Need a Job? The Recession and Offshoring Don’t Have to Be Obstacles
Updated June 2, 2010
All eyes are on Germany as the possible savior in the woes of the European Union’s recovery. Germany was the first to enjoy a growing gross domestic product. But Germany is eyeing budget cuts – billions of euros. Possible cuts include defense and higher sin taxes. The goal is savings totaling €10 billion or $12.22 billion.
Economists’ eyes are also on the U.S. GDP, a basic measure of the nation’s performance. But the U.S. recession will not be officially over until we get a definitive word from the National Bureau of Economic Research. Not to be negative, but you might recall the official determination about the current recession was late – not until December 2008. That was a full year after the bureau’s economists realized the recession originated 12 months earlier.
During those 12 months, many on Main Street were already reeling from the effects of the severe downturn. Profits were harder to achieve, especially for retailers. Advertising budgets were cut. Autos and trucks weren’t selling well as consumers became more tight-fisted with their money. The situation was exacerbated when big banks and credit card companies started cutting credit lines and imposing stiff fees in undesirable usury practices.
If you’re a boss planning your budget and workforce, it is certainly best to consider more than a macro-view of the economy. For an accurate snapshot, use discernment in the micro factors directly and indirectly affecting you. Listen closely to your customers.
That also means: Don’t be fooled about many companies exceeding earnings expectations on Wall Street during the recession.
Candidly, times are not necessarily good if those companies are merely cutting employee hours or laying-off workers and slashing costs to achieve profits. Profits created by stagnant wages adversely affect consumer confidence.
If you are a non-exempt employee – just like senior management – you should be aware of these issues. Higher profits do not equate with strong employment prospects, either. So, even if the GDP gets in the black, we still might not be in a true recovery.
What else should you do? Stay positive and passionately do your best to help your company make a dollar. And if your company lobbies government in the political arena, find why. It just might be to create an environment conducive to competitiveness.
Offshoring Job Losses
Many Americans have either been under-employed or jobless as the result of offshoring jobs, too. Just as automation replaced workers a few decades ago, look for innovation and productivity to increase as companies cut costs.
A study by The Conference Board and Duke University shows the number of offshoring U.S. companies dramatically increased from 2005 to 2008 – 22 percent to 50 percent. What’s more, 60 percent of such companies plan to increase their offshoring.
Business has complained for years about too few Americans having degrees in science and math. The lack of talent and innovations in speeding products to the marketplace are the catalysts for the increase in offshoring.
No matter how you are impacted by offshoring, you will want to read the comment by the report’s co-author on The Conference Board Web site, www.conference-board.org.
“Outsourcing innovation in engineering, research and development, product and software development, and knowledge processes makes companies, whatever their country of origin, more competitive by increasing speed to market and compensating for domestic talent gaps,” wrote Ton Heijmen.
The report also states the shortage of American talent has prompted many small companies to offshore jobs. And the talent is not limited to China or India – talent is being utilized in Brazil, Egypt, Sri Lanka and Russia.
Conversely, many economists say jobs are coming to the U.S. as a result of the offshoring phenomenon.
“That is, the world sends more service sector jobs to the US than the US sends to the world, where the jobs under discussion involve trade in services of computing (which includes computer software designs) and other business services (which include accounting and other back-office operations),” wrote Richard Baldwin, a professor of International Economics at the Graduate Institute, Geneva on www.voxeu.org.
VoxEU.org is a portal established by the Centre for Economic Policy Research, www.CEPR.org.
One of the reasons for offshoring is competitiveness – due to a lack of economic and political liberty – a condition imposed by the federal and state governments. (For Northwest readers, see: Analysis: Steps for Economic Success in Washington State.)
Consider this statement on the Web site of the nonpartisan Tax Foundation:
“Currently, the average combined federal and state corporate tax rate in the U.S. is 39.3 percent, second among OECD countries to Japan’s combined rate of 39.5 percent,” wrote Scott A. Hodge, president of the Tax Foundation, www.taxfoundation.org.
(Thirty countries belong to OCED, Organisation for Economic Co-operation and Development, www.oecd.org. It was formed in 1960 for a “For a stronger, cleaner, fairer world economy.”)
Among his other conclusions, Mr. Hodge has a stunning assessment: “24 U.S. states have a combined corporate tax rate higher than top-ranked Japan.”
So here is the bottom-line: Undeniably, many Americans have suffered hardship as a result of the recession and offshoring. However, remember the U.S. will soon come out the recession and we are a vital part of an evolving dynamic global economy.
