark Zuckerberg's: no manufacturing costs, no attention to detail or design, no bothersome concerns about quality. Just capture a market aggressively and protect yourself from all comers until you can really enrich yourself with a pumped-up IPO.

You're so vain, you probably think these words are about you

How "radically self-regarding" are today's superpredator CEOs? It's not enough to escape censure or conviction for their deeds. Like JPMorgan Chase CEO Jamie Dimon, they demand adoration from the public that they've so badly abused, and they're furious if they don't get it. Like Dimon, they're capable of claiming they're far better than their peers, while at the same time arguing that none of them should ever be criticized.

(DeIulio: "Under some conditions they are affectionate and loyal to fellow gang members or relatives ...")

And, like Dimon, they're more than happy to propose cutting Social Security and Medicare benefits for the elderly in order to pay the costs for their own malfeasance and ensure that their own taxes are kept low. (DeIulio: ".... but not even morns or grandmorns are sacred to them.")

The self regard can become truly stunning, as when Goldman Sachs CEO Lloyd Blankfein said "We're doing God's work." The apotheosis of corporate super-vanity may well have come when hedge fund manager Stephen Schwarzman of Blackstone claimed that raising his taxes to the level paid by ordinary citizens was "like when Hitler invaded Poland in 1939."

To a superpredator, being treated like other human beings is like being subjected to a war of extermination.

Superpredators Are Made, Not Born

How do people like this rise to positions of prominence?

My own business experience included a number of experiences that served as a training ground for predation: Corporate 'team building' exercises that rewarded cynicism and idealized the abuse of customers. Tests of my willingness to bend ethically. Slang terms from my bosses and peers that fostered a culture of insensitivity toward other people.

And mine was a pretty mild corporate experience. The people I worked for and with tended to be moral, fair, and ethical people for the most part. There are many of them out there, and a lot of them are still running corporations. But the financial inequities between the 99 percent and the 1 percent are at play among the 1 percent, too. The wealthiest and fastest-rising corporate stars are those who display the characteristics of the corporate predator.

But the superpredators couldn't exist if government policy didn't encourage their rise: through tax policy, through deregulation, through a refusal to enforce and strengthen antitrust laws (it's hard for customers to avoid a predatory company if it has no real competitors) through lax enforcement of current laws, and through the unwillingness of our leaders to "name and shame" those who exploit their customers, their shareholders, or their society in pursuit of selfish ends.

Outsourcer in Chief?

Is David Axelrod right to describe Mitt Romney as the "Outsourcer in Chief," as he did in a recent press call? Yes - provided that he's allowed a little poetic license. Axelrod was also right when he added that Romney's job at Bain Capital was maximizing value for his investors, not creating or preserving US jobs. Many corporate executives, including me, have been obliged to consider outsourcing when working in a for-profit environment.

The issue is deeper than that. Bain Capital's fortunes, and Mitt Romney's, were always dependent on the kindness of strangers - specifically, strangers in high government office. Bain's first big success was made possible because of tax concessions granted to it by the government of Massachusetts.

Romney's personal wealth was greatly increased by the Federal government's decision to treat much of his income as investment income and tax it at a much lower rate than many schoolteachers or secretaries pay. Romney was able to pay the low 15 percent rate, which was supposedly create to encourage personal investment, even at times when the income in question came from services fees and not from investing his own capital.

Romney and his partners also benefited from the fact that government leaders chose to offer this low tax rate even for investments that took jobs away, destroyed companies, or shipped jobs overseas. The failure to distinguish between productive and destructive investment was a choice - a choice to reward destructive financial behavior as richly as we reward constructive financial behavior.

And that decision encouraged the growth of superpredator capitalism. After all, which is harder: To come up with a new idea and build a company around it, or to swoop down on companies, force it to acquire huge debts, use the borrowed money to pay yourself huge fees (for which you're taxed as if you were a real investor), and then use some of your new fortune to pervert the political process even more?

