Newsweek column on outsourcing

Newsweek ^ | 8-07-2003 | Michael Rogers

[samuel_adams_us]

Aug. 7, 2003 / 5:32 PM ET Readers on outsourcing: I’ve been corresponding with readers this week about two Newsweek pieces, one on the “jobless recovery” phenomenon and the other on offshore outsourcing. It’s a major hot-button topic, particularly among IT workers, but the mail for the most part has been quite reasoned, if somewhat sorrowful and resigned. A few readers asked some pointed questions:

Name: Marc Hansen Hometown: Seattle When all the Microsoft, Oracle, and IBM software production has been outsourced offshore, and when all Intel factories are completely automated, and when all Home Depot stores have self-check-out lines. ... my question is: Who, in America, will be able to afford the food that the McDonald’s robots cook?

Name: EV Hometown: Annapolis, Md. Where do all of these upper level managers think they will be when everyone has been outsourced? Guess they better learn Hindi or one of the other 18 dialects. You are only a manager if there is someone left to manage.

Name: Daniel E. Platt Hometown: Putnam Valley, N.Y. Sixteenth century Spain was quite rich on gold from America. While they funded the industrial revolution in the rest of Europe, they were largely left behind in the end. Are we doomed to the same fate? Or should we purchase a future at the cost of lower profit margins now?

Rogers replies: All good questions. Here are some personal tales from the trenches:

Name: Toni Klinger Hometown: Massillon, Ohio I am so angry. My husband is 59 and lost his job to Canada four months ago. Yesterday, my sister-in-law was notified that her skip-tracing job was going to India. Hey, no problem, she’s only been with the company for 21 years! I have never been so frustrated in my life. People in their 50s just can’t start over. I hate life!

Name: G. Popsworth Hometown: Dallas, Texas I am struggling with what to suggest to my children for a course of study at college. It is becoming more and more difficult for college grads to find employment. Now with outsourcing rampant, they need something stable for their career opportunities. A small town dentist, doctor or lawyer might be appropriate.

Name: Thela Jinseet Hometown: Clinton, N.J. Here’s my story: I am a journalist for an online publication, and I’m bracing for impact. My employer’s entire technical staff is from India, making up nearly 50% of the employees here. The owners of the company are also Indian and they outsource to a team in India. Our Indian employees are a real bargain because they work ungodly hours: 10- to 12-hour days every day and on the weekends. They are also extremely bright. And it’s for low pay. But there’s more. My husband lost his electrical engineering job four days after 9-11 from a major Japanese company that closed its plant and moved its operations to France. Despite graduating with honors from a top university, it took more than a year for him to find work. And just in time: We had two weeks of unemployment benefits left, which was barely enough to pay for our mortgage. This time, he saw a substantial cut in pay. I am truly frightened after our experience. I am scared to buy another house. (We had to sell ours for his new job.) I am scared to have a baby. We can’t afford to save for retirement. Pensions are a thing of the past. My company doesn’t even have a 401(k) plan or even direct deposit for paychecks. I fear we will be poverty-stricken when we retire at 75. Why isn’t Congress listening?

Rogers replies: There were also some suggestions about what to do:

Name: Bill Hometown: Roswell, Ga. Outsourcing customer service jobs overseas is a double-edged sword. One side slashes the number of jobs that are available to U.S. employees and the other side slashes the income taxes that the federal government can collect. Uncle Sam ends up funding unemployment benefits for U.S. citizens who are denied jobs that have been sent overseas. One solution may be to penalize these outsourcing companies in the form of a negative subsidy so that they can help pay benefits for the unemployed.

Name: Mike K. Hometown: Aurora, Ill. Outsourcing makes for some really profitable companies, but fewer consumers have the money to buy that company’s products. That profit won’t last for long. Remember the big “Buy American” kick back in the 80s? I think we’re on the way to the “Hire American” craze. Find out who outsources and who doesn’t and support those who support America by hiring Americans.

[samuel_adams_us]

Wrong, I want the leadership of the corporation to be ethical, hand over some of the profits to the share holders, not giant bonuses for the CEO. I know you want total capitalism but this country isn't a capitalist country, its a country governed by and for the people, what's in the best interest for the people, not the CEO of Enron.

[hotdogjones]

It is the cost of living that has forced people to ask for higher wages. As result wages in the US have gotton out of control and corporations are shipping work overseas. Expect a major real estate crash, because as more white collar workers can't find work or forced to take lower paying jobs at walmarts they will be able to afford less and dump their expensive mortgages on the housing market. The adjustment will be painfull. I call it the deflation adjustment. Once wages in the US go down, work will come back to the us. Look at the German car mfg corporations opening up plants in the us.

Regardless of who is in office (repub or dem) there is nothing they can do. We had a stock market bubble, real estate bubble, white collar wage bubble. Now they are popping.

http://www.comstockfunds.com/index.cfm?act=Newsletter.cfm&category=Market%20Commentary&newsletterid=1015&menugroup=Home&aol=1

[fortaydoos]

While I do not agree with your points, having lurked on these threads a long time I know your heart is in the right place. You obviously want what is best for America as a whole and, even though I disagree with you on how to get that, the personal attacks on you that you endure are ridiculous. I certainly agree with you there are lots of CEOs who would sell us all into slavery for a nickle if they could.

