America's Workers Get Stiffed Again

By Granholm, Jennifer M.; Mulhern, Daniel G. | Newsweek, August 15, 2011 | Go to article overview
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America's Workers Get Stiffed Again

Granholm, Jennifer M., Mulhern, Daniel G., Newsweek

Byline: Jennifer M. Granholm and Daniel G. Mulhern

The small-government, tax-cut-only approach is helping our competitors win the global race for jobs.

Jobs aren't scarce. and manufacturing jobs aren't disappearing. No, really: there are more jobs--even manufacturing jobs--than ever! The federal government pegs the net job increase at U.S. multinational companies at about half a million since 2000. And let's give credit to tax policy, too, which has freed up cash for companies to add those jobs. According to the Center on Budget and Policy Priorities, American companies are paying less in taxes as a percentage of GDP than ever recorded. In the quarter just ended, corporate profits soared.

Soaring profits and tax cuts translate into jobs, right? Yes!

Just not in America.

Those half-million jobs were created by multinationals cutting 2.4 million jobs in the U.S. while adding 2.9 million offshore. The invisible hand is working overtime these days, grabbing American corporate profits and putting them to work in other economies. Cash--whether from improved operations or tax cuts--continues to flow abroad, adding jobs and pushing up foreign income. Countries like China, Singapore, and India aggressively partner with their companies--and ours--to support further production and jobs for their people.

When Jennifer was governor of Michigan--trying everything, old and new, to create jobs--she saw clearly how taxes alone were seldom central to corporate decision making. Indeed, they were often on the periphery.

In 2005, for example, Michigan-based auto supplier Delphi filed for bankruptcy--at the time, the world's largest manufacturing bankruptcy. Back then, Delphi operated 41 U.S. plants and employed 50,000 workers. Today it has just 5,000 employees in the U.S. with more than 100,000 factory workers in other countries. Then there was the small manufacturer that announced layoffs. The CEO said privately there was nothing the state could do. His voice quivering, he explained he was patriotic and had sworn he would always hire American, but now he had to go to China or close altogether. Taxes were a nonissue; material costs, wages, and proximity to customers and partners drove the decision.

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