Enriched by government generosity, encouraged by government policy to act against the public interest: That's the Bain Capital story - and the Mitt Romney story too. Romney wasn't born bad, in a financial sense. He was encouraged to be bad by government policy, which he then entered political life in order to continue the cycle of encouragement.

There's a moral to this story, and it's a simple one: If you reward predatory behavior, you will create more predators.

Stopping the Superpredators: It's Everybody's Job

But if our corporate predators have behaved poorly, so have our political and social leaders. They've failed to censure them for their misbehavior - not just legally, but by using the 'bully pulpit' to lecture them on their misdeeds. President Obama began to do that this year, ever so gently, and even these mild words have driven the corporate class into a frenzy.

Yet it is the misbehaving executives of corporate America, along with their political enablers (Republican Rep. Spencer Bachus: "Washington exists to serve the banks") that has led these executives into a life of "moral poverty."

John DeIulio defined moral poverty this way: "It is the poverty of being without loving, capable, responsible adults who teach you right from wrong. It is the poverty of being without parents and other authorities who habituate you to feel joy at others' ioy, pain at others' pain, happiness when you do right, remorse when you do wrong. It is the poverty of growing up in the virtual absence of people who teach morality by their own everyday example and who insist that you follow suit."

It's up to our leaders - and us - to lead tomorrow's corporate executives away from a life of corporate super-predation. Fortunately, you can help. You can be one of the adults who provides a moral role model for the next generation of business leaders. You can help prevent these young people from turning into Corporate Super-Predators.

And you can help in another way: by preventing Mitt Romney from becoming President of the United States.

Conscience of a Conservative

But if society turned Mitt Romney into a corporate predator, it is Romney's conscience that must carry the burden for his lack of remorse. He has never expressed regrets for the lost jobs or human suffering created by his work.

Whatever your disappointments with Obama, we cannot allow a member of the Superpredator Corporate Class to lead this nation. Members of the Superpredator Corporate Class reinforce each other's immoral behavior, whereas Obama's genteel remonstrations of corporate America - buffered as they are by words of undeserved praise for the likes of Jamie Dimon - have driven them into an irrational frenzy.

To his great credit, John Iulio distinguished himself from the corporate predators - and from Mitt Romney - by expressing profound remorse for his actions. His expressions of regret, and his genuine efforts to undo the wrongs he had helped perpetrate, marked him as a human being of conscience and consciousness.

But before that happened, DeIulio wrote with horror about young criminals' "vacant stares and smiles, and the remorseless eyes (that) were at once too frightening and too depressing."

Which reminds me: Did you happen to catch Jamie Dimon's Capitol Hill testimony last week?

Who Protects Info You Give To Offshored Call Centers?

Dave Johnson — Fri, 16 Dec 2011 14:27:15 -0500

Companies are always looking for ways to reduce the number of people they employ, and for ways to reduce the pay and benefits for the ones they keep. One way they have been doing this is to send jobs out of the country to places where the people don't have the protections of democracy. Then they come back here and threaten the rest of us with losing our jobs, too, if we don't give in. We have to find ways to restore the protections of democracy.

We are all familiar with "offshoring." This is the process of packing up a factory or office, and moving what it does outside of the US to places where people are paid less -- usually because they don't have any say in how their country is run (a.k.a. democracy). Then the company brings the same products or services back to the US and calls that "trade." Allowing this to happen makes democracy a competitive disadvantage.

One (more) job that has been offshored is call centers. We call to place an order or to get customer service, etc., and the person we talk to is in another country and we can't understand them. This is frustrating, but it is even more frustrating when you think that this is one more job that someone here used to do.

Earlier this week I wrote about a new bill called The U.S. Call Center Worker and Consumer Protection Act that would help bring call-center jobs back to the US. In Call-Center Bill Would Let Customers Ask To Talk To Americans, I explained,

Today many call-center jobs are being moved out of the country to India and the Philippines. This costs American jobs, and can be very frustrating to consumers who have to speak to people who they cannot understand because of language problems or cultural differences. The The U.S. Call Center Worker and Consumer Protection Act gives consumers the right to ask where the person they are speaking with is based, and ask for an American-based representative instead.

