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Preservation not protectionism

A majority of economists and corporate executives believe that globalization is good for America overall despite the significant disruption it causes. But there is a substantial difference between thoughtfully embracing global free trade and assuming a laissez faire attitude towards how this trend affects businesses, communities and individual workers.

Dr. Ron Hira, an assistant professor of public policy at Rochester Institute of Technology and an expert on the economic impacts of offshore outsourcing articulates a major concern about global business. “It is important for advocates of free trade to figure out how to ensure (not just assume) that we do not have a great deal of idle human capital in the U.S. It is not sufficient to call it ‘painful’ and hope for rosy redeployment scenarios. Free trade advocates should have an obligation, because it is within our country’s own self-interest, to make sure that those who are displaced through no fault of their own have the means to transition into productive positions.” (See http://www.ieeeusa.org/forum/issues/H1bvisa/hiranvtc03.html for the complete text of his speech.)

So, what can be done to soften the downside of global business and preserve our vital human and economic assets? I don’t claim to have all the answers, but here are a few suggestions:

1. Large companies should act more responsibly toward displaced workers. Corporations can and should do more to provide workers whose jobs are eliminated from offshore outsourcing with the financial support they need to retrain or move into newer, growing fields. The McKinsey Global Institute estimates that as little as 4 to 5 percent of the savings companies realize from outsourcing off shore, could insure all full-time workers who lost jobs as a result. The program would compensate those workers for 70 percent of the wages they missed from the time they were laid off to the time they were reemployed, as well as offer health care subsidies for up to two years. Corporate funded programs like this would go a long way to helping American workers make the transition to new, higher value work. It would strengthen our communities and our economy too.

2. Large corporations should invest more here. Some companies are pursuing global operations to grow their markets and talent. But others are simply chasing cheap sources of labor without a long term business strategy for growth and innovation. A survey posted on the Outsourcing Institute’s web site showed that only 9 percent of companies responding invested the savings from offshore outsourcing in R&D. (It should be noted that 25% said they are still waiting for the savings to appear.) To ensure their own survival and future growth, these corporations should invest some of the purported savings they realize from using cheaper overseas labor into building new capabilities and businesses in this country.
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3. The federal government should stop immigration policy abuses. To make sure the labor playing field is level the federal government should abolish tax incentives that reward companies for moving people and operations offshore and abuses of guest-worker visa regulations (H-1B and L-1) that allow offshore companies to import workers from overseas to work here at cut rates. Dr. Hira believes this practice is tantamount to dumping and needs to be stopped. On the other hand, we must strengthen legal immigration policies to ensure that we continue to draw and absorb aspiring immigrants from all over the world into our economy and culture.

4. Communities should invest more in local workers and entrepreneurs. If communities are to survive and thrive they need to be more proactive in providing opportunities for learning and creating new jobs and businesses. More must be done to invest in developing local human capital and nurturing entrepreneurs. Communities need to partner with local educational and financial institutions to develop programs that entice companies to retrain workers and invest in knowledge creation locally. They must also find ways to help entrepreneurs – who often do more to create new wealth and jobs than large companies. It’s time for government at all levels to rethink how the self-employed and new small business startups can be given a leg up on creating tomorrow’s industries and jobs.

Global business is here to stay. It is critical therefore that American corporate, government and community leaders work together to preserve and grow our inherent cultural, human and economic assets. This will make us stronger, not weaker, in the new global economy.

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Tony DiRomualdo is a business researcher, writer, and advisor with Next Generation Consulting. He works at the intersection of people, business strategy, and information technology to help companies create a committed and high performance workforce. Tony can be reached at td@nextgenerationconsulting.com.

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The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.

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