A key element of President Obama’s corporate taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. reform plan has been introduced in the U.S. House of Representatives by Rep. Bill Pascrell (D-NJ) and in the Senate by Sen. Debbie Stabenow (D-MI). Called the “Bring Jobs Home Act” (H.R. 5542), the bill would give eligible firms a tax credit equal to 20 percent of the cost of relocating overseas jobs back to the U.S.
Of course, the premise behind this legislation is that U.S. companies are “shipping jobs overseas” because of various perceived loopholes in the tax code and that a new tax break will encourage them to bring those jobs home.
But the facts show that the outsourcing issue may be one of the most over-hyped issues in American politics.
Hard data from the Bureau of Labor Statistics (BLS) shows that only a small fraction of the mass layoffs in any given year are moved offshore. The vast majority of layoffs that result from the movement of jobs from one location to another are domestic – meaning that U.S. workers have more to fear from their job being moved from one state to another rather than to another country.
The table below shows the total number of job losses resulting from mass layoffs (layoffs of 50 workers or more) from 2008 to 2010. In 2010, just 3.1 percent of the nearly 1.3 million total layoffs were the result of relocating jobs from one location to another. Of those three years, 2008 had the largest percentage of relocation-driven layoffs at 4.0 percent.
BLS and the employers cannot always document where those jobs are move to, but the data clearly indicates that the vast majority of those jobs are domestic relocations and within the parent company. For example, in 2010 BLS was able to identify the destination of 18,622 job losses resulting from the movement of work (just 1.2 percent of the total layoffs that year). Of those identified, 71 percent were domestic relocations. By contrast, 5,336 of those job losses (29 percent) were relocated abroad and the majority of them were within the parent company.
The bottom line is that the outsourcing of U.S. jobs abroad has become a political urban legend that has little basis in fact. As such, policies such as the Bring Jobs Home Act are likely to play well politically but have little impact on creating jobs here in the U.S.
|
Mass Layoffs and Separations Resulting from Movement of Work |
|||
|
2008 |
2009 |
2010 |
|
|
Total private nonfarm layoffs |
1,516,978 |
2,108,202 |
1,256,606 |
|
Total layoffs from movement of work |
60,956 |
61,694 |
39,104 |
|
Percentage of total layoffs |
4.0% |
2.9% |
3.1% |
|
Layoffs where relocation destination is known |
35,076 |
32,228 |
18,622 |
|
Out of country relocations |
11,431 |
10,378 |
5,336 |
|
Percent |
33% |
32% |
29% |
|
Within company |
10,392 |
9,630 |
3,548 |
|
Different company |
1039 |
748 |
1,788 |
|
Domestic relocations |
23,370 |
21,555 |
13,286 |
|
Percent |
67% |
67% |
71% |
|
Within company |
20,943 |
18,184 |
11,128 |
|
Different company |
2,427 |
3,371 |
2,158 |
|
Source: BLS, http://www.bls.gov/mls/mlsreport1038.pdf, Tables 13, 14 |