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Why multinationals aren't adding U.S. jobs

162 views · Published 29 September 2014 · 5:05 · Indexed 8 October 2026

Channel: KaFaDoKyA NEWS · 2014 · News & Politics

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By contrast, in the 1990s they hired 4.4 million Americans and 2.7 million people in other countries.

Here's what some U.S.-based multinationals are doing:

• Heavy-equipment maker Caterpillar, based in Peoria, Ill., has cut about 2,800 jobs in the U.S. since 2008 while hiring over 8,000 people in the Asia Pacific region. Caterpillar gets two-thirds of its revenues from outside the U.S., and Asia Pacific sales have grown nearly 40% since 2008. Caterpillar declined comment.

• IBM has reduced its U.S. workforce from 105,000 in 2009 to 83,000 now, estimated Alliance@IBM of the Communications Workers of America, which is trying to organize U.S. IBM employees. (For competitive reasons, IBM no longer discloses its U.S. employment.) In 2012, Computerworld reported that IBM had 112,000 workers in India, up from 6,000 in 2002. An IBM spokesman said its global workforce has remained stable for the past three years and "at any given time we have about 3,000 job openings to support our strategic initiatives."

• Cisco Systems' U.S. workforce has remained steady since 2009, while it added 8,000 jobs abroad. It now has about half of its sales and employees in the U.S. In 2013, CEO John Chambers told CNBC, "…I

n terms of future growth, unless tax policy changes, you will see (hiring) occur outside the U.S." Cisco said in an emailed statement it will continue to hire and invest in the U.S. and elsewhere as it adjusts workforce to new opportunities.

John Challenger, chief executive officer of Challenger, Gray & Christmas, a Chicago-based outplacement firm, said large multinationals move jobs overseas because they need to manufacture and sell products in countries like India and China, which have two to three times the USA's GDP growth.

Plus, Challenger said, "The lower-skilled and semi-skilled jobs are much more subject to globalization and automation than the higher-skilled jobs."

Multinationals, however, have been slashing higher-skilled jobs as well.

In general, multinationals pay 25% above the national average compensation, according to a 2012 study in the Harvard Business Review.

Because most giant multinationals are public companies, they're under pressure from Wall Street, hedge funds, and activist investors.

"The power of financial markets and shareholder pressures are driving short-term decisions," said Rosemary Batt, a professor at the ILR School at Cornell University, who along with Eileen Appelbaum wrote a recent book, Private Equity at Work.

(Of the companies mentioned, all except Caterpillar have seen their stocks lag the Standard & Poor's 500 index over the past five years, so keeping U.S. headcount down hasn't helped them outperform.)

"Since the financial crisis, public companies have accelerated their investment in labor-saving technologies, driving efficiencies in the U.S.," she explained.

Pressure to boost shareholder return also pushes big public companies to lay off U.S. workers, add them overseas, and relocate to cut their taxes, she said.

What they all have in common is a laser focus on the bottom line. That's why nearly half of all Americans don't believe the recession is over and many don't think their jobs are secure.











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