Kerry report: Economy 'threatened' by offshoring

Presidential candidate's position paper calls for expanding a federal program to help tech workers hurt by offshore outsourcing.

Software programmers and other professionals hurt by outsourcing should get federal assistance, Democratic presidential candidate John Kerry said Tuesday in a new position paper.

Kerry's paper also repeats a number of his ideas for keeping high-paying jobs in America in the face of the offshore-outsourcing trend, in which skilled work is sent to lower-wage countries such as India. The paper, published one week before the presidential election, is the latest move by Kerry to attack President Bush on economic matters. Bush has been quiet on the specific topic of shipping work abroad, but his advisers have defended so-called "offshoring" as healthy for the economy.

Kerry's new paper argues that the Trade Adjustment Assistance (TAA) program should be expanded to cover white-collar workers displaced by outsourcing. The program, which gives workers up to two years of income support and training services if they lose their jobs to foreign competition, currently does not cover all technology professionals.

"America confronts a new competitive challenge. The very sectors that drove the American boom of the 1990s are now being threatened by offshore outsourcing," the Kerry report states. "Today, America's innovation workers--software programmers and other professionals--are seeing their jobs outsourced to lower-wage countries around the world."

The offshoring phenomenon owes to factors including better global communications and much lower wages for programmers in developing countries. But the exact scale of the trend has remained murky.

There are conflicting signs about whether the job market is improving for U.S. technology professionals. But they are likely to face growing competition from other countries: Research firm IDC recently predicted that the worldwide market for offshore information technology services will more than double between 2003 and 2008 to $17 billion.

To help U.S. workers find better, higher-paying jobs, President Bush has proposed doubling the number of people served by a job-training program and increase funding for community colleges. Earlier this month, he signed a bill that extends the federal research tax credit by 18 months. And on Oct. 22, he signed a bill that, among other things, is designed to encourage companies to reinvest money earned abroad in the United States by temporarily taxing repatriated income at a rate of 5.25 percent.

Kerry himself proposed such a temporary tax holiday. But his campaign criticized the new law for failing to end an incentive for companies to send jobs offshore; companies can still defer taxes on overseas income. Kerry plans to end tax breaks for companies that ship jobs overseas and continues to call for federal contract work to be performed by American workers "where possible."

Attacking Bush
In his new paper, Kerry asserts that the Bush administration "refuses to acknowledge the extent of the challenge facing America's innovation-intensive services--a key engine of our 21st century economy." Kerry's plan calls for making America the "location of choice for high-value services" through steps such as reining in the spiraling costs of health care and education.

The White House on Tuesday did not immediately respond to a request to discuss the offshoring issue.

The paper reiterates Kerry's stand that call center employees must disclose their location and says he will require companies to give at least a three-month advance notice before laying off employees and shipping their jobs overseas.

Regarding TAA, Kerry also said he supports expanding the health care tax credit associated with the program to 95 percent of premium costs from the current level of 65 percent.

In addition, Kerry calls for reforming the controversial H-1B and L-1 visa programs, which have been accused of fueling the offshore trend. For instance, he wants to ensure "that American workers with the necessary skills get the opportunity to fill available white-collar service jobs in our own economy before an H-1B visa applicant" does. Currently, employers do not have to attest that they sought U.S. workers to fill the job before applying for an H-1B visa.

Kerry said he would cap the L-1 visa program, which allows companies to temporarily bring in employees from other countries for managerial or executive work, or for work that entails specialized knowledge. His proposal to limit the number of L-1 visas runs counter to the view of the Information Technology Association of America trade group. Earlier this year, ITAA President Harris Miller testified in Congress that "the overall program is not broken and doesn't need to be fixed."

Miller said he'd heard concerns that visas have been given out to individuals without "specialized" knowledge. In response, the ITAA issued a paper with examples of what does and does not qualify as specialized knowledge in the IT industry. But Miller argued that legislative reforms to the L-1 program could reduce the amount of foreign direct investment made in the United States.

Marcus Courtney, president of technology worker labor group WashTech, praised Kerry's paper. "Today, the Kerry campaign has announced a real plan to ensure that America's best-paying, best-skilled jobs are kept in the U.S.," Courtney said in a statement. "A Kerry administration, unlike the current one, understands that America's white-collar workers are facing losing their jobs in today's global economy and is putting his words into action to increase the job security, wages and benefits for white-collar workers."

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