The U.S. in general, and U.S. businesses in particular, are understandably preoccupied with the need to reinvigorate business and get American workers back to work. While a lot of attention has been focused on ensuring that the jobs created by government stimulus dollars create jobs in America, rather than in other countries, a lot less thought has been given to another fundamental question:
How many of those jobs that are created in the U.S. will be sustainable, and how many will migrate offshore—pushing newly employed workers back onto the unemployment lines?
Businesses are increasingly caught between the proverbial rock and hard place. On one hand, these companies must continue to grow their businesses and maintain profitability. On the other hand, they desperately want to maintain loyalty to their employees and their communities. These companies are increasingly being forced to look to offshore or foreign-based employees as a means of:
- Gaining access to the best people—especially technical people—at a time when fewer U.S.-born students are studying science, engineering, math and IT (SEMIT) and the supply of offshore and other foreign-born graduates is exploding;
- Protecting themselves from lower-cost competitors who already rely on offshore employees; and
- Building emerging country presences to capitalize on markets that are expected to grow at 2-3 times the rate of the U.S. and other developed country markets.
The country is reluctantly coming to grips with the fact that the majority of blue-collar manufacturing jobs will inevitably move offshore. We have spent the last five decades helping our children prepare for the jobs of the future—a.k.a. knowledge jobs—and retraining displaced blue collar workers for these jobs. Indeed, 75% of U.S. jobs are now in services and more than 60% of these consist of some form of knowledge jobs.
But what happens when these knowledge jobs go offshore? Services offshoring has moved far beyond call centers and IT application maintenance. Accounting, financial analysis, market research, medical diagnostics, legal research and medical diagnostics jobs are all going offshore. So too is cardiac surgery and R&D—the “seed corn” for business growth. China, in fact, is now the most popular location in the world for establishing new R&D hubs and India is the third most popular (after the U.S.). Where will the next secure, high-value U.S. careers come from? What do we train our children for?
Although no one yet knows the answers to these or dozens of other key questions, that has not delayed calls for urgent action. These include proposals and laws that will:
- Slash the number of H-IB visas;
- Make it more difficult for foreign students to enter and remain in the U.S.;
- Forbid companies working on government contracts or receiving government funds to hire non-U.S. citizens; and
- Tax unrepatriated foreign income.
And all this is before the issue surrounding the offshoring of knowledge jobs has even become a public hot button. What will happen when the public really understands the implications of living in a global knowledge economy? The jobs that will be lost and never created? The compression of U.S. salaries? The confusion surrounding (if not the actual loss of) career options for students and employees?
The reaction will almost certainly surpass that to the globalization of manufacturing jobs. And while the intensity may not reach the level surrounding financial service bonuses, it will last much longer. After all, society and parents have been preparing children for the decline of the manufacturing industry for years by pushing them to prepare for a secure, well-paying knowledge job by going to college. What will happen when large numbers of the highest-end knowledge jobs begin to disappear—and nobody has a clear vision as to the types of jobs that will replace them?
Companies and executives that offshore such jobs will be vilified. Political remedies will almost certainly be draconian.
What’s the private sector to do? Although it will be tough for business to portray the globalization of knowledge work as a positive for American workers, it cannot afford to hunker down with the hope that the PR/political storm will never materialize, or to ride it out.
However, the private sector does have the potential of partially defusing the GKE time bomb—and simultaneously helping to educate and enlist the support of some powerful government allies. How? My next post will provide a playbook describing some of the primary actions the private sector can take to protecting its employees and communities, while simultaneously protecting its customers and shareholders.
For much more on this topic, see my report Why the Private Sector Must Develop a Socially Responsive Workforce Globalization Policy.