Like most great American tragedies, this is a story that has ramifications for every American. It’s a story about why the American middle class is failing but it is also a personal tragedy about American workers losing high-tech high paying manufacturing jobs to outsourcing and it’s about a town and workers lives being destroyed for decidedly unAmerican profits. The story is also a microcosm of how the super wealthy, such as Mr. Romney in this case, profit from destroying the wealth of the middle class by replacing American jobs with cheap ( $1.35-99 cents/ hour) labor that works 135 hours per week.
Since 2000, the US has lost 5.5 million manufacturing jobs and most of these jobs moved to China which may pay workers as little as a 99 cents an hour. Republican Presidential candidate Mitt Romney reported last year that he had divested all of his interests in China. As it turns out, he didn’t and still owns interests in Chinese companies. Over the last two years, he’s made a large profit using an unusual tax loophole to pay a low tax rate on profits he made from a company named Sensata.
The Sensata workers from Freeport Illinois are to be laid off near election day. The lay-offs were announced even though Sensata had record profits. The jobs are being shipped to China. The business term for this type of job shipping is off-shoring..
The workers believe that Bain is acting in an unethical manner because their jobs are being replaced by foreign labor that works for very low slave wages (about $1.35-99 cents per hour) in a communist country where plants operate without quality, safety or pollution controls. The American workers were also forced to train their Chinese replacements while the companies America flag over the plant was lowered.
The workers also point out that the business model used in this deal is similar to many of the deals that Mr. Romney made when he was at Bain. Bain purchased the company from Honeywell and then outsourced many HoneyWell jobs before renaming the company Sensata. Sensata is a European firm that is owned by Bain capital. Although Mr. Romney didn’t make this deal, the workers feel he should use his influence to stop the job losses. For the past year, Mr. Romney has refused to intervene, accept a petition from the workers and their supporters, or discuss the matter with the workers.
Bainport, a protest encampment, was set up for the laid off workers last month.
President Obama’s jobs bill would have discouraged Bain from outsourcing the jobs. The bill was blocked by both Republicans and conservative Democrats over the summer and again last week. The bill would have blocked Mr. Romney and Bain from receiving tax breaks for closing a company that is shipping jobs overseas.
Mr. Romney’s campaign has made a number of false statements in regards to the Sensata story. His campaign accused Mr. Obama of owning stock in the company (not true) and argued that Democrats were involved in the management of Bain without noting that the head of Sensata made a $655,000 donation to the Romney campaign. In addition, Bain is the leading contributor to the Republican National Party. Mr. Romney’s campaign also claimed that his money is in a blind trust so he has no control over it which many have argued isn’t the case.
The media has also expressed concerns over the legality and ethics of the tax maneuvers used by Mr. Romney to receive lower taxes for profits he earned from Sensata and other companies. Other argued that Mr. Romney is taking advantage of a loophole in the tax laws which allows Bain to deduct the costs of closing the plant while transferring the jobs to China.
Mr. Romney has also argued that Bain outsourced failing companies. However, Sensata was making record profits.
More recently, Mr. Romney has argued that the President has Chinese investments through an old pension account. Of course, a pension account really is like a blind trust. You have no control over specific investments. Republicans also have attempted to misdirect the public by accussing the Sensata workers of being communists.
So far, most media reports have been rather piecemeal. Reporting on some aspects of the story while ignoring others. For example, some stories have focused on the idea that the only way to determine whether Mr. Romney’s taxes are not illegal or questionable would be to see them. However, Mr. Romney has refused to release his taxes for the period under question (2000-2009). Most mainstream news sources have yet to cover the story.
However, the really important message of the story is that slowly all American workers are being forced to compete with sweatshop labor that lacks safety, quality, labor and pollution control standards. That is, the Sensata workers’ story partly explains why the American middle class is failing and it also partly explains how the superwealthy are becoming even more wealthy.
Complete Timeline, References and Videos Relating to Sensata Last Updated October 22nd, 2012
UPDATE 2 ! Breaking News Sensata is threatening to fire it’s remaining employees now if they protest with Rev. Jackson tomorrow. Employees have decided to go ahead with the rally.
UPDATE1 In response to comments, I added the response of five presidential candidates opinions on this topic based on a response to a Townhall question and Candy Crowley follow-up question from the second debate.
CAROL GOLDBERG: The outsourcing of American jobs overseas has taken a toll on our economy. What plans do you have to put back and keep jobs here in the United States?
