iOS app Android app More

U.S. Commerce Department Urges More Hiring Of American Workers By Foreign Companies

Fdi Usa

First Posted: 06/15/11 10:57 AM ET Updated: 08/15/11 06:12 AM ET

Large foreign companies that invest directly in the United States have proven to be a promising source of high-paying American jobs, and the United States should be doing more to encourage foreign investment, according to a new report from the U.S. Commerce Department.

In the report, the Commerce Department urged the government to encourage more foreign companies to hire American workers -- especially companies based in countries such as China that export to the United States more than they import. Economists at the Commerce Department said more investment by foreign companies could help revitalize the American economy by creating jobs and by producing more U.S. exports.

“This could definitely help the job situation,” said Mark Doms, chief economist at the U.S. Department of Commerce. “If there’s a foreign-based car company, we would rather make their cars here than import their cars abroad."

According to the Commerce Department report, 84 percent of foreign direct investment in the United States in 2010 came from or through only eight countries: Switzerland, the United Kingdom, Japan, France, Germany, Luxembourg, the Netherlands, and Canada.

But depending on the employer, foreign investment is not always a win-win situation, said Damon Silvers, director of policy and special counsel for the AFL-CIO.

“Unfortunately, there is also an increasing number of companies from countries with high labor standards that come to the United States and treat their employees in a way that they would never treat their employees back home,” Silvers said. “There’s always going to be people in the world looking to operate at the low end of things. You can’t stop them, but you don’t want to be the place they go.”

The Commerce Department report claimed that jobs funded by foreign companies tend to be more secure and higher-paying than those funded by American companies and that foreign investment even could help revive the anemic American manufacturing industry.

Mark Doms, the chief economist at the Commerce Department, said foreign companies choose to pay American workers high salaries because the American workforce is highly skilled, there is a large market of American consumers who can buy their goods and the United States has better law enforcement than other countries.

But the Commerce Department’s claim that wages at foreign companies in the United States are up to 30 percent higher than American company wages may be misleading, Heather Boushey, senior economist at the Center for American Progress, said.

Boushey said that since foreign companies tend to produce higher-end goods in the United States -- such as cars rather than T-shirts -- it would be difficult to gauge whether foreign companies pay more than American companies because they are foreign or because of the types of products that they choose to make in the U.S.

“Many U.S. companies employ a significant part -- even most of their employees -- overseas, so large multinationals are doing the same thing in other countries," Boushey said. "The issue is: Are companies investing enough in America to create jobs here?"

Lila Shapiro contributed reporting.

FOLLOW HUFFPOST BUSINESS
Subscribe to the HuffPost Money newsletter!