The best approach has always been the free-enterprise system. Embracing change is the only productive option for individuals to enjoy success.
The road to economic success will be easier if governments stop their heavy taxation. Instead, economic wisdom and best practices should be their goals.
Economic and political liberties are vital to the success of this nation – the effectiveness of economic policies depends on whether government has economic wisdom. That means allowing for economic and political liberties.
As I’ve written before: “Economic liberty is the freedom to make decisions in a free-enterprise system. Political liberty is possible when government stops its unproductive practices so entrepreneurs can have the necessary tools to create jobs and take full responsibility for their successes or failures.”
From the Coach’s Corner, if you are out of work or under-employed, it is time for an assessment of your strengths, weaknesses, opportunities and threats. Consider a career that offers more value to an employer or learn business-startup skills if you want to be the big boss.
For more insights on how to cope with offshoring of jobs, you might want to read the writings of Michael T. Robinson, the creator of www.careerplanner.com. I agree with his approach.
Visit: www.careerplanner.com/Career-Articles/Offshoring-Jobs.cfm.
If you decide to launch a business, don’t be surprised if you become more aware of the need for economic and political liberty.
If You Own a Small Business, What Songs Are You Singing?
To paraphrase a song sung by a Tony Award-winning star of stage and film musicals, Ethel Merman: “There’s no business like small business.” But it appears many small businesses have been singing the blues for years.
Data from Equifax indicates small-business bankruptcy filings are skyrocketing – they were up 81 percent at the halfway point of 2009 compared to June of 2008. It is estimated there are 25 million small businesses in America.
The most small-business bankruptcy filings were in regions of southern and northern California – the Los Angeles, Riverside/San Bernardino and Sacramento metropolitan areas.
Yes, it is true that the bankruptcy trend does not tell the whole story.
Some small businesses have been successful in getting outsourcing opportunities to sell to big firms. In looking for market share, many large companies are catering to small businesses with lower prices for goods and services.
And even though the stock market has been performing more like a raging bull since March, and a study shows small business confidence is hopeful for a turnaround by 2010, not every small-business owner is likely to be enthused.
A recent confidence survey by Administaff, www.administaff.com, showed 40 percent of responding businesses said they have been performing worse than they anticipated while 60 percent were content with their 2009 performance.
But small businesses appear to have reason to be concerned.
Published reports indicate the President Obama healthcare surtax would decrease the federal income tax base according to the nonpartisan, nonprofit Tax Foundation, www.taxfoundation.org. The organization is also quoted as predicting that 1.3 million small businesses would pay even more taxes under his plan.
Actually, healthcare reform and taxes have been issues for small business for as long as I can remember. That’s based on my experience as a business-coaching columnist, management consultant and two-year host of a radio program, which was sponsored and podcast statewide by the Association of Washington Business, www.awb.org.
Unfortunately, the concerns of small businesses in Washington state have long mirrored those throughout nation, for example, according to two different studies released in 2007.
Before the recession, economic confidence had declined among small business owners, according to Discover Small Business Watch. Some 32 percent believed business conditions in their industries were deteriorating while 40 percent complained of cash-flow problems.
The numbers were similar from the National Small Business Association, www.nsba.biz, as 43 percent of responding members said the economy was worse for them in 2007 than it was five years before in 2002.
Other financial concerns: Thirty-nine percent cited health benefits; 31 percent worried about available capital; 27 percent complained about state and local taxes; 25 percent feared federal taxes; and 23 percent mentioned a lack of qualified workers.
In 1995, 67 percent of surveyed companies offered health benefits, but now only 41 percent do so.
What issues did they want addressed in the presidential campaign between Senator John McCain and the eventual winner, President Obama? Thirty-one percent cited taxes while 30 percent said health care costs were the most important.
Overall, while 60 percent of surveyed companies invest in a Web site, a high percentage of small businesses didn’t have a Web presence. They included 57 percent of service companies; 39 percent of retailers; 33 percent of professional services; 67 percent of construction companies; and 32 percent of manufacturers.
Meantime, it appears a common denominator in small-business issues is government and whether it will continue to hinder business with economic policies. Note the concerns about taxes, and health care reform. Small businesses aren’t likely to become really confident until government stops hindering our free-market system and starts allowing economic and political liberties.
From the Coach’s Corner, you can influence your company’s future by focusing on people.
My research shows 53 percent of a customer’s buying motivation depends on people. What are the so-called soft skills of your spokespersons, customer service, finance and salespeople? Customers want value, good service and to be treated well.
And if you don’t have an effective Internet presence, get busy. And good luck!
