The Washington Post is good to point out that some of the big American companies pushing the government for a repatriation tax holiday, which would temporarily slash the tax on foreign earnings by 85 percent for the second time in seven years, don’t reveal where their employees are based.
“It’s an important piece of information that the American people should have,” said Ron Hira, an associate professor of public policy at the Rochester Institute of Technology. “Should you listen to the kind of advice these companies have about how to grow the economy when their record and their model indicates they’ve cut jobs? . . . Or should we talk to people who actually do create jobs in the United States?”
This stat can’t get repeated enough, and it’s good to see it up high here in the second paragraph:
So secretive are these companies that they hand the figure over to government statisticians on the condition that officials will release only an aggregate number. The latest data show that multinationals cut 2.9 million jobs in the United States and added 2.4 million overseas between 2000 and 2009.
And there’s some interesting reporting in this story.
For one, IBM now employs more workers in India than it does in the U.S., according to this estimate:
Data from before 2009 showed IBM rapidly shifting workers to India. Dave Finegold, dean of the Rutgers School of Management and Labor Relations, estimates that 2009, when the company stopped sharing its U.S. employment figure, also marked the first time the company had more employees in India than the United States. Finegold based his number on reports from the media, third-party groups and former employees who have tried to track the number.
It would have been nice to have some numbers here, like what percent of IBM’s workers are in India and the U.S. I’m assuming the company has lots of workers outside both countries.
The Post tells us how many workers Procter & Gamble has in the U.S. and overseas, and it’s not pretty:
You won’t find Procter & Gamble’s U.S. head count in its filings, either. When initially asked for the number, company spokesman Paul Fox wrote in an e-mail: “We do not track nor report U.S.-specific jobs numbers vs. jobs overseas.” After it was pointed out that P&G’s chief executive, Bob McDonald, had cited such figures in a Cincinnati Enquirer op-ed piece, Fox acknowledged the company did track that data. The number of U.S. employees is 35,000 out of 127,000 total, or 28 percent.
It’s always fun to see a company busted like that.
But the Post misses by not reporting what studies have shown about the last repatriation holiday, when companies brought home hundreds of billions of dollars after a 2004 giveaway.
Back then, companies were supposed to directly create jobs with the money they repatriated. Instead they played the financialization game: paying it out in dividends and buying back shares. There’s no doubt that shareholders spent some of this money and would do so again this time, stimulating the economy to some extent. But the Congressional Research Service says “the repatriations did not increase domestic investment or employment.”
The companies that brought big bucks home ended up cutting jobs in the wake of the tax holiday, according to the CRS report. I guess it’s possible that the companies would have cut even more jobs had they not run into this windfall, but that’s not much of a selling point, and it’s countered by what the companies did with the money.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.