President Barack Obama hosted business leaders who have brought jobs back to the United States and challenged the rest of corporate America to do the same.
His administration will do its part to support this “insourcing” trend, Obama said. The president will soon propose new tax breaks “that reward companies that choose to bring jobs home and invest in America—and eliminate tax breaks for companies that move jobs overseas.”
The president didn’t divulge any details, and he’s proposed similar tax changes before. But they haven’t gained much traction because business groups would rather see comprehensive tax reform than proposals that tinker around the edges. Plus, a temporary tax break in 2009's economic stimulus bill that rewarded businesses for hiring unemployed workers didn’t have much of an impact on job creation. While businesses are always happy to get a tax break, they make decisions on when and where to hire workers based on market considerations.
For some businesses, market considerations are making it more attractive to hire workers here at home instead of giving overseas workers jobs. Labor costs in China, for example, are rising—a reality that reduces the advantage of moving operations there, especially given the shipping costs and other logistical challenges involved in operating so far away from home.
Master Lock, for example, has returned 100 jobs to Milwaukee that had been moved overseas. “When Master Lock looked at their numbers, they saw that union workers in America could do the same job, at competitive cost, as nonunion workers in China,” Obama said. “In fact, Master Lock is now exporting their products from the U.S. to China and Europe.”
Obama said the United States is “at a unique moment in our recent history where factors like rising American productivity and increasingly competitive costs at home mean the economic case to invest in America and bring jobs back home is strong—and getting stronger.”
Executives at U.S. companies have a responsibility to America as well as their shareholders, Obama argued.
“My message to business leaders today is simple: Ask yourselves what you can do to bring jobs back to the country that made our success possible—and I will do every thing in power to help you do it,” Obama said.
Besides proposing tax incentives for creating jobs domestically, Obama also will ask Congress for $12 million to beef up his administration’s SelectUSA program. Through this project, federal officials work with state and local officials to attract foreign investment in the United States.
In addition, the Small Business Administration will encourage businesses to use its international trade loans to insource jobs in the U.S.