Not JUST Jobs Lost -- Data Privacy Is Lost, Too

A new study by the Communication Workers of America backs up the need for that bill. The report is called, Why Shipping Call Center Jobs Overseas Hurts Us Back Home. The study found that offshoring call-centers undoes protection of Americans’ private information. Personal data can be available to people who could use it for criminal purposes. Also, once information is sent across borders governments do not need warrants to collect this info.

From the press release, CWA Study Exposes Overseas Call Center Issues That Threaten American Consumers’ Personal Information,

The Communications Workers of America today released a sobering report detailing the linkage between the off-shoring of call center jobs and a range of serious negative effects on U.S. consumers and job seekers, including placing consumers’ personal information at risk.

… Key findings of the report include:

When a U.S. customer’s financial information is sent overseas, it loses the protections of the 4th Amendment to the Constitution. As long as an individual’s data is not specifically “targeted,” the data can be collected and analyzed by U.S. federal agencies without a warrant.
The documented security hazards are in addition to the damage caused to individuals and communities in the United States by the movement of local call center jobs overseas, off-shoring that often comes after taxpayer-funded dollars and other incentives are heaped upon the corporation.
As of this year, the Philippines surpassed India as the top destination for U.S. companies off-shoring call center jobs. American companies also have opened call centers in countries including Egypt, Saudi Arabia, China and Mexico.
Americans’ personal data also is at risk in foreign call centers in the relative difficulty in providing background checks on employees. Many foreign nations do not maintain central criminal databases and do not have standard identifiers such as the U.S. Social Security number. As a result, proper background checks are expensive, with one estimate putting the cost at up to $1,000 per employee.

This is one more way that offshoring is hurting us. By sending call-center jobs out of the country we are sending the data we give to those call centers out of the country and outside of the protection of our laws. So this call-center bill, named The U.S. Call Center Worker and Consumer Protection Act (H.R.3596) is important to us. It is bipartisan, introduced by Rep. Tim Bishop (D-N.Y.) and Rep. David McKinley (R-W.Va.). Call your own member of Congress and let them know that you support this.

Call-Center Bill Would Let Customers Ask To Talk To Americans

Dave Johnson — Tue, 13 Dec 2011 14:24:40 -0500

Last week Rep. Tim Bishop (D-N.Y.) and Rep. David McKinley (R-W.Va.) introduced The U.S. Call Center Worker and Consumer Protection Act, a bipartisan bill to both help fight the offshoring of call-center jobs and protect consumers. This proposed legislation would let the public know which companies are engaging in sending jobs out of the country, let customers ask to use an American call center instead, and ban federal grants or guaranteed loans to American companies that move call center jobs out of the US. The bill should also give us the right to get a person on the phone at all, within a few minutes, and not requiring a long phone tree of choices first, but I guess that's for another day...

Today many call-center jobs are being moved out of the country to India and the Philippines. This costs American jobs, and can be very frustrating to consumers who have to speak to people who they cannot understand because of language problems or cultural differences. The The U.S. Call Center Worker and Consumer Protection Act gives consumers the right to ask where the person they are speaking with is based, and ask for an American-based representative instead. Among the things this bill would accomplish:

Require the Department of Labor to publicly list firms that move call center jobs overseas.
Make these firms ineligible for any direct or indirect federal loans or loan guarantees for five years.
Require 120 day advance notification of a proposed move off-shore.
Require call center employees to tell U.S. consumers where they are located, if asked.
Require that call centers transfer calls to a U.S. call center if asked.

At the Huffington Post, David Jamieson writes more about this bill, in, Overseas Call Centers Target Of Anti-Outsourcing Bill,

Although some call-center jobs have trickled back into the U.S. in recent years, the long-term trend has shown thousands of American-based customer service positions being outsourced to India and the Philippines, where workers come considerably cheaper. The Philippines' call-center industry recently surpassed India's as the largest in the world, according to a report in USA Today.

