Washington Watch – Debate Brews Over Outsourcing Jobs

Legislation targeting offshore outsourcing and a plan by President Bush to welcome more foreign labor are fanning the election-year debate over jobs?and sending a mixed message to CIOs who are trying to develop outsourcing plans.

Last month, N. Gregory Mankiw, chairman of Bush’s Council of Economic Advisers, endorsed offshoring white-collar work as having a long-term benefit on the economy. His statement followed an announcement by Bush in January calling for a new temporary worker program that would allow companies to hire foreign labor more easily because the job market necessitates new immigration laws.

The Bush immigration plan has IT workers worried. Because there are already two visa programs for admitting technology workers into the country?the H-1B and the L-1?immigration experts initially believed that Bush’s proposal would target low-skilled workers, such as migrant farm workers, who are now here illegally. However, Margaret Spellings, Bush’s domestic policy adviser, said in a January speech at the Cato Institute that the program would not be limited to any specific industries. She added that it could include nurses and teachers?two groups that, like tech workers, are already covered by the H-1B program.

“Does it mean we can bring in programmers at $10 an hour because no American would take that job [at that wage]?” asks John Bauman, president of the Organization for the Rights of American Workers, an advocacy group. In that case, Bauman sees little hope for unemployed American tech workers to find jobs if the plan moves forward.

Congress Runs for Cover

The president’s plan could face an uphill battle in Congress, which has to approve it. Lawmakers are getting nervous about how the controversy over immigration and offshoring will play during an election year. Legislation limiting offshore outsourcing?a provision sponsored by Sens. Craig Thomas (R-Wyo.) and George Voinovich (R-Ohio) in an omnibus appropriations bill enacted in January?forbids private companies with government contracts from sending that work offshore.

Because the provision expires at the end of September, some political observers are calling it “political cover” to appeal to voters still worried about jobs. Voinovich, who is up for reelection this fall, recently attributed job losses in his home state in part to “the mismanagement of our trade policies.”

But the vote may also signal a growing rift in the GOP over globalization, says Catherine Mann, a senior fellow at the Institute for International Economics, a nonpartisan think tank that specializes in international economic policy. Mann says that CIOs should be wary. “The message is that the march of globalization into the halls of the white-collar workforce” has made jobs a more sensitive issue for politicians courting the middle class, she says. “They ought to be aware that the strategy of globalization is under closer scrutiny.” In fact, Democrats have vowed to make offshoring a central theme for campaigns this fall. Senate Minority Leader Tom Daschle (D-S.D.) has introduced a bill that would require companies outsourcing more than 15 jobs offshore to disclose that fact and give workers three months’ notice.

All this leaves CIOs who are trying to craft outsourcing plans in a tight spot. Mann says that the spending bill could be the beginning of a trend. “CIOs need to consider that if companies fail to come up with reasonable strategies” to keep workers employed when jobs go offshore, “then it is possible that the political response will be to limit what [companies] can do,” she says.

-Ben Worthen