American Multinationals Slashed U.S. Workforce

American Multinationals Slashed U.S. Workforce

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American multinational corporations have been creating millions of jobs over the past decade. The problem is most of those jobs were created overseas, according to The Wall Street Journal.

In the ten years between 2000 and 2010, American companies that are bound by no borders cut 2.9 million jobs in the U.S. while adding 2.4 million jobs overseas.

With America’s failed trade policies that encourage outsourcing, the trend is likely to continue, perhaps even increase. The jobs loss could be very steep given the fact that multinationals employ one in five Americans.

"All the incentives in the global economy—an overvalued U.S. dollar, lower corporate taxes abroad, very aggressive investment incentives abroad, government pressure abroad versus none at home—are such as to steadily move the production of tradable goods and the provision of tradable services out of the U.S.," says Clyde Prestowitz, a former trade negotiator, told The Wall Street Journal. "That has been having, and will continue to have, a negative impact on U.S. employment and wages."

In 2009, American multinationals employed 21.1 million workers in the U.S. and 10.3 million people worldwide. That same year, they cut their U.S. workforces by 5.3 percent, or 1.2 million workers.

Some of the most famous American companies can hardly be considered American anymore. General Electric slashed its U.S. workforce by 28,000 from 2005 to 2010. In 2000, 30 percent of the company’s business was conducted overseas. Today, that number has rocketed to 60 percent. Fifty-four percent of the company’s workforce is now overseas.

Caterpillar’s workforce grew 39 percent in the five years between 2005 and 2010. Its U.S. workforce grew just 7.8 percent over the same time.

Cisco Systems nearly doubled its foreign workforce from 26 percent to 46 percent over that time.

The list goes on and on. Even America’s Big Three automakers are pouring money into developing plants and research facilities in places like China, India and Brazil.

At the same time that these companies are ignoring their responsibilities to the American economy, they are begging for handouts from taxpayers in the form of tax holidays on overseas profits.

Many multinational corporations are lobbying lawmakers to provide them with a one-time exemption of the 35 percent tax rate on overseas profits. They say that would allow them to repatriate billions of dollars, which will result in the creation of thousands of jobs.

A similar provision was granted in 2004. That year, multinational companies brought back about $300 million in overseas profits at a discounted rate. However, the economic benefits were few and far between, except for those few companies that benefited directly. In fact, the move actually increased the amount of profits that companies stored overseas.

“The goal was to encourage U.S. multinationals to pay bigger cash dividends from their overseas subsidiaries and use the cash to make investments in the United States. Unfortunately, there is no evidence that it increased U.S. investment or jobs, and it cost taxpayers billions,” Assistant Treasury Secretary for Tax Policy Michael Mundaca said in a blog on the Treasury's website.

Source: Economy in Crisis

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