... In addition to scuttling any grants or guaranteed loans for a period of five years, the U.S. Call Center Worker and Consumer Protection Act would require that companies that are about to offshore call-center jobs notify the Labor Department 120 days before they do so. The companies would then be put on a public list. Bishop said the law would apply to businesses in all industries.

Such a bill is unlikely to garner strong support from anti-protectionist, free-trade GOP members of Congress, but the inclusion of the call-center rules adds an interesting wrinkle. Given the widespread frustration of customers who end up on long calls with agents overseas, plenty of constituents, Republican and Democrat alike, would probably appreciate the option of dealing more regularly with customer service reps based in America.

In a press release, the Communications Workers of America, the union that represents call-center employees, writes,

The Communications Workers of America is strongly backing new, bi-partisan legislation introduced in the House of Representatives today that would ban federal grants and loans to corporations who move U.S. call center jobs overseas. CWA represents 700,000 workers in telecommunications and other sectors; more than 150,000 are customer service professionals.

.. “Americans are fed up with good-paying family supporting call center jobs here in the United States being shipped overseas so the one percent can make a little extra money,” said CWA Chief of Staff Ron Collins. This legislation does not prevent them from moving if they want, but it prevents them from gaining access to our tax dollars while they do so.”

Collins, who began his career in a U.S.-based Verizon call center, said CWA members across the country will be mobilizing support for the legislation in individual states and Congressional Districts.

“We will go door to door to reinforce to members of Congress that this is a bill their constituents want and need,” Collins said. “We appreciate Representatives Bishop, McKinley and all the members of Congress who are supporting this important legislation.”

The full text of the bill is available here:

H.R.3596 - To require a publicly available a list of all employers that relocate a call center overseas and to make such companies ineligible for Federal grants or guaranteed loans and to require disclosure of the physical location of business agents engaging in customer service communications.

Erie, Pa., Town Hall: "No Country Ever Went Broke Investing In Its Own People"

Dave Johnson — Tue, 19 Oct 2010 13:03:00 -0400

Last night's "Keep It Made In America" Town Hall meeting was at the Bayfront Convention Center in Erie, Pennsylvania. Kyle Foust, Chairman of the Erie County Council welcomed the attendees and led off the Town Hall meeting, quoting Hubert Humphrey: "No country ever went broke by investing in its own people."

I recently spoke with a Tea Party member who did not know that it is government that builds the roads, airports, sewer systems, etc. that make up the infrastructure that is the foundation of our country's ability to have companies at all. He actually thought that private companies do this, and that "government spending" just "takes money out of the economy." Maybe this is why so many candidates in this election say that "government spending" is bad but will not say, no matter how hard they are pressed, what spending they plan to cut in their quest for "smaller government."

The Town Hall

Following a Unitarian invocation by Rev Steve Aschmann, Scott Paul of the Alliance for American Manufacturing (AAM) -- the organization that is putting on these "Keep It Made In America" Town Hall events -- explained what AAM is about, strengthening manufacturing in this country. Scott gave the audience several facts about manufacturing:

74% of Tea Party supporters support more manufacturing, as do 82% of union members.
563,500 in Pennsylvania work in the manufacturing sector
This is down from 864,000 in 2000
And represents a 35% cut in manufacturing jobs.

Candidates Speak

Two local House candidates spoke at this meeting. Mike Kelley, Republican candidate for Congress spoke first.

"We can’t control unfair competition. Just make it fair, that’s all, make it fair. Enforce the rules. We play by the rules, other people don’t. Chinese currency."

