Computer Aid Inc., began a business model in the mid-2000's where they would hire employees as contractors for 2 years, then assign those contractors to clients who needed IT support services. Corporations such as Wyeth Pharmaceuticals could save millions each year, by outsourcing the majority of their IT support department to another company. By doing this, they could write off the cost of contractors as an expense, and Computer Aid could avoid certain labor laws by classifying these full time employees as contractors.
Sadly this is now the standard in the United States. Drugstore.com, who was bought out by Walgreens employ's a similar model, hiring IT support personnel from a temporary staffing company called Insight Global and seeking contract extensions every 6 to 12 months for those services. Boeing employs the same business model when it comes to hiring IT Support personnel.
These are middle class jobs, being outsources within the United States. It goes a step further though, as countries like India and China increase their infrastructure to accommodate the modern age, even those jobs which are outsourced inside the United States are in danger. The claim is made by business professionals, "These policies save the company money, lowers their risk, and offers the company flexibility in a competitive market".
Let's take a look at this claim and break it down. These policies save a company money. Well, you wouldn't have to pay for healthcare, human resources staff, hiring managers, overtime, holiday pay, or any other Federally protected worker benefit. Those would be expenses of the contracting company; However, that is only half the story. You also would not have loyal, competent employees who are vested in the success of the business. You would have little control over the types of employees the contracting company would bring in until it was to late. Finally, by moving your IT Support operation out of house, you are essentially gambling on the success of the company providing bodies in the seats. While the company may be saved a nominal amount of money overall, the tax breaks a company receives for claiming losses and expenses related to hiring contractors is where the real payday is.
So part of the problem I see with the modern day workforce is the tax system, designed to reward corporations even when they are acting against the public interest by circumventing labor laws and outsourcing jobs. This would be an easy fix, if the political will existed to address the issue. Unfortunately, those corporations who profit off of the exploitation of American workers, have a sufficient bankroll to ensure politicians work to further their interests, not ours.
There are also corporations, such as Wyeth Pharmaceuticals who send technical or skilled labor jobs to places like Bangalore, India. For years we have recognized a shift in customer service call centers moving overseas, but entry-level positions were only the beginning. In 1995, Kenneth Bradsher wrote, "SKILLED WORKERS WATCH THEIR JOBS MIGRATE OVERSEAS" in the New York Times. This was almost 20 years ago, yet today we see more middle class jobs leaving our shores than ever before.
Dealing with the taxation issue is only part of the solution to bring jobs back to the United States. We also need to ensure corporations who incorporate in the United States are penalized when they send jobs overseas.