Jobs and a campaign

IF there was a lot of anxiety when the Senate gave its assent to an amendment relating to outsourcing on January 22, leading Democrats showed recently that they are behind none in politicking.

It happened in the wake of the remark by the Chairman of President George W. Bush's Council of Economic Advisers, Gregory Mankiw, that outsourcing by American companies was "just a new way of doing international trade" and that it "is probably a plus for the economy in the long run". The Democrats were `outraged' that the White House was being "insensitive" to the plight of Americans losing jobs, and that Bush was pleasing Corporate America at the expense of the worker. Although noted economists and analysts explained that Mankiw was only trying to make some sense of the issue in terms of the economic gains that would be made, it did not count in the realm of politics. Another move that will pick up steam in the days ahead is the introduction of the Jobs for America Act in the Senate.

The White House was on the defensive and so was Mankiw, who went on to say that his comments were misinterpreted. "My lack of clarity left the wrong impression that I praised the loss of jobs." In a letter to the Speaker of the House of Representatives, Mankiw said: "It is regrettable whenever anyone loses a job." Hastert, a prominent Republican, disagreed with Mankiw's comment. He said that "his theory fails a basic test of real economics". Hastert's comment was no less than a signal to the White House.

The President was not far behind trying to undo the damage done by his top economic expert. "I don't worry about numbers, I worry about people. There are still some people looking for work because of the recession. There are people looking for work because jobs have gone overseas.... We need to act to make sure that there are more jobs at home and people are more likely to retain a job," Bush said.

But Mankiw had done the "damage" and the Democrats were in no mood to listen to the damage-control experts at the White House or elsewhere. "This week Americans learnt something important. Exporting jobs isn't an accident - it's administration policy," remarked the top Democrat in the Senate, Tom Daschle, at a press conference called to spell out details of the Jobs for America Act.

"This is Alice in Wonderland economics. America has lost 2.9 million private sector jobs since January 2001. Nearly every State in the nation has lost manufacturing jobs and contrary to the administration's economic theories, there is nothing good about it. The administration is putting corporate profits ahead of American jobs," Daschle said.

The Jobs for America Act would require companies that lay off 15 or more workers to explain why they are being moved and where they are going; employees who are going to be laid off would have to be given notice at least three months in advance. The legislation would require companies to notify the Department of Labour and other relevant agencies at the State and local levels and the Department of Labour would have to compile statistics of "offshored" jobs and report them to Congress on an annual basis.

It remains to be seen how the Bill works its way through Congress. But it is for real and in an election year law-makers can move pretty fast when their political interests are at stake. In a larger perspective, the Democrats have decided to make outsourcing one of their major poll planks. No amount of objective economic analysis is going to matter at this stage.

Linked to the debate on outsourcing is the issue of certain professional visas; law-makers have started setting their sights on L visas - the L-1As, which are applicable to senior managers/executives, and the L-1Bs, which are reserved for workers with "specialised knowledge". At a Congressional hearing not too long ago, law-makers seemed intent on coming to grips with the perceived abuses in the processing of L visas, especially because it pertained to those in the category of "specialised knowledge".

India is one of the countries that have been targeted for the so-called blatant abuse of what constituted "specialised knowledge"; and there is the charge that Indian companies are involved in sub-contracting and they win contracts in the U.S. and bring workers from home to fill the positions. Another allegation is that Indian companies are trying to circumvent the numbers cap in the H-1B visas by utilising the L visas. Most of the allegations have been refuted by Indian coporations, but it might not make a difference at a time when economic growth and loss of white-collar jobs are highly sensitive issues in the U.S.

India may account for only about 20,413 L-1 visas of a total of about 3,14,000 issued for Fiscal 2002. But the fact remains that any tightening of the visa regime will affect Indian companies that have been relying on this category. Knowledgeable sources make the point that the first hit will come from law-makers by way of a definitional squeeze on what constituted "specialised knowledge". The broad charge against some companies is that they bring in workers without the "specialised knowledge" that is mandated by the visa.