United Technologies Just Got More Lucrative Government Contracts After Offshoring Jobs To Mexico

Why isn’t President Trump even doing the obvious to stop job offshoring?
04/25/2017 10:14 am ET Updated Apr 26, 2017
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United Technologies, the firm President Donald Trump spotlighted with his threat to punish companies offshoring jobs, is moving more than 1,000 of its Indiana Carrier jobs to Mexico despite Trump’s intervention. Instead of punishment, since Inauguration Day the major defense contractor has been awarded new lucrative government contracts.

Really. Fifteen new contracts.

Cutting off firms from obtaining lucrative government contracts paid with taxpayers’ funds should be a no-brainer for a president who pledged to fight offshoring. And it’s much easier than the things Trump pledged to do and has not: slap taxes on the goods offshoring firms ship back here and introduce and move in his first 100 days an “End the Offshoring Act.”

Public Citizen and Good Jobs Nation dug through two massive government databases to investigate whether UT was a fluke, or many of the nation’s major contractors are offshoring. The findings in a new report we released today are infuriating:

  • Fifty-six percent of the top 50 federal contractors in fiscal year 2016 were certified under just one narrow U.S. government program as having engaged in offshoring
  • Forty-one of the top 100 FY 2016 contractors were certified as having offshored jobs. Those firms received a shopping $176 billion in taxpayer-funded contracts in 2016, which adds up to more than a third of total contract spending for that year.
  • Not only UT, but chronic job offshorer General Electric has obtained new lucrative contracts since Trump entered the White House. GE has offshored the largest number of jobs of any of the top 50 federal contractors, more than 8,700.

And, our findings do not even capture the full scope of the problem even though we found that the top 100 commercial contractors have shifted at least 58,913 American jobs abroad.

Our study almost certainly undercounts the offshoring activities of major government contractors because we only counted job offshoring that was officially certified by the U.S. government under Trade Adjustment Assistance (TAA). (You can check for government-certified trade job loss in your state and community. Public Citizen has the entire database in a searchable form online.)

Trump’s inaction on this front is perverse given procurement policy is one of the most effective tools Trump has to counter offshoring.

TAA only provides a partial accounting of American jobs lost to offshoring. Until 2009, TAA did not include service-sector workers, so call centers and other “back office” functions were excluded. And there is no affirmative reporting requirement: A worker, union, company, or state labor department must know about TAA, decide to apply and then gather the information needed to prove the jobs were offshored, rather than lost to other factors.

So, the potential is even greater to make a real difference by forcing firms to choose between obtaining government contracts and offshoring their American workers’ jobs.

Trump’s inaction on this front is perverse given procurement policy is one of the most effective tools Trump has to counter offshoring. The U.S. government has a long tradition of using its contract spending – which currently adds up to $470 billion per year – to promote national policy goals. A share of federal government contracts must be awarded to small businesses and women- and minority-owned firms, and to qualify for government construction projects, firms must agree to pay workers prevailing wages.

And a U.S. president also has broad powers to enact “policies and directives” for federal contracting without congressional legislation.

President Lyndon Johnson used this authority when he issued Executive Order 11246 in 1965 prohibiting contractors from discriminating against any of their employees – not just those performing federal work – on grounds of race or gender. President Barack Obama relied on the same authority to set minimum wage for contractors “to promote economy and efficiency in procurement by contracting with sources who adequately compensate their workers” via Executive Order 13658 and to establish sick leave entitlements for federal contract employees with Executive Order 13706.

Meanwhile, Democrats in Congress have proposed legislation that takes a more systematic approach to combatting corporate offshoring, including Senator Bernie Sanders’ “Outsourcing Prevention Act” and Senators Joe Donnelly, Sherrod Brown, and Kristen Gillibrand’s “End Outsourcing Act.” A common element in each proposal is that firms that choose to offshore should not be rewarded with government contracts or other government financial support.

To date, Trump also has not taken a position on these legislative initiatives, and without his active support, they have little prospect of passing a Republican-dominated Congress.

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