Q: "Will you support buy American policies?" A: Who would not? Especially in taxpayer-funded projects.
Q: "Hold China accountable?" A: The world has been waiting for America to take the lead. China has to be held accountable when they break the rules.
Q: "Policies?" Competition, we never back away from competition. We need to get a national strategy in place. Taxes – need a VAT. Others all do it. (Note, Kelley's answer is good for manufacturing. Short explanation: Other countries use a VAT to boost their manufacturing sector. Their manufacturers get a VAT rebate, but goods imported from the US do not, so in effect a VAT is a either a subsidy of their companies or a tariff on imports from us.)

Next up was his opponent in the race, Congresswoman Kathy Dahlkemper:

We need to get back to a manufacturing economy, to provide that good family-sustaining wage.

How to keep it made in America, three points:
1) Close the loopholes, Republicans’s did not vote with us on this. My opponent has pledged, signed a pledge no to remove the tax advantages given to companies for moving factories out of the country and outsourcing American jobs. (Note see my post on this today.)
2) Stop China’s cheating. Everyone knows China cheats. The currency bill, voted for it, the Chamber of Commerce - that's the national Chamber which is a very different thing from the local Chambers -- is against it. We also have to stop China's illegal trade practices and dumping (selling below cost to capture markets).
3) Invest in our domestic manufacturing base. The COMPETES act has passed the House, but Senate… Education.

Raw materials – rare earth elements, China is saying they can get these IF they bring manufacturing t their country.
We can produce them here, but don’t. Because China subsidizes, it is not profitable to start production here.

The Panel

This Town Hall's panel of local experts:
• Kenneth Boothe Jr., General Manager, Donjon Ship Builders
• Reverend Jeffery Priscaro, St. Ann's church
• Ron Oliver, Community Labor Leader
• Tim Ryan President, Apex Offshore Wind.
• David J. Rosenberg, Head of Marketing, North America Gamesa Energy
• Hillary Bright, Blue/Green Alliance Field Organizer.

Priscaro – When people make things It create sjobsm, revenue, they buy houses, participate in economy.

Ryan – Windmills, local wind turbines on old steel mill site, made in the US. Sun Ray project in Texas used GE wind turbines, GE Transport made the gearboxes. Gemasa, of Sain, has set up manufacturing near here. The Export/Import bank financing requires high local content. We need a national Renewable Energy Standard, then there is a tremendous opportunity for American manufacturing in wind energy.

Oliver – the effect on people of losing job, moving, move in with mom, manufacturing is the heartbeat of America.

Boothe – Donjon has recently gone from 13 employees, in 10 months have 118. 125 by end of year, 150 then up to 250.

Bright – Labor and environmentalists share common goals Hadn’t recognized how intertwined manufacturing is with a healthy community, environment, wages, families, healthy communities. And healthy environment. The way we see America in future generations, manufacturing is key to recognizing that.

Q: "Where are we going to get jobs? We need the infrastructure rebuilt, everything reconstructed. How?"

Bright – AAM, others have recognized that one of the largest opportunities is in clean energy. The stimulus was a down payment. Opportunity at federal policy level like Renewable Energy Standard to create the market and the demand to get it going, otherwise we lose the race to countries like China.

Oliver – We need to create the jobs here, the stimulus was using money to buy windmills made in China.

Ryan – We need new power plants as well as wind energy power plants. National policy has been up and down up and down, industry can’t survive on federal programs that last 6 months or a year, we need national policy that looks at the next 20 years or so.

Priest, we lost jobs because of legislation, we can gina jobs by legislation.

Q: "What can we do to stop the leak of jobs from US?"

Scott Paul: Stop tax breaks to ship jobs overseas.

(Note - All pictures by Ike Gittlen, USW, click any pic for enlargement, see the entire collection here.)

Dems Right To Force Votes On Outsourcing And China Currency

Dave Johnson — Wed, 29 Sep 2010 20:00:22 -0400

Tuesday in A Chance To Show The Public -- TAKE THE VOTES I wrote,

Our form of government depends on an informed public. But currently the gap between what the public wants and what the public knows is huge. Democrats in Congress have an opportunity this week to draw sharp contrasts between the parties, so voters can be made aware of the choice this November. They owe it to the public to help them make decisions.

