We hear a lot about US jobs being outsourced overseas (‘stolen’). But what about the 8M insourced jobs we ‘stole’ from overseas in 2019?

Mark J. Perry.

"During Donald Trump’s time in office, we heard a lot of criticism from him, his economic advisers, and supporters about US firms outsourcing factory jobs overseas, along with accusations that countries like Mexico, China, and Japan were “stealing US jobs” (see approximately 20,000 Google search results for “Trump” and “stealing jobs”).

What we never heard about from Team Trump and other economic nationalists and protectionists are the thousands of jobs that are “insourced” into every US state by foreign companies. Those insourced “stolen” jobs totaled nearly 8 million American workers and represented 6.2% of all private-sector US jobs in 2019 based on new data released this week by the Bureau of Economic Analysis on “Activities of U.S. Affiliates of Foreign Multinational Enterprises.” The dynamic map above shows the thousands (and in more than half of US states hundreds of thousands) of insourced jobs in each US state in 2019. You can move your mouse over individual states to see each state’s insourced job figures, which range from 7,700 in Wyoming to 843,900 in California and average more than 154,000 insourced (“stolen”) jobs per US state.

Here are some key statistics on foreign business activities in the U.S. that highlight the significant economic benefits to the American economy from the more than 8,000 foreign-based firms that outsourced jobs and production into the US in 2019:

• The 8,328 US affiliates of foreign multinational enterprises (MNEs) employed 7.95 million American workers in 2019, a 1.9% increase from 7.8 million workers in 2018, adding roughly 150,000 insourced (“stolen”) jobs to the US economy in 2019
• Employment by US affiliates of foreign companies of 7.95 million American employees represented 6.2% of the total U.S. private industry employment in 2019 (128.2 million workers)
• The current-dollar value added of majority-owned US affiliates, a measure of their direct contribution to America’s gross domestic product, totaled $1.13 trillion in 2019 and accounted for 6.0% of total US private industry value added in 2019 of $18.8 trillion
• US affiliates of foreign companies supported nearly 3 million US factory jobs in 2019, accounting for more than 22% of America’s 12.8 million US factory workers
• US affiliates of foreign MNEs paid $665 billion in compensation for their US workers in 2019—with an average compensation of $83,700 per worker
• Foreign companies paid an average annual compensation of more than $94,000 to their employees in America’s manufacturing sector
• US affiliates of foreign companies employed more than 500,000 US auto industry manufacturing workers in 2019, with average compensation per worker of $84,000
• In addition to more than 500,000 US auto factory workers, foreign companies employed 79,000 Americans in the wholesale trade category “Motor vehicles and motor vehicle parts and supplies”
• US affiliates exported $409 billion in goods in 2019 (24.4% of all US exports)
• US affiliates imported $775 billion in goods in 2019 (nearly 30% of all US imports)
• US affiliates spent more than $78.4 billion on R&D in 2019 (15.8% of all US business-funded R&D of $495 billion)
• US affiliates spent $285 billion on new property, plant, and equipment in 2019
• US affiliates paid $54.0 billion in US income taxes in 2019, which is more than the bottom 50% of US taxpayers paid in federal income taxes in 2018 (most recent year available, $45 billion)
• As a separate state, the 7.95 million Americans employed by foreign-based companies would have been the fifth-largest US “state” ranked by the number of nonfarm payroll employees in 2019 behind only California, Texas, New York, and Florida
• As a separate state, the $665 billion paid to Americans working for foreign insourcing companies in the US would have ranked that group of American employees in 2019 as the seventh-largest US “state” for Personal Income, just behind No. 6 Pennsylvania at $743 billion but ahead of No. 8 New Jersey at $626 billion

In other words, the insourcing of production and jobs to the US has a significant and positive impact on our economy, and yet this huge economic stimulus to the US economy gets almost no attention. All we heard from Team Trump and still hear today from other politicians, protectionists, and trade/labor unions are the jobs that are allegedly being “stolen” from the US by China, Japan, Europe, and Mexico.

Bottom Line: In today’s highly globalized economy, multinational firms (both US-based and foreign-based) operate in a competitive global marketplace that increasingly makes national borders meaningless and irrelevant, as firms capitalize on hyper-efficient global supply chains/webs that add enormous value, and ultimately result in lower costs and higher quality for the goods that consumers buy here and around the world. In the Trump-era discussions on US manufacturing, the outsourcing of production and jobs overseas, and the supposed “theft” of our jobs by Mexico, China, and Japan, what got lost is another big part of the global economy: the insourcing of nearly 8 million jobs into America by the 8,000+ US-based affiliates of foreign multinational companies that operate here and employ millions of our workers.

Q: How could it possibly make sense to accuse Mexico, China, and Japan of “stealing” our jobs unless they also admit that the US is also “stealing” jobs from other countries, nearly eight million in 2019? A more enlightened and up-to-date view of international trade would recognize the economic reality that modern businesses today operate in an increasingly globalized marketplace for their inputs, parts, materials, supplies along complex, cross-border supply and value chains that include multiple dozens of countries. In addition, those global companies serve retail markets in hundreds of countries around the globe.

Just like it makes economic and business sense for thousands of foreign companies to outsource jobs and production from their countries to every US state (perhaps because the US is one of their major retail markets), it also makes economic and business sense for thousands of US companies to outsource jobs and production from the US to foreign countries, perhaps also because overseas markets now represent more than 50% of retail sales for many US-based companies like Apple (60.2% of 2020 sales were in foreign markets, see data here), Procter and Gamble (56% of its sales were overseas), GE (56% foreign sales), Intel (78.7% overseas sales) and IBM (53.7%). Hopefully, in the post-Trump era, we can move beyond a simplistic, nationalistic (“America First”) and outdated view of the global economy based on a fixed number of jobs where countries have to fight to “steal” jobs from each other in a zero-sum, win-lose world, to a more advanced and sensible view of a dynamic world of interconnected, cross-border transactions where production and employment decisions are grounded in the reality of economics, and not politics."