Hans F. Sennholz, “Exporting American Jobs” — Summary

Hans F. Sennholz’s “Exporting American Jobs” is a brief single-author economic commentary from January 2004, focused on the early-2000s debate over outsourcing after IBM and other firms announced the relocation of service and programming jobs abroad. Its central thesis is that the movement of jobs overseas is not chiefly the result of employer disloyalty, foreign manipulation, or “greed,” but of domestic American policy: monetary conditions, tax burdens, labor mandates, regulation, and litigation have made highly productive U.S. labor too costly for many employers to retain.

The essay opens from a concrete news event—IBM’s plan to move thousands of programming jobs to India, China, and elsewhere—and immediately places it within a broader labor-market crisis.

Since 2001 more than 2.5 million American jobs have vanished; the number of those that found their way abroad is a matter of hot dispute.

Sennholz then turns against the public interpretation of outsourcing. He presents media commentators and politicians as blaming exploitation, greed, and disloyalty, but argues that such explanations rest on an “ideology of social conflict and government welfare.” In his view, this ideology leads naturally to coercive remedies—tariffs, regulation, taxation, and pressure on countries such as China to raise their costs.

Motivated by the ideology of social conflict and government welfare, they would seek to prevent the loss of jobs by way of legislation, regulation, taxation, and other coercion.

Against this, Sennholz reframes foreign job growth as part of international cooperation rather than conflict. Asian development is not treated as theft from American workers, but as evidence of expanding specialization and capital mobility.

Their economies are expanding rapidly and standards of living are rising thanks to an ever widening international division of labor and cooperation.

The essay’s core conceptual move is to shift causality from “foreign competition” to the domestic cost structure imposed on labor. Sennholz insists that American workers may be among the world’s most productive, but productivity alone cannot save jobs if policy raises the total cost of employment beyond profitability.

Even the most productive labor in the world can be rendered uneconomical and unproductive, if its costs are raised to inflict losses on employers.

He identifies two main policy sources of this disadvantage. The first is monetary policy: very low interest rates and large trade deficits encourage American capital to seek returns abroad while American consumers buy goods produced by that capital overseas. The second is the accumulation of labor-cost mandates—Social Security, Medicare, unemployment insurance, workers’ compensation, health insurance, pensions, paid leave, and other benefits. His emphasis is not on wages narrowly defined, but on the full employer cost of hiring.

Obviously, it is total costs, not just take-home pay, that affect the demand for labor.

The argument then broadens from statutory benefits to the legal and regulatory environment surrounding employment. Benefit mandates, lawsuits, unions, compliance regimes, and product-liability exposure all become part of the same structure: policies intended to protect labor can, in Sennholz’s account, reduce the demand for it by making employment more expensive and risky.

Benefit mandates in turn engender additional labor costs which at times may exceed the former.

Sennholz reinforces his claim by invoking the National Association of Manufacturers, whose findings he summarizes as evidence that federal taxation, benefit costs, and regulatory compliance are pushing manufacturing abroad.

It found that a suffocating burden of federal taxation and regulation is driving American manufacturing jobs abroad.

The essay concludes by warning that the same political mentality that misdiagnoses outsourcing is likely to intensify it. If legislators interpret job loss through doctrines of employer greed and international conflict, they will impose more restrictions, tariffs, and labor regulations—the very measures Sennholz believes accelerate relocation.

They are liable to heap more laws on the pile of old laws and hasten the exodus of American jobs.

The relevance of the piece lies in its Austrian/free-market interpretation of globalization: outsourcing is not a betrayal to be stopped by protectionism, but a symptom of distorted domestic incentives. Its polemical force comes from reversing the usual moral charge. For Sennholz, the danger is not that firms seek lower-cost locations, but that American policy makes productive domestic employment uneconomic and then blames foreigners for the result.