By Chris Bennett, CEO and founder of NetInterests (Published Feb. 16, 2004)

Is it a good thing that jobs are being moved overseas?
A different viewpoint on why this can be an opportunity for us all

[PART I OF II]

Let the jobs go to China, India, Mexico….?

Should we actually facilitate the flow of jobs to other countries from the United States, in general, and the State of Maryland in particular? A different approach to this issue is, "Yes we should." And that a portion of the benefits should be reinvested in upgrading skills and promoting the creation of companies to employ those skills at wages appropriate - for our local people/workers. The United States is not, and will not be the only nation experiencing a loss of jobs overseas. In this area America and Maryland can provide leadership that is good for our country. We can offer a model for consideration by the rest of the world. We should create a job relocation fund. The proceeds should be invested in skilled workers and companies that are positioned in growth industries.

Movement of jobs and skills are reality - take advantage of it

I want to invest a few lines in explaining my inclination to make an opportunity of this trend. I am an entrepreneur. I see both opportunity and risks. To date the risks have garnered the majority of attention… in the form of concern over high-paying jobs moving from the US to other countries and being replaced by positions that pay less well. This employment drain is real. But so is the opportunity if we take a different view.

The global movement of jobs and skills makes sense. It increases the possibility of finding resources that are right for a company at a particular time. Organizations need certain skills changes as markets evolve. The ability to compete is limited if the options for getting those skills are constrained to a specific geography. Businesses may survive and thrive if they execute successfully - continuing their ability to provide jobs directly and indirectly through their suppliers. Jobs and skills must be free to move to where they create the most value.

For the area and people to whom the employment is relocating, they will have new options for earning money. Often the new jobs provide relatively better wage and tax revenue. They benefit from the relocation.

The impact on the area losing the jobs is tougher. Salaries and tax base are lost. Without the money and / or the time to transition to other opportunities, it creates a hardship from which the area may not recover. We can turn the hardship into an opportunity if we can fill the gap created by the loss of money and time. If the economics of relocating operations are beneficial to a company, then a reasonable portion of those benefits should be directed to the community and people harmed by the relocation directly.

We should not stop there. Instead, we should provide incentives to create new companies in growth markets and new jobs for the workers. The goal should be to put the community in a position that provides a good standard of living today. Over time the impact of the fund should make the local area attractive to new opportunities from domestic and foreign markets. Eventually a community and its people may find themselves better-off by losing low paying employers and jobs - replacing them with higher paying opportunities. One key will be the creation of the right employment opportunities.

I can provide a first-hand example of how a fluid global market for skills and jobs can be beneficial in the "real world" level. I'm an entrepreneur. The financial resources available to my company at startup were minimal. For us each dollar is precious at this stage of our development. The bulk of our resources are local. We buy some of the skills that we need from people in other countries and in other states of the US - using the Internet as the medium that allows domestic and foreign contractors to work with us. Our research shows that we are saving money by outsourcing this work. The money we've saved by contracting with them has helped us to be competitive and to spend money in Maryland.

We are a young company. Our business processes allow certain skills to be done remotely. Strategic work and assets are kept local. This helps to manage areas of quality and intellectual property. Those things are important to our business model.
Arguably, we have exported skills but not jobs. Internet technology has freed us to separate work into skills. I believe this makes the local work more competitive and secure. There are some things that work better when people are in the same area. Most important the technology allowed our need for skills to flow to the person/country/state that offers what we want - at the right price. Based on feedback from our contractors that price affords to them a standard of living that meets their need(s) in their country. There is a balance between our demand for their skills and their supply and price. This works for certain skills today. It is likely that the number of skills that may be sourced anywhere around the world will change and expand - as technology advances and as competition shifts.

Similarly, existing and new organizations can redesign their work and their processes. Many of them are doing so today. Skills and work can be separated so that the right organization provides them - regardless of geography. The remaining local work can be more competitive and stable. This work redesign process is easier for new companies. They can design their organization to match circumstances and opportunity with precision from inception. Their probability of growth and job creation increases if they are successful. This potential increases the importance of promoting new companies - whether they emerge from existing businesses or result from a startup.