Specifically I cited the outsourcing/offshoring problem, where our tax policies actually give companies an incentive to move jobs out of the country, and the Chinese currency problem, where the Congress has shown China that they back the President's efforts to get them to bring their currency to market rates. Congress forced clear votes on the issues that are so important to people, so people now know where their representatives stand and can hold them accountable.

The Senate did take the vote Tuesday on stopping some of the policies that encourage companies to outsource our jobs. All Republicans and a few "corporate Democrats" stood with the Wall Street and the big multinationals and filibustered against Main Street and jobs. And now the public knows.

The bill will not become law, but the public can see who stood up for them and who stood up for the job-killers. This is just as important -- possibly more important in the long run -- because it helps break through the corporate-financed smokescreen that masks the real agenda that pushes for a few becoming vastly wealthy at the expense of the rest of us. The public can finally see clearly and act accordingly.

Once again, because of this vote the public now knows that all the Republicans and a few "corporate Democrats" voted to continue the policies that encourage companies to move our jobs out of the country.

Wednesday the House passed a bill to take action on currency manipulation, which currently is in the news because of China's manipulation of its currency which gives goods made in China a pricing advantage of up to 40%. This bill passed 348-79 with broad bipartisan support.

The trends in policy and polling are going in good directions. The fact that Democrats are in the lead on currency and are being joined by many Republicans shows that the "anti-protectionist" rap is no longer working. The public is extremely supportive of these actions. Taking these on is smart politics as well as good policy.

I wrote this in Tuesday's post and I'd like to conclude by repeating it: Democrats are leading in the right direction on currency, on manufacturing and on jobs. But it is important to TAKE THE VOTES, so the public can see for sure who is for things and who is against things. The voting matters as much for what the public understands, not whether it will pass, tells the public that there are politicians who get it. Theater matters because the public, in a democracy, must know where their representatives stand. And voting for smart policies, pas or fail, is not just theater, it is doing the right thing.

Taking these votes combines smart politics and smart substance and it is smart before an election. The public deserves to know.

A Tax Trick That Forces Companies To Close Factories

Dave Johnson — Fri, 16 Apr 2010 11:01:43 -0400

Yesterday was April 15, so I wrote about Tax Tricks. Here's a tax trick to talk about: Offshore Tax Havens for corporations.

Here's one way that offshore tax havens work. You make an item in one country, and sell it at cost to a subsidiary that is based (post office box) in a tax haven country with no or low taxes. So there is no profit to report in the country that it was made in. Then, your company or another subsidiary buys it for import in the US, for a price near to the amount the product will be sold for here. So when it sells, there is no profit to be taxed here. All the profit occurs in the low-or-no tax country. We, the People collect no taxes with which to pay for the schools and roads that make our economy competitive.

This tax trick encourages companies to move offshore, closing factories, laying off workers, kill the local suppliers and force costs onto the community. So not only are we losing the tax base and suffering the loss of the jobs and factory, we're picking up many of the costs. When a company like Whirlpool says they have to close a plant and destroy a community for competitive reasons, it's because they can do it, and if they don't their competitors will. If their competitors do and they don't respond they lose out, even to the possible point of going out of business (and closing factories and destroying communities.)

Don't blame the companies. Companies do what we let them do. If you don't take advantage of this your competitors will. If your competitors gain enough advantage and you don't you even face going out of business -- and closing factories, destroying communities, putting the costs on the public etc. So by allowing this, Congress forces companies to do this. The word you hear is "encourages" but really, in a competitive environment, allowing it at all forces not encourages.

It is OUR job to set up the playing field on which these companies compete and to define the rules they will use. Zach Carter writes in 10 Ways to Force the Stinking Rich to Share Their Wealth,

According to the Government Accountability Office, 83 of the 100 largest American corporations (pdf) engage in this kind of tax evasion. All of those companies have lobbyists.

These companies do it because we let them, which means we make them do it.

Congress: FIX IT!

