By forcing the allocation of jobs, just as any good or service, and not allowing the free market to dictate the equilibrium, one of two things will always happen: an excess of quantity supplied or an excess of quantity demanded. To simplify: unemployment will occur or businesses will have to downsize or shut down.
In the case of the Senate bill, which gives tax cuts to companies who prove they’ve hired an American replacement, should not have any long term effects on market equilibrium. In the short run, it will create an incentive for companies to acquire tax cuts from hiring American workers. However, the amount of money to be saved from outsourcing the production of goods or services will outweigh the benefits of hiring expensive American workers in order to gain a break on payroll taxes.
By luring jobs back to the United States, as the article suggests, we notice the behavior portrayed by U.S. companies as a result of more jobs will be to hire less Americans and eventually revert back to outsourcing (once again reaching market equilibrium). One should never force the allocation of anything in the free market: jobs, goods or services. Notice in a simple supply-demand graph, an excess of supply (or workers) results from shifting the equilibrium point toward, what seems, a more desirable situation (ie, more jobs). This excess represents American workers who are unable to get hired by these companies because they simply aren’t competitive enough to compete with outsourced workers. The result from our tool, represents a situation by which the quantity supplied (workers), exceeds the quantity demanded (company demand for workers). This simply results in unemployment.