With the economy topping many polls as the most important factor in this year's election, you're sure to hear, if you haven't already, the candidates touting their ability to create more jobs. To hear them talk you would think they have a magic bag full of jobs — just reach in and sprinkle some new jobs here and some new jobs there.
But as you might expect, it's not that simple. In fact, the president has very little power to create or eliminate jobs on his own. Countless factors — the price of oil, home prices, events in Iraq, even the weather — can impact how many jobs the economy produces in a given year.
That being said, the president may be able to wield some influence over the general direction of the economy, especially if he can get Congress to work with him. The competing Republican and Democratic economic philosophies about jobs can be seen in how the parties' presidential candidates approach the issue of "outsourcing," or the transferring of jobs from the U.S. to overseas.
In a sense, there's nothing new about outsourcing. Big manufacturing companies, carmakers and garment makers, in particular, have been relocating factories abroad for years. Those most impacted by such moves in the past were blue-collar workers.
But thanks to an increasingly well-educated and English-speaking workforce in countries such as India, outsourcing now impacts white-collar workers as well. Why pay a call center attendant in California $30,000 a year when someone more qualified can do the job in Bangalore, India, for $6,000? That thinking has led some of the U.S.'s best-known companies, including IBM, to outsource thousands of jobs overseas.
The Republican Party generally believes that outsourcing is a good thing. Republicans argue that it allows U.S. companies to save money on existing services and then create more or newer services Stateside. The belief is that this pushes businesses to create more jobs worldwide — including in the U.S. — simultaneously generating more wealth for the U.S. and developing countries. During this election cycle, the Bush administration has remained largely mum on the subject, as the issue is a hot-button topic and the president does not want to be seen as a supporter of taking away jobs from U.S. workers. But in a moment of candor, Treasury Secretary John Snow argued that outsourcing is actually good for the U.S. economy in the long run.
"It's part of trade," Snow told the Cincinnati Enquirer in March. "It's one aspect of trade, and there can't be any doubt about the fact that trade makes the economy stronger."
In a sense, Snow is right. Outsourcing is just another form of foreign trade. Less expensive foreign labor means cheaper prices for U.S. consumers. It also means lower costs for U.S. companies, which could mean more jobs and fatter profit margins.
The Democratic Party, on the other hand, largely believes that job stability for U.S. workers should take precedence over a company's ability to move jobs around to save money.
Kerry demonstrated this principle with his reaction to Snow's remarks. He has used Snow's comments to suggest that the Bush administration has little regard for workers, especially in states that have been hit hard by job losses. He argues that companies should be incentivized (i.e. given tax breaks) away from outsourcing.
"We now have a tax code that does more to reward companies for moving overseas than it does to reward them for creating jobs here in America," Kerry said. "So if I am elected president, I will fight for the most sweeping international tax law reform in 40 years — a plan to replace tax incentives to take jobs offshore with new incentives for job creation on our own shores."
Actually, Kerry is a bit behind the curve on that one — a bill doing that very thing passed the Senate two weeks ago without his vote while he was campaigning in Kentucky.
For more on Democratic and Republican views on jobs and the economy see "Who's Better For The Economy: Bush Or Kerry?"