U.S. Stimulus Helping Chinese, Spanish Wind Energy Industries

Natasha Chart — Tue, 03 Nov 2009 02:53:57 -0500

Wind energy is supposed to be able to create thousands of manufacturing jobs, but unfortunately the early wind energy manufacturing jobs financed by U.S. stimulus money have all gone to overseas manufacturers. There are at least three reasons why this happens, some easier to fix than others.

The Easier Problem

First is the problem of U.S. wind-turbine manufacturing capacity. It's tiny.

This could be improved by the adoption of a well-designed feed-in tariff. Feed-in tariffs are where the government sets mandates for renewable energy and supports the purchase of the resulting electricity at a rate that pays for the initial market entry.

Feed-in tariffs are why Spain is one of the countries whose wind turbines are being purchased for installation in the U.S. Also, many countries have preferential purchasing policies at the local level, which don't violate World Trade Organization rules.

Both feed-in tariffs and state or local government 'buy American' policies could be implemented in full keeping with our international trade obligations and we should do so at once.

The U.S. needs to support its own industries, particularly those with significant environmental benefits, without apology.

The Somewhat Harder Problem

The U.S. government has a bad attitude towards manufacturing and has favored the making of money over the making of things for a long time, the more complicated the scheme, the better. And conventional wisdom from the Commerce Department to all the serious business press has held that offshoring and outsourcing US jobs would cause no net changes in the job picture overall, even if there might be an unfortunate backlash tendency among the public.

Indeed, the policy elite seem baffled when people get upset that their mill or factory job disappears and they had to take work stocking shelves at a store that sells the imported version of what they used to make. Politicians appear confused when workers with degrees in computer science react badly to being told to get an education. But their confusion is surely an act.

It's been clear for a while now that many industries leave and don't come back. Manufacturing capacity and know-how is shipped off first, then the high value research and development jobs follow after them.

Retraining, a solution that politicians like to promote along with stern bromides about 'personal responsibility', is only a solution that works if there are comparable jobs to train for. It only works if the finance industry is willing to invest in businesses that hire skilled Americans, and if the tax code stops advantaging companies who keep jobs and profits overseas.

The reality more Americans live with all the time is that their job prospects have gotten worse over the years, with employers and investors increasingly unwilling to share profits with them.

Obama recognized this when he was campaigning and newly elected, saying that he'd stop offshoring tax breaks all the way through the summer. As of the middle of October, business leaders had convinced the president to shelve those plans.

You might hear politicians, business leaders, news anchors and various policy wonks say that outsourcing creates jobs and increases real wages for Americans. This is a lie unless you're referring specifically to the top 10 percent of U.S. income earners, though wage inequality is a problem all around the globe.

Those offshoring tax breaks need to be rescinded, and more, policy makers need to connect start connecting the dots between an economy that makes useful things and one in which ordinary consumers can afford to buy them. One hedge fund manage making a million dollars off an overseas business deal isn't going to generate the same level of beneficial economic activity as twenty manufacturing workers making $50,000* per year, each.

The Very Challenging Problem

This problem is the real sticker, because unlike adjusting our own policies, economy, or leaders' attitudes, this one involves Chinese policy.

Wind turbines require rare earth elements for their manufacture, which make good permanent magnets, and this is also true of many other green technologies. As Keith Bradsher pointed out, "China currently accounts for 93 percent of production of so-called rare earth elements — and more than 99 percent of the output for two of these elements, dysprosium and terbium," and they've been both more tightly restricting exports every year, as well as securing controlling interests in overseas mines.

The Chinese government is well aware that most wealth is created farther down the value chain than simple extraction, that the real money is in processing and fabrication. They would like their people to earn that profit. Considering that I'd like my government to take the same attitude, I can hardly fault the Chinese on that count.

I even hope the Chinese do continue to grow their alternative energy manufacturing for their own domestic market in particular. At present, they're sending over 95 percent of their solar panels to be exported, while opening a new coal plant every 7-10 days.

