19 Jul Product dumping, labor dumping – it's all the same
There are strict federal laws about product dumping in the United States and many companies use those laws to protect and guard their markets. Many industries have used them, ranging from the steel industry to the car industry and not surprisingly, the high-tech industries.
Just as product dumping can destabilize the competitive structure of world industries, labor dumping in highly skilled areas can ravage the economic stability of what was thought to be solid middle-class jobs in the United States.
Full employment with hollow salaries
Are we really in a boom economy if thousands of highly skilled, graduate-degreed people in various disciplines, not just IT, are losing their jobs and having to take on jobs at one-third to one-half the pay?
That is the critical question that goes unanswered by all the great East Coast economists and talking-heads on the national business TV channels, as well as the West Coast high-tech visionaries who are maybe too far removed from the realities of the market.
Underemployment is not being addressed as a lot of U.S. talent is sitting on the sidelines as a result of foreign labor dumping. You can see the economic results if you look hard and take some time to talk with people who have gone from six-figure jobs to jobs that pay $30,000 to $40,000 since 2001. I always thought this was just a Midwest phenomenon but feedback to previous articles on this subject prove otherwise.
According to feedback by Dr. Gene Nelson:
Illegal immigration is very relevant to this controversy as government statistics indicate that 41 percent of illegal aliens are visa over-stayers. Most of the people in this category work in high skill fields. Using the estimate of 20 million U.S. illegal aliens, that means 8.2 million high skill jobs are filled by illegal aliens
The mantra that “these are all jobs Americans do not want” starts to sound pretty lame after seeing this statistic. The ones bleating that mantra have a vested interest in protecting labor dumping. Anyone who tries to deny this fact has a vested interest in wanting cheap labor.
Look at state deficits that are skyrocketing because state legislatures are still spending money like its 1999.
More states will become like Pennsylvania and have to layoff thousands in order to try to keep afloat. Pennsylvania is looking to lay off 24,000 people. State workers are furious but that’s what happens when the people paying the salaries are underemployed.
How many times do I have to point out that if you have thousands of people in your state that take a 50 percent to 66 percent cut in pay, the payroll taxes that your state reaps drop dramatically. Unemployment might be 4.5 percent but that statistic does not reflect huge salary and benefit cuts when people take lesser jobs. You can’t buy a $300,000 house or condo working at Starbucks or Home Depot. You also pay a lot less in taxes, which means government workers will be looking at pay reductions as well.
Underemployment contributes to housing foreclosures, lower new car sales, and a lot of other economic indicators that many do not see in a tight inter-relationship.
When a company believes its products are being edged out of the market by predatory practices, it runs to the Federal Trade Commission and lobbies Congress to protect their markets as well as their profits. That includes the pharmaceutical industry, the car industry, the steel industry, agricultural products, and even the high-tech sectors. When it comes to labor, that outrage does not seem to exist.
How dumping is determined in the U.S.
This is an excerpt from an article that gives a clear overview of product dumping. It is important to understand this principle as most people responding to a previous article don’t know about the mechanisms that are in place to protect companies – mechanisms that also should be in place to protect labor.
The Department of Commerce and the U.S. International Trade Commission (ITC) together start the investigation process of a dumping case.
Writer Tam Harbert (1998), lists the steps in starting an anti-dumping case as (Harbert, 1998, p. 7):
1. U.S. company submits a petition to the International Trade Commission at the Department of Commerce, alleging that a foreign company is dumping its product in the U.S.
2. If the Commerce Department determines that sufficient evidence exists, it will proceed with an investigation.
3. The ITC then may start its own investigation to determine whether there is an injury to any domestic companies.
4. If the ITC finds there has been material injury to a U.S. company, the Commerce Department will determine whether the product in question is being sold in the U.S. at “less than fair value,” or at a lower price than that sold in the home market or a third country’s market.
5. If the Department issues a preliminary finding that sufficient evidence of such pricing practices exists, it will direct the U.S. Customs Service to suspend the importation of the product, or require U.S. importers of the product to post a deposit. This bond must be paid to the U.S. government in the event that a final determination finds that the product is being sold at less than fair value.
