Congressman Sanders Discusses Legislative Priorities For The New Year

Congressman Sanders Discusses Legislative Priorities For The New Year

Last session we had good success with our work on pensions. Despite very strong opposition we passed legislation which made it very clear that conversions to cash balance pension plans which slash the pensions promised to older workers are illegal and cannot be done. A lot more work needs to be done in this area but we took an important step forward in protecting the pensions of older workers.

In terms of prescription drugs, the work that we are doing on reimportation has made huge advances in the last year. Because the pharmaceutical industry continues to rip off the American public and charge us, by far, the highest prices in the world for medicine, more and more individuals are looking to Canada and elsewhere as a source of lower cost medicine. In Congress the House overwhelmingly passed a strong re-importation bill and we believe that we have the votes in the Senate to do the same. Most importantly a number of states and cities, Minnesota , Illinois , New Hampshire, Iowa , etc, are going forward on their own.

We have also played an active role on the USA Patriot Act, and the FCC decision on Media deregulation.

There are many issues out there that we are going to be working hard on this coming session: agriculture, veterans needs, housing, education and labor law to name a few - but this morning I want to focus on one issue that we will be spending a fair amount of time on - and that is the decision of large, multi-national corporations to ship American jobs abroad - both in blue collar manufacturing and white collar information technology.

Of all of the economic trends that are taking place in our country today, the most significant has to do with the collapse of our manufacturing sector and the loss of decent paying jobs. A number of years ago the largest employer in the U.S. was General Motors which had a strong union and paid workers a living wage with strong benefits. Today, increasingly, the new jobs that are being created are service industry jobs which often pay workers low wages and inadequate benefits.

Over the last 3 years, some 2.7 million decent paying jobs have been lost in the manufacturing sector - 16% of our manufacturing sector. Our trade deficit continues to soar and will likely be over $500 billion in 2003 and over $120billion with China alone. In terms of China we can see what is going on when we hear from Jeffrey Immelt, the CEO of General Electric. Here is what he had to say about China at a GE investor meeting on December 6, 2002 . "When I'm talking to GE managers, I talk China , China , China , China , China . You need to be there." And he continues; "I'm a nut on China …Our sourcing from China is going to grow to $5 billion. We are building a tech center in China . Every discussion today has to center on China ."

The CEO of Hewlett Packard, Carly Fiorina, had this to say recently; "There is no job that is America 's god given right anymore."

Over the years advocates of unfettered free trade have tried to gloss over the bad news about the decline in factory employment by promising that a "new high-tech economy" was in the making. It would be a new economy in which millions of Americans would be working for excellent wages at high-tech jobs. We have all heard that mantra over and over again. We don't have to worry about those "old economy" factory jobs anymore. We are the United States of America . We're going to have new clean, high-tech computer jobs. Our young people are going to be able to go out into the market place and earn $50,000, $60,000, $70,000 a year sitting behind their desks. That is the economic future of the United States . That is what they told us.

Unfortunately, the advocates of unfettered free trade are wrong again. We now know that blue collar manufacturing jobs are not the only casualty of unfettered free trade. Estimates are that some 50 to 60 thousand high-tech white collar jobs have been lost in this country in the last 2 years, and that many of them have ended up in India . When Americans argue with the phone company about whether their phone bill is right or not, you're not going to be talking to a phone company employee in Chicago or New York or Los Angeles . Increasingly, you will be talking to somebody in India . And that whole phenomenon of out-sourcing information technology jobs is happening more and more. According to Forester Research, a major consultant on this issue, they say, "Over the next 15 years 3.3 million U.S. service industry jobs and $136 billion in wages will move offshore. The information technology industry will lead the initial overseas exodus." That is from Forester Research. According to Booz Allen Hamilton, companies can lower their costs by as much as 80 percent by shifting tasks such as computer programming, accounting, and procurement to China .

Goldman Sachs & CO. estimates that about 200,000 service jobs, a large percentage in information technology, have been shipped abroad to U.S. affiliate during the past three years. Goldman also says that manufacturers have moved overseas in the past three years as many as 500,000 - increasingly skilled design and technology positions - or about 20% of the total manufacturing losses for the period. (WSJ)

Among many other companies moving high-tech jobs abroad is Microsoft, which is spending $750 million over the next 3 years on research and development and outsourcing in China . Recently, Intel Corporation Chairman Andy Grove warned that the U.S. could lose the bulk of its information technology jobs to overseas competitors in the next decade, largely to India and China . In other words, Mr. Speaker, not only has unfettered free trade cost us much of our textile industry, our footwear industry, our steel industry, our tool and die industry, our electronic industry, our furniture industry, as well as many, many other industries, it is now going to cost us, unless we change it, millions of high-tech jobs as well.

Lou Dobbs of CNN recently reported on a UC-Berkeley study warning that as many as 14 million white-collar jobs in the U.S. could be shipped overseas to India, China and other countries - representing 11% of all U.S. employees. These jobs include over 2.8 million computer and math professionals with average annual salaries of $60,350; and over 2.15 million business and financial service support jobs with average annual salaries of $52,559. Let me briefly quote from a press release discussing that study from the UC Berkeley

" Berkeley , October 29, 2003 - A ferocious new wave of outsourcing of white-collar jobs is sweeping the United States , according to a new study published by University of California , Berkeley, researchers, who say the trend could leave as many as 14 million service jobs in the United States vulnerable." The study also indicates that jobs remaining in the United States could be subject to pressures to lower wages. And why would that be? Well, here are some comparisons between wages in the U.S. and India - where a lot of these high-tech jobs are going. In the U.S. a telephone operator earns $12.57 an hour, in India less than $1.00. A payroll clerk in the U.S. averages $15.17 an hour, while in India it is less than $2.00 an hour. An accountant in the U.S. makes $23.35 an hour, while in India that wage is between $6 and $15 an hour.

Jobs most vulnerable to the new wave of outsourcing, the researchers say, include medical transcriptions services, stock market research for financial firms, customer service call centers, legal online database research, payroll and other "back office" activities.

Bardhan and Kroll say that the widely quoted Forrester Research (an independent technology research company) report issued in 2002 that 3.3 million jobs would be lost to outsourcing by 2015 already seems conservative. They point to the rate of outsourcing over the past few years to India - 25,000 to 30,000 jobs in June 2003 alone.

India , they say, is the leading destination for outsourcing due to its population's widespread use of English in both education and business, institutional similarities with the United States in its legal system, wide wage differentials with the United States , and its large numbers of science and engineering graduates. Yet, other locations such as China , East Asia, Russia , Israel , and Ireland also are increasingly popular and competitive outsourcing destinations, the authors say.