Asking the Feds for Help With Outsourcing -- But Are We Asking the Right Questions?

Posted 9:22 PM by Michael Fox

Ron Hira, a professor of public policy at the Rochester Institute of Technology with a new book, "Outsourcing America: What's Behind Our National Crisis and How We Can Reclaim American Jobs," was interviewed in the Sunday NYT, Cutting the Losses From Outsourcing. What's not discussed in the interview is the impact of employment law, and resulting litigation, as a motivator to move jobs to where the litigation climate might be less costly. If it is in the book it wasn't important enough to merit mention in the press release, nor is it obvious that it is included from the table of contents.

The only employment law piece discussed in the interview is extending the WARN act to outsourcing situations. Depending on the facts, WARN may apply anyway as there is no "outsourcing exception." But advocating more legislation, enforced by litigation, is hardly addressing the issue from a "what are the costs of employment law and litigation" point of view.

If one looked, one might find more of a connection than you would think. Looking at the growth of the temporary help services -- in hindsight perhaps the initial tentative step on America's journey to outsourcing -- one scholar found a significant impact of judicial limitations on the employment at will doctrine. According to MIT professor, David Autor, 20% of the growth of the temporary help services in a 22 year period could be attributed to court decisions strengthening employees' rights to challenge their termination. Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing.

And the years studied -- 1973 to 1995-- are hardly the highwater mark of judicial intervention in the workplace. Maybe asking the feds for help with outsourcing is the right thing, but maybe the help is in a different direction.

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