WASHINGTON -- After the Washington Post published a story last week detailing how Bain Capital investments may have helped send American jobs overseas, the Mitt Romney campaign tried to draw the very legitimate distinction between "offshoring" and "outsourcing" in the modern American economy.
On Friday, Romney campaign spokeswoman Andrea Saul quickly criticized the Post for not adequately defining the two trends. "This is a fundamentally flawed story that does not differentiate between domestic outsourcing versus offshoring," Saul said.
On Sunday, Romney campaign strategist Eric Fehrnstrom advanced the outsourcing versus offshoring distinction, providing perfectly adequate definitions of both phenomenons. "There’s a very simple difference between outsourcing and offshoring,” Fehrnstrom said on CBS' "Face the Nation." "[Outsourcing] is done by companies every day. They take functions and they allow vendors to do it rather than handling it in-house. Offshoring is the shipment of American jobs overseas."
But to distance Romney from offshoring, Fehrnstrom ends up giving implicit approval to domestic outsourcing. It's an unfortunate political position to be in, particularly during a campaign that's not just about American jobs but the quality of American jobs. Outsourcing may not eliminate jobs the way offshoring does, and the Romney campaign did not immediately respond to a request for clarification on its stance on domestic outsourcing. But in many industries, outsourcing ultimately leads to lower wages, fewer benefits and less job security for the same position.
Take the American warehouse industry. As HuffPost reported last year, much of the retail supply chain is now predicated upon a system of outsourcing, whereby retailers hire third-party "logistics" providers, many of whom in turn hire labor agencies, who in turn hire temporary workers -- the sort of vendor-based system Fehrnstrom spoke of. This outsourcing reduces costs for companies at the top of the chain, who don't have to worry about hiring employees directly and paying decent wages, no doubt helping keep prices down for consumers. But there's a price to be paid by workers on the bottom rung. Many of them end up working on a temp basis for around minimum wage with no benefits and no guarantee of a job the following week.
Such outsourcing is now common in manufacturing, food processing and even the hospitality industry, with hotels handing some of their housekeeping duties to outside labor companies.
"It seems to be spreading like wildfire," Nelson Lichtenstein, a professor of American labor history at the University of California, Santa Barbara, told HuffPost last year. "All of these companies, wherever they possibly can, they want to create a workforce that doesn't work for them."
That's to say nothing of the public-sector outsourcing gripping budget-strapped states and municipalities these days. In Michigan, for instance, state-run veterans' nursing homes have turned to private contract workers to save money; the workers earn about half of what their government counterparts earn, while the state's savings have turned out to be questionable. In New Jersey, the state has outsourced a good deal of its corrections duties to privately run halfway houses, as the New York Times recently reported. Wages at the facilities are low while the number of inmate escapes are high.
Of course, many Americans may not have personally witnessed the downsides of outsourcing, particularly if it hasn't hit their fields. Perhaps that's what the Romney campaign is banking on -- outsourcing certainly seems a lot less pernicious than offshoring. But the distinction doesn't mollify the Communications Workers of America, one of the unions that pounced on Romney last week when the Post story was published. Many of the jobs traditionally held by that union's members -- tech support, customer service -- have been offshored as well as domestically outsourced, going to other U.S. companies that do it cheaper, in part by paying workers less.
"Outsourcing isn't a great thing, either," said Candice Johnson, a CWA spokeswoman. "It often means jobs get sent somewhere else in the U.S., where the workers get less pay and no benefits, and maybe they're even classified as an independent contractor so they don't get labor protections. It's another industry trend that might help companies and CEO's, but it doesn't help workers."
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