As U.S. companies shift jobs to low-paid workers in developing nations, a growing number of economists and politicians worry that offshore outsourcing could damage the nation's fiscal health by draining tax coffers.
But up to one quarter of lost wages translate to lost tax revenues, by conventional accounting methods. So if 3.3 million white-collar jobs and $136 billion in wages move overseas by 2015 as Forrester Research predicts, that means federal, state and local tax receipts could decline as much as $34 billion.
"Here's the big reason why tax revenues are declining: all these jobs are leaving the country," said John McGowan, professor of accounting at Saint Louis University. "We need to start talking about this problem and not just blithely saying, 'Free trade is the solution' just because it boosts corporate profits and Wall Street likes it."
Where have we heard this before? Oh, we know: it's what we've been saying all along!