If recent job figures are any indication, the fragile U.S. economic recovery has shriveled in the bud. Businesses filled only 69,000 jobs in May, the weakest growth in a year, and unemployment rose to 8.2 percent, the first increase since last June.
Some business experts believe our economy can get a shot in the arm through foreign investment, and are encouraging Congress to do something about it.
According to the Organization for International Investment (OFII), U.S. subsidiaries of foreign-owned businesses are already big contributors to the American economy—and could be doing more.
Foreign companies in the U.S. are responsible for 21 million American jobs, or 12.2 percent of all jobs in this country. For every worker receiving an employee paycheck at a U.S. subsidiary of a global company, an additional three jobs are supported in the U.S. economy.
According to OFII, these U.S. subsidiaries:
- Spend an annual $43.4 billion on U.S. research and development activities
- Reinvest an annual $93.6 billion in their U.S. operations
- Account for less than 1 percent of all U.S. business but pay $38 billion in annual U.S. corporate taxes, nearly 17 percent of total U.S. corporate tax payments
- Spend an annual $154.2 billion on property, plant construction and new equipment
- Directly employ 5.3 million Americans
- Support an annual payroll of $409.7 billion, with average compensation per worker of $77,597, about one-third higher than compensation at all U.S. companies
- Manufacture in America to export goods around the world, accounting for more than 21 percent of all U.S. exports, or $219.7 billion
- Buy $1.8 trillion in intermediate inputs from local suppliers and small businesses, almost 80 cents for every dollar spent of their total input purchases
- Are more highly unionized than the overall business community, with 12.4 percent of employees covered, compared with 8.2 percent at all U.S. businesses.
Several insurance companies are involved in OFII, including ACE INA Holdings Inc., AEGON USA, Allianz of North America, Generali, QBE the Americas, XL Global and Zurich Insurance Group.
Zurich is a good example of foreign direct investment (FDI) at work. Its U.S. headquarters in suburban Chicago employs 3,000 and contributes more than $300 million to the Illinois economy through wages paid.
FDI also benefits both insurers and agents by spurring commercial business growth and creating more opportunities for insurance sales and services. Dennis F. Kerrigan Jr., executive vice president, general counsel and corporate secretary for Zurich North America, called FDI “the opposite of outsourcing.”
Senate and House leaders of both parties recently introduced legislation to encourage FDI. In a still-shaky economy, it seems like an idea that both sides of a divisive Congress can get behind, especially in an election year where a lack of jobs is a political hot potato.