“insourcing.” For example, they point out that the Japanese have built car plants in the US. This is a false analogy. The Japanese car plants in the US are an example of direct foreign investment. The Japanese produce in the US in order to sell in the US. The plants are a response to Reagan era import quotas on Japanese cars and to high transport costs. The Japanese are not producing cars in the US for the purpose of sending them back to Japan to be marketed. They are not using cheaper American labor to produce for the Japanese home market. At least not yet.
However, as US wages are driven down by offshoring and work visas for foreigners, the US will find itself with an excess supply of labor that can, therefore, be employed at a wage less than labor’s contribution to output. When this occurs, more prosperous countries, such as Japan, possibly could begin ruining their own economy by exporting jobs to Third World America.
Other apologists imply that H-1B and other work visas are a form of “insourcing.” They argue that the ability of US firms to bring in foreigners to compensate for alleged shortages of US workers allows the corporations to keep their operations in America and not have to move them abroad. This false claim, which a Washington Post editorial (March 2, 2009) endorsed, was rebutted by Senators Charles Grassley and Bernie Sanders, who observed that “with many thousands of financial services workers unemployed, it’s absurd to claim that banks can’t find top-notch American workers to perform these jobs” ( Washington Pos t, March 5, 2009).
Senators Grassley and Sanders could have made a stronger point. The work visa program is supposed to be for specialized, high-tech skills that are allegedly in short-supply in the US. In fact, the vast majority of those brought in on work visas are brought in as lower-paid replacements for American workers, who are dismissed after being forced to train their foreign replacements.
The practice of replacing American employees with foreigners brought in on work visas is reported more at the state and local level than nationally. For example, on March 30, 2009, a Charlotte, North Carolina, TV station, WSOC, reported that Wachovia Bank (now Wells Fargo) was cutting labor costs by bringing in foreign replacements for American employees.
Congress forbade banks that receive bailout money from hiring foreigners to replace American employees. But the H-1B visa lobby got its hands on the legislation and inserted a loophole. The banks cannot directly hire foreigners as replacements for US employees, but they can hire contractors to supply “contract labor.” The bank pays the contractor, and the contractor pays the workers.
Computerworld (February 24, 2009) reports that the H-1B visas are becoming the property of Indian contract labor firms, such as Tata, Infosys, Wipro, and Satyam.
These firms contract with American employers to supply reduced-cost labor from abroad with which to replace American employees.
The combination of offshoring and work visas is creating a new kind of American unemployment that cannot be cured by boosting consumer demand. Business Week (March 9, 2009) reports that JPMorgan Chase is increasing its outsourcing to India by 25 percent. Computerworld (February 24, 2009) reports that Nielsen Company, which measures TV audiences and consumer trends for clients, is laying off American employees at a Florida facility after announcing a 10-year global outsourcing agreement valued at $1.2 billion with Tata. Computerworld quotes Janice Miller, a city councilwoman: “they are still bringing in Indians, and there are a lot of local people out of work.”
The New York Times (March 6, 2009) reports that IBM is laying off US employees piecemeal in order to avoid compliance with layoff notice laws. According to the New York Times , “ IBM’s American employment has declined steadily, down to 29 percent of its worldwide
However, as US wages are driven down by offshoring and work visas for foreigners, the US will find itself with an excess supply of labor that can, therefore, be employed at a wage less than labor’s contribution to output. When this occurs, more prosperous countries, such as Japan, possibly could begin ruining their own economy by exporting jobs to Third World America.
Other apologists imply that H-1B and other work visas are a form of “insourcing.” They argue that the ability of US firms to bring in foreigners to compensate for alleged shortages of US workers allows the corporations to keep their operations in America and not have to move them abroad. This false claim, which a Washington Post editorial (March 2, 2009) endorsed, was rebutted by Senators Charles Grassley and Bernie Sanders, who observed that “with many thousands of financial services workers unemployed, it’s absurd to claim that banks can’t find top-notch American workers to perform these jobs” ( Washington Pos t, March 5, 2009).
Senators Grassley and Sanders could have made a stronger point. The work visa program is supposed to be for specialized, high-tech skills that are allegedly in short-supply in the US. In fact, the vast majority of those brought in on work visas are brought in as lower-paid replacements for American workers, who are dismissed after being forced to train their foreign replacements.
The practice of replacing American employees with foreigners brought in on work visas is reported more at the state and local level than nationally. For example, on March 30, 2009, a Charlotte, North Carolina, TV station, WSOC, reported that Wachovia Bank (now Wells Fargo) was cutting labor costs by bringing in foreign replacements for American employees.
Congress forbade banks that receive bailout money from hiring foreigners to replace American employees. But the H-1B visa lobby got its hands on the legislation and inserted a loophole. The banks cannot directly hire foreigners as replacements for US employees, but they can hire contractors to supply “contract labor.” The bank pays the contractor, and the contractor pays the workers.
Computerworld (February 24, 2009) reports that the H-1B visas are becoming the property of Indian contract labor firms, such as Tata, Infosys, Wipro, and Satyam.
These firms contract with American employers to supply reduced-cost labor from abroad with which to replace American employees.
The combination of offshoring and work visas is creating a new kind of American unemployment that cannot be cured by boosting consumer demand. Business Week (March 9, 2009) reports that JPMorgan Chase is increasing its outsourcing to India by 25 percent. Computerworld (February 24, 2009) reports that Nielsen Company, which measures TV audiences and consumer trends for clients, is laying off American employees at a Florida facility after announcing a 10-year global outsourcing agreement valued at $1.2 billion with Tata. Computerworld quotes Janice Miller, a city councilwoman: “they are still bringing in Indians, and there are a lot of local people out of work.”
The New York Times (March 6, 2009) reports that IBM is laying off US employees piecemeal in order to avoid compliance with layoff notice laws. According to the New York Times , “ IBM’s American employment has declined steadily, down to 29 percent of its worldwide
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