15 July 2003

He won't be able to have a career designing and building stuff because all those jobs have moved to India

Another article about programmer jobs departing for offshore centers. I reckon the flurry of emails being sent by engineers, programmers and other white collar workers has resonated with writers across the nation. AZ Republic columnist Jon Talton penned a column last week on the new "brain arbitrage".
Their fearful e-mails, from Arizona and nationwide, have overtaken every other topic I hear about from readers.

American companies are no longer just sending manufacturing jobs offshore - now the jobs are high-skilled technology positions. Forrester Research, which is hardly an alarmist outfit, estimates that a cumulative 472,000 information technology jobs will move to India alone by 2015. Call-center jobs, a staple of the regional economy here, are already on their way. A total of 3.3 million service sector jobs are expected to be part of the exodus.

The companies are playing what the Financial Times calls "brain arbitrage." That's the difference in cost between a skilled knowledge worker in India, or another developing nation, and the United States or Western Europe. The developing nations have an insurmountable advantage. The top 100 financial institutions in the world expect to save $180 billion a year by moving jobs to lower-wage countries. The loss for Western countries: 2 million jobs.

Some, like this so-annointed "Boswell of Silicon Valley" says we should stop whining and embrace the new better jobs and talented immigrants instead of lamenting the jobs lost. Yeah, try telling that to some poor soul who can't meet the mortgage payment now or others who are working double part time jobs in a feeble attempt to make ends meet. The India press is all over the issue, even more so than our national scribes, as they throttle up the lobbyist effort to protect their bustling software industry. One group actually has the audacity to proclaim that outsourcing has saved U.S. jobs! And I guess the H1-B visa holder replacement that I had to train before I was terminated was a positive result on my professional career? Black is white, up is down.

In the 70s and 80s, manufacturing jobs migrated overseas and the unfortunate folks who got axed from decent paying jobs were told to get better training, go back to school, prepare for the "knowledge economy".

Now, these "knowledge jobs" are moving offshore en masse, but this time, the folks being displaced are shorter on future options AND don't have the retirement setup that many in the 70s and 80s were able to escape with. My father was a steel worker and got hit hard by layoffs, yet managed to get 20 years of service in before the final blow. He's got a pension and it isn't much, but when added to social security and a few part time gigs when he wants to stash enough dough to vacation in Vegas for a week, it works. Where are the terminated programmers, engineers, accountants and other white collar workers going to go? They're squeezed out of the unskilled market by cheaper, more captive, more docile immigrant labor, and there is only so many jobs at the higher levels. Not everyone can be a CEO, or a lawyer, or a doctor. I suppose in some direct marketing utopian dreamscape, everyone can be the master of their own pyramid scheme...

One of the consequences of technological advances is that less work is required. Even before temporary work visas and offshore migration of corporate employment, head counts at Fortune 500 companies were significantly decreased from the 70s and early 80s. With automation, improving computer processor power and cheaper data storage, it takes less workers to manage an enterprise. It's making those at the top of the financial pyramid filthy rich, but at the cost of eroding the middle and working class status of Americans, who now will have to get in line and elbow each other off the few crumbs that get tossed their way. An upsurge in demand though for providing "personal services" to the affluent will be one area with improving vocational prospects.

I don't believe protectionist measures are the answer - the unforseen consequences of such measures may nullify any small temporary benefit garnered. However, I would be in favor of levying increased duties on imported goods and services from nations that have been judged to violate human rights and exploit workers, or worse where child prostitution is still legal. And the practice of issuing H1-B, and L visas should cease and desist, as well as any policy that promotes illegal immigration. I don't believe that illegal immigration is an inevitable truth - it wasn't for many years, and the problem could be simply solved by enforcing current law, better SSN validation of new hires and financially punishing employers who knowingly hire the "undocumented worker". It's a sin, in my view, to drive down wages of Americans or direct them to the food bank and unemployment office, while an additional burden is laid upon the taxpayer to subsidize a business entity's unlawful practice. That's plain wrong.

Other than that I don't have any answers.


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