MITT ROMNEY: Boy, great question and important question, because you’re absolutely right. And the place where we’ve seen manufacturing go has been China. China is now the largest manufacturer in the world—used to be the United States of America. A lot of good people have lost jobs. A half-a-million manufacturing jobs have been lost in the last four years. That’s total over the last four years. One of the reasons for that is that people think it’s more attractive in some cases to go offshore than to—than to stay here. We have made it less attractive for enterprises to stay here than to go offshore from time to time. What I will do as president is make sure it’s more attractive to come to America again.
This is the way we’re going to create jobs in this country. It’s not by trickle-down government, saying we’re going to take more money from people and hire more government workers, raise more taxes, put in place more regulations. Trickle-down government has never worked here, has never worked anywhere. I want to make America the most attractive place in the world for entrepreneurs, for small business, for big business, to invest and grow in America.
Now, we’re going to have to make sure that as we trade with other nations] that they play by the rules. And China hasn’t. One of the reasons—or one of the ways they don’t play by the rules is artificially holding down the value of their currency, because if they put their currency down low, that means their prices on their goods are low. And that makes them advantageous in the marketplace. We lose sales, and manufacturers here in the U.S. making the same products can’t compete. China has been a currency manipulator for years and years and years. And the president has a regular opportunity to—to label them as a—as a currency manipulator but refuses to do so. On day one, I will label China a currency manipulator, which will allow me as president to be able to put in place, if necessary, tariffs where I believe that they are taking unfair advantage of our manufacturers. So we’re going to make sure that people we trade with around the world play by the rules.
But let me—let me not just stop there. Don’t forget, what’s key to bringing back jobs here is not just finding someone else to punish—and I’m going to be strict with people who we trade with to make sure they—they follow the law and play by the rules—but it’s also to make America the most attractive place in the world for businesses of all kinds. That’s why I want to down the tax rates on small employers, big employers, so they want to be here. Canada’s tax rate on companies is now 15 percent. Ours is 35 percent. So if you’re starting a business, where would you rather start it? We have to be competitive if we’re going to create more jobs here.
Regulations have quadrupled. The rate of regulations quadrupled under this president. I talk to small businesses across the country. They say, “We feel like we’re under attack from our own government.” I want to make sure that regulators see their job as encouraging small business, not crushing it. And there’s no question but that “Obamacare” has been an extraordinary deterrent to enterprises of all kinds hiring people.
My priority is making sure that we get more people hired. If we have more people hired, if we get back manufacturing jobs, if we get back all kinds of jobs into this country, then you’re going to see rising incomes again. The reason incomes are down is because unemployment is so high. I know what it takes to get this to happen, and my plan will do that, and one part of it is to make sure that we keep China playing by the rules.
VIRGIL GOODE JR.: President Obama claims to be for jobs in America, yet, under his administration, continuing the tradition in the Bush administration, they bring in approximately 1.2 million people every year and give them green cards. Of that 1.2 million, about three-fourths are working-age persons stealing jobs from U.S. citizens. The jobs in America should go first to U.S. citizens. With unemployment, to use Obama’s numbers, at 7.8 percent, we need to have a near-complete moratorium on green card issuances. Mr. Obama’s title should be, “bring ’em in from other countries.”
Then you go to Mr. Romney on the issue. When he was with Bain Capital, they sent all kinds of jobs to China and other foreign countries because of lower wages, no employment commission restrictions, no Department of Labor restrictions. If I were president, our trade measures would be totally renegotiated in favor of manufacturing and more jobs in this country, instead of seeing how many we could send overseas that benefit many of those behind the super PACs that are pouring so much money into the Obama and Romney ads. Virgil Goode will stand up for jobs in the United States for U.S. citizens first.
ROCKY ANDERSON: For 35 years, we had a thriving middle class in this country. People were doing well. That doesn’t mean there weren’t people on the margins, but there were good jobs. Wages were being raised. We had a strong union movement, which contributed a great deal to that thriving middle class. And now we’re seeing a return to the Gilded Age with a disparity in income and wealth unparalleled since the 1920s. We can do so much better providing good jobs, but having a strong labor movement in this country is crucial to that.
DR. JILL STEIN: So, if the question is how to stop the outsourcing of our jobs, you know, it’s very clear we need to stop expanding the free trade agreements that send our jobs overseas and which also undermine wages here at home by effectively threatening workers that if they don’t drop their wages and their benefits, that their jobs are gone.
