U.S. Workers in a Global Job Market: Government Needs to Collect and Analyze Data on the Offshoring of Science and Technology Jobs So That It Can Take Action to Nurture and Encourage Highly Skilled U.S. Workers

By Hira, Ron | Issues in Science and Technology, Spring 2009 | Go to article overview

U.S. Workers in a Global Job Market: Government Needs to Collect and Analyze Data on the Offshoring of Science and Technology Jobs So That It Can Take Action to Nurture and Encourage Highly Skilled U.S. Workers


Hira, Ron, Issues in Science and Technology


Among the many changes that are part of the emergence of a global economy is a radically different relationship between U.S. high-tech companies and their employees. As late as the 1990s, a degree in science, technology, engineering, or mathematics (STEM) was a virtual guarantee of employment. Today, many good STEM jobs are moving to other countries, reducing prospects for current STEM workers and dimming the appeal of STEM studies for young people. U.S. policymakers need to learn more about these developments so that they can make the critical choices about how to nurture a key ingredient in the nation's future economic health, the STEM workforce.

U.S. corporate leaders are not hiding the fact that globalization has fundamentally changed how they manage their human resources. Craig Barrett, then the chief executive officer (CEO) of Intel Corporation, said that his company can succeed without ever hiring another American. In an article in Foreign Affairs magazine, IBM's CEO Sam Palmisano gave the eulogy for the multinational corporation (MNC), introducing us to the globally integrated enterprise (GIE): "Many parties to the globalization debate mistakenly project into the future a picture of corporations that is unchanged from that of today or yesterday. ... But businesses are changing in fundamental ways--structurally, operationally, culturally--in response to the imperatives of globalization and new technology."

GIEs do not have to locate their high-value jobs in their home country; they can locate research, development, design, or services wherever they like without sacrificing efficiency. Ron Rittenmeyer, then the CEO of EDS, said he "is agnostic specifically about where" EDS locates its workers, choosing the place that reaps the best economic efficiency. EDS, which had virtually no employees in low-cost countries in 2002, had 43% of its workforce in low-cost countries by 2008. IBM, once known for its lifetime employment, now forces its U.S. workers to train foreign replacements as a condition of severance. In an odd twist, IBM is offering U.S. workers the opportunity to apply for jobs in its facilities in low-cost countries such as India and Brazil at local wage rates.

Policy discussions have not kept pace with changes in the job market, and little attention is being paid to the new labor market for U.S. STEM workers. In a time of GIEs, advanced tools and technology can be located anywhere, depriving U.S. workers of an advantage they once had over their counterparts in low-wage countries. And because technology workers not only create new knowledge for existing companies but are also an important source of entrepreneurship and startup firms, the workforce relocation may undermine U.S. world leadership as game-changing new companies and technologies are located in low-cost countries rather than the United States. The new corporate globalism will make innovations less geographically sticky, raising questions about how to make public R&D investments pay off locally or even nationally. Of course, scientists and engineers in other countries can generate new ideas and technologies that U.S. companies can import and put to use, but that too will require adjustments because this is not a strategy with which U.S. companies have much experience. In short, the geographic location of inputs and the flow of technology knowledge, and people are sure to be significantly altered by these changes in firm behavior.

As Ralph Gomory, a former senior vice president for science and technology at IBM, has noted, the interests of corporations and countries are diverging. Corporate leaders, whose performance is not measured by how many U.S. workers they employ or the long-term health of the U.S. economy, will pursue their private interests with vigor even if their actions harm their U.S. employees or are bad prescriptions for the economy. Simply put, what's good for IBM may not be good for the United States and vice versa. …

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