The fact that jobs are moving from one country to another is incontrovertible. The trend has expanded from labor intensive industries, like manufacturing and textiles, and is spreading to knowledge and service worker sectors now, such as software development and call centers. The causes appear to be complex at the detail level. An over-simplified view is that organizations believe that costs will be reduced and an acceptable level of quality achieved. I am for making it easy for organizations to relocate jobs and skills offshore - as long as they share a portion of the benefits with people left behind locally.

Invest in people and companies that build presence in the right industries/markets

I propose that a worker retraining and new company investment fund be created. Let's call it a relocation fee fund. Any company that moves a job to another country - from the US - must contribute to the fund a fee (based on a fixed percentage of the compensation and benefits for the specific job)(1). The percentage should be sufficient to pay for retraining of the worker at a local and accredited place of higher education for a period of time limited. Also, it should make some contribution to establishing new companies that can create demand for the jobs and skills that are likely to earn higher compensation. This has seven distinct benefits that produce a win-win type effect.

o Workers affected by the loss of jobs benefit - they have funds and some time to build skills for positions that will be marketable and of interest to them personally
o Existing companies and capital markets benefit - they realize predictability in considering the impact of moving jobs. In many instances it is in their own self-interest to leave this type of legacy. They are seeding the creation of skills, customers and markets - for their products/services/interests going forward. For example; if IBM closes a computer manufacturing plant then one of the residual impacts will be a group of people that are trained workers. As consumers they are likely to reduce spending until their employment situation becomes positive. Some of those skills from IBM are transferable to other industries, such as bioinformatics. Retraining increases the probability that a higher percentage of the workers can retain or increase their standard of living. This enables them to both benefit potential employers and to purchase products and services, from companies like IBM.
o New and emerging companies' benefit - the financial capital created will expand the pool of seed money needed to promote entrepreneurship. It can accelerate the process of developing new ideas and the work of building companies to employ people and skills around the ideas. Similarly, the retraining part of the fee pool will increase the availability of a workforce with the current skills that they need to progress. This favors startup and emerging companies that want to grow, but are inhibited by a lack of a trained workforce. On an even more positive note, personal experience shows that a retrained person may be more valuable to a company than one that lacks comparable experience. Their retraining helps to make them flexible. Their prior experience will help them to make better business decisions and to avoid mistakes or risk undue. The combination of capital and trained people creates an economic velocity.
o Higher Education benefits - the fee fund combines both students, likely to be interested in leading edge skills, and funding for tuition/research.
o U.S. competitiveness benefits - the pool of marketable new ideas (intellectual property), and potentially legally recognized copyrights, trade/service marks and patents will grow. The intangible and tangible value of these assets can increase, even more so as domestic economies become more knowledge and knowledge worker intensive. These new ideas have a multiplier effect. It can ripple though the fabric of a local community - such as education, government and job markets. Look at Austin, TX, Boston, MA, Minneapolis-St. Paul, MN, Research Triangle, NC, and Silicon Valley, CA as examples.
o Government benefits - the tax base is retained and may be enhanced. The likelihood that people will need government services is reduced (unemployment, welfare, etc.) and/or become a burden/threat to society, e.g., committing a crime.
o You and I, the public, benefit - in addition to the benefits mentioned above, common sense shows that it is beneficial to create or maintain jobs and employment for our neighbors. Every public good that we use is affected, such as schools, parks, transportation, public safety / policy, and so on.

One of my favorite sayings is that, "a rising tide raises all boats." This proposal is consistent with that ideal. It promotes sustained economic expansion. It is more positive to experience economic progress than decline or recession. We have seen both sides of that coin over the five years past.

(Part II will be published next week 2/23/04)

(1) In a recent National Public Radio© broadcast it was stated that the North American Free Trade Agreement (NAFTA) includes a worker retraining provision. That is consistent with information provided during my International Law studies at Georgetown University. I believe that this proposal is unique because it is broader in scope and addresses the strategic impact of skills rebalancing in a way that is market based and targeted to promote economic development in areas with growth opportunities

Chris Bennett has 20 years of domestic and international experience as an advisor and business person. He is the CEO and founder of NetInterests a company located at the MTECH/TAP incubator of the University of Maryland. chris.bennett@netinterests.com

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