So, we saw the first free trade agreement, NAFTA, enacted under Bill Clinton, a Democrat. We saw it carried out under George Bush, but then we saw Barack Obama expand three free trade agreements and is now negotiating a secret free trade agreement, the Trans-Pacific Partnership, that will continue to offshore jobs, undermine wages, and, as well, this time compromise American sovereignty with an international corporate board that can rule on our laws and regulations and say whether or not they pass muster. This is an absolute outrage against American sovereignty, democracy and our economy.
We need to turn the free trade agreements into fair trade agreements. And again, the Green New Deal will create the community-based jobs we need here, supporting small businesses, worker co-operatives, and public services and worker—and public works to put people back to work right now, for the cost—less than the cost of the first stimulus package.
President Obama promised that he would support the Employee Free Choice Act, and he did almost nothing to see that that was done, yet another promise betrayed by President Obama for the middle class while he was serving the interests of Wall Street. So we can bring those jobs back. We can renegotiate those trade agreements, put in place a WPA-like project, and raise wages, including the minimum wage, which will have that rippling effect and helping out everybody along the way.
PRESIDENT OBAMA: OK. We need to create jobs here. And both Governor Romney and I agree, actually, that we should lower our corporate tax rate. It’s too high.
But there’s a difference in terms of how we would do it. I want to close loopholes that allow companies to deduct expenses when they move to China, that allow them to profit offshore and not have to get taxed, so they have tax advantages offshore. All those changes in our tax code would make a difference.
Now Governor Romney actually wants to expand those tax breaks. One of his big ideas when it comes to corporate tax reform would be to say, if you invest overseas, you make profits overseas, you don’t have to pay U.S. taxes. But of course if you’re a small business or a mom- and-pop business or a big business starting up here, you’ve got to pay even the reduced rate that Governor Romney’s talking about. And it’s estimated that that will create 800,000 new jobs. Problem is, they’ll be in China or India or Germany. That’s not the way we’re going to create jobs here.
The way we’re going to create jobs here is not just to change our tax code but also to double our exports. And we are on pace to double our exports, one of the commitments I made when I was president. That’s creating tens of thousands of jobs all across the country. That’s why we’ve kept on pushing trade deals but trade deals that make sure that American workers and American businesses are getting a good deal.
Now Governor Romney talked about China. As I already indicated, in the private sector, Governor Romney’s company invested in what were called pioneers of outsourcing. That’s not my phrase; that’s what reporters called it.
And as far as currency manipulation, the currency’s actually gone up 11 percent since I’ve been president because we have pushed them hard. And we’ve put unprecedented trade pressure on China. That’s why exports have significantly increased under my presidency. That’s going to help to create jobs here.
CROWLEY: Mr. President, we have a really short time for a quick discussion here.
iPad, the Macs, the iPhones, they are all manufactured in China. One of the major reasons is labor is so much cheaper here. How do you convince a great American company to bring that manufacturing back here?
ROMNEY: The answer is very straightforward. We can compete with anyone in the world as long as the playing field is level. China’s been cheating over the years. One by holding down the value of their currency. Number two, by stealing our intellectual property; our designs, our patents, our technology. There’s even an Apple store in China that’s a counterfeit Apple store, selling counterfeit goods. They hack into our computers. We will have to have people play on a fair basis, that’s number one.
Number two, we have to make America the most attractive place for entrepreneurs, for people who want to expand their business. That’s what brings jobs in. The president’s characterization of my tax plan…
ROMNEY: …is completely…is completely…
ROMNEY: …is completely false. Let me tell you…
CROWLEY: Let me to go the president here because we really are running out of time. And the question is can we ever get — we can’t get wages like that. It can’t be sustained.
OBAMA: Candy, there are some jobs that are not going to come back. Because they are low wage, low skill jobs. I want high wage, high skill jobs. That’s why we have to emphasize manufacturing. That’s why we have to invest in advanced manufacturing. That’s why we’ve got to make sure that we’ve got the best science and research in the world. And when we talk about deficits, if we’re adding to our deficit for tax cuts for folks who don’t need them, and we’re cutting investments in research and science that will create the next Apple, create the next new innovation that will sell products around the world, we will lose that race.
If we’re not training engineers to make sure that they are equipped here in this country. Then companies won’t come here. Those investments are what’s going to help to make sure that we continue to lead this world economy, not just next year, but 10 years from now, 50 years from now, 100 years from now.