What's your first thought when someone mentions the global economy? I bet it's something along the lines of, "That's why we've lost all those industrial jobs—the ones that went to Mexico, China, and India."
A lot of Americans blame cheap foreign labor for the perceived decline in our nation's industrial employment base, but there are two things wrong with that picture. First, our industrial ranking is still No. 1; we still produce more goods than any other nation. Secondly, yes, millions of jobs have been outsourced to other countries, but the converse is also true. While numerous companies headquartered in the United States now produce or offer a service in other nations, numerous companies based across the pond produce something or offer services right here in the United States. And those companies are creating jobs for Americans.
The Organization for International Investment (OFII), a Washington, D.C.-based lobbying group representing foreign companies doing business in this country, says that foreign companies employ 5.1 million Americans here in the United States. In California alone, 543,000 people are employed by companies headquartered outside the United States, as are roughly 378,000 in New York, 345,000 in Texas, and well over 200,000 each in Pennsylvania, Illinois, Florida, New Jersey, and Ohio.
And the U.S. Commerce Department says that total foreign direct investment in the United States shot up about 67 percent last year to almost $184 billion, compared with about $110 billion in 2005. OFII president and CEO Todd M. Milan notes that much of this investment came from reinvested earnings. "Money that insourcing companies earned here stayed here— [they're] reinvesting their profits in the United States," he says.
Though some have pointed to the rising foreign investment in this country as cause for alarm, that's a misguided response, says OFII's senior vice president, Nancy McLernon. "You simply can't put a flag on companies anymore," she says. "The United States should be measured by its attractiveness in terms of doing business here for all companies, foreign-owned and domestic."
So, there have been jobs lost to other economies, millions of them. However, many of those jobs are low-skilled positions. Meanwhile, American businesses have been adding layers of sophisticated automation to their operations—a move that leads to the displacement of some workers but also raises the skill levels of millions of others.
As the OFII points out, there's a terrific economic balancing going on in terms of employment and investment right here in the United States. Hundreds of foreign companies are building and modernizing plants and hiring millions of American workers.
While outsourcing may get the headlines, insourcing continues to bring new employment opportunities to the domestic economy. And I have yet to hear a good argument against that. Who cares what flag the headquarters flies? If it's made here, it contributes to the GDP. Taken together, these developments in terms of insourcing, outsourcing, and investments in new technology are a pretty good indicator that our economy is adjusting to globalization quite nicely. Sounds like America is still a super-success story to me.