Yet it significantly disadvantages manufacturing in other countries that the Chinese government won't allow the materials to be sold on the open market like other commodities.

The Obama administration, acting in concert with the European Union, filed a June complaint with the WTO about Chinese export restrictions of raw materials that have driven prices up for the steel industry. It might be a while before we know how that's going to turn out in the end. Perhaps rare earth mineral exports will be a target of future actions, or perhaps more clean, high grade deposits (rare earths are often found in low concentrations and contaminated with radioactive elements) will come to light that the Chinese don't control.

Either way, something's got to give.

A flourishing US wind industry that does more than installation and maintenance will require steady supplies of permanent magnets. Otherwise, they'll end up over the same barrel as Toyota, whose Prius hybrids use 12 kg of rare earth materials per battery and more for the motor, and whose component manufacture they're now under pressure to move to China.

These issues are solvable, but it'll take quite the fire getting lit underneath the US political establishment to get them sorted out.

* Speaking of which, the median US household income in 2007 was $50,740, and it dropped 3.6% in 2008.

With a Weak Economy, We Need Smarter Policies

SharedGrowth — Sun, 03 Aug 2008 14:45:59 -0400

The old tricks aren’t working any more. The government’s tools for a weak economy have been to lower interest rates, borrow and spend, or have a war. Now, interest rates are so low that you can’t earn enough on your savings to keep up with inflation, the government owes $31,666 for every man, woman and child in America, and we have two of the longest running wars in U.S. history. We need something new, something smarter.

Here’s a radical suggestion. Let’s stop collecting taxes in foolish ways. All we need are two simple changes to our existing system.

Start with capital gains and dividends. Right now, people who earn more money in a year than you could dream of making in your lifetime pay only a 15% tax on most of that income, which is less than the Social Security and Medicare taxes that any middle class wage earner pays on their income. With patience and good planning, they pay no tax at all on their gains. Why do we have such a strange system? Economists will cite two reasons.

First, if we tax these earnings from wealth as heavily as we tax earnings from work, then the wealthy will tend to spend more of their money instead of investing it. But the government just went deeper into debt sending out billions of dollars in checks to try (not very successfully) to get people to spend money. So why are we bribing the wealthy to NOT spend money?

Second, because people can avoid having taxable gains by simply not selling their stock, having a normal tax rate on gains will tend to keep investment dollars from flowing to the best investments, which is bad for the economy. But what if instead we got corporations to pay out all of their earnings as dividends and then have to ask people to reinvest the cash? That would be a much more effective way to make money flow where it should.

Now consider corporate tax. Under our system, if a U.S. corporation earns $1.00 in Switzerland and keeps the cash out of the U.S., it keeps $1.00. If it earns the same $1.00 in the U.S., it must give $0.35 to the tax man. So where do you suppose companies will put their most valuable activities? Worse, this is an addiction. Again, if the company brings the cash home it pays tax, so it reinvests anyplace but here. Reinvesting that cash at a 4% return abroad is as good as getting a 9.5% return after bringing it home. That kind of incentive is what has been killing U.S. jobs and keeping down U.S. wages. There is less demand for U.S. workers because this is a bad place to invest, so employees can’t demand as much pay.

What is the simple solution? Give corporations a deduction for paying dividends, and make up the lost tax revenue by getting rid of the capital gain benefits on the individual side and raising taxes a bit on people earning over $500,000 a year. On average, the over $500,000 group would still pay total federal and state income tax of only 37.6%. Cash would flow and jobs would grow. Wouldn’t that be smarter?

Matt Lykken is an international tax attorney and the Director of SharedEconomicGrowth.org.
Biographical information at http://www.sharedeconomicgrowth.org/home/aboutus.html

40 million US Jobs are Offshorable

Eran Lillestrand — Fri, 14 Mar 2008 14:07:01 -0400

An estimated 40 million U.S. jobs are potentially offshorable, including scientists and mathematicians, telephone operators and typists