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Senior Editor

Bill may force companies to disclose offshoring plans

Feb 12, 20044 mins
Enterprise ApplicationsManufacturing Industry

Reacting to a top George W. Bush administration official’s defense of offshore outsourcing, Senate Democrats Thursday introduced legislation requiring companies to publicly disclosure when they intend to move jobs offshore.

Senate Minority Leader Tom Daschle’s bill would require any company that plans to lay off 15 or more workers and send those jobs overseas to disclose how many jobs are affected, where the jobs are going and why they are being offshored. The workers must be given three months’ advance notice. And the companies would be required to notify federal and state agencies responsible for helping laid-off workers, according to a bill summary.

The bill also calls on the U.S. Department of Labor to compile statistics of offshored jobs and report annually to Congress.

Daschle (D-S.D.) introduced the bill Thursday on Capitol Hill at a news conference, which came in response to comments made this week by Gregory Mankiw, chairman of the Council of Economic Advisors, who argued in testimony before the Senate’s Joint Economic Committee that outsourcing helps the U.S. to be more productive.

The White House’s top economic advisor compared service-sector offshore outsourcing to manufacturing and said they both produce economic gains.

“The benefits from new forms of trade, such as in services, are no different from the benefits from traditional trade in goods,” Mankiw said in his testimony. “Outsourcing of professional services is a prominent example of a new type of trade. The gains from trade that take place over the Internet or telephone lines are no different than the gains from trade in physical goods transported by ship or plane.

“When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically,” he said. “This allows the United States to devote its resources to more productive purposes.”

“There is nothing good” about offshoring, Daschle said in a statement. “The exporting of jobs is hurting millions of Americans and countless communities across the country.”

Joining him was Chuck Hackett, a former network engineer and computer programmer, who lost his job to outsourcing about two years ago. “Before I was laid off, I was asked to train a replacement worker who was hired for lower wages,” Hackett said in a statement released by Daschle’s office. “This is a disturbing trend not only in my community, but in many other communities, and middle-class workers are feeling the brunt of it.”

High-tech labor organizers praised the legislation, saying it could impede companies from sending work overseas, in part by making offshoring more expensive.

“I think it can have a potentially significant impact — it sounds fantastic,” said Marcus Courtney, president of the Seattle-based Washington Alliance of Technology Workers.

Once state and local governments are aware of a company’s offshore intentions, “there can be a lot of pressure points applied to companies moving work overseas,” such as attacking tax breaks they may be receiving, said Courtney.

Ralph Montefusco, a former IBM employee who is now a union organizer for Alliance @ IBM said the legislation’s disclosure requirements is what his union has been seeking. “Disclosure is something companies do not like to do,” said Montefusco, who also believes such a law will make companies think twice before offshoring work.

Even so, Stan Lepeak, an analyst at Meta Group, said he doesn’t believe the proposed legislation will have a major effect because companies are motivated by “solid business reasons.” They’re also likely be able to avoid disclosure by outsourcings jobs to a U.S.-based company, which can then ship those jobs overseas.

“I don’t think it will materially stop the flow of offshoring,” he said.