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Press Releases :: July 24, 2006

Gordon: Commerce Report on Offshoring Confirms U.S. Job Losses May Accelerate

Job losses continue in industrial sectors across the U.S. with little response from the Federal Government, noted U.S. House Science Committee Ranking Member Rep. Bart Gordon (D-TN). Gordon and fellow Committee Democrats have sought to highlight this growing problem – known as "offshoring" – in an attempt to insure hard working Americans are kept in the loop on the state of their jobs.

Democrats’ efforts have centered on obtaining data compiled in 2004 by analysts at the Technology Administration (TA) within the U.S. Department of Commerce.  Their report, entitled An Overview of Workforce Globalization in the U.S. IT Services and Software, U.S. Semiconductor and the U.S. Pharmaceuticals Industries, provided an in-depth analysis of the ongoing loss of U.S. high tech jobs (semiconductors, information technology and software, and pharmaceuticals) and represents the most complete analysis to date on offshoring of U.S. jobs.

Until today, the full form of their report has never been publicly released.

"American workers deserve the most complete analysis available on the status of U.S. high-tech jobs, now and in the future," said Rep. Gordon.  "This report represented the best information we had and Congress deserved to be privy to it."

The Commerce Department released a 12-page summary in September 2005 of the estimated 200-page analysis.  That 12-page summary cost taxpayers roughly $335,000 and TA staff contend that the summary did not accurately reflect their extensive analysis.

Science Democrats then requested the full 200-page report from the Department, asserting that document could provide the best insight to date assembled by the U.S. Government on the factors driving U.S. jobs "offshore" to foreign countries.  In April of this year, Science Committee Democrats and Republicans jointly requested the Department turn over the valuable data.

In reviewing the lengthy analysis, Science Democrats found the TA staff findings were not accurately portrayed in the shortened report.  The draft chapters reveal a far more sophisticated understanding of what has been happening with corporate investment and employment patterns in particular industries than any other publicly released document from the Bush Administration.

The brief 12-page publicly released summary downplayed the significance of offshoring, asserting that "many recent studies showing that the globalization of the workforce, along with global sourcing, offers just as many opportunities as challenges for U.S. firms and workers."

Science Democrats’ review of the original working papers also reveals a more subtle and detailed analysis of factors that are driving American firms to move jobs offshore.  The message of the original work is that offshoring is happening at significant levels in some industrial sectors and the phenomenon will continue and is likely to accelerate.  The summary released by the Administration modifies or simply eliminates statements that alluded to offshoring as a problem or the possibility that it may increase.

For example, the original report observed: "U.S. companies have the leading share of global semiconductor revenues.  Highly skilled workers within the U.S. semiconductor industry - including engineers in manufacturing, design, and R&D - remain mostly in the United States. The U.S. semiconductor industry has an established history of outsourcing and off-shoring.  Fifty percent of the industry’s employees and thirty percent of its engineers were in offshore locations in 2003."

In the publicly released copy the italicized sentences above were dropped from the summary.

Entire observations were also dropped from the public summary that indicated offshoring appeared to be a problem.  The following statements disappeared from the draft summary:

  • "Venture capitalists are now encouraging U.S. IT start-ups to use lower cost offshore destinations for software development to reduce the “cash-burn rate."
  • "The present driver of off-shoring in semiconductor design is to reduce labor costs and shorten the time to market."
  • "Present outsourcing and off-shoring trends have the potential to affect the U.S. semiconductor manufacturing workforce."

Rep. Gordon noted that, "Letting the public see what experts at the Department of Commerce were thinking about offshoring jobs would tend to inform public debate, rather than confuse it.  The authors of this report wrote at the direction of Congress and expected their work to be publicly released."

In fighting a year-long battle to compel the release of this information, Rep. Gordon added that his intention in obtaining and analyzing the information "is simple… to shed light on the truth of what is happening to American high-tech jobs."

More information can be found on the Science Democrat’s website.

News from the House Science and Technology Committee
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Bart Gordon, Chairman


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