6. The ITC, at this point, must determine if there is any actual material damage to U.S. companies caused by the alleged dumped imports.
7. If the ITC determines that the dumping has caused injury to a U.S. manufacturer, the products then are subjected to “antidumping duties” equal to the amount of the determined margin.
If, however, the ITC finds that there is insufficient evidence, the case is dismissed.
When the Commerce Department makes its final decision, the case can go in several directions. First, if dumping has been found to occur, the foreign business can appeal the decision made by the Commerce Department. This causes the case to go longer, and will cause both businesses more money.
However, this can benefit the foreign business because the Commerce Department and the ITC may stumble upon information that they have not see or information that they misinterpreted the first time.
An appeal of the case may also benefit the foreign business because of the high cost it takes to start an anti-dumping case the second time. This is beneficial to the foreign business because it may be able to afford the cost of another case.
While on the other hand, the American business may not be able to afford an appeal by the foreign business. This same process can also happen in reverse if the Commerce Department’s final decision is that dumping has not occurred.
Several readers pointed out that besides the unions, where are the professional engineering associations and other guilds that want everyone to join but in the most critical time that they could be effective with a strong voice, their silence is deafening. That seems to speak volumes of their focus on self-survival, instead of being the outspoken spokespeople for the industry professionals that they collect dues from.
Even the companies that support increasing work visas have used the product dumping laws to protect their profits. Both AOL and Microsoft want protection, yet like the idea of cheap labor.
What about the great universities?
One long-time reader, who has some sterling academic credentials, posed these questions while reading my draft:
Where are they in this debate? Or, is it possible that they have too many vested interests to take up this issue for the American students that they are always supposedly so concerned about educating for the “jobs of the future”? Are they too entwined with business interests that have the need for low-cost labor, wherever it comes from? Are they too interested in keeping a low profile so they don’t lose all the foreign students who come here on temporary visas and then end up staying permanently? Every time there is an academic brought up on some issue, we hear the cries for academic freedom and that is typically the fence they hide behind to say and do as they please. Well, since they have academic freedom, how about using it to address this issue? Or are there too many competing interests that keep them silent?
Evidently, degrees from Northwestern, the University of Chicago, and other supposedly top-ranked schools don’t seem to command high money and employment as much as they advertise. I have talked to graduates of these schools who have lost good jobs in the last five or six years and have yet to find anything that comes close to what they were making.
Is a foreign degree better? What are the costs of getting a Masters degree from Northwestern or University of Chicago versus a degree overseas? What are the returns?
Based on what I have gotten in feedback, are some companies concerned that they would be paying too much for someone from the University of Chicago or Northwestern, so they hire someone from a foreign school? When did we commoditize talent?
And what about the student who has an Executive Master’s degree from Northwestern University not getting the job because he did not have a Project Management Professional certificate? When did a PMP certificate overshadow an Executive Master’s degree from any school for that matter? Or is it something else?
Was that a real HR concern or was that a way of disqualifying a good candidate so that the company could hire a non-citizen as mentioned as a practice in a previous articles? Should the recommendation be to highly skilled people to go a get a certificate instead of your Master’s degree if you want to get hired?
Based on feedback from people interviewing for jobs, that is the case. Something is wrong and more people better rise up to question what has happened in the last several years, or accept the fact that higher education is absolutely no guarantee for better-paying jobs and that labor dumping is acceptable.
Carlinism: Underemployment must be addressed or many more will see job and pay erosion.
Recent articles by James Carlini
• James Carlini: Green is the color of speed in ranking broadband infrastructure
• James Carlini: A disgusting video: U.S. companies sell out Americans
• James Carlini: No network infrastructure, no Olympics, no nothing
• James Carlini: Technology and mergers: Getting the strategic applications
• James Carlini: Bridging the digital divide is the wrong battle cry
This article previously appeared in MidwestBusiness.com, and was reprinted with its permission.
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