Will US be the emerging Market?

Betty Sutton (D-Ohio) used databases from the Bureau of Labor Statistics’ “Quarterly Census of Employment and Wages” to compute the following statistics:

There were 398,887 private manufacturing establishments of all sizes in the United States during the first quarter of 2001. By the end of 2010, the number declined to 342,647, a loss of 56,190 facilities.

Over a period of 10 years (from 2001 to 2011) that worked out to an average yearly loss of 5,619 factories. Dividing that by the 365 days in a year, on average, there were 15.39 factories lost every day.

Betty Sutton had said, “Many big companies have not created jobs in the U.S. Instead, they’ve taken many of their jobs to countries with the cheapest labor, the least regulations and few employee rights. This flies in the face of the Republicans’ concern that taxes on the rich means fewer jobs,” she said. (Politifact rates her claim as “TRUE”)

The Wall Street Journal surveyed employment data by some of the nation’s largest corporations — General Electric, Caterpillar, Microsoft, Wal-Mart, Chevron, Cisco, Intel, Stanley Works, Merck, United Technologies, and Oracle — and found that during that same period that Betty Sutton speaks of, these corporations cut their domestic workforces by 2.9 million people, while at the same time, hiring 2.4 million people overseas.

The Washington Post reported, “Over the past two decades, American companies have dramatically expanded their overseas operations and supply networks, especially in Asia, while shrinking their workforces at home.”

David Corn of Mother Jones reports that, according to government documents, while at Bain Capital Mitt Romney invested heavily in a Chinese manufacturing company that depended on U.S. outsourcing for its profits — and explicitly stated that such outsourcing was crucial to its success.

Another Washington Post article reported last year that during the nearly 15 years that Romney was actively involved in running Bain Capital, it owned companies that were pioneers in the practice of shipping work from the United States to overseas call centers and factories making computer components.

Do you remember Mitt Romney’s 47 Percent Manifesto, when he was explaining how he had been told that barbed wire fences had been put up to keep people out of the factory where the young Chinese girls had worked?

Four years ago during the Great Recession, representatives of many of the nation’s most powerful corporations attended the 2009 Strategic Outsourcing Conference to talk about how to send more American jobs overseas. Conference organizers polled the more than 70 senior executives who attended the conference about the behavior of their companies in response to the recession. The majority said their companies increased outsourcing.

And another question that was asked of the executives found that the top reason for companies to outsource American jobs was to “reduce operating costs” (and not because Americans lacked job skills).

American jobs have been shifting to low-wage countries for decades, and the trend has continued during Obama’s presidency. From 2008 to 2010, U.S. trade with China alone cost about 450,000 American jobs because of the growth of Chinese exports, said Robert E. Scott, a pro-labor advocate at the liberal Economic Policy Institute.

These same people also want to bring their profits back into the United States with as little tax liability as possible. Cisco Systems, which had 26 percent of its workforce abroad at the start of the decade — had 46 percent of its workforce abroad by the end.

Cisco was involved in a lobbying campaign titled “Win America”, calling for a tax repatriation holiday that would let big corporations “bring money they have stashed overseas back to the U.S. at a dramatically lower tax rate.” A similar tax break in 2004 had actually increased the amount of money companies hoarded overseas.

In a 2011 interview with BusinessWeek, Senator Kent Conrad (D-ND) said that approving another tax holiday without closing the myriad loopholes in the corporate tax code “makes a farce out of the whole system.”

In the budgets debates over the last two years, the Republicans “talked” about tax loopholes, but as of yet, has not named a single one — although, the Democrats do in their budget proposal, as do the Congressional Progressive Caucus.

At the Center for American Progress, Seth Hanlon had earlier noted that the nonsensical U.S. corporate tax code combines the ability to stow tax-free cash overseas with a slew of loopholes; these have driven corporate tax revenue down to one of the lowest points in history. Approving another repatriation holiday would fix none of those problems and constitute just another giveaway to corporations that already aren’t paying their fair share.

All during the Great Recession U.S. companies have been making record profits; and more and more of their money is staying offshore — and is barely being taxed. A recent Wall Street Journal analysis of 60 big U.S. companies found that, together, they shielded more than 40% of their annual profits from U.S. taxes.

And here is a list  of 64 major U.S. corporations that, on average over the past 5 years, collectively only paid an average of 8.1% in actual U.S. corporate taxes to the U.S. Treasury.

Credit Suisse reported that of all the developed nations, per capita income, the U.S. had fallen from 1st to 7th place. At this rate, the United States might one day be the next “new emerging market” — when China starts investing more in American workers.

 

Originally posted to Bud Meyers on Sun Mar 24, 2013 at 08:52 PM PDT.

Also republished by In Support of Labor and Unions.

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