[samuel_adams_us]

Do you see anywhere in the Constitution of this country that says anything about corporations? I don't, it talks about the citizens.

[dfwgator]

What, companies charge what the need to in order to make a profit, that's business, with the savings from shipping the jobs overseas they are not lowering their prices, they are putting the profits in their pocket.

Shouldn't that then open up the opportunity for a competiting company to pass on the savings to customers, and thus force the "greedy" company to adjust their prices in order to stay competitive?

[samuel_adams_us]

I want an america for my children, my family has lived here for 14 generations, I am generation X, my son is X+1. I want him to have freedom and a life, todays' corporations are taking away our freedom, you either work 100 hours a week and are a robot, or you live on the street. Our parents and grand parents would be disgusted with what this country has become.

[Dead Dog]

RIAA doesn't have the power to tax and raise tarrifs.

[UnBlinkingEye]

When you call for tarriffs to protect your job, you are calling for increased prices for some so you can enjoy an increased life style at their expense. Sounds like a theme more at home in the democrat party.

Tariffs do more than protect jobs, they encourage the growth of industry in the nation and raise revenue that can be used to lower other federal taxes like self employment, payroll, and income taxes.

[samuel_adams_us]

I agree with the competition part and prices, but what most don't see is that the competition is amongst only a few players who are left in the industry, they can pretty much manipulate the price they want when they want. There is no real competition anymore, that's why the oil businesses keep screwing us at the pump when there is a glut of oil.

[hedgetrimmer]

The government will have just about as much luck stopping offshoring

Since the government is funding outsourcing, it can surely stop it by cutting off funding to outsource and ridding us of that that rotten OPIC which insures investment in communist countries with taxpayer dollars.

[DugwayDuke]

"Wrong, I want the leadership of the corporation to be ethical, hand over some of the profits to the share holders, not giant bonuses for the CEO."

Cool, now you're in favor of wage controls on executive compensation as well as welfare job subsidies.

"I know you want total capitalism but this country isn't a capitalist country,.."

So, you want to make the country less capitalistic and more socialistic?

"... its a country governed by and for the people, what's in the best interest for the people, not the CEO of Enron."

Isn't that the same logic the Democrats use to justify welfare subsidies for their constituents?

[DugwayDuke]

"Do you see anywhere in the Constitution of this country that says anything about corporations? I don't, it talks about the citizens."

That's a fair question so I'll answer it, "No". So now answer my question: "Do you see anywhere in the Constitution that says you have a right to your neigbor's money?"

[af_vet_rr]

Find out who outsources and who doesn’t and support those who support America by hiring Americans.

Which is rapidly coming down to mom-and-pop businesses.

I try very hard to support local businesses, rather than chains, because I know those chain stores have, at some point, probably outsourced something overseas, but it's getting harder and harder to do-so, and even the mom-and-pop/local businesses are probably selling goods that were made overseas.

Ugh. At least they haven't outsourced the military (well they've hired plenty of civilian contractors to free up personnel for other duties, but it's not quite that bad yet).

[samuel_adams_us]

Money over morals for you eh bud? Sold your soul to the devil?

[samuel_adams_us]

No, and I didn't say anyone did.

[af_vet_rr]

Can you say tariffs? A tax on offshoring easily collectable and not cost effective to avoid.

Do you think it would happen? Sounds great, but do you honestly think either party would push this through? Sure the Republicans would like to help American businesses, and the dems would be using it to help the unions, but Joe Blow on the street is going to yell and scream when the price of his tv or radio or whatever shoots up.

[DugwayDuke]

"Tariffs do more than protect jobs, they encourage the growth of industry in the nation and raise revenue that can be used to lower other federal taxes like self employment, payroll, and income taxes."

Exactly how does this logic differ from that used by the democrats to justify an increase in the minimum wage? Are you also a supporter of their arguments for a "living wage"? If not, why not?

[Constitutional Patriot]

"Find out who outsources and who doesn’t and support those who support America by hiring Americans."

This can work if enough Americans participate. It may not bring the jobs back, but it will punish the companies that are profiting from low cost foreign labor.

[Dirk McQuickly]

As usual, those who sit in the Ivory Tower screw whoever they need to in order to stay there. Yesterday, it was stock. Today, it's jobs.

There are limitations within our system -- anti-trust, securities law, etc. We have these laws beacause the legislature recognized the need to have some -- SOME oversight in matters that affect the overall health of the economy. I don't think it's an insult to free-market theory to require employers to maintain a specific percentage of jobs stateside.

My God, people from college-educated households are seriously debating the merits of sending their kids to a university for $100,000 per child (by the time they're through) just to be unemployed when they graduate. Trade schools will see a marked increase in enrollment in the coming years, I guarantee. Heating and air conditioning may not be glamorous, but it's good money and a steady job.