US Election 2004: Kerry takes on offshoring

Software programmers and other professionals hurt by outsourcing should get federal assistance, Democratic US presidential candidate John Kerry said on 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 advisors have defended so-called "offshoring" as healthy for the economy.

Kerry's new paper argues that the Trade Adjustment Assistance (TAA) programme should be expanded to cover white-collar workers displaced by outsourcing. The programme, 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 much to factors including better global communications and 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 US 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 $17bn.

To help US workers find better, higher-paying jobs, President Bush has proposed to double the number of people served by a job-training programme 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 22 October 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 criticised the new law for failing to stop an incentive for companies to send jobs offshore, because they 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".

In his new paper, Kerry claims 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 spiralling 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 centre employees must disclose their location and says he will require companies to give at least three months of advance notice before laying off employees and shipping their jobs overseas.

In addition, Kerry calls for reforming the controversial H-1B and L-1 visa programmes, which have been accused of fuelling 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 US workers to fill the job before applying for an H-1B visa.

Kerry said he would cap the L-1 visa programme, which allows companies to temporarily bring in employees from other countries for managerial or executive work, or for work that entails specialised 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 programme 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 "specialised" knowledge. In response, the ITAA issued a paper with examples of what does and does not qualify as specialised knowledge in the IT industry. But Miller argued that legislative reforms to the L-1 programme could reduce the amount of foreign direct investment made in the United States.

Marcus Courtney, president of technology worker labour 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 US," 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."