Should Multinationals Have to Report Jobs in the U.S.?

An article in today’s Washington Post takes many U.S. multinationals to task for wanting on the one hand tax incentives to create jobs and on the other refusing to report their breakdown of jobs here and overseas. Indeed, while all companies in the United States are required by law to report the number of jobs they have to the U.S. government, that data is by law also protected and is only revealed in aggregate (e.g., jobs in particular industries), not by individual firm.

While it might be useful to know this data by firm, there is a very good reason why many multinational firms don’t want to report it: American politics is so broken that any company that is creating more jobs overseas than here at home is immediately branded as an anti-American, selfish corporation that puts profits ahead of people.  Remember John Kerry’s “Benedict Arnold corporations” from 2004?  Who wants this kind of grief for doing what your shareholders (and customers) are demanding?

The ultimate in this kind of thinking is to fall prey to the dangerous illusion that the U.S. can have a thirving economy without healthy large multinational corporations located here and employing people here. My colleague Ron Hira succumbs to this view when he is quoted in the article as saying, “should you listen to the kind of advice these companies have about how to grow the economy when their record and their model indicates they’ve cut jobs? … Or should we talk to people who actually do create jobs in the United States?” To be sure, not every idea companies propose is the right one, and certainly there are good ideas that they would do well to support, but to say that just because companies are moving jobs offshore that we should no longer listen to them for policy ideas of how to get them to not move jobs offshore is frankly ludicrous. One of the problems is that we have not been listening enough to multinational companies. For many have been saying for years how we need to boost the R&D tax credit, invest more in science and technology, boost support for science and engineering educaiton, etc. But Washington has largely ignored their advice.

If we take the view that as a nation we can be indifferent to the health of large multinational corporations, especially their establishments in the United States, we are largley kissing our economic future goodbye. You can’t build a powerhouse economy on pizza parlors and barber shops. Yet all too many people would have economic policy focus on these good old fashioned, red-blooded, mom and pop, “Main Street” companies but they disregard the reality that the vitality of these firms is almost 100 percent dependent on the mulitnationals making investments in America.

A bit like a guy who loses his girl friend because he stops being interesting and then blames her for leaving, too many now blame corporations for making what are essentially rational decisions. American corporate taxes are among the highest in the world. Our public investment in research and development, reserach universities, workforce training and infrastruture lag many other nations. We all too often lay down or turn the other cheek when it comes to foreign unfair trade practices that unfairly induce multinationals to create jobs there. What do you expect companies to do in this situation. To be sure, companies could and should take a longer view of how to innovate and raise productivity and not be so quick to take the low cost path in India or China.  But fundamentally absent us changing, our corporate girlfriend will continue to see more in the other guy.

And so back to the job numbers. If they report job numbers that show that companies are adding jobs outside the U.S. we blame them. No wonder they don’t want to report jobs data.

Its time for pundits, policy makers and other folks to wake up and smell the coffee.  If you are the governor of New York or Texas you don’t call your corporation that is headquartered there a “Benedict Arnold” for moving a factory to another state or another nation. You fight harder to make your state more competitive so the next time a decision like this gets made you will be the benefactor. So rather than blame the girlfriend for leaving us, let’s look in the mirror, lose some weight, find some new clothes, get a new attitude and turn off the TV. In other words, blaming companies for moving jobs offshore gets us nowhere. What gets us somewhere is taking the hard steps to make America competitve again,and that is not just cutting taxes or streamlining regulations, as important as that is, its also expanding public investment and  developing a real national innovation and competitiveness strategy.

Image Credit: Bill Bradford

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About the author

Dr. Robert D. Atkinson is one of the country’s foremost thinkers on innovation economics. With has an extensive background in technology policy, he has conducted ground-breaking research projects on technology and innovation, is a valued adviser to state and national policy makers, and a popular speaker on innovation policy nationally and internationally. He is the author of "Innovation Economics: The Race for Global Advantage" (Yale, forthcoming) and "The Past and Future of America’s Economy: Long Waves of Innovation That Power Cycles of Growth" (Edward Elgar, 2005). Before coming to ITIF, Atkinson was Vice President of the Progressive Policy Institute and Director of PPI’s Technology & New Economy Project. Ars Technica listed Atkinson as one of 2009’s Tech Policy People to Watch. He has testified before a number of committees in Congress and has appeared in various media outlets including CNN, Fox News, MSNBC, NPR, and NBC Nightly News. He received his Ph.D. in City and Regional Planning from the University of North Carolina at Chapel Hill in 1989.
  • Seamus Grimes

    Some are speaking about taking a break from globalisation during the recession, but globalisation suits some people very well.Zachary Karabell did quite a good job explaining how the economies of the US and China have become intertwined in hs book ‘Superfusion’, but as you say people like to have the benefits without the costs.Globaisation works well for the owners of IP. Take the big US tech multinationals for example. Their former employees in the US lose out as their shareholders from the other side of town incetivise the management with huge salaries to increase quarterly performance. It makes sense for them to offshore and outsoruce to Foxconn (1.3 million employees) in China, while the Chinese slaves do the work for peanuts. Most of the added value and profit returns to the IP owners and their shareholders in the form of higher dividends, while their bluse collar fellow citizens watch on in disbelief. Meanwhile the public representatives of al of these ctiszens pretend to represent them all, and begin blaming the Chinese slaves for the outcome.In an era when large multinationals seek to become global operators (even seeking to become Chinese companies as part of this strategy), the relationship between them and their home country chnages hugely. They may use their government to lobby for them, when the going gets tough in China in terms of access to the market, but they use all of their stratgic thinking to ensure that they don’t pay US corporate tax rates. The fact is that much of our thniking remains within the confines of doemstic economies that no longer exist as entities in themselves.

  • Phil

    The Washington Post article pushes accountability for companies that want to receive tax incentives to create jobs in the US. What’s the problem? Rob Atkinson seems to have a lot of good ideas, but ignoring accountability because it might turn out to be embarrassing for many large corporations is not a good idea. If the people of this country, through our government, pay for something through tax incentives, we should be able to know if we’re getting what we pay for.

  • Rob Atkinson

    Phil, thanks for your comment.  My point was not really this, although perhaps I could have been clearer.  It was that one reason why some companies don’t want to report is because they get roundly criticized for being unpatriotic.  My point is that it’s not enough to require reporting, we have to change the focus to figuring out what the US is doing wrong (in not creating an environment where investment happens here), not what companies are doing wrong.<o:p></o:p> From: Posterous [mailto: