How America Can Return Jobs And Prosperity to the Middle Class
By Mark Orttung, CEO, Nexient
Election Day is fast approaching and the presidential candidates will undoubtedly continue the debate over how to best restore prosperity and economic vitality—building on the now near seven-year recovery from the Great Recession. There is much on the line for voters, many of whom feel that even with notable private sector job growth, a low unemployment rate of five percent and huge stock market gains; the American dream may not be as attainable as it once was. Millions of Americans worry about stagnant wages over the past decade, declining incomes, the availability of high-quality jobs and sluggish economic growth.
A common theme surrounding the current economic environment is the issue of how America can continue to be the global leader in job and wealth creation, innovation, and strong and sustainable economic growth.
One area long considered as a staple in the formula for a robust economy is trade. Increasingly though, because of off-shoring decisions made by companies competing in an increasingly connected and competitive global marketplace, trade has become a hot-button issue and heavily debated. Critical, however, for U.S. companies is the ongoing ability to drive innovation in the global marketplace, create commercial opportunities here and abroad, and spur hiring and generate dynamic economic activity.
As manufacturing, along with service and technology jobs move to lower-wage countries such as China, India, Vietnam, and others; Americans who once attained a solid middle-class lifestyle are now looking around with confusion as they are forced into low-wage positions that provide little room for upward mobility. According to one estimate, 2,382,000 jobs were outsourced overseas in 2015.
The high profile public corporate sector, which for decades provided the platform for career opportunity and wage growth, has for the last 25 years embraced employment models that see labor as a cost to be controlled rather than an asset to be managed. For example, companies took an assembly line approach to information technology (IT), in order to cut costs to stay competitive. Wall Street took center stage as cost cutting permeated the C-suite and decisions such as off-shoring and outsourcing exemplified an over-emphasis on cutting costs at the expense of the ability to drive innovation.
Crossing the Line
Perhaps even more disturbing, some companies are gaming the system in order to maintain their margins. In recent cases: HCL, Cognizant, Infosys, Disney, and Southern California Edison were accused of abusing the prominent H-1B visa program to their advantage. The immigration statute is designed to provide companies access to specialized talent with expertise in fields such as mathematics, engineering and technology that may not be readily available in the U.S. However, the law governing the process strictly forbids American workers being displaced in favor of foreign workers. According to the language “a limit of 65,000 visas are available for new hires—and 20,000 additional visas for foreign professionals who graduate with a Master’s or Doctorate from a U.S. university.”
In these corporate cases, H1-B visas were apparently granted inappropriately to foreign workers entering the country. At Disney, 300 workers were replaced with lower cost foreign counterparts and at Edison over 500 existing employees lost their positions to high-tech workers from India.
The first place to find the genius of tomorrow is right in corporate America’s backyard from coast to coast Job Migration
It was reported in both instances that American workers doing the jobs in question were displaced at their sites in favor of imported talent, clearly in violation of the statute.
The Need for Action
Tactics such as these, though discomforting and crude, are just a piece of the larger problem associated with the broader issues of American competitiveness, immigration, trade policies, and off-shoring activities. Despite the claims from business about how the U.S. is not producing quality candidates, the reality is that students coming out of American universities are exceptional and provide a significant opportunity for U.S. firms. American companies need incredible talent to build their brands, so it is imperative that these U.S. trained graduates and professionals already in the workplace are the ones to build the next wave of entrepreneurial energy, global leading businesses, and disruptive technologies. The first place to find the genius of tomorrow is right in corporate America’s backyard from coast to coast.
Outsourcing versus On-Shoring
Critical to the process of building strong organizations and creating American opportunities is understanding the benefits and risks associated with outsourcing versus hiring workers here. Off-shoring, which has long been relied on by organizations as low-hanging profitability fruit, may not be as ripe as once considered. While employment costs may be initially lower, owners and executives are learning that long-term issues of quality, reliability, cohesiveness in operations, and potential uncertainty in product and service offerings may not be worth the risk.
While corporations pursued global outsourcing to lower costs, a few things happened. Most importantly, internal technology teams were hollowed out; leaving organizations unprepared for the transformative role technology is playing across every industry. Without internal talent or a partnering model to access the talent, many corporations are under a severe, in some cases, existential threat. At the same time, the H1-B process was hijacked to meet the needs of a few global outsourcers and corporations at the expense of the local workforce and the truly innovative U.S. businesses.
Many technology companies have successfully opted to focus on innovation fueled by local labor. Companies in Silicon Valley and across the technology industry realized the value of local talent and largely built their local workforces to drive innovation while using a global workforce to build peripheral products and support expansion to new geographies. The success of these technology companies creates a call to action for companies across all industries to focus on creating American jobs and find a value proposition for customers, employers, and employees over the long-run. Creating this tight partnership between companies and customers is exactly what today’s U.S. job market – largely comprised of millennials– is looking for in employment. Today’s candidates have a strong social conscience and are looking for roles where they can create meaningful value.
An American Business Solution
Collaboration, innovation, team-building, and productivity are at the root of a model that blends the ingenuity of Silicon Valley with the deep-rooted American work ethic built in the Midwest and flourishing nationwide that simply is not duplicated anywhere else in the world.
Companies looking at American-based hiring can capture the synergies of U.S. talent and deploy its capacity and capability towards bringing customers superior products and services. Along the way, the myopic “benefit” of lower labor costs associated with off-shoring activities fades away to the long-term realized gains in ROI, quality labor/management relations, customer satisfaction improvements, and organic competencies growth. This model also creates an upward life-cycle trajectory in which higher quality of work generates more customers, leading to greater revenue, profits, and ultimately more hiring of American workers. Over the long-term this architecture trains, grooms and develops the managers and C-suite executives of the next decade, who will spawn new industries, technologies, and American-led innovation. And of course, this framework is more than just a company or an industry winning, it is about communities teeming with new opportunities, employees earning great wages and benefits and America gaining strength from a renewed and vibrant economy.
Made in the USA is taking on a whole new meaning as technology companies, such as Nexient and others are embracing the utilization of American workers to enhance their future growth.
Founded in 2010 and based in Newark, CA, Nexient, is a US-based software services partner focusing on Agile Development and Business Acceleration. The company builds solutions that combine Agile expertise with Silicon Valley innovation to help clients be more responsive to their market.