Other Public Commentary
By Alan Caruba
The curse of Cassandra was that she could predict the future, but that no one would believe her.
Ron and Anil Hira have written “Outsourcing America” ($22.00, Amacom) about the way American jobs will be leaving thousands, possibly even millions, unemployed while low-paid, but well educated workers in India, China and elsewhere replace them. This is likely to be one of those warnings that are going to go largely ignored until it is too late.
Economists at the University of California who have looked at the current job scene and calculated which of those jobs can be done elsewhere for less suggests that nearly one in nine of all US jobs are vulnerable to being outsourced. That’s a staggering 14 million white-collar jobs. The 2004 UC report predicts that, by 2015, approximately 3.5 million white-collar jobs representing $151 billion in wages will move overseas. By the end of this year, the report sees 830,000 jobs leaving.
Who is embracing this enticing way to save money? American companies for whom the requirement to compete in the global marketplace virtually demands they take advantage of this option. The jobs affected include those in information technology, call-center operators, accounting, architecture, medical and legal services, and high-level engineering design. By 2008, an estimated 700,000 jobs in customer service and the corporate back-office will move to India.
Even the federal government and some state governments have begin to outsource public sector jobs, including welfare and food stamp service jobs.
The Internet and the ability to move information by phone anywhere in the world is the primary reason for this, but it must be said that Asian nations have been concentrating for years on high standards of education to catch up and compete with the West. They have long-term strategic goals, while we in the West concentrate on the next quarterly report. As a result, there is an endless supply of educated, under-employed workers in India and China.
We think we are living in a global, free-trade world of endless possibilities, but this ignores the fact that Asian governments such as China, Japan, South Korea, Singapore, and Taiwan have policies that are designed to help certain industries for the precise purpose of competing with the US. By contrast, the US government cannot seem to stop generating an endless flow of new regulations that impede the ability of every kind and size of business enterprise to compete. It is estimated that the cost of complying with these regulations costs Americans $800 billion a year.
One only has to look at the nation’s huge trade deficits to conclude that something is very wrong with the way we do business with the world. This is not a call for tariffs or other obstacles, but it is a call for the reduction of government mandates that make it difficult to compete.
As out-sourcing increases, American college and university students are beginning to take note. Enrollment, for example, in computer science dropped twenty percent in 2003-2004. Why pursue a career in technological fields, engineering, and other demanding professions when people on the other side of the globe who can afford to earn less can do these jobs? Wages in developing nations like India and China are ten to twenty percent less than those US workers must earn.
Need it be said that, as more and more jobs are out-sourced, a great pool of unemployed Americans will occur? Do not make the assumption they will find other jobs. As the authors of “Outsourcing America” point out, “The track record for the reemployment of displaced US workers is abysmal.”
Now add the vast horde of illegal aliens flooding the US to take jobs in the construction industry and other enterprises. Consider the fate of countless lawn care or janitorial services companies who cannot compete with those who employ illegal aliens. Consider the $20 billion Mexicans sent home last year, an amount larger than Mexico’s revenues from oil and tourism.
While jobs at the low end of the wage scale disappear for Americans, so too are jobs held by the middle-class. The worse part of all this is that the government is doing nothing to address either the out-sourcing losses or immigration problems. Even now the White House keeps calling for “guest worker” programs that, for migrant labor makes sense, but not for the other jobs Americans would gladly fill. There are already programs that allow foreign white-collar workers to come here and replace higher paid US workers.
There are some indicators that American companies have discovered that out-sourced call centers are a turn-off for many American consumers, but this is cold comfort for the countless Americans, including the 1.8 million college graduates who join the labor force each year.
The result is predictable. Unemployed US workers will pay no taxes, nor will they be buying all those foreign-made products that fill the shelves in American malls. They will not be contributing to retirement savings programs or pension funds that would otherwise be used to invest in new business ventures.
This is a calamity
already for those who must compete for blue-collar jobs and it is going
to be the same for the middle class. The ripple effect on the American
economy will be widespread and awful.
© 2005 Alan Caruba - All Rights Reserved
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Alan Caruba writes a weekly column, “Warning Signs” that is posted on the website of The National Anxiety Center ~
While jobs at the low end of the wage scale disappear for Americans, so too are jobs held by the middle-class. The worse part of all this is that the government is doing nothing to address either the out-sourcing losses or immigration problems.