Experts: Offshoring-displaced workers need more benefits

The U.S. government needs to do a better job of supporting and training IT and other workers who have lost jobs to offshore outsourcing, two economists on the opposite side of the offshoring debate said Tuesday.

Many other countries have better benefits and retraining programs, Alan Blinder, an economist from Princeton University, told the U.S. House of Representatives Science and Technology Committee.

"The U.S. government now offers disgracefully little help for workers who are displaced from their jobs," he said. "I'm talking about stingy unemployment insurance ... the prospect of losing your health insurance, your pension rights, and so on. I can't believe our country can't do better than that."

Blinder, who has suggested that 30 million to 40 million U.S. jobs could potentially be replaced by offshoring, found support for stronger worker benefits from Martin Baily, senior academic advisor at the McKinsey Global Institute and a defender of global outsourcing. "We do very little with the training of workers," he said.

But the witnesses at the hearing on the impact of offshoring U.S. research and development found little other common ground.

Baily suggested the benefits of a global economy to the U.S. far outweigh the downsides. About 80 percent of the available investments in the global economy is coming into the U.S., instead of it flowing outside the country, he said.

Globalization has "brought tremendous benefits to the United States," said Baily, chairman of the Council of Economic Advisers during President Bill Clinton's administration. "It's made the U.S. much more competitive. We've had access to better technology."

More than a quarter of the people with doctorate degrees in the U.S. are foreign born, he added. "We're actually benefiting from the education that's being provided to people overseas," he said.

The U.S. also benefits from computer hardware and software made overseas, he added. "At some level, we have to embrace the fact that science and technology is a global endeavor," he said.

But Blinder and Ralph Gomory, president of the Alfred P. Sloan Foundation, suggested there are significant downsides to offshore outsources. Under current U.S. policies, there's a "large-scale occupational migration" on the way, and the U.S. government needs to prepare for it, Blinder said.

While many U.S. lawmakers support free trade, globalization is different, added Gomory, former senior vice president for science and technology at IBM Corp. Typically, free trade involves countries migrating to create the goods they are most efficient at producing, then trade with other countries that produce other goods, he said.

But in globalization, the U.S. is moving much of its important production capability overseas, he added. "When the U.S. trades semiconductors for Asian sneakers ... that is trade," he said. "This type of exchange clearly benefits both countries."

But U.S. companies build semiconductor plants in other countries instead of the U.S., that's not free trade, he said. "Neither economic theory nor common sense asserts that shift is automatically good for the United States," Gomory added.

Lawmakers said they will consider the testimony as they look at ways to address offshoring. "What we want to do is make sure that companies find that U.S. scientists, engineers and students are the best in the world," said Representative Bart Gordon, a Tennessee Democrat and chairman of the committee. "We want to make sure we enact policies that